**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





(Mark
      One)


**[X]
      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





**For
      the Quarterly Period Ended November 30, 2007**





**[
      ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934**





**For
      the Transition Period from _________ to _________**





**Commission
      file number: 0-30703**





**COLLECTIBLE
      CONCEPTS GROUP, INC.**


(Exact
      name of registrant as specified on its charter)




**Delaware**
            **95-4026880**(State
                or other jurisdiction of incorporation or organization)
            (IRS
                Employer Identification No.)




**1600
      Lower State Road**


**Doylestown,
      PA 18901**


(Address
      of principle executive offices)





**(215)
      491-1075**


(Registrant’s
      telephone number, including area code)





(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      past 12 months (or for such shorter period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.


Yes
o  No
x





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





State
      the
      number of shares outstanding of each of the registrant's classes of common
      equity, as of the latest practicable date:  5,203,622,292  shares
      issued and outstanding as of February 20, 2008.








**COLLECTIBLE
      CONCEPTS GROUP, INC.**





**INDEX**PART
                I
            FINANCIAL
                STATEMENTSITEM
                1
            Condensed
                Consolidated Balance Sheet as of November 30, 2007
                (Unaudited)
            3Condensed
                Consolidated Statements of Operations for the Three and Nine Months
                ended
                November 30, 2007 and 2006 (Unaudited)
            4Condensed
                Consolidated Statement of Changes in Shareholders' Deficiency for
                the Nine
                Months ended November 30, 2007 (Unaudited)
            5Condensed
                Consolidated Statements of Cash Flows for the Nine Months ended November
                30, 2007 and 2006 (Unaudited)
            6Notes
                to Condensed Consolidated Financial Statements as of November 30,
                2007
                (Unaudited)
            7
                -
                25ITEM
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            26
                - 37ITEM
                3
            Controls
                and Procedures
            38PART
                II
            OTHER
                INFORMATIONITEM
                1
            Legal
                proceedings
            39ITEM
                2
            Unregistered
                sales of equity securities and use of proceeds
            39ITEM
                3
            Defaults
                upon senior securities
            39ITEM
                4
            Submission
                of matters to a vote of security holders
            39ITEM
                5
            Other
                information
            39ITEM
                6
            Exhibits
            40SIGNATURES
            41





2




COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIESCONDENSED
                CONSOLIDATED BALANCE SHEETS(Unaudited)November
                30,
            
            
            February
                28,2007
            
            
            2007ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            5,502
            
            $
            23,171Accounts
                receivable, net of allowance of $33,753 and $30,516,
                respectively
            
            
            4,463
            
            
            144,162Inventories,
                net of allowance of $89,756 and $116,573
            
            
            341,908
            
            
            204,973Advances,
                related party
            
            
            -
            
            
            79,899Advance,
                officer
            
            
            204
            
            
            14,619Prepaid
                royalties
            
            
            34,167
            
            
            21,392Other
                prepaid expenses
            
            
            100
            
            
            100Total
                current assets
            
            
            386,344
            
            
            488,316PROPERTY
                AND EQUIPMENT, NET (Note C)
            
            
            6,023
            
            
            7,390OTHER
                ASSETS:Cash
                held in escrow
            
            
            89,053
            
            
            -Trademarks
            
            
            1,300
            
            
            1,300Deposits
            
            
            3,200
            
            
            3,200Total
                other assets
            
            
            93,553
            
            
            4,500TOTAL
                ASSETS
            
            $
            485,919
            
            $
            500,206LIABILITIES
                AND DEFICIENCY IN STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                payable and accrued expenses (Note D)
            
            $
            3,440,600
            
            $
            2,938,256Notes
                and loans payable
            
            
            561,467
            
            
            649,813Loans
                payable, related party (Note K)
            
            
            20,455
            
            
            67,000Convertible
                subordinated debentures (Note F)
            
            
            33,300
            
            
            34,500Convertible
                secured debentures (Note E)
            
            
            3,781,284
            
            
            2,837,848Total
                current liabilities
            
            
            7,837,106
            
            
            6,527,417LONG
                TERM DEBT, LESS CURRENT MATURITIESNotes
                payable
            
            
            200,000
            
            
            200,000Derivative
                liability related to convertible debentures
            
            
            23,497,000
            
            
            69,667,000Warrant
                liability related to convertible debentures
            
            
            4,246
            
            
            12,273Total
                long term liabilities
            
            
            23,701,246
            
            
            69,879,273Total
                liabilities
            
            
            31,538,352
            
            
            76,406,690COMMITMENTS
                AND CONTINGENCIES (Note J)DEFICIENCY
                IN STOCKHOLDERS' EQUITYPreferred
                stock, Series A; par value $0.001 per share; 1,000,000 shares authorized,
                1,000,000 issued and outstanding
            
            
            1,000
            
            
            1,000Common
                stock, par value $0.001 per share; 10,000,000,000 shares authorized,
                5,203,622,292 and 1,519,292,086 issued and outstanding, respectively
                (Note
                H)
            
            
            5,203,622
            
            
            1,519,200Common
                stock to be issued, 1,562,124 and 1,091,191, respectively (Note
                H)
            
            
            72,573
            
            
            67,384Additional
                paid in capital (Note H)
            
            
            14,987,266
            
            
            17,778,261Accumulated
                deficit
            
            
            (51,316,894
            )
            
            (95,272,329
            )Total
                deficiency in stockholders' equity
            
            
            (31,052,433
            )
            
            (75,906,484
            )TOTAL
                LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
            
            $
            485,919
            
            $
            500,206


See
      the
      accompanying notes to the unaudited condensed consolidated financial
      statements




3





COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)Three
                months ended November 30,
            Nine
                months ended November 30,2007
            
            
            2006
            
            
            2007
            
            
            2006REVENUES:Net
                sales
            
            $
            39,685
            
            $
            291,495
            
            $
            377,623
            
            $
            636,891Cost
                of sales
            
            
            55,556
            
            
            249,893
            
            
            447,541
            
            
            636,808Gross
                profit (loss)
            
            
            (15,871
            )
            
            41,602
            
            
            (69,918
            )
            
            83OPERATING
                EXPENSESSelling
                and administrative
            
            
            336,484
            
            
            323,259
            
            
            1,096,941
            
            
            1,518,705Impairment
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            233,200Depreciation
                and amortization
            
            
            438
            
            
            664
            
            
            1,367
            
            
            14,489Total
                operating expenses
            
            
            336,922
            
            
            323,923
            
            
            1,098,309
            
            
            1,766,394LOSS
                FROM OPERATIONS
            
            
            (352,793
            )
            
            (282,321
            )
            
            (1,168,227
            )
            
            (1,766,311
            )Other
                income (expense)
            
            
            
            
            
            -
            
            
            
            
            
            9,785Financing
                costs related to conversion of convertible debt
            
            
            -
            
            
            (86,100
            )
            
            (725,432
            )
            
            (1,442,926
            )Gain
                (loss) on adjustment of derivative and warrant liability to fair
                value
            
            
            (1,569,508
            )
            
            583,007
            
            
            47,303,027
            
            
            (2,319,784
            )Interest
                expense
            
            
            (515,086
            )
            
            (369,710
            )
            
            (1,453,932
            )
            
            (1,207,339
            )Net
                Income (loss) before income taxes
            
            
            (2,437,388
            )
            
            (155,124
            )
            
            43,955,435
            
            
            (6,726,575
            )Income
                taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -NET
                INCOME (LOSS)
            
            $
            (2,437,388
            )
            $
            (155,124
            )
            $
            43,955,435
            
            $
            (6,726,575
            )Net
                income (loss) per common shares outstanding (basic)
            
            $
            (0.00
            )
            $
            (0.17
            )
            $
            0.01
            
            $
            (8.05
            )Net
                loss per common shares outstanding (fully diluted) (Note
                A)
            
            
            N/A
            
            
            N/A
            
            
            Note
                A
            
            
            N/AWeighted
                average common shares outstanding (basic)
            
            
            5,203,622,292
            
            
            938,684
            
            
            4,550,134,490
            
            
            835,289Weighted
                average common shares outstanding (fully diluted)
            
            
            N/A
            
            
            N/A
            
            
            Note
                A
            
            
            N/A


See
      the
      accompanying notes to the unaudited condensed consolidated financial
      statements





4





COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDERS'
                EQUITYNINE
                MONTHS ENDED NOVEMBER 30, 2007(unaudited)AdditionalPreferred
            
            
            Stock
            
            
            Common
            
            
            Stock
            
            Common
                stock to be issued:
            
            Paid
                in
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            TotalBalance
                as of February 28, 2007-Note F
            
            
            1,000,000
            
            $
            1,000
            
            
            1,519,292,086
            
            $
            1,519,200
            
            
            1,091,191
            
            $
            67,384
            
            $
            17,778,261
            
            $
            (95,272,329
            )
            $
            (75,906,484
            )Common
                stock canceled for services rendered
            
            
            -
            
            
            -
            
            
            (2,998,675
            )
            
            (2,999
            )
            
            -
            
            
            -
            
            
            (9,001
            )
            
            -
            
            
            (12,000
            )Conversion
                of secured convertible debentures to common stock
            
            
            -
            
            
            -
            
            
            1,628,261,000
            
            
            1,628,261
            
            
            -
            
            
            -
            
            
            (1,259,312
            )
            
            
            
            
            368,949Conversion
                of subordinated convertible debentures to common stock and interest
                to
                common stock
            
            
            -
            
            
            -
            
            
            1,999,999,997
            
            
            2,000,000
            
            
            -
            
            
            -
            
            
            (1,458,333
            )
            
            
            
            
            541,667Common
                stock to be issued for anti-dilution note provisions
            
            
            -
            
            
            -
            
            
            
            
            
            
            
            
            59,538,817
            
            
            44,574
            
            
            (44,574
            )
            
            
            
            
            -Common
                stock issued for anti-dilution note provisions
            
            
            -
            
            
            -
            
            
            59,067,884
            
            
            59,160
            
            
            (59,067,884
            )
            
            (39,385
            )
            
            (19,775
            )
            
            
            
            
            -Net
                income (loss)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            43,955,435
            
            
            43,955,435Balance
                at November 30, 2007
            
            
            1,000,000
            
            $
            1,000
            
            
            5,203,622,292
            
            $
            5,203,622
            
            
            1,562,124
            
            $
            72,573
            
            $
            14,987,266
            
            $
            (51,316,894
            )
            $
            (31,052,433
            )


See
      the
      accompanying notes to the unaudited condensed consolidated financial
      statements





5


COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIESCONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)Nine
                months ended November 30,2007
            
            
            2006Net
                income (loss)
            
            $
            43,955,435
            
            $
            (6,726,575
            )Adjustments
                to reconcile net income (loss) to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            1,367
            
            
            14,489Provision
                for bad debt expense
            
            
            3,237
            
            
            9,298Provision
                for trade credit allowance
            
            
            
            
            
            376,227Impairment
                loss
            
            
            
            
            
            233,200Common
                stock issued in connection with services rendered, net of
                cancellations
            
            
            (12,000
            )
            
            221,800Common
                stock issued in connection with anti-dilution note
                provisions
            
            
            
            
            
            20,262Options
                issued for services rendered
            
            
            
            
            
            3,100Amortization
                of deferred equity based expense
            
            
            -
            
            
            40,000Accretion
                of convertible notes payable
            
            
            993,202
            
            
            806,338Loss
                on conversion of notes and loans payable
            
            
            415,931
            
            
            902,418Loss
                on conversion of secured convertible debt
            
            
            309,502
            
            
            497,545Loss
                on conversion subordinate debt and interest
            
            
            -
            
            
            42,463Unrealized
                (income) loss on adjustment of derivative and warrant liability to
                fair
                value of underlying securities
            
            
            (47,303,027
            )
            
            2,319,784(Increase)
                decrease in:Accounts
                receivable
            
            
            136,462
            
            
            (107,917
            )Trade
                credits
            
            
            -
            
            
            (376,227
            )Inventories
            
            
            (136,935
            )
            
            (249,294
            )Advances,
                related party
            
            
            79,899
            
            
            -Advance,
                officer
            
            
            14,415
            
            
            -Prepaid
                interest
            
            
            -
            
            
            20,625Prepaid
                royalties
            
            
            (12,775
            )
            
            37,916Other
                prepaid expenses
            
            
            -
            
            
            2,765Cash
                held in escrow
            
            
            (89,053
            )
            
            -Increase
                (decrease) in:Cash
                overdraft
            
            
            -
            
            
            13,156Accounts
                payable and accrued expenses
            
            
            502,345
            
            
            377,811Net
                cash used in operating activities
            
            
            (1,141,995
            )
            
