**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**







**FORM
      10-KSB**




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




**For
      the Fiscal Year Ended February 28, 2007**




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




**For
      the Transition Period From _____ to _____**









Commission
      File Number 000-30703




**COLLECTIBLE
      CONCEPTS GROUP, INC.**


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


**Delaware**
              **95-4026880**(State
                  or other jurisdiction of incorporation
                or
                  organization)
              (IRS
                  Employer Identification No.)**1600
                  Lower State Road**
                **Doylestown,
                  PA**
              **18901**
              **(215)
                  491-1075**(Address
                  of principal executive office)
              (Postal
                  Code)
              (Issuer's
                  telephone
                number)




Securities
      registered under Section 12(b) of the Exchange Act:




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




Indicate
      by check mark whether the issuer (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 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  
      x 
No  o




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




Yes o
      No  x




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-B is not contained herein, and will not 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
      Form 10-KSB.




Yes o
      No  x  Delinquent filers are disclosed
      herein.




Total
      revenues for Fiscal Year Ended February 28, 2007 were $955,218.




The
      aggregate market value of the Common Stock held by non-affiliates (as affiliates
      are defined in Rule 12b-2 of the Exchange Act) of the registrant, computed
      by
      reference to the average of the high and low sale price on June 5, 2007, was
      $513,914.





As
      of
      June 5, 2007 there were 5,139,143,049 shares of issuer’s common stock
      outstanding .
















**COLLECTIBLE
      CONCEPTS GROUP, INC.**


**FORM
      10-KSB**




**For
      the Fiscal Year Ended February 28, 2007**


Part
                  I
              
              
              PageItem
                  1.
              Description
                  of Business.
              
              3Item
                  2.
              Description
                  of Property.
              
              14Item
                  3.
              Legal
                  Proceedings.
              
              14Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders.
              
              14Part
                  ll
              
              
              PageItem
                  5.
              Market
                  for Common Equity and Related Stockholder Matters.
              
              15Item
                  6.
              Management's
                  Discussion and Analysis or Plan of Operation.
              
              17Item
                  7.
              Financial
                  Statements
              
              F-1Item
                  8.
              Changes
                  In and Disagreements With Accountants on Accounting and Financial
                  Disclosure.
              
              27Item
                  8A.
              Controls
                  and Procedures.
              
              27Item
                  8B.
              Other
                  Information.
              
              28Part
                  lll
              
              
              PageItem
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliance with
                  Section
                  16(a) of the Exchange Act.
              
              29Item
                  10.
              Executive
                  Compensation.
              
              30Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              32Item
                  12.
              Certain
                  Relationships and Related Transactions.
              
              33Item
                  13.
              Exhibits.
              
              34Item
                  14.
              Principal
                  Accountant Fees and Services.
              
              36Signatures.
              
              37








2


**PART
      I**





**FORWARD-LOOKING
      INFORMATION**





This
      Annual Report of Collectible Concepts Group, Inc. on Form 10-KSB contains
      forward-looking statements, particularly those identified with the words,
      "anticipates," "believes," "expects," "plans," “intends”, “objectives” and
      similar expressions. These statements reflect management's best judgment based
      on factors known at the time of such statements. The reader may find discussions
      containing such forward-looking statements in the material set forth under
      "Legal Proceedings" and "Management's Discussion and Analysis and Plan of
      Operations," generally, and specifically therein under the captions "Liquidity
      and Capital Resources" as well as elsewhere in this Annual Report on Form
      10-KSB. Actual events or results may differ materially from those discussed
      herein.





**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 or 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. Since then, we have
      focused on a greater variety of products but virtually all in the sports
      licensing industry. We have created both joint venture and distributorship
      agreements so that more expanded lines of products are available to our sales
      force.




3





We
      have
      allowed all of our licenses related to the entertainment industry lapse as
      we
      pursue the college and professional sports markets. Currently, we have a
      licensing agreement with the National Basketball Association.




**CURRENT
      PRODUCT LINES**





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. 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 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. New products include
      wooden collectibles licenses by the NFL and NCAA and MLB and covered by our
      Joint Venture Agreement with GridWorks, Inc. and Salt and Pepper Shakers and
      Lenticular Cups, Notebooks and Coasters licensed by NFL and NASCAR through
      our
      distribution agreement with Brax3D.




**DISTRIBUTION
      CHANNELS**





We
      sell
      our collectible products through traditional retailers, distributors, online
      merchants and catalogers. 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.





**JOINT
      VENTURE AGREEMENT**





On
      April
      30, 2006, we entered into a joint venture agreement with Gridworks, Inc of
      Elgin, Iowa. Under that joint venture agreement, a new corporation named
      American Sports Ventures, Inc was created that will eventually hold new licenses
      to be added in the future. Gridworks is a licensed manufacturer of high-quality
      wood sports collectibles that are skillfully laser etched at their plant in
      Elgin. The line includes NFL footballs in several sizes, NCAA licensed
      basketballs, and special event items such as a Super Bowl or other commemorative
      item, all made of wood. Under the terms of the agreement, Collectible Concepts
      Group and Barry Nelson, the President of Gridworks, will be providing the
      capital necessary to fund the Gridworks operations as well as all marketing
      and
      other operating expenses associated with American Sports Ventures, Inc.
      Gridworks will be providing its wood collectibles to American Sports Ventures
      at
      cost.





In
      addition, we are marketing to convenience store and supermarkets for the first
      time because of our new lines of NFL salt and pepper shakers as well as NFL
      three dimensional eighteen ounce drinking cups, and NFL three dimensