UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007


                        Commission File Number 001-32300



                                 SMARTPROS LTD.
        (Exact name of small business issuer as specified in its charter)

                DELAWARE                                      13-4100476
                ---------                                     ----------
      (State or other jurisdiction                         (I.R.S. Employer
    of incorporation or organization)                     Identification No.)

                   12 SKYLINE DRIVE, HAWTHORNE, NEW YORK 10532
                   -------------------------------------------
                     (Address of principal executive office)

                                 (914) 345-2620
                (Issuer's telephone number, including area code)

Check whether the issuer: (1) 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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                                 Yes |x| No | |

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes | | No |x|

Number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: As of May 1, 2007, there were 4,875,774
shares of common stock outstanding.

Transitional Small Business Disclosure Format.

                                 Yes | | No |x|


<PAGE>



                                 SMARTPROS LTD.

                               FORM 10-QSB REPORT

                                 March 31, 2007

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                          PAGE
<S>                                                                                                       <C>
PART I - FINANCIAL INFORMATION

      Item 1.  Condensed Consolidated Financial Statements (Unaudited)

               Balance Sheets - March 31, 2007, and December 31, 2006 (Audited)                           3

               Statements of Operations for the three-month periods ended March 31, 2007,
                and 2006                                                                                  4

               Statements of Cash Flows for the three-month periods ended March 31, 2007, and 2006        5

               Notes to Condensed Consolidated Financial Statements                                       6

      Item 2.  Management's Discussion and Analysis or Plan of Operation                                  9

      Item 3.  Controls and Procedures                                                                    16

PART II - OTHER INFORMATION

      Item 1.  Legal Proceedings                                                                          16

      Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                                16

      Item 3.  Defaults Upon Senior Securities                                                            16

      Item 4.  Submission of Matters to a Vote of Security Holders                                        17

      Item 5.  Other Information                                                                          17

      Item 6.  Exhibits                                                                                   17

SIGNATURES                                                                                                17
</TABLE>

                           FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" within the meaning of Section 21E of the Securities
and Exchange Act of 1934. These statements relate to the plans and objectives of
management for future operations as well as to market trends and expectations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The forward-looking statements
included herein are based on current expectations, plans and assumptions
relating to the future operation of our business. These expectations, plans and
assumptions involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond our control. Although we believe that our expectations, plans and
assumptions underlying the forward-looking statements are reasonable, they could
prove inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by us or any other person that our objectives and
plans will be achieved. We undertake no obligation to revise or update publicly
any forward-looking statements for any reason.

The terms "we", "our", "us", or any derivative thereof, as used herein refer to
SmartPros Ltd., a Delaware corporation, and its predecessors.


                                       2

<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

SMARTPROS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                  MARCH 31,       DECEMBER 31,
                                                                                     2007           2006
                                                                                 (UNAUDITED)      (AUDITED)
-------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                    $  7,830,357    $  7,393,789
   Accounts receivable, net of allowance for doubtful accounts
      of $39,842                                                                   2,149,002       1,960,939
   Prepaid expenses and other current assets                                         353,560         277,393
                                                                                ----------------------------
Total Current Assets                                                              10,332,919       9,632,121
                                                                                ----------------------------

Property and equipment, net                                                          445,439         438,260
Goodwill                                                                             145,684         130,684
Other intangibles, net                                                             2,678,311       2,651,132
Other assets, including restricted cash of $150,000                                  154,673         154,673
Deferred tax asset                                                                   513,000         378,000
                                                                                ----------------------------
                                                                                   3,937,107       3,752,749
                                                                                ----------------------------
Total Assets                                                                    $ 14,270,026    $ 13,384,870
                                                                                ============================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                             $    403,380    $    552,630
   Accrued expenses                                                                  226,916         380,464
   Current portion of capital lease and equipment financing obligations               19,085          25,991
   Deferred revenue                                                                4,600,113       4,007,074
                                                                                ----------------------------
Total Current Liabilities                                                          5,249,494       4,966,159
                                                                                ----------------------------

Long-Term Liabilities:
   Other liabilities                                                                 110,123         120,137
                                                                                ----------------------------
Total Long-Term Liabilities                                                          110,123         120,137
                                                                                ----------------------------

Commitments and Contingencies
Stockholders' Equity:
   Convertible preferred stock, $.001 par value, authorized 1,000,000 shares,
        0 shares issued and outstanding                                                    -               -
   Common stock, $.0001 par value, authorized 30,000,000 shares,
        5,186,505 issued and 4,875,774 outstanding at March 31, 2007 and
         December 31, 2006                                                               519             519
   Additional paid-in capital                                                     16,581,944      16,572,944
   Accumulated (deficit)                                                          (6,688,045)     (7,274,824)
                                                                                ----------------------------
                                                                                   9,894,418       9,298,639
   Common stock in treasury, at cost - 310,731 shares                               (922,625)       (922,625)
   Deferred compensation                                                             (61,384)        (77,440)
                                                                                ----------------------------
Total Stockholders' Equity                                                         8,910,409       8,298,574
                                                                                ----------------------------
Total Liabilities and Stockholders' Equity                                      $ 14,270,026    $ 13,384,870
                                                                                ============================
</TABLE>
--------------------------------------------------------------------------------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                       3
<PAGE>

SMARTPROS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                                             MARCH 31,
                                                    ---------------------------
                                                       2007            2006
---------------------------------------------       ---------------------------
<S>                                                 <C>             <C>
Net Revenues                                        $ 3,723,631     $ 2,533,579
Cost of Revenues                                      1,468,913         986,687
                                                    ---------------------------
   Gross Profit                                       2,254,718       1,546,892
                                                    ---------------------------