            (1,520,816
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchase
                of fixed assets
            
            
            -
            
            
            (8,645
            )Net
                cash used in investing activities
            
            
            -
            
            
            (8,645
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from common stock subscribed
            
            
            -
            
            
            15,000Proceeds
                from issuance of convertible secured debentures
            
            
            1,125,000
            
            
            900,000Repayments
                of subordinated convertible debentures
            
            
            (1,200
            )
            
            (131,510
            )Repayments
                of notes and loans payable
            
            
            (47,929
            )
            
            -Proceeds
                from notes and loans payable
            
            
            95,000
            
            
            670,000Repayments
                of notes payable-related party
            
            
            (89,159
            )
            
            (1,235
            )Proceeds
                from notes payable-related party
            
            
            42,614
            
            
            2,468Net
                cash provided from financing activities
            
            
            1,124,326
            
            
            1,454,723Net
                increase in cash and cash equivalents
            
            
            (17,669
            )
            
            (74,738
            )Cash
                and cash equivalents at beginning of period
            
            
            23,171
            
            
            74,738Cash
                and cash equivalents at end of period
            
            $
            5,502
            
            $
            -SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Cash
                paid during the period for interest
            
            $
            -
            
            $
            -Cash
                paid during the period for taxes
            
            $
            -
            
            $
            -


See
      the
      accompanying notes to the unaudited condensed consolidated financial
      statements




6




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**




**NOTE
      A -NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES**





Business
      and Basis of Presentation





Basis
      of Presentation





These
      unaudited condensed consolidated statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and the instructions to Form 10-QSB and do
      not
      include all the information and footnotes required by accounting principles
      generally accepted in the United States of America for complete financial
      statements. In the opinion of management, all adjustments (consisting of normal
      recurring accruals) considered necessary for a fair presentation of the results
      for the interim periods have been included. Operating results for the three
      and
      nine months ended November 30, 2007 are not necessarily indicative of the
      results that may be expected for the year ending February 28, 2008. The
      accompanying unaudited condensed consolidated financial statements and the
      information included under the heading "Management's Discussion and Analysis"
      should be read in conjunction with the Company's audited consolidated financial
      statements and related notes included in the Company's Form 10-KSB for the
      year
      ended February 28, 2007.





Principles
      of Consolidation




The
      consolidated financial statements include the accounts of Collectible Concepts
      Group, Inc. and its two wholly owned subsidiaries, Team Sports Specialties
      Corporation and Music Art Corporation (collectively, the "Company"). All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.





Revenue
      Recognition





For
      revenue from product/contract sales, the Company recognizes revenue in
      accordance with Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB
      104"), which superseded Staff Accounting Bulletin No. 101, Revenue Recognition
      in Financial Statements (“SAB 101"). SAB 101 requires that four basic criteria
      must be met before revenue can be recognized: 1) Persuasive evidence of an
      arrangement exists; 2) delivery has occurred; 3) the selling price is fixed
      and
      determinable; and 4) collectibility is reasonably assured.




Determination
      of criteria (3) and (4) are based on management’s judgments regarding the fixed
      nature of the selling prices of the products delivered and the collectibility
      of
      those amounts. Provisions for discounts and rebates to customers, estimated
      returns and allowances, and other adjustments are provided for in the same
      period the related sales are recorded. The Company defers any revenue for which
      the product has not been delivered or is subject to refund until such time
      that
      the company and the customer jointly determine that the product has been
      delivered or no refund will be required. At November 30, 2007 and February
      28,
      2007; the Company did not have any deferred revenues. SAB 104 incorporates
      Emerging Issues Task Force 00-21 (“EITF 00-21"), Multiple-Deliverable Revenue
      Arrangements. EITF 00-21 addresses accounting for arrangements that may involve
      the delivery or performance of multiple products, services and/or rights to
      use
      assets. The effect of implementing EITF 00-21 on the Company’s financial
      position and results of operations was not significant.





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      the price to the customer is fixed, collectibility is reasonable assured and
      title and risk of ownership is passed to the customer, which is usually upon
      shipment. However, certain customers may request to take title and risk of
      ownership prior to shipment. Revenue for these transactions is recognized only
      when:





1.
      Title
      and risk of ownership have passed to the customer;




2.
      The
      Company has obtained a written fixed purchase commitment;




3.
      The
      customer has requested the transaction be on a bill and hold basis;




4.
      The
      customer has provided a delivery schedule;




5.
      All
      performance obligations related to the sale have been completed;




6.
      The
      product has been processed to the customer’s specifications, accepted by the
      customer and made ready for shipment;




7


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**


**NOTE
      A -NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
      (continued)**





Revenue
      Recognition (continued)




7.
      The
      product is segregated and is not available to fill other orders.





The
      remittance terms for these “bill and hold” transactions are consistent with all
      other sale by the company. There were no bill and hold transactions at November
      30, 2007 and February 28, 2007.





Currently,
      there are no warranties provided with the purchase of the Company‘s products.
      The cost of replacing defective products and product returns have been
      immaterial and within management’s expectations. In the future, when the Company
      deems warranty reserves are appropriate that such costs will be accrued to
      reflect anticipated warranty costs.





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 disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenue and expenses during the reporting period. Actual
      results could differ from those estimates.





Cash
      and cash equivalents





For
      purposes of the Statements of Cash Flows, the Company considers all highly
      liquid debt instruments purchased with a maturity date of three months or less
      to be cash equivalents.





Concentration
      of Credit Risk





Financial
      instruments and related items, which potentially subject the Company to
      concentrations of credit risk, consist primarily of cash, cash equivalents
      and
      trade receivables. The Company places its cash and temporary cash investments
      with high credit quality institutions. At times, such investments may be in
      excess of the FDIC insurance limit. The Company periodically reviews its trade
      receivables in determining its allowance for doubtful accounts. At November
      30,
      2007 and February 28, 2007, allowance for doubtful account balance was $33,753
      and $30,516, respectively.





Cash
      Equivalents





For
      the
      purpose of the accompanying consolidated financial statements, all highly liquid
      investments with a maturity of three months or less are considered to be cash
      equivalents.





Advances
      Officer





The
      Company has set up certain bank accounts in an officer’s name to help facilitate
      payments as the Company rebuilds its credit worthiness.





Inventories





Inventories
      are stated at the lower of cost or market determined by the weighted average
      cost method. Inventories consist of products available for sale to distributors
      and customers.





8


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**


**NOTE
      A -NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
      (continued)**





Inventory
      (continued)





Components
      of inventories as of November 30, 2007 and February 28, 2007 are as
      follows:





November
                30,
              2007
            
            February
                28,
              2007Finished
                goods
            
            $
            430,169
            
            $
            321,546Raw
                materials
            
            
            1,495
            
            
            -Less:
                allowance for obsolescence
            
            
            (89,756)
            
            
            (116,573)Net
            
            $
            341,908
            
            $
            204,973





Property
      and Equipment





Property
      and equipment are stated at cost less accumulated depreciation. When retired
      or
      otherwise disposed, the related carrying value and accumulated depreciation
      are
      removed from the respective accounts and the net difference less any amount
      realized from disposition, is reflected in earnings. Depreciation is provided
      using the straight-line method over their estimated useful lives as
      follows:





Computer
            5
                yearsOffice
                equipment
            3
                to 5 years





Impairment
      of Long-Lived Assets





The
      Company has adopted Statement of Financial Accounting Standards No. 144 (“SFAS
      144”). SFAS 144 requires that long-lived assets and certain identifiable
      intangibles held and used by the Company be reviewed for impairment whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be recoverable. Events relating to recoverability may include
      significant unfavorable changes in business conditions, recurring losses, or
      a
      forecasted inability to achieve break-even operating results over an extended
      period. The Company evaluates the recoverability of long-lived assets based
      upon
      forecasted discounted cash flows. Should impairment in value be indicated,
      the
      carrying value of intangible assets will be adjusted, based on estimates of
      future discounted cash flows resulting from the use and ultimate disposition
      of
      the asset. SFAS 144 also requires assets to be disposed of be reported at the
      lower of the carrying amount or the fair value less disposal costs.




Advertising





The
      Company follows the policy of charging the costs of advertising to expense
      as
      incurred. The Company charged to operations $17,023 and $122,772 as advertising
      costs for the nine months ended November 30, 2007 and 2006,
      respectively.





Fair
      Value of Financial Instruments





Carrying
      amounts of financial instruments held by the Company, which includes cash,
      accounts receivable, accounts payable and accrued expenses approximate fair
      value due to the short-term maturities of these assets and liabilities.
      Long-term debt, convertible secured debentures, notes and loans payable and
      convertible subordinated debentures approximate fair value based upon debt
      terms
      available for entities under similar terms.





Segments





The
      Company applies Statement of Financial Accounting Standards No. 131,
“Disclosures about Segments of an Enterprises and Related Interpretation.” The
      Company operates in one segment and therefore segment information is not
      presented.





9


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**


**NOTE
      A -NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
      (continued)**





Shipping
      and Handling Fees





The
      Company includes shipping and handling fees billed to customers as revenue
      and
      the related costs as cost of sales. Such fees and costs are primarily comprised
      of outbound freight. Shipping and handling fees are included in revenues in
      the
      accompanying consolidated statements of income.





Income
      (Loss) per Share





The
      following reconciliation of net income and share amounts used in the computation
      of income (loss) per share for the nine months ended November 30,
      2007:





Nine
                Months Ended
              November
                30, 2007Net
                income used in computing basic net income per share
            
            $
            43,955,435Impact
                of assumed assumptions:Accretion
                of convertible debenture charged to interest expense
            
            
            993,202Impact
                of equity classified as liability:Gain
                on debt derivative and warrant liability marked to fair
                value
            
            
            (47,303,027
            )Net
                loss in computing diluted net loss per share:
            
            $
            (2,354,390
            )





The
      weighted average shares outstanding used in the basic net income per share
      computations for the nine months ended November 30, 2007 was 4,550,134,490.
      In
      determining the number of shares used in computing diluted loss per share,
      the
      Company did not add approximately potentially dilutive securities for the nine
      months ended November 30, 2007 because the effect would be anti-dilutive. The
      potentially dilutive securities are mostly attributable to the warrants, options
      and convertible debentures outstanding. As a result, the diluted loss per share
      for the nine months ended November 30, 2007 was $0.00.





As
      of November 30, 2007, the Company does not have enough common shares available
      to convert all the eligible debt to shares if the debt holders elected to
      convert all of their notes and to issue the required number of shares of common
      stock to be issued per the statement of stockholders' deficiency.





Non
      monetary/barter transactions





The
      Company consummated contracts whereby the Company, for product delivered, has
      available for usage: media, goods and services with certain restrictions and
      limitations collectively referred to as “trade credits”. Since collectiblity
      cannot be reasonably assured, the Company records these transactions as benefit
      is received.





Stock
      based compensation





On
      December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
      Statement No. 123R (revised 2004), Share-Based Payment" which is a revision
      of
      FASB Statement No. 123, "Accounting for Stock-Based Compensation". Statement
      123R supersedes APB opinion No. 25, "Accounting for Stock Issued to Employees",
      and amends FASB Statement No. 95, "Statement of Cash Flows". Generally, the
      approach in Statement 123R is similar to the approach described in Statement
      123. However, Statement 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the income
      statement based on their fair values. Pro-forma disclosure is no longer an
      alternative. This statement does not change the accounting guidance for share
      based payment transactions with parties other than employees provided in
      Statement of Financial Accounting Standards No. 123(R). This statement does
      not
      address the accounting for employee share ownership plans, which are subject
      to
      AICPA Statement of Position 93-6, “Employers’ Accounting for Employee Stock
      Ownership Plans.” On April 14, 2005, the SEC amended the effective date of the
      provisions of this statement. The effect of this amendment by the SEC is that
      the Company had to comply with Statement 123R and use the Fair Value based
      method of accounting no later than the first quarter of 2006. The Company
      implemented SFAS No. 123(R) on March 1, 2006 using the modified prospective
      method.





10


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**


**NOTE
      A -NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
      (continued)**





Stock
      based compensation (continued)





The
      Company made no employee stock-based compensation grants before February 28,
      2007 and during the nine months ended November 30, 2007 and therefore has no
      unrecognized stock compensation related liabilities or expense unvested or
      vested prior to 2007 and for the nine months ended November 30, 2007.





Accounting
      for investments





As
      more
      fully described in Note J, the Company owns 37.5% of Andrew Sports Venture,
      a
      Joint Venture operation. The Company accounts for their investment using the
      Equity method of accounting. For the nine months ended November 30, 2007 and
      2006, the Joint Venture did not recognize any income or loss requiring the
      Company to record its pro-rata portion.





