<PAGE>

                                  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 28, 2007

                                       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.)

1214 East 15th Street, Brooklyn, New York                          11230
-----------------------------------------                          -----
(Address of Principal Executive Offices)                         (Zip Code)

                                 (718) 758-3807
                                 --------------
                           (Issuer's Telephone Number)

         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, par value $0.0001 per share
                    -----------------------------------------
                                (Title of Class)

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. [X]

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

The issuer's revenues for the fiscal year ended February 28, 2007 were $787,088.

The number of shares outstanding of the issuer's Common Stock as of June 8, 2007
was 45,476,917 shares. The aggregate market value of the Common Stock totaling
41,956,292 shares held by non-affiliates, based on the approximate average of
the bid and asked prices of $0.13 per share as of June 8, 2007 was $5,454,318.


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



<PAGE>

<TABLE>
<CAPTION>
                                Table of Contents

                                                                                       PAGE
                                                                                       ----
<S>     <C>
PART I
          Item 1.  Description of Business.                                              3
                   Risk Factors.                                                        11
          Item 2.  Description of Property.                                             12
          Item 3.  Legal Proceedings.
          Item 4.  Submission of Matters to a Vote of Security Holders.                 12

PART II
          Item 5.  Market for Common Equity, Related Stockholder Matters and
                   Small Business Issuer Purchases of Equity Securities.                13
          Item 6.  Management's Discussion and Analysis or Plan of Operation.           14
          Item 7.  Financial Statements.                                                20
          Item 8.  Changes in and Disagreements with Accountants on Accounting
                   and Financial Disclosure.                                            20
          Item 8A. Controls and Procedures.                                             20
          Item 8B. Other Information.                                                   21

PART III
          Item 9.  Directors, Executive Officers, Promoters, Control Persons and
                   Corporate Governance; Compliance with Section 16(a) of the
                   Exchange Act.                                                        21
          Item 10. Executive Compensation.                                              22
          Item 11. Security Ownership of Certain Beneficial Owners and
                   Management and Related Stockholder Matters.                          24
          Item 12. Certain Relationships and Related Transactions, and Director
                   Independence.                                                        25
          Item 13. Exhibits.                                                            26
          Item 14. Principal Accountant Fees and Services.                              26
SIGNATURES                                                                              27
</TABLE>


                                       2


<PAGE>


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.



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS


GENERAL
-------

         Multi-Media Tutorial Services, Inc., a Delaware corporation formed in
1994, (the "Company"), produces, acquires and distributes a variety of products
to educational institutions and consumers using direct marketing through
Internet advertising. The Company's principal product to date has been
proprietary tutorial education programs on videotape, DVD and CD Rom 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, DVD's,CD Roms 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 DVD's available.

         The Company has developed a website, TutorialChannel.com which
incorporates various on-line products and services, among them interactive test
taking practice, streaming video featuring the Math Made Easy courseware and
on-line tutoring. The Tutorial Channel enables parents to obtain personalized
live on-line tutoring for their children in the comfort of their home at prices
significantly lower than traditional tutoring. The Company employs tutors who
have graduated in mathematics and performed at the top of their class. The
Company plans on promoting its online services through a redesigned website and
internet advertising. The Company plans on promoting its online services through
a redesigned website and internet advertising.

         The Company currently offers online tutoring services to its customers
and has acquired several hundred paid subscriptions. The average current
subscription price for these customers is $29.95 per month which includes the
Company's on line testing service and a limited number of tutoring sessions.

         The Company has developed an online test preparation division. This
entails online preparation for the standardized tests such as SAT, PSAT and ACT.
The Company expects to begin marketing this service in the upcoming fall season.

         The Company generates leads through Internet advertising. The Company
utilizes its own inbound and outbound telephone sales force to convert these
leads into sales. Payment is made by credit card or direct debit to a checking
account. The product is then shipped to the customer. The Company's products
have been purchased by over 300,000 customers over the last ten years.

         The Company's objective is to become the premiere resource for parent
and students across the country for their tutorial and remedial home study
programs. The Company's website, Mathmadeeasy.com, provides a full menu of the
Company's tutorial programs with easy to use ordering facilities. The Company
has experienced a steady increase in both visitors to its website as well as
sales conducted through the website. The Company recently completed the redesign
of the Math Made Easy website which presents the Company's products in a more
attractive format and simplifies the ordering process.


                                       3


<PAGE>

PRODUCTS
--------

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

CURRENT PRODUCTS
----------------

         The Company's Math Made Easy line covers all levels of math from
pre-school through elementary school as well as high school and college level.
These products are intended to provide a comprehensive review of the subject
matter in a condensed and efficient format. Typically, an entire year's course
is condensed into less than five hours of programming consisting of videotape or
DVD lesson reviews, accompanied by computer graphics and exercises. The average
math consumer order consists of a set of five educational videotapes or DVD's at
a price of $200. Sets of five videotapes are sold to schools at a price of $279,
and 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
DVD's and workbooks. The Company purchases these products at discounted rates
from the respective manufacturers or distributors and then distributes them
through the Company's direct marketing division. The average reading consumer
order consists of five videotapes or DVD's at a price of $200 for each order.

PRODUCT DEVELOPMENT
-------------------

         The Company produces many of its own math DVD products and supplemental
workbooks developed by 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 in the
production of many of its programs. The Company currently employs a staff of
educational writers and software developers who are currently preparing content
for the Company's subsidiary, Tutorialchannel.com. The Company plans on
producing additional titles in the mathematics field.

         Many of the Company's DVD's 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 products, the Company purchases
products from third parties.

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.

         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 and TutorialChannel.com 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.


                                       4


<PAGE>

         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 utilized by parents to pick
from a broad range of educational products and services to meet children's
needs.

         The Federal education legislation known as "No Child Left behind"
promises to open up a significant new channel for the Company to market its
educational products and on-line services to the school system. In April, 2007,
the Company was by the Ohio State Department of Education to be an
SES(supplemental educational services) provider as per the No Child Left Behind
Program. The Company plans to research the marketing channels available to
solicit students who qualify for this program. According to the U.S. Department
of Education, the No Child Left Behind budget for the 2006-2007 school year is
$23,478,807,000.

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

           o      In the last five years we have seen 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.

         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.

         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. The Company's management vision is to develop a broad array
of focused tutorial programs 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 computers and DVD 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 DVD's. 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 500,000 names, of which 300,000 ordered
product, and approximately 200,000 names of potential customers.

         HOME SCHOOLING MARKET - As the home schooling phenomenon continues to
grow, the Company plans to direct its on-line teaching and tutorial services to
meet the needs of these students. Often, home schoolers need supplemental review
and tutorial services. The Company can satisfy the needs of these home schoolers
through its online tutorial subscriptions which combine on-line live tutoring
with its online test banks and practice exercises. The Company plans on
initiating a focused internet advertising campaign targeted at home school
parents.

         SAT PREP - The Company plans on initiating a focused advertising
campaign utilizing search engine advertising and an internet public relations
campaign to galvanize business for its on-line SAT Prep division. The Company
expects the SAT prep to become a significant growth area in its total portfolio
of tutorial services.


                                       5


<PAGE>

         The Company believes that its online tutorial services make it an
attractive source for schools and college sales.

         In each of the fiscal years ended February 28, 2007 and 2006, consumer
videotape and DVD sales and school videotape and DVD sales constituted
approximately 90%, and 10%, respectively, of total educational sales.

SALES, MARKETING AND DISTRIBUTION
---------------------------------

         The Company sells its programs on DVD to schools and consumers. The
Company maintains an in house sales force and is able to convert generally 25%
of its leads into customers. As the Company continues to expand its sales force
it will seek out new Internet advertising opportunities to increase its volume
of leads.

         The Company conducts an active outbound sales program to its past
customers in which it provides previous customers the follow-up course at a
discounted price.

         The Company maintains active relationships with several school and
library distributors who order a wide array of the Company's programs.
Additionally, the Company deals directly with a significant number of school
districts who order the Company's programs from time to time.

         Credit cards are the preferred method of payment. Customer credit cards
are either billed in full or in partial monthly payments. Schools are invoiced
for their purchases. 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 the customer submits to the
Company their bank name and checking account routing number.

PERSONNEL AND TRAINING
----------------------

         The Company believes that the quality of its employees is a key factor
in its effort to develop a profitable sales business. All salespeople receive a
detailed review of each product they will be selling. In addition, the Company
trains its salespeople in the art of converting an inquiry into a sale. A
salesperson is in training for approximately five days, prior to working on a
full-time basis. Furthermore, the Company continually monitors sales
conversations to assure quality and customer satisfaction. Compensation is based
on a combination of salary and commission. See "Employees" and "Risk Factors."

RETURNS, GUARANTY AND WARRANTY POLICIES
---------------------------------------

         The Company offers its customers a 60 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 sales 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. The Company has accrued
approximately $23,000, included in accrued expenses, for potential refunds as of
February 28, 2007. See "Risk Factors."


                                       6


<PAGE>

SEASONALITY
-----------

         The Company's educational sales business is highly seasonal. Demand
falls off significantly during summer and mid-winter 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.

ADVERTISING AVAILABILITY
------------------------

         In the Internet arena, as more advertisers compete for web customers,
advertising prices may significantly increase, reducing the Company's
profitability.

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.

COMPETITION
-----------

         The Company's educational DVD offerings compete with a variety of
software related tutorials of well established companies, who market their
materials in computer software related stores. These companies typically provide
a significant advertising budget to support their retail sales programs. In
addition, the Company's self help tutorial programs compete with local and
national privately owned learning centers such as Sylvan Learning Corp as well
as Kaplan's educational testing centers. These companies allocate many millions
of dollars to support the branding of these centers. Almost all of these
competitors have greater financial resources, greater public and industry
recognition and broader marketing capabilities than our Company. The market is
also 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
through Internet advertising, the Company recognizes that the Internet currently
hosts many other educational and children related sites that include competitive
educational software. This could diminish demand for the Company's products.

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 Company is not
directly affected by the new government regulations restricting unsolicited
calls to consumers who place themselves on a "do not call" list since the
Company does not initiate any cold calls to consumers who have not made a prior
inquiry to the Company. Nevertheless, the pervasive negative opinion on
telesales calls could adversely affect the Company's sales campaigns.

EMPLOYEES
---------

         As of June 8, 2007, the Company had 20 employees, of whom two were
executive officers, 14 were engaged in sales, and four were in marketing,
support and administration. The Company has made significant reductions in
personnel in order to reduce overhead expenses. The Company routinely 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.

PROPERTY
--------

         The Company leases an approximate 1,400 square foot facility at 1214
East 15th Street, Brooklyn, New York, which houses its telemarketing and other
staff. This lease, which currently calls for monthly rent of $2,500, expired in
February, 2006. The Company is currently leasing this facility on a
month-to-month basis. In November 2005, the Company opened a new sales facility
in Lakewood, NJ where it employs approximately 6 individuals. This lease, which
currently calls for monthly rent of $1,300, and is set to expire in November
2007.


                                       7


<PAGE>

                                  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.

WE HAVE A HISTORY OF OPERATING LOSSES.

         The Company has experienced significant losses from operations since
inception. It experienced losses of approximately $823,000 and $449,000 for the
fiscal years ended February 28, 2007 and 2006, respectively. As of February 28,
2007, the Company had a working capital deficit of approximately $6,358,000 and
an accumulated deficit of approximately $20,494,000. 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, 2007, the Company had outstanding investor loans and advances
aggregating approximately $2,387,000, of which $726,000 may be converted into
equity. All of these notes payable are either due on demand or past due, except
for one note payable totaling $50,000 due in the fiscal year ended February 28,
2010. 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. 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
sales 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 their independent public accountants,
which includes an explanatory paragraph describing the uncertainty as to the
ability of the Company to continue as a going concern. See "Management's
Discussion and Analysis or Plan of Operation" and "Consolidated Financial
Statements."

WE HAVE A NEED FOR ADDITIONAL FINANCING TO SUSTAIN OUR OPERATIONS.