Operating Expenses:
   Selling, general and administrative                1,726,181       1,367,679
   Depreciation and amortization                        165,469         148,071
                                                    ---------------------------
                                                      1,891,650       1,515,750
                                                    ---------------------------
   Operating Income                                     363,068          31,142
                                                    ---------------------------

Other Income (Expense):
   Interest income                                       89,313          73,460
   Interest expense                                        (601)         (1,587)
                                                    ---------------------------
                                                         88,712          71,873
                                                    ---------------------------

Income before benefit for income taxes                  451,780         103,015
Add: income tax benefit                                 135,000          47,000
                                                    ---------------------------
Net Income                                          $   586,780     $   150,015
                                                    ===========     ===========

Net Income Per Common Share:
   Basic net income per common share                $       .12     $       .03
                                                    ===========     ===========

   Diluted net income per common share              $       .12     $       .03
                                                    ===========     ===========

Weighted Average Number of Shares Outstanding
   Basic                                              4,875,774       5,040,900
                                                    ===========     ===========

   Diluted                                            4,919,940       5,057,916
                                                    ===========     ===========
</TABLE>













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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                       4
<PAGE>



SMARTPROS LTD. AND SUBSIDIARIES
(UNAUDITED)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                             MARCH 31,
                                                                                            (UNAUDITED)
                                                                                   ---------------------------
                                                                                       2007           2006
--------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>            <C>
Cash Flows from Operating Activities:
Net income                                                                         $   586,780    $   150,015
                                                                                   --------------------------
   Adjustments to reconcile net income to net cash provided by operating
      activities:
      Depreciation and amortization                                                    165,469        148,071
      Reduction in deferred compensation                                                16,056         10,500
      Stock compensation expense                                                         9,000          9,226
      Deferred income tax benefit                                                     (135,000)             -
   Changes in operating assets and liabilities:
      (Increase) decrease in operating assets:
         Accounts receivable                                                          (188,063)      (612,503)
         Prepaid expenses and other current assets                                     (76,167)         6,274
         Other assets                                                                        -        (54,673)
      (Decrease) increase in operating liabilities:
         Accounts payable and accrued expenses                                        (302,798)       (77,278)
         Deferred revenue                                                              593,039        314,617
         Other liabilities                                                             (10,014)       (20,028)
                                                                                   --------------------------
   Total adjustments                                                                    71,522       (275,794)
                                                                                   --------------------------
Net Cash Provided by (Used in) Operating Activities                                    658,302       (125,779)
                                                                                   --------------------------

Cash Flows from Investing Activities:
   Acquisition of property and equipment                                               (51,813)       (18,168)
   Capitalized course costs                                                                  -        (18,855)
   Property and equipment acquired from acquisitions                                    (2,201)       (31,000)
   Intangible assets acquired from acquisitions                                       (154,099)      (454,012)
   Cash paid for acquisitions                                                           (6,715)       (17,843)
                                                                                   --------------------------
Net Cash (Used in) Investing Activities                                               (214,828)      (539,878)
                                                                                   --------------------------
Cash Flows from Financing Activities:
   Exercise of stock options                                                                 -         52,799
   Payments under capital lease obligations                                             (6,906)       (10,460)
                                                                                   --------------------------
Net Cash  (Used in) Provided by Financing Activities                                    (6,906)        42,339
                                                                                   --------------------------

Net Increase (Decrease) in Cash and Cash equivalents                                   436,568       (623,318)
Cash and Cash Equivalents, beginning of period                                       7,393,789      7,505,691
                                                                                   --------------------------
Cash and Cash equivalents, end of period                                           $ 7,830,357    $ 6,882,373
                                                                                   ==========================

Supplemental Disclosure:
Cash paid for interest                                                             $       601    $     1,587
                                                                                   ==========================
</TABLE>




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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                                       5
<PAGE>


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

NOTE 1.  BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
of SmartPros Ltd. ("SmartPros" or the "Company") included herein have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and with instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 2006, and the notes thereto
included in the Company's Annual Report on Form 10-KSB filed with the United
States Securities and Exchange Commission on March 26, 2007. Results of
consolidated operations for the interim periods are not necessarily indicative
of a full year's operating results. The unaudited condensed consolidated
financial statements herein include the accounts of the Company and its wholly
owned subsidiaries, Working Values, Ltd. and Skye Multimedia Ltd. (Skye). All
material inter-company accounts and transactions have been eliminated.

NOTE 2.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The Company, a Delaware corporation, was organized in 1981 as Center
for Video Education, Inc. for the purpose of producing educational videos
primarily directed to the accounting profession. SmartPros' primary products
today are periodic video and Internet subscription services directed to
corporate accountants, financial managers and accountants in public practice. In
addition, the Company produces a series of continuing education courses directed
to the engineering profession as well as a series of courses designed for
candidates for the professional engineering exam. Through its Working Values
subsidiary, the Company develops programs on governance, compliance and ethics
for corporations. As a result of acquisitions made during 2006 and 2007, the
Company now also offers educational products for the banking, financial services
and pharmaceutical industries amongst others. SmartPros also produces custom
videos and rents out its studios.

         SmartPros is located in Hawthorne, New York, where it maintains its
corporate offices, new media lab, video production studios and tape duplication
facilities. While the Company's management monitors the revenue streams of the
various products and services, operations are managed and financial performance
is evaluated on a company-wide basis. Accordingly, all of the Company's
operations are considered by management to be aggregated in one reportable
segment.

         USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

         REVENUE RECOGNITION

         The Company recognizes revenues from its subscription services as
earned. Video and online subscriptions are generally billed on an annual basis,
while individual online subscriptions predominately are paid by credit card at
point of sale. Both of these types of sales are deferred at the time of billing
or payment and amortized into revenue on a monthly basis over the term of the
subscription, which is generally one year. Engineering products are
non-subscription based and revenue is recognized upon shipment or, in the case
of individual online sales, payment. Revenues from non-subscription services
provided to customers, such as website design, video production, consulting
services and custom projects are generally recognized on a proportional
performance basis where sufficient information relating to project status and
other supporting documentation is available. The contracts may have different
billing arrangements resulting in either unbilled or deferred revenue. The
Company obtains either signed agreements or purchase orders from its
non-subscription customers outlining the terms and conditions of


                                       6
<PAGE>



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

NOTE 2.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
(CONT'D)

the sale or service to be provided. Otherwise, such services are recognized as
revenues after completion and delivery to the customer. Duplication and related
services are generally recognized upon shipment or, if later, when the Company's
obligations are complete and realization of receivable amounts is assured.

         CAPITALIZED COURSE COSTS

         Capitalized course costs include the direct cost of internally
developing proprietary educational products and materials that have extended
useful lives. Amortization of these capitalized course costs commences when the
courses are available for sale from the Company's catalog. The amortization
period is five years, except for the Sarbanes-Oxley courses that have a
three-year amortization period. Other course costs incurred in connection with
any of the Company's monthly subscription products or custom work is charged to
expense as incurred. As a result of our recent acquisitions, the Company
acquired $500,000 of course costs that are being amortized over a five-year
period. Included in other intangible assets at March 31, 2007, are capitalized
course costs of $535,715 (exclusive of Sarbanes-Oxley courses), net of
accumulated amortization of $101,121.

         DEFERRED REVENUE

         Deferred revenue related to subscription services represents the
portion of unearned subscription revenue, which is amortized on a monthly,
straight-line basis, as earned. Deferred revenue related to website design,
video production or technology services represents that portion of amounts
billed by the Company, or cash collected by the Company, for which services have
not yet been provided or earned in accordance with the Company's revenue
recognition policy.

         EARNINGS PER SHARE

         Basic earnings or loss per common share is net income or loss, as the
case may be, divided by the weighted average number of common shares outstanding
during the year. Basic earnings or loss per share exclude any dilutive effects
of options, warrants and convertible securities. Diluted earnings per common
share include the dilutive effect of shares of Common Stock issuable under stock
options and warrants. Diluted earnings per share are computed using the weighted
average number of Common Stock and Common Stock equivalent shares outstanding
during the period. Common Stock equivalent shares of 44,166 and 17,016 for the
three month periods ended March 31, 2007, and 2006, respectively, include the
Company's stock options and warrants that are dilutive.

         STOCK-BASED COMPENSATION

         The Company's 1999 Stock Option Plan (the "Plan") permits the grant of
options and restricted stock to employees, directors and consultants. The total
number of shares reserved for grants under the plan is 882,319, provided that
restricted stock grants may not exceed 200,000 shares. As of March 31, 2007,
there were 388,472 options outstanding, of which 323,903 are currently
exercisable and 447,887 options are available for future grants. To date, 29,460
options have been exercised and 16,500 shares of common stock were issued as
part of the 2006 year-end bonus to certain executives of the Company. All stock
options and grants under the Plan are granted at the fair market value of the
common stock at the grant date. Employee stock options vest ratably over a
four-year period and generally expire 10 years from the grant date. Stock
options granted to non-employee directors vest in the same manner. Restricted
stock awards are subject to forfeiture unless certain time and/or performance
requirements are satisfied.

         Effective January 1, 2006, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123 (revised 2004), SHARE-BASED PAYMENT ("SFAS
No.123R"), which addresses the accounting for stock-based payment transactions
in which an enterprise receives director and employee services in exchange for
(a) equity instruments of the enterprise or (b) liabilities that are based on
the fair value of the enterprise's equity instruments or that may be settled by
the issuance of such equity instruments. In March 2005, the SEC issued Staff
Accounting Bulletin ("SAB") No. 107, which provides supplemental implementation
guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for
stock-based compensation transactions using the intrinsic value method under
Accounting



                                       7
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES, and instead generally requires that such transactions be accounted
for using a fair-value-based method. The Company uses the Black-Scholes-Merton
("BSM") option-pricing model to determine the fair value of stock-based awards
under SFAS No. 123R, consistent with that used for pro forma disclosures under
SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("SFAS No. 123"). The
Company has elected the modified prospective transition method permitted by SFAS
No. 123R and, accordingly, prior periods have not been restated to reflect the
impact of SFAS No. 123R. The modified prospective transition method requires
that stock-based compensation expense be recorded for all new and unvested stock
options that are ultimately expected to vest as the requisite service is
rendered beginning on January 1, 2006. Stock-based compensation expense for
awards granted prior to January 1, 2006, is based on the grant date fair value
as determined under the pro forma provisions of SFAS No.123. The Company has
recorded an incremental stock-based compensation expense of $9,000 and $9,226
during the first quarter of 2007 and 2006, respectively, as a result of the
adoption of SFAS No. 123R.

         SFAS No. 123R requires the use of a valuation model to calculate the
fair value of stock-based awards. The Company has elected to use the
Black-Sholes-Merton option-pricing model, which incorporates various assumptions
including volatility, expected life, interest rates and dividend yields. The
expected volatility is based on the historic volatility of the Company's common
stock over the most recent period commensurate with the estimated expected life
of the Company's stock options, adjusted for the impact of unusual fluctuations
not reasonably expected to recur. The expected life of an award is based on
historical experience and on the terms and conditions of the stock awards
granted to employees and directors.