Recent
      accounting pronouncements





In
      December 2006, the FASB issued FSP EITF 00-19-2, “ *Accounting
      for Registration Payment Arrangements* ”
      (“ FSP
      00-19 -2”)
      which addresses accounting for registration payment arrangements. FSP
      00-19 -2
      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
      00-19 -2
      further clarifies that a financial instrument subject to a registration payment
      arrangement should be accounted for in accordance with other applicable
      generally accepted accounting principles without regard to the contingent
      obligation to transfer consideration pursuant to the registration payment
      arrangement. For registration payment arrangements and financial instruments
      subject to those arrangements that were entered into prior to the issuance
      of
      EITF 00-19-2, this guidance shall be effective for financial statements issued
      for fiscal years beginning after December 15, 2006 and interim periods within
      those fiscal years. The
      Company does not expect adoption of this standard will have a material impact
      on
      its financial position, results of operations or cash flows





In
      February 2007, the FASB issued SFAS No. 159, “ *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* ”
(“SFAS
      No. 159”). SFAS
      No.
      159 permits entities to choose to measure many financial instruments, and
      certain other items, at fair value. SFAS
      No.
      159 applies to reporting periods beginning after November 15, 2007. The adoption
      of SFAS No. 159 is not expected to have a material impact on the Company’s
      financial position, results of operations or cash flows.





In
      December 2007, the FASB issued SFAS No. 141(R), *"Business
      Combinations"* ("SFAS No. 141(R)"), which establishes principles and requirements for how
      an acquirer recognizes and measures in its financial statements the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest in
      an
      acquiree, including the recognition and measurement of goodwill acquired in
      a
      business combination. SFAS No. 141R is effective as of the beginning of the
      first fiscal year beginning on or after December 15, 2008. Earlier adoption
      is prohibited and the Company is currently evaluating the effect, if any, that
      the adoption will have on its financial position, results of operations or
      cash
      flows.





In
      December 2007, the FASB issued SFAS No. 160, *"Noncontrolling
      Interest in Consolidated Financial Statements, an amendment of ARB
      No. 51"* ("SFAS No. 160"), which will change the accounting and reporting for
      minority interests, which will be recharacterized as noncontrolling interests
      and classified as a component of equity within the consolidated balance sheets.
      SFAS No. 160 is effective as of the beginning of the first fiscal year beginning
      on or after December 15, 2008. Earlier adoption is prohibited and the
      Company is currently evaluating the effect, if any, that the adoption will
      have
      on its financial position, results of operations or cash flows.





Reclassifications





Certain
      items in the prior period have been reclassified to conform to classifications
      used in the current period.





11


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**


**NOTE
      B - FILM LIBRARY**





The
      Company acquired a historical film library containing thousands of hours of
      sports events including boxing, baseball, football and auto racing along with
      others. The asset acquisition agreement made on December 15, 2005 gives the
      Company title to the entire library. The Film library consists of over 5,000
      hours of sporting events from the years 1948 - 1972; there are also additional
      sports films in the library after 1972 in addition there is an old time cartoon
      library as well as classic movies. The film library was acquired for a purchase
      price of $250,000 with $50,000 paid in cash and the remainder due five years
      from the date of the note along with interest accrued at 6% per annum. As part
      of acquisition of the film library, the Company was assigned a licensing
      agreement whereby royalties (minimum of $50,000 per year) will be received
      over
      the next ten years. Since collectiblity cannot be reasonably assured, the
      Company has not recorded revenue from the licensing agreement.





Additionally,
      the Company has been notified by certain licensees that the rights may not
      have
      been properly acquired from the seller. The matter is currently under review
      by
      management.





During
      the three months ended August 31, 2006, the Company management preformed an
      evaluation of its intangible assets including the film library for purposes
      of
      determining the implied fair value of the assets at August 31, 2006. The test
      indicated that the recorded remaining book value of its film library exceeded
      its fair value, as determined by discounted cash flows. As a result, upon
      completion of the assessment, management recorded a non-cash impairment charge
      of $233,200, net of tax, or $0.00 per share during the three months ended August
      31, 2006 to reduce the carrying value of the patents to $ 0. Considerable
      management judgment is necessary to estimate the fair value. Accordingly, actual
      results could vary significantly from management’s estimates.





**NOTE
      C - PROPERTY AND EQUIPMENT**





Property
      and equipment at November 30, 2007 and February 28, 2007 are as
      follows:





November
                30,
              2007
            
            February
                28,
              2007Computer
                and office equipment
            
            $
            102,779
            
            $
            134,825Less:
                accumulated depreciation
            
            
            (96,756
            )
            
            (127,435
            )Net
                property and equipment
            
            $
            6,023
            
            $
            7,390




In
      the
      three months ended November 30, 2007, the Company disposed a fully depreciated
      vehicle at $0.0 gain/loss.





The
      total
      depreciation expense for the nine months ended November 30, 2007 and 2006
      amounted to $1,367 and $14,489, respectively; the total depreciation expense
      for
      the three months ended November 30, 2007 and 2006 amounted to $438 and $664,
      respectively.





**NOTE
      D - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**





Accounts
      payable and accrued liabilities at November 30, 2007 and February 28, 2007
      are
      as follows:





November
                30,
              2007
            
            February
                28,
              2007Accounts
                payable
            
            $
            1,430,241
            
            $
            1,452,267Accrued
                interest, of which $42,908 is for related party
            
            
            1,068,090
            
            
            618,010Accrued
                payroll and payroll taxes
            
            
            297,467
            
            
            255,364Accrued
                royalties
            
            
            311,004
            
            
            314,747Other
                accrued expenses
            
            
            333,798
            
            
            297,868Total
            
            $
            3,440,600
            
            $
            2,938,256





12


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES**





Notes
      payable at November 30, 2007 and February 28, 2007 are as follows:





November
                30,
              2007
            
            February
                28,
              200710%
                convertible debenture dated May 2000, face value of $400,000, due
                one year
                from the date of the note with interest payable quarterly during
                the life
                of the note. The note is convertible into the Company’s common stock at
                the lower of a) $4.00 (See Note H) or b) 25% of market value. The
                Company
                has granted the note holder a security interest in substantially
                all of
                the Company’s assets and intellectual property. Additionally, the note
                holder has certain registration rights. The Company is in violation
                of the
                loan covenants (see below)
            
            $
            95,640
            
            $
            145,40612%
                convertible debenture dated May 28, 2002, face value of $75,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            75,000
            
            
            75,00015%
                convertible debenture dated November 26, 2002, face value of $250,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            250,000
            
            
            250,00015%
                convertible debenture dated May 15, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture dated June 20, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture dated July 23, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,000




13


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





November
                30,
              2007
            
            February
                28,
              200715%
                convertible debenture dated November 14, 2003, face value of $50,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            50,000
            
            $
            50,00015%
                convertible debenture dated January 13, 2004, face value of $50,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            50,000
            
            
            50,00015%
                convertible debenture dated February 13, 2004, face value of $25,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture March 16, 2004, face value of $100,000, due
                one year
                from date of the note with interest payable per annum. The note is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            100,000
            
            
            100,00015%
                convertible debenture dated May 28, 2004, face value of $550,000,
                due two
                years from date of the note with interest payable per annum. The
                note is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            550,000
            
            
            550,00015%
                convertible debenture dated September 30, 2004, face value of $250,000,
                due two years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.26 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            250,000
            
            
            250,000




14


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





November
                30,
              2007
            
            February
                28,
              200710%
                convertible debenture dated May 18, 2005, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            338,265
            
            $
            237,80810%
                convertible debenture dated July 7, 2005, face value of $850,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            680,000
            
            
            466,5302%
                convertible debenture dated September 29, 2005, face value of $302,597,
                due three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            218,865
            
            
            142,87010%
                convertible debenture dated January 20, 2006, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 20% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            248,037
            
            
            147,5808%
                convertible debenture dated March 23, 2006, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $3.00 (See Note H) or b) 20% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            225,388
            
            
            124,9328%
                convertible debenture dated May 31, 2006, face value of $500,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $3.00 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            250,228
            
            
            124,658




15


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





November
                30,
              2007
            
            February
                28,
              20072%
                convertible debenture dated December 31, 2006, face value of $270,430,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.0016 or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            82,487
            
            $
            14,5718%
                convertible debenture dated January 23, 2007, face value of $250,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            71,004
            
            
            8,2198%
                convertible debenture dated February 22, 2007, face value of $50,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            12,831
            
            
            2748%
                convertible debenture dated March 14, 2007, face value of $50,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            11,918
            
            
            -0-8%
                convertible debenture dated June 4, 2007, face value of $700,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            114,429
            
            
            -0-8%
                convertible debenture dated November 4, 2007, face value of $375,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at 20% of the average
                of the three lowest intraday trading prices for the common stock
                on a
                principal market for twenty days before, but not including, conversion
                date. The Company granted the note holder a security interest in
                substantially all of the Company’s assets and intellectual property.
                Additionally, the note holder has certain registration rights. The
                Company
                is in violation of the loan covenants (see below)
            
            
            7,192
            
            
            -0-3,781,284
            
            
            2,837,848Less
                current portion
            
            
            3,781,284
            
            
            2,837,848Long
                term portion
            
            $
            -0-
            
            $
            -0-





16


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**




**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





The
      Company entered into a Securities Purchase Agreement with accredited investors
      in May 2000 for the issuance of an aggregate of $400,000 of convertible notes
      (“Convertible Notes”) and attached to the Convertible Notes was warrants to
      purchase 40,000 shares (See Note H) of the Company’s common stock at an exercise
      price of $20.00 (See Note H) for five years. The Convertible Notes accrue
      interest at 10% per annum, payable quarterly, and were due one year from the
      date of the note. The note holder has the option to convert any unpaid note
      principal to the Company’s common stock at a rate of the lower of a) $4.00 (See
      Note H) or b) 25% of the current market value. The Company issued to the
      investors Convertible Notes of $400,000 in exchange for net proceeds of
      $400,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $95,640 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 28, 2002 for the issuance of an aggregate of $75,000 of convertible
      notes
      (“Convertible Notes”) and attached to the Convertible Notes were warrants to
      purchase 1,500 shares (See Note H) of the Company’s common stock at an exercise
      price $0.50 (See Note H) for five years. The Convertible Notes accrue interest
      at 12% per annum and were due one year from the date of the note. The note
      holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $75,000 in
      exchange for net proceeds of $75,000. As of November 30, 2007, the remaining
      balance of these debentures of $75,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on November 26, 2002 for the issuance of an aggregate of $250,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.45 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $250,000 in exchange for net proceeds of $250,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $250,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 15, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes
      (“Convertible Notes”) and attached to the Convertible Notes were warrants to
      purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.40 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of November 30, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.




The
      Company entered into a Securities Purchase Agreement with accredited investors
      on June 20, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.20 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of November 30, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on July 23, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares of the Company’s common stock at an exercise price of
      $0.10 (See Note H) for five years. The Convertible Notes accrue interest at
      15%
      per annum and were due one year from the date of the note. The note holder
      has
      the option to convert any unpaid note principal to the Company’s common stock at
      a rate of the lower of a) $1.00 (See Note H) or b) 25% of the average of the
      three lowest intraday trading prices for the common stock on a principal market
      for the 20 trading days before, but not including, conversion date. The Company
      issued to the investors Convertible Notes of $25,000 in exchange for net
      proceeds of $25,000. As of November 30, 2007, the remaining balance of these
      debentures of $25,000 is still unpaid and in default.




17


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
        30, 2007**
 **(Unaudited)**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on November 14, 2003 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.10 for five years. The Convertible Notes accrue interest
      at
      15% per annum and were due one year from the date of the note. The note holder
      has the option to convert any unpaid note principal to the Company’s common
      stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the average
      of the three lowest intraday trading prices for the common stock on a principal
      market for the 20 trading days before, but not including, conversion date.
      The
      Company issued to the investors Convertible Notes of $50,000 in exchange for
      net
      proceeds of $50,000. As of November 30, 2007, the remaining balance of these
      debentures of $50,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 13, 2004 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.10 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $50,000 in exchange for net proceeds of $50,000. As of November 30, 2007, the
      remaining balance of these debentures of $50,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on February 13, 2004 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.15 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of November 30, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on March 16, 2004 for the issuance of an aggregate of $100,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 2,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.15 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $100,000 in exchange for net proceeds of $100,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $100,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 28, 2004 for the issuance of an aggregate of $550,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 16,500 shares (See Note H) of the Company’s common stock at an
      exercise price of $3.00 for seven years. The Convertible Notes accrue interest
      at 15% per annum and were due two years from the date of the note. The note
      holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $550,000 in
      exchange for net proceeds of $550,000. As of November 30, 2007, the remaining
      balance of these debentures of $550,000 is still unpaid and in
      default.




