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 May 31, 2006

|_|   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                   (IRS Employer
     incorporation or organization)                 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 |_|          No |X|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

State the number of shares outstanding of each of the registrant's classes of
common equity, as of the latest practicable date: 5,882,143,049 shares issued
and outstanding as of July 17, 2006.

<PAGE>

                        COLLECTIBLE CONCEPTS GROUP, INC.

                                      INDEX

<TABLE>
<CAPTION>
<S>                                                                                                      <C>
PART I     FINANCIAL STATEMENTS

           ITEM 1       Condensed  Consolidated  Balance Sheet As Of May 31, 2006  (Unaudited)  and
                        February 28, 2006                                                                3

                        Condensed Consolidated  Statements Of Operations For The Three Months Ended
                        May 31, 2006 and 2005 (Unaudited)                                                4

                        Condensed  Consolidated  Statement Of Changes In  Stockholders'  Deficiency
                        For The Three Months ended May 31, 2006 (Unaudited)                              6

                        Condensed Consolidated  Statements Of Cash Flows For The Three Months ended
                        May 31, 2006 and 2005 (Unaudited)                                                7

                        Notes To Condensed  Consolidated  Financial  Statements  As Of May 31, 2006
                        (Unaudited)                                                                    8 - 24

           ITEM 2       Management's Discussion and Analysis of Financial Condition and Results of
                        Operations                                                                    25 - 32

           ITEM 3       Controls and Procedures                                                          33

PART II    OTHER INFORMATION

           ITEM 1       Legal proceedings                                                                34
           ITEM 2       Unregistered sales of equity securities and use of proceeds                      34
           ITEM 3       Defaults upon senior securities                                                  34
           ITEM 4       Submission of matters to a vote of security holders                              34
           ITEM 5       Other information                                                                34
           ITEM 6       Exhibits                                                                         35

           SIGNATURES                                                                                    36
</TABLE>


              COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                May 31,       February 28,
                                                                                 2006             2006
                                                                              ------------    ------------
                                                                              (Unaudited)
                               ASSETS
<S>                                                                           <C>             <C>
CURRENT ASSETS
Cash and cash equivalents                                                     $    500,233    $     74,738
Accounts receivable, net of allowance of $18,536 and $10,517,
respectively                                                                        16,063          57,835

Trade credits                                                                       25,290              --

Inventories                                                                        255,248         189,844
Deposits on inventory                                                              125,765              --

Prepaid interest                                                                        --          20,625

Prepaid royalties                                                                   40,173          62,416

Other prepaid expenses                                                                 100           2,865
                                                                              ------------    ------------

  Total current assets                                                             962,872         408,323
                                                                              ------------    ------------

Property and equipment, net                                                          2,787           1,130
                                                                              ------------    ------------

Other assets:

Film library, net                                                                  239,500         245,800
Trade credits                                                                      376,299              --

Trademarks                                                                           1,300           1,300

Deposits                                                                             3,200           3,200
                                                                              ------------    ------------

  Total other assets                                                               620,299         250,300
                                                                              ------------    ------------

TOTAL ASSETS                                                                  $  1,585,958    $    659,753
                                                                              ============    ============

LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses                                         $  2,901,786    $  2,898,725

Accrued expenses, related party                                                    690,266         744,513

Notes and loans payable                                                            546,309         483,459

Loans payable, related party                                                         1,143           1,878

Convertible subordinated debentures                                                 37,500         127,300

Convertible secured debentures                                                   2,111,416       1,887,399
                                                                              ------------    ------------

  Total current liabilities                                                      6,288,420       6,143,274
                                                                              ------------    ------------

Long term debt, less current maturities

Notes payable                                                                      200,000         200,000

Derivative liability related to convertible debentures                          17,693,000      13,743,000

Warrant liability related to convertible debentures                                 76,061          53,569
                                                                              ------------    ------------

  Total long term liabilities                                                   17,969,061      13,996,569
                                                                              ------------    ------------

  Total liabilities                                                             24,257,481      20,139,843
                                                                              ------------    ------------

COMMITMENTS AND CONTINGENCIES

DEFICIENCY IN STOCKHOLDERS' EQUITY
Common stock, par value $0.001 per share; 15,000,000,000 shares authorized,
3,876,143,049 and 699,695,037 issued and outstanding,
respectively                                                                     3,876,143         699,694

Common stock to be issued, 91,496,623 and 313,573,817 respectively                  92,252         149,714

Common stock subscription                                                               --          15,000

Subscription receivable                                                                 --         (15,000)

Additional paid in capital                                                      12,502,079      14,107,115

Deferred equity based expense                                                      (25,000)        (40,000)

Accumulated deficit                                                            (39,116,997)    (34,396,613)
                                                                              ------------    ------------

  Total deficiency in stockholders' equity                                     (22,671,523)    (19,480,090)
                                                                              ------------    ------------

TOTAL LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY                      $  1,585,958    $    659,753
                                                                              ============    ============
</TABLE>

 See the accompanying notes to the condensed consolidated financial statements


                                      F-1
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                            Three months ended May 31,
                                                                             2006               2005
                                                                       ---------------    ---------------
                                                                                         Restated-see note K
<S>                                                                    <C>                <C>
REVENUES:
Net sales                                                              $       443,795    $        15,032

Cost of sales                                                                  144,238             21,934
                                                                       ---------------    ---------------

  Gross profit (loss)                                                          299,557             (6,902)
                                                                       ---------------    ---------------

OPERATING EXPENSES

Selling and administrative                                                     723,652            290,638

Depreciation and amortization                                                    7,143              2,488
                                                                       ---------------    ---------------

  Total operating expenses                                                     730,795            293,126
                                                                       ---------------    ---------------


LOSS FROM OPERATIONS                                                          (431,238)          (300,028)
                                                                       ---------------    ---------------


Other income (expense)

Financing costs related to conversion of debt and accrued interest            (454,381)                --

Loss on adjustment of derivative and warrant liability to fair value        (3,425,759)        (1,180,466)

Interest expense                                                              (409,006)          (230,659)
                                                                       ---------------    ---------------
 Total other expense                                                        (4,289,146)        (1,411,125)
                                                                       ---------------    ---------------


Net loss before income taxes                                                (4,720,384)        (1,711,153)


Income taxes                                                                        --                 --
                                                                       ---------------    ---------------

NET (LOSS)                                                             $    (4,720,384)   $    (1,711,153)
                                                                       ===============    ===============

Net loss per common shares outstanding (basic and diluted)             $         (0.00)   $         (0.00)
                                                                       ===============    ===============


Weighted average common shares outstanding (basic and diluted)           1,495,110,322        699,695,037
                                                                       ===============    ===============
</TABLE>


  See the accompanying notes to the condensed consolidated financial statements


                                      F-2
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENT OF DEFICIENCY IN STOCKHOLDERS' EQUITY
                         THREE MONTHS ENDED MAY 31, 2006
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                      Common         Additional
                         Common         Stock       Common stock to be issued:         Stock          Paid in      Subscription
                         Shares         Amount         Shares         Amount       Subscription       Capital       Receivable
                         ------         ------         ------         ------       ------------       -------       ----------
<S>                     <C>             <C>           <C>             <C>               <C>          <C>             <C>
Balance as of
February 28, 2006       699,695,037     $ 699,694     313,573,817     $  149,714        $  15,000    $ 14,107,115    $  (15,000)

Conversion of
secured convertible
debentures to
common stock            604,200,000       604,200                                                       (187,129)

Conversion of
subordinated
convertible
debentures to
common stock and
interest to common
stock                   452,539,000       452,539                                                       (271,526)

Conversion of notes
and loans payable
to common stock       1,134,161,012     1,134,162                                                       (575,095)

Amortization of
deferred
compensation
expenses

Common stock issued
for services
rendered                688,700,000       688,700                                                       (346,900)

Cash received on
subscription             27,000,000        27,000                                        (15,000)        (12,000)         15,000

Common stock issued
for subscribed
shares                  108,000,000       108,000   (108,000,000)       (60,000)                         (48,000)

Common stock issued
under late issuance
stock subscription
provisions              143,500,000       143,500   (143,500,000)                                       (143,500)

Common stock to be
issued for
anti-dilution note
provisions                                             47,770,806         10,003                         (10,003)

Common stock issued
for anti-dilution
note provisions          18,348,000        18,348    (18,348,000)        (7,465)                         (10,883)


Net loss
                      -------------    ----------      ----------      ---------         --------    ------------      --------

Balance at May 31,
2006                  3,876,143,049    $3,876,143      91,496,623      $  92,252         $    -      $ 12,502,079      $     -
                      ==============   ==========     ===========      ==========       =========   ==============    ==========

<CAPTION>
                                Deferred
                              Equity based      Accumulated
                                Expense           Deficit           Total
                                -------           -------           -----
<S>                             <C>            <C>               <C>
Balance as of
February 28, 2006               $   (40,000)   $ (34,396,613)    $ (19,480,090)

Conversion of
secured convertible
debentures to
common stock                                                            417,071

Conversion of
subordinated
convertible
debentures to
common stock and
interest to common
stock                                                                   181,013

Conversion of notes
and loans payable
to common stock                                                         559,067

Amortization of
deferred
compensation
expenses                              15,000                             15,000

Common stock issued
for services
rendered                                                                341,800

Cash received on
subscription                                                             15,000

Common stock issued
for subscribed
shares                                                                        -

Common stock issued
under late issuance
stock subscription
provisions                                                                    -

Common stock to be
issued for
anti-dilution note
provisions                                                                    -

Common stock issued
for anti-dilution
note provisions                                                               -


Net loss                                            (4,720,384)      (4,720,384)
                                 ------------   -------------     -------------

Balance at May 31,
2006                             $   (25,000)   $ (39,116,997)    $ (22,671,523)
                                 ============  ===============    ==============
</TABLE>



 See the accompanying notes to the condensed consolidated financial statements


                                      F-3
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               Three months ended May 31,
                                                                                 2006           2005
                                                                              -----------    -----------
                                                                                          Restated-See note K
<S>                                                                           <C>            <C>
Net loss                                                                      $(4,720,384)   $(1,711,153)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization                                                       7,143          2,488

Provision for bad debt expense                                                      8,885             --

Common stock issued in connection with services rendered                          341,800         32,221

Amortization of deferred equity based expense                                      15,000             --

Accretion of convertible notes payable                                            287,821        158,993
Financing cost related to conversion of debt and accrued interest                 454,381
Loss on adjustment of derivative and warrant liability to fair value of
underlying securities                                                           3,425,759      1,180,466
(Increase) decrease in:

Accounts receivable                                                                32,887        110,893

Loan receivable                                                                        --          1,245

Trade credits                                                                    (401,589)            --

Inventories                                                                       (65,404)            --
Deposits on inventory                                                            (125,765)       (36,680)

Prepaid interest                                                                   20,625         20,625

Prepaid royalties                                                                  22,243       (114,001)

Other prepaid expenses                                                              2,765             --
Increase (decrease) in:

Accounts payable and accrued expenses                                              (2,437)       (46,214)
                                                                              -----------    -----------

Net cash used in operating activities                                            (696,270)      (401,117)
                                                                              -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets                                                           (2,500)            --
                                                                              -----------    -----------

Net cash used in investing activities                                              (2,500)            --
                                                                              -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from common stock subscribed                                              15,000         60,000

Proceeds from issuance of convertible secured debentures                          900,000        373,332

Repayments of notes and loans payable                                             (75,000)       (15,922)

Proceeds from notes and loans payable                                             285,000         15,000

Repayments of notes payable-related party                                            (835)       (13,029)

Proceeds from notes payable-related party                                             100             --
                                                                              -----------    -----------

Net cash provided from financing activities                                     1,124,265        419,381
                                                                              -----------    -----------


Net increase in cash and cash equivalents                                         425,495         18,264

Cash and cash equivalents at beginning of period                                   74,738          1,040
                                                                              -----------    -----------
Cash and cash equivalents at end of period                                    $   500,233    $    19,304
                                                                              ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:


Cash paid during the period for interest                                      $        --    $        --


Cash paid during the period for taxes                                         $        --    $        --
</TABLE>

 See the accompanying notes to the condensed consolidated financial statements


                                      F-4
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

These 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
months ended May 31, 2006 are not necessarily indicative of the results that may
be expected for the year ending February 28, 2007. The accompanying 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, 2006.