         The assumptions used for the three-month periods ended March 31, 2007,
and 2006, and the resulting estimates of weighted-average fair value of options
granted during those periods are as follows:
<TABLE>
<CAPTION>

                                                                      THREE MONTHS ENDED MARCH 31,
                                                                         2007             2006
                                                                  ---------------    ---------------
<S>                                                                 <C>               <C>
Expected life (years)                                                    5.5               5.5
Risk-free interest rate                                                 4.51%             4.75%
Volatility                                                              35.0%             33.0%
Dividend yields                                                         --                 --
Weighted-average fair value of options during the period            $   1.91          $   1.20
</TABLE>


         The Company granted 6,500 options under the Plan during the three
months ended March 31, 2007, at exercise prices ranging from $4.49 per share to
$5.50 per share and 3,637 shares were forfeited.

         The following table represents our stock options granted, exercised and
forfeited for the three months ended March 31, 2007:
<TABLE>
<CAPTION>
                                                                     WEIGHTED AVERAGE              WEIGHTED AVERAGE
                                                                    EXERCISE PRICE PER          REMAINING CONTRACTUAL
           STOCK OPTIONS                   NUMBER OF SHARES                SHARE                         TERM
-------------------------------------     -------------------     ------------------------     -------------------------
<S>                                            <C>                         <C>                           <C>
Outstanding at January 1,
  2007                                         385,609                     $4.57                         5.5
Granted                                          6,500                     $4.72
Exercised                                         -                        $0.00
Forfeited/expired                               (3,637)                    $4.21
                                          -------------------
Outstanding at March 31, 2007                  388,472                     $4.57                         6.7
                                          ===================     ========================     =========================
Exercisable at March 31, 2007                  323,903                     $4.80                         6.1
                                          ===================     ========================     =========================
</TABLE>

                                       8
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------

         INCOME TAX EXPENSE

         Commencing January 1, 2006, the Company is recognizing the benefit of
its deferred income tax asset available from its net operating loss
carryforward. This resulted in a net income tax benefit of $135,000 for the
three months ended March 31, 2007.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS REPORT.
CERTAIN STATEMENTS IN THIS DISCUSSION AND ELSEWHERE IN THIS REPORT CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
AND EXCHANGE ACT OF 1934. SEE THE "FORWARD LOOKING STATEMENT" IMMEDIATELY
FOLLOWING THE TABLE OF CONTENTS. BECAUSE THIS DISCUSSION INVOLVES RISK AND
UNCERTAINTIES, OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO REVISE OR
UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS FOR ANY REASON.

         We provide learning solutions and/or training materials for (a)
accounting and finance professionals; (b) engineering professionals; (c) legal
professionals; (d) banking and pharmaceutical industry employees and (e) ethics
and compliance training for the general corporate community. Our learning
solutions for the accounting, engineering and legal professions are designed to
meet the continuing professional education requirements of the various state
licensing agencies and professional associations. In addition, we provide
value-added services through our learning management system, marketed under the
name SmartPros' Professional Education Center(TM), which we believe is key to
our revenue growth and future success.

         Our learning and training solutions are delivered in multiple formats
including videotape, CD-ROM and other formats available for distribution over
the Internet and corporate intranets. Today, online subscription sales are the
fastest growing part of our business.

         In February 2006, we acquired substantially all of the operating assets
and assumed certain liabilities of Skye Multimedia Inc. for approximately
$520,000. In addition, the selling shareholders of Skye Multimedia are entitled
to an additional payment based on the average earnings of Skye Multimedia
between March 1, 2006, and December 31, 2008, less adjustments for use of
capital and other costs. In no event will the total additional payment exceed
$1.2 million. The additional payment may be paid 50% in cash and 50% in shares
of our common stock at our discretion. If the additional payment is paid partly
in stock, the price of the stock will be determined by the average price for the
twenty business days subsequent to December 31, 2008.

         As a result of this acquisition, through our new subsidiary, Skye
Multimedia Ltd. (Skye), we develop custom interactive marketing and training
applications for CD, DVD, Internet and learning management systems. Skye offers
a broad range of services including content design, animation, and audio/video
production and application development. Skye's clients are a diverse group of
companies from pharmaceutical, financial, technology and other industries.






                                       9
<PAGE>



         Also in February 2006, we acquired substantially all of the operating
assets and assumed certain liabilities from Sage International Group, Inc.
(Sage). As a result, we acquired a library of 58 nationally certified online
training solutions for the banking, securities and insurance industries. Sage's
"off-the-shelf" courses and custom designed programs employ delivery methods
suited to the specific needs of its clients, which include professional firms of
all sizes as well as many of the Fortune 500 companies and a large number of
midsize and small companies.

         In October 2006, we acquired substantially all of the operating assets
and assumed certain liabilities of MGI Management Institute Inc. for $100,000.
MGI provides training courses for the engineering profession and is an
enhancement to our existing series of courses.

         In November 2006, through our Working Values subsidiary, we acquired
substantially all of the operating assets and assumed certain liabilities of
Cognistar Interactive Corporation for $320,000. Cognistar produces online and
customized training courses for the legal profession.

         In March 2007, we acquired substantially all of the assets and assumed
certain liabilities of The Selbst Group Inc. for approximately $154,000. The
Selbst Group is a specialized consulting firm providing various training
programs for the financial services industry. We have combined Sage and The
Selbst Group into our newly named Financial Services Training division.

         We measure our operations using both financial and other metrics. The
financial metrics include revenues, gross margins, operating expenses and income
from continuing operations. Other key metrics include (i) revenues by sales
source, (ii) online sales, (iii) cash flows and (iv) EBITDA.

         Some of the most significant trends affecting our business are the
following:

     o   The increasing recognition by professionals and corporations that they
         must continually improve their skills and those of their employees in
         order to remain competitive.

     o   New laws and regulations affecting the conduct of business and the
         relationship between a corporation and its employees.

     o   The increased competition in today's economy for skilled employees and
         the recognition that effective training can be used to recruit and
         train employees.

     o   The development and acceptance of the Internet as a delivery channel
         for the types of products and services we offer.

