U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                 AMENDMENT NO. 2
                                       TO



                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    FOR FISCAL YEAR ENDED FEBRUARY 28, 2005.

                                    000-30703
                             Commission File Number

                        COLLECTIBLE CONCEPTS GROUP, INC.

                 (Name of small business issuer in its charter)



          Delaware                                               95-4026880
          --------                                               ----------
State or other jurisdiction                                     IRS Employer
      of incorporation                                       Identification No.

                  1600 Lower State Road, Doylestown, PA 18901,
                 (215) 491-1075 (Address and telephone number of
                          principal executive offices)

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $0.001

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Exchange Act,  during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [X].

The registrant's revenues from continuing operations for the year ended February
28, 2005 were $679,682.

As of July 27,  2005,  the  aggregate  market  value of the common stock held by
non-affiliates computed by reference to the average bid and asked prices of such
stock was $1,128,725.

As of July 27, 2005, the registrant had 699,695,037  shares of common stock, par
value $.001 per share, outstanding.


                                       1
<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

                  BUSINESS DEVELOPMENT & HISTORICAL PERSPECTIVE

      Collectible Concepts Group, Inc. was originally formed on March 1, 1986 as
"Amour  Corporation".  We changed our name to "Bard  Sports  Corp." in September
1988,  and changed our name again on February 28, 1993 to "USA Sports Corp".  We
changed our name to "Collectible Concepts Group, Inc." on April 27, 1999. We are
incorporated under the laws of the State of Delaware.

      Our roots are in the production  and  distribution  of  collectible  items
principally related to various sports. Following what management perceived to be
a change in consumer trends from high end sports  collectibles to more commodity
types of sports items such as trading cards, we modified our business  direction
and refocused  our efforts on the emerging  consumer  interest in  entertainment
related  collectibles.  This redirection to the entertainment markets required a
significant  development  effort  on our  part,  particularly  in  terms  of the
procurement  of new licenses and marketing  privileges  necessary to produce and
distribute  collectibles  in this new  marketing  area.  Beginning  in 1999,  we
proceeded  to obtain  licenses,  from Marvel for its X-Men,  Spiderman  and Hulk
movies as well as licenses to produce  products  related to the  Terminator 1, 2
and 3 movie  series.  Expanding  on our plan to  provide  entertainment  related
goods; we also purchased  licenses from Marvel for its comic book characters and
additional  licenses  for the  Three  Stooges  and  Chicken  Soup  for the  Soul
(terminated  December 31, 2002). We proceeded to secure more licenses  including
Planet of the Apes,  Farscape,  Stan Lee Media, Vern Troyer and Titan Motorcycle
Company.  Items covered by these licenses included hanging wall scrolls produced
in a silk-like  fabric,  collector  pins,  sculpted items and items shown in the
film  such as dog tags,  rings  and  replicas  of jet  airplanes.  While we were
successful  in  presenting  the Company to the  entertainment  marketplace  as a
viable licensee,  we made significant  investments in the cost of these licenses
both in terms of the down payments and,  importantly,  the guaranteed  royalties
stipulated under the license agreements.  Additional  investment both in dollars
and human resources was also required to develop the authorized products.  These
expenditures  taxed our financial  resources placing serious  limitations on our
ability to deliver  products in a timely  fashion,  a crucial  requirement  when
consumer  demand is driven by  scheduled  events  such as movie  releases.  This
proved to be a major factor in the decline in our revenues.

      We continued to seek a business model that would enable us to leverage our
strengths in licensing and  distribution of collectibles  and not burden us with
the financial  requirements  associated with product development,  manufacturing
and inventory. Additionally, we sought to alter our strategic direction to focus
on markets that had a more mainstream  profile than the  entertainment  industry
provides.  We concluded that the College affinity market,  the children's market
and the  professional  sports  market  were venues  where we could  perform in a
modality  that would more  fully  utilize  our  strengths  and not be  seriously
affected by our weaknesses.  We adopted this new business model and proceeded to
secure business opportunities in the new target markets.

      The Company has allowed all of its licenses  related to the  entertainment
industry  lapse as we  pursue  the  college  and  professional  sports  markets.
Currently  the Company  has  licensing  agreements  with the  National  Football
League,  National  Basketball  Association,  Arena  Football  League and over 25
different colleges.

                              CURRENT PRODUCT LINES

      Following the migration to  entertainment  related  licenses,  our product
line is currently comprised of items principally related to our new professional
sports licenses. Revenues for the current year were derived principally from the
sale of products  for these  licenses.  These  include  our satin wall  scrolls,
Fanbana's  and  megaphone  caps.  This core  grouping of products  provides  the
foundation  for  our  catalog  of  goods  to all  four  of our  target  markets;
entertainment,   children's,  collegiate  and  professional  sports.  We  obtain
licenses  within  each of the target  markets  and  produce  products  using the
licensed  images  appropriate to that market.  We produce our satin wall scrolls
with images of  Spiderman  and other  marvel  characters  for the  entertainment
market and also with images of mascots and school logos from  colleges with whom
we have licenses.  By simply changing the licensed image, we are able to produce
products from the core family group for all of our markets.  In this manner,  we
have dramatically reduced the number of manufacturing resources necessary to run
our business without limiting the scope of our marketplace.


                                       2
<PAGE>


                              DISTRIBUTION CHANNELS

      We  sell  our  collectible   products   through   traditional   retailers,
distributors, and catalogers.  Historically, we have placed our products in over
4,500 retail locations  including Spencer Gifts,  Claire's Boutique,  Musicland,
Tower  Records,  Halloween and costume  shops,  and a growing list of retailers.
Additionally,  we sell our college affinity products through college  bookstores
on and off campus as well as a host of retailers  located in and around  college
campuses.  Our products are presented to these channels  through  manufacturer's
representatives  as well as our own internal sales staff. Our Stories for Heroes
audio book is  offered to  consumers  through a variety of  retailers  including
bookstores, record shops and on the Internet via Amazon.com.

                       SUBSEQUENT EVENTS AND DEVELOPMENTS

      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  that was owed upon
signing the agreement.

      On May 12, 2005, we 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. We paid $10,000 for the rights
to the license.

      On May 18, 2005, 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  47,368,422 shares of our common
stock.  This money is being used to re-new our product license with the National
Football  League  and  to  produce  enough  quantity  of  NFL  related  products
(Fanbana's, Megaphone Caps and Scrolls) to meet expected demand for the upcoming
season.

      In June 2005, the Company renewed its licensing agreement with the NFL for
the period April 2005 through March 2006.  The agreement  includes a 12% royalty
paid on sales with a minimum  annual  royalty of $100,000,  of which $30,000 was
due upon signing the agreement.

      On July 7, 2005, 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)  $850,000  in secured
convertible  notes and (ii) warrants to purchase  1,700,000 shares of our common
stock. This money is being used to purchase inventory and working capital.

                                NEW OPPORTUNITIES

      Building on our revised  business  model,  we continued  to seek  products
whose  marketability  would be enhanced by the application of images,  logos and
other identifying  symbols available through licenses we had or could obtain. We
looked for product  partners whose goods addressed our new target  markets,  the
children's  market,  college market and the  professional  sports market.  These
sectors  represent new revenue  opportunities for us; the college and children's
segments are renewable markets, producing a fresh group of consumers every year;
licensed goods sales are extremely prevalent in children's marketing circles and
typically not limited to single products; the college marketplace extends beyond
that of the current student bodies and includes the alumni  populations as well;
the collegiate and  professional  sports markets are well known as popular areas
for the  distribution  of various  promotional  items  bearing  team and sponsor
company logos and slogans. Our long history and experience in the sports markets
provide additional benefits to this endeavor.  During the current fiscal year we
entered into several relationships consistent with our new business strategy.


                                       3
<PAGE>


                               MARKETING STRATEGY


      We  have  expanded  our  marketing   strategies  and  now  produce  unique
collectible products for the entertainment, children's, college and professional
sports markets.  We market our products  primarily through various  distributors
and independent sales  organizations  that collectively cover all of our markets
both  domestic and  international.  We also market our  merchandise  directly to
consumers online through established websites such as Amazon.com and others. Our
independent  representatives  also sell to mass  merchandisers  such as  Target,
Wal-Mart and K-Mart as well as smaller chains and independently owned stores. We
are planning to market our college  products through the CLP Group who will sell
to  college  bookstores  and to other  on-campus  retailers.  For the year ended
February 28, 2005, CLP Group was our primary customer,  who accounted for 89% of
our revenues during the year.


      We do not believe we can clearly  define the cash needs to  stabilize  and
expand our business.  We continue to investigate  various merger and acquisition
opportunities and routinely examined license opportunities.  Accordingly,  there
may be  significant  variation  in the range of  dollars  needed if any of these
potential business  arrangements come to fruition. In general, the fixed cost of
a  license,  or  minimum  royalty,  can range from  $10,000  to  $100,000,  plus
royalties  earned  over the  minimum,  and would  normally  cover a one,  two or
three-year  period.  While we have  refocused  our business  model to ameliorate
traditional  product  development and production  costs,  actual costs will vary
depending  upon the  nature  and type of the  product  to be  developed  and the
expected revenue stream to the licensor.  Our  pre-production  activity includes
prototype and sample package and display artwork and models, all of which may go
through  several  iterations  as both we and the  licensor  review the  samples.
Historically,  pre-production  costs also  included  tooling  costs,  which were
capitalized, and the other pre-production costs that were expensed. In the past,
these pre-production costs have ranged from $5,000 to $100,000.

      As of February 28, 2005, we had accounts  payable and accrued  expenses of
$3,807,400 and $1,517,218 in loans,  notes and debentures past due or coming due
within  the  next 12  months.  We do not  currently  have  sufficient  financial
resources to meet these  obligations and will depend on new outside financing to
satisfy our pending  obligations.  We also lack adequate financial  resources to
purchase inventory and meet all of the financial  commitments necessary to enter
into new product  ventures,  and will depend on new outside financing to further
these  efforts.  There  can be no  assurance  that we  will  be  able to  obtain
additional  adequate outside financing to purchase  inventory,  meet our current
obligations  or  continue  to  expand  our  operations.  We would not be able to
continue at our current staffing and expense levels without additional cash from
cash sales, collection of accounts receivable or additional funding.

      Further,  our success in marketing  products based upon motion pictures is
largely  dependent upon the box office success of the films.  Thus, there can be
no assurance that any licensing rights that we may obtain will prove profitable.

                                   COMPETITION

      Our licenses  typically grant us the exclusive  right to produce  specific
products  utilizing specific images and logos so competition for our products in
the marketplace is generally quite limited.  We believe that direct  competition
for  obtaining  licenses  in our  entertainment  is not a  factor.  We  consider
competition  for  licenses  in the  college  and  children's  markets to be more
significant   although  we  have   experienced   good  results  in  our  initial
applications to various schools.  Generally, we believe we will receive licenses
in most of the cases where we seek them.  Historically,  we experienced our most
significant  competition  in  obtaining  shelf  space in retail  outlets for our
products,  however,  under the new  business  configuration  that  channels  our
efforts and talents through partnerships and strategic  relationships with other
entities with existing  products,  the impact of competition is greatly softened
and actually  reduced to the level of competing for the  strategic  relationship
rather than  competing  for the  end-user  consumer.  Here,  the strength of our
licenses  and/or  product  positions (as in the case of our exclusive  marketing
rights for the Fanbana), serve to neutralize competition and afford us a clearer
path to market. This is especially true in the college market where our products
will be featured in college bookstores and other on-campus retailers creating an
acutely focused retail environment servicing our target consumers exclusively.


                                       4
<PAGE>


                                  MANUFACTURERS

      We do not manufacture our own products, but rely on outside manufacturers.
Several of these outside  manufacturers are located overseas and we believe that
there are sufficient numbers of manufacturers that we will not have to rely upon
any  single  source  and  will  be  able  to  obtain  alternative  manufacturing
facilities  if chosen  manufacturers  do not perform.  We  generally  enter into
exclusive manufacturing  agreements with our manufacturers for a single product,
but may use various  manufacturers for all of the products in a series. The main
raw  materials  used by our  manufacturers  are  plastics,  pewter,  resins  and
packaging  material.  We do not believe  that there is any  significant  risk of
shortages in these raw  materials,  nor is fluctuation in the price of these raw
materials  likely to have an adverse impact on our costs or profit margins.  All
of our manufacturing agreements are U.S. dollar denominated,  so we generally do
not face exchange rate risks.

                              INTELLECTUAL PROPERTY

      We have  several key licenses  and  business  arrangements  upon which the
success of our  business is  dependent,  including  licenses  with the  National
Football League, the National Basketball Association,  the Arena Football League
and a license for  marketing  involving  the Three  Stooges.  The success of our
college  marketing  initiatives is dependent on our existing  school licenses as
well as our ability to continue to add more schools to our  portfolio of college
licenses as our sales  campaigns  roll out. The  following is a list of colleges
and universities that we have existing licenses with and the license  expiration
date:

         School                     License Expiration Date
         ---------------            ------------------------
         Univ of Memphis            June 30, 2006
         Brigham Young              June 30, 2006
         Notre Dame                 June 30, 2006
         Arkansas State             June 30, 2006
         Arizona State              March 31, 2006
         Univ of Connecticut        June 30, 2006
         Duke                       June 30, 2006
         Univ of Iowa               April 16, 2006
         Iowa State                 December 31, 2006
         Louisiana State            June 30, 2006
         Univ of Maryland           June 30, 2006
         Univ of Miami              June 30, 2006
         Michigan State             December 31, 2006
         Michigan                   December 31, 2006
         Mississippi State          June 30, 2006
         Univ of N Carolina         June 30, 2006
         Ohio State                 June 30, 2006
         Oklahoma                   June 30, 2006
         Oklahoma State             June 30, 2006
         Oregon                     June 30, 2006
         Richmond                   March 31, 2006
         Texas A & M                March 31, 2006
         Villanova                  June 30, 2006
         Virginia                   June 30, 2006
         Virginia Tech              July 1, 2006
         Wake Forest                March 31, 2006
         West Virginia              June 30, 2006


                                       5
<PAGE>




Employees

      As of July 1,  2005,  we had five  full time  employees,  of which two are
management; two are marketing and one shipping and delivery. In addition, we had
one part time  employee  and three  independent  consultants.  We  consider  our
relations with our employees to be good.

ITEM 2. DESCRIPTION OF PROPERTY.

      Our  executive and  principal  administrative  offices are located at 1600
Lower State Road,  Doylestown,  Pennsylvania  18901,  where we  currently  lease
approximately  2,600  square feet of office  space.  We renewed the lease for an
additional  five years,  expiring in September 2009. The monthly rental payments
under the lease are $2,000 in 2005,  with annual  increases of $960.  We believe
that  our  leased  property  is  sufficient  for  our  current  and  immediately
foreseeable operating needs.

ITEM 3. LEGAL PROCEEDINGS.

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

      None.


                                       6
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

                            MARKET FOR COMMON EQUITY

      Our common stock trades on the  Over-the-Counter  Bulletin Board under the
symbol "CCGI."

      For the periods indicated, the following table sets forth the high and low
bid  prices  per share of common  stock.  These  prices  represent  inter-dealer
quotations  without  retail  markup,   markdown,   or  commission  and  may  not
necessarily represent actual transactions.

                             Low($)    High($)
                             ------    -------
2004
First Quarter                 0.01       0.02
Second Quarter                0.01       0.01
Third Quarter                 0.01       0.01
Fourth Quarter                0.01       0.01

2005
First Quarter                 0.01       0.01
Second Quarter                0.01       0.01
Third Quarter                 0.01       0.01
Fourth Quarter                0.01       0.01

2006
First Quarter                 0.01       0.01
Second Quarter (1)            0.01       0.01

(1) As of July 27, 2005

      As of July 29, 2005,  management  believes there to be  approximately  946
holders of record of our common stock.

Dividend Policy

      We have  never paid any cash  dividends  on our  capital  stock and do not
anticipate  paying any cash  dividends  on our common  stock in the  foreseeable
future.  We intend to retain  future  earnings to fund  ongoing  operations  and
future capital  requirements of our business.  Any future  determination  to pay
cash dividends will be at the discretion of the Board and will be dependent upon
our financial  condition,  results of operations,  capital requirements and such
other factors as the Board deems relevant.

Recent Sales Of Unregistered Securities


      On November 3, 2004,  we issued  20,000,000  shares of our common stock to
one  accredited  investor in  exchange  for the  retirement  of $60,000 in loans
payable.  Such issuances were considered  exempt from  registration by reason of
Section 4(2) of the Securities Act of 1933.

      On November 30, 2004, we issued  20,000,000  shares of our common stock to
one  accredited  investor in  exchange  for the  retirement  of $40,000 in loans
payable.  Such issuances were considered  exempt from  registration by reason of
Section 4(2) of the Securities Act of 1933.

      On December 8, 2004,  we issued  9,900,000  shares of our common  stock to
three  accredited  investors  in  exchange  for the  retirement  of  $19,800  in
convertible  notes.  Such issuances were considered  exempt from registration by
reason of Section 4(2) of the Securities Act of 1933.



                                       7
<PAGE>


      On February 1, 2005, we issued 5,000,000 shares of our common stock to one
accredited  investor in exchange for the retirement of $10,000 in loans payable.
Such issuances were  considered  exempt from  registration  by reason of Section
4(2) of the Securities Act of 1933.