18


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**




**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on September 30, 2004 for the issuance of an aggregate of $250,000 of
      convertible notes (“Convertible Notes”) and attached to the Convertible Notes
      were warrants to purchase 12,500 shares (See Note H) of the Company’s common
      stock at an exercise price of $3.00 for seven years. The Convertible Notes
      accrue interest at 15% per annum and were due two years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $0.26 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $250,000 in exchange for net proceeds of $250,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $250,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 18, 2005 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 473,684 shares (See Note H) of the Company’s common stock at an
      exercise price of $3.00 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum (current default rate of 15%) and were due
      three years from the date of the note. The note holder has the option to convert
      any unpaid note principal to the Company’s common stock at a rate of the lower
      of a) $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
      trading prices for the common stock on a principal market for the 20 trading
      days before, but not including, conversion date. The Company issued to the
      investors Convertible Notes of $400,000 in exchange for net proceeds of
      $400,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $400,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on July 7, 2005 for the issuance of an aggregate of $850,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 17,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $3.00 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum (current default rate of 15%) and were due
      three years from the date of the note. The note holder has the option to convert
      any unpaid note principal to the Company’s common stock at a rate of the lower
      of a) $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
      trading prices for the common stock on a principal market for the 20 trading
      days before, but not including, conversion date. The Company issued to the
      investors Convertible Notes of $850,000 in exchange for net proceeds of
      $850,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $850,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on September 29, 2005 for the issuance of an aggregate of $302,597 of
      convertible notes (“Convertible Notes”) in exchange for accrued interest due
      said accredited investors. The Convertible Notes accrue interest at 2% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.16 (See Note H) or b) 25% of the average of the
      three
      lowest intraday trading prices for the common stock on a principal market for
      the 20 trading days before, but not including, conversion date. The Company
      issued to the investors Convertible Notes of $302,597 in exchange for net
      proceeds of $302,597. As of November 30, 2007, the remaining balance of these
      debentures of $302,597 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 20, 2006 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 4,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $3.00 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum and were due three years from the date of
      the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $0.16 (See Note H) or b) 20%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $400,000 in exchange for net proceeds of $400,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $400,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on March 23, 2006 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.50 (See Note H) for seven years. The Convertible Notes
      accrue interest at 8% per annum and were due three years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $3.00 (See Note H) or b) 20%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $400,000 in exchange for net proceeds of $400,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $400,000 is still unpaid and in
      default.




19





**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**




**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 31, 2006 for the issuance of an aggregate of $500,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.50 (See Note H) for seven years. The Convertible Notes
      accrue interest at 8% per annum and were due three years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $3.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $500,000 in exchange for net proceeds of $500,000. As of November 30, 2007,
      the
      remaining balance of these debentures of $500,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on December 31, 2006 for the issuance of an aggregate of $270,430 of convertible
      notes (“Convertible Notes”). Convertible Notes accrue interest at 2% per annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.0016 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $270,430 in exchange for accrued interest
      owed of $270,430. As of November 30, 2007, the remaining balance of these
      debentures of $270,430 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 23, 2007 for the issuance of an aggregate of $250,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 10,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for seven years. The Convertible Notes accrue interest at 2% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $250,000 in exchange for net proceeds of
      $250,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $250,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on February 22, 2007 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for seven years. The Convertible Notes accrue interest at 8% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $50,000 in exchange for net proceeds of
      $50,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $50,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on March 14, 2007 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for seven years. The Convertible Notes accrue interest at 8% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $50,000 in exchange for net proceeds of
      $50,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $50,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on June 4, 2007 for the issuance of an aggregate of $700,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for five years. The Convertible Notes accrue interest at 8% per annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $700,000 in exchange for net proceeds of
      $645,000. As of November 30, 2007, the remaining balance of these debentures
      of
      $700,000 is still unpaid and in default.





20


**COLLECTIBLE
      CONCEPTS GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**NOVEMBER
      30, 2007**


**(Unaudited)**




**NOTE
      E - CONVERTIBLE SECURED DEBENTURES (continued)**





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on November 4, 2007 for the issuance of an aggregate of $375,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 15,000,000 shares of the Company’s common stock at an exercise price
      of $0.001 for seven years. The Convertible Notes accrue interest at 8% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of 20% of the average of the three lowest intraday trading prices for
      the
      common stock on a principal market for the 20 trading days before, but not
      including, conversion date. The Company issued to the investors Convertible
      Notes of $375,000 in exchange for net proceeds of $375,000. As of November
      30,
      2007, the remaining balance of these debentures of $375,000 is still unpaid
      and
      in default.





Due
      to
      the indeterminate number of shares which might be issued under the embedded
      convertible host debt conversion feature of these debentures, the Company is
      required to record a liability relating to both the detachable warrants and
      embedded convertible feature of the notes payable (included in the liabilities
      as a “derivative liability”).





The
      accompanying unaudited condensed consolidated financial statements comply with
      current requirements relating to warrants and embedded derivatives as described
      in FAS 133 as follows:





l
            The
                Company treats the full fair market value of the derivative and warrant
                liability on the convertible secured debentures as a discount on
                the
                debentures (limited to their face value). The excess, if any, is
                recorded
                as an increase in the derivative liability and warrant liability
                with a
                corresponding increase in Loss on adjustment of the derivative and
                warrant
                liability to fair value.





l
            Subsequent
                to the initial recording, the change in the fair value of the detachable
                warrants, determined under the Black-Scholes option pricing formula
                and
                the change in the fair value of the embedded derivative (utilizing
                the
                Black-Scholes option pricing formula) in the conversion feature of
                the
                convertible debentures are recorded as adjustments to the liabilities
                as
                of each balance sheet date with a corresponding change in Loss on
                adjustment of the derivative and warrant liability to fair
                value.





l
            The
                expense relating to the change in the fair value of the Company’s stock
                reflected in the change in the fair value of the warrants and derivatives
                (noted above) is included in other income in the accompanying consolidated
                statements of operations.





The
      following table summarizes the various components of the convertible debentures
      as of November 30, 2007 and February 28, 2007:





November
                30, 2007
            
            February
                28, 2007Convertible
                debentures described above (net of conversions)
            
            $
            6,068,667
            
            $
            4,993,433Less:
                discount
            
            
            (2,287,383
            )
            
            (2,155,585
            )Convertible
                debentures as reported
            
            $
            3,781,284
            
            $
            2,837,848




**NOTE
      F - CONVERTIBLE SUBORDINATED DEBENTURES**





Convertible
      subordinated debentures as of November 30, 2007 and February 28,
      2007:





November
                30, 2007
            
            February
                28, 200712%
                convertible debenture, unsecured with a maturity at August 2001.
                The
                debenture is convertible into the Company’s common stock at $7.50 (See
                Note H) per share. The note is currently in default.
            
            
            $
                25,000
            
            
            $
                25,00012%
                convertible debenture, unsecured with an original one year maturity
                at May
                2004. The debenture is convertible into the Company’s common stock at
                $4.00 (See Note H) or 50% of the average of the lowest three intraday
                trading prices during the twenty trading days immediately preceding
                conversion. The note is currently in default
            
            
            8,300
            
            
            9,500Total
            
            
            33,300
            
            
            34,500Less:
                current portion
            
            
            (33,300
            )
            
            (34,500
            )Long
                term debt
            
            $
            -
            
            $
            -




21
 
  ****COLLECTIBLE
        CONCEPTS GROUP, INC. AND
        SUBSIDIARIES****


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
          30, 2007**
 **(Unaudited)**


**NOTE
      G - LOAN AGREEMENTS**





In
      March
      2006, the Company entered into an agreement with an individual investor whereby
      the investor agreed to provide up to $750,000 with an interest rate of 10%
      per
      annum, payable annually, maturing one year from each draw. The Company, at
      its
      option, can repay the debt in cash or may elect to convert any of the loans
      into
      shares of its common stock at 50% of the closing bid of the previous day. As
      of
      November 30, 2007, the Company has borrowed $285,333, net, from this facility,
      which is included in notes and loans payable.





The
      Company has various unsecured notes and loans payable to certain individuals
      and
      investors with interest ranging from 8% to 12% per annum with various maturity
      dates up through January 2007, the Company currently owes $276,134 and is in
      default with the balances remaining unpaid as of November 30, 2007.




**NOTE
      H - CAPITAL STOCK**





Series
      A - Convertible Preferred Stock





On
      September 4, 2006, the Company filed a Certificate of Designation creating
      a
      $0.001 par value Series A Convertible Preferred Stock for 1,000,000 shares.





The
      holders of record of the Series A Convertible Preferred stock shall have the
      right, at their option, at any time subsequent to the date on which the Closing
      Bid Price of the Company’s common stock is at least $0.05 (See Note H), to
      convert any or all of such holder’s shares of Series A Convertible Preferred
      stock into such number of fully paid and non-assessable shares of the Company’s
      common stock equal to the number of shares of Series A - Convertible Preferred
      stock multiplied by 20 (See below).





The
      holders of the Series shall have the right to vote, separately, in person or
      by
      proxy, at a special or annual meeting of the shareholders, on all matters voted
      on by the holders of the Common Stock voting together as a single class with
      other shares entitled to vote. With respect to any such vote, each share of
      Series A Preferred Stock shall entitle the holder at cast 60 (See below) votes
      per share of Series A Preferred stock.





The
      Series A Preferred Stock shall, with respect to distributions of assets and
      rights upon the occurrence of a Liquidation rank (i) senior to all classes
      of
      common stock of the Company and (ii) senior to each other class of Capital
      Stock
      of the Company hereafter created with does not expressly rank pari passu or
      senior to the Series A Preferred Stock.




The
      Series A Preferred Stock shall not be redeemed or subject to redemption, whether
      by option of the Company or any holder thereof, or otherwise.





The
      holders of record of the Series A Convertible Preferred shall be entitled to
      share in any cash dividends or distributions that my be declared and paid on
      the
      Common Stock on a pro rata basis as if the holders had been converted into
      shares of Common Stock.





Common
      Stock





On
      December 14, 2006, the Company affected a one-for-one hundred reverse stock
      split of it authorized and outstanding shares of common stock, $0.001 par value.
      Total authorized shares were reduced from 15,000,000,000 to 10,000,000,000
      shares. All references in the financial statements and notes to financial
      statements, number of shares, and share amounts have been retroactively restated
      to reflect the reverse split. The Company has restated 6,996,950 shares of
      common stock issued and outstanding as of February 28, 2006.





In
      October 2001, the Company entered into an agreement with a third party whereby
      the third party has an anti-dilution ownership of 1.603% of the Company. For
      the
      six months ended August 31, 2007, the Company issued 59,067,884 under this
      provision to the third party. An additional 1,562,124 has not been issued.
      These
      shares are shown as common stock to be issued with a corresponding decrease
      to
      additional paid in capital as of August 31, 2007. On February 28, 2005,
      ownership of the 1.603% anti-dilution agreement was sold to another company.





In
      March
      2006, the Company amended its article of incorporation with an effective date
      of
      March 24, 2006. This amendment was to increase the number of authorized $0.001
      par value common shares from 700,000,000 to 15,000,000,000. This amendment
      also
      created and authorized a new class of preferred $0.001 par value stock with
      10,000,000 shares.





22


****COLLECTIBLE
        CONCEPTS GROUP, INC. AND
        SUBSIDIARIES****
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
            30, 2007**
 **(Unaudited)**


**NOTE
      H - CAPITAL STOCK**  **(continued)**





Common
      Stock (continued)




During
      the nine months ended November 30, 2007, the Company canceled 2,998,675 shares
      of Company common stock having a fair value of $12,000. The cancellation was
      based upon an incorrect issuance of shares.





During
      the nine months ended November 30, 2007, the Company converted $49,766 of
      convertible secured debentures into 1,628,261,000 shares of common stock having
      a fair value of $368,949. The conversion of debt to stock was based upon
      conversion prices set forth in the Securities Purchase Agreement (see Note
      E).
      The loss of $319,183 on these conversions was included in the Loss on adjustment
      of derivative and warrant liability to fair value.





During
      nine months ended November 30, 2007, the Company converted $135,417 of notes
      and
      loans payable into 1,999,999,997 shares of common stock. The conversions of
      debt
      to stock were based upon negotiated conversion prices with debtors. The Company
      recognized a financing cost of $406,250 on these conversions.