         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 actively seeking sources of
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 or Plan of Operation."

ANY FUTURE ISSUANCES OF STOCK WILL CAUSE DILUTION TO OUR CURRENT STOCKHOLDERS.

         The Company currently has outstanding options, warrants and other
rights to acquire an aggregate of approximately 15,599,000 shares of Common
Stock and as of June 8, 2007, the price of the Company's current stock as quoted
on the NASD Electronic Bulletin Board was approximately $.13 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."

INCREASED CONSUMER RETURNS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUE.

         The Company typically experiences returns of from customers which is
standard for the industry. The Company has accrued approximately $23,000,
included in accrued expenses, for potential refunds as of February 28, 2007.
Increased consumer returns due to the perceived inferiority or ineffectiveness
of our products could have a material adverse effect on our revenues and cause
our business to fail.


                                       8


<PAGE>

WE COMPETE WITH OTHER INTERNET AND OTHER MEDIA ADVERTISERS WHO HAVE GREATER
RESOURCES THAN US.

         As the Company has shifted its advertising dollars from radio to
Internet, the Company has effectively eliminated its dependence on the
availability of advertising inventory which fluctuates widely according to
seasonality and demand versus supply. The Company may return to radio and be
subject to these fluctuations. In the Internet arena, as more advertisers
compete for web customers, advertising prices may significantly increase,
reducing the Company's profitability.

OUR PRODUCTS ARE DISCRETIONARY ITEMS AND DEMAND MAY DECREASE DUE TO DOWNTURNS IN
THE ECONOMY.

         Our products are discretionary consumer goods. Downturns in the
economic climate, whether actual or perceived, may decrease people's
discretionary income or desire to spend such income and decrease consumer demand
and the performance of the Company's own advertising campaign on behalf of its
own products.

WE ARE HIGHLY DEPENDENT ON OUR MATH MADE EASY(TM) PRODUCT LINE.

         In the fiscal year ended February 28, 2007, most of the Company's
educational sales were from the Math Made Easy(TM) product line. The Company is
currently selling its math programs in both videotape, DVD, and CD Rom formats.
Many of the educational product companies have reconfigured their videotape
based programs into interactive computer software. The Company has plans to do
this as well but may lack the financing to successfully complete this project.

         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.

CONSUMERS MIGHT BE RELUCTANT TO MAKE PURCHASES OVER THE PHONE WITH THEIR CREDIT
CARDS.

         Credit card frauds perpetrated by disreputable telemarketing operations
have adversely affected the willingness 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.

WE, LIKE MOST SALES DRIVEN BUSINESSES, HAVE A HIGH SALES FORCE TURNOVER RATE.

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

WE ARE IN A COMPETITIVE INDUSTRY.

         The Company's educational DVD offerings compete with a variety of
software related tutorials of well established companies, who market their
materials in computer software related stores. These companies typically provide
a significant advertising budget to support their retail sales programs. In
addition, the Company's self help tutorial programs compete with local and
national privately owned learning centers such as Sylvan Learning Corp as well
as Kaplan's educational testing centers. These companies allocate many millions
of dollars to support the branding of these centers. Almost all of these
competitors have greater financial resources, greater public and industry
recognition and broader marketing capabilities than our Company. The market is
also characterized by numerous small companies, with whose products the Company


                                       9


<PAGE>

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
through Internet advertising, the Company recognizes that the Internet currently
hosts many other educational and children related sites that include competitive
educational software. This could diminish demand for the Company's products.

WE ARE HIGHLY DEPENDENT ON OUR MANAGEMENT TEAM.

         The Company's business is significantly dependent upon the personal
efforts and continued availability of Barry Reichman, its Chief Executive
Officer. The loss or unavailability to the Company of Mr. Reichman could have a
Material adverse effect upon the Company's business operations and prospects. To
the extent that the services of Mr. Reichman 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.

OUR TELEPHONE SALES TEAM COULD FACE THE PUBLIC'S UNFAVORABLE ASSOCIATION WITH
UNSOLICITED TELEMARKETERS.

         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 Company is not
directly affected by the new government regulations restricting unsolicited
calls to consumers who place themselves on a "do not call" list since the
Company does not initiate any cold calls to consumers who have not made a prior
inquiry to the Company. Nevertheless, the pervasive negative opinion on
telesales calls could adversely affect the Company's sales campaigns.

WE WERE DELISTED FROM THE NASDAQ SMALL-CAP MARKET FOR FAILURE TO MEET
MAINTENANCE CRITERIA AND OUR COMMON STOCK IS SUBJECT TO THE 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 re-listing on the NASDAQ Small Cap Market.

         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"). 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


                                       10


<PAGE>

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.

THERE IS A LIMITED PUBLIC TRADING MARKET FOR THE COMPANY'S SECURITIES.

         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
re-listing of its securities on NASDAQ.

LIMITATION OF USE OF NET OPERATING LOSS CARRYFORWARDS.

         As of February 28, 2007, the Company had federal net operating loss
carryforwards of approximately $13,545,000, portions of which expire yearly
through 2027 (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 or Plan of Operation--Liquidity and
Capital Resources."

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.  DESCRIPTION OF PROPERTY.

         The Company leases an approximate 1,400 square foot facility at 1214
East 15th Street, Brooklyn, New York, which houses its telemarketing and other
staff. This lease, which currently calls for monthly rent of $2,500, expired in
February, 2006. The Company is currently leasing this facility on a
month-to-month basis. In November 2005 the Company opened a new sales facility
in Lakewood, NJ where it employs approximately 6 individuals. This lease, which
currently calls for monthly rent of $1,300, and is set to expire in November
2007.


                                       11


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS.

         The Company had made a settlement with one of its creditors that had
begun litigation on January 6, 2000 in Superior Court, Judicial District of
Stanford/Norwalk, whereby it has settled a $235,000 claim for $190,000 with a
29-month payout schedule. The Company has paid approximately $30,000 in honor of
this settlement; however, since the creditor has not honored the terms of the
settlement agreement to activate and to provide upgrades of its software, the
Company has discontinued its schedule of payments. The creditor sued the Company
in the state of Connecticut but the court ruled that the creditor could not
proceed with the suit in the State of Connecticut. This case has not been
reopened by the creditor.

           In August, 2004 the Company settled with its largest creditor to whom
it owed approximately $600,000. The case was originally brought in New York in
2001. The creditor has settled for $150,000 with a four year payout schedule.
The Company is currently conforming to the schedule. The original judgment that
the creditor held against the Company was withdrawn. However, the creditor has a
stipulated judgment whereby in the event that the Company defaults on its
payments the creditor can obtain a judgment for the remaining balance plus a
penalty of $150,000.

         The Company is subject to a claim for federal payroll and unemployment
taxes for approximately, $400,000, and $100,000, respectively, which the Company
is disputing. With regard to the federal payroll taxes, the Company has received
notice of a levy in the amount of $83,448.33 against certain of the Company's
assets. It has also received notice from the Federal Government and the
Department of Labor of various liens with regard to the above arrears. The
Company has filed a 941c adjustment which should eliminate all or at least a
substantial portion of these tax arrears. It is doing so under advice of legal
counsel who specializes in payroll tax issues. There is no assurance that the
Company will be successful in resolving this dispute and having these liens
removed.

         In 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. As of February 2001, this note has expired and Holtz
Rubinstein & Co has received a judgment for $120,000. The complaint by Holtz
Rubenstein was entered April, 2001 in Supreme Court, Suffolk County.


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

         None.


                                       12


<PAGE>

                                     PART II



ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
         BUSINESS ISSUER OF EQUITY SECURITIES.

         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,
2005 and 2006 and the initial quarter of the fiscal year ending February 28,
2007.


                                  COMMON STOCK

                                       Bid Prices ($)       Asked Prices ($)
                                       --------------        -------------
                                       High       Low        High      Low
                                       ----       ---        ----      ---

Year Ending February 28, 2006
1st Quarter                            0.06       0.035      0.08      0.042
2nd Quarter                            0.0511     0.21       0.07      0.03
3rd Quarter                            0.045      0.15       0.05      0.02
4th Quarter                            0.072      0.19       0.0799    0.02

Year Ending February 28, 2007
1st Quarter                            0.069      0.02       0.08      0.021
2nd Quarter                            0.112      0.04       0.13      0.045
3rd Quarter                            0.060      0.041      0.079     0.044
4th Quarter                            0.111      0.03       0.12      0.04

Year Ending February 29, 2008
1st Quarter                            0.12       0.075      0.13      0.08


         The closing bid and asked sales prices of the Common Stock, as traded
in the over-the-counter market, on June 8, 2007 were approximately $.12 and
$.13, 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.

HOLDERS

         As of the close of business on June 8, 2007, there approximately 120
holders of the Company's Common Stock.


DIVIDENDS

      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 any 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.


                                       13


<PAGE>

SALES OF UNREGISTERED SECURITIES

         In April 2006, the Company issued 250,000 shares of common stock at a
market price of $0.05 per share, for payment of previously accrued legal fees of
$12,500.

         In April 2006, the Company issued 400,000 shares of common stock upon
the exercise of options for $0.01 per share. The Company is awaiting proceeds
from this option exercise. The Company has recorded this stock issuance as a
stock subscription receivable of $4,000.

         In May 2006 the Company entered into a one year consulting agreement
commencing on June 1, 2006. In lieu of cash payment under this agreement, the
Company issued 500,000 shares of common stock on June 1, 2006. These shares were
issued at the market price of $0.06 per share, for a total value of $30,000. The
Company recorded deferred compensation for the entire issuance to be earned over
the one year consulting period. During the year ended February 28, 2007, the
Company expensed $22,500, of this deferred compensation.

         During July and August 2006 the Company issued 1,600,000 shares of
common stock for consulting services. These shares were issued at market prices
ranging from $0.04 to $0.05 per share. The value of these shares, recorded as a
non-cash compensation expense, was $74,000.

         During December 2006 the Company issued 136,250 shares of common stock
for consulting services. These shares were issued at a market price of $0.05 per
share. The value of these shares, recorded as a non-cash compensation expense,
was $6,813.

         In December 2006 the Company issued 125,000 shares of common stock, to
a holder of a note payable, to obtain a one year extension on the due date of
the note to December 31, 2007. These shares were valued at market for $6,250 and
are recorded as a non-cash financing charge.

         In addition to the issuance of common stock, the Company granted the
note holder a warrant to purchase 125,000 shares of common stock at $0.10 per
share. This warrant granted on December 31, 2006, is exercisable upon issuance
and has a five year life. The Company has valued this warrant under a
Black-Scholes option-pricing model. The total value assigned to these warrants
was $5,600 recorded as financing costs. The following assumptions were used in
the Black-Scholes calculation: dividend yield of 0%, expected volatility of
274%, risk-free interest rate of 4.70%, and an expected life of five years.

         During the year ended February 28, 2007, the Company granted a warrant
to a business consultant for services rendered. A total of 100,000 shares of
common stock at an exercise price of $0.02 per were granted with this warrant.
This warrant has a life of five years from the date of grant. This warrant was
valued at $4,990 and recorded as a non-cash financing charge. The warrant was
valued using the Black-Scholes valuation model with the following assumptions:
dividend yield of 0%, expected volatility of 252%, risk-free interest rate of
4.95%, and an expected life of five years.

         On April 10, 2006, the Company issued a 10% unsecured convertible
promissory note in the amount of $50,000, referred to as "Series E" notes.
Issued with the debt, were 250,000 shares of the Company's common stock value at
$5,275, which the Company recorded as a discount on debt that is being amortized
and expensed as interest over the life of the debt, or until such time as the
debt is converted. During the year ended February 28, 2007 the Company amortized
$1,613, of this debt discount.

         During the year ended February 28, 2007, a total of $50,000 Series C -
notes payable including accrued interest of $17,000, converted into 670,000
shares of the Company's common stock at $0.10 per share, the minimum conversion
price per the note payable.