      On February 9, 2005, we issued 2,000,000 shares of our common stock to one
accredited  investor in exchange for the  retirement of $4,000 in loans payable.
Such issuances were  considered  exempt from  registration  by reason of Section
4(2) of the Securities Act of 1933.

      On February 16, 2005, we issued  10,000,000  shares of our common stock to
one  accredited  investor in  exchange  for the  retirement  of $20,000 in loans
payable.  Such issuances were considered  exempt from  registration by reason of
Section 4(2) of the Securities Act of 1933.

      * All of the above offerings and sales were deemed to be exempt under rule
506 of Regulation D and Section 4(2) of the  Securities Act of 1933, as amended.
No advertising or general  solicitation was employed in offering the securities.
The  offerings and sales were made to a limited  number of persons,  all of whom
were accredited investors,  business associates of Collectible Concepts Group or
executive officers of Collectible Concepts Group, and transfer was restricted by
Collectible Concepts Group in accordance with the requirements of the Securities
Act of 1933. In addition to representations by the above-referenced  persons, we
have made independent  determinations that all of the  above-referenced  persons
were  accredited  or  sophisticated  investors,  and that they were  capable  of
analyzing the merits and risks of their investment, and that they understood the
speculative nature of their investment. Furthermore, all of the above-referenced
persons were  provided  with access to our  Securities  and Exchange  Commission
filings.  Except as disclosed  above,  we have not employed any  underwriters in
connection with any of the above transactions.

Equity Compensation Plans

      None.


                                       8
<PAGE>


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

      Some of the  information  in this  Form  10-KSB  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 under "Risk
Factors," "Business" and elsewhere in this prospectus. See "Risk Factors."

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.

      The Company  continues  to pursue its  re-evaluated  business  model.  The
Company  believes that  licenses have evolved into less time  sensitive and sale
spiking  properties.  The Company is not renewing or continuing licenses that do
not fit our new business model. The Company's new business model will be focused
on more evergreen properties and those with a longer window of opportunity.  The
Company  recognized  the need to have  products that  addressed  the  mainstream
consumer market where market size and repeat sales  opportunities could give the
Company a means to stabilize and grow its revenues.  To avoid the time,  expense
and risks associated with in-house new product  development,  the Company sought
out entities with  mainstream  consumer  products whose  marketability  could be
enhanced by the addition of the Company's  licenses.  These activities  produced
new joint  ventures and products that  addressed new markets in keeping with the
Company's new  marketing  direction  aimed at the  collegiate  and  professional
sports marketplaces.

      In July of 2004,  our Stories for Heroes  audio book of Arthur  children's
stories were released for  distribution in a pre-launch  campaign on Amazon.com.
CCGI 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.

      On July 19, 2004, we 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.

      In  July  2004,  one of our  largest  distributors,  the CLP  Group,  Inc.
succeeded in obtaining  approval from  McDonald's fast food chain as an approved
vendor of our Fanbana product line. This is an important achievement inasmuch as
approval as a McDonald's  vendor involves close scrutiny and clears the path for
sales to this huge  international  chain. CLP is actively engaged in selling our
Fanbana's with various college logos to several hundred McDonald's stores in the
southeastern and southwestern USA.

      On September 17, 2004,  we signed an agreement  with the NFL for a license
and we were granted  permission  to produce and sell our products for all 32 NFL
teams.

      In September  2004, NFL great Joe Theismann  joined CCGI as an advisor and
consultant.


                                       9
<PAGE>


      On February 28, 2005, the Company sold to Alizay Consultant Limited a 2.5%
interest 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 any future  license in 2006 with Major League  Baseball
("MLB"),  if  obtained.  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.


      During the year ended February 28, 2005, the Company  successfully  signed
licensing agreements with over 25 different colleges,  which include Notre Dame,
The Ohio  State  University,  University  of Miami and  University  of  Southern
California.  The Company  also signed a licensing  agreement  with the  National
Basketball  Association  in February  2005.  The Company is also  pursuing  more
collegiate licenses.

      Sales for the  twelve  months  ended  February  28,  2005  were  comprised
primarily  of products  offered with our National  Football  League  License and
College  Licenses.  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 twelve months ended February 28, 2005 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. This
is especially  evidenced by the arrangement with Maxim Logistics who will be our
principal provider of Satin Scrolls, one of our leading products. Several of our
manufacturers  will also store and ship product directly to a customer,  thereby
reducing  shipping time and  eliminating the costs we would incur if the product
was  first  shipped  to our  location.  We also  feel 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,  general  and  administrative  expense  consists  of payroll  and
related fringe benefits,  royalties,  commissions  paid to  manufacturers  sales
representatives,   advertising,  rent,  depreciation  and  other  related  fixed
overhead  expenses.  Also included in this category are the expenses  related to
the replication of 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,  general and administrative  expenses.  Costs of manufacturing products
for sale are included within costs of sales.

      The  amount  and  timing of the  revenue  generated  from the sales of our
professional   sports  and  collegiate   licenses   related  products  are  more
predictable  then the  entertainment  related products we concentrated on in the
past.   As  these  sales  grow  our  revenues  and  net  income  may   fluctuate
significantly between comparable periods. Additionally,  since our inception, we
have experienced  significant operating and net losses that we have been able to
fund by obtaining private capital. Until we achieve significant sales, we do not
know when we will  generate  income  from  operations  and if we will be able to
raise sufficient capital necessary to fund future operations.


                                       10
<PAGE>


      As of the fiscal  year ended  February  28,  2005,  we had an  accumulated
deficit of $ 21,858,769.  This deficit arose from  operating  losses and not any
particular  transaction  or  transactions.  We  have  not  generated  sufficient
revenues to meet our operating expenses. As a result, there is substantial doubt
about our ability to continue as a going concern.

Twelve Months Ended  February 28, 2005 compared to Twelve Months Ended  February
29, 2004.

      Net revenue for the twelve months ended  February 28 2005 was $679,682 and
primarily  consisted of sales of  professional  and  collegiate  sports  related
products, X-Men 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 and
future sales from these  products are not  expected.  Net revenue for the twelve
months ended February 29, 2004 was $117,816 and primarily  consisted of sales of
X-Men products,  Terminator products,  Marvel Character products, E-Bay Internet
sales and a Special Ninja scroll sale.

      Cost of sales for the twelve months ended  February 28, 2005  increased by
$459,276  from the twelve  months ended  February 29,  2004.  This  increase was
mainly  attributable  to the increase in product sales of promotional  Fanbana's
and products  related to our National  Football League and Collegiate  licenses.
Cost of sales as a  percentage  of  revenues  decreased  to 87.9% for the twelve
months  ended  February  28,  2005 as  compared to 117% for the same period last
year.

      Selling,  general and administrative  expenses for the twelve months ended
February 28, 2005  increased to $1,289,910  from  $1,266,228 for the same period
the previous  year.  For the twelve months ended  February 28, 2005 and February
29, 2004 the services  obtained through the issuance of stock included  internal
accounting  and  financial  services,   internet  website  creation,   marketing
assistance,  insurance program review and general management consulting services
in the amount of $186,209 and $412,975 respectively. As previously mentioned, we
incur charges to bring the product to market.  These charges relate to the costs
of producing  samples as well as the related  package  design costs that must be
approved by the licensor prior to full production  runs of the product.  For the
twelve months ended February 28, 2005, we incurred charges relating to the costs
of producing the samples as well as the related package design of $44,952 versus
charges of $36,975 for the same period the previous year.

      We incurred  interest  expense of  $749,747  for the twelve  months  ended
February 28, 2005 as compared to $469,150 for the same period the previous  year
due to increased borrowings and the beneficial conversion calculation related to
the  application  of the Emerging  Issues Task Force  Bulletin for accounting of
convertible  securities and notes and loans payable with  beneficial  conversion
features.  The beneficial conversion  calculation added $487,500 and $268,750 of
interest expense  respectively for the twelve months ended February 28, 2005 and
February 29, 2004, respectively.

      As a result of the above,  we had a net loss of $1,680,968  for the twelve
months ended  February 28, 2005 as compared to a net loss of $1,322,823  for the
same period last year.

Liquidity and Capital Resources

      As  of  February  28,  2005,  we  had  a  working  capital  deficiency  of
$5,105,539.  The working  capital  deficit as of  February  28, 2005 is a direct
result of the  unprofitable  operations  for prior years as well as for the past
twelve  months ended  February 28, 2005 that  resulted in cash used in operating
activities of $735,665.  We had an ending cash balance of $1,040 at February 28,
2005. As such, we will have to raise  additional  capital within the next twelve
months.

      We have  financed  our  losses  through  private  sales of equity and debt
securities  and the  issuance of stock for  services.  During the twelve  months
ended February 28, 2005, we received the following capital  infusions:  $735,000
from issuance of secured  convertible  debentures and $1,612 (net of repayments)
from other  borrowings.  Additionally,  during this period,  we received notices
requesting conversion from the holders of demand notes,  convertible  debentures
and accrued interest in the aggregate amount of $282,070. These instruments were
converted into 226,991,973 shares of common stock.


                                       11
<PAGE>


      As of February 28, 2005,  we had $506,098 in  outstanding  notes and loans
payable,  (of which $4,297 is due to related  parties)  $127,300 in  convertible
subordinated  debentures  and  $1,580,695  in  outstanding  convertible  secured
debentures.  As of February 28, 2005, we had $1,569,467 in accounts  payable and
$2,237,933 in 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.


      In  connection  with our licensing  agreements  with  professional  sports
organizations  and  colleges  and  universities,  we are required to pay miminum
royalty  fees.  As of February  28,  2005,  we owe  $238,969  in unpaid  mimimum
royalties, of which $215,750 is owed on non renewed agreements.


      Our  independent  auditors have issued a going concern  paragraph in their
opinion  on  our  consolidated   financial   statements  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 Sold
                          Convertible Notes      Rate
                                 Sold
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
<S>                       <C>                 <C>          <C>                                                         <C>
May 2000                  $400,000            10%          $0.04 or 25% of market value                                4,000,000
                          ($258,820
                          remaining)
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
May 28, 2002              $75,000             12%          $.01  or 25%  of the  average  of  the  lowest  three         150,000
                                                           intraday  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         500,000
                                                           intraday  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          50,000
                                                           intraday  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          50,000
                                                           intraday  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          50,000
                                                           intraday  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         100,000
                                                           intraday  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         100,000
                                                           intraday  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          50,000
                                                           intraday  trading  prices  during the twenty  trading
                                                           days immediately preceding conversion
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
March 16, 2004            $100,000            15%          $.01  or 25%  of the  average  of  the  lowest  three         200,000
                                                           intraday  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       1,650,000
                                                           intraday  trading  prices  during the twenty  trading
                                                           days immediately preceding conversion
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
September 30, 2004        $250,000            15%          $.01  or 25%  of the  average  of  the  lowest  three       1,250,000
                                                           intraday  trading  prices  during the twenty  trading
                                                           days immediately preceding conversion
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
May 18, 2005              $400,000            15%          $.0016  or 25% of the  average  of the  lowest  three      47,368,422
                                                           intraday  trading  prices  during the twenty  trading
                                                           days immediately preceding conversion
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
July 7, 2005              $850,000            15%          $.0016  or 25% of the  average  of the  lowest  three       1,700,000
                                                           intraday  trading  prices  during the twenty  trading
                                                           days immediately preceding conversion
------------------------- ------------------- ------------ ------------------------------------------------------ ---------------
</TABLE>


                                       12
<PAGE>


      The secured convertible notes bear interest as described above,  typically
mature two years from the date of issuance or two years from when the company is
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  September  30,  2005,  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  $.001  and,
therefore,  the conversion price for the secured  convertible notes was $.00025.
Based on this  conversion  price,  the $2,933,820 in secured  convertible  notes
remaining,  excluding interest,  were convertible into 11,735,280,000  shares of
our common stock. If the Company's stock price should decrease, the Company will
be required to issue substantially more shares, which will cause dilution to the
Company's 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 the  Company's
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,  except for the secured
convertible  debentures issued July 7, 2005. 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 lendors,  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 lendors pursuant to
our existing security agreements.



      In August 2001, we issued $71,800 in subordinated  convertible debentures.
The  debentures  have a 12% coupon  and  mature one year from date of  issuance.
Conversions  to common  stock are at the lower of $0.01 or 25% of the average of
the  lowest  three  intraday  trading  prices  during the  twenty  trading  days
immediately preceding conversion. The debentures are in default.

      In May 2004, we issued $65,500 in subordinated convertible debentures. The
debentures  have a 12%  coupon  and  mature  one  year  from  date of  issuance.
Conversions  to common stock are at a price of $.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.

      The Company  currently  does not have a  sufficient  number of  authorized
shares of common stock  available if all debt holders  decided to convert  their


                                       13
<PAGE>


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 secured  convertible
debenture  holders  have  informed  us that they  have not and do not  intend to
convert  any of their debt at this time.  Therefore,  no accrual for the penalty
has been made at February 28, 2005. We do not, however, have any legally binding
commitment  from the  debenture  holders to waive the default  provision  of the
debenture.


      The lack of a  sufficient  number of  authorized  shares  of common  stock
available for the conversion of all our  outstanding  convertible  debt resulted
from a combination of issues.  First,  as a result of the variable  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.

      In order to have a sufficient  number of authorized shares of common stock
available for the conversion of all our outstanding convertible debt, we need to
increase the number of shares of common stock that we are  authorized  to issue.
We have  filed a  preliminary  information  statement  with the  Securities  and
Exchange  Commission,  which has been amended and is being  reviewed by the SEC,
stating that a majority of our shareholders  have voted in favor of an amendment
to our certificate of incorporation to increase the authorized  number of shares
of common stock.  Once we have cleared all comments from the SEC, we will file a
definitive  information  statement  with the SEC.  After we file the  definitive
information  statement,  we  will  mail a copy  of  the  definitive  information
statement,  along with all documents  incorporated by reference therein,  to our
shareholders of record. 20 days after mailing of the information  statement,  we
will file a  certificate  of  amendment  with the  Delaware  secretary  of state
amending our  certificate of  incorporation  to increase the number of shares of
authorized common stock. Upon the certificate of amendment being accepted by the
Delaware  Secretary  of State,  we will have a sufficient  number of  authorized
shares of common  stock  available  for the  conversion  of all our  outstanding
convertible debt.


      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.


      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. There can be no assurance that financing
will be available in amounts or on terms acceptable to us, if at all.


                                       14
<PAGE>


      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.

                                  RISK FACTORS

      Much of the  information  included  in this annual  report  includes or is
based upon estimates,  projections or other "forward-looking  statements".  Such
forward-looking  statements  include any projections or estimates made by us and
our  management  in  connection  with  our  business  operations.   While  these
forward-looking  statements,  and any assumptions upon which they are based, are
made in good faith and reflect our current  judgment  regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

      Such estimates,  projections or other "forward-looking statements" involve
various risks and  uncertainties  as outlined  below. We caution the reader that
important  factors  in some  cases  have  affected  and,  in the  future,  could
materially  affect actual results and cause actual results to differ  materially
from  the  results  expressed  in  any  such  estimates,  projections  or  other
"forward-looking statements".

      Our common shares are considered speculative. Prospective investors should
consider carefully the risk factors set out below.

RISKS RELATING TO OUR BUSINESS:

WE HAVE A HISTORY OF LOSSES WHICH MAY CONTINUE,  WHICH MAY NEGATIVELY IMPACT OUR
ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES.

      We incurred net losses of $1,680,968  for the year ended February 28, 2005
and  $1,322,823  for the year ended February 29, 2004. We cannot assure you that
we can achieve or sustain  profitability  on a quarterly  or annual basis in the
future. Our operations are subject to the risks and competition  inherent in the
establishment  of a business  enterprise.  There can be no assurance that future
operations  will be  profitable.  Revenues  and profits will depend upon various
factors,  including whether we will be able to increase revenue.  As a result of
continuing  losses,  we may exhaust all of our resources prior to completing the
development of our products.  Additionally,  as we continue to incur losses, our
accumulated deficit will continue to increase, which might make it harder for us
to obtain  financing in the future.  We may not achieve our business  objectives
and the failure to achieve such goals would have an adverse  impact on us, which
could result in reducing or terminating our operations.

IF WE ARE UNABLE TO OBTAIN  ADDITIONAL  FUNDING OUR BUSINESS  OPERATIONS WILL BE
HARMED AND IF WE DO OBTAIN ADDITIONAL  FINANCING OUR THEN EXISTING  SHAREHOLDERS
MAY SUFFER SUBSTANTIAL DILUTION.

      We will  require  additional  funds to  sustain  and  expand  our  product
manufacturing and licensing activities. We anticipate that we will require up to
approximately  $500,000 to fund our  anticipated  operations for the next twelve
months,  depending  on  revenue  from  operations.  Additional  capital  will be
required to effectively  support the  operations and to otherwise  implement our
overall business strategy.  Even if we do receive additional  financing,  it may
not be sufficient to sustain or expand our research and  development  operations
or continue our business operations.


                                       15
<PAGE>


      There can be no assurance  that  financing will be available in amounts or
on terms acceptable to us, if at all. The inability to obtain additional capital
will  restrict  our  ability to grow and may reduce our  ability to  continue to
conduct business operations. If we are unable to obtain additional financing, we
will likely be  required to curtail our  research  and  development  plans.  Any
additional  equity  financing  may  involve  substantial  dilution  to our  then
existing shareholders.

OUR INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM HAS EXPRESSED  SUBSTANTIAL
DOUBT ABOUT OUR ABILITY TO  CONTINUE  AS A GOING  CONCERN,  WHICH MAY HINDER OUR
ABILITY TO OBTAIN FUTURE FINANCING.