Principles of Consolidation

The condensed 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.

Use of Estimates

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

Prepaid Royalties

During the quarter ended May 31, 2005 the Company changed its policy on minimum
royalties due on new royalty agreements. The minimum amount due on royalty
agreements for collectibles related to movies had been expensed upon the
execution of the agreement. For sports collectibles however, the Company now
amortizes the minimum amount of royalties due over the life of the agreement or
the date the minimum royalty amount has been exceeded, whichever is shorter, for
each agreement.

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 May
31, 2006 and February 28, 2006, allowance for doubtful account balance was
$18,536 and $10,517, respectively.

Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided
by the weighted average number of common shares outstanding. The assumed
conversion of convertible debt into 605,563,410,667 common shares and
3,897,253,333 common shares as of May 31, 2006 and 2005, respectively, and the
exercise of outstanding options and warrants to purchase 282,672,308 common
shares and 80,572,308 common shares as of May 31, 2006 and 2005, respectively,
were not included in the computation of diluted loss per share because the
assumed conversion and exercise would be anti-dilutive for all periods
presented. As of May 31, 2006, 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. The
Company and its attorney are currently working on the necessary actions to
rectify the situation.


                                      F-5
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

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

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". The Company recorded
these transactions based on the expected fair value of the goods and services
expected to be received.

Stock based compensation

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This statement
amended SFAS 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary charge to the fair value based
method of accounting for stock-based employee compensation. In addition, this
statement amended the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. Effective for the three months ended May 31,
2006 the Company has adopted SFAS 123 (R) which supersedes APB Opinion No. 25,
"Accounting for Stock Issued to Employees" and eliminates the intrinsic value
method that was provided in SFAS 123 for accounting of stock-based compensation
to employees.

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinions
No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
principle and the reporting of a correction of an error. SFAS 154 is effective
for accounting changes and the reporting of a correction of an error made in
fiscal years beginning after December 15, 2005 and is required to be adopted by
the Company in the first quarter of fiscal 2007. The Company has elected to
adopt SFAS 154 early and did so in their financial statements for the year ended
February 28, 2006.

On February 16, 2006 the Financial Accounting Standards Board (FASB) issued SFAS
155, "Accounting for Certain Hybrid Instruments," which amends SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," and SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." SFAS 155 allows financial instruments that have embedded
derivatives to be accounted for as a whole (eliminating the need to bifurcate
the derivative from its host) if the holder elects to account for the whole
instrument on a fair value basis. SFAS 155 also clarifies and amends certain
other provisions of SFAS 133 and SFAS 140. This statement is effective for all
financial instruments acquired or issued in fiscal years beginning after
September 15, 2006. The Company does not expect its adoption of this new
standard to have a material impact 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.

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 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.

The total cost of the film library is being amortized over the expected useful
life of ten years. The Company recorded $6,300 as amortization expense for the
three months ended May 31, 2006.


                                      F-6
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES

Notes payable at May 31, 2006 and February 28, 2006 are as follows:

<TABLE>
<CAPTION>
<S>                                                                                  <C>             <C>
--------------------------------------------------------------------------- ----------------- ---------------
                                                                                May 31,          February
                                                                                  2006           28, 2006
--------------------------------------------------------------------------- ----------------- ---------------
10% 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)
$0.04 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)                        $195,016        $258,820

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
12% 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) $0.01 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          75,000
--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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

--------------------------------------------------------------------------- ----------------- ---------------
</TABLE>


                                      F-7
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

<TABLE>
<CAPTION>
<S>                                                                                    <C>             <C>
--------------------------------------------------------------------------- ----------------- ---------------
                                                                                May 31,          February
                                                                                  2006           28, 2006
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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          50,000

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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         $50,000

--------------------------------------------------------------------------- ----------------- ---------------
</TABLE>


                                      F-8
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------- ----------------- ---------------
                                                                                May 31,          February
                                                                                  2006           28, 2006
--------------------------------------------------------------------------- ----------------- ---------------
<S>                                                                                    <C>             <C>
15% 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) $0.01 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

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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         100,000

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.01 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         482,945

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
15% 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) $0.0026 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)                                                   $208,219        $176,712

--------------------------------------------------------------------------- ----------------- ---------------
</TABLE>


                                      F-9
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------- ----------------- ---------------
                                                                                May 31,          February
                                                                                  2006           28, 2006
--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
<S>                                                                                   <C>             <C>
10% 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) $0.0016 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)                                                    138,082         104,475

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
10% 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) $0.0016 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)                                                    254,612         183,196

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
2% 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) $0.0016 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)                                                     67,428          42,004

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
10% 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) $0.0016 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)                                                    $47,854         $14,247
--------------------------------------------------------------------------- ----------------- ---------------
</TABLE>



                                      F-10
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------- ----------------- ---------------
                                                                                May 31,          February
                                                                                  2006           28, 2006
--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
<S>                                                                                    <C>                 <C>
8% 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) $0.03 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)                                                     25,205             -0-

--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
8% 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) $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)                                                       -0-             -0-

--------------------------------------------------------------------------- ----------------- ---------------
                                                                                    2,111,416       1,887,399
--------------------------------------------------------------------------- ----------------- ---------------
Less current portion                                                                2,111,416       1,887,399
                                                                                    ---------       ---------
--------------------------------------------------------------------------- ----------------- ---------------
--------------------------------------------------------------------------- ----------------- ---------------
Long term portion                                                                        $-0-         $   -0-
                                                                                         ====         =======
--------------------------------------------------------------------------- ----------------- ---------------
</TABLE>

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
were warrants to purchase 4,000,000 shares of the Company's common stock at an
exercise price of $0.20 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) $0.04 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 May 31, 2006, the
remaining balance of these debentures of $195,016 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 150,000 shares of the Company's common stock at an
exercise price $0.005 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) $0.01 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 May 31, 2006, the remaining balance of these
debentures of $75,000 is still unpaid and in default.


                                      F-11
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

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 500,000 shares of the Company's common stock at an
exercise price of $0.0045 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) $0.01 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 May 31, 2006, 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 50,000 shares of the Company's common stock at an
exercise price of $0.004 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) $0.01 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 May 31, 2006, 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 50,000 shares of the Company's common stock at an
exercise price of $0.002 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) $0.01 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 May 31, 2006, 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 50,000 shares of the Company's common stock at an
exercise price of $0.001 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) $0.01 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 May 31, 2006, 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 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 100,000 shares of the Company's common stock at an
exercise price of $0.001 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) $0.01 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 May 31, 2006, 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 100,000 shares of the Company's common stock at an
exercise price of $0.001 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) $0.01 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 May 31, 2006, the remaining balance of these
debentures of $50,000 is still unpaid and in default.


                                      F-12
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

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 50,000 shares of the Company's common stock at an
exercise price of $0.0015 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) $0.01 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 May 31, 2006, 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 200,000 shares of the Company's common stock at an
exercise price of $0.0015 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) $0.01 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 May 31, 2006, 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 1,650,000 shares of the Company's common stock at an
exercise price of $0.03 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) $0.01 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 May 31, 2006, the remaining balance of these
debentures of $550,000 is still unpaid and in default.

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 1,250,000 shares of the Company's common stock at an
exercise price of $0.03 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) $0.0026 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 May 31, 2006, 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 47,368,422 shares of the Company's common stock at an
exercise price of $0.0016 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) $0.0016 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
$400,000 in exchange for net proceeds of $400,000. As of May 31, 2006, 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 1,700,000 shares of the Company's common stock at an
exercise price of $0.0016 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) $0.0016 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
$850,000 in exchange for net proceeds of $850,000. As of May 31, 2006, the
remaining balance of these debentures of $850,000 is still unpaid and in
default.


                                      F-13
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

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) $0.0016 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 $302,597 in exchange for net proceeds of
$302,597. As of May 31, 2006, 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 400,000 shares of the Company's common stock at an
exercise price of $0.002 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) $0.0016 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 May 31, 2006, 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 100,000,000 shares of the Company's common stock at an
exercise price of $0.005 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) 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 May 31, 2006, 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 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 100,000,000 shares of the Company's common stock at an
exercise price of $0.005 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 $500,000 in exchange for net
proceeds of $500,000. As of May 31, 2006, the remaining balance of these
debentures of $500,000 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 financial statements comply with current requirements relating
to warrants and embedded derivatives as described in FAS 133 as follows:

o        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.

o        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.

o        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.


                                      F-14
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE C - CONVERTIBLE SECURED DEBENTURES (continued)

The following table summarizes the various components of the convertible
debentures as of May 31, 2006 and February 28, 2006:


                                               May 31,       February 28,
                                                2006            2006
                                              -----------    -----------
Convertible debentures described above (net   $ 4,472,613    $ 3,636,417
of conversions)
Less: discount                                 (2,361,197)    (1,749,018)
                                              -----------    -----------
Convertible debentures as reported            $ 2,111,416    $ 1,887,399
                                              ===========    ===========

NOTE D - CONVERTIBLE SUBORDINATED DEBENTURES

Convertible subordinated debentures as of May 31, 2006 and February 28, 2006 are
as follows:

<TABLE>
<CAPTION>
                                                                   May 31,        February 28,
                                                                     2006             2006
                                                                     ----             ----
                                                               ----------------- ----------------
<S>                                                                        <C>           <C>
12%  convertible  debenture,  unsecured  with a  maturity  of
August  2001.   The   debenture  is   convertible   into  the
Company's  common  stock  at  $0.05  per  share.  The note is
currently in default.                                                      $-0-          $40,000
                                                               ----------------- ----------------
                                                               ----------------- ----------------
12%  convertible  debenture,  unsecured  with a  maturity  at
August 2001. The debenture is convertible  into the Company's
common  stock at $0.075 per share.  The note is  currently in
default.                                                                    -0-           31,800
                                                               ----------------- ----------------
                                                               ----------------- ----------------
12% convertible debenture, unsecured with an original one year maturity at May
2004. The debenture is convertible into the Company's common stock at $0.04 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                                         37,500           55,500
                                                                         ------           ------
                                                               ----------------- ----------------
Total                                                                    37,500          127,300
                                                               ----------------- ----------------
Less: current portion                                                  (37,500)        (127,300)
                                                                       --------        ---------
                                                               ----------------- ----------------
Long term debt                                                              $ 0              $ 0
                                                                            ===              ===
                                                               ----------------- ----------------
</TABLE>


NOTE E - LINE OF CREDIT

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 18% 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 75% of the closing bid of the previous day. As of
May 31, 2006, the Company has borrowed $215,000, net, from this facility which
is included in notes and loans payable.

NOTE F - COMMON STOCK

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 three months ended May 31, 2006, the Company issued 18,348,000 under
this provision to the third party. An additional 38,296,623 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 May 31, 2006. 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.


                                      F-15
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE F - COMMON STOCK (continued)

During the three months ended May 31, 2006, the Company issued 108,000,000
shares of common stock for $60,000 received in fiscal 2006 and 27,000,000 shares
of common stock for $15,000 received in first quarter of fiscal 2007. In
addition, the Company issued 143,500,000 common shares under a late issuance
stock subscription provision.

During the three months ended May 31, 2006, the Company issued 688,700,000
shares of its common stock for $341,800 of services rendered.

During the three months ended May 31, 2006, the Company converted $63,804 of
convertible secured debentures into 604,200,000 shares of common stock having a
fair value of $417,071. The conversion of debt to stock was based upon
conversion prices set forth in the Securities Purchase Agreement (see Note C).
The loss of $353,267 on these conversions was included in the Loss on adjustment
of derivative and warrant liability to fair value.

During the three months ended May 31, 2006, the Company converted $89,800 of
convertible subordinated debentures and $48,749 in related interest into
452,539,000 shares of common stock. The conversions of debt to stock were based
upon negotiated conversion prices with debtors (See note D) for prices below the
conversion prices at date of original issuance. The Company recognized a
financing cost of $42,464 on these conversions.

During the three months ended May 31, 2006, the Company converted $147,150 of
notes and loans payable into 1,134,161,012 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 $411,917 on these
conversions.