         In February 2007, a total of $75,000 of demand notes payable redeemed
their note principal for Series E notes. Under the terms of the Series E note,
the note holder upon issuance of Series E receives 5 shares of common stock for
each $1 of debt, for a total of 375,000 share of common stock. These shares have
been valued at $29,950, and have been recorded as discount on debt, that was to
have been amortized and expensed as interest over the life of the debt, or until
such time as the debt was converted. Upon issuance of these Series E notes, the
note holder converted all $75,000 principal of Series E into 750,000 shares of
common stock, at the minimum conversion price of $0.10 per share or $75,000. The
$29,950 discount on debt was fully expensed as interest upon conversion of the
Series E to common stock.


                                       14


<PAGE>

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

         None of the above issuances involved underwriters, underwriting
discounts. We relied upon the exemption from the registration requirements of
the Securities Act afforded the Company under Section 4(2) promulgated
thereunder. We believed these exemptions were available because:

      o     We are not a blank check company;
      o     Total sales did not exceed $1,000,000;
      o     Our officers or directors made all sales of our common stock to the
            above persons;
      o     Sales were not made by general solicitation or advertising;
      o     Sales were made to persons with pre-existing relationships to the
            Company, our officers or directors; and
      o     Sales were made to investors who were either accredited investors or
            who represented that they were sophisticated enough to evaluate the
            risks of the investment.


                                       15


<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

         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.

GENERAL
-------

         Multi-Media Tutorial Services, Inc., a Delaware corporation formed in
1994 the "Company"), produces, acquires and distributes a variety of products to
educational institutions and consumers using direct marketing through Internet
advertising. The Company's principal product to date has been proprietary
tutorial education programs on videotape, DVD and CD Rom 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, DVD's, CD ROMs 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
DVD's available.

         The Company has developed a website, TutorialChannel.com which
incorporates various on-line products and services, among them interactive test
taking practice, streaming video featuring the Math Made Easy courseware and
on-line tutoring. The Company plans on promoting its online services through a
redesigned website and internet advertising.

         The Company currently offers online tutoring services to its customers
and has acquired several hundred paid subscriptions. The average current
subscription price for these customers is $29.95 per month which includes the
Company's on line testing service and a limited number of tutoring sessions.

         The Company has developed an online test preparation division. This
entails online preparation for the standardized tests such as SAT, PSAT and ACT.
The Company expects to begin marketing this service in the upcoming fall season.

         The Company generates leads through Internet advertising. The Company
utilizes its own inbound and outbound telephone sales force to convert these
leads into sales. Payment is made by credit card or direct debit to a checking
account. The product is then shipped to the customer. The Company's products
have been purchased by over 300,000 customers over the last ten years.

         The Company's objective is to become the premiere resource for parent
and students across the country for their tutorial and remedial home study
programs. The Company's website, Mathmadeeasy.com, provides a full menu of the
Company's tutorial programs with easy to use ordering facilities. The Company
has experienced a steady increase in both visitors to its website as well as
sales conducted through the website. The Company recently completed the redesign
of the Math Made Easy website which presents the Company's products in a more
attractive format and simplifies the ordering process.


                                       16


<PAGE>

PRODUCTS
--------

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

CURRENT PRODUCTS
----------------

         The Company's Math Made Easy line covers all levels of math from
pre-school through elementary school as well as high school and college level.
These products are intended to provide a comprehensive review of the subject
matter in a condensed and efficient format. Typically, an entire year's course
is condensed into less than five hours of programming consisting of videotape or
DVD lesson reviews, accompanied by computer graphics and exercises. The average
math consumer order consists of a set of five educational videotapes or DVD's at
a price of $200. Sets of five videotapes are sold to schools at a price of $279,
and 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
DVD's and workbooks. The Company purchases these products at discounted rates
from the respective manufacturers or distributors and then distributes them
through the Company's direct marketing division. The average reading consumer
order consists of five videotapes or DVD's at a price of $200 for each order.

PRODUCT DEVELOPMENT
-------------------

         The Company produces many of its own math DVD products and supplemental
workbooks developed by 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 in the
production of many of its programs. The Company currently employs a staff of
educational writers and software developers who are currently preparing content
for the Company's subsidiary, Tutorialchannel.com. The Company plans on
producing additional titles in the mathematics field and expanding its on-line
tutorial servicing business.

         Many of the Company's DVD's 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.


        As more and more companies introduce on-line products and services the
Company may find itself at a competitive disadvantage in terms of pricing and
advertising. Larger companies with significantly bigger advertising resources
may be able to negatively impact the Company's on-line expansion plans.
Furthermore, other companies may be able to develop superior technology with
respect to on-line learning which will put the Company's services at a
competitive disadvantage.


RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED FEBRUARY 28, 2007 AND FEBRUARY
28, 2006.

         Net sales for the fiscal year ended February 28, 2007 decreased by
$348,792 or 30.7%, to $787,088 from $1,135,880 in the fiscal year ended February
28, 2006. A more competitive environment on web advertising resulted in fewer
advertising opportunities, thereby decreasing sales. The Company has engaged an
online media advertising company to develop new advertising avenues for the
Company's products.

         Gross profit decreased by $299,197, or 30.0%, to $696,954 in 2007, from
$996,151 in 2006.

         Selling, General and Administrative expenses increased by $38,787, or
3.2%, to $1,242,581 in 2007 from $1,203,794 for 2006. Of these expenses,
$191,114 of this expense pertained to issuance of stock for professional and
consulting services.


                                       17


<PAGE>

         Loss from operations increased by $337,984, or 162.8%, to $545,627 in
2007 from to $207,643 in 2006. The decrease in sales and higher general and
administrative expenses resulted in higher loss from operations.

         Interest expense increased by $36,627, or 15.2%, to $277,672 in 2007
from $241,045 in 2006. During 2007, a total $43,413 of the interest expense
relates to: (i) issuance of 125,000 shares of common stock for an extension on a
note payable owed by the Company, valued at market for $6,250, (ii) issuance of
250,000 shares of common stock in connection with the issuance of a $50,000 note
payable valued at market for $5,275, recorded as a discount on debt, of which
$1,613 has been amortized and accounted for as interest expense,(iii) issuance
of 375,000 shares of common stock in connection with the issuance of a $75,000
note payable valued at market for $29,950, (iv) issuance of warrants to purchase
125,000 shares of common stock at $0.10 per share, valued under the
Black-Scholes valuation model at $5,600. These warrants have a five year life
from the date of grant.

         During 2006 a total of $29,350 of the interest expense relates to:
(i)issuance of 125,000 shares of common stock for an extension of a due date on
a note payable granted to the Company, valued at market for $3,750, (ii)
issuance of five-year warrants to purchase 125,000 shares of common stock at
$0.10 per share issued in connection with the previous loan extension, and
valued under the Black-Scholes valuation model at $3,700, (iii) grant of five
year warrants to financial consultants to purchase 600,000 shares of common
stock at an exercise price of $0.10 per share and valued at $21,900 using the
Black-Scholes option pricing model

         Net losses increased by $374,611, or 83.5%, to $823,299 in 2007 from to
$448,688 in 2006. The decrease in sales and higher general and administrative
expenses resulted in a higher net loss in 2007.

         LIQUIDITY AND CAPITAL RESOURCES.
         --------------------------------

         The Company's cash decreased by $18,767 during the year ended February
28, 2007. At February 28, 2007 cash deficit was $16,113, compared to cash on
hand at February 28, 2006 of $2,654.

         Net cash used in operating activities in 2007 was $165,669, as compared
to cash provided from operating activities in the amount of $2,355 in 2006. This
is primarily the result of the operating loss.


         Net cash used in investing activities in 2007 was $26,444, compared to
net cash used of $28,102 in 2006.

         Net cash provided from financing activities in 2007 was $189,459,
compared to $21,000 in 2006. The primary increase in cash from financing
activities was the proceeds from more loans in 2007 versus 2006.

         During the year ended February 28, 2007, the Company issued 2,236,250
shares of common stock for financial consulting and legal services valued
between $0.04 to $0.06 per share; 125,000 shares of common stock valued at $0.05
per share accounted for as interest, to extend a note payable; 250,000 shares of
common stock valued at $0.05 per share to liquidate certain trade payables;
250,000 shares of common stock issued with debt valued at $0.0211 per share,
accounted for as a debt discount to be amortized over the life of the loan;
375,000 shares of common stock issued with debt valued at $0.0799 per share,
accounted for as a debt discount to be amortized over the life of the loan;
400,000 shares of common stock issued upon the exercise of a stock option at
$0.01 per share; 1,420,000 shares of common stock valued at $0.10 per share for
conversion of outstanding convertible debt.

         During the year ended February 28, 2007, the Company issued five year
warrants to a consultant to purchase a total of 100,000 shares of common stock
at $0.02 per share, valued at $4,990 using the Black-Scholes valuation model.
Additionally the Company issued warrants to purchase 125,000 shares of common
stock at $0.10 per share in consideration for the extension of a one year term
on an outstanding note payable. These warrants were valued at $5,600 using the
Black-Scholes valuation model.


                                       18


<PAGE>

         During the year ended February 28, 2006 the Company issued 2,100,000
shares of common stock valued between $0.02 and $0.06 per share in payment of
professional services and consulting services, The Company also issued 125,000
shares valued at $.03 per share, to obtain an extension on a loan payable
accounted for as an interest expense.

         The Company continues to meet its working capital requirements through
debt and equity funding from outside sources and internally generated funds. 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 or 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's annual report from its independent public accountants
includes an explanatory paragraph describing the uncertainty as to the ability
of the Company's operations to continue as a going concern. The Company incurred
net losses of approximately $823,000 and $449,000 during the years ended
February 28, 2007 and 2006, respectively. In addition, the Company had an
accumulated deficit of approximately $20,494,000 and a working capital deficit
of approximately $6,358,000 as of February 28, 2007. The Internal Revenue
Service has placed a tax lien on substantially all of the Company's assets as
the Company is in arrears on payment of payroll taxes, accrued prior to February
28, 2004, of approximately $631,000. 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 contemplating 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.

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

Off-Balance Sheet Arrangements
------------------------------

None


                                       19


<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.

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

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

         None

ITEM 8A. CONTROLS AND PROCEDURES


CEO and CFO Certifications
--------------------------

         As of the end of the year covered by this annual report, the Company
carried out under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer ("the
Certifying Officers"), an evaluation of the effectiveness of our "disclosure
controls and procedures." The certifications of the CEO and the CFO required by
Rules 13a-14(a) and 15d-14(c) of the Securities Exchange Act of 1934, as amended
(the "Certifications") are filed as exhibits to this report.

         This section of this report contains information concerning the
evaluation of our "disclosure controls and procedures" (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) ("Disclosure Controls") and changes to
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) ("Internal Controls") referred to in the Certifications
and should be read in conjunction with the Certifications for a more complete
understanding of the topics presented.

Evaluation of Disclosure Controls
---------------------------------

         The Company maintains controls and procedures designed to ensure that
they are able to collect the information that is required to be disclosed in the
reports they file with the Securities and Exchange Commission (the "SEC") and to
process, summarize and disclose this information within the time period
specified in the rules of the SEC. The Company Chief Executive and Chief
Financial Officer is responsible for establishing, maintaining and enhancing
these procedures. The office is also responsible, as required by the rules
established by the SEC, for the evaluation of the effectiveness of these
procedures.

         Based on management's evaluation (with participation of our principal
executive officer and principal financial officer), as of the end of the period
covered by this report, the principal executive officer and principal financial
officer concluded that a deficiency was identified in the Company's internal
controls over financial reporting which constituted a "material weakness."
Accordingly, management concluded that the Company's disclosure controls and
procedures were not effective.

         The material weakness was the result of an insufficient number of
personnel having adequate knowledge, experience and training to provide
effective, and timely, oversight and review over the Company's financial close
and reporting process.

Limitations on the Effectiveness of Controls
--------------------------------------------

         The Company's management does not expect that their disclosure controls
or their internal controls over financial reporting will prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, but not absolute, assurance that the objectives of a control
system are met. Further, any control system reflects limitations on resources,
and the benefits of a control system must be considered relative to its costs.
These limitations also include the realities that judgments in decision-making
can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.