      In their  report dated June 6, 2005,  our  independent  registered  public
accounting firm stated that our financial statements for the year ended February
28, 2005 were prepared  assuming that we would continue as a going concern.  Our
ability to  continue  as a going  concern is an issue  raised due to our working
capital deficiency of $5,105,539,  shareholders'  deficiency of $5,791,869,  net
loss of  $1,680,968  and net cash used in  operations of $735,665 as of February
28,  2005.  We continue  to  experience  net  operating  losses.  Our ability to
continue  as a going  concern  is subject  to our  ability to  generate a profit
and/or  obtain  necessary  funding from  outside  sources,  including  obtaining
additional  funding  from  the  sale  of our  securities,  generating  sales  or
obtaining loans and grants from various financial  institutions  where possible.
Our continued net operating losses increase the difficulty in meeting such goals
and there can be no assurances that such methods will prove successful.

MANY OF OUR  COMPETITORS  ARE  LARGER  AND  HAVE  GREATER  FINANCIAL  AND  OTHER
RESOURCES  THAN WE DO AND THOSE  ADVANTAGES  COULD MAKE IT  DIFFICULT  FOR US TO
COMPETE WITH THEM.

      The general market for our products and services is extremely  competitive
and includes several companies which have achieved  substantially greater market
shares than we have, and have longer operating  histories,  have larger customer
bases, have substantially greater financial, development and marketing resources
than we do. If overall demand for our products  should  decrease it could have a
materially adverse affect on our operating results.

A SUBSTANTIAL PORTION OF OUR REVENUE IS DERIVED FROM A SINGLE CUSTOMER.

      Our largest  customer,  CLP Group accounted for  approximately  89% of our
gross revenue  during fiscal year ended  February 28, 2005. We do not enter into
long-term agreements with any of our customers.  Instead, we enter into a number
of individual  purchase order commitments with our customers.  A decision by our
significant  customer,  whether motivated by competitive  conditions,  financial
difficulties or otherwise,  to decrease the amount of merchandise purchased from
us, or to change their manner of doing  business  with us, could have a material
adverse effect on our financial condition and results of operations.

A   MANUFACTURER'S   INABILITY   TO  PRODUCE  OUR  GOODS  ON  TIME  AND  TO  OUR
SPECIFICATIONS COULD RESULT IN LOST REVENUE AND NET LOSSES

      We do not own or operate any manufacturing facilities and therefore depend
upon independent  third parties for the manufacture of all of our products.  Our
products  are  manufactured  to our  specifications  by a foreign  manufacturer.
During fiscal 2005, all of our products were  manufactured  by a small number of
manufacturers. The inability of a manufacturer to ship orders of our products in
a timely  manner or to meet our  quality  standards  could  cause us to miss the
delivery date requirements of our customers for those items,  which could result
in  cancellation  of orders,  refusal to accept  deliveries  or a  reduction  in
purchase  prices,  any of which  could  have a  material  adverse  effect as our
revenues  would  decrease  and we would incur net losses as a result of sales of
the product, if any sales could be made.  Further,  because quality is a leading
factor when  customers  and  retailers  accept or reject  goods,  any decline in
quality by our  third-party  manufacturers  could be  detrimental  not only to a
particular  order,  but also to our  future  relationship  with that  particular
customer.


                                       16
<PAGE>


IF WE NEED TO REPLACE  MANUFACTURERS,  OUR EXPENSES COULD INCREASE  RESULTING IN
SMALLER PROFIT MARGINS

      We  compete  with  other  companies  for the  production  capacity  of our
manufacturers.  Some of these  competitors  have  greater  financial  and  other
resources  than we have, and thus may have an advantage in the  competition  for
production.  If we  experience  a  significant  increase  in  demand,  or if our
existing  manufacturers must be replaced,  we may have to expand our third-party
manufacturing  capacity. We cannot assure you that this additional capacity will
be  available  when  required on terms that are  acceptable  to us or similar to
existing  terms  which we have with our  current  manufacturers,  either  from a
production standpoint or a financial standpoint. The manufacturers we use do not
produce our products exclusively.

      Should we be forced to replace our current manufacturers, who we rely upon
for all of our production  needs,  then we may  experience an adverse  financial
impact, or an adverse  operational impact, such as being forced to pay increased
costs  for such  replacement  manufacturing  or  delays  upon  distribution  and
delivery  of our  products  to our  customers,  which  could  cause  us to  lose
customers or lose revenues because of late shipments.

IF A MANUFACTURER OF OURS FAILS TO USE ACCEPTABLE LABOR PRACTICES, WE MIGHT HAVE
DELAYS IN  SHIPMENTS  OR FACE  JOINT  LIABILITY  FOR  VIOLATIONS,  RESULTING  IN
DECREASED REVENUE AND INCREASED EXPENSES

      While we require our  independent  manufacturers  to operate in compliance
with  applicable  laws and  regulations,  we have no control  over the  ultimate
actions  of  our  independent  manufacturers.  While  our  internal  and  vendor
operating guidelines promote ethical business practices and our staff and buying
agents  periodically  visit  and  monitor  the  operations  of  our  independent
manufacturers,  we do not control these  manufacturers or their labor practices.
The violation of labor or other laws by an independent  manufacturer of ours, or
by  one  of  our  licensing  partners,  or  the  divergence  of  an  independent
manufacturer's  or licensing  partner's  labor  practices  from those  generally
accepted as ethical in the United States, could interrupt,  or otherwise disrupt
the shipment of finished products to us or damage our reputation.  Any of these,
in turn,  could have a material  adverse  effect on our financial  condition and
results of operations.

THE FAILURE TO MANAGE OUR GROWTH IN OPERATIONS AND  ACQUISITIONS  OF NEW PRODUCT
LINES AND NEW BUSINESSES COULD HAVE A MATERIAL ADVERSE EFFECT ON US.

      The expected growth of our operations (as to which no  representation  can
be made) will place a significant strain on our current management resources. To
manage this expected growth, we will need to improve our:

      o     operations and financial systems;
      o     procedures and controls; and
      o     training and management of our employees.

      Our future growth may be  attributable  to acquisitions of and new product
lines and new businesses.  We expect that future  acquisitions,  if successfully
consummated,  will create  increased  working capital  requirements,  which will
likely precede by several months any material  contribution of an acquisition to
our net income.

      Our failure to manage  growth or future  acquisitions  successfully  could
seriously harm our operating  results.  Also,  acquisition costs could cause our
quarterly operating results to vary significantly. Furthermore, our stockholders
would be diluted if we financed the  acquisitions by incurring  convertible debt
or issuing securities.

      Although we currently only have operations within the United States, if we
were to acquire  an  international  operation;  we will face  additional  risks,
including:


                                       17
<PAGE>


      o     difficulties  in staffing,  managing and  integrating  international
            operations due to language, cultural or other differences;

      o     Different or conflicting regulatory or legal requirements;

      o     foreign currency fluctuations; and

      o     diversion of significant time and attention of our management.

IF WE ARE UNABLE TO RETAIN THE SERVICES OF MR. LIPSCHUTZ, OR IF WE ARE UNABLE TO
SUCCESSFULLY  RECRUIT QUALIFIED MANAGERIAL AND SALES PERSONNEL HAVING EXPERIENCE
IN BUSINESS, WE MAY NOT BE ABLE TO CONTINUE OUR OPERATIONS.

      Our success depends to a significant  extent upon the continued service of
Mr. Paul  Lipschutz,  our Chief Executive  Officer and sole director.  We do not
have an employment  agreement  with Mr.  Lipschutz.  Loss of the services of Mr.
Lipschutz  could have a material  adverse  effect on our growth,  revenues,  and
prospective  business.  We do not maintain key-man  insurance on the life of Mr.
Lipschutz.  In  addition,  in order to  successfully  implement  and  manage our
business  plan,  we will be dependent  upon,  among other  things,  successfully
recruiting  qualified  managerial  and  sales  personnel  having  experience  in
business.  Competition  for qualified  individuals  is intense.  There can be no
assurance that we will be able to find, attract and retain existing employees or
that we will  be  able to  find,  attract  and  retain  qualified  personnel  on
acceptable terms.

POTENTIAL  PRODUCT  LIABILITY  CLAIMS COULD  AFFECT OUR  EARNINGS AND  FINANCIAL
CONDITION.

      We face a potential  risk of  liability  claims  based on our products and
services,  and we have faced such claims in the past.  We  currently do not have
any product  liability  coverage but are attempting to obtain  coverage which we
will believe to be adequate. We cannot assure,  however, that we will be able to
obtain or maintain this insurance at reasonable cost and on reasonable terms. We
also cannot assure that this insurance, if obtained, will be adequate to protect
us against a product  liability  claim,  should  one arise.  In the event that a
product liability claim is successfully brought against us, it could result in a
significant  decrease in our  liquidity  or assets,  which  could  result in the
reduction or termination of our business.

RISKS RELATING TO OUR CURRENT FINANCING ARRANGEMENT:

THERE ARE A LARGE NUMBER OF SHARES UNDERLYING OUR SECURED  CONVERTIBLE NOTES AND
WARRANTS  THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES MAY
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.

      As of August 29, 2005,  we had  699,695,037  shares of common stock issued
and outstanding,  secured  convertible  notes  outstanding that may be converted
into an estimated 10,250,000,000 shares of common stock at current market prices
and  outstanding  warrants to purchase  57,218,422  shares of common  stock.  In
addition,  the number of shares of common stock issuable upon  conversion of the
outstanding  secured  convertible  notes may increase if the market price of our
stock  declines.  All of the shares,  including all of the shares  issuable upon
conversion of the notes and upon  exercise of our warrants,  may be sold without
restriction.  The sale of these shares may adversely  affect the market price of
our common stock.

THE CONTINUOUSLY  ADJUSTABLE CONVERSION PRICE FEATURE OF OUR SECURED CONVERTIBLE
NOTES COULD REQUIRE US TO ISSUE A SUBSTANTIALLY  GREATER NUMBER OF SHARES, WHICH
WILL CAUSE DILUTION TO OUR EXISTING STOCKHOLDERS.

      Our obligation to issue shares upon conversion of our secured  convertible
notes is  essentially  limitless.  The  following is an example of the amount of
shares of our common stock that are  issuable,  upon  conversion  of our secured
convertible notes (excluding accrued interest),  based on market prices 25%, 50%
and 75% below the market price as of August 26, 2005 of $0.0018 per share.


                                       18
<PAGE>


<TABLE>
<CAPTION>
                                                                           Number                         % of
% Below             Price Per                  With Discount             of Shares                      Outstanding
Market                 Share                     at 75%                  Issuable                         Stock
------                 -----                     ------                  --------                         -----
<S>                   <C>                        <C>                    <C>                               <C>
25%                   $.00135                    $.0003375              9,111,111,112                     92.87%
50%                   $.0009                     $.000225              13,666,666,667                     95.13%
75%                   $.00045                    $.0001125             27,333,333,334                     97.50%
</TABLE>

      As  illustrated,  the  number  of shares of  common  stock  issuable  upon
conversion of our secured convertible notes will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.

THE CONTINUOUSLY  ADJUSTABLE CONVERSION PRICE FEATURE OF OUR SECURED CONVERTIBLE
NOTES MAY  ENCOURAGE  INVESTORS TO MAKE SHORT SALES IN OUR COMMON  STOCK,  WHICH
COULD HAVE A DEPRESSIVE EFFECT ON THE PRICE OF OUR COMMON STOCK.

      The secured  convertible  notes are convertible  into shares of our common
stock at a 75%  discount to the trading  price of the common  stock prior to the
conversion.  The significant  downward pressure on the price of the common stock
as the  investors  convert  and sells  material  amounts of common  stock  could
encourage short sales by investors.  This could place further downward  pressure
on the price of the common stock. The investors could sell common stock into the
market  in  anticipation  of  covering  the  short  sale  by  converting   their
securities,  which could cause the further downward pressure on the stock price.
In addition,  not only the sale of shares issued upon  conversion or exercise of
the secured  convertible  notes,  but also the mere  perception that these sales
could occur, may adversely affect the market price of the common stock.

THE  ISSUANCE OF SHARES UPON  CONVERSION  OF THE SECURED  CONVERTIBLE  NOTES AND
EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE AND SUBSTANTIAL DILUTION TO
OUR EXISTING STOCKHOLDERS.

      The issuance of shares upon  conversion of the secured  convertible  notes
and exercise of warrants may result in substantial  dilution to the interests of
other  stockholders since the investors may ultimately convert and sell the full
amount  issuable on  conversion.  Although the  investors  may not convert their
secured  convertible  notes and/or exercise their warrants if such conversion or
exercise would cause them to own more than 4.9% of our outstanding common stock,
this  restriction  does  not  prevent  the  investors  from  converting   and/or
exercising  some of  their  holdings  and  then  converting  the  rest of  their
holdings. In this way, the investors could sell more than this limit while never
holding  more than this  limit.  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,
including investors in this offering.

IN THE EVENT THAT OUR STOCK PRICE DECLINES, THE SHARES OF COMMON STOCK ALLOCATED
FOR CONVERSION OF THE SECURED  CONVERTIBLE NOTES TO BE REGISTERED  PURSUANT TO A
REGISTRATION  STATEMENT  MAY NOT BE  ADEQUATE  AND WE MAY BE  REQUIRED TO FILE A
SUBSEQUENT  REGISTRATION  STATEMENT COVERING ADDITIONAL SHARES. IF THE SHARES WE
HAVE ALLOCATED AND PLAN TO REGISTER ARE NOT ADEQUATE AND WE ARE REQUIRED TO FILE
AN  ADDITIONAL  REGISTRATION  STATEMENT,  WE  MAY  INCUR  SUBSTANTIAL  COSTS  IN
CONNECTION THEREWITH.

      Based on our current market price and the potential decrease in our market
price as a result of the  issuance  of shares  upon  conversion  of the  secured
convertible notes, we have made a good faith estimate as to the amount of shares
of common stock that we are required to register and allocate for  conversion of
the secured convertible notes. Accordingly,  we plan to allocate and register at
least  10,250,000,000  shares to cover the conversion of the secured convertible
notes. In the event that our stock price  decreases,  the shares of common stock
we have  allocated for conversion of the secured  convertible  notes and plan to
register may not be adequate. If the shares we allocate and register pursuant to
the  registration  statement  are not  adequate  and we are  required to file an
additional  registration statement, we may incur substantial costs in connection
with the preparation and filing of such registration statement.

IF WE ARE REQUIRED FOR ANY REASON TO REPAY OUR OUTSTANDING  SECURED  CONVERTIBLE
NOTES,  WE WOULD BE REQUIRED TO DEPLETE OUR WORKING  CAPITAL,  IF AVAILABLE,  OR
RAISE ADDITIONAL FUNDS. OUR FAILURE TO REPAY THE SECURED  CONVERTIBLE  NOTES, IF
REQUIRED,  COULD RESULT IN LEGAL ACTION AGAINST US, WHICH COULD REQUIRE THE SALE
OF SUBSTANTIAL ASSETS.


                                       19
<PAGE>


      Between 2000 and 2005, we entered into Securities  Purchase Agreements for
the sale of an aggregate of $3,075,000  principal amount of secured  convertible
notes. The secured  convertible  notes are due and payable,  with interest,  two
years from the date of issuance  (or three  years from the date of issuance  for
those  issued in 2005) or two years  (or three  years for those  issued in 2005)
from when the company is in compliance with the terms of the securities purchase
agreements,  unless  sooner  converted  into  shares  of our  common  stock.  We
currently have $3,075,000 secured  convertible notes  outstanding.  In addition,
any event of default such as our failure to repay the principal or interest when
due, our failure to issue shares of common stock upon  conversion by the holder,
our failure to timely file a  registration  statement or have such  registration
statement declared effective, breach of any covenant, representation or warranty
in  the  Securities   Purchase  Agreements  or  related  convertible  note,  the
assignment or  appointment  of a receiver to control a  substantial  part of our
property or business,  the filing of a money  judgment,  writ or similar process
against our  company in excess of $50,000,  the  commencement  of a  bankruptcy,
insolvency, reorganization or liquidation proceeding against our company and the
delisting of our common stock could  require the early  repayment of the secured
convertible  notes,  including a default interest rate of 15% on the outstanding
principal  balance of the notes if the  default is not cured with the  specified
grace  period.  We  anticipate  that the full amount of the secured  convertible
notes will be converted into shares of our common stock,  in accordance with the
terms of the secured  convertible notes. If we are required to repay the secured
convertible  notes,  we would be required to use our limited working capital and
raise additional funds. If we were unable to repay the notes when required,  the
note holders could  commence legal action against us and foreclose on all of our
assets to recover the amounts due.  Any such action would  require us to curtail
or cease operations.



                                       20
<PAGE>


WE ARE CURRENTLY IN DEFAULT UNDER THE SECURITIES PURCHASE AGREEMENTS AND SECURED
CONVERTIBLE NOTES AND THE INVESTORS HAVE THE RIGHT TO TAKE POSSESSION OF ALL OUR
GOODS,  INVENTORY,  CONTRACTUAL  RIGHTS AND  GENERAL  INTANGIBLES,  RECEIVABLES,
DOCUMENTS, INSTRUMENTS, CHATTEL PAPER, AND INTELLECTUAL PROPERTY.