NOTE G - STOCK OPTIONS

In December 2003, the Company issued 20,000,000 options to a consultant having a
ten-year term. The exercise price is $0.001 for the first 5,000,000 options,
$0.002 for the next 5,000,000 options, $0.003 for the next 5,000,000 options and
$0.004 for the last 5,000,000 options. The only restriction is that no more than
5,000,000 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 $833 and $2,083 for the three months ended May 31, 2006 and 2005,
respectively.

In May 2005, the Company issued 12,000,000 options to an advisor having a
three-year term. The exercise price is $0.003. 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 and
$200 for the three months ended May 31, 2006 and 2005, respectively. The advisor
is also to receive 5% of sales on certain licensing agreements.

NOTE H - COMMITMENTS AND CONTINGENCIES

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 $351,851 ($212,750 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 $58,557 and $21,721 for
the three months ended May 31, 2006 and 2005, 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.


                                      F-16
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE H - COMMITMENTS AND CONTINGENCIES (continued)

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.

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 $196,000 as of May 31, 2006 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 May 31, 2006 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.


                                      F-17
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE H - COMMITMENTS AND CONTINGENCIES (continued)

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.

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, which will be at least $50,000 per
month, 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 of $1.5 million per year of the
agreement. American Sports Ventures, Inc. was inactive as of May 31, 2006.

Concentrations

For the three months ended May 31, 2006 and 2005, 93% and 97%, of the Company's
revenues were derived from its three largest customers, respectively.

The Company obtains a significant portion of its new borrowings from one
investment group. During the three months ended May 31, 2006, the Company
borrowed $900,000 from this investment group. As of May 31, 2006, a total of
$4,472,613 was owed to this investment group (See Note C).

Debt Conversions

As of May 31, 2006, 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 increased the number of authorized
shares to 15,000,000,000 to partly rectify the situation but a possible
shortfall still exists. 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 C
with regard to the convertible secured dentures). 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 Note D).

In the three months ended May 31, 2006, the Company recorded a discount on
convertible secured debentures with a corresponding increase in the derivative
and warrant liabilities.


                                      F-18
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE I - RELATED PARTY TRANSACTIONS

The Company has an employment agreement with its president, who has elected to
defer a portion of his salary in support of the cash needs of the Company. As of
May 31, 2006 and 2005, the amount of salary deferred was $552,979 and $589,421,
respectively, which is included in accrued expenses - related parties. Also
$137,287 and $184,290 of accrued compensation were due to the Company's
President's wife as of May 31, 2006 and 2005, respectively.

The Company has loans payable of $1,143, which are included as loans payable -
related party in the accompanying consolidated balance sheet, due to a related
party as of May 31, 2006. During the three months ended May 31, 2006, the
Company recorded interest expense of $29 relating to loans from its president
and other related parties and $77,485 in accrued interest was payable relating
to these loans as of May 31, 2006, which is included in accrued expenses in the
accompanying consolidated balance sheet.

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

During the three months ended May 31, 2006, the Company converted $63,804 of
convertible secured debentures into 604,200,000 shares of common stock and a
$353,267 loss on adjustment of derivative and warrant liability to fair value
was recognized accordingly.

During the three months ended May 31, 2006, the Company converted $89,800 of
convertible subordinated debentures and $48,749 of related interest into
452,539,000 shares of common stock and $42,464 financing cost was recognized
accordingly.

During the three months ended May 31, 2006, the Company converted $147,150 of
notes and loans payable into 1,134,161,012 shares of common stock and a $411,917
financing cost was recognized accordingly.

NOTE K - RESTATEMENT

During fiscal 2006, it was determined the correct application of accounting
principles had not been applied in the accounting for convertible debentures and
detachable warrants (See note C).

Based on the original accounting for the convertible debentures and detachable
warrants, the Company recognized an embedded beneficial conversion feature
present in the convertible note and allocated a portion of the proceeds equal to
the intrinsic value of that feature (limited to the face value of the notes) to
additional paid in capital. Accordingly, the proceeds attributed to the common
stock, convertible debt and warrants have been restated to reflect the fair
value method.

The accounting principles on the aforementioned transactions are currently
reflected in the accompanying May 31, 2006 financial statements in accordance
with SFAS 154. The necessary corrections to apply the impact to the previously
issued May 31, 2005 financial statements are as follows:

<TABLE>
<CAPTION>
---------------------------- ---------------------- --------------------- ---------------------------
                                 May 31, 2005           May 31, 2005      Amount increase (decrease)
                              financial statement   financial statement        in May 31, 2005
                               balance prior to            post                  financial
                                  restatement          restatement               statements
---------------------------- ---------------------- --------------------- ---------------------------
<S>                                     <C>                 <C>                          <C>
Net loss                                $(471,694)          $(1,711,153)                 $(1,239,459)
---------------------------- ---------------------- --------------------- ---------------------------
---------------------------- ---------------------- --------------------- ---------------------------
Loss  per  share-basic  and
diluted                                    $(0.00)               $(0.00)                      $(0.00)
---------------------------- ---------------------- --------------------- ---------------------------
</TABLE>


                                      F-19
<PAGE>

                COLLECTIBLE CONCEPTS GROUP, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               As of May 31, 2006
                                   (Unaudited)

NOTE K - RESTATEMENT (continued)

The resulting effects on the prior period adjustments on the May 31, 2005 cash
flows by area are as follows:

<TABLE>
<CAPTION>
---------------------------------- ------------------ --------------------- --------------------------
                                     May 31, 2005         May 31, 2005           Amount increase
                                       financial      financial statement     (decrease) in May 31,
                                       statement        post restatement    2005 financial statements
                                   balance prior to
                                      restatement
---------------------------------- ------------------ --------------------- --------------------------
<S>                                       <C>                   <C>                              <C>
Net    cash    from     operating         $(401,117)            $(401,117)                       $-0-
activities
---------------------------------- ------------------ --------------------- --------------------------
---------------------------------- ------------------ --------------------- --------------------------
Net    cash    from     investing
activities                                       -0-                   -0-                        -0-
---------------------------------- ------------------ --------------------- --------------------------
---------------------------------- ------------------ --------------------- --------------------------
Net    cash    from     financing            419,381               419,381                        -0-
activities
---------------------------------- ------------------ --------------------- --------------------------
</TABLE>


NOTE L - GOING CONCERN

The accompanying 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 period ended May 31, 2006, the Company had a working capital
deficiency of $5,325,548, a stockholders' deficiency of $22,671,523 a net loss
of $4,720,384 and net cash used in operations of $696,270. 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.