**NOTE
      I - STOCK OPTIONS**





In
      December 2003, the Company issued 200,000 options to a consultant having a
      ten-year term. The exercise price is $0.10 for the first 50,000 options, $0.20
      for the next 50,000 options, $0.30 for the next 50,000 options and $0.40 for
      the
      last 50,000 options. The only restriction is that no more than 50,000 options
      can be exercised in any one year. The total expense associated with issuing
      the
      options of $40,000 is being recognized over the earliest periods that the
      options may be exercised. The expense associated with these options was $-0-
      and
      $15,000 for the nine months ended November 30, 2007 and 2006,
      respectively.





In
      September 2004, the Company issued 20,000 options to an advisor having a
      five-year term. The exercise price is $0.15. The options are immediately
      exercisable. The fair value of the options of $3,000 was expensed during the
      year ended February 28, 2005. This agreement including the options was cancelled
      during fiscal year ended February 28, 2007.





In
      May
      2005, the Company issued 120,000 options to an advisor having a three-year
      term.
      The exercise price is $0.30. The options are immediately exercisable. The fair
      value of the options of $7,200 is being amortized over the life of the contract.
      The expense associated with these options was $600 for the three months ended
      May 31, 2006. The advisor is also to receive 5% of sales on certain licensing
      agreements. This agreement including the options was cancelled during fiscal
      year ended February 28, 2007.





Options
            
            Weighted
                Average Exercise PriceOutstanding
                as of February 29, 2006
            
            
            340,000
            
            $
            .3Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            (140,000)
            
            
            .3ExpiredOutstanding
                as of February 28, 2007
            
            
            200,000
            
            $
            .3Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Expired
            
            
            -
            
            
            -Outstanding
                as of November 30, 2007
            
            
            200,000
            
            $
            .3




23




****COLLECTIBLE
      CONCEPTS GROUP, INC. AND
      SUBSIDIARIES****


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
          30, 2007**
 **(Unaudited)**


**NOTE
      J - COMMITMENTS AND CONTINGENCIES**





Lease





The
      Company is currently leasing its office located at 1600 Lower State Road
      Doylestown, PA. 18901. The Company is current is rent is $2,220 per month and
      the lease currently runs month to month and may be terminated by either party
      with a thirty day notice.





Employment
      agreement





Mr.
      Lipschutz’s initial base salary under the Employment Agreement for calendar year
      1999 was $125,000. During the calendar year 2000 and for each year thereafter,
      Mr. Lipschutz is entitled to an additional salary based on our gross sales
      as
      follows:





Annual
                Revenues
            
            Additional
                Salaries$1,000,000
                to $1,999,999
            
            $25,000$2,000,000
                to $2,999,999
            
            $50,000$3,000,000
                to $4,999,999
            
            $75,000Each
                $1,000,000 increment thereafter
            
            $25,000





Beginning
      with the calendar year 2001, Mr. Lipschutz's base salary increased by 15% of
      the
      sum of his previous year's base salary and additional salary under the table
      above for the immediately preceding year. Mr. Lipschutz agree to forgo his
      15% increase in lieu of a 5% increase for calendar year ended 2005.





Licenses





The
      Company has entered into various licensing agreements (the “Agreements”) for the
      right to manufacture, sell and distribute certain collectibles and novelties
      relating to current and future movie characters, as well as certain accessories
      containing logos and names of professional, minor league and college sports
      teams. The Agreements for the collectibles initially expired at various dates
      through 2004 and generally require the Company to pay a royalty of between
      9%
      and 12% of sales, with certain minimum royalty payments required. The Company
      has decided not to renew royalty agreements as they pertain to college sports
      teams and current and future movie characters. The unpaid minimum royalty fees
      of $311,004 ($303,596) which are owed on non renewed agreements) related to
      these agreements are included in accrued expenses in the accompanying
      consolidated balance sheet. Royalty expense amounted to approximately $35,038
      and $50,990 for the nine months ended November 30, 2007 and 2006,
      respectively.





On
      February 28, 2005, the Company sold a partial interest (2.5%) in its future
      revenues generated under each of its National Football League (“NFL”) license
      (2005), its National Basketball Association (“NBA”) license in 2005-2006 and its
      upcoming license in 2006 with Major League Baseball (“MLB”). The agreement
      included a clause that would extend the partial sale of revenues to an
      additional year of sales under the NFL license, should the Company be
      unsuccessful in obtaining the MLB license. The 2.5% revenues stake was sold
      to a
      third-party company for a total of $80,000. Additionally, the purchaser assumed
      the rights to a 1.603% anti-dilution ownership in the Company from its previous
      owner, as well as all of the issued shares of common stock previously owned
      by
      that party.





In
      May
      2005, the Company agreed to give an advisor a 5% royalty for five years for
      helping the Company secure the following licensing agreements, National Hockey
      League (“NHL”), Minor League Baseball, Arena Football and the National
      Basketball Association (“NBA”).





On
      April
      10, 2006 the Company signed a license agreement with Diann Wall-Wilson for
      a
      broad line of products utilizing her copyrighted designs for the United States
      Marine Corp Bulldog, United States Navy Goat, United States Air Force Falcon
      and
      the Coast Guard Otter. The Company paid $20,000 for this license in $5,000
      monthly increments beginning April 10, 2006 and the final payment paid July
      10,
      2006. This licensing agreement is for 5 years. The agreement calls for a 10%
      royalty of which the $20,000 in initial payments are a pre paid
      royalty.





24




****COLLECTIBLE
      CONCEPTS GROUP, INC. AND
      SUBSIDIARIES****


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
          30, 2007**
 **(Unaudited)**


**NOTE
      J - COMMITMENTS AND CONTINGENCIES (continued)**





Payroll
      Related Taxes





The
      Company is non-compliant with respect to payment of employee and employer
      payroll-related taxes. The estimated liability that is included in accrued
      expenses was approximately $248,232 as of November 2007, which includes
      penalties and interest.





Other
      Contingencies





In
      the
      normal course of business the Company is subject to various regulations,
      proceedings, lawsuits, claims and other matters, including actions under laws
      and regulations related to the environment and health and safety, among others.
      The Company believes the amounts provided in its consolidated financial
      statements, as prescribed by generally accepted accounting principles, are
      adequate in light of the probable and estimable liabilities. However, there
      can
      be no assurances that the actual amounts required to discharge alleged
      liabilities from various lawsuits, claims, legal proceedings and other matters,
      and to comply with applicable laws and regulations, will not exceed the amounts
      reflected in the accompanying consolidated financial statements or will not
      have
      a material adverse effect on its consolidated results of operations, financial
      condition and cash flows. Any costs that may be incurred in excess of those
      amounts provided as of February 28, 2007 cannot currently be
      determined.





In
      fiscal
      2002, a licensing company commenced a lawsuit for various causes of action
      for
      breach of contract, trademark infringement and seeking a permanent injunction
      precluding the Company from using any of the plaintiffs’ intellectual property.
      The Company consented to the entry of a permanent injunction and the parties
      entered into a settlement agreement, which resulted in the dismissal of the
      action in December 2003. However, despite the dismissal of the action, the
      plaintiff reserves the right to pursue monetary claims against the Company
      for
      its breach of various license agreements.





Agreements





In
      February 2003, the Company entered into a joint venture agreement with another
      party whereby the other party was responsible for producing and marketing
      flashlight and battery products. The Company was responsible for obtaining
      the
      necessary licenses, design of the images and the marketing of the products.
      Under the terms of the agreement, 50% of the sales were to be retained by the
      Company and the other 50% were to be remitted to the other entity. Nothing
      had
      ever transpired under the joint venture. On November 8, 2003, the Company
      replaced its joint venture agreement and entered into a new services agreement.
      The Company will assist in obtaining licenses and managing other aspects of
      the
      business of selling licensed flashlight and battery products. Any licenses
      obtained in this manner will be assigned. This agreement provides a 1% royalty
      to the Company on net sales of any flashlight and/or battery products containing
      images available either from licenses the Company has or assisted in obtaining.
      Additionally, the Company may sell these licensed products and will receive
      a
      sales commission based on a formula of several variables that is expected to
      produce an average commission of 15% of the sale price. As of the date of this
      report, the Company has not sold any of the licensed products and has earned
      no
      royalties as provided by this agreement.





In
      September 2004, the Company signed a licensing agreement with the National
      Football League, which expired on March 31, 2005. The agreement was renewed
      for
      the period April 2005 through March 2006. The agreement was not renewed again
      by
      the Company.





In
      March
      2005, the Company signed a licensing agreement with the NBA, which expires
      on
      September 30, 2006. The agreement includes a 12% royalty paid on sales, with
      a
      minimum royalty for the period of $25,000. On September 9, 2005, the Company
      signed an amendment to its license with the NBA to add additional products.
      This
      increase in products changed the minimum royalty agreement from $25,000 to
      $35,000, which is included in prepaid royalties and is being amortized over
      the
      term of the agreement or until the minimum is met, whichever is sooner. In
      addition, the amendment also changed the royalty percentage from 12% to
      16%.





On
      May
      12, 2005, the Company signed a licensing agreement with the Arena Football
      League, which expires on June 30, 2007. The agreement includes a 12% royalty
      paid on sales with no minimum royalty guarantees. The Company paid a “First
      Advance” of $10,000 for the rights to the license, which is included in prepaid
      royalties and is being amortized over the term of the agreement or until the
      royalties exceed the First Advance, whichever is sooner.





25




****COLLECTIBLE
      CONCEPTS GROUP, INC. AND
      SUBSIDIARIES****


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
          30, 2007**
 **(Unaudited)**


**NOTE
      J - COMMITMENTS AND CONTINGENCIES (continued)**





Agreements
      (continued)





On
      September 12, 2005, the Company signed a licensing agreement with the National
      Hockey League, which expires on June 30, 2007. The agreement includes a 10%
      royalty paid on sales with a minimum royalty for the period of $50,000,
      subsequently amended to $22,500, which is included in prepaid royalties and
      is
      being amortized over the term of the agreement or until the minimum is met,
      whichever is sooner.





In
      March
      2006, the Company signed a one year renewable Purchase and Sale Agreement with
      Brax-3D, LLC. This agreement gives the Company an exclusive right to sell
      products produced by Brax-3D, LLC as long as the Company meets minimum
      purchasing requirements of $1,284,750 in products. As part of this agreement,
      Collectible is required to provide Brax-3D, LLC a $200,000 standby letter of
      credit. As yet, the letter of credit has not been provided.





In
      March
      2006, the Company consummated a contract whereby the Company, for product
      delivered, has available for usage: media, goods and services with certain
      restrictions and limitations collectively referred to as “trade credits”. The
      Company’s ability to access these trade credits has not yet been
      determined.





On
      April
      30, 2006, the Company entered into a Joint Venture Agreement with Gridworks,
      Inc. of Elgin, Iowa. Under the agreement, a new corporation called American
      Sports Ventures, Inc. was formed of which the Company, Gridworks and an
      individual investor are shareholders with ownership percentages of 37.5%, 37.5%
      and 25%, respectively. Gridworks is a licensed manufacturer of wood sports
      collectibles. Under the terms of the agreement, the Company and the individual
      investor will provide the capital necessary to fund the Gridworks operations
      as
      well as all marketing and other operating expenses associated with American
      Sports Ventures, Inc. Gridworks will be providing its wood collectibles to
      American Sports Ventures at cost and the Company will be executing various
      marketing initiatives to sell the products. Net profits, if any, from operations
      will be distributed to the shareholders in accordance with their respective
      ownership percentage. The Company is obligated to meet certain minimum purchase
      requirements. American Sports Ventures, Inc. The Joint Venture has recognized
      no
      income; therefore the Company will recognize no income from the Joint
      Venture.





On
      January 3, 2007, the Company entered into an agreement to purchase a Wi-Fi
      TV
      station form Wi-Fi TV, Inc. The cost of this station is $12,500 to be financed
      by Wi-Fi TV, Inc. The $12,500 is due in 4 quarterly payments of $3,125 each,
      with the first payment due by March 31, 2007. The Wi-Fi TV provides
      communication mediums which allow access to a larger market.





Concentrations





For
      the
      nine months November 30, 2007 and 2006, 50% and 24%, of the Company’s revenues
      were derived from its five largest customers, respectively.





For
      the
      nine months ended November 30, 2007 and 2006, 89% and 90%, of the Company’s
      purchases were made from its three largest vendors, of which 39% and 30% of
      the
      total 2007 and 2006 purchases respectively, were from American Sports Venture,
      Inc., a related party.