                                       20


<PAGE>

Changes in Internal Controls
----------------------------

         The Company maintains a system of internal controls designed to provide
reasonable assurance that transactions are executed in accordance with
management's general or specific authorization; transactions are recorded as
necessary to permit preparation of financial statements in conformity with
Generally Accepted Accounting Principles ("GAAP").

         It is the responsibility of Company management to establish and
maintain adequate internal control over financial reporting. The material
weakness identified relates to an insufficient number of personnel having
adequate knowledge, experience and training to provide effective oversight and
review over our financial close and reporting process. This is the result of
limited financial resources. These control deficiencies in the aggregate did not
result in any misstatements in the interim and fiscal year end consolidated
financial statements. Management is in the process of remedying the material
weakness described above.


Internal Control Over Financial Reporting
-----------------------------------------

         As reported in the Company's amended 10-K/A for the year ended February
28, 2006, filed with the SEC on March 29, 2007, the Company inadvertently
omitted "Item 8A. Controls and Procedures" from their original filing of Form
10-KSB. Management is currently implementing procedures, and providing personnel
and financial resources to avoid reoccurrence of disclosure omissions in future
filings.

ITEM 8B. OTHER INFORMATION.

None.


                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
         GOVERNANCE, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Officers and Directors
----------------------

         The officers and directors of the Company, as of June 8, 2007, are as
follows:

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

 Barry Reichman               56            Chief Executive Officer,
                                            Chief Financial Officer and Director

 Anne Reichman                53            Director


Biographies and family relationships
------------------------------------

         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 Video Tutorial Service,
a wholly owned subsidiary of Multi-media Tutorial Services, Inc 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
Video Tutorial Service and supervised internal accounting. Ms. Reichman was also
an assistant producer in a number of Video Tutorial Service 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.


                                       21


<PAGE>

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Section 16(a) of the Exchange Act 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 pursuant to section 12, 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, 2004, no reports were
required to be filed under Section 16 (a) of the Exchange Act by any of the
Company's executive officers, directors or 10% beneficial owners because the
Company does not have a class of stock which is registered under Section 12 of
the Exchange Act.


CODE OF ETHICS

         We have not adopted a Code of Business Conduct and Ethics that applies
to our principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions in
that our officers and directors serves in all the above capacities.


AUDIT, NOMINATING AND COMPENSATION COMMITTEES

         Our Board of Directors does not have standing audit, nominating or
compensation committees, and our Board of Directors performs the functions that
would otherwise be delegated to such committees. Currently, our Board of
Directors believes that the cost of establishing such committees, including the
costs necessary to recruit and retain qualified independent directors to serve
on our Board of Directors and such committees and the legal costs to properly
form and document the authority, policies and procedures of such committees are
not justified under our current circumstances.


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, 2007, to the Company's Chief Executive Officer and other
officers of the Company who received annual compensation in excess of $100,000
(each, a "named executive officer").


         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, 2007 and February 28, 2006:

<TABLE>
<CAPTION>
                                                   SUMMARY COMPENSATION TABLE

                                                                             Non-Equity
                                                                             Incentive    Nonqualified
  Name and                                            Stock       Option        Plan        Deferred
  Principal                  Salary      Bonus       Awards       Awards    Compensation  Compensation   All Other      Total
  Position        Year        ($)         ($)          ($)         ($)          ($)         Earnings    Compensation     ($)
     (a)          (b)         (c)         (d)          (e)         (f)          (g)          ($)(h)       ($) (i)        (j)
-------------- ----------- ----------- ----------- ------------ ----------- ------------- ------------- ------------- -----------
<S>               <C>       <C>            <C>          <C>      <C>             <C>           <C>           <C>         <C>
Barry             2007      $100,000       0            0        $33,000(2)     0             0             0         $133,000
Reichman       ----------- ----------- ----------- ------------ ----------- ------------- ------------- ------------- -----------
(1)               2006      $100,000       0            0        $72,170(3)     0             0             0         $172,170
</TABLE>

(1)  Mr. Reichman has served as Chief Executive Officer since July 31, 1999.
(2)  Reflects three option awards each for 250,000 shares of common stock
     granted on August 14, 2006, November 30, 2006 and December 1, 2006 at en
     exercise price of $.06, $.04 and $.04 respectively. The options were fully
     vested on the date of grand and terminate on the tenth anniversary of the
     date of the grant.
(3)  Reflects an option granted on May 9, 2005 for 1,000,000 shares at an
     exercise price of $.10 per share. Options vest in 200,000 increments on the
     anniversary of the date of grant and terminate on the tenth anniversary of
     the date of grant. The Company was not subject to SFAS 123R for the fiscal
     year ended February 28, 2006. Dollar amount reflected in table is
     calculated on a pro forma basis.

                                       22


<PAGE>

         EMPLOYMENT AGREEMENTS

         On January 1, 2005 The Company has entered into five year employment
agreements with Barry Reichman, Anne Reichman and Harold Reichman pursuant to
which they are paid annual base salaries of $100,000, $75,000 and $50,000
respectively. Harold Reichman has waived his annual salary of $50,000 until such
time that the Company is profitable. Unpaid salaries for the other executives
are accounted for in accrued expenses. These employment agreements require the
issuance of options to these employees at the market price.

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 Stock Options
("NQSO"). The Stock Option Plan expired 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 NQSO 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 NQSO
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, NQSO 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.

         During the year ended February 28, 2006, the Company established the
2006 Incentive Compensation Plan ("2006 Plan"). Underlying the 2006 Plan a total
of 3,600,000 shares are available to be granted. As of February 28,
2007, 1,236,250 shares were granted under this plan. The 2006 Plan is effective
from June 13, 2006 through June 13, 2011.


                                       23


<PAGE>

<TABLE>
<S>                     <C>
                                          OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

                                          Option Awards                                              Stock Awards
------------ ------------------------------------------------------------------------ -------------------------------------------
   Name        Number of       Number of         Equity       Option       Option      Number    Market     Equity      Equity
              Securities       Securities       Incentive    Exercise    Expiration      of      Value     Incentive   Incentive
              Underlying       Underlying     Plan Awards:   Price ($)      Date       Shares     of         Plan        Plan
              Unexercised     Unexercised       Number of                                or      Shares     Awards:     Awards:
                Options         Options        Securities                              Units      or       Number of   Market or
                  (#)             (#)          Underlying                                of      Units     Unearned     Payout
              Exercisable    Unexercisable     Unexercised                             Stock      of        Shares,    Value of
                                                 Options                               That      Stock     Units or    Unearned
                                                   (#)                                 Have      That        Other      Shares,
                                                                                        Not      Have       Rights     Units or
                                                                                      Vested      Not      That Have    Other
                                                                                        (#)     Vested        Not       Rights
                                                                                                  (#)       Vested     That Have
                                                                                                             (#)          Not
                                                                                                                      Vested ($)
------------ -------------- ----------------- -------------- ---------- ------------- --------- -------- ------------ -----------
    (a)           (b)             (c)              (d)          (e)         (f)         (g)       (h)        (i)         (j)
------------ -------------- ----------------- -------------- ---------- ------------- --------- -------- ------------ -----------
              104,967                                          $.30      May 27, 2008
   Barry      120,000                                           .12      Dec 1, 2009
 Reichman   1,000,000                                           .10      Sept 1, 2009
              400,000                                           .10      May 9, 2015
                               600,000                          .10      May 9, 2015
            1,000,000                                           .07      Jan  2, 2012
            2,000,000                                           .06      Dec 2, 2010
              250,000                                           .06      Aug 14, 2016
              250,000                                           .04      Nov 30, 2016
              250,000                                           .04      Dec 1, 2016
------------ -------------- ----------------- -------------- ---------- ------------- --------- -------- ------------ -----------
</TABLE>


COMPENSATION OF DIRECTORS

         We do not currently pay any cash fees to our directors, but we pay
directors' expenses in attending board meetings. During the year ended February
28, 2007, no director expenses were reimbursed.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

         The following table sets forth as of June 8, 2007, 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, 1214 East 15th Street Brooklyn, NY 11230

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

Barry Reichman (1)                    14,020,592                25.05%

Anne Reichman (1)                     14,020,592                25.05%

Mike Lee (2)                           3,425,000                 7.48%

Josh B. Scheinfeld
  and Steve G. Martin (3)              4,703,611                 9.99%

All officers and directors
  as a group (2 persons)(4)           14,020,592                25.05%

----------

#        Based on 45,476,917 shares of Common Stock outstanding as of June 8,
         2007. 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.


                                       24


<PAGE>

(1)      Mr. and Mrs. Reichman are husband and wife. Mr. Reichman is an officer
         and director of the Company. Mrs. Reichman is a director of the
         Company. Includes options to purchase up to 5,974,967 shares granted to
         Mr. Reichman, options to purchase up to 4,525,000 shares granted to
         Mrs. Reichman, and 3,520,625 shares owned by Mr. Reichman.

(2)      The address for Michael Lee is 14 Woodbridge Rd, Hingham, MA 02043,
         includes warrants to purchase 300,000 shares of common stock granted to
         Mr. Lee.

(3)      The address for Josh Scheinfeld and Steve Martin is 222 Merchandise
         Mart Plaza Suite 9-112, Chicago, IL 60654. Includes warrants to
         purchase 1,625,000 shares of common stock.

(4)      See Footnotes 1 and 2 above.


<TABLE>
<CAPTION>
                                 SECURITIES AUTHORIZED FOR ISSUANCE INCENTIVE COMPENSATION PLAN

--------------------------------- ------------------------------- ------------------------------- -------------------------------
                                                                                                       Number of securities
                                                                                                     remaining available for
                                    Number of securities to be                                     future issuance under equity
                                   issued upon the exercise of      Weighted average exercise     compensation plans (excluding
                                  outstanding options, warrants   price of outstanding options,      securities reflected in
                                            and rights                 warrants and rights                 column (a))
                                               (a)                             (b)                             (c)
--------------------------------- ------------------------------- ------------------------------- -------------------------------
<S>     <C>
Equity compensation plans
approved by security holders        1,236,250                               N/A                    2,363,750
--------------------------------- ------------------------------- ------------------------------- -------------------------------
Equity compensation plans not
approved by security holders           -                                      -                      -
--------------------------------- ------------------------------- ------------------------------- -------------------------------
         Total                      1,236,250                               N/A                    2,323,750
--------------------------------- ------------------------------- ------------------------------- -------------------------------
</TABLE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
         INDEPENDENCE.

No transactions have occurred since the beginning of the Company's last fiscal
year or are proposed with respect to which a director, executive officer,
security holder owning of record or beneficially more than 5% of any class of
the Company's securities or any member of the immediate families of the
foregoing persons had or will have a direct or indirect material interest.


DIRECTOR INDEPENDENCE

None of the Company's members of the board of directors are deemed to be
independent.


                                       25


<PAGE>

ITEM 13. EXHIBITS

                                    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     1995 Stock Option Plan (1)
10.2     2006 Incentive Compensation Plan (2)
21.1     List of Subsidiaries (3)
23.1     Consent of Sherb & CO, LLP, independent registered public accounting
           firm
31.1     Certification of Barry Reichman pursuant to 18 U.S.C. Section 1350, as
           adopted to section 302 of the Sarbanes-Oxley Act of 2002 (3)
32.1     Certification of Barry Reichman pursuant to 18 U.S.C. Section 1350, as
           adopted to section 906 of the Sarbanes-Oxley Act of 2002 (3)

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

(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 Form S-8 (File No.:
     333-135694) filed with the commission on July 11, 2006.

(3)  Incorporated by reference from the Company's Annual Report on Form 10-KSB
     for the fiscal year ended February 26, 2006 filed with the Commission on
     June 15, 2006.



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The Company's board of directors reviews and approves audit and permissible
non-audit services performed by its independent accountants, as well as the fees
charged for such services. In its review of non-audit service fees and its
appointment of Sherb & Co, LLP as the Company's independent accountants, the
board of directors considered whether the provision of such services is
compatible with maintaining independence. All of the services provided and fees
charged by Sherb & Co, LLP in 2007 and 2006 were approved by the board of
directors.