      In connection with the Securities  Purchase  Agreements we entered into in
between  2000 and 2005,  we granted in favor of the  investors a first  priority
security interest in all of our goods, inventory, contractual rights and general
intangibles,   receivables,   documents,   instruments,   chattel   paper,   and
intellectual  property.  Pursuant  to  the  terms  of  the  Securities  Purchase
Agreements,  an  event  of  default  has  occurred.  Pursuant  to  the  Security
Agreements,  in the event of a  default,  the  Investors  have the right to take
possession of the collateral, to operate our business using the collateral,  and
have the right to assign, sell, lease or otherwise dispose of and deliver all or
any part of the  collateral,  at public or private  sale or otherwise to satisfy
our  obligations  under these  agreements.  As of the date of this  filing,  the
Investors  have not declared a default by the Company,  although there can be no
assurance that they will not declare a default in the future.

RISKS RELATING TO OUR COMMON STOCK:

IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS,  WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF  BROKER-DEALERS  TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR  SECURITIES IN
THE SECONDARY MARKET.

      Companies trading on the OTC Bulletin Board, such as us, must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports  under  Section 13, in order to maintain  price
quotation  privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements,  we could be removed from the OTC Bulletin Board. As
a result,  the market liquidity for our securities  could be severely  adversely
affected by limiting the ability of  broker-dealers  to sell our  securities and
the ability of  stockholders to sell their  securities in the secondary  market.
Prior  to May 2001  and new  management,  we were  delinquent  in our  reporting
requirements,  having failed to file our  quarterly  and annual  reports for the
years ended 1998 - 2000 (except the quarterly reports for the first two quarters
of 1999). We have been current in our reporting  requirements for the last three
years,  however,  there can be no assurance that in the future we will always be
current in our reporting requirements.

OUR  COMMON  STOCK IS  SUBJECT  TO THE  "PENNY  STOCK"  RULES OF THE SEC AND THE
TRADING MARKET IN OUR  SECURITIES IS LIMITED,  WHICH MAKES  TRANSACTIONS  IN OUR
STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.

      The  Securities  and  Exchange  Commission  has  adopted  Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes  relevant to us,
as any equity  security  that has a market price of less than $5.00 per share or
with an  exercise  price of less  than  $5.00  per  share,  subject  to  certain
exceptions.  For any  transaction  involving a penny stock,  unless exempt,  the
rules require:

      o     that a broker or dealer approve a person's  account for transactions
            in penny stocks; and
      o     the broker or dealer  receive from the investor a written  agreement
            to the  transaction,  setting forth the identity and quantity of the
            penny stock to be purchased.

      In order to approve a person's  account for  transactions in penny stocks,
the broker or dealer must:

      o     obtain financial information and investment experience objectives of
            the person; and
      o     make a  reasonable  determination  that  the  transactions  in penny
            stocks are  suitable  for that person and the person has  sufficient
            knowledge  and  experience  in  financial  matters  to be capable of
            evaluating the risks of transactions in penny stocks.

      The broker or dealer  must also  deliver,  prior to any  transaction  in a
penny stock, a disclosure  schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:


                                       21
<PAGE>


      o     sets  forth  the  basis on  which  the  broker  or  dealer  made the
            suitability determination; and
      o     that the broker or dealer received a signed,  written agreement from
            the investor prior to the transaction.

      Generally,  brokers  may  be  less  willing  to  execute  transactions  in
securities  subject to the "penny stock" rules.  This may make it more difficult
for  investors  to dispose of our common stock and cause a decline in the market
value of our stock.

      Disclosure  also has to be made  about  the  risks of  investing  in penny
stocks  in  both  public  offerings  and in  secondary  trading  and  about  the
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.


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 February  28,  2005,  we had an  allowance  for bad debts of  $40,587.  We
actively manage our accounts receivable to minimize our credit risks and believe
that our current allowance for doubtful accounts is fairly stated.

      Realizability  of Inventory  Values:  We make judgments about the ultimate
realizability  of our inventory in order to record our inventory at its lower of
cost or  market.  These  judgments  involve  reviewing  current  demand  for our
products in comparison to present inventory levels and reviewing inventory costs
compared to current market values.  As of February 28, 2005, we had no inventory
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.


                                       22
<PAGE>

Recent Accounting Pronouncements

      In May 2003, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 150,  "Accounting For
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity".  SFAS No. 150 changes the accounting for certain financial  instruments
with  characteristics  of both  liabilities  and  equity  that,  under  previous
pronouncements, issuers could account for as equity. The new accounting guidance
contained in SFAS No. 150  requires  that those  instruments  be  classified  as
liabilities in the balance sheet.

      SFAS  No.  150  affects  the  issuer's   accounting  for  three  types  of
freestanding  financial  instruments.  One type is a mandatory redeemable share,
which the issuing company is obligated to buy back in exchange for cash or other
assets.  A second type  includes  put options and a forward  purchase  contract,
which involves instruments that do or may require the issuer to buy back some of
its shares in exchange for cash or other assets.  The third type of  instruments
that are  liabilities  under this Statement is  obligations  that can be settled
with shares,  the monetary value of which is fixed, tied solely or predominantly
to a variable such as a market index, or varies  inversely with the value of the
issuers' shares. SFAS No. 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety.

      Most of the provisions of Statement 150 are  consistent  with the existing
definition  of  liabilities  in FASB  Concepts  Statement  No. 6,  "Elements  of
Financial Statements". The remaining provisions of this Statement are consistent
with the  FASB's  proposal  to  revise  that  definition  to  encompass  certain
obligations  that a  reporting  entity  can or must  settle by  issuing  its own
shares. This Statement shall be effective for financial instruments entered into
or modified after May 31, 2003 and otherwise shall be effective at the beginning
of the first interim period beginning after June 15, 2003,  except for mandatory
redeemable  financial  instruments  of a  non-public  entity,  as to  which  the
effective date is for fiscal periods beginning after December 15, 2004.

      In January 2003,  (as revised in December  2003) The Financial  Accounting
Standards  Board  ("FASB")  issued  Interpretation  No.  46,  "Consolidation  of
Variable Interest  Entities",  an interpretation of Accounting Research Bulletin
("ARB")  No. 51,  "Consolidated  Financial  Statements".  Interpretation  No. 46
addresses  consolidation by business  enterprises of variable interest entities,
which  have  one or  both  of the  following  characteristics:  (i)  the  equity
investment  at risk is not  sufficient  to  permit  the  entity to  finance  its
activities without additional  subordinated support from other parties, which is
provided  through  other  interest  that will absorb some or all of the expected
losses  of the  entity;  (ii)  the  equity  investors  lack  one or  more of the
following essential  characteristics of a controlling  financial  interest:  the
direct or  indirect  ability to make  decisions  about the  entities  activities
through  voting  rights or  similar  rights;  or the  obligation  to absorb  the
expected  losses of the entity if they occur,  which  makes it possible  for the
entity to finance its  activities;  the right to receive the  expected  residual
returns of the entity if they occur,  which is the  compensation for the risk of
absorbing the expected losses.

      Interpretation No. 46(R), as revised,  also requires expanded  disclosures
by the primary  beneficiary (as defined) of a variable interest entity and by an
enterprise  that holds a significant  variable  interest in a variable  interest
entity but is not the primary beneficiary.

      Interpretation No. 46(R), as revised, applies to small business issuers no
later than the end of the first  reporting  period that ends after  December 15,
2004. This effective date includes those entities to which Interpretation 46 had
previously  been  applied.   However,  prior  to  the  required  application  of
Interpretation  No. 46, a public  entity that is a small  business  issuer shall
apply  Interpretation  46 or this  Interpretation  to  those  entities  that are
considered  to be  special-purpose  entities  no later than as of the end of the
first reporting period that ends after December 15, 2003.

      Interpretation 46(R) may be applied prospectively with a cumulative-effect
adjustment  as of  the  date  on  which  it is  first  applied  or by  restating
previously   issued   financial   statements  for  one  or  more  years  with  a
cumulative-effect adjustment as of the beginning of the first year restated.

      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


                                       23
<PAGE>

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 will
adopt SFAS No. 123 (R) in its  quarter  ending  March 31,  2006.  The Company is
currently  evaluating  the  provisions  of  SFAS  No.  123  (R)  and has not yet
determined the impact,  if any, that SFAS No. 123 (R) will have on its financial
statement presentation or disclosures.

      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
will become  effective  for the Company in the quarter  ended May 31, 2006.  The
Company  believes  that the  adoption  of SFAS No. 151 is not  expected  to have
significant effect on the Company's financial statements.

      In December 2004, the FASB issued SFAS No.153,  "Exchanges of Non-monetary
Assets", an amendment of Accounting Principles Board ("APB") Opinion No. 29. The
guidance in APB Opinion No.29,  "Accounting for  Non-monetary  Transactions"  is
based on the principle that exchanges of non-monetary  assets should be measured
based on value of the assets  exchanged.  APB 29 included certain  exceptions to
that  principle.  SFAS  153  amends  APB  29  to  eliminate  the  exception  for
non-monetary  exchanges  of similar  productive  assets and  replaces  it with a
general  exception  for  exchanges  of  non-monetary  assets  that  do not  have
commercial  substance.  A non-monetary  exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the  exchange.  SFAS  153 is  effective  for  non-monetary  assets  exchanges
occurring in fiscal periods  beginning after June 15, 2005. The Company does not
expect  that the  adoption  of SFAS  153  will  have a  material  effect  on its
financial position or results of operations.

      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 is currently  evaluating  the effect
that  the  adoption  of SFAS  154  will  have  on its  consolidated  results  of
operations and financial condition.

      We do not expect the adoption of these  pronouncements  to have a material
impact on our consolidated financial position or results of operations.


                                       24
<PAGE>

ITEM 7. FINANCIAL STATEMENTS.

                        COLLECTIBLE CONCEPTS GROUP, INC.
                                AND SUBSIDIARIES


                                    CONTENTS

----------- ----------- --------------------------------------------------------
PAGE        F-1         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

----------- ----------- --------------------------------------------------------
PAGE        F-2         CONSOLIDATED BALANCE SHEET AS OF FEBRUARY 28,2005

----------- ----------- --------------------------------------------------------
PAGE        F-3         CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS
                          ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

----------- ----------- --------------------------------------------------------
PAGE        F-4-5       CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
                          DEFICIENCY FOR THE YEARS ENDED FEBRUARY 28, 2005 AND
                          FEBRUARY 29, 2004

----------- ----------- --------------------------------------------------------
PAGE        F-6         CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
                          ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

----------- ----------- --------------------------------------------------------
PAGE        F-7-29      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF
                          FEBRUARY 28, 2005

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


                                       25
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To the Board of Directors of: Collectible Concepts Group, Inc. and Subsidiaries

We have  audited the  accompanying  consolidated  balance  sheet of  Collectible
Concepts Group, Inc. and Subsidiaries  (the "Company"),  as of February 28, 2005
and the related consolidated statements of operations,  changes in shareholders'
deficiency and cash flows for the years ended February 28, 2005 and February 29,
2004. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly in all material respects,  the financial position of Collectible Concepts
Group,  Inc. and  Subsidiaries as of February 28, 2005, and the results of their
operations  and their  cash  flows for the years  ended  February  28,  2005 and
February 29, 2004, in conformity with accounting  principles  generally accepted
in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial statements,  the Company's working capital deficiency of
$5,105,539,  shareholders' deficiency of $5,791,869,  net loss of $1,680,968 and
net cash used in  operations  of  $735,665  raise  substantial  doubt  about its
ability to continue as a going  concern.  Management's  plan in regards to these
matters is also described in Note 2. These consolidated  financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


WEINBERG & COMPANY, P.A.
Boca Raton, Florida
June 6, 2005


                                      F-1
<PAGE>


<TABLE>
<CAPTION>
                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                             AS OF FEBRUARY 28, 2005

                                     ASSETS
<S>                                                                                                       <C>
CURRENT ASSETS
Cash                                                                                                      $      1,040
Accounts receivable, net of allowance for doubtful accounts of $40,587                                         216,794
Loan receivable                                                                                                  1,245
                                                                                                          ------------
Total Current Assets                                                                                           219,079
                                                                                                          ------------

PROPERTY AND EQUIPMENT, NET                                                                                      6,045
                                                                                                          ------------

OTHER ASSETS
Trademarks                                                                                                       1,300
Security deposits                                                                                                3,200
                                                                                                          ------------
Total Other Assets                                                                                               4,500
                                                                                                          ------------

TOTAL ASSETS                                                                                              $    229,624
                                                                                                          ============

LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES
Accounts payable                                                                                          $  1,569,467
Accrued expenses                                                                                             1,491,972
Accrued expenses - related parties                                                                             745,961
Convertible secured debentures, current portion                                                                883,820
Notes and loans payable                                                                                        501,801
Loans payable - related parties                                                                                  4,297
Convertible subordinated debentures                                                                            127,300
                                                                                                          ------------
Total Current Liabilities                                                                                    5,324,618

Convertible secured debentures, long term portion                                                              696,875
                                                                                                          ------------

TOTAL LIABILITIES                                                                                            6,021,493
                                                                                                          ------------

COMMITMENTS AND CONTINGENCIES                                                                                     --

SHAREHOLDERS' DEFICIENCY
Common stock, $.001 par value, 700,000,000 shares authorized, 699,695,037 shares issued and outstanding        699,694
Common stock to be issued (7,162,036 shares)                                                                    24,802
Additional paid-in capital                                                                                  15,873,654
Deferred equity based expense                                                                                 (531,250)
Accumulated deficit                                                                                        (21,858,769)
                                                                                                          ------------
Total Shareholders' Deficiency                                                                              (5,791,869)
                                                                                                          ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY                                                            $    229,624
                                                                                                          ============
</TABLE>


           See accompanying notes to consolidated financial statements
                                       F-2


<PAGE>


<TABLE>
<CAPTION>
                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS FOR
             THE YEARS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

                                                                                     2005             2004
                                                                            -------------    -------------
<S>                                                                         <C>              <C>
NET SALES                                                                   $     679,682    $     117,816

COST OF SALES                                                                     597,767          138,491
                                                                            -------------    -------------

GROSS PROFIT (LOSS)                                                                81,915          (20,675)

OPERATING EXPENSES
Selling, general and administrative                                             1,289,910        1,266,228
                                                                            -------------    -------------

LOSS FROM OPERATIONS                                                           (1,207,995)      (1,286,903)
                                                                            -------------    -------------

OTHER INCOME (EXPENSE)
Consulting income                                                                  35,709           25,858
Other income                                                                       21,454             --
Interest income                                                                      --                 10
Interest expense                                                                 (749,747)        (469,150)
Gain on forgiveness of debt                                                       129,111          190,000
Royalties income                                                                   90,500             --
Gain on settlement of debt and interest                                              --            217,362
                                                                            -------------    -------------
Total Other Income (Expense)                                                     (472,973)         (35,920)
                                                                            -------------    -------------

LOSS BEFORE TAX PROVISION                                                      (1,680,968)      (1,322,823)
INCOME TAX PROVISION                                                                 --               --
                                                                            -------------    -------------

NET LOSS                                                                    $  (1,680,968)   $  (1,322,823)
                                                                            =============    =============


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

WEIGHTED AVERAGE SHARES USED IN NET LOSS CALCULATIONS - BASIC AND DILUTED     555,933,697      244,167,988
                                                                            =============    =============
</TABLE>

           See accompanying notes to consolidated financial statements
                                       F-3


<PAGE>

<TABLE>
<CAPTION>

                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
           FOR THE YEARS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

                                                                                         Common Stock
                                                          Common Stock                     To be issued
                                                       Shares         Amount         Shares          Amount
--------------------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>               <C>          <C>
Balance, February 28, 2003                         99,400,121   $     99,400      1,524,506    $     10,374
Common stock issued for cash                        9,714,286          9,714           --              --
Common stock issued for services rendered         144,275,000        144,275           --              --
Common stock to be issued per anti-dilution
        provision                                        --             --        5,338,493          13,519
Settlement of accrued expenses                           --             --        1,184,000           2,368
Conversions of convertible secured debentures
        to common stock                            58,993,857         58,994           --              --
Conversions of notes and loans payable to
        common stock                              109,916,700        109,916      2,016,000           4,032
Beneficial conversion on convertible debentures          --             --             --              --
Amortization of deferred equity based expense            --             --             --              --
Issuance of options and warrants                         --             --             --              --
Net loss, year ended February 29, 2004                   --             --             --              --
                                                 ------------   ------------   ------------    ------------

Balance February 29, 2004                         422,299,964   $    422,299     10,062,999    $     30,293
                                                  ============    ============    ============    =============

<CAPTION>
                                                              Additional              Deferred
                                                               Paid-In             Equity-Based    Accumulated
                                                       Capital         Expense         Deficit           Total
--------------------------------------------------------------------------------------------------------------
<S>                                               <C>             <C>             <C>             <C>
Balance, February 28, 2003                        $ 14,396,576    $   (187,500)   $(18,854,978)   $ (4,536,128)
Common stock issued for cash                             7,286            --              --            17,000
Common stock issued for services rendered              268,700            --              --           412,975
Common stock to be issued per anti-dilution
        provision                                      (13,519)           --              --              --
Settlement of accrued expenses                            --              --              --             2,368
Conversions of convertible secured debentures
        to common stock                                (26,010)           --              --            32,984
Conversions of notes and loans payable to
        common stock                                   (64,916)           --              --            49,032
Beneficial conversion on convertible debentures        200,000        (200,000)           --              --
Amortization of deferred equity based expense             --           268,750            --           268,750
Issuance of options and warrants                        20,622            --              --            20,622
Net loss, year ended February 29, 2004                    --              --        (1,322,823)     (1,322,823)
                                                  ------------    ------------    ------------    ------------