         In 2004, we raised approximately $6 million of net proceeds in an
initial public offering. Through March 31, 2007, we have used approximately $1.8
million of those proceeds; $500,000 to repay debt and $1.3 million in connection
with the acquisitions made in 2006 and 2007. We intend to use the remaining $4.2
million net proceeds from the offering, cash flow from operations and our
publicly-traded common stock to execute our growth strategy, which contemplates
acquiring other companies that provide learning solutions or their assets. We
intend to focus on acquisitions that will allow us to increase the breadth and
depth of our current product offerings, including the general corporate market
for compliance, governance and ethics. We will also consider acquisitions that
will give us access to new market segments such as law, insurance, health care
and financial services. We prefer acquisitions that are accretive, as opposed to
those that are dilutive, but ultimately the decision will be based on maximizing
shareholder value rather than short-term profits. The size of the acquisitions
will be determined, in part, by our size, the capital available to us and the
liquidity and price of our stock. We may use debt to enhance or augment our
ability to consummate larger transactions.

         There are many risks involved with acquisitions. These risks include
integrating the acquired business into our existing operations and corporate
structure, retaining key employees and minimizing disruptions to our existing
business. We cannot assure you that we will be able to identify appropriate
acquisitions opportunities or negotiate reasonable terms or that any acquired
business or assets will deliver the shareholder value that we anticipated at the
outset.



                                       10
<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The discussion and analysis of our financial condition and results of
operations is based on our consolidated financial statements that have been
prepared according to accounting principles generally accepted in the United
States. In preparing these financial statements, we are required to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses and related disclosures of contingent assets and
liabilities. We evaluate these estimates on an ongoing basis. We base these
estimates on historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities.
Actual results may differ from these estimates under different assumptions or
conditions. We consider the following accounting policies to be the most
important to the portrayal of our financial condition.

     REVENUES

         Most of our revenue is in the form of subscription fees for our monthly
accounting update programs or our course library. Other sources of revenue
include direct sales of programs on a non-subscription basis, fees for various
services, including website design, software development, tape duplication,
video production, video conversion, course design and development, ongoing
maintenance of our clients' online learning content management system and
licensing fees. Subscriptions are billed on an annual basis, payable in advance
and deferred at the time of billing. Individual sales made over the Internet are
by credit card only. Renewals are usually sent out 60 days before the
subscription period ends. We usually obtain either a signed agreement or
purchase orders from our non-subscription customers outlining the terms and
conditions of the sale or service to be provided. Larger transactions are
usually dealt with by contract, the financial terms of which depend on the
services being provided. The contracts may have different billing arrangements
resulting in either unbilled or deferred revenue. Contracts for development and
production services typically provide for a significant upfront payment and a
series of payments based on deliverables specifically identified in the
contract.

         Revenues from subscription services are recognized as earned, deferred
at the time of billing or payment and amortized into revenue on a monthly basis
over the term of the subscription. Engineering products are non-subscription
based and revenue is recognized upon shipment of the product or, in the case of
online sales, payment. Revenues from non-subscription services provided to
customers, such as website design, video production, consulting services and
custom projects, are generally recognized on a proportional performance basis
where sufficient information relating to project status and other supporting
documentation is available. Otherwise, these services are recognized as revenues
after completion and delivery to the customer. Duplication and related services
are generally recognized upon shipment or, if later, when our obligations are
complete and realization of receivable amounts is assured. Both Working Values
and Skye recognize revenue on a proportional performance basis.

     EQUIPMENT, INTANGIBLE ASSETS AND LEASEHOLD IMPROVEMENTS

         Fixed and intangible assets are carried at cost less their respective
accumulated depreciation/amortization and are depreciated/amortized using the
straight-line method over their estimated useful lives, which range from three
to ten years. Leasehold improvements are amortized over the lesser of their
estimated lives or the life of the lease. Major expenditures for renewals and
improvements are capitalized and amortized over their useful lives.

     IMPAIRMENT OF LONG-LIVED ASSETS

         We review long-lived assets and certain intangible assets annually for
impairment whenever circumstances and situations change such that there is an
indication that the carrying amounts may not be recovered.

     STOCK-BASED COMPENSATION

         Effective January 1, 2006, we adopted SFAS No. 123R. As a result,
compensation costs are now recognized for stock options granted to employees.
Options and warrants granted to employees and non-employees are recorded as an
expense at the date of grant based on the then estimated fair value of the
security in question.


                                       11
<PAGE>

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2007 AND 2006

         The first quarter of 2007 was our tenth consecutive quarter of
profitability since we became a reporting company. The following table compares
our statement of operations data for the three months ended March 31, 2007, and
2006. The trends suggested by this table may not he indicative of future
operating results, which will depend on various factors including the relative
mix of products sold (accounting/finance, engineering, banking/insurance
securities or corporate training) and the method of sale (video or online) as
well as the timing of custom project work, which can vary from quarter to
quarter. In addition, our operating results in future periods may also be
affected by acquisitions.