Audit Fees
----------

The aggregate fees billed for professional services for the audit of the annual
financial statements of the Company and the reviews of the financial statements
included in the Company's annual reports on Form 10-KSB for Fiscal Years ended
February 28, 2007 and 2006 were $25,800 and $25,500 respectively, net of
expenses.


Audit-Related Fees
------------------

There were no other fees billed by during the last two fiscal years for
assurance and related services that were reasonably related to the performance
of the audit or review of the Company's financial statements and not reported
under "Audit Fees" above.


Tax Fees
--------

There were no tax fees billed during the last two fiscal years for products and
services provided.


All Other Fees
--------------

There were no other fees billed during the last two fiscal years for products
and services provided.


                                       26


<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: June 11, 2007              By: /s/ BARRY REICHMAN
                                      ------------------------------------------
                                      Barry Reichman, Chief Executive Officer,
                                      Chief Financial Officer and Director
                                        (Principal Executive Officer
                                        Principal Accounting Officer)


         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.



Date: June 11, 2007                   /s/ BARRY REICHMAN
                                      ------------------------------------------
                                      Barry Reichman, Chief Executive Officer
                                      Chief Financial Officer and Director
                                        (Principal Executive Officer
                                        Principal Accounting Officer)



  Date: June 11, 2007                 /s/ ANNE REICHMAN
                                      ------------------------------------------
                                      Anne Reichman, Director


                                       27


<PAGE>

                              FINANCIAL STATEMENTS
                                February 28, 2007

                                      INDEX


PART I. FINANCIAL INFORMATION

                                                                         PAGE
                                                                        NUMBER
                                                                      ----------
Financial Statements

       Report of Independent Registered Public Accounting Firm        F-1

       Consolidated Balance Sheet                                     F-2

       Consolidated Statements of Operations                          F-3

       Consolidated Statements of Stockholders' Deficit               F-4

       Consolidated Statements of Cash Flows                          F-5

       Notes to Consolidated Financial Statements                     F-6 - F-16



                                       28


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
Multi-Media Tutorial Services, Inc.

We have audited the accompanying consolidated balance sheet of Multi-Media
Tutorial Services, Inc., as of February 28, 2007 and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
ended February 28, 2007 and 2006. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. 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
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Multi-Media Tutorial Services, Inc. as of February 28, 2007, and the
consolidated results of its operations and its cash flows for the years ended
February 28, 2007 and 2006 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
the Multi-Media Tutorial Services, Inc will continue as a going concern. As
discussed in Note 2 to the consolidated financial statements, the Company has
incurred an accumulated deficit of approximately $20,494,000. The Company has
incurred net losses of approximately $823,000 and $449,000 for the fiscal years
ended February 28, 2007 and 2006, respectively. Additionally, the Company has a
working capital deficiency at February 28, 2007 of approximately $6,358,000. The
Internal Revenue Service has imposed a tax lien on substantially all of the
Company's assets, as the Company is in arrears on payments of payroll taxes of
approximately $631,000. These factors, among others, raise substantial doubts
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 2 to the financial statements. The
accompanying consolidated financial statements do not include any adjustments
that might result should the Company be unable to continue as a going concern.



                                                /s/ Sherb & Co, LLP
                                                --------------------------------
                                                Sherb & Co, LLP
                                                Certified Public Accountants

New York, New York
June 5, 2007


                                      F-1


<PAGE>

<TABLE>
<CAPTION>
                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                AND SUBSIDIARIES
                                                      CONSOLIDATED BALANCE SHEET
                                                               February 28, 2007
--------------------------------------------------------------------------------

                                     ASSETS

<S>     <C>
CURRENT ASSETS
       Accounts receivable, less allowance for                     $     62,835
          doubtful accounts of $20,800
       Inventory, net                                                     7,401
       Prepaid expenses                                                  53,325
                                                                   ------------
          Total current assets                                          123,561
                                                                   ------------

FURNITURE AND EQUIPMENT, net                                             10,902
INTANGIBLE ASSETS, net                                                   53,481
OTHER ASSETS                                                              8,745
                                                                   ------------

                                                                   $    196,689
                                                                   ============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
       Bank overdraft                                              $     16,113
       Notes payable                                                  2,337,225
       Accounts payable and accrued expenses                          4,127,838
                                                                   ------------
          Total Current Liabilities                                   6,481,176
                                                                   ------------

LONG TERM DEBT:
       Note Payable, net of discount of $3,662                           46,338
                                                                   ------------

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, $0.0001 par value
          100,000,000 shares authorized
          41,826,917 shares issued and outstanding                        4,183
       Stock subscription receivable                                     (4,000)
       Additional paid-in capital                                    14,162,759
       Accumulated deficit                                          (20,493,767)
                                                                   ------------
          Total Stockholders' Deficit                                (6,330,825)
                                                                   ------------

                                                                   $    196,689
                                                                   ============

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


                                       F-2


<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------

                                                        For the Year Ended
                                                           February 28,
                                                 ------------------------------
                                                     2007              2006
                                                 ------------      ------------

NET SALES                                        $    787,088      $  1,135,880
COST OF SALES                                          90,134           139,729
                                                 ------------      ------------
GROSS PROFIT                                          696,954           996,151

SELLING, GENERAL AND ADMINISTRATIVE                 1,242,581         1,203,794
                                                 ------------      ------------


LOSS FROM OPERATIONS                                 (545,627)         (207,643)

INTEREST EXPENSE                                     (277,672)         (241,045)
                                                 ------------      ------------

NET LOSS                                         $   (823,299)     $   (448,688)
                                                 ============      ============

BASIC AND DILUTED LOSS PER SHARE                 $      (0.02)     $      (0.01)
                                                 ============      ============

WEIGHTED-AVERAGE SHARES OUTSTANDING                38,846,831        35,719,914
                                                 ============      ============

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


                                      F-3


<PAGE>

                                                                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                                                                AND SUBSIDIARIES
                                                                                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
--------------------------------------------------------------------------------------------------------------------------------
                                               Common Stock              Stock        Additional
                                       ---------------------------   Subscription      Paid-In      Accumulated
                                          Shares         Amount       Receivable       Capital        Deficit          Total
                                       ------------   ------------   ------------    ------------   ------------    ------------

Balance, February 28, 2005               34,545,667   $      3,455   $         --    $ 13,653,989   $(19,221,780)   $ (5,564,336)
      Common Stock issued for:
         Interest                           125,000             13             --           3,737             --           3,750
         Services                         2,100,000            210             --          64,290             --          64,500
      Warrants to purchase stock
       issued for:
         Extension of loan payable               --             --             --           3,700             --           3,700
         Services                                --             --             --          21,900             --          21,900
      Amortization of deferred
       compensation                              --             --             --          18,959             --          18,959
      Net Loss                                   --             --             --              --       (448,688)       (448,688)
                                       ------------   ------------   ------------    ------------   ------------    ------------

Balance, February 28, 2006               36,770,667          3,678             --      13,766,575    (19,670,468)     (5,900,215)

      Common Stock issued for:
         Interest                           125,000             12             --           6,238             --           6,250
         Services                         2,236,250            224             --         103,090             --         103,314
         Payment of accounts payable        250,000             25             --          12,475             --          12,500
         Exercise of stock option           400,000             40         (4,000)          3,960             --              --
         Series E debt financing            625,000             62             --          35,163             --          35,225
         Conversion of debt               1,420,000            142             --         141,858             --         142,000
      Warrants to purchase stock
       issued for:
         Extension of loan payable               --             --             --           5,600             --           5,600
         Services                                --             --             --           4,990             --           4,990
      Employee stock options                     --             --             --          82,810             --          82,810
      Net Loss                                   --             --             --              --       (823,299)       (823,299)
                                       ------------   ------------   ------------    ------------   ------------    ------------

Balance, February 28, 2007               41,826,917   $      4,183   $     (4,000)   $ 14,162,759   $(20,493,767)   $ (6,330,825)
                                       ============   ============   ============    ============   ============    ============

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

                                                               F-4




<PAGE>

                                                           MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                              AND SUBSIDIARIES
                                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------------------------

                                                                          For the Year Ended
                                                                             February 28,
                                                                        ----------------------
                                                                          2007          2006
                                                                        ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES
       Net loss                                                         $(823,299)   $(448,688)
Adjustments to reconcile net loss to net cash
       (used in) provided by operating activities
            Depreciation and amortization                                  36,230       36,030
            Amortization of prepaid contract for service                   40,103           --
            Amortization of deferred compensation                          22,500       18,959
            Amortization of discount on debt                               31,563           --
            Stock based compensation                                       82,811           --
            Common stock issued for:
                Extension for loan repayment                                6,250        3,750
                Services                                                   80,813       64,500
            Warrants to purchase common stock granted for:
                Extension of loan payable due date                          5,600        3,700
                Services                                                    4,990       21,900
Changes in Operating assets and Liabilities:
       Accounts receivable                                                 60,209      (46,494)
       Inventory                                                               24        8,276
       Prepaid expenses and other assets                                    5,070       (9,285)
       Other assets                                                        (5,745)          --
       Accounts payable and accrued expenses                              287,212      356,942
       Payroll taxes payable                                                   --       (7,235)
                                                                        ---------    ---------
Net cash (used in) provided by operating activities                      (165,669)       2,355
                                                                        ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES
       Purchase of furniture and equipment                                     --       (9,345)
       Increase in intangibles                                            (26,444)     (24,699)
                                                                        ---------    ---------
Net cash used in investing activities                                     (26,444)     (34,044)
                                                                        ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from issuance of notes payable                            174,346       32,500
       Repayment of principal of note payable                              (1,000)          --
       Bank overdraft                                                      16,113           --
                                                                        ---------    ---------
Net cash provided by financing activities                                 189,459       32,500
                                                                        ---------    ---------

Net increase in cash                                                       (2,654)         811

CASH, BEGINNING OF PERIOD                                                   2,654        1,843
                                                                        ---------    ---------

CASH, END OF PERIOD                                                     $      --    $   2,654
                                                                        =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
       INTEREST PAID                                                    $      --    $      --
                                                                        =========    =========
       INCOME TAXES PAID                                                $      --    $      --
                                                                        =========    =========
NON-CASH INVESTING AND FINANCING ACTIVITIES
       Common stock issued:
            Settlement of accounts payable and accrued expense          $  12,500    $      --
                                                                        =========    =========
            With issuance of debt                                       $   5,275    $      --
                                                                        =========    =========
            Exercise of option / stock subscription receivable          $   4,000    $      --
                                                                        =========    =========
            Deferred compensation paid in common stock                  $  30,000    $      --
                                                                        =========    =========
            Conversion of debt and accrued interest into common stock   $ 142,000           --
                                                                        =========    =========
       Debt issued for:
            Prepaid consulting services                                 $  87,500    $      --
                                                                        =========    =========

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


                                              F-5
</TABLE>


<PAGE>

                                             MULTI-MEDIA TUTORIAL SERVICES, INC.
                                                                  AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                               FEBRUARY 28, 2007
--------------------------------------------------------------------------------

NOTE 1 - DESCRIPTION OF BUSINESS

Multi-Media Tutorial Services, Inc., ("MMTS") a Delaware corporation, is engaged
in the production and sales of educational videocassettes, CD's and DVD's
through its wholly-owned subsidiaries Video Tutorial Services, Inc. ("VTS") and
Math Channel, Inc. ("Math Channel"). VTS, a New York State corporation was
established in 1985. Math Channel, a New York State corporation was established
in December 2005 to provide tutorial one-on-one on line educational services.
Henceforth VTS, Math Channel or MMTS are to be referred to as the "Company",
unless reference is made to the respective company. The Company sells its
educational products and services on the Internet via the Company's website,
Mathmadeeasy.com and through its own inbound and outbound sales force.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern
-------------
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 approximately $823,000 and $449,000 during the years ended February 28, 2007
and 2006, respectively. In addition, the Company had an accumulated deficit of
approximately $20,494,000 and a working capital deficit of approximately
$6,358,000 as of February 28, 2007. The Internal Revenue Service has placed a
tax lien on substantially all of the Company's assets as the Company is in
arrears on payment of payroll taxes, accrued prior to February 28, 2004, of
approximately $631,000. 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
contemplating 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 subsidiaries, VTS and Math Channel.
All significant intercompany transactions and balances have been eliminated in
consolidation. Action Telesales and Communications, Inc is an affiliated company
of the Company which handles the billing process for MMTS and VTS. All
intercompany transactions have been eliminated.