Balance February 29, 2004                         $ 14,788,739    ($   118,750)   ($20,177,801)   ($ 5,055,220)
                                                  ============    ============    ============    =============
</TABLE>

           See accompanying notes to consolidated financial statements
                                      F-4


<PAGE>


<TABLE>
<CAPTION>
                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
           FOR THE YEARS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

                                                                                            Common Stock
                                                             Common Stock                   To be issued
                                                        Shares          Amount          Shares          Amount
                                                    ------------    ------------    ------------    ------------
<S>                                                  <C>            <C>               <C>           <C>
Balance February 29, 2004                            422,299,964    $    422,299      10,062,999    $     30,293
Common stock issued for services                      59,103,100          59,103            --              --
Common stock issued for financing                      5,000,000           5,000           5,000          10,000
Common stock to be issued per anti-dilution
provision                                                   --              --         4,399,037           9,109
Common stock issued per anti-duliution provision       7,300,000           7,300      (7,300,000)        (14,600)
Beneficial conversion on convertible debentures             --              --              --              --
Amortization of deferred equity based expense               --              --              --              --
Acquisition of treasury stock from CEO               (21,000,000)        (21,000)           --              --
Conversion of convertible secured debentures to
common stock                                         138,563,402         138,563            --              --
Conversion of convertible subordinated debentures
and accrued interest to common stock                  11,428,571          11,429            --              --
Conversion of notes and loans payable and accrued
interest to common stock                              77,000,000          77,000            --              --
Issuance of options and warrants for services
rendered and interest expense                               --              --              --              --
Net loss, year ended February 28, 2005                      --              --              --              --
                                                    ------------    ------------    ------------    ------------

Balance February 28,2005                             699,695,037    $    699,694       7,162,036    $     24,802
                                                    ============    ============    ============    ============

<CAPTION>
                                                      Additional      Deferred
                                                       Paid-In      Equity-Based    Accumulated
                                                       Capital         Expense         Deficit           Total
                                                    ------------    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>             <C>
Balance February 29, 2004                           $ 14,788,739    $   (118,750)   $(20,177,801)   $ (5,055,220)
Common stock issued for services                         117,106            --              --           176,209
Common stock issued for financing
Common stock to be issued per anti-dilution
provision                                                 (9,109)           --              --              --
Common stock issued per anti-duliution provision           7,300            --              --              --
Beneficial conversion on convertible debentures          900,000        (900,000)           --              --
Amortization of deferred equity based expense               --           487,500            --           487,500
Acquisition of treasury stock from CEO                   (21,000)           --              --           (42,000)
Conversion of convertible secured debentures to
common stock                                             (62,668)           --              --            75,895
Conversion of convertible subordinated debentures
and accrued interest to common stock                        (229)           --              --            11,200
Conversion of notes and loans payable and accrued
interest to common stock                                 117,975            --              --           194,975
Issuance of options and warrants for services
rendered and interest expense                             30,540            --              --            30,540
Net loss, year ended February 28, 2005                      --              --        (1,680,968)     (1,680,968)
                                                    ------------    ------------    ------------    ------------

Balance February 28,2005                            $ 15,873,654    $   (531,250)   $(21,858,769)   $ (5,791,869)
                                                    ============    ============    ============    ============
</TABLE>
           See accompanying notes to consolidated financial statements
                                       F-5


<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE YEARS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004

                                                        2005           2004
                                                 -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                         $(1,680,968)   $(1,322,823)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation                                          14,788         17,085
Allowance for bad debt expense                        40,587           --
Common stock and options issued for services
rendered and financing                               185,146        427,559
Issuance of warrants for interest expense             31,603          6,038
Amortization of deferred equity based expense        487,500        268,750
(Gain) loss on settlement of debt and interest          --         (217,362)
Gain on forgiveness of debt                         (129,111)      (190,000)
Amortization of interest                              61,875
Changes in operating assets and liabilities:
Accounts receivable                                 (254,579)           710
Loan Receivable                                       (1,245)          --
Inventories                                             --           23,270
Accounts payable and accrued expenses                508,739        640,426
                                                 -----------    -----------
Net Cash Used in Operating Activities               (735,665)      (346,347)
                                                 -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:                   --             --
                                                 -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible
secured debentures                                   735,000        200,000
Proceeds from issuance of convertible
subordinated debentures                                 --           65,500
Proceeds from issuance of common stock                  --           17,000
Repayment of notes and loans payable                (131,430)        (5,057)
Proceeds from notes and loans payable                240,189         90,000
Repayment of notes payable - related parties        (154,277)       (65,392)
Proceeds from notes payable - related parties         47,130         37,789
                                                 -----------    -----------
Net Cash Provided By Financing Activities            736,612        339,840
                                                 -----------    -----------

NET INCREASE (DECREASE) IN CASH                          947         (6,507)

CASH - BEGINNING OF YEAR                                  93          6,600
                                                 -----------    -----------

CASH - END OF YEAR                               $     1,040    $        93
                                                 ===========    ===========

           See accompanying notes to consolidated financial statements
                                      F-6


<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


NOTE  1 NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (A) Description of Business

      Collectible Concepts Group, Inc. and its subsidiaries  (collectively,  the
      "Company")  distribute  high-end and novelty  products related to both the
      entertainment  and  sports  industries.  The  Company  sells its  products
      through  retailers,  distributors,  department  stores,  the  internet and
      catalogers. -

      (B) Principles of Consolidation

      The accompanying consolidated financial statements include the accounts of
      Collectible  Concepts  Group,  Inc.  and its  two  wholly  owned  inactive
      subsidiaries,   Team  Sports   Specialties   Corporation   and  Music  Art
      Corporation.  All significant  intercompany accounts and transactions have
      been eliminated.

      (C) Use of Estimates

      The  preparation of 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  consolidated   financial
      statements  and  reported  amounts of  revenues  and  expenses  during the
      reporting period. Actual results could differ from those estimates.

      (D) Revenue Recognition

      Revenue from the sale of products is recognized when  persuasive  evidence
      of an  arrangement  exists,  shipment  has  occurred,  the  price has been
      determined and collectability is reasonably  assured.  The Company records
      an allowance for estimated returns, as required.

      (E) Cash

      Cash consists of cash held on deposit at financial institutions.

      (F) Inventories

      Merchandise  inventories were previously valued at lower of cost or market
      on the first in,  first out (FIFO)  method.  As of  February  28, 2005 the
      Company produces  products once it has confirmed orders and does not carry
      inventory.


                                      F-7
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005

      (G) Property and Equipment

      Property  and  equipment  consists  principally  of  office  and  computer
      equipment and is recorded at cost less accumulated depreciation. Upon sale
      or  retirement,  the  cost  of  the  asset  and  the  related  accumulated
      depreciation are removed from the accounts and the resultant gain or loss,
      if any,  is included  in the  statement  of  operations.  Depreciation  is
      computed  using the  straight-line  method based on the  estimated  useful
      lives of the related assets, principally five to seven years.

      (H) Long-Lived Assets

      The Company reviews  long-lived  assets for impairment  under Statement of
      Financial  Accounting Standards No. 144, "Accounting for the Impairment or
      Disposal of Long-Lived  Assets." Long-lived assets to be held and used are
      reviewed  for  impairment  whenever  events or  changes  in  circumstances
      indicate that the carrying amount of an asset may not be recoverable.  The
      carrying amount of a long-lived asset is not recoverable if it exceeds the
      sum of the  undiscounted  cash flows  expected  to result from the use and
      eventual disposition of the asset. Long-lived assets to be disposed of are
      reported at the lower of carrying amount or fair value less cost to sell.

      (I) Loss Per Share

      The Company follows  Statement of Financial  Accounting  Standards No. 128
      ("SFAS No. 128")  "Earnings  Per Share".  Basic and fully diluted loss per
      share  amounts are computed  based on net loss and divided by the weighted
      average  number of common shares  outstanding.  The assumed  conversion of
      convertible   debt   into   3,097,253,333   common   shares  in  2005  and
      1,383,148,293  common  shares  in 2004  and the  exercise  of  outstanding
      options  and  warrants to purchase  21,203,886  common  shares in 2005 and
      6,311,029  common shares in 2004 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 February 28, 2005 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 common shares, if all of the options and warrants
      were to be exercised.  The Company and its attorney are currently  working
      on the  necessary  actions to  increase  the number of  authorized  common
      shares.

      (J) 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.


                                      F-8
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      (K) Advertising Expense

      The  Company  participates  in  various  advertising  programs.  All costs
      related to advertising  are expensed in the period  incurred.  Advertising
      expense amounted to approximately $8,680 and $0 for the fiscal years ended
      February 28, 2005 and February 29, 2004, respectively.

      (L) Income Taxes

      Deferred  taxes  are  accounted  for  in  accordance  with  SFAS  No.  109
      "Accounting  for  Income  Taxes."  The  Statement  requires  an asset  and
      liability  approach for  financial  accounting  and  reporting  for income
      taxes.  Deferred income taxes are provided for the difference  between the
      tax  basis  of an  asset  or  liability  and its  reported  amount  in the
      financial  statements  using  enacted tax rates that are expected to be in
      effect for the year in which the  differences  are  expected  to  reverse.
      Deferred income taxes arise principally from differences between financial
      and income tax reporting,  including  amounts recorded for inventory,  the
      allowance for doubtful accounts, accrued expenses, the availability of net
      operating  loss  carryforwards  and certain other  temporary  differences.
      Deferred  income tax assets are  reduced by a  valuation  allowance  when,
      based on the weight of evidence available, it is more likely than not that
      some portion or all of the  deferred tax assets will not be realized.  The
      determination of the requirement for a valuation allowance is an estimate,
      which is reasonably possible to change in the near term.

      (M) Stock-Based Compensation

      SFAS No. 123, "Accounting for Stock-Based  Compensation"  encourages,  but
      does not require,  companies to record  compensation  cost for stock-based
      employee  compensation  plans at fair  value.  The  Company  has chosen to
      account for employee  stock-based  compensation  using the intrinsic value
      method  prescribed in Accounting  Principles Board ("APB") Opinion No. 25,
      "Accounting for Stock Issued to Employees",  and related  interpretations.
      Accordingly,  compensation  cost for  stock  options  is  measured  as the
      excess,  if any, of the quoted market price of the Company's  stock at the
      date of grant over the amount an  employee  must pay to acquire the stock.
      The Company  values  shares  issued in  consideration  of services at fair
      value.  Options or warrants  issued to  non-employees  and consultants are
      recorded  using  the  fair  value  method,   based  on  the  Black-Scholes
      option-pricing model. There were no options issued to employees during the
      periods presented. Therefore, the required disclosure of pro forma amounts
      under  SFAS  No.  123,  as  modified  by SFAS  No.  148,  "Accounting  for
      Stock-Based  Compensation  -  Transition  and  Disclosure",  has not  been
      presented.


                                      F-9
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      (N) Reclassifications

      Certain  items from prior  year have been  reclassified  to conform to the
      current year presentation.

      (O) Segments

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

      (P) Shipping and Handling Fees

      The Company  includes  shipping and  handling  fees billed to customers as
      revenue  and the related  costs as cost of sales.  Such fees and costs are
      primarily  comprised  of  outbound  freight.  Included  in revenues in the
      accompanying  consolidated  statements of income are shipping and handling
      fees of $1,388 and $334 for the years ended February 28, 2005 and February
      29, 2004, respectively.

      (Q) Recent Accounting Pronouncements

      In January 2003,  (as revised in December  2003) The Financial  Accounting
      Standards Board ("FASB") issued  Interpretation No. 46(R),  "Consolidation
      of Variable Interest  Entities",  an interpretation of Accounting Research
      Bulletin   ("ARB")   No.   51,   "Consolidated    Financial   Statements".
      Interpretation No. 46(R) addresses  consolidation by business  enterprises
      of variable  interest  entities,  which have one or both of the  following
      characteristics:  (i) the equity  investment at risk is not  sufficient to
      permit  the  entity  to  finance   its   activities   without   additional
      subordinated  support from other parties,  which is provided through other
      interests  that  will  absorb  some or all of the  expected  losses of the
      entity;  (ii)  the  equity  investors  lack  one or more of the  following
      essential  characteristics of a controlling financial interest: the direct
      or  indirect  ability  to make  decisions  about the  entities  activities
      through voting rights or similar  rights;  or the obligation to absorb the
      expected  losses of the entity if they occur,  which makes it possible for
      the entity to finance its  activities;  the right to receive the  expected
      residual  returns of the entity if they occur,  which is the  compensation
      for the risk of absorbing the expected losses.

      Interpretation  46(R) also requires  expanded  disclosures  by the primary
      beneficiary  (as  defined)  of  a  variable  interest  entity  and  by  an
      enterprise  that  holds a  significant  variable  interest  in a  variable
      interest entity but is not the primary beneficiary.

      Interpretation  46(R) applies to small business  issuers no later than the
      end of the first reporting  period that ends after December 15, 2004. This
      effective  date includes  those  entities to which  Interpretation  46 had
      previously  been applied.  However,  prior to the required  application of
      Interpretation  No. 46, a public  entity that is a small  business  issuer
      shall apply  Interpretation 46(R) or this Interpretation to those entities
      that are considered to be special-purpose entities no later than as of the
      end of the first reporting period that ends after December 15, 2003


                                      F-10
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      Interpretation   No.   46(R)   may  be   applied   prospectively   with  a
      cumulative-effect  adjustment  as of the date on which it is first applied
      or by restating  previously  issued  financial  statements for one or more
      years with a cumulative-effect adjustment as of the beginning of the first
      year restated.

      The  implementation of the provisions of  Interpretation  No. 46(R) is not
      expected  to  have a  significant  effect  on the  Company's  consolidated
      financial statement presentation or disclosure.

      In May 2003, the Financial  Accounting  Standards  Board  ("FASB")  issued
      Statement of Financial  Accounting Standards ("SFAS") No. 150, "Accounting
      For Certain Financial Instruments with Characteristics of both Liabilities
      and Equity".  SFAS No. 150 changes the  accounting  for certain  financial
      instruments  with  characteristics  of both  liabilities  and equity that,
      under previous  pronouncements,  issuers could account for as equity.  The
      new  accounting  guidance  contained in SFAS No. 150  requires  that those
      instruments be classified as liabilities in the balance sheet.

      SFAS  No.  150  affects  the  issuer's   accounting  for  three  types  of
      freestanding  financial  instruments.  One type is a mandatory  redeemable
      share,  which the issuing company is obligated to buy back in exchange for
      cash or other  assets.  A second  type  includes  put  options and forward
      purchase  contracts,  which involve instruments that do or may require the
      issuer  to buy  back  some of its  shares  in  exchange  for cash or other
      assets.  The third type of  instruments  that are  liabilities  under this
      Statement is  obligations  that can be settled  with shares,  the monetary
      value of which is fixed,  tied solely or  predominantly to a variable such
      as a market  index,  or varies  inversely  with the value of the  issuers'
      shares.  SFAS No. 150 does not apply to  features  embedded in a financial
      instrument that is not a derivative in its entirety.

      Most of the provisions of Statement 150 are  consistent  with the existing
      definition of liabilities  in FASB Concepts  Statement No. 6, "Elements of
      Financial  Statements".  The remaining  provisions  of this  Statement are
      consistent with the FASB's proposal to revise that definition to encompass
      certain  obligations that a reporting entity can or must settle by issuing
      its  own  shares.   This  Statement   shall  be  effective  for  financial
      instruments  entered  into or modified  after May 31,  2003 and  otherwise
      shall be effective at the beginning of the first interim period  beginning
      after June 15, 2003, except for mandatory redeemable financial instruments
      of a  non-public  entity,  as to which the  effective  date is for  fiscal
      periods beginning after December 15, 2004.


                                      F-11
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      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
      will adopt SFAS No. 123 (R) in its  quarter  ending  March 31,  2006.  The
      Company is currently evaluating the provisions of SFAS No. 123 (R) and has
      not yet determined the impact,  if any, that SFAS No. 123 (R) will have on
      its financial statement presentation or disclosures.

      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  will  become  effective  for the  Company in the
      quarter ended May 31, 2006. The Company believes that the adoption of SFAS
      No.  151 is not  expected  to have  significant  effect  on the  Company's
      financial statements.

      In December 2004, the FASB issued SFAS No.153,  "Exchanges of Non-monetary
      Assets",  an amendment of Accounting  Principles Board ("APB") Opinion No.
      29. The  guidance  in APB  Opinion  No.29,  "Accounting  for  Non-monetary
      Transactions"  is based on the principle  that  exchanges of  non-monetary
      assets should be measured based on value of the assets  exchanged.  APB 29
      included certain  exceptions to that principle.  SFAS 153 amends APB 29 to
      eliminate the exception for non-monetary  exchanges of similar  productive
      assets  and  replaces  it  with  a  general  exception  for  exchanges  of
      non-monetary assets that do not have commercial substance.  A non-monetary
      exchange has  commercial  substance if the future cash flows of the entity
      are expected to change significantly as a result of the exchange. SFAS 153
      is effective for non-monetary assets exchanges occurring in fiscal periods
      beginning  after June 15,  2005.  The  Company  does not  expect  that the
      adoption of SFAS 153 will have a material effect on its financial position
      or results of operations.