The
      Company obtains a significant portion of its new borrowings from one investment
      group. During nine months ended November 30, 2007, the Company borrowed
      $1,125,000 from this investment group. As of November 30, 2007, a total of
      $6,068,667 was owed to this investment group (See Note E).





Debt
      Conversions





As
      of
      November 30, 2007, the Company did not have a sufficient number of authorized
      shares of common stock available if all of the convertible secured and
      convertible subordinated debenture holders decided to convert their debt into
      the Company’s common stock. The Company has reduced the number of authorized
      shares from 15,000,000,000 to 10,000,000,000 (See Note H) to partly rectify
      the
      situation but a possible shortfall may exist. The provisions of the convertible
      secured debentures call for a 24% penalty on the amount of debt a note holder
      attempts to convert and if there are not enough authorized shares available
      to
      do so (See Note H) with regard to the convertible secured debentures). However
      the convertible subordinated debenture agreements do not contain a provision
      to
      address the inability of the debt holders to convert and the possible financial
      effects of this are unknown (See Notes I).





26




****COLLECTIBLE
      CONCEPTS GROUP, INC. AND
      SUBSIDIARIES****


**NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **NOVEMBER
          30, 2007**
 **(Unaudited)**


**NOTE
      J - COMMITMENTS AND CONTINGENCIES (continued)**





Debt
      Conversions (continued)





In
      the
      nine months ended November 30, 2007, the Company recorded a discount on
      convertible secured debentures with a corresponding increase in the derivative
      and warrant liabilities.





**NOTE
      K - RELATED PARTY TRANSACTIONS**





The
      Company has an employment agreement with its president, who has elected in
      the
      past to defer a portion of his salary in support of the cash needs of the
      Company.





The
      Company has loans payable of $20,455, which are included as loans payable -
      related party in the accompanying consolidated balance sheet, due to a related
      party as of November 30, 2007. During the nine months ended November 30, 2007,
      the Company recorded interest expense of $1,683 relating to loans from its
      president and other related parties and $42,908 in accrued interest was payable
      relating to these loans as of November 30, 2007, which is included in accrued
      expenses in the accompanying consolidated balance sheet.





**NOTE
      L - NON-CASH INVESTING AND FINANCING ACTIVITIES IN THE STATEMENTS OF CASH
      FLOWS**





During
      the nine months ended November 30, 2007, the Company converted $49,766 of
      convertible secured debentures into 1,628,261,000 shares of common stock and
      a
      $319,183 loss on adjustment of derivative and warrant liability to fair value
      was recognized accordingly.





During
      the nine months ended November 30, 2007, the Company converted $135,417 of
      notes
      and loans payable into 1,999,999,997 shares of common stock and a $406,250
      financing cost was recognized accordingly.





**NOTE
      M - GOING CONCERN**





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared on a going concern basis, which contemplates the realization of assets
      and the settlement of liabilities and commitments in the normal course of
      business. Since inception, the Company has not generated sufficient revenues
      to
      meet its operating expenses and has incurred significant operating losses and
      net losses. As of and for the nine months ended November 30, 2007, the Company
      had a working capital deficiency of $7,450,762, a stockholders’ deficiency of
      $31,052,433, a net loss from operations of $1,168,227 and net cash used in
      operations of $1,141,995. The Company has minimal cash available for operations
      and is in default with respect to repayment provisions of certain convertible
      secured and convertible subordinated debentures, and notes and loans payables.
      In addition, the Company was not able to complete an effective registration
      statement within 150 days as required in connection with the sale of certain
      convertible secured debentures to a group of investors and, as a result, the
      Company is in default of the debenture agreement. These matters raise
      substantial doubt about the Company’s ability to continue as a going concern.
      The consolidated financial statements do not include any adjustments relating
      to
      the recoverability and classification of recorded assets, or the amounts and
      classification of liabilities that might be necessary in the event the Company
      cannot continue in existence.





In
      order
      to generate additional revenues and the working capital needed to continue
      and
      expand operations, the Company’s management has committed to a plan for reducing
      expenses, increasing retail distribution channels for its products and raising
      additional capital. There can be no assurances that the Company will be able
      to
      obtain the necessary funding to finance their operations or grow revenue in
      sufficient amounts to fund their operations.





27


*The
        following discussion should be read in conjunction with the unaudited condensed
        consolidated financial statements and notes thereto set forth in Item 1of
        this
        Quarterly Report. In addition to historical information, this discussion
        and
        analysis contains forward-looking statements that involve risks, uncertainties
        and assumptions, which could cause actual results to differ materially from
        Management’s expectations. Factors that could cause differences include, but are
        not limited to, expected market demand for the Company’s services, fluctuations
        in pricing for products distributed by the Company and services offered by
        competitors, as well as general conditions of the telecommunications
        marketplace.*





**ITEM
      2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF
      OPERATIONS**





Some
      of
      the information in this Form 10-QSB contains forward-looking statements that
      involve substantial risks and uncertainties. You can identify these statements
      by forward-looking words such as "may," "will," "expect," "anticipate,"
      "believe," "estimate" and "continue," or similar words. You should read
      statements that contain these words carefully because they:





l
            discuss
                our future expectations; l
            contain projections of our future results
              of
              operations or of our financial condition; and l
            state other "forward-looking" information.





We
      believe it is important to communicate our expectations. However, there may
      be
      events in the future that we are not able to accurately predict or over which
      we
      have no control. Our actual results and the timing of certain events could
      differ materially from those anticipated in these forward-looking statements
      as
      a result of certain factors, including those set forth in our filings with
      the
      Securities and Exchange Commission.





The
      following detailed analysis of operations should be read in conjunction with
      the
      audited consolidated financial statements and related notes included in the
      Company's Form 10-KSB for the year ended February 28, 2007.





**General**





We
      earn
      revenues from distributing novelty and high-end licensed sports products. These
      products are currently sold through gift shops, distributors, department stores,
      the Internet, catalogs, convenience stores, drug stores, supermarkets and a
      variety of retail stores.





We continue
      to pursue our re-evaluated business model. We believe that licenses have evolved
      into less time sensitive and sale spiking properties. Our new business model
      focuses on more evergreen properties and those with a longer window of
      opportunity. We recognize the need to have products that addressed the
      mainstream consumer market where market size and repeat sales opportunities
      could give us a means to stabilize and grow our revenues, while working on
      improving our gross profit margin. Over the next six months, we plan to focus
      on
      developing a line of licensing products involving the United States military
      branches, including a dedicated website with online store.





One
      of
      the ways we hope to improve our profit margin was with kiosk sales. This holiday
      season we had planned to work with various mall operators to open our own kiosks
      during the months of November and December. These kiosks were to carry the
      full
      line of wood products as well as Brax3D products and our proprietary licensed
      products. Each kiosk was to be stocked with college and professional sports
      team
      items and concentrated on the local regional teams for that area. Unfortunately,
      the plant of our manufacturer of wood products, Gridworks, was destroyed by
      fire
      in October, along with all inventory of completed and uncompleted items. They
      plan to rebuild their factory and fulfill all outstanding orders. However,
      this
      holiday season is lost to us and there is no guarantee we will be in position
      to
      capitalize on this opportunity in the future.





We
      are
      also looking to capitalize on our National Basketball Association License.
      We
      signed an agreement in March 2007, with Electronic Arts, Inc., to carry images
      from their “NBA Live 0_” and “NBA Street” video game along with their trademark
      on our growth charts, which are sold in kiosk, the NBA store and other
      retailers.





On
      November 4, 2007, we entered into a Securities Purchase Agreement with our
      current **** note
      holders for the issuances of an aggregate of $375,000 of convertible notes
      and
      attached to the Convertible Notes were warrants to purchase 15,000,000 shares
      of
      our common stock at an exercise price of $0.001 for seven years. The Convertible
      Notes accrue interest at 8% per annum and are due three years from the date
      of
      the note. The note holder has the option to convert any unpaid note principal
      to
      our common stock at a rate of the lower of a) $.003 or b) 25% of the average
      of
      the three lowest intraday trading prices for the common stock on a principal
      market for the 20 trading days before, but not including, conversion
      date.





28


In
      March
      2007, we began airing our Wi-Fi TV channel. The Wi-Fi TV platform contains
      live
      TV, live chat, interactive shopping cart and even free online phone calls,
      combined with multiple categories of channels and breaking news about these
      topics. We believe this will provide us with a greater marketing reach, allowing
      us to reach a larger target audience than traditional forms of marketing and
      advertising. Our TV station is available globally on the Internet. Wi-Fi TV
      allows viewers to chat live about the program they are watching and all of
      our
      products will be included in the Wi-Fi TV Shopping Cart, opening a brand new
      technologic window of sales opportunities. A five minute digitized program
      was
      completed and began showing on the channel. We have not been able to realize
      the
      potential of the station because of funding limitations that have prevented
      us
      from marketing the site resulting in reduced inventory on the site, and to
      date,
      the station has not resulted in any significant amount of revenue.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED NOVEMBER 30, 2007 COMPARED TO THREE MONTHS ENDED NOVEMBER 30,
      2006.**





Net
      revenue for the three months ended November 30, 2007 was $39,685 compared to
      $291,495 for the three months ended November 30, 2006. Net revenue for both
      periods consisted primarily of sales of professional and collegiate sports
      related products, and E-Bay Internet sales. The decrease in net revenue was
      a
      result of a fire at the Gridworks plant.





Cost
      of
      sales for the three months ended November 30, 2007 decreased by $194,337 from
      $249,893 for the three months ended November 30, 2006 to $55,556 for the three
      months ended November 30, 2007. This decrease was mainly attributable the
      decrease in sales. Cost of sales as a percentage of revenues increased to 140%
      for the three months ended November 30, 2006 from 85.7% for the same period
      last
      year.





Cost
      of
      sales for the three months ended November 30, 2007 were comprised of costs
      associated with the sale of the products related to the National Basketball
      League and National Hockey League Licenses as well as alliances with Brax3D
      and
      Gridworks. These products are contract manufactured for us by both domestic
      and
      foreign companies to specifications developed by us and approved by the various
      licensors. We do not feel this places us at risk for filling future orders
      on a
      timely basis because we have developed relationships with alternate suppliers
      for most of our products. Several of our manufacturers will also store and
      ship
      product directly to a customer, thereby reducing shipping time and eliminating
      the costs we would incur if the product was first shipped to our location.
      We
      also feel that we are not at risk for any currency fluctuations in our dealing
      with our foreign manufacturers since all orders are based on U.S. dollars and
      we
      do not have any long term purchase commitments.





Selling
      and administrative expenses for the three months ended November 30, 2007
      increased to $336,484 from $323,259 for the same period the previous year.




Selling
      and administrative expense consists of payroll and related fringe benefits,
      royalties, commissions paid to sales representatives, advertising, rent,
      depreciation and other related fixed overhead expenses. Also included in this
      category are the expenses related to the replication of items ready them for
      mass production by the contract manufacturers, as well as the non-cash costs
      related to services satisfied by the issuance of our stock. The services
      provided were in direct support of our operations. As we grow through
      acquisitions and the sales of current product, we anticipate we will have to
      rely less on the issuance of stock for services due to increased cash flows
      as
      well as capital. The benefits to us from these stock transactions are to reduce
      the use of cash, which allow us to devote the maximum amount of resources to
      expanding the business. For accounting purposes, we valued these services at
      the
      fair market value of the services rendered or the fair market value of the
      stock
      at times of issuance whichever was more readily determinable. Production costs
      include prototypes and samples of packaging, displays and products. All expensed
      production costs are included within selling and administrative expenses.





We
      incurred interest expense of $515,086 for the three months ended November 30,
      2007 as compared to $369,710 for the same period the previous year due to
      increased borrowings and the debt accretion related to the application of SFAS
      133. The accretion of debt calculation added $354,503 and $228,852 of interest
      expense respectively for the three months ended November 30, 2007 and November
      30, 2006, respectively.





For
      the
      three months ended November 30, 2007, we incurred a non-cash loss in adjusting
      the fair value of the debenture and related warrant derivatives relating to
      the
      convertible debentures of $1,569,508 as compared with a non-cash gain $583,007
      during the prior year.




As
      a
      result of the above, we had a net loss of $2,437,388 for the three months ended
      November 30, 2007 as compared to a net loss of $155,123 for the same period
      last
      year.