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-6


<PAGE>

Allowance for Doubtful Accounts
-------------------------------
The allowance for doubtful accounts is based on the Company's assessment of the
collectibility of customer accounts and the aging of the accounts receivable.
The Company regularly reviews the adequacy of the Company's allowance for
doubtful accounts through identification of specific receivables where it is
expected that payments will not be received. The Company also establishes an
allocated reserve that is applied to all amounts that are not specifically
identified. In determining specific receivables where collections may not be
received, the Company reviews past due receivables and gives consideration to
prior collection, history and changes in the Company's overall business
condition. The allowance for doubtful accounts reflects the Company's best
estimate as of the reporting date.

Inventory
----------
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, CD's, DVD's, and textbooks. The Company has a reserve of $10,000
on inventory as of February 28, 2007.

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.

Stock Based Compensation
------------------------
Stock-Based Compensation - The Company periodically issues shares of common
stock for services rendered or for financing costs. Such shares are valued based
on the market price on the transaction date.

The Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs.

Effective March 1, 2006, the company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment" (SFAS
123(R)). The company previously applied Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations and provided the required pro forma disclosures of SFAS No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). Stock-based compensation
represents the cost related to stock-based awards granted to employees and
others. The company measures stock-based compensation cost at grant date, based
on the estimated fair value of the award, and recognizes the cost as expense on
a straight-line basis (net of estimated forfeitures) over the requisite service
period. The company estimates the fair value of stock options using a
Black-Scholes valuation model. The expense is recorded in the Consolidated
Statement of Operations.

Revenue Recognition
-------------------
The Company recognizes revenue only when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable, and
collectibility is probable. When other significant obligations remain after
products are delivered, revenue is recognized only after such obligations are
fulfilled. Cost of Goods Sold represents the cost of product shipped to the
customer. The Company provides a reserve for anticipated returns for customers
based upon historical return levels.


                                      F-7


<PAGE>

Shipping and Handling Costs
----------------------------
The Company includes shipping and handling costs in cost of sales. Such costs
were approximately $26,000 and $38,000 in the years ended February 28, 2007 and
2006 respectively.

Advertising
-----------
The Company uses direct-response media advertising, consisting primarily of
Internet advertising. The Company expenses advertising costs as incurred.
Advertising expense was approximately $146,000 and $210,000 during the years
ended February 28, 2007 and 2006, respectively.

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 notes
payable also approximates fair value because the current interest rates offered
to the Company for debt of similar maturities are substantially the same.

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 shares of common stock 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 shares of common stock that would
have been outstanding if the potential shares of common stock had been issued
and if the additional shares of common stock were dilutive. For the years ended
February 28, 2007 and February 29, 2006, the Company incurred net losses;
therefore, basic and diluted loss per share are the same. The outstanding
options excluded in the computation amounted to 14,439,348 and 11,574,348 at
February 28, 2007 and 2006 respectively. The amount of shares upon conversion of
convertible debt excluded in the computation amounted to approximately 8,000,000
at February 28, 2007.


                                      F-8


<PAGE>

Recent Accounting Pronouncements
---------------------------------

-        In March 2006, the FASB issued SFAS No. 156: "Accounting For Servicing
         of Certain Financial Instruments- an amendment of SFAS No. 140." This
         statement establishes, among other things, the accounting for all
         separately recognized servicing assets and servicing liabilities. This
         statement amends SFAS No. 140 to require that all separately recognized
         servicing assets and servicing liabilities be initially measured at
         fair value, if practicable. SFAS No. 156 permits, but does not require,
         the subsequent measurement of separately recognized servicing assets
         and servicing liabilities at fair value. An entity that uses derivative
         instruments to mitigate the risks inherent in servicing assets and
         servicing liabilities is required to account for those derivative
         instruments at fair value. Under SFAS No. 156, an entity can elect
         subsequent fair value measurement to account for it's separately
         recognized servicing assets and servicing liabilities. By electing that
         option, an entity may simplify its accounting because this statement
         permits income statement recognition of the potential offsetting
         changes in fair value of those servicing assets and servicing
         liabilities and derivative instruments in the same accounting period.
         SFAS No. 156 is effective for financial statements for fiscal years
         beginning after September 15, 2006. Earlier adoption of SFAS No. 156 is
         permitted as of the beginning of an entity's fiscal year, provided the
         entity has not yet issued any financial statements for that fiscal
         year. The adoption of SFAS No 156 is not expected have a significant
         impact on the Company's consolidated financial statements.

-        In July 2006, the FASB issued FASB Interpretation ("FIN") No. 48,
         "Accounting for Uncertainty in Income Taxes -- An Interpretation of
         FASB Statement No. 109." FIN No. 48 clarifies the accounting for
         uncertainty in income taxes recognized in an enterprise's financial
         statements in accordance with SFAS No. 109, "Accounting for Income
         Taxes." FIN No. 48 prescribes a recognition threshold and measurement
         attribute for the financial statement recognition and measurement of a
         tax position taken or expected to be taken in a tax return. The new
         standard also provides guidance on de-recognition, classification,
         interest and penalties, accounting in interim periods and disclosure.
         The provisions of FIN No. 48 are effective for fiscal years beginning
         after December 15, 2006. The adoption of FIN No. 48 is not expected to
         have a significant impact on the Company's consolidated financial
         statements.

-        In September 2006, the FASB issued SFAS No. 157; "Fair Value
         Measurements". This statement defines fair value, establishes a
         framework for measuring fair value in generally accepted accounting
         principles (GAAP), and expands disclosures about fair value
         measurements. This statement applies under other accounting
         pronouncements that require or permit fair value measurements, the FASB
         having previously concluded in those accounting pronouncements that
         fair value is a relevant measurement attribute. Accordingly, this
         statement does not require any new fair value measurements. However,
         for some entities, the application of this Statement will change
         current practices. This Statement is effective for financial statements
         for fiscal years beginning after November 15, 2007. Earlier application
         is permitted provided that the reporting entity has not yet issued
         financial statements for that fiscal year. The Company is currently
         evaluating the provisions of FASB 157 to determine the impact on the
         Company's consolidated financial statements.

-        In September 2006, the Staff of the SEC issued SAB No. 108:
         "Considering the Effects of Prior Year Misstatements when Quantifying
         Misstatements in Current Year Financial Statements". SAB No. 108
         provides guidance on the consideration of the effects of prior year
         misstatements in quantifying current year misstatements for the purpose
         of determining whether the current year's financial statements are
         materially misstated. The SEC staff believes registrants must quantify
         errors using both a balance sheet and income statement approach and
         evaluate whether either approach results in quantifying a misstatement
         that, when all relevant quantitative and qualitative factors are
         considered, is material. This Statement is effective for fiscal years
         ending after November 15, 2006. The adoption of SAB No. 108 did not
         have a significant impact on the Company's consolidated financial
         statements.


                                      F-9


<PAGE>

-        In July 2006, the Emerging Issues Task Force ("EITF") of the FASB
         reached a consensus and ratified Issue No. 06-2: "Accounting for
         Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement
         No. 43, Accounting for Compensated Absences". SFAS No. 43 provides
         guidance for accounting for compensated absences and states that an
         employer shall accrue a liability for employees' compensation for
         future absences if certain conditions are met. However, since certain
         compensated absences such as sabbatical leave do not typically accrue
         until fully vested, there was uncertainty as to whether employee rights
         to the compensated absence accumulate and meet the conditions of SFAS
         No. 43. The consensus reached by the EITF has determined that
         sabbatical and other similar benefits do accumulate and should be
         accrued for over the requisite service period. Further, the EITF has
         called for adoption of the consensus for fiscal years beginning after
         December 15, 2006. EITF 06-2 was effective beginning January 1, 2007.
         The adoption of SAB No. 108 is not expected to have a significant
         impact on the Company's consolidated financial statements.

-        In December 2006, the FASB approved FASB Staff Position (FSP) No. EITF
         00-19-2, "Accounting for Registration Payment Arrangements" ("FSP EITF
         00-19-2"), which specifies that the contingent obligation to make
         future payments or otherwise transfer consideration under a
         registration payment arrangement, whether issued as a separate
         agreement or included as a provision of a financial instrument or other
         agreement, should be separately recognized and measured in accordance
         with SFAS No. 5, "Accounting for Contingencies". FSP EITF 00-19-2 also
         requires additional disclosure regarding the nature of any registration
         payment arrangements, alternative settlement methods, the maximum
         potential amount of consideration and the current carrying amount of
         the liability, if any. The guidance in FSP EITF 00-19-2 amends FASB
         Statements No. 133, "Accounting for Derivative Instruments and Hedging
         Activities", and No. 150, "Accounting for Certain Financial Instruments
         with Characteristics of both Liabilities and Equity", and FASB
         Interpretation No. 45, "Guarantor's Accounting and Disclosure
         requirement for Guarantees, Including Indirect Guarantees of
         Indebtedness of Others", to include scope exceptions for registration
         payment arrangements. FSP EITF 00-19-2 is effective immediately for
         registration payment arrangements and the financial instruments subject
         to those arrangements that are entered into or modified subsequent to
         the issuance date of this FSP, or for financial statements issued for
         fiscal years beginning after December 15, 2006, and interim periods
         within those fiscal years, for registration payment arrangements
         entered into prior to the issuance date of this FSP. The company is
         currently evaluating the potential impact of FSP EITF 00-19-2 on our
         financial statements. The Company is currently evaluating the potential
         effect of FSP EITF 00-19-2 on future financial statements.

-        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
         for Financial Assets and Financial Liabilities-including an amendment
         of FAS 115" (SFAS 159). SFAS 159 allows entities to choose, at
         specified election dates, to measure eligible financial assets and
         liabilities at fair value that are not otherwise required to be
         measured at fair value. If a company elects the fair value option for
         an eligible item, changes in that item's fair value in subsequent
         reporting periods must be recognized in current earnings. SFAS 159 is
         effective for fiscal years beginning after November 15, 2007. The
         adoption of SFAS No 159 is not expected to have a significant impact on
         the Company's consolidated financial statements.

Management does not believe that recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying financial statements.

NOTE 3 - FURNITURE AND EQUIPMENT

Furniture and equipment at February 28, 2007 consisted of the following:

           Furniture and fixtures                      $      55,965
           Office equipment                                   31,448
           Computer equipment                                185,865
                                                       -------------
                                                             273,278
           Less accumulated depreciation                     262,376
                                                       -------------
                                                       $      10,902
                                                       =============


                                      F-10


<PAGE>

Depreciation expense was $6,253 and $10,423 for the years ended February 28,
2007 and February 29, 2006, respectively.

Substantially all the assets collateralize debt due to a vendor.

Additionally, the Internal Revenue Service has placed a tax lien on all the
Company's assets to secure payment of payroll taxes in arrears approximating
$500,000. The Company has submitted returns for the parent company, MMTS and its
subsidiary, VTS upon advice of counsel. Thus far, the MMTS amended returns have
been accepted. If the amended returns of the VTS are accepted as well, this will
substantially reduce the Company's tax liability. There is no assurance,
however, that these amended returns will be accepted.

NOTE 4 - INTANGIBLE ASSETS

Intangible assets at February 28, 2007 consisted of the following:

           Master video production costs               $   1,143,505
           Web Site Development Costs                        137,266
           Software                                           30,271
           Patents and Copyrights                             22,088
                                                       -------------
                                                           1,333,130
           Less accumulated amortization                   1,279,649
                                                       -------------
                                                       $      53,481
                                                       =============

Amortization expense was $29,977 and $25,607 for the years ended February 28,
2007 and 2006 respectively.