      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 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 is  currently  evaluating  the effect that the
      adoption of SFAS 154 will have on its  consolidated  results of operations
      and financial condition.  Management does not expect the adoption of these
      pronouncements  to have a material  impact on the  Company's  consolidated
      financial position or results of operations.


                                      F-12
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


NOTE  2 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 year ended February 28,
      2005,  the Company  had a working  capital  deficiency  of  $5,105,539,  a
      shareholders'  deficiency of $5,791,869,  a net loss of $1,680,968 and net
      cash  used in  operations  of  $735,665.  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 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  3 PROPERTY AND EQUIPMENT

      As  of  February  28,  2005,  property  and  equipment  consisted  of  the
      following:

      Computer and Office Equipment       $           126,179
      Accumulated Depreciation                       (120,134)
                                             ----------------

      Property and Equipment, net         $             6,045
                                             ================

      Depreciation  expense  amounted to $14,788 and $17,085 for the years ended
      February 28, 2005 and February 29, 2004, respectively.


                                      F-13
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


NOTE  4 ACCRUED EXPENSES

      As of February 28, 2005, accrued expenses consisted of the following:

      Accrued interest, of which $76,636 is
        due to related party                       $           623,411
      Accrued payroll and payroll taxes - other                330,517
      Accrued royalties                                        238,969
      Other miscellaneous accrued expenses                     299,075
                                                      ----------------

      Accrued Expenses                             $         1,491,972
                                                      ================

NOTE  5 CONVERTIBLE SECURED DEBENTURES

      On September 30, 2004 the Company issued  $250,000 of convertible  secured
      debentures to a group of investors.  These debentures  mature on September
      30,  2006 and bear  interest  at 15% per  annum and are  convertible  into
      shares of the  Company's  common  stock at the lower of $.01 or 25% of the
      average of the lowest  three  intraday  trading  prices  during the twenty
      trading  days  immediately  preceding   conversion.   This  results  in  a
      beneficial  conversion  feature  in the amount of  $250,000,  (since it is
      limited to the amount  received) which is being amortized over the term of
      the loan. Of this amount  $62,500 was amortized to expense during the year
      ended February 28, 2005 and $187,500  remains  deferred as of February 28,
      2005.  Additionally,  the Company  issued  warrants to purchase  1,500,000
      shares of common  stock  having a fair value of $710,  which was  expensed
      during the year ended February 28, 2005.

      On May 28,  2004  the  Company  issued  $550,000  of  convertible  secured
      debentures to a group of  investors.  These  debentures  mature on May 28,
      2006 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $550,000,  (since it is  limited to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount  $206,250 was amortized to expense  during the year ended  February
      28,  2005 and  $343,750  remains  deferred  as of February  28,  2005.  In
      addition,  there was a $165,000  discount taken on the debenture  which is
      being  amortized  over its two  year  life.  Of this  amount  $61,875  was
      amortized to interest  expense during the year ended February 28, 2005 and
      $103,125  remains  deferred as of February  28,  2005.  Additionally,  the
      Company  issued  warrants to  purchase  1,650,000  shares of common  stock
      having a fair value of $2,301,  which was  expensed  during the year ended
      February 28, 2005.

      On March 17,  2004 the Company  issued  $100,000  of  convertible  secured
      debentures to a group of investors.  These debentures  mature on March 17,
      2005 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $100,000,  (since it is  limited to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount  $100,000 was amortized to expense  during the year ended  February
      28, 2005 and $0 remains  deferred as of February 28, 2005.  As of the date
      of this report, these debentures are still unpaid and in default.


                                      F-14
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      On February 20, 2004 the Company  issued  $25,000 of  convertible  secured
      debentures to a group of investors.  These  debentures  mature on February
      20,  2005 and bear  interest  at 15% per  annum and are  convertible  into
      shares of the  Company's  common  stock at the lower of $.01 or 25% of the
      average of the lowest  three  intraday  trading  prices  during the twenty
      trading  days  immediately  preceding   conversion.   This  results  in  a
      beneficial  conversion  feature  in the  amount of  $25,000,  (since it is
      limited to the amount  received) which is being amortized over the term of
      the loan. Of this amount  $25,000 was amortized to expense during the year
      ended  February 28, 2005 and $0 remains  deferred as of February 28, 2005.
      As of the date of this report,  these  debentures  are still unpaid and in
      default.

      On January 13,  2004 the Company  issued  $50,000 of  convertible  secured
      debentures to a group of investors. These debentures mature on January 13,
      2005 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $50,000,  (since it is  limited  to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount $37,500 and $12,500 was amortized to expense during the years ended
      February  28, 2005 and  February  29,  2004 and $0 remains  deferred as of
      February 28, 2005.  As of the date of this report,  these  debentures  are
      still unpaid and in default.

      On November 17, 2003, the Company  issued  $50,000 of convertible  secured
      debentures to a group of investors.  These  debentures  mature on November
      17,  2004 and bear  interest  at 15% per  annum and are  convertible  into
      shares of the  Company's  common  stock at the lower of $.01 or 25% of the
      average of the lowest  three  intraday  trading  prices  during the twenty
      trading  days  immediately  preceding   conversion.   This  results  in  a
      beneficial  conversion  feature  in the  amount of  $50,000,  (since it is
      limited to the amount  received) which is being amortized over the term of
      the loan.  Of this amount  $37,500 and  $12,500 was  amortized  to expense
      during the years  ended  February  28, 2005 and  February  29, 2004 and $0
      remains  deferred as of February 28, 2005.  As of the date of this report,
      these debentures are still unpaid and in default.

      On July 18,  2003,  the  Company  issued  $25,000 of  convertible  secured
      debentures to a group of investors.  These  debentures  mature on July 18,
      2004 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $25,000,  (since it is  limited  to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount $6,250 and $18,750 was amortized to expense  during the years ended
      February  28, 2005 and  February  29,  2004 and $0 remains  deferred as of
      February 28, 2005.  As of the date of this report,  these  debentures  are
      still unpaid and in default.


                                      F-15
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      On June 25,  2003,  the  Company  issued  $25,000 of  convertible  secured
      debentures to a group of investors.  These  debentures  mature on June 25,
      2004 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $25,000,  (since it is  limited  to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount $6,250 and $18,750 was amortized to expense  during the years ended
      February  28, 2005 and  February  29,  2004 and $0 remains  deferred as of
      February 28, 2005.  As of the date of this report,  these  debentures  are
      still unpaid and in default.

      On May 13,  2003,  the  Company  issued  $25,000  of  convertible  secured
      debentures to a group of  investors.  These  debentures  mature on May 13,
      2004 and bear interest at 15% per annum and are convertible into shares of
      the  Company's  common stock at the lower of $.01 or 25% of the average of
      the lowest three  intraday  trading  prices during the twenty trading days
      immediately preceding conversion.  This results in a beneficial conversion
      feature  in the  amount of  $25,000,  (since it is  limited  to the amount
      received)  which is being  amortized  over the term of the  loan.  Of this
      amount $6,250 and $18,750 was amortized to expense  during the years ended
      February  28, 2005 and  February  29,  2004 and $0 remains  deferred as of
      February 28, 2005.  As of the date of this report,  these  debentures  are
      still unpaid and in default.

      On November 26, 2002, the Company issued  $250,000 of convertible  secured
      debentures to a group of investors.  These debentures  matured on November
      26,  2003 and bear  interest  at 15% per  annum and are  convertible  into
      shares of the  Company's  common  stock at the lower of $.01 or 25% of the
      average of the lowest  three  intraday  trading  prices  during the twenty
      trading  days  immediately  preceding  conversion.   This  resulted  in  a
      beneficial  conversion  feature in the amount of $250,000,  which has been
      fully  recognized as an expenses at February 28, 2003.  The debentures are
      convertible  into shares of the Company's  common stock at any time at the
      holder's  option equal to the quotient of (a) the aggregate  amount of the
      principle and accrued  interest and unpaid  interest to be so converted by
      (b) the conversion  price As of the date of this report,  these debentures
      are still unpaid and in default.

      On May  28,  2002,  the  Company  issued  a  $75,000  convertible  secured
      debenture  to a group of investors  with a conversion  price of 50% of the
      average of the lowest three intraday trading prices during the twenty days
      immediately preceding conversion. This resulted in a beneficial conversion
      feature  of  $75,000,  which has been  fully  recognized  as an expense at
      February 28, 2003. The debentures bear interest of 12% simple interest per
      annum and matured on July 28, 2003. The debentures  are  convertible  into
      shares of the  Company's  common stock at any time at the holder's  option
      equal to the quotient of (a) the  aggregate  amount of the  principle  and
      accrued  interest  and  unpaid  interest  to be so  converted  by (b)  the
      conversion  price.  As of the date of this report,  these  debentures  are
      still unpaid and in default.


                                      F-16
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


In May 2000, the Company issued $400,000 of secured convertible  debentures to a
group of  investors.  These  debentures  matured in April  2001,  are secured by
substantially  all of the  Company's  assets and bear interest at 10% per annum,
payable quarterly;  the debentures are convertible into common stock at any time
at the  holder's  option at the lesser of $2.80 or 50% of market value (the debt
discount of $65,000 assigned to this beneficial  conversion feature was recorded
as  additional  paid-in  capital and the debt discount was amortized as interest
expense in the quarter ended May 31, 2000 because the debentures are convertible
at any time at the  holder's  option);  the  debentures  also have  warrants  to
purchase  57,143  shares  of  common  stock at 110% of the  market  value on the
closing  date  -  the  warrants  have  a  five-year  life  and  are  exercisable
immediately (using an option pricing model, the warrants were valued at $280,000
using the following  assumptions:  no expected  payment of  dividends,  expected
lives of warrants of three years,  a risk free rate of 6.5% and a volatility  of
75%).  The  $280,000  was recorded as  additional  paid-in  capital and the debt
discount  was  amortized  to  interest  expense  over  the  term of the  related
debentures. As of February 28, 2002, the debt discount had been fully amortized.
The debenture  holders also have certain rights in the event the Company files a
registration  statement.  The  Company  was not able to  complete  an  effective
registration  statement within 150 days of the debenture sale. As a result,  the
Company is in default of the debenture agreement. During fiscal 2005, $75,895 of
convertible  secured  debentures was converted into 138,563,402 shares of common
stock (See Note 8). As of the date of this report,  $258,820 of these debentures
are still unpaid and in default.

The principal  amount $883,820 of the secured  convertible  notes are due upon a
default under the terms of secured  convertible  notes. 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. We are
required to file a  registration  statement  with the  Securities  and  Exchange
Commission within 30 days of receipt of a written demand by the investors, which
will include the common stock underlying the secured  convertible  notes and the
warrants.  If the registration  statement is not filed within 30 days of receipt
of a written  demand by the  investors or if the  registration  statement is not
declared  effective  within 90 days from the date of filing,  we are required to
pay  liquidated  damages  to the  investors.  In the event  that we  breach  any
representation or warranty in the Securities Purchase Agreement, we are required
to pay  liquidated  damages in shares or cash, at the election of the investors,
in an amount  equal to 3% of the  outstanding  principal  amount of the  secured
convertible notes per month plus accrued and unpaid interest.

The Company  currently does not have a sufficient number of authorized shares of
common stock available if all debt holders decided to convert their  convertible
secured  debentures into 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 a noteholder attempts to convert and there are not


                                      F-17
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


enough authorized shares available.  The secured  convertible  debenture holders
have  informed  us that they have not and do not intend to convert  any of their
debt until the number of authorized shares is increased.  Therefore,  no accrual
for the penalty has been made at February 28, 2005. We do not, however, have any
legally  binding  commitment  from the  debenture  holders to waive the  default
provision of the debentures.

      The  following  schedule  reflects  convertible  secured  debentures as of
      February 28, 2005 (in order of due date):

       10% convertible secured debentures, due April 2001
       (net of conversions) (A)                                   $      258,820

       12% convertible secured debentures, due July 2003 (A)              75,000

       15% convertible secured debentures, due November 2003 (A)         250,000

       15% convertible secured debentures, due May 2004 (A)               25,000

       15% convertible secured debentures, due June 2004 (A)              25,000

       15% convertible secured debentures, due July 2004 (A)              25,000

       15% convertible secured debentures, due November 2004 (A)          50,000

       15% convertible secured debentures, due January 2005 (A)           50,000

       15% convertible secured debentures, due February 2005 (A)          25,000

       15% convertible secured debentures, due March 2005  (A)           100,000

       15% convertible secured  debentures,  due May 2006, net
        (See Subsequent Event Note 14)                                   446,875


       15% convertible secured debentures, due September 2006            250,000
                                                                    ------------

       Total                                                           1,580,695

       less current portion                                             883,820
                                                                    ------------

       Long term portion                                          $      696,875
                                                                    ============
(A) In default as of the date of this report


                                      F-18
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


NOTE  6 NOTES AND LOANS PAYABLE

      As of February  28,  2005,  notes and loans  payable  consisted of various
      unsecured notes and loans payable to certain individuals, investors and an
      auto finance  company.  The notes and loans bear interest at various rates
      ranging from 8.0% to 12.0% and had various maturities through August 2001,
      except for the  automobile  loan,  which  matures  February 28, 2006.  The
      balance of the notes and loans  payable,  with the  exception  of the auto
      loan in the amount of  $6,583,  are in  default  and  remain  unpaid as of
      February 28, 2005.

      During the year ended  February 28, 2005 and  February 29, 2004,  the note
      and loan  holders  converted  notes and  loans  payable  in the  amount of
      $151,500  and  $45,000  and  accrued  interest  of  $43,475  and  $0  into
      77,000,000  and  109,916,700  common  shares based upon stated  conversion
      prices  or  negotiated  conversion  prices  (See  Note  8).  Due to  these
      conversions, the Company realized a gain of $0 for the year ended February
      28,  2005,  and $136,998  for the year ended  February  29,  2004,  as the
      negotiated  converted  price  was more than the fair  market  value of the
      Company's  common stock on the date of the  conversion  for the year ended
      February 29, 2004.

      During the year ended February 28, 2005,  one of our note holders  forgave
      $115,000  of the  $165,000  owed to him leaving a balance  outstanding  of
      $50,000.

      The  Company  has loans  payable of $4,297,  which are  included  as loans
      payable - related parties in the accompanying  consolidated balance sheet,
      due to various  related  parties as of February 28, 2005.  During the year
      ended February 28, 2005, the Company  recorded  interest expense of $1,921
      relating to loans from its president and other related parties and $76,636
      in accrued interest was payable relating to these loans as of February 28,
      2005,   which  is  included  in  accrued   expenses  in  the  accompanying
      consolidated balance sheet (See Notes 4 and 12).

      During the year ended February 28, 2005, the Company borrowed and repaid a
      note  payable for $2,500 from one note holder.  Additionally,  the Company
      issued 500,000 shares of common stock having a fair value of $1,500, which
      was expensed during the year ended February 28, 2005.

      During the year ended February 28, 2005, the Company borrowed and repaid a
      note payable for $15,000 from one note holder.  Additionally,  the Company
      issued  3,000,000  shares of common  stock  having a fair value of $9,000,
      which was expensed during the year ended February 28, 2005.


                                      F-19
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      During the year ended February 28, 2005, the Company borrowed and repaid a
      note payable for $15,000 from one note holder.  Additionally,  the Company
      issued  5,000,000  shares of common  stock having a fair value of $10,000,
      which was expensed  during the year ended  February 28, 2005.  The Company
      also issued warrants to purchase 5,000,000 shares of common stock having a
      fair value of $13,371,  of which $5,000 was expensed during the year ended
      February  28,  2005 as the  total  expense  related  to  common  stock and
      warrants issued is limited to the value of the note.

      During the year ended February 29, 2004, the Company borrowed and repaid a
      note payable for $40,000 from two note holders.  Additionally, the Company
      issued  15,000,000  shares of common stock having a fair value of $44,000,
      of which $ 40,000 was expensed  during the year ended February 28, 2005 as
      the total expense  related to common stock and warrants  issued is limited
      to the value of the note.  The Company  also  issued  warrants to purchase
      5,000,000 shares of common stock having a fair value of $15,080,  of which
      $0 was  expensed  during the year  ended  February  28,  2005 as the total
      expense  related  to common  stock and  warrants  issued is limited to the
      value of the note.

NOTE  7 CONVERTIBLE SUBORDINATED DEBENTURES

      As of February 28, 2005 the Company has outstanding $71,800 of convertible
      subordinated debentures that were issued in prior years that bear interest
      at 12% per annum and matured at various  times  through  August 2001.  The
      debentures  are  in  default  and  remain  unpaid.  Each  $1,000  unit  is
      convertible at any time at the holder's option, into between 143 and 1,429
      shares of Company common stock for an aggregate of 38,214 common shares.

      The  Company  issued an  additional  $65,500 of  convertible  subordinated
      debentures  during the year ended February 28, 2005.  The debentures  bear
      interest  at 12% per  annum  and have a term of one  year.  Subsequent  to
      February 28, 2005, the debentures were not paid at their due dates and are
      in default.  Each $1,000 unit is  convertible  at any time at the holder's
      option,  into 1,000,000 shares of Company common stock for an aggregate of
      65,500,000 common shares.

      During  the  years  ended   February  28,  2005  and  February  29,  2004,
      respectively,  the debenture  holders converted  convertible  subordinated
      debentures in the amount of $10,000 and $0 and accrued  interest of $1,200
      and $0 into  11,428,571  and 0 common  shares  (total)  based upon  stated
      conversion prices or negotiated conversion prices.