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED MARCH 31,
                                        --------------------------------------------------------------------------------------------
                                                        2006                                     2007
                                        -----------------------------------   ---------------------------------------
                                             AMOUNT           PERCENTAGE            AMOUNT               PERCENTAGE       CHANGE
                                        ----------------    ---------------   -------------------    ----------------  -------------
<S>                                     <C>                      <C>           <C>                       <C>              <C>
Net revenues                            $   2,533,579            100.0%        $ 3,723,631               100.0%             47.0%
Cost of revenues                              986,687             38.9%          1,468,913                39.4%             48.9%
                                        ----------------    ---------------   -------------------    ----------------
Gross profit                                1,546,892             61.1%          2,254,718                60.6%             45.8%
                                        ----------------    ---------------   -------------------    ----------------
Selling, general and administrative         1,367,679             54.0%          1,726,181                46.4%             26.2%
Depreciation and amortization                 148,071              5.8%            165,499                 4.4%             11.7%
                                        ----------------    ---------------   -------------------    ----------------
Total operating expenses                    1,515,750             59.8%          1,891,650                50.8%             24.8%
                                        ----------------    ---------------   -------------------    ----------------
Operating income                               31,142              1.2%            363,068                 9.8%           1065.8%
Other income, net                              71,873              2.8%             88,712                 2.4%             23.4%
                                        ----------------    ---------------   -------------------    ----------------
Net income before income tax benefit          103,015              4.1%            451,780                12.1%            338.6%
Income tax benefit                            (47,000)            -1.8%           (135,000)                3.7%            187.2%
                                        ----------------    ---------------   -------------------    ----------------
Net income                               $    150,015              5.9%       $    586,780                15.8%            291.1%
                                        ================    ===============   ===================    ================
</TABLE>
     NET REVENUES

         Net revenues for the quarter ended March 31, 2007, increased
approximately $1,190,000, or 47%, compared to net revenues for the three months
ended March 31, 2006. This increase was primarily due to Skye Multimedia whose
revenues increased by $707,000; our Cognistar legal division, whose revenue
increased by $209,000; our accounting/finance division whose revenues increased
by $213,000; The Selbst Group, which we acquired in March 2007, had revenues of
$74,000; our compliance and ethics division whose revenues increased by $36,000;
and our engineering division whose revenues increased by $15,000. These
increases were offset by a reduction in revenues from video production and
duplication and consulting services in the amount of $62,000.

         In the first quarter of 2007, net revenues from our accounting/finance
and related products were $2.2 million or 68% of sales, compared to $2.0 million
or 77% of sales in the comparable 2006 period. Sales of our subscription-based
products which include both subscription-based revenue and direct sales of
course material on a non-subscription basis increased from $1.75 million in 2006
to $2.03 million in 2007. This increase is due to our continued marketing
efforts to increase sales. Revenues from other projects in our accounting
division that are not subscription based, decreased from $209,000 in 2006 to
$148,000 in 2007. These sales fluctuate from period to period, and are not
indicative of any trends. Online sales, which are primarily accounting products,
continue to be an important factor contributing to our overall revenue growth.
In the 2007 period, net revenues from online sales accounted for approximately
$883,000, or 24% of net revenues, compared to $687,000, or 27% of net revenues
in the comparable 2006 period. This represents a 29% increase in absolute
dollars even though as a percentage of net revenues online sales declined
because most of the sales made by some of our newly acquired divisions are not
Internet based subscription sales.

         In the quarter Skye Multimedia generated revenues of $767,000 compared
to $60,000 in the first quarter of 2006. However for Q1 2006, Skye only had one
month of operation.

         Sales from our financial services training division, which includes
Sage Online and The Selbst Group, generated $81,000 of revenue during the
quarter. We acquired Sage Online in March 2006 and The Selbst Group in March
2007. For March 2006, Sage Online had sales of $9,000.

         For the first quarter of 2007, Working Values contributed a total of
$403,000 to net revenues compared to $158,000 in the first quarter of 2006. For
the 2007 period, $194,000 of revenue was generated


                                       12
<PAGE>

by the ethics and compliance division and $209,000 was generated by our
Cognistar legal division, acquired in November 2006. Revenue generated by our
ethics and compliance division is derived primarily from custom consulting work.
Custom work is non-repetitive and subject to market conditions and can vary from
quarter to quarter. Cognistar makes both subscription-based and direct sales of
its courses.

         Net revenues from sales of our engineering products, including those of
MGI that we acquired in the fourth quarter of 2006, are not subscription based.
Sales were $231,000 in the first quarter of 2007 compared to $216,000 in the
first quarter of 2006. This increase is not necessarily indicative of any
trends, but is a result of timing differences in the placement of orders from
customers and greater marketing efforts.

         Net revenues from video production, duplication and consulting services
for the first quarter of 2007 were $68,000 compared to $130,000 for the first
quarter of 2006. In general, we believe this decline reflects an overall trend
in the video production and duplication business. We are making an effort to
hire sales personnel that will generate more revenue for this department. Under
our long-standing policy, revenue is credited to the originating department
regardless of the type of service that is performed. For example, a contract to
convert videotapes to digital format is credited to the accounting education
department if that is where the sale originated, even if the project has nothing
to do with accounting.

     COST OF REVENUES

         Cost of revenues includes (i) production costs - I.E., the salaries,
benefits and other costs related to personnel, whether our employees or
independent contractors, who are used directly in production, including
producing our educational programs and/or upgrading our technology; (ii)
royalties paid to third parties; (iii) the cost of materials, such as videotape
and packaging supplies; and (iv) shipping and other costs. There are many
different types of expenses that are characterized as production costs and many
of them vary from period to period depending on many factors. Skye and our other
non-subscription-based divisions operate on a lower gross profit percentage than
that of our subscription-based products. Our gross profit percentage decreased
slightly from 61.1% for the three months ended March 31, 2006, to 60.6% in the
current period. In addition, we have devoted a significant amount of internal
resources in developing new products; re-tooling existing products and
technology; and integrating our recently acquired subsidiaries into our various
platforms. These costs have not been capitalized and are therefore included in
our cost of revenues.