Future amortization of intangible assets is expected to be as follows:

                   Year ended February 28,
                                  2008                 $     19,753
                                  2009                       13,847
                                  2010                       13,847
                                  2011                        5,420
                                  2012                          614

NOTE 5 - NOTES PAYABLE

-        On February 28, 2007 the Company was obligated for the following short
         term, or due upon demand, notes payable:

<TABLE>
<CAPTION>
<S>                 <C>
           a.)      10% notes, unsecured, payable on demand. These advances accrue interest
                    based on an annualized rate of 10% per annum. During the year ended
                    February 28, 2006 the Company was loaned $37,500  under these terms.           $       572,313

           b.)      During the year ended February 28, 2007, the Company issued at various
                    times, demand notes totaling $124,346 for cash. These notes accrue interest
                    at 10% per annum. In lieu of cash payment the Company may redeem these
                    notes, and any accrued interest, with the issuance of Series E unsecured
                    convertible promissory notes.


                                      F-11


<PAGE>

         (Table continued - )

                    On April 10, 2006, the Company issued demand notes totaling $87,500 for
                    consulting services to be performed by the note holders over a twenty-four
                    month period, subsequent to the issuance of these notes payable. These notes
                    accrue interest at 10% per annum. In lieu of cash payment the Company may
                    redeem these notes, and any accrued interest, with the issuance of Series E
                    unsecured convertible promissory notes ("Series E"). The Company has
                    recorded the issuance of these notes payable for consulting services as a
                    prepaid expense of $87,500 that is being expensed over the twenty four month
                    period of the consulting agreement. During the year ended February 28, 2007,
                    the Company expensed $40,104, of this deferred compensation.

                    In February 2007, a total of $75,000 of these demand notes redeemed their
                    note principal (accrued interest paid subsequent to February 28, 2007) for
                    Series E notes. Under the terms of the Series E note, the note holder upon
                    issuance of Series E receives 5 shares of common stock for each $1 of
                    debt, for a total of 375,000 share of common stock. These shares have been
                    valued at $29,950, and have been recorded as a discount on debt, that was
                    to have been amortized and expensed as interest over the life of the debt,
                    or until such time as the debt was converted. The Series E debt is
                    convertible at $.50 per share, or 50 percent of the average closing bid
                    during the five trading days prior to the note holder giving notice of
                    conversion, but not lower than $.10 per share. This note, including
                    accrued interest, was due and payable in February 2010. In February 2007,
                    these demand note holders, upon conversion into these Series E notes,
                    converted all $75,000 Series E principal into 750,000 shares of common
                    stock valued at $0.10 per share or $75,000. The $29,950 discount on debt
                    was fully expensed as interest upon conversion of the Series E into common
                    stock.                                                                                 136,846

           c.)      8% notes, unsecured, payable on demand. These advances accrue interest based
                    on an annualized rate of 8% per annum.                                                 750,000

           d.)      Non-interest bearing notes, unsecured, payable on demand. During the year
                    ended February 28, 2007, the Comonay repaid $1,000 of these                            201,676

           e.)      17% convertible unsecured notes payable on demand; the notes are convertible
                    into common stock at a price of $1.2656 per share or an alternate conversion
                    of 75% of the closing bid for the first five trading days prior to
                    conversion. The alternate conversion price cannot be lower than $0.55 per
                    share, or more than $3.55 per share.                                                   250,000

           f.)      10% convertible unsecured notes, payable on demand. The notes are
                    convertible into common stock at a price of the lesser of $.50 or 50% of
                    the average closing bid during the five trading days prior to notice of
                    conversion, but not lower than $.10 per share.                                         401,390


                                      F-12


<PAGE>

         (Table continued - )

           g.)      10% convertible notes payable variously in 2006; the notes are convertible
                    into common stock at the lesser of $.50 or 50% of the average of the closing
                    bid price in the over the counter market during the five business days
                    ending on the day before the holder gives notice of conversion, but not
                    lower than $.10 per share.

                    During the year ended February 28, 2007, a total of $50,000 of these notes
                    payable including accrued interest of $17,000, converted into 670,000
                    shares of the Company's common stock at $0.10 per share.                                25,000
                                                                                                   ----------------
                                                                                                   $     2,337,225
                                                                                                   ================

         Certain of the above notes payable are from stockholders of the
         Company.

-        LONG-TERM NOTE PAYABLE:

         As of February 28, 2007 the Company was obligated for the following
         long-term notes payable:

                   On April 10, 2006, the Company issued a 10% unsecured convertible               $        50,000
                   promissory note in the amount of $50,000, referred to as "Series E" notes.
                   Issued with the debt, were 250,000 shares of the Company's common stock
                   value at $5,275, which the Company recorded as a discount on debt that is
                   being amortized and expensed as interest over the life of the debt, or
                   until such time as the debt is converted. During the year ended February
                   28, 2007 the Company amortized $1,613, of this debt discount. The debt is
                   convertible at $.50 per share or 50 percent of the average closing bid
                   during the five trading days prior to the note holder giving notice of
                   conversion, but not lower than $.10 per share. This note, including accrued
                   interest, is due and payable on or before April 10, 2009, and is classified
                   as long term debt.
                                                                                                   ----------------
                                                                                                            50,000
                   Less: Unamortized portion of Debt Discount                                               (3,662)
                                                                                                   ----------------
                                                                                                            46,338
                                                                                                   ================
</TABLE>

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

At February 28, 2007 accounts payable and accrued expenses consisted of the
following:

         Trade payables                                   $  795,658
         Accruals:
             Interest                                      1,899,315
             Salaries and payroll expenses                 1,218,093
             Other                                           214,772
                                                          ----------
                                                          $4,127,838
                                                          ==========

NOTE 7 - INCOME TAXES

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
the recognition of deferred tax asserts and liabilities for both the expected
impact of differences between the financial statements and the tax basis of
assets and liabilities, and for the expected future tax benefit to be derived
from tax losses and tax credit carryforwards. SFAS 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of realization
of deferred tax assets.


                                      F-13


<PAGE>

For the period ended February 28, 2007 and February 29, 2006, the provision
(benefit) for income taxes differs from the amounts computed by applying the
statutory federal income tax rate to the (loss) before provision for income
taxes, the reconciliation is as follows:

                                                    Year Ended February 28,
                                                -------------------------------
                                                     2007              2006
                                                -------------     -------------

         Benefit computed at statutory rate     $     293,000     $     157,000
         Income tax benefit not utilized             (293,000)         (157,000)
                                                -------------     -------------
         Net income tax benefit                 $          --     $          --
                                                =============     =============

The Company had a net operating loss carryforward for tax purposes totaling
approximately $13,545,000 at February 28, 2007 expiring through the year 2027.
Listed below are the tax effects of the items related to the Company's net tax
asset.

         Tax benefit of net operating loss carryforward           $   4,800,000
         Valuation allowance Net deferred tax asset                  (4,800,000)
                                                                  -------------
                                                                  $          --
                                                                  =============

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Commitments:
------------

         Operating Leases -
         ----------------

         In March, 2004 the Company entered into a two year operating lease at a
         new facility in Brooklyn, New York. The lease began on March 1, 2004
         and expired on February 28, 2006. The Company is currently leasing this
         facility on a month-to-month basis.

         In November, 2005 the Company entered into a one year lease for office
         and distribution functions in Lakewood, New Jersey for the operation of
         their Math Channel subsidiary. This lease expired in November 2006 and
         automatically renewed until November 2007. It has monthly rental
         requirements of $1,300.

         The Company rents additional storage capacity at a Brooklyn, New York
         facility. This rental arrangement has no lease and is on a
         month-to-month basis. This rental arrangement is approximately $350 per
         month.

         Net rent expense, for the above facilities was $48,700 and $39,400 for
         the years ended February 28, 2007 and 2006, respectively.

         Employment Agreements -
         ---------------------

         The Company has employment agreements with their Chief Executive
         Officer (CEO), a Director and Operations Manager and the wife of the
         CEO, and the brother of the CEO. These employment agreements are in
         effect from January 1, 2005 through December 31, 2009. Total
         compensation for the CEO is set at $100,000 per year. For the
         operations manager the annual salary is $75,000. The brother of the CEO
         has waived his annual salary of $50,000 until such time that the
         Company is profitable. This salary is not being expensed for the years
         ended February 28, 2006 and 2007.


                                      F-14


<PAGE>

Contingencies:
--------------

         The Company is subject to litigation in the normal course of business,
         and claims may arise from time to time. Presently the Company is not
         aware of any pending or threatened litigation and has not provided a
         reserve or an accrual for any such contingencies.

         The Company has a significant amount of debt and notes payable that
         have been recorded. In certain instances, the Company has been
         involved, and may be involved in the future, in litigation due to
         non-payment of debt and notes payable.

NOTE 9 -  COMMON STOCK

-        During the year ended February 28, 2006, the Company issued 2,100,000
         shares for financial consulting and legal services. These shares were
         issued at market with prices ranging from $0.02 to $0.06 per share, for
         a total value of $64,500.

-        In December 2005 the Company issued 125,000 shares of common stock, to
         a holder of a note payable, to obtain a one year extension on the due
         date of the note to December 31, 2006. These shares were valued at
         market for $3,750 and are recorded as a non-cash financing charge.

         In addition to the issuance of common stock, the Company granted the
         note holder a warrant to purchase 125,000 shares of common stock at
         $0.10 per share. This warrant granted on December 31, 2005, is
         exercisable upon issuance and has a five year life. The Company has
         valued this warrant under a Black-Scholes option-pricing model. The
         total value assigned to these warrants was $3,700 recorded as financing
         costs. The following assumptions were used in the Black-Scholes
         calculation: dividend yield of 0%, expected volatility of 266%,
         risk-free interest rate of 4.35%, and an expected life of five years.

-        During the year ended February 28, 2006, the Company issued warrants to
         two financial consultants to purchase a total of 600,000 shares of
         common stock at $0.10 per share. These warrants were granted on June 1,
         2005, are exercisable upon issuance and have a two year life. The
         Company has valued these warrants under a Black-Scholes option-pricing
         model. The total value assigned to these warrants was $21,900 recorded
         as a non-cash financing charge. The following assumptions were used in
         the Black-Scholes calculation: dividend yield of 0%, expected
         volatility of 240%, risk-free interest rate of 3.50%, and an expected
         life of two years.

-        In April 2006, the Company issued 250,000 shares of common stock at a
         market price of $0.05 per share, for payment of previously accrued
         legal fees of $12,500.

-        In April 2006, the Company issued 400,000 shares of common stock upon
         the exercise of options for $0.01 per share. The Company is awaiting
         proceeds from this option exercise. The Company has recorded this stock
         issuance as a stock subscription receivable of $4,000.

-        In May 2006 the Company entered into a one year consulting agreement
         commencing on June 1, 2006. In lieu of cash payment under this
         agreement, the Company issued 500,000 shares of common stock on June 1,
         2006. These shares were issued at the market price of $0.06 per share,
         for a total value of $30,000. The Company recorded deferred
         compensation for the entire issuance to be earned over the one year
         consulting period. During the year ended February 28, 2007, the Company
         expensed $22,500, of this deferred compensation.

-        During July and August 2006 the Company issued 1,600,000 shares of
         common stock for consulting services. These shares were issued at
         market prices ranging from $0.04 to $0.05 per share. The value of these
         shares, recorded as a non-cash compensation expense, was $74,000.

-        During December 2006 the Company issued 136,250 shares of common stock
         for consulting services. These shares were issued at a market price of
         $0.05 per share. The value of these shares, recorded as a non-cash
         compensation expense, was $6,813.


                                      F-15


<PAGE>

-        In December 2006 the Company issued 125,000 shares of common stock, to
         a holder of a note payable, to obtain a one year extension on the due
         date of the note to December 31, 2007. These shares were valued at
         market for $6,250 and are recorded as a non-cash financing charge.