NOTE M - SUBSEQUENT EVENTS


Subsequent to May 31, 2006, the Company issued the following shares of common
stock:

       ---------------------- ----------------------------------- ------------
            Number of shares  Purpose                             Value
       ---------------------- ----------------------------------- ------------
               2,006,000,000  Debt conversion                     $93,888
       ---------------------- ----------------------------------- ------------

                                      F-20
<PAGE>


<PAGE>

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:

      o     discuss our future expectations;
      o     contain projections of our future results of operations or of our
            financial condition; and
      o     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, 2006.

General

         We earn revenues from distributing high-end and novelty products
principally related to the entertainment and sports industries. These products
are sold through retailers, distributors, department stores, the Internet and
catalogs.

         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. To avoid the time,
expense and risks associated with in-house new product development, we have
sought out entities with mainstream consumer products whose marketability could
be enhanced by the addition of our licenses. These activities produced new joint
ventures and products that addressed new markets in keeping with our new
marketing direction aimed at the collegiate and professional sports
marketplaces.

         We had a licensing agreement with the NFL by which we had permission to
produce and sell our products for all 32 NFL teams. This license ended March 31,
2006 and was not renewed.

         On February 28, 2005, we sold a partial interest (2.5%) in our future
revenues generated under our National Football League ("NFL") license (2005),
our National Basketball Association ("NBA") license in 2005-2006 and our
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 we 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 us from its previous owner, as well as
all of the issued shares of common stock previously owned by that party.


                                       3
<PAGE>

         We acquired a historical film library containing thousands of hours of
sports events including, among others, boxing, baseball, football and auto
racing. The asset acquisition agreement was entered into December 15, 2005 and
gives us title to the entire library. The film library consists of over 5,000
hours of sporting events from the years 1948 through 1972. Additionally, there
are also sports films in the library after 1972. As well, 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 in a note
payable due five years from the acquisition date along with interest accrued at
6% per annum. As part of acquisition of the film library, we were assigned a
licensing agreement whereby royalties (minimum of $50,000 per year) will be
received over the next ten years, although there are questions concerning the
ability of the licensee to pay such royalties. Additionally, we have entered
into a Joint Marketing agreement with Back in Time TV under which we will cross
market each other's products.

         On April 10, 2006 we 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. We paid $20,000 for this license in $5,000
monthly increments beginning April 10, 2006 and the final payment was 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.

         On April 30, 2006, we 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 Collectible Concepts Group,
Gridworks and Mr. Nick Fegen are the shareholders with ownership percentages of
37.5%, 37.5% and 25%, respectively. Gridworks is a licensed manufacturer of high
quality wood sports collectibles including such items as laser etched baseballs,
footballs, basketballs, baseball bats and similar items each featuring a team or
college logo and/or commemorating a special event such as a Super Bowl or World
Series victory. Under the terms of the agreement, Collectible Concepts Group and
Nick Fegen will be providing 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 absolute cost and we will be executing various
marketing initiatives to sell the products. These initiatives include marketing
through our national sales rep organization, direct marketing via Internet sales
on our web site and direct to consumer at retail mall kiosks during the holiday
season. Profits from operations after all expenses and costs and a reserve for
operating expenses, will be distributed to the shareholders in accordance with
their respective ownership percentage. The web site was activated in June 2006
and a Holiday Retail Mall Sales Program has been designed and is currently being
presented to Specialty Retailers in selected regions of the country in
anticipation of the upcoming holiday sales cycle. Our risks of any potential
losses are limited to any expenses we may incur.

         Our Stories for Heroes audio book of Arthur children's stories are sold
exclusively on Amazon.com. We partnered with 212 Media Group to manage the
manufacturing, marketing and distribution of the audio book. The CD itself is an
enhanced audio CD that features stories, pictures, music and games for children,
parents and teachers. Celebrity readers include Clay Aiken, Kelly Ripa and Kevin
Bacon.

         We have entered into an exclusive licensing agreement with Dimensional
Products & Imaging, Inc.(DPI), to develop and market unique print products using
DPI's Vertical D TM dimensional imaging.

         On March 23, 2006, we entered into a Securities Purchase Agreement with
AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New
Millennium Capital Partners II, LLC for the sale of (i) $400,000 in secured
convertible notes and (ii) warrants to purchase 100,000,000 shares of our common
stock.

                                       4
<PAGE>

         On May 31, 2006, we entered into a Securities Purchase Agreement with
AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New
Millennium Capital Partners II, LLC for the sale of (i) $500,000 in secured
convertible notes and (ii) warrants to purchase 100,000,000 shares of our common
stock.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MAY 31, 2006 COMPARED TO THREE MONTHS ENDED MAY 31, 2005.

         Net revenue for the three months ended May 31, 2006 was $443,795 and
primarily consisted of sales of professional and collegiate sports related
products, promotional Fanbana sales and E-Bay Internet sales. Net revenue for
the three months ended May 31, 2005 was $15,032 and primarily consisted of sales
of professional and collegiate sports related products, X-Men products,
Terminator products, Marvel Character products, promotional Fanbana sales and
E-Bay Internet sales. Sales from X-men and Marvel Character products were sell
offs of merchandise remaining under licenses that previously expired.

         Sales for the three months ended May 31, 2006 were comprised primarily
of products offered with our National Football League License and College
Licenses. The National Football League license expired on March 31, 2006 and was
not renewed. Instead of paying the royalties for the NFL license our self, we
have decided to work with distributors who have NFL licenses to sell their
products instead. Since the NFL season does not start until August, we cannot
determine what impact, if any, the change in our business strategy will have on
our sales.

         Additional revenues were also produced from the sale of products
related to our Marvel, Three Stooges and Terminator license and a special order
of Nurse Dana scrolls. In addition to income from traditional sources, revenue
was generated from Internet sales through e-bay. The timely availability of
product samples has become a critical element in the ability to successfully
obtain orders from distributors and especially retailers who prepare product
sales plans (plan-o-gram) at least six months in advance. Consumer demand for
these products is most often driven directly by the initial start of a sports
season and followed later by the success of individual teams. Consequently, we
have missed the window of opportunity afforded us by certain of our licenses. We
are constantly seeking to remedy this serious problem by raising additional
working capital and, most importantly, by seeking new sourcing for our principal
products that can produce samples in a timely and cost effective way to support
the sales efforts.