29




**NINE
      MONTHS ENDED NOVEMBER 30, 2007 COMPARED TO NINE MONTHS ENDED NOVEMBER 30, 2006.**





Net
      revenue for the nine months ended November 30, 2007 was $377,623 compared to
      $636,891 for the nine months ended November 30, 2006. Net revenue for both
      periods consisted primarily of sales of professional and collegiate sports
      related products, and E-Bay Internet sales . The
      increase in net revenue was a result of implantation of our new alliances with
      Brax3D and Gridworks. The decrease in net revenue was a result of a fire at
      the
      Gridworks plant.





Cost
      of
      sales for the nine months ended November 30, 2007 decreased by $189,467 from
      $636,808 for the nine months ended November 30, 2006 to $447,541 for the nine
      months ended November 30, 2007. This increase was mainly attributable to an
      increase in sales volume. Cost of sales as a percentage of revenues increased
      to
      118% for the nine months ended November 30, 2007 from 100% for the same period
      last year.





Cost
      of
      sales for the nine months ended November 30, 2007 were comprised of costs
      associated with the sale of the products related to the National Football League
      License and College Licenses owned by our distributors as well as alliances
      with
      Brax3D and Gridworks. These products are contract manufactured for us by both
      domestic and foreign companies to specifications developed by us and approved
      by
      the various licensors. We do not feel this places us at risk for filling future
      orders on a timely basis because we have developed relationships with alternate
      suppliers for most of our products. Several of our manufacturers will also
      store
      and ship product directly to a customer, thereby reducing shipping time and
      eliminating the costs we would incur if the product was first shipped to our
      location. We also feel that we are not at risk for any currency fluctuations
      in
      our dealing with our foreign manufacturers since all orders are based on U.S.
      dollars and we do not have any long term purchase commitments.





Selling
      and administrative expenses for the nine months ended November 30, 2007
      decreased to $1,096,941 from $1,518,705 for the same period the prev ious
      year. The decreases in selling and administrative expenses were mainly a result
      of decreases sales for the period. .




Selling
      and administrative expense consists of payroll and related fringe benefits,
      royalties, commissions paid to manufacturers sales representatives, advertising,
      rent, depreciation and other related fixed overhead expenses. Also included
      in
      this category are the expenses related to the replication of items to ready
      them
      for mass production by the contract manufacturers, as well as the non-cash
      costs
      related to services satisfied by the issuance of our stock. The services
      provided were in direct support of our operations. As we grow and increase
      sales
      of current product, we anticipate we will have to rely less on the issuance
      of
      stock for services due to increased cash flows as well as capital. The benefits
      to us from these stock transactions are to reduce the use of cash, which allow
      us to devote the maximum amount of resources to expanding the business. For
      accounting purposes, we valued these services at the fair market value of the
      services rendered or the fair market value of the stock at times of issuance
      whichever was more readily determinable. Production costs include prototypes
      and
      samples of packaging, displays and products. All expensed production costs
      are
      included within selling and administrative expenses.





We
      incurred interest expense of $1,453,932 for the nine months ended November
      30,
      2007 as compared to $1,207,339 for the same period the previous year due to
      increased borrowings and the debt accretion related to the application of SFAS
      133. The accretion of debt calculation added $996,249 and $806,338 of interest
      expense respectively for the nine months ended November 30, 2007 and November
      30, 2006, respectively.





For
      the
      nine months ended November 30, 2007, we incurred a non-cash gain in adjusting
      the fair value of the debenture and related warrant derivatives relating to
      the
      convertible debentures of $47,303,027 as compared with $2,319,784 non-cash
      loss
      during the prior year.




As
      a
      result of the above, we had a net income of $43,955,435 for the nine months
      ended November 30, 2007 as compared to a net loss of $6,726,574 for the same
      period last year.




**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      November 30, 2007, we had a working capital deficiency of $7,450,762. The
      working capital deficit as
      of
      November 30, 2007 is a direct result of the unprofitable operations for prior
      years as well as for the past three months ende d
      November 30, 2007 that resulted in cash used in operating activities of
      $1,141,995. We had an ending cash balance of $5,502 at November 30, 2007. As
      such, we need to raise additional capital to continue operations. We currently
      do not have any commitments for additional capital, and no assurances that
      capital will be available on terms acceptable to us, or at all.





We
      have
      financed our losses through private sales of debt securities and the issuance
      of
      stock for services. During the nine months ended November 30, 2007, we received
      the following capital infusions: $1,125,000 from issuance of secured convertible
      debentures and $95,000 from notes and loans payable.





30


We
      are
      working with various distributors and independent sales representatives in
      an
      effort to cut costs, offer a greater variety of products and to increase the
      customer base for our products. We believe that if we can increase our revenues
      and improve our gross profit margin that this will allow us to reach
      profitability.





While
      we
      have raised capital to meet our working capital and financing needs in the
      past,
      additional financing is required within the next 12 months in order to meet
      our
      current and projected cash flow deficits from operations and development. We
      believe that we will need approximately $1,500,000 in additional funds to
      continue operations for the next 12 months, depending on revenues from
      operations. We are constantly seeking additional sources of financing; however,
      there can be no assurance that financing will be available in amounts or on
      terms acceptable to us, if at all.





As
      of
      November 30, 2007, we had $581,922 in outstanding notes and loans payable,
      (of
      which $20,455 is due to related parties), $33,300 in convertible subordinated
      debentures and $3,781,284 in outstanding convertible secured debentures. As
      of
      November 30, 2007, we had $3,440,600 in accounts payable, accrued expenses,
      accrued payroll, accrued royalties and related taxes. (Some of the accrued
      expenses are for federal withholding taxes and are related to calendar years
      1999, 2000 and 2001. We are currently making payments on our current federal
      payroll tax obligations as well as monthly payments for these prior
      obligations). We have been able to operate based on deferring vendor and
      employee payments, deferring interest and debt repayments and obtaining
      additional borrowings and proceeds from equity. However, there is no guarantee
      that we will continue to be successful with respect to these actions.
      Furthermore, there can be no assurances that we will be able to obtain the
      necessary funding to finance our operations or grow revenue in sufficient
      amounts to fund our operating expenses.





Our
      independent auditors have issued a going concern paragraph in their opinion
      on
      our consolidated financial statements for the fiscal year ended February 28,
      2007 that states there is substantial doubt about our ability to continue as
      a
      going concern. Our ability to continue as a going concern is dependent on our
      ability to access capital through debt and equity funding as well as market
      and
      sell our various products.





To
      obtain
      funding for its ongoing operations, the Company has entered into Securities
      Purchase Agreements with several accredited investors, on the following dates
      for the sale of secured convertible notes and warrants:





**Transaction
                Date**
            **Secured
                Convertible Notes Sold**
            **Interest
                Rate**
            **Conversion
                Price**
            **Warrants**May
                2000
            $400,000
              ($95,640
                remaining)
            10%
            $4.00
                or 25% of market value
            40,000May
                28, 2002
            $75,000
            12%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            1,500November
                26, 2002
            $250,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            5,000May
                15, 2003
            $25,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            500June
                20, 2003
            $25,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            500July
                23, 2003
            $25,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            500November
                14, 2003
            $50,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            1,000




31




January
                13, 2004
            $50,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            1,000February
                13, 2004
            $25,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            500March
                16, 2004
            $100,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            2,000May
                28, 2004
            $550,000
            15%
            $1.00
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            16,500September
                30, 2004
            $250,000
            15%
            $.26
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            12,500May
                18, 2005
            $400,000
            10%
            $.16
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            473,684July
                7, 2005
            $850,000
            10%
            $.16
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            17,000September
                29, 2005
            $302,597
            2%
            $.16
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            -0-January
                20, 2006
            $400,000
            10%
            $.16
                or 20% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            4,000March
                23, 2006
            $400,000
            8%
            $3.00
                or 20% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            1,000,000May
                31, 2006
            $500,000
            8%
            $3.00
                or 20% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            1,000,000December
                31, 2006
            $270,430
            2%
            $.16
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            -0-January
                23, 2007
            $250,000
            8%
            $.03
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            10,000,000February
                22, 2007
            $50,000
            8%
            $.03
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            5,000,000March
                16, 2007
            $50,000
            8%
            $.03
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            5,000,000June
                4, 2007
            $700,000
            8%
            $.03
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            5,000,000November
                4, 2007
            $375,000
            8%
            $.03
                or 25% of the average of the lowest three intraday trading prices
                during
                the twenty trading days immediately preceding conversion
            5,000,000





The
      secured convertible notes bear interest as described above, typically mature
      one
      to three years from the date of issuance or one to three years from when we
      are
      in compliance with the terms of the securities purchase agreements, and are
      convertible into our common stock, at the investors' option, on the terms as
      described above. As of February 20, 2008, the average of the three lowest
      intraday trading prices for our common stock during the preceding 20 trading
      days as reported on the Over the Counter Bulletin Board was $.0001 and,
      therefore, the conversion price for the secured convertible notes was $.000025
      at 25% or $.00002 at 20%. Based on this conversion price, the $6,068,687 in
      secured convertible notes remaining, excluding interest, would convert into
      242,746,680,000 shares of our common stock. If the price of our common stock
      should decrease, we will be required to issue substantially more shares, which
      will cause dilution to our existing stockholders. There is no upper limit on
      the
      number of shares that may be issued, which will have the effect of further
      diluting the proportionate equity interest and voting power of holders of our
      common stock .





32


In
      connection with the sale of convertible notes, we granted the investors
      registration rights. Pursuant to the registration rights agreements, we were
      required to file registration statements for the shares underlying the
      convertible notes and warrants within a specified period of time from the sale
      of such securities and to have the registration statement declared effective
      by
      the Securities and Exchange Commission within another specified period of time.
      In the event that we did not timely file the registration statements or have
      them declared effective, we are obligated to pay liquidated damages. We have
      not
      filed any registration statements registering the securities underlying the
      convertible securities. As a result, an event of default has occurred regarding
      all of the above listed secured convertible debentures. As a result of this
      default, we are obligated to pay the debenture holders the principal amount
      of
      the debentures together with interest and certain other amounts. We do not
      have
      the capital resources to pay the amounts required under this agreement. The
      secured convertible debenture holders have informed us that they do not intend
      to take any action at this time due to the default. We do not, however, have
      any
      legally binding commitment from the debenture holders to waive the default
      provision of the debenture. In addition, we granted the investors a security
      interest in substantially all of our assets, including the assets of our wholly
      owned subsidiaries, and intellectual property. These events of default, taken
      as
      a whole, are reasonably likely to have a material impact on our short-term
      and
      long-term liquidity. The investors have been willing in the past to provide
      us
      with capital as needed to sustain our day-to-day operations and to forego
      enforcing default provisions, however, no assurance can be given that they
      will
      provide such capital in the future or continue to forego enforcing default
      provisions, which they are under no obligation to do so. In the event that
      we
      need additional capital in the future for our day-to-day operations, and the
      investors do not provide such funds, we will have to seek capital from new
      investors. As a result of these events of default and that all of our assets
      are
      secured by the current investors, it is highly unlikely that we would be able
      to
      obtain additional capital from other investors. If we are unable to obtain
      additional capital, we would likely be required to curtail or cease our
      operations. As all of our assets are secured by our existing lenders, of which
      we are currently in default, we do not anticipate filing for bankruptcy
      protection, as all of our assets would be transferred to our lenders pursuant
      to
      our existing security agreements.





In
      August
      2001, we issued $71,800 in subordinated convertible debentures. The debentures
      have a 12% coupon and mature one year from date of issuance. Conversions to
      common stock are at the lower of $.01 or 25% of the average of the lowest three
      intraday trading prices during the twenty trading days immediately preceding
      conversion. The debentures are in default.





In
      May
      2004, we issued $65,500 in subordinated convertible debentures. The debentures
      have a 12% coupon and mature one year from date of issuance. Conversions to
      common stock are at a price of $.10 per share of common stock. Conversions
      of
      any interest on the debentures are at current market price. The debentures
      are
      in default.





We
      recently decreased the number of authorized shares of common stock to
      10,000,000,000 in connection with a reverse split; this is not a sufficient
      number of authorized shares of common stock available if all debt holders
      decided to convert their convertible secured debentures into shares of our
      common stock. We are working on rectifying the situation. The provisions of
      the
      debt instruments call for a 24% penalty on the amount of debt owed if a
      noteholder attempts to convert and there are not enough authorized shares
      available. The secured convertible debenture holders have informed us that
      they
      have not and do not intend to convert any of their debt at this time into more
      shares than we have authorized and available. Therefore, no accrual for the
      penalty has been made at November 30, 2007. We do not, however, have any legally
      binding commitment from the debenture holders to waive the default provision
      of
      the debenture.