         In addition to the issuance of common stock, the Company granted the
         note holder a warrant to purchase 125,000 shares of common stock at
         $0.10 per share. This warrant granted on December 31, 2006, is
         exercisable upon issuance and has a five year life. The Company has
         valued this warrant under a Black-Scholes option-pricing model. The
         total value assigned to these warrants was $5,600 recorded as financing
         costs. The following assumptions were used in the Black-Scholes
         calculation: dividend yield of 0%, expected volatility of 274%,
         risk-free interest rate of 4.70%, and an expected life of five years.

-        During the year ended February 28, 2007, the Company granted a warrant
         to a business consultant for services rendered. A total of 100,000
         shares of common stock at an exercise price of $0.02 per were granted
         with this warrant. This warrant has a life of five years from the date
         of grant. This warrant was valued at $4,990 and recorded as a non-cash
         financing charge. The warrant was valued using the Black-Scholes
         valuation model with the following assumptions: dividend yield of 0%,
         expected volatility of 252%, risk-free interest rate of 4.95%, and an
         expected life of five years.

-        On April 10, 2006, the Company issued a 10% unsecured convertible
         promissory note in the amount of $50,000, referred to as "Series E"
         notes. Issued with the debt, were 250,000 shares of the Company's
         common stock value at $5,275, which the Company recorded as a discount
         on debt that is being amortized and expensed as interest over the life
         of the debt, or until such time as the debt is converted. During the
         year ended February 28, 2007 the Company amortized $1,613, of this debt
         discount.

-        During the year ended February 28, 2007, a total of $50,000 Series C -
         notes payable including accrued interest of $17,000, converted into
         670,000 shares of the Company's common stock at $0.10 per share, the
         minimum conversion price per the note payable.

-        In February 2007, a total of $75,000 of demand notes payable redeemed
         their note principal for Series E notes. Under the terms of the Series
         E note, the note holder upon issuance of Series E receives 5 shares of
         common stock for each $1 of debt, for a total of 375,000 share of
         common stock. These shares have been valued at $29,950, and have been
         recorded as discount on debt, that was to have been amortized and
         expensed as interest over the life of the debt, or until such time as
         the debt was converted. Upon issuance of these Series E notes, the note
         holder converted all $75,000 principal of Series E into 750,000 shares
         of common stock, at the minimum conversion price of $0.10 per share or
         $75,000. The $29,950 discount on debt was fully expensed as interest
         upon conversion of the Series E to common stock.

NOTE 10 - STOCK WARRANTS AND OPTIONS

         Effective March 1, 2006, the Company began recording compensation
         expense associated with stock-based awards and other forms of equity
         compensation in accordance with Statement of Financial Accounting
         Standards No. 123-R, Share-Based Payment, ("SFAS 123R") as interpreted
         by SEC Staff Accounting Bulletin No. 107. The Company adopted the
         modified prospective transition method provided for under SFAS 123R and
         consequently has not retroactively adjusted results from prior periods.
         Under this transition method, compensation cost associated with
         stock-based awards recognized in the first quarter of fiscal year 2007
         includes 1) quarterly amortization related to the remaining unvested
         portion of stock-based awards granted prior to December 15, 2005, based
         on the grant date fair value estimated in accordance with the original
         provisions of Statement of Financial Accounting Standards No. 123,
         Accounting for Stock-Based Compensation, ("SFAS 123"); and 2) would
         include quarterly amortization related to stock-based awards granted
         subsequent to March 1, 2006, based on the grant-date fair value
         estimated in accordance with the provisions of SFAS 123R. In addition,
         the Company records expense over the vesting period in connection with
         stock options granted. The compensation expense for stock-based awards
         includes an estimate for forfeitures and is recognized over the
         expected term of the award on a straight line basis.


                                      F-16


<PAGE>

         Prior to March 1, 2006, the Company accounted for stock-based awards
         using the intrinsic value method of accounting in accordance with
         Accounting Principles Board Opinion No. 25, "Accounting for Stock
         Issued to Employees" ("APB 25"). Under the intrinsic value method of
         accounting, no compensation expense was recognized in the Company's
         consolidated statements of operations when the exercise price of the
         Company's employee stock option grant equaled the market price of the
         underlying common stock on the date of grant and the measurement date
         of the option grant is certain. Under SFAS 123R, the Company remeasures
         the intrinsic value of the options at the end of each reporting period
         until the options are exercised, cancelled or expire unexercised. As of
         February 28, 2007, there are 1,160,000 options with a weighted average
         exercise price of $0.07 and a weighted average remaining life of
         approximately 8.34 years, remaining outstanding and continue to be
         remeasured at the intrinsic value over their remaining vesting period
         of 3.75 years. Compensation expense in any given period is calculated
         as the difference between total earned compensation at the end of the
         period, less total earned compensation at the beginning of the period.
         Compensation earned is calculated on a straight line basis over the
         requisite service period for any given option award.

         During the year ended February 28, 2006, the Company established the
         2006 Incentive Compensation Plan ("2006 Plan"). Underlying the 2006
         Plan a total of 3,600,000 shares are available to be granted. The 2006
         Plan is effective from June 13, 2006 through June 13, 2011.

         When the stock options are granted, the fair value of each option grant
         is estimated on the date of grant using the Black-Scholes valuation
         model. The Following table is a summary of the weighted average
         assumptions used to value the granted employee stock options during the
         years ended February 28, 2007 and 2006.

                                                 For the Year Ended February 28,
                                                 -------------------------------
                                                     2007              2006
                                                 ------------      -------------

                 Risk free interest rate             4.70%            4.29%
                 Expected life                     10 yrs.           5 yrs.
                 Dividend rate                       0.00%            0.00%
                 Expected volatility                  267%             244%

         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.

         During the year ended February 28, 2007 the Company granted options for
         1,450,000 shares of the Company's common stock to various officers of
         the Company at exercise prices ranging from $0.04 to $0.06 per share.
         These options were valued at $64,500, using the Black-Scholes valuation
         model. These options are exercisable upon grant, and accordingly their
         entire value has been expensed as a general and administrative expense
         for the year ended February 28, 2007. These options have a life of 10
         years from the date of grant

         The Company recorded $82,811 of compensation expense, net of related
         tax effects, relative to stock options for the year ended February 28,
         2007, in accordance with SFAS 123R. Included in such expense is the
         $64,500 expense related to the granting of options to various Company
         officers. Net loss per share, basic and diluted, for SFAS 123R expense
         is approximately ($0.00) for the year ended February 28, 2007.

         As of February 28, 2007, there is approximately $57,840 of total
         unrecognized compensation costs related to granted stock options that
         are unvested. These costs are expected to be recognized over a weighted
         average period of 3.75 years.


                                      F-17


<PAGE>

         During the year ended February 28, 2006 the Company granted options for
         1,700,000 shares of the Company's common stock to various officers of
         the Company at exercise prices ranging from $0.03 to $0.10 per share.
         These options were valued at $91,554, using the Black-Scholes valuation
         model. These options vest over a 5 year period and have a life of 10
         years from the date of grant. Commencing with the adoption of SFAS
         123(R), at the beginning of the fiscal year ended February 28, 2007,
         the expense related to unvested portion of these option grants are
         included in the Company's SFAS 123(R) calculation as these options vest
         in future periods.

         The table below sets out the pro forma amounts of net income and net
         income per share that would have resulted for the year ended February
         28, 2006, if the Company accounted for its employee stock plans under
         the fair value recognition provisions of SFAS 123(R).


                                                                      Year Ended
                                                                       February
                                                                       28, 2006
                                                                      ---------
            Net loss available to common shareholders, as reported    $(448,668)
            Deduct:   total stock-based employee compensation
                      determined under fair value based method
                      for all awards, net of related tax effects        (15,403)
                                                                      ---------
            Pro-forma net loss available to common shareholders       $(464,091)
                                                                      =========

            Earnings per share:
                      Basic and diluted- as reported                  $   (0.01)
                                                                      =========
                      Basic and diluted- pro-forma                    $   (0.01)
                                                                      =========

         The following summarizes the stock option transactions:

<TABLE>
<CAPTION>
                                                                Outside Option Plan
                                                             --------------------------
                                                 Weighted                    Weighted
                                Stock Options     Average    Stock Options    Average
                                 and Warrants    Exercise     and Warrants   Exercise
                                 Outstanding       Price       Outstanding     Price
                                 -----------     ---------   -------------   ----------
<S>                               <C>            <C>           <C>           <C>
Balance at February 28, 2005      6,131,694      $   0.19       6,567,654    $    0.10
       Granted                    2,550,000          0.08              --           --
       Expired                           --            --              --           --
       Exercised                         --            --              --           --
                                 -----------     ---------   -------------   ----------
Balance at February 28, 2006      8,681,694      $   0.09       6,567,654    $    0.09
       Granted                           --            --       1,675,000         0.05
       Expired                           --            --        (925,000)        0.08
       Exercised                         --            --        (400,000)        0.01
                                 -----------     ---------   -------------   ----------
Balance at February 28, 2007      8,681,694      $   0.09       6,917,654    $    0.09
                                 ===========     =========   =============   ==========


The following table summarizes the outstanding and exercisable options as of
February 28, 2007:

                                       Weighted       Weighted                   Weighted
                                        Average        Average                    Average
    Range of            Number         Remaining      Exercise      Number       Exercise
 Exercise Price      Outstanding     Life in Years      Price     Exercisable      Price
-----------------    ------------    -------------    --------    -----------    ---------
 $ 0.01 - $ 0.06       8,125,000       5.88 yrs.      $  0.05       7,565,000    $   0.05
 $ 0.07 - $ 0.10       5,525,000       4.04 yrs.      $  0.09       4,925,000    $   0.09
 $ 0.12 - $ 0.25       1,470,000       2.88 yrs.      $  0.24       1,470,000    $   0.24
 $ 0.30 - $ 0.90         479,348       1.64 yrs.      $  0.41         479,348    $   0.41
                     ------------    -------------    --------    -----------    ---------
                      15,599,348       3.91 yrs.      $  0.09      14,439,348    $   0.09
</TABLE>


                                      F-18


<PAGE>

NOTE 11 - SUBSEQUENT EVENTS

-        In March 2007, a total of $50,000 of demand notes payable, issued for
         consulting services in April 2006, were redeemed by the note holder for
         a Series E note. Under the terms of the Series E note, the note holder
         upon issuance of Series E receives 5 shares of common stock for each $1
         of debt, for a total of 250,000 shares of common stock. These shares
         will be valued, and recorded as a discount on debt, that will be
         amortized and expensed as interest over the life of the debt, or until
         such time as the debt is converted. The Series E debt is convertible at
         $.50 per share, or 50 percent of the average closing bid during the
         five trading days prior to the note holder giving notice of conversion,
         but not lower than $.10 per share. This note, including accrued
         interest, was due and payable in March 2010. In March 2007, these
         demand note holders, upon conversion into these Series E notes,
         converted all $50,000 Series E principal into 500,000 shares of common
         stock valued at $0.10 per share or $50,000. The discount on debt will
         be fully expensed as interest due to the conversion of the Series E
         into common stock.

-        In March and April 2007, the Company sold Series E notes totaling
         $450,000. Under the terms of the Series E notes, the note holders upon
         issuance of Series E received 5 shares of common stock for each $1 of
         debt, for a total of 2,250,000 shares of common stock. These shares
         will be valued, and recorded as a discount on debt, that will be
         amortized and expensed as interest over the life of the debt, or until
         such time as the debt is converted. The Series E debt is convertible at
         $.50 per share, or 50 percent of the average closing bid during the
         five trading days prior to the note holder giving notice of conversion,
         but not lower than $.10 per share. These notes, including accrued
         interest, will be due and payable in March and April 2010.

-        In March 2007, the Company entered into, and commenced, a consulting
         agreement for services. A total of 1,000,000 shares of the Company's
         common stock will be issued for these services at a rate of 100,000
         shares per month.

-        In March 2007, the Company issued 350,000 shares of its common stock
         for services.


                                      F-19