      The Company  currently  does not have a  sufficient  number of  authorized
      shares of common stock  available  if all debt holders  decided to convert
      their convertible subordinated debentures into the Company's common stock.
      The Company is working on rectifying the situation (See Note 11(H)).


                                      F-20
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      The following schedule reflects convertible subordinated debentures as of
February 28, 2005 (in order of due date):

       12% convertible subordinated debentures,
        unsecured, due at various times through
        August 2001 (A)                                      $            71,800

       12% convertible subordinated debentures,
        unsecured, due at various times during
        quarter ended May 31, 2004 (A)                                    55,500
                                                                   -------------

       Total                                                  $          127,300
                                                                   =============

      (A) In default

NOTE  8 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.  During the year ended  February  28,  2005,  the Company  issued
      7,300,000  shares  of common  stock  owed as part of this  agreement.  The
      Company has not issued  3,962,036  shares owed as of February 28, 2005, to
      the third party.  These shares are shown as common stock to be issued with
      a corresponding  decrease to additional paid in capital as of February 28,
      2005.  On  February  28,  2005,  ownership  of  the  1.603%  anti-dilution
      agreement was sold to another company (See Note 11(C)).

      In December  2003,  the Company  agreed to issue  3,200,000  shares of the
      Company's  common  stock to settle  $145,763  of notes  and loans  payable
      (including accrued interest of $4,733).  These shares have not been issued
      and are shown as common  stock to be issued as of  February  28,  2005 and
      February 29, 2004.

      During the year ended February 28, 2005, the Company  converted $75,895 of
      convertible secured debentures into 138,563,402 shares of common stock. No
      gain or loss has been  recognized  on the  aforementioned  conversions  of
      convertible secured debentures.

      During the year ended February 28, 2005, the Company  converted $10,000 of
      convertible  subordinated  debentures and $1,200 of related  interest into
      11,428,571  shares of common stock. No gain or loss has been recognized on
      the aforementioned  conversions of convertible subordinated debentures and
      accrued interest.

      During the year ended February 28, 2005, the Company converted $151,500 of
      notes and loans payable and $43,475 of accrued  interest  into  77,000,000
      shares  of  common  stock.  No gain or loss  has  been  recognized  on the
      aforementioned   conversions  of  notes  and  loans  payable  and  accrued
      interest.


                                      F-21
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      During the year ended February 28, 2005, the Company  acquired  21,000,000
      shares of its common  stock from the Chief  Executive  Officer in exchange
      for a note  payable of $42,000.  The  21,000,000  shares were  immediately
      reissued  to the note and loan  holders as part of the  77,000,000  shares
      discussed in the above paragraph. See note 12 for additional related party
      transactions.

      During the fiscal year ended February 29, 2004, the debenture  holders and
      note and loan holders converted $32,984 of convertible secured debentures,
      notes and loans  payable  and related  accrued  interest  into  58,993,857
      shares of common  stock Based on sales of common stock for cash during the
      year ended  February 29, 2004 for prices below  market  value,  no gain or
      loss has been recognized on the aforementioned  conversions of convertible
      secured debentures.

      During the year ended February 29, 2004, the Company converted $186,030 of
      notes and loans payable into  111,932,700  shares of common stock of which
      2,016,000  are  shown  as to be  issued  having a fair  value of  $49,032,
      resulting in a gain of  $136,988.  The  conversions  of debt to stock were
      based upon negotiated  conversion prices with the debtors.  Based on sales
      of common  stock for cash  during the year  ended  February  29,  2004 for
      prices  below market  value,  no gain or loss has been  recognized  on the
      afore mentioned conversions of notes and loans payable.

      During the year ended February 29, 2004, the Company  converted $82,733 of
      accrued expenses into 1,184,000 shares of common stock having a fair value
      of $2,368 resulting in a gain of $80,365.

      During the year ended February 29, 2004, the Company received $17,000 from
      the  issuance  of  9,714,286   shares  of  common  stock  through  private
      placements to various investors.

      From time to time, the Company has issued common stock in exchange for the
      performance  of services or as an  alternative  to the payment of internal
      accounting and financial services,  internet website creation,  marketing,
      insurance  program review and general  management  consulting.  The dollar
      value  of  these   activities   included  in  the  selling,   general  and
      administrative  expenses  was  $186,209  and  $412,975  for the year ended
      February 28, 2005 and February 29, 2004, respectively.  These transactions
      have been recorded at the fair value of the services  rendered or the fair
      value of the common stock issued,  whichever was more readily evident. The
      number of shares of common stock issued for the aforementioned  activities
      in the years ended  February 28, 2005 and February 29, 2004 was 64,103,100
      (of which 12,000,000  shares were issued to its president) and 144,275,000
      (of which 67,800,000 shares were issued to its president), respectively.


                                      F-22
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


NOTE  9 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 $15,833 and
      $14,584  for the years ended  February  28, 2005 and  February  29,  2004,
      respectively.

      In September  2004,  the Company  issued  2,000,000  options to an advisor
      having a five-year  term. The exercise  price is $0.0015.  The options are
      immediately  exercisable.  The fair  value of the  options  of $3,000  was
      expensed during the year ended February 28, 2005.

      The following is a summary of the status of stock option  activity for the
      fiscal year ended February 28, 2005.

                                         Options              Weighted Average
                                                               Exercise Price
                                    ------------------       -------------------
                                    ------------------       -------------------

Outstanding as of February 29, 2004        20,007,143       $              .003
 Granted                                    2,000,000       $              .002
 Exercised                                    -             $                 -
 Forfeited
                                            -               $                 -
                                    ------------------       -------------------
Outstanding as of February 28, 2005        22,007,143       $              .003
                                    ==================       ===================

      The Company has adopted the disclosure-only provisions of SFAS No. 123 but
      applies APB Opinion 25  ("Accounting  for Stock Issued to  Employees")  in
      accounting  for stock options  issued to employees.  No stock options were
      issued to employees for the years ended February 28, 2005 and February 29,
      2004. Accordingly,  there has been no proforma effect of applying SFAS 123
      for the years ended February 28, 2005 and February 29, 2004.

NOTE  10 INCOME TAXES

      Income tax expense  (benefit)  for the years ended  February  28, 2005 and
      February 29, 2004 are summarized as follows:

                                                2005                  2004
                                          -----------------      ---------------
                                          -----------------      ---------------
      Current:
       Federal                         $             -        $            -
       State                                         -                     -
       Deferred Federal and State                    -                     -
                                          -----------------      ---------------

      Income tax expense (benefit)     $             -        $            -
                                          =================      ===============


                                      F-23
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      The Company's tax expense  differs from the "expected" tax expense for the
      years ended February 28, 2005 and February 29, 2004 as follows:

                                                         2005            2004
                                                       ---------      ---------

U.S. Federal income tax provision (benefit)        $   (571,529)    $ (449,760)
Effect of unused net
  operating loss carryforward                           571,529        449,760
                                                       ---------      ---------

                                                   $       -        $      -
                                                       =========      =========

      The tax effects of  temporary  differences  that gave rise to  significant
      portions of deferred tax assets and  liabilities  at February 28, 2005 and
      February 29, 2004 are as follows:

                                                2005                  2004
                                          -----------------     ----------------
Deferred tax assets:
  Net operating loss carryforward        $     (7,587,816)   $       (7,016,287)
                                            -----------------     --------------
     Total gross deferred tax assets           (7,587,816)           (7,016,287)
  Less valuation allowance                      7,587,816             7,016,287
                                            -----------------     --------------

Net deferred tax assets                  $             -       $             -
                                            =================     ==============

      As of February 28, 2005, the Company has net operating loss  carryforwards
      of $20,640,751  for U.S.  Federal income tax purposes  available to offset
      future taxable income expiring on various dates through 2025.

      The net change in the valuation  allowance  during the year ended February
      28, 2005 was an increase of $571,529.

NOTE  11 COMMITMENTS AND CONTINGENCIES

      (A) Lease Commitments and Contingencies

      The Company leases its office space under a non-cancelable operating lease
      agreement expiring in September 2009.

      The minimum  annual lease  payments due under the lease  agreement  are as
      follows:

For the Year Ended February 28,
             2006                                  $            25,440
             2007                                               26,400
             2008                                               27,360
             2009                                               28,320
             2010                                               14,400
                                                      -----------------
                                                   $           121,920
                                                      =================


                                      F-24
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      Rent  expense  was  approximately  $28,720 and $23,050 for the years ended
      February 28, 2005 and February 29, 2004, respectively.

      (B) Employment Agreements

      The  Company  has  an  employment  contract  (the  "agreement")  with  its
      president  through  January 1, 2005,  which provides for annual salary and
      bonuses  based on  Company  revenues.  The  agreement  also  provides  for
      one-year extensions every January 1 unless the Company gives notice.

      In December of 2003,  the Company and a former note holder  entered into a
      five  year  Employment   Agreement  under  which  the  Company  agreed  to
      compensate  the  individual  $500 per month (when not fully  available for
      work) or $500 per week plus  commissions  (when fully available for work).
      Additionally,  20,000,000  stock  options were granted at exercise  prices
      ranging  from  $.001 to  $.004.  The  options  have a  ten-year  term.  An
      additional  3,200,000 shares of our common stock are to be issued in trust
      to a special  fund.  Compensation  afforded  to the  employee  under  this
      agreement  satisfied  any and all of our  indebtedness  to the former note
      holder.

      (C) 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 renewed all
      royalty  agreements  as they  pertain  to  professional  minor  league and
      college  sports  teams.  The  Company has decided not to renew the royalty
      agreements  relating to current and future  movie  characters.  The unpaid
      minimum  royalty fees of $238,969  ($215,750 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  $124,000  and $77,000 for the years ended  February 28,
      2005 and February 29, 2004, 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-25
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      (D) Payroll Related Taxes

      The  Company is  non-compliant  with  respect to payment of  employee  and
      employer payroll-related taxes. The estimated liability, which is included
      in accrued expenses (see Note 4) was  approximately  $231,000 and $218,000
      as of  February  28,  2005 and  February  29,  2004,  respectively,  which
      includes penalties and interest.

      (E) Other Contingencies

      In the  normal  course of  business  the  Company  is  subject  to various
      regulations,  proceedings,  lawsuits, claims and other matters,  including
      actions under laws and  regulations  related to the environment and health
      and safety, among others. The Company believes the amounts provided in its
      consolidated  financial  statements,  as prescribed by generally  accepted
      accounting principles, are adequate in light of the probable and estimable
      liabilities.  However,  there can be no assurances that the actual amounts
      required to discharge alleged  liabilities from various lawsuits,  claims,
      legal  proceedings  and other matters,  and to comply with applicable laws
      and regulations, will not exceed the amounts reflected in the accompanying
      consolidated  financial  statements  or will not have a  material  adverse
      effect on its consolidated results of operations,  financial condition and
      cash  flows.  Any costs that may be  incurred  in excess of those  amounts
      provided as of February 28, 2005 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.

      (F) 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.


                                      F-26
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      In  September  2004,  the Company  signed a licensing  agreement  with the
      National  Football League,  which expired on March 31, 2005. The agreement
      was renewed in June 2005 for the period April 2005 through March 2006 (See
      Note 14).  The  agreement  includes  a 12%  royalty  paid on sales  with a
      minimum  annual  royalty  of  $100,000  that was  paid  upon  signing  the
      agreement and expensed during the year ended February 28, 2005.

      (G) Concentrations

      For the year ended February 28, 2005,  89% of the Company's  revenues were
      derived from its largest  customer.  For the year ended February 29, 2004,
      63%  of  the  Company's  revenues  were  derived  from  its  four  largest
      customers.

      The Company  obtains a significant  portion of its new borrowings from one
      investment  group.  During the year ended  February 28, 2005,  the Company
      borrowed  $900,000 from this investment  group. As of February 28, 2005, a
      total of $1,580,695 (net of discounts) was owed to this  investment  group
      (See Note 5).

      (H) Debt Conversions

      The Company  currently  does 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 is  currently  working on
      rectifying  the  situation.  The  provisions  of the  convertible  secured
      debentures  call for a 24%  penalty  on the  amount  of debt a  noteholder
      attempts to convert if there are not enough authorized shares available to
      do so  (See  Note 5 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 7).

NOTE  12 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 February 28, 2005, and February 29, 2004, the amount of
      salary deferred was $577,000 and $452,000, respectively, which is included
      in accrued  expenses - related  parties.  Also,  $168,961  and $109,290 of
      accrued  compensation  was  due to the  Company's  President's  wife as of
      February 28, 2005 and February 29, 2004, respectively.


                                      F-27
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      The  Company  issued  shares  to  its  president  (12,000,000  shares  and
      67,800,000  shares for the years ended  February 28, 2005 and February 29,
      2004, respectively), in exchange for electing to defer his salary.

      During the year ended February 28, 2005, the Company  received  21,000,000
      treasury shares from the Company's President valued at $42,000 in exchange
      for  a  related   party  note  payable  of  $42,000.   These  shares  were
      subsequently issued as part of debt conversions.

      The  Company  has loans  payable of $4,297,  which are  included  as loans
      payable - related parties in the accompanying  consolidated balance sheet,
      due to various  related  parties as of February 28, 2005.  During the year
      ended February 28, 2005, the Company  recorded  interest expense of $1,921
      relating to loans from its president and other related parties and $76,636
      in accrued interest was payable relating to these loans as of February 28,
      2005  which  is   included  in  accrued   expenses  in  the   accompanying
      consolidated balance sheet.

NOTE  13 NON-CASH  INVESTING AND FINANCING  ACTIVITIES IN THE STATEMENTS OF CASH
      FLOWS

      During the year ended February 28, 2005, the Company  converted $75,895 of
      convertible secured debentures into 138,563,402 shares of common stock.

      During the year ended February 28, 2005, the Company  converted $10,000 of
      convertible subordinated debentures and $1,200 of related accrued interest
      into 11,428,571 shares of common stock.

      During the year ended February 28, 2005, the Company converted $151,500 of
      notes and loan  payable and $43,475 of accrued  interest  into  77,000,000
      shares of common stock.

      During the year ended February 28, 2005, the Company  received  21,000,000
      treasury shares from the Company's President valued at $42,000 in exchange
      for  a  related   party  note  payable  of  $42,000.   These  shares  were
      subsequently issued as part of debt conversions.

      During the year ended February 29, 2004, the Company  converted $32,984 of
      convertible secured debentures into 58,993,857 shares of common stock.

      During the year ended February 29, 2004, the Company converted $186,030 of
      notes and loans payable into  111,932,700  shares of common stock having a
      fair value of $49,032, of which 2,016,000 are to be issued. The conversion
      of these  notes  and loans  resulted  in a gain on  settlement  of debt of
      $136,997.


                                      F-28
<PAGE>


                COLLECTIBLE CONCEPTS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             AS OF FEBRUARY 28, 2005


      During the year ended February 29, 2004, the Company  converted $82,733 of
      accrued expenses into 1,184,000 shares of common stock to be issued having
      a fair value of $2,368.  The conversion of these accrued expenses resulted
      in a gain on settlement of debt of $80,365.

      Cash  payments for interest  expense were  immaterial  for the years ended
      February 28, 2005 and February 29, 2004.

NOTE  14 SUBSEQUENT EVENTS

      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 that was
      owed and paid upon signing the agreement.

      In May 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 $10,000 for the rights to the license.

      In May 2005,  the  Company at various  dates  issued  convertible  secured
      debentures  totaling  $400,000 to an investment  group.  These  debentures
      mature  three years from the date of  issuance,  bear  interest at 10% per
      annum and are convertible into shares of the Company's common stock at the
      lesser of $ .01 or 50% of the average of the lowest three intraday trading
      prices during the twenty trading days immediately preceding conversion.

      In June 2005, the Company renewed its licensing agreement with the NFL for
      the period April 2005 through  March 2006.  The  agreement  includes a 12%
      royalty paid on sales with a minimum annual royalty of $100,000,  of which
      $30,000 was owed and paid upon signing the agreement.

      On June 30, 2005, the 15%  convertible  secured  debenture,  due May 2006,
      will be in default because under the terms of the debenture  agreement the
      Company  will not have a sufficient  number of  authorized  common  shares
      available if the debt holders decided to convert their secured  debentures
      into the Company's common stock.

      In July 2005,  the Company  entered into a Securities  Purchase  Agreement
      with an  investment  group  for the sale of (i)  $850,000  in  convertible
      secured  notes and (ii)  warrants to purchase  1,700,000  shares of common
      stock. This money is being used to purchase inventory and working capital.


                                      F-29


<PAGE>


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

      None.

ITEM 8A - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.


      As of February 28, 2005, our management  carried out an evaluation,  under
the  supervision of our Chief Executive  Officer and Chief Financial  Officer of
the  effectiveness  of the design  and  operation  of our  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 on that  evaluation,  our
chief  executive   officer  and  chief  financial  officer  concluded  that  our
disclosure  controls and  procedures  are not  effective  to provide  reasonable
assurance  that  information we are required to disclose in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and forms,  and that such information is not accumulated and communicated to our
management,  including our chief executive officer and chief financial  officer,
as appropriate, to allow timely decisions regarding required disclosure.  Please
see  the  subsection  "Significant   Deficiencies  In  Disclosure  Controls  And
Procedures Or Internal Controls" below.

Changes in Internal Control over Financial Reporting.

