Consolidated Interim Financial Statements (Expressed in Canadian dollars)  LINGO MEDIA INC. March 31, 2007 and 2006 (Unaudited)                      The Consolidated Interim Balance Sheet of Lingo Media Inc. as at March 31, 2007 and the Consolidated Interim Statements of Operations, Deficits and Cash Flows for the three months then ended have not been reviewed by the Companys auditors. These financial statements are the responsibility of the management and have been reviewed and approved by the Companys Audit Committee.    LINGO MEDIA INC. March 31, 2007 and 2006 (Expressed in Canadian dollars) (Unaudited)   CONTENTS PageConsolidated Interim Balance Sheets3Consolidated Interim Statements of Deficit4Consolidated Interim Statements of Operations5Consolidated Interim Statements of Cash Flows6Notes to Consolidated Interim Financial Statements7    2   LINGO MEDIA INC. Consolidated Interim Balance Sheets (Expressed in Canadian dollars) (Unaudited)  March 31 2007December 31 2007AssetsCurrent assets:Cash$                 -$         73,169Short term investment150,000150,000Accounts and grants receivable (note 2)251,805304,924Inventory172,631154,276Prepaid and sundry assets185,781130,573949,750812,942Investment and advances (note 3)182,520182,520Deferred costs (note 3)157,419157,419Property and equipment, net73,34877,304Development costs, net350,037343,308Future Income Taxes189,534189,534Goodwill1,121,1311,121,131$   2,834,205$    2,884,158Liabilities and Shareholders' EquityCurrent liabilities:Bank Indebtness$        16,701$                   -Bank loans (note 4)485,000485,000Accounts payable579,598526,491Accrued liabilities91,329148,578Unearned revenue177,778-1,350,5531,160,069Loans payable (note 5)347,541347,541Shareholders' equity:Capital stock (note 6(a))5,033,6565,028,656Contributed surplus342,447325,293Deficit(4,287,075)(3,977,401)1,089,0281,376,548Commitments$   2,834,205$    2,884,158 See accompanying notes to consolidated interim financial statements. Approved on behalf of the Board:  Director  Director    3   LINGO MEDIA INC. Consolidated Interim Statements of Deficit (Expressed in Canadian dollars) (Unaudited)  For the three months ended March 3120072006Deficit, beginning of period$      (3,977,402)$   (3,228,477)Net loss for the period(309,674)(309,640)Deficit, end of period$      (4,287,075)$   (3,538,117) See accompanying notes to consolidated interim financial statements.   4   LINGO MEDIA INC. Consolidated Interim Statements of Operations (Expressed in Canadian dollars) (Unaudited)  For the three months ended March 3120072006Revenue$          667,533$           2,397Direct costs139,5731,235Margin527,9601,162Expenses:General and administrative770,319178,927Amortization20,71866,268Interest and other financial expenses29,4423,282Stock-based compensation17,15462,325837,633310,802Loss before income taxes and other taxes(309,674)(309,640)Income taxes and other taxes--Net loss for the period(309,674)(309,640)Loss per share$               (0.01)$            (0.01)Weighted average number ofcommon shares outstanding29,590,94126,070,589 See accompanying notes to consolidated interim financial statements.  5   LINGO MEDIA INC. Consolidated Interim Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited)  For the three months ended March 3120072006Cash flows provided by (used in):Operations:Net loss for the period$         (309,674)$   (309,640)Items not affecting cash:Amortization of property and equipment4,1202,401Amortization of development costs16,59846,199Amortization of acquired publishing content-17,668Stock-based compensation17,15462,325Change in non-cash balances related to operations:Accounts and grants receivable52,955(45,208)Inventory(18,355)640Prepaid and sundry assets(55,208)10,469Accounts payable53,10783,056Accrued liabilities(84,733)(22,653)Unearned revenue177,778123,000Cash used by operating activities(118,773)(31,743)Financing:Increase in bank loans-20,000Increase (decrease) in loans payable47,230(48,937)Issuance of capital stock5,0002,945Cash provided by financing activities52,230(25,992)Investing:Purchase of property and equipment-(1,707)Deferred costs-(15,620)Development costs(23,327)(54,496)Cash used in investing activities(23,327)(71,823)Increase / (decrease) in cash(89,870)(129,558)Cash, beginning of period73,169144,337(Bank indebtness) cash, end of period$           (16,701)$       14,779   6   Lingo Media Inc. (the "Company or Lingo Media") develops, publishes and licenses book, audio/video cassette, CD-based product and supplemental product for English language learning for the educational school markets in China.  In addition, through its subsidiary, A+ Child Development (Canada) Ltd., the Company specializes in early childhood cognitive development programs, through the publishing and distribution of educational materials along with its proprietary curriculum through its four offices in Calgary, Edmonton, Vancouver and Toronto.  1.    Significant accounting policies: (a) Basis of presentation: The disclosures contained in these unaudited interim consolidated financial statements do not include all the requirements of generally accepted accounting principles (GAAP) for annual financial statements. The unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2007. The unaudited interim consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary to present fairly the financial position of the Company as of March 31, 2007 and the results of operations and cash flows for the three months ended March 31, 2007 and 2006.  2.       Accounts and grants receivable: Accounts and grants receivable consist of: March 31, 2007December 31, 2006Trade receivables$          214,104$                285,141Grants receivable (note 12)37,70119,783$          251,805$                304,924  3.   