         Cost of sales for the three months ended May 31, 2006 increased by
$122,304 from the three months ended May 31, 2006. This increase was mainly
attributable increased sales volume. Cost of sales as a percentage of revenues
increased to 32.5% for the three months ended May 31, 2006 as compared to 145.2%
for the same period last year.

         Cost of sales for the three months ended May 31, 2006 were comprised of
costs associated with the sale of the products related to the National Football
League License and College Licenses. 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 feels 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 May 31,
2006 increased to $723,652 from $290,638 for the same period the previous year.
For the three months ended May 31, 2006 we incurred $341,800 in non cash
services through the issuance of common stock.

                                       5
<PAGE>

         Selling and administrative expense consists of payroll and related
fringe benefits, royalties, commissions paid to manufacturers sales
representatives, advertising, rent and other related fixed overhead expenses.
Also included in this category are the expenses related to the replication of
movie props 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 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 $409,006 for the three months ended May
31, 2006 as compared to $230,659 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 $287,821 and $109,954 of interest
expense respectively for the three months ended May 31, 2006 and May 31, 2005,
respectively.

         For the three months ended May 31, 2006, we incurred a non-cash loss in
adjusting the fair value of the embedded conversion feature and related warrant
derivatives relating to the convertible debentures of $3,072,492 as compared
with $1,180,466 during the prior year. Additionally, for the three months ended
May 31, 2006, we incurred a non-cash loss with conversion of our convertible
debentures to common stock of $353,267.

         As a result of the above, we had a net loss of $4,720,384 for the three
months ended May 31, 2006 as compared to a net loss of $1,711,153 for the same
period last year.

LIQUIDITY AND CAPITAL RESOURCES

         As of May 31, 2006, we had a working capital deficiency of $5,325,548.
The working capital deficit as of May 31, 2006 is a direct result of the
unprofitable operations for prior years as well as for the past three months
ended May 31, 2006 that resulted in cash used in operating activities of
$696,270. We had an ending cash balance of $500,233 at May 31, 2006. As such, we
will have to raise additional capital within the next twelve months.

         We have financed our losses through private sales of debt securities
and the issuance of stock for services. During the three months ended May 31,
2006, we received the following capital infusions: $900,000 from issuance of
secured convertible debentures.

         We have entered into an agreement with an individual investor whereby
the investor agreed to provide us with a line of credit up to $750,000 with an
interest rate of 18% per annum, payable annually, maturing one year from each
draw. We, at our option, can repay the debt in cash or may elect to convert any
of the loans into shares of our common stock at 75% of the closing bid of the
previous day. As of May 31, 2006, we have borrowed $215,000, net, from this
facility.

         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 have sufficient funds to conduct our operations for several
months, but not for 12 months or more. We believe that we will need
approximately $750,000 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 May 31, 2006, we had $547,452 in outstanding notes and loans
payable, (of which $1,143 is due to related parties) $37,500 in convertible
subordinated debentures and $2,111,416 in outstanding convertible secured
debentures, net. As of May 31, 2006, we had $3,592,052 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.

                                       6
<PAGE>

         Our independent auditors have issued a going concern paragraph in their
opinion on our consolidated financial statements for the year ended February 28,
2006 that is included in our Form 10-KSB 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:

<TABLE>
<CAPTION>
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
     Transaction Date       Secured       Interest                         Conversion Price                         Warrants
                          Convertible        Rate
                          Notes Sold
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------

---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
<S>                    <C>                <C>         <C>                                                         <C>
May 2000               $400,000           10%         $0.04 or 25% of market value                                 4,000,000
                       ($186,128
                       remaining)
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
May 28, 2002           $75,000            12%         $.01 or 25% of the  average  of the lowest  three  intraday  150,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
November 26, 2002      $250,000           15%         $.01 or 25% of the  average  of the lowest  three  intraday  500,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
May 15, 2003           $25,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  50,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
June 20, 2003          $25,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  50,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
July 23, 2003          $25,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  50,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
November 14, 2003      $50,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  100,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
January 13, 2004       $50,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  100,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
February 13, 2004      $25,000            15%         $.01 or 25% of the  average  of the lowest  three  intraday  50,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
</TABLE>

                                       7
<PAGE>
<TABLE>
<CAPTION>
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
     Transaction Date       Secured       Interest                         Conversion Price                         Warrants
                          Convertible        Rate
                          Notes Sold
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------

---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
<S>                    <C>                <C>         <C>                                                         <C>
March 16, 2004         $100,000           15%         $.01 or 25% of the  average  of the lowest  three  intraday  200,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
May 28, 2004           $550,000           15%         $.01 or 25% of the  average  of the lowest  three  intraday  1,650,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
September 30, 2004     $250,000           15%         $.0026 or 25% of the average of the lowest  three  intraday  1,250,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
May 18, 2005           $400,000           10%         $.0016 or 25% of the average of the lowest  three  intraday  47,368,422
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
July 7, 2005           $850,000           10%         $.0016 or 25% of the average of the lowest  three  intraday  1,700,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
September 29, 2005     $302,597           2%          $0.0016 or 25% of the average of the lowest three  intraday  -0-
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
January 20, 2006       $400,000           10%         $0.0016 or 20% of the average of the lowest three  intraday  400,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
March 23, 2006         $400,000           8%          $0.03 or 20% of the  average of the lowest  three  intraday  100,000,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
May 31, 2006           $500,000           8%          $0.03 or 25% of the  average of the lowest  three  intraday  100,000,000
                                                      trading prices during the twenty  trading days  immediately
                                                      preceding conversion
---------------------- ------------------ ----------- ------------------------------------------------------------ ----------------
</TABLE>

         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 July 14, 2006, 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 $4,463,725 in
secured convertible notes remaining, excluding interest, would convert into
186,549,000,000 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.

         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.