      There were no changes in internal  controls over financial  reporting that
occurred during the period covered by this report that have materially affected,
or are  reasonably  likely to  materially  effect,  our  internal  control  over
financial  reporting.  As described  below, as a result of our evaluation of our
disclosure  controls and procedures as of February 28, 2005, we determined  that
our controls and  procedures  are not effective and  subsequent to the period of
this report, began to implement changes to our internal controls.

Significant  Deficiencies  In  Disclosure  Controls And  Procedures  Or Internal
Controls

      Our independent auditors have identified several material deficiencies and
significant  weaknesses  in our  financial  reporting  controls and  procedures,
including:

1)    Difficulties and delays in providing proper support and  documentation for
      cash  receipts,   disbursements,   general   journal   entries  and  other
      transactions;

2)    Problems in analyzing account balances or transactions recorded because of
      the  inability of the computer  accounting  program to provide an adequate
      audit trail;

3)    Entering  into  verbal  agreements  that  were not  properly  recorded  or
      memorialized  in  writing;

4)    Limited written  evidence of management  authorization of vendor payments;
      and

5)    Understating  our accounts  payable,  accrued  royalties and allowance for
      doubtful accounts.


                                       26
<PAGE>


      These  deficiencies  could have resulted in material  misstatements to the
financial  statements  for the year  ended  February  28,  2005.  We are  taking
corrective action to resolve these weaknesses and deficiencies. In June 2005, we
hired a full-time bookkeeper.  Our bookkeeper has been charged with establishing
proper records and accounts, including establishing separate records for each of
our clients and vendors. In addition, we have promoted an employee to handle all
of our invoicing and billing on a full-time basis. We have made  arrangements to
have our accountant, who works for us on a part-time basis, to be in our offices
one day each week to oversee  these  changes  and to review and  account for all
transactions  that  occurred  during the prior  week.  As well,  we have  opened
several  banking  accounts,  with each new account  established for a particular
purpose, such as payroll/commission and purchasing. Lastly, we have instituted a
policy whereby management is prohibited from entering into verbal contracts.  We
believe  that  these  actions  will  correct  the  material   deficiencies   and
significant weaknesses in our controls and procedures and we anticipate that our
material  deficiencies  and weaknesses will be fully corrected before the end of
the November 30, 2005 quarter.



                                       27
<PAGE>

PART III

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



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

Paul Lipschutz             59               Chief Executive Officer and Director

Jay Lipschutz              37               Secretary

Directors  serve until the next annual  meeting and until their  successors  are
elected and  qualified.  Officers are  appointed to serve for one year until the
meeting of the board of directors  following the annual meeting of  stockholders
and until their successors have been elected and qualified.

Paul  Lipschutz.  Mr.  Lipschutz  has been our  Chief  Executive  Officer  and a
director since 1992.  Mr.  Lipschutz is a 1967 graduate of The Wharton School of
Finance and Commerce of the University of  Pennsylvania.  Jay Lipschutz and Paul
Lipschutz are first cousins, once removed.

Jay Lipschutz.  Mr.  Lipschutz has been our Secretary  since December 2001. From
1999 until December 2001, Mr.  Lipschutz  served as our director of shipping and
receiving.  Prior to 1999, Mr.  Lipschutz served as the director of shipping and
receiving  at  Children's  Hospital  of  Philadelphia.  Jay  Lipschutz  and Paul
Lipschutz are first cousins, once removed.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

      Based  solely upon a review of Forms 3, 4 and 5, and  amendments  thereto,
furnished  to us during  fiscal  year  2005,  we are not aware of any  director,
officer or  beneficial  owner of more than ten percent of the  Company's  Common
Stock that,  during  fiscal year 2005,  failed to file on a timely basis reports
required by Section 16(a) of the Securities Exchange Act of 1934.

Code of Ethics

      A code of ethics relates to written standards that are reasonably designed
to deter wrongdoing and to promote:

(1)   Honest and ethical  conduct,  including the ethical  handling of actual or
      apparent   conflicts  of  interest   between   personal  and  professional
      relationships;

(2)   Full, fair, accurate,  timely and understandable disclosure in reports and
      documents  that are filed with,  or submitted  to, the  Commission  and in
      other public communications made by an issuer;

(3)   Compliance with applicable governmental laws, rules and regulations;

(4)   The prompt internal  reporting of violations of the code to an appropriate
      person or persons identified in the code; and

(5)   Accountability for adherence to the code.


                                       28
<PAGE>

      We have not  adopted  a  corporate  code of  ethics  that  applies  to our
principal executive officer,  principal financial officer,  principal accounting
officer or controller, or persons performing similar functions.

      Our  decision to not adopt such a code of ethics  results  from our having
only a limited number of officers and directors  operating as the management for
the Company. We believe that as a result of the limited interaction which occurs
having such a small management  structure for the Company eliminates the current
need for such a code, in that violations of such a code.

ITEM 10. EXECUTIVE COMPENSATION.

      The following table sets forth certain  compensation paid or accrued by us
to certain of our executive  officers  during fiscal years ended 2005,  2004 and
2003.

Summary Compensation Table


<TABLE>
<CAPTION>
                                                                           Other
                                                           Annual      Restricted     Options       LTIP
  Name & Principal                Salary       Bonus       Compen-        Stock         SARs       Payouts      All Other
      Position          Year        ($)         ($)      sation ($)    Awards ($)      (#)(1)        ($)      Compensation
--------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------
--------------
<S>                     <C>     <C>              <C>          <C>          <C>            <C>         <C>            <C>
Paul S. Lipschutz,      2005    150,000 (1)      0            0            34,000         0           0              0
CEO                     2004    142,750 (1)      0            0           177,000         0           0              0
                        2003    142,750 (1)      0            0            28,000         0           0              0
--------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------
--------------
</TABLE>


(1) Mr. Lipschutz agreed to defer his salary in fiscal years 2005, 2004 and 2003
due to our financial  condition and to help us secure  financing.  Mr. Lipschutz
received an  aggregate  14,000,000  shares of common stock as  compensation  for
services in fiscal year 2003,  67,800,000 in fiscal year 2004 and  12,000,000 in
fiscal year 2005.

OPTIONS

      No options were exercised and 2,000,000 were granted during fiscal 2005.

      There were no long-term incentive plans or rewards made in fiscal 2005.

Employment Agreements

      Mr. Lipschutz,  our Chief Executive Officer,  has an Employment  Agreement
with us which became effective on January 1, 1999 and which  originally  expired
on January 1, 2004. At each  anniversary date of the Employment  Agreement,  the
Employment  Agreement will extend for another year,  unless either Mr. Lipschutz
or we give ninety days prior notice of intent not to have the Agreement renewed.
No notice was given on January 1, 2004;  therefore the Employment  Agreement has
been  extended to January 1, 2005.  No notice was given on January 1, 2005,  the
term of the Employment Agreement will be extended to January 1, 2006.

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


                                       29
<PAGE>

                      Annual Revenues                  Additional Salaries
                      ---------------                  -------------------

               $1,000,000 to $1,999,999                     $25,000

               $2,000,000 to $2,999,999                     $50,000

               $3,000,000 to $4,999,999                     $75,000

     Each $1,000,000 increment thereafter                   $25,000

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

Directors Compensation.

      Each director  receives  50,000 shares of our common stock per quarter for
their services.


                                       30
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT.

As of July 27, 2005,  there were  699,695,037  shares of common stock, par value
$0.001 outstanding. The following table sets forth certain information regarding
the beneficial ownership of our common stock as of May 27, 2005:

o     all directors

o     each  person  who is known by us to be the  beneficial  owner of more than
      five percent (5%) of the outstanding common stock

o     each executive officer named in the Summary Compensation Table

o     all directors and executive officers as a group

The number of shares beneficially owned by each director or executive officer is
determined  under  rules  of the SEC,  and the  information  is not  necessarily
indicative of beneficial  ownership for any other purpose.  Under the SEC rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment  power. In addition,  beneficial  ownership
includes any shares that the individual has the right to acquire within 60 days.
Unless  otherwise  indicated,  each person listed below has sole  investment and
voting  power  (or  shares  such  powers  with his or her  spouse).  In  certain
instances,  the number of shares  listed  includes  (in addition to shares owned
directly), shares held by the spouse or children of the person, or by a trust or
estate of which the  person is a trustee or an  executor  or in which the person
may have a beneficial interest.


Title of Class    Name and Address                 Amount of        Percent of
                  of Beneficial Owner              Beneficial         Class
                                                   Ownership           (1)

Common Stock      Paul S. Lipschutz                91,382,271 (2)     13.1%
                  1600 Lower State Road
                  Doylestown, PA 18901

Common Stock      Jay Lipschutz                       939,641             *
                  1600 Lower State Road
                  Doylestown, PA 18901

Common Stock      Shares of all directors and      92,321,912 (2)     13.2%
                  executive officers as a
                  group (2 persons)

Common Stock      Kenneth Adelberg                 43,292,857          6.2%
                  609 Longchamps Drive
                  Devon, PA 19333

Common Stock      Richard and Elizabeth Elmore     66,816,199          9.5%
                  1600 Lower State Road
                  Doylestown, PA 18901

Common Stock      Roy and Christine Mittman        56,009,524          8.0%
                  2006 Millpond Court
                  Wall, NJ 07719

* Represents less than 1%

(1) Based on 699,695,037 shares of common stock currently outstanding.

                                       31
<PAGE>

(2) Include 3,500,000 shares owned by Paul Lipschutz's wife,  Marilyn Lonker, as
to which Mr. Lipschutz disclaims beneficial ownership. Includes 375 shares owned
by the estate of Harvey Benson, of which Mr. Lipschutz serves as Executor.

STOCK OPTION PLANS

      None.


                                       32
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Beginning in fiscal year 1996, Mr. Lipschutz, our Chief Executive Officer,
made various loans to us to assist with meeting our important expenditures.

      At February 28, 2005,  the principal  amount of Mr.  Lipschutz's  loan had
decreased to $0 through net borrowings.  The loan accumulated $1,921 in interest
during fiscal year 2005,  and the loan had total accrued  interest of $76,636 at
February 28, 2005.  The total amount owed to Mr.  Lipschutz,  with  interest and
principal on the loan, at February 29, 2004 was $133,418.

ITEM 13. EXHIBITS

3.1   Certificate  of  Incorporation  of the Company filed as Exhibit 3.1 to the
      registration  statement on Form 10-SB filed with the Commission on May 24,
      2000 and incorporated herein by reference.

3.2   Amendment to Certificate  of  Incorporation  of the Company,  changing the
      name of the Company from Amour Corporation to Bard Sports Corp.,  filed as
      Exhibit  3.1 to the  registration  statement  on Form 10-SB filed with the
      Commission on May 24, 2000 and incorporated herein by reference.

3.3   Amendment to Certificate  of  Incorporation  of the Company,  changing the
      name of the Company from Bard Sports Corp. to USA Sports  Group,  Inc. and
      increasing  the  authorized  common  stock,  filed as  Exhibit  3.1 to the
      registration  statement on Form 10-SB filed with the Commission on May 24,
      2000 and incorporated herein by reference.

3.4   Amendment to Certificate  of  Incorporation  of the Company,  changing the
      name of the Company from USA Sports Group,  Inc. to  Collectible  Concepts
      Group, Inc. and increasing the authorized  common stock,  filed as Exhibit
      3.1 to the registration  statement on Form 10-SB filed with the Commission
      on May 24, 2000 and incorporated herein by reference.

3.5   By-Laws of the Company, filed as Exhibit 3.2 to the registration statement
      on Form 10-SB filed with the  Commission on May 24, 2000 and  incorporated
      herein by reference.

4.1   Form of debenture,  filed as Exhibit 4.1 to the registration  statement on
      Form 10-SB  filed with the  Commission  on May 24,  2000 and  incorporated
      herein by reference.

4.2   Form  of  debenture  issued  April  2000,  filed  as  Exhibit  4.2  to the
      registration  statement on Form 10-SB filed with the Commission on May 24,
      2000 and incorporated herein by reference.

4.3   Form of Stock Purchase  Warrant,  filed as Exhibit 4.3 to the registration
      statement  on Form 10-SB  filed with the  Commission  on May 24,  2000 and
      incorporated herein by reference.

4.4   Form  of  Registration  Rights  Agreement,  filed  as  Exhibit  4.4 to the
      registration  statement on Form 10-SB filed with the Commission on May 24,
      2000 and incorporated herein by reference.

4.5   Secured  Convertible  Debenture with New Millennium  Capital  Partners II,
      LLC, AJW Partners, LLC and Equilibrium Equity, LLC, filed as Exhibit 10.11
      to the registration statement on Form 10-SB/A filed with the Commission on
      September 7, 2000 and incorporated herein by reference.


                                       33
<PAGE>

4.6   Security  Agreement  by and  among the  Company,  New  Millennium  Capital
      Partners II, LLC, AJW Partners,  LLC and Equilibrium Equity, LLC, filed as
      Exhibit 10.12 to the registration statement on Form 10-SB/A filed with the
      Commission on September 7, 2000 and incorporated herein by reference.

10.1  Paul  Lipschutz  employment  agreement,  filed  as  Exhibit  10.1  to  the
      registration  statement on Form 10-SB filed with the Commission on May 24,
      2000 and incorporated herein by reference.

10.2  Financial  Consulting  Agreement  between the  Company and NIR Group,  LLC
      filed as Exhibit  10.7 to the  registration  statement on Form 10-SB filed
      with the Commission on May 24, 2000 and incorporated herein by reference.

10.3  Lease for 1600 Lower State Road, filed as Exhibit 10.9 to the registration
      statement  on Form 10-SB  filed with the  Commission  on May 24,  2000 and
      incorporated herein by reference.


10.4  Professional  Services  Agreement,  dated as of September 1, 2004,  by and
      between the Company and JRT Associates,  Inc.,  filed as an exhibit to the
      amended annual report on Form 10-KSB, field with the Commission on October
      20, 2005 and incorporated herein by reference.

10.5  Amendment,  dated May 4, 2005, to the Professional  Services  Agreement by
      and between the Company and JRT Associates,  Inc.,  filed as an exhibit to
      the amended  annual  report on Form 10-KSB,  field with the  Commission on
      October 20, 2005 and incorporated herein by reference.

10.6  Amendment,  dated May 4, 2005, to the Professional  Services  Agreement by
      and between the Company and JRT Associates,  Inc.,  filed as an exhibit to
      the amended  annual  report on Form 10-KSB,  field with the  Commission on
      October 20, 2005 and incorporated herein by reference.

10.7  Amendment,  dated May 4, 2005, to the Professional  Services  Agreement by
      and between the Company and JRT Associates,  Inc.,  filed as an exhibit to
      the amended  annual  report on Form 10-KSB,  field with the  Commission on
      October 20, 2005 and incorporated herein by reference.

10.8  Amendment,  dated May 4, 2005, to the Professional  Services  Agreement by
      and between the Company and JRT Associates,  Inc.,  filed as an exhibit to
      the amended  annual  report on Form 10-KSB,  field with the  Commission on
      October 20, 2005 and incorporated herein by reference.

10.9  Amendment,  dated January 31, 2005, to the Professional Services Agreement
      by and between the Company and JRT Associates,  Inc.,  filed as an exhibit
      to the amended annual report on Form 10-KSB,  field with the Commission on
      October 20, 2005 and incorporated herein by reference.

10.10 License  Agreement,  dated May 12,  2005,  by and  between the Company and
      Bravado  International  Group  Merchandising  Services,  Inc., filed as an
      exhibit  to the  amended  annual  report on Form  10-KSB,  field  with the
      Commission on October 20, 2005 and incorporated herein by reference.

10.11 Amendment,  dated  September  9,  2005,  to  the  Retail  Product  License
      Agreement by and between the Company and NBA Properties, Inc., filed as an
      exhibit  to the  amended  annual  report on Form  10-KSB,  field  with the
      Commission on October 20, 2005 and incorporated herein by reference.

10.12 Retail Product  License  Agreement,  dated August 26, 2005, by and between
      the Company and NHL Enterprises,  L.P., filed as an exhibit to the amended
      annual  report on Form 10-KSB,  field with the  Commission  on October 20,
      2005 and incorporated herein by reference.


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)

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

      The  aggregate  fees billed by our  auditors,  for  professional  services
rendered for the audit of the  Company's  annual  financial  statements  for the
years ended  February 28, 2005 and February 29, 2004, and for the reviews of the
financial  statements included in the Company's Quarterly Reports on Form 10-QSB
during the fiscal years were $91,649 and $133,345, respectively.

                                       34
<PAGE>

Tax Fees

      Weinberg & Company,  P.A.  did not bill the Company  for tax related  work
during fiscal years 2005 or 2004.

All Other Fees

      Weinberg & Company,  P.A. did not bill the Company for any other  services
during fiscal years 2005 or 2004.

      The Board of Directors has  considered  whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.


                                       35
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) 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., a Delaware Corporation




Dated December 16, 2005          By: /s/ Paul Lipschutz
                                     ----------------------
                                     Paul Lipschutz
                                     Chief Executive Officer (Principal
                                     Executive Officer), Principal Financial
                                     Officer and Principal Accounting Officer




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

Signature                                Title                       Date





/s/ Paul Lipschutz          Chief Executive Officer            December 16, 2005
-------------------------   (Principal Executive Officer),
Paul Lipschutz              Principal Financial Officer,
                            Principal Accounting Officer and
                            Director


/s/ Jay Lipschutz           Director                           December 16, 2005
-------------------------
Jay Lipschutz



                                       26