         Compared to the first quarter of 2006, cost of revenues in the first
quarter of 2007 increased by $482,000. The increase was primarily attributable
to payroll and related costs from our newly acquired subsidiaries and other
production related costs including the expenditure of approximately $90,000 to
convert Cognistar courses to our platform. Due to the increased direct costs as
a result of our acquisitions, our product mix has changed resulting in lower
gross profit.

     o   OUTSIDE LABOR AND DIRECT PRODUCTION COSTS. Outside labor includes the
         cost of hiring actors and production personnel such as directors,
         producers and cameramen and the outsourcing of non-video technology.
         The cost of such outside labor, which is primarily video production and
         technology personnel, increased $307,000, including the $90,000 spent
         on converting Cognistar courses to our platform. This increase is
         directly related to the outsourcing of technology personnel. Direct
         production costs, which are costs related to producing videos or
         courses other than labor costs, such as the cost of renting equipment
         and locations, and the use of outsourced labor in the technology area,
         increased $61,000. The variation in direct production costs are related
         to the type of production and other projects and do not reflect any
         trends in our business. As our business grows we may be required to
         hire additional production personnel, increasing our cost of revenues.

     o   ROYALTIES. Royalty expense decreased in the three months ended March
         31, 2007, compared to the comparable 2006 period by $10,000. This is a
         result of product mixes in the engineering sector and royalties due to
         our organizational partners in the accounting education area for which
         we often have to make estimates, as the information may not be
         available.

     o   SALARIES. Overall, payroll and related costs attributable to production
         personnel increased by $105,000. We have reduced salaries and related
         costs in our video production department as a result of decreased
         business. This is offset by increased salaries and related costs as a
         result of our


                                       13
<PAGE>

         recent acquisitions. In addition, in the 2006 period we only owned Skye
         for one month as compared to this period.

     o   OTHER PRODUCTION RELATED COSTS. These are other costs directly related
         to the production of our products such as purchases of materials,
         travel, shipping and other. These costs increased by $22,000 from 2006
         to 2007. This is a direct result of increased business from Skye.

     GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses include corporate overhead such as
compensation and benefits for administrative, sales and marketing and finance
personnel, rent, insurance, professional fees, travel and entertainment and
office expenses. General and administrative expenses increased by $359,000 in
the first quarter of 2007 from the comparable period in 2006. This represents a
26% increase from the comparable 2006 period. This increase is primarily
attributable to the inclusion of Skye's operating expenses in the current
period. General and administrative costs consist of a number of different types
of expenses, including salaries and related costs. The increase in salaries is a
result of a number of factors including additional personnel costs of
approximately $276,000 as a result of our recent acquisitions. In the latter
part of 2006 we began to outsource our customer service operations at a
quarterly expense of approximately $30,000. While certain operating costs have
increased as a result of our acquisitions, such as rent, telephone and
insurance, we have tried to control other costs such as selling costs, which
include advertising, promotion, travel and entertainment, that decreased by
$25,000. Our other operating costs decreased by approximately $52,000, including
a reduction in investor relation expense. We continue to look for other
opportunities to reduce our overhead. Although, we make every effort to control
our costs, we anticipate that general and administrative expenses will continue
to increase primarily as a result of our recent acquisitions and a general
increase in such costs as health insurance and travel.

     DEPRECIATION and AMORTIZATION

         Depreciation and amortization expenses increased by $17,000 in the
first quarter of 2007 compared to the first quarter of 2006 as a result of
increased amortization expense from our recent acquisitions and capitalized
course costs. We expect our depreciation and amortization expenses on our fixed
assets to continue to increase. Although many of our older assets are either
fully or almost fully depreciated and we do not anticipate replacing them at the
same rate, this is offset by the amortization of the intangibles acquired in
these acquisitions.

     INCOME FROM OPERATIONS

         For the three months ended March 31, 2007, net income from operations
was $363,000 compared to $31,000 in the comparable period of 2006. This increase
is primarily attributable to the performance of Skye, and increased sales of our
accounting products, as well as increased sales from our recent acquisitions.
Our quarterly earnings are affected by the mix of custom projects compared to
subscription- and education-based sales.

     OTHER INCOME/EXPENSES

         Other income and expense items consist of interest paid on indebtedness
and interest earned on deposits. We have not yet used the balance of the net
proceeds from our initial public offering combined with higher interest rates
have resulted in increased interest income. As a result, for the first quarter
of 2007 we had net interest income of $89,000 compared to net interest income of
$72,000 in the first quarter of 2006 after expending approximately $154,000 for
The Selbst Group acquisition in March 2007.

     PROVISION FOR INCOME TAXES

         The Company has begun to account for deferred tax benefits available
from its net operating loss carryforward pursuant to SFAS No. 109. It is
anticipated that the Company will recognize approximately $540,000 in such
benefits this year by annualizing the current quarter's income, offset by any
charges for the corporate alternative minimum tax. This number is subject to
change based on earnings during the year.


                                       14
<PAGE>

     NET INCOME

         For the three months ended March 31, 2007, we recorded a net profit of
$587,000, or $.12 per share, basic and diluted, compared to a net income of
$150,000 or $.03 per share, basic and diluted, for the three months ended March
31, 2006. The increase in net profit is attributable to growth in sales and the
income tax benefit being recognized in the current period. Earnings per share
before the benefit of the deferred tax asset would have been $.09 per share.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES

         Historically, we have financed our working capital requirements through
internally generated funds, sales of equity and debt securities and proceeds
from short-term bank borrowings. In October 2004, we completed our initial
public offering, which resulted in net proceeds to us of approximately $6
million. Through March 31, 2007, we have used approximately $1.3 million of
these funds to make acquisitions.

         Our working capital as of March 31, 2007, was approximately $5.08
million compared to $4.67 million at December 31, 2006. Our current ratio at
March 31, 2007, was 1.97 to 1 compared to 1.94 to 1 at December 31, 2006. The
current ratio is derived by dividing current assets by current liabilities and
is a measure used by lending sources to assess our ability to repay short-term
liabilities. The largest component of our current liabilities, $4.6 million at
March 31, 2007, compared to $4.0 million at December 31, 2006, was deferred
revenue, which is revenue collected or billed but not yet earned under the
principles of revenue recognition. Most of this revenue is in the form of
subscription fees and will be earned over the next 12 months. The cost of
fulfilling our monthly subscription obligation does not exceed this revenue and
is booked to expense as incurred. For some of our products, there are no
additional costs, other than shipping costs, required to complete our
obligations, as the material already exists.