                                       8
<PAGE>

         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 $0.01 or 25% of the
average of the lowest three intraday trading prices during the twenty trading
days immediately preceding conversion. These debentures were settled in the
three months ended May 31, 2006.

         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 $.001 per share of common stock.
Conversions of any interest on the debentures are at current market price. On
September 1, 2004, $10,000 of the note, and $1,200 in interest were converted
into 11,428,571 shares of common stock. The debentures are in default. As of May
31, 2006, there is $37,500 remaining.

         The Company recently increased the number of authorized shares of
common stock to 15,000,000,000, but this is still not a sufficient number of
authorized shares of common stock available if all debt holders decided to
convert their convertible secured debentures in the Company's common stock. The
Company is 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 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 conversation
price, 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.

                                       9
<PAGE>

         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 May 31, 2006, we had an allowance for bad debts of $18,536. We actively
manage our accounts receivable to minimize our credit risks and believe that our
current allowance for doubtful accounts is fairly stated.

                                       10
<PAGE>

         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 May 31, 2006, we had inventory of
$255,248 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.

         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 losses of $3,425,759 and $1,180,466 for the three ended May 31, 2006
and 2005, respectively.

         Realizability of Trade Credits Received in Non monetary/Barter
Transactions: We consummated contracts whereby we, for product delivered, hves
available for usage: media, goods and services with certain restrictions and
limitations collectively referred to as "trade credits". We recorded these
transactions based on the expected fair value of the goods and services expected
to be received. As of May 31, 2006, we had trade credits of $401,589.

Recent Accounting Pronouncements

         In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based
Payment". SFAS No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees". SFAS No. 123 (R) focuses primarily on the accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123 (R) requires companies to recognize in the statement
of operations the cost of employee services received in exchange for awards of
equity instruments based on the grant-date fair value of those awards (with
limited exceptions). SFAS No. 123 (R) is effective as of the first interim or
annual reporting period that begins after June 15, 2005 for non-small business
issuers and after December 15, 2005 for small business issuers. Accordingly, the
Company adopted SFAS No. 123 (R) in its quarter ending May 31, 2006. The Company
did not have an impact from this revised standard or any significant impact on
the Company's results of operations.

         In November 2004, the FASB issued Statement of Financial Accounting
  Standards No. 151, "Inventory Costs". This statement amends the guidance in
  ARB No. 43 Chapter 4 Inventory Pricing to require items such as idle facility
  costs, excessive spoilage, double freight and handling costs to be expenses in
  the current period, regardless if they are abnormal amounts or not. This
  Statement became become effective for the Company in the quarter ended May 31,
  2006. The adoption of this Statement had no immediate material impact on the
  Company.

                                       11
<PAGE>


         In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
  Error Corrections" ("SFAS 154") which replaces Accounting Principles Board
  Opinions No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting
  Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28."
  SFAS 154 provides guidance on the accounting or and reporting of accounting
  changes and error corrections. It establishes retrospective application, or
  the latest practicable date, as the required method for reporting a change in
  accounting principle and the reporting of a correction of an error. SFAS 154
  is effective for accounting changes and a correction of errors made in fiscal
  years beginning after December 15, 2005 and is required to be adopted by the
  Company in the first quarter of fiscal 2007. The Company elected to adopt SFAS
  154 early with its 10-KSB for the fiscal year ended February 28, 2006.


                                       12
<PAGE>

ITEM 3 - CONTROLS AND PROCEDURES

     a)  Evaluation of Disclosure Controls and Procedures. As of May 31, 2006,
         the Company's management carried out an evaluation, under the
         supervision of the Company's Chief Executive Officer and Chief
         Financial Officer of the effectiveness of the design and operation of
         the Company's system of disclosure controls and procedures pursuant to
         the Securities and Exchange Act, Rule 13a-15(e) and 15d-15(e) under the
         Exchange Act). Based upon that evaluation, the Chief Executive Officer
         and Chief Financial Officer concluded that the Company's disclosure
         controls and procedures were effective, as of the date of their
         evaluation, for the purposes of recording, processing, summarizing and
         timely reporting material information required to be disclosed in
         reports filed by the Company under the Securities Exchange Act of 1934.

     b)  Changes in internal controls. There were no changes in internal
         controls over financial reporting that occurred during the period
         covered by this report that has materially affected, or is likely to
         materially effect, the Company's internal control over financial
         reporting.


                                       13
<PAGE>

                                     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 May 31, 2006 the Company issued
688,700,000 shares of common stock for financial services rendered having a
value of $341,800.

         The Company relied upon the exemption provided in Section 4(2) of the
Securities Act of 1933 in connection with above-referenced transactions. The
Company relied on Section 4(2) with respect to these transactions as no public
solicitation was employed, the shares bore restrictive legends, and the
acquirers of the shares had access to the information which would be contained
in the Registration Statement and had sufficient sophistication so as not to
require the protection afforded by the Registration under the Securities Act.
Each of the purchasers of the Company's securities was given the opportunity to
ask question of and received answers from Company management. No commission or
other remuneration was paid or given in connection with the offer and sale of
the securities.

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 $4,463,725 and
interest. 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

Pursuant to a written consent of a majority of stockholders dated May 2, 2005 in
lieu of a special meeting of the stockholders, the majority of stockholders
approved the following actions, which were implimented in the first quarter
during the fiscal year 2007:

1. To Amend the Company's Certificate of Incorporation, as amended, to increase
the number of authorized shares of common stock, par value $.001 per share (the
"Common Stock"), of the Company from 700,000,000 shares to 15,000,000,000
shares;

2. To Amend the Company's Certificate of Incorporation, as amended, to authorize
the creation of 10,000,000 shares of blank check preferred stock;

3. To elect two directors to the Company's Board of Directors, to hold office
until their successors are elected and qualified or until their earlier
resignation or removal; and

4. To adopt the Company's 2005 Incentive Stock Plan.

ITEM 5   OTHER INFORMATION

         Not applicable.


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<PAGE>

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)


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<PAGE>

                                   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:   July 24, 2006              By: /s/ PAUL S. LIPSCHUTZ
                                      ----------------------
                                   Paul S. Lipschutz
                                   Chief Executive Officer
                                   (Principal Executive Officer),
                                   Principal Financial Officer and Principal
                                   Accounting Officer


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