The
      lack
      of a sufficient number of authorized shares of common stock available for the
      conversion of all our outstanding convertible debt resulted from a combination
      of issues. First, as a result of the variable conversion prices, as our stock
      price has declined since we first issued the convertible notes/debentures,
      resulting in a significant increase in the number of shares issuable upon
      conversion of all our outstanding convertible debt. Second, since becoming
      a
      public company, we have had problems in filing our periodic reports on a timely
      basis. Between the filing of our quarterly report on January 14, 2002 for the
      quarter ended August 31, 2001 (which itself was not timely filed) and the filing
      of our quarterly report on July 20, 2004 for the quarter ended November 30,
      2001, we did not file any periodic reports. On April 14, 2005, we filed our
      quarterly report for the quarter ended November 30, 2004, which brought us
      current for the first time in several years. Unfortunately, we did not file
      our
      annual report for the year ended February 28, 2005 or our quarterly reports
      for
      the quarter ended May 31, 2005 on a timely basis. Those reports have
      subsequently been filed and we are now current in our reporting requirements.
      However, as a result of our lack of filings, we were unable to file an
      information/proxy statement during that time to increase the number of shares
      of
      our authorized common stock. In addition, as a result of our lack of filings,
      we
      had limited ability to raise funds. As a result, we sold multiple rounds of
      convertible debentures/notes at a significant discount to the market price
      in
      order to continue our operations during such time. As a result, there were
      not
      enough shares of common stock that were authorized but unissued underlying
      those
      convertible debentures/notes, when issued.





33


In
      November 2002, we successfully negotiated a long-term payment plan with the
      IRS
      to retire our outstanding payroll tax obligations. The plan was executed in
      December 2002 and calls for escalating monthly payments to be made over a period
      of 18 months. After an initial down payment of $25,800 in December 2002, we
      have
      agreed to a payment schedule of $5,750 for the first six months, $13,000 for
      the
      next six months and $25,000 for the final six months. We made the agreed
      payments in a timely fashion through the first six months and are currently
      behind schedule on the balance. We are negotiating with the IRS to recast the
      plan in accordance with our ability to make timely payments.





We
      will
      still need additional investments in order to continue operations to cash flow
      break even. Additional investments are being sought, but we cannot guarantee
      that we will be able to obtain such investments. Financing transactions may
      include the issuance of equity or debt securities, obtaining credit facilities,
      or other financing mechanisms. However, the trading price of our common stock
      and the downturn in the U.S. stock and debt markets could make it more difficult
      to obtain financing through the issuance of equity or debt securities. Even
      if
      we are able to raise the funds required, it is possible that we could incur
      unexpected costs and expenses, fail to collect significant amounts owed to
      us,
      or experience unexpected cash requirements that would force us to seek
      alternative financing. Further, if we issue additional equity or debt
      securities, stockholders may experience additional dilution or the new equity
      securities may have rights, preferences or privileges senior to those of
      existing holders of our common stock. If additional financing is not available
      or is not available on acceptable terms, we will have to curtail our
      operations.





By
      adjusting our operations and development to the level of capitalization, we
      believe we have sufficient capital resources to meet projected cash flow
      deficits. However, if during that period or thereafter, we are not successful
      in
      generating sufficient liquidity from operations or in raising sufficient capital
      resources, on terms acceptable to us, this could have a material adverse effect
      on our business, results of operations liquidity and financial
      condition.





**Critical
      Accounting Policies**





Our
      financial statements are prepared based on the application of accounting
      principles generally accepted in the United States of America. These accounting
      principles require us to exercise significant judgment about future events
      that
      affect the amounts reported throughout our financial statements. Actual events
      could unfold quite differently than our previous judgments had predicted.
      Therefore the estimates and assumptions inherent in the financial statements
      included in this report could be materially different once those actual events
      are known. We believe the following policies may involve a higher degree of
      judgment and complexity in their application and represent critical accounting
      policies used in the preparation of our financial statements. If different
      assumptions or estimates were used, our financial statements could be materially
      different from those included in this report.





Revenue
      Recognition **:** **** We
      recognize revenues in accordance with Staff Accounting Bulletin 104, Revenue
      Recognition in Financial Statements (SAB 104). We develop and sell collectibles
      in the entertainment and sports markets. Revenue from such product sales is
      recognized when persuasive evidence of an arrangement exists, delivery has
      occurred, the fee is fixed or determinable and collectibility is probable.
      At
      this time the earnings process is complete and the risks and rewards of
      ownership have transferred to the customer, which is generally when the goods
      are shipped and all significant obligations of the Company have been
      satisfied.





Accounts
      Receivable: **** We
      must
      make judgments about the collectibility of our accounts receivable to be able
      to
      present them at their net realizable value on the balance sheet. To do this,
      we
      carefully analyze the aging of our customer accounts, try to understand why
      accounts have not been paid, and review historical bad debt problems. From
      this
      analysis, we record an estimated allowance for receivables that we believe
      will
      ultimately become uncollectible. As of November 30, 2007, we had an allowance
      for bad debts of $64,504. We actively manage our accounts receivable to minimize
      our credit risks and believe that our current allowance for doubtful accounts
      is
      fairly stated.





Realizability
      of Inventory Values: We make
      judgments about the ultimate realizability of our inventory in order to record
      our inventory at its lower of cost or market. These judgments involve reviewing
      current demand for our products in comparison to present inventory levels and
      reviewing inventory costs compared to current market values. As of November
      30,
      2007, we had inventory of $370,081 on hand.





Long-lived
      Assets: We
      assess the impairment of long-lived assets whenever events or changes in
      circumstances indicate that their carrying value may not be recoverable from
      the
      estimated future cash flows expected to result from their use and eventual
      disposition. Our long-lived assets subject to this evaluation include property
      and equipment. Intangible assets other than goodwill are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying value
      may
      not be fully recoverable. We are required to make judgments and assumptions
      in
      identifying those events or changes in circumstances that may trigger
      impairment.





34


Fair
      Value of Financial Instruments: Carrying
      amounts of financial instruments held by the Company, which includes cash,
      accounts receivable, accounts payable and accrued expenses approximate fair
      value due to the short-term maturities of these assets and liabilities.
      Long-term debt, convertible secured debentures, notes and loans payable and
      convertible subordinated debentures approximate fair value based upon debt
      terms
      available for entities under similar terms.





Derivative
      Valuations: In
      accordance with SFAS 133, we are required to estimate the fair value of any
      embedded derivatives and detachable warrants relating to our secured convertible
      debentures. These estimates require significant assumptions and management
      judgment which may affect the amounts reported throughout the financial
      statements. This resulted in the Company recognizing income of $47,303,027
      an
      expense of $2,319,784 for the nine months ended November 30, 2007 and 2006,
      respectively.





**Recent
      Accounting Pronouncements**





In
      February 2007 the FASB issued its Statement of Financial Accounting Standards
      159 “The Fair Value Option for Financial Assets and Financial Liabilities”
-including an amendment of FASB Statement 115. This Statement improves financial
      reporting by providing entities the opportunity to mitigate volatility in
      reporting earnings caused by measuring related assets and liabilities
      differently without having to apply complex hedge accounting provisions. This
      Statement is expected to expand the use of fair value measurement, which is
      consistent with the Board’s long-term measurement objectives for accounting for
      financial instruments. The effective date is as of the beginning of the fiscal
      year begins after November 15, 2007. The Company does not expect adoption of
      this standard will have a material impact on its financial position, operations
      or cash flows.




In
        December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
        Payment Arrangements ("FSP 00-19-2") which addresses accounting for registration
        payment arrangements. FSP 00-19-2 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 FASB Statement No. 5, Accounting
        for
        Contingencies. FSP 00-19-2 further clarifies that a financial instrument
        subject
        to a registration payment arrangement should be accounted for in accordance
        with
        other applicable generally accepted accounting principles without regard
        to the
        contingent obligation to transfer consideration pursuant to the registration
        payment arrangement. For registration payment arrangements and financial
        instruments subject to those arrangements that were entered into prior to
        the
        issuance of EITF 00-19-2, this guidance shall be effective for financial
        statements issued for fiscal years beginning after December 15, 2006 and
        interim
        periods within those fiscal years. We adopted FSP 00-19-2 in the preparation
        of
        the financial statements.
  In
        December 2007, the FASB issued SFAS No. 141(R), *"Business
        Combinations"* ("SFAS No.
        141(R)"), which establishes principles and requirements for how an acquirer
        recognizes and measures in its financial statements the identifiable assets
        acquired, the liabilities assumed, and any noncontrolling interest in an
        acquiree, including the recognition and measurement of goodwill acquired
        in a
        business combination. SFAS No. 141R is effective as of the beginning of the
        first fiscal year beginning on or after December 15,
        2008.  Earlier adoption is prohibited and we are currently evaluating
        the effect, if any, that the adoption will have on our financial position,
        results of operations or cash flows.
  In
        December 2007, the FASB issued SFAS No. 160, *"Noncontrolling Interest in Consolidated Financial Statements, an amendment
        of
        ARB No. 51"* ("SFAS
        No. 160"), which will change the accounting and reporting for minority
        interests, which will be recharacterized as noncontrolling interests and
        classified as a component of equity within the consolidated balance
        sheets.  SFAS No. 160 is effective as of the beginning of the first
        fiscal year beginning on or after December 15, 2008.  Earlier
        adoption is prohibited and we are currently evaluating the effect, if any,
        that
        the adoption will have on our financial position, results of operations or
        cash
        flows.




35




**ITEM
      3. CONTROLS AND PROCEDURES**





*(a)* *Evaluation
      of disclosure controls and procedures.*





Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
      as
      of November 30, 2007. In designing and evaluating the disclosure controls
      and procedures, management recognizes that any controls and procedures, no
      matter how well designed and operated, can provide only reasonable assurance
      of
      achieving the desired control objectives. In addition, the design of disclosure
      controls and procedures must reflect the fact that there are resource
      constraints and that management is required to apply its judgment in evaluating
      the benefits of possible controls and procedures relative to their costs.





Based
      on our evaluation, our chief executive officer and chief financial officer
      concluded that our disclosure controls and procedures are designed at a
      reasonable assurance level and are effective to provide reasonable assurance
      that information we are required to disclose in reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in Securities and Exchange Commission rules and
      forms, and that such information is accumulated and communicated to our
      management, including our chief executive officer and chief financial officer,
      as appropriate, to allow timely decisions regarding required disclosure.





*(b)
      Changes in internal control over financial reporting.*





We regularly
      review our system of internal control over financial reporting and make changes
      to our processes and systems to improve controls and increase efficiency, while
      ensuring that we maintain an effective internal control environment. Changes
      may
      include such activities as implementing new, more efficient systems,
      consolidating activities, and migrating processes.





There
      were no changes in our internal control over financial reporting that occurred
      during the period covered by this Quarterly Report on Form 10-QSB that have
      materially affected, or are reasonably likely to materially affect, our internal
      control over financial reporting .




36


**PART
      II**





**ITEM
      1 LEGAL PROCEEDING**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings which
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business. we are currently not aware
      of any such legal proceedings or claims that we believe will have, individually
      or in the aggregate, a material adverse affect on our business, financial
      condition or operating results.





**ITEM
      2**  **CHANGES
      IN SECURITIES AND USE OF PROCEEDS**





During
      the three months ended November 30, 2007, we did not issue any shares of our
      common or preferred stock.





**ITEM
      3**  **DEFAULTS UPON SENIOR SECURITIES**





The
      Company is currently in default on all of its convertible secured debentures
      that the Company has issued, in the total amount of $6,068,687. The Company
      is
      also currently in default on interest payments owed on these secured convertible
      debentures. As a result of these defaults, the Company is obligated to pay
      interest and certain other amounts. The Company does not have the capital
      resources to pay the amounts required. The debenture holders have informed
      the
      Company that they do not intend to take any action at this time due to the
      default. The Company does not, however, have any legally binding commitment
      from
      the debenture holders. The debentures are secured substantially by all of the
      Company's assets.





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





Not
      applicable.





**ITEM
      5**  **OTHER
      INFORMATION**




Not
      applicable.




**ITEM
      6**  **EXHIBITS**





31.1
      -
      Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule
      15d-14(a), promulgated under the Securities and Exchange Act of 1934, as
      amended




31.2
      -
      Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d
      14(a), promulgated under the Securities and Exchange Act of 1934, as
      amended





32.1
      -
      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)





32.2
      -
      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)




37


**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.




**COLLECTIBLE
                CONCEPTS GROUP,
                INC.**Date:
                February 22, 2008
            By:
            */s/
              PAUL S. LIPSCHUTZ*Paul
                S. LipschutzChief
                Executive Officer (Principal Executive Officer),Principal Financial Officer
              and
              Principal Accounting Officer




38