         The primary components of our operating cash flows are net income
adjusted for non-cash expenses, such as depreciation and amortization, and the
changes in accounts receivable, accounts payable and deferred revenues. For the
three months ended March 31, 2007, net cash provided by operating activities was
$658,000 and we had a net cash increase of $437,000, which included an outlay of
approximately $154,000 for the acquisition and after expending approximately
$52,000 for asset purchases. Our accounts receivable and deferred revenue have
increased by approximately $189,000 and $593,000 respectively from the beginning
of the year, indicating a growth in sales that will be recognized in subsequent
periods.

         Capital expenditures for the three months ended March 31, 2007, were
approximately $52,000, which consisted primarily of computer equipment
purchases. Although, we continually upgrade our technology hardware, we do not
anticipate any significant capital expenditures relating to equipment purchases
over the next 12 months.

         At March 31, 2007, our only indebtedness consisted of capital lease
obligations, the balance of which was $19,000 compared to $26,000 at December
31, 2006. We have an outstanding lease with IDB Leasing, which had an aggregate
outstanding balance at March 31, 2007, of $4,000. The lease has a 48-month term
that expires in June 2007, an imputed interest rate of 7.0% and monthly payments
of $2,055. In August 2004, we financed the purchase of a van. The loan is for a
term of 36 months, bears interest at 4.99% per annum and requires 35 monthly
payments of $358 and a final payment of approximately $13,800 due in August
2007. The lender has agreed to repurchase the vehicle at our option for the
amount of the final payment less any applicable expenses, at the end of the
term. At March 31, 2007, the balance on the loan was $15,000.

         As of March 31, 2007, we had commitments under four operating leases -
the leases for our executive offices in Hawthorne, New York, the Working Values
executive offices in Sharon, Massachusetts, and its Cognistar division in
Westborough, Massachusetts, and Skye's executive offices in Bridgewater, New
Jersey - aggregating $1.17 million through February 2010.

         We believe that the remaining net proceeds of our initial public
offering in October 2004 together with cash flow from operations will be
sufficient to meet our working capital and capital expenditure requirements from
the next 12 months.

         In the future, we may issue additional debt or equity securities to
satisfy our cash needs. Any debt incurred or issued may be secured or unsecured,
at a fixed or variable interest rate and may contain other


                                       15
<PAGE>

terms and conditions that our board of directors deems prudent. Any sales of
equity securities may be at or below current market prices. We cannot assure you
that we will be successful in generating sufficient capital to adequately fund
our liquidity needs.

ITEM 3.  CONTROLS AND PROCEDURES

         EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Management, with the
participation of the chief executive officer and the chief financial officer,
carried out an evaluation of the effectiveness of our "disclosure controls and
procedures" (as defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act") Rules 13a-15(e) and 15-d-15(e)) as of the end of the period
covered by this quarterly report (the "Evaluation Date"). Based upon that
evaluation, the chief executive officer and the chief financial officer
concluded that, as of the Evaluation Date, our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act (i) is recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms and (ii) is accumulated and communicated to our
management, including our chief executive and chief financial officers, as
appropriate to allow timely decisions regarding required disclosure.

         CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There were no
changes in our internal controls over financial reporting that occurred during
the period covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

                                     PART II
                                OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS.

         We are not currently a party to any legal proceeding.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

RECENT SALES OF UNREGISTERED SECURITIES

         There were no sales of unregistered securities during the period
covered by this Report.

USE OF PROCEEDS

         On October 19, 2004, our registration statement on Form SB-2,
commission file number 333-115454 (the "Registration Statement") registering the
offer and sale of units (each a "Unit" and collectively the "Units"), each Unit
consisting of three shares of our common stock, par value $.0001 per share, and
one and one-half common stock purchase warrants, was declared effective by the
U.S. Securities and Exchange Commission. The warrants included in the Units have
a term of five years and an exercise price of $7.125 per share. We sold all
600,000 Units covered by the Registration Statement. Paulson Investment Company,
Inc. was the representative of the underwriters of the offering. The gross
proceeds to us from the offering were $7.65 million and the net proceeds were
$6.0 million. As of the date hereof, we used approximately $0.5 million of the
net proceeds to repay indebtedness and approximately $1.3 million for
acquisitions. The remaining $4.2 million will be used for working capital and
general corporate purposes, including acquisitions.

COMPANY PURCHASES OF ITS EQUITY SECURITIES

         On November 7, 2006, the Board of Directors approved a stock buy back
program under which $750,000 of our funds was allocated to purchase shares of
our common stock on the American Stock Exchange. During the quarter ended March
31, 2007, no such purchases were made.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

         None.


                                       16
<PAGE>

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

         None.

ITEM 5.  OTHER INFORMATION.

         None.

ITEM 6. EXHIBITS.

        Exhibits:

       EXHIBIT NO.          DESCRIPTION
       -----------          -----------
          31.1      Certification of Chief Executive Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

          31.2      Certification of Chief Financial Officer pursuant to Section
                    302 of the Sarbanes-Oxley Act of 2002.

          32.1      Certification of Chief Executive Officer and Chief Financial
                    Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                SMARTPROS LTD.
                                                --------------
                                               (Registrant)


Date: May 8, 2007                               /S/ ALLEN S. GREENE
                                                -------------------
                                                Chief Executive Officer


Date: May 8, 2007                               /S/ STANLEY P. WIRTHEIM
                                                -----------------------
                                                Chief Financial Officer
                                                (Principal Financial Officer)