Deferred costs, investment and advances: In June 2005, the Company signed a definitive Joint Venture Agreement (JV Agreement) with Sanlong Cultural Communication Co. Ltd. (Sanlong). The joint venture company will be known as Hebei Jintu Education Book Co. Ltd. (Jintu).  Jintu will continue Sanlongs recently launched direct-to-consumer business of distributing educational newspapers and product extensions located in Shijiazhuang, Hebei Province, China. Under the JV Agreement, Lingo Media will invest approximately $365,000 (¥2,550,000 RMB) for its 51% share of Jintu. The closing is subject to government approval in China. Pursuant to the June 2005 agreement, as at March 31, 2007 the Company advanced funds for working capital to Sanlong through a trust of $182,520, included in investment and advances, with a view to establishing Jintu and incurred $157,419 in expenditures, included in deferred costs,  related to pre-operating costs.  Upon commencement of the joint venture, the investment and advances will be converted into Lingo Medias share of registered capital of the joint venture and these advances and investment is non refundable.   4.      Bank loans: March 31 2007December 31 2006Line of credit of $150,000 bearing interest at prime plus 2.5% per annum, due on demand and secured by the Companys accounts receivable from customers in China, which in turn are secured by the Export Development Corporation.$    125,000$      135,000Operating loan of $500,000 bearing interest at prime plus 2% per annum and secured by a charge on all assets including inventory and accounts receivables.360,000350,000$    485,000$      485,000 The terms of the operating loan require that certain measurable covenants be met.  As at March 31, 2007, the Company was in violation of certain covenants.  As the operating loan is currently presented as a current liability no additional adjustment is required. 5.      Loans payable: Loans payable consists of the following: March 31December 3120072006Loan payable, due to a shareholder, is interest bearingat 12% per annum and is due on August 31, 2008$               51,306$                7,541Loan payable, due to a non-related party, is interestbearing at 12% per annum payable monthly and issecured by a general security agreement and is due onAugust 31, 2008343,465340,000394,771347,541Less: Current portion-(101,929)$             394,771$            347,541   7   6.       Capital stock: (a) Issued Common SharesNumberAmountBalance, January 1, 200732,578,170$      5,028,656Issued:Option exercised50,0005,000Balance, March 31, 200732,628,170$      5,033,656 (b) Options WeightedNumber ofAverageOptionsExercise PriceOutstanding, January 1, 20071,929,437$             0.19Exercised(50,000)0.10Issued1,650,0000.10Outstanding, March 31, 20073,529,437$             0.15Options exercisable, March 31, 20072,128,933$             0.18  7.    Government grants: Included as a reduction of general and administrative expenses are government grants of $28,750 (2006  $35,392), relating to the Company's publishing projects in China and Canada. Certain government grants are repayable in the event that the Company's annual net income for each of the previous two years exceeds 15% of revenue. During the year, the conditions for the repayment of grants did not arise and no liability was recorded.  8   8.    Segmented information: The Company operates two distinct reportable business segments as follows: English Language Learning: The Company develops, publishes, distributes and licenses book, audio/video cassette, CD-based product and supplemental product for English language learning for the educational school markets in China and in Canada. Early Childhood Development: The Company specializes in early childhood cognitive development programs, through the publishing and distribution of educational materials along with its unique curriculum through its four offices in Calgary, Edmonton, Vancouver and Toronto.  English Language LearningEarly Childhood DevelopmentTotalRevenue$                587$       666,946$             667,533Cost of Sales235139,338139,573Margin$                352$       527,608$             527,960  The Company's revenue by geographic region based on the region in which the customers are located is as follows: March 31, 2007December 31, 2006Canada$               667,533$                       2,397China--$               667,533$                       2,397  The majority of the Companys identifiable assets are located as follows:  March 31, 2007December 31, 2006Canada$            2,634,984$                2,768,399China182,520182,520$            2,817,504$                2,950,919  9.  Reconciliation of Canadian and United States generally accepted accounting principles ("GAAP"): These consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in Canada. Except as set out below, these financial statements also comply, in all material aspects, with the United States generally accepted accounting principles. The following tables reconcile results as reported under Canadian GAAP with those that would have been reported under United States GAAP. Statements of Operations: March 31March 3120072006Loss for the period - Canadian GAAP$(309,674)$(309,640)Impact of United States GAAP andadjustments:Amortization of development costs (a)16,59826,310Deferred costs (d)-(15,620)Loss for the period - United States GAAP$(293,076)$(298,950)  The cumulative effect of these adjustments on the consolidated shareholders' equity of the Company is as follows: March 31March 3120072006Shareholders' equity - Canadian GAAP$1,089,028$1,376,548Development costs(121,005)(121,005)Compensation expense(243,250)(243,250)Deferred costs(157,419)(157,419)Shareholders' equity - United States GAAP$567,354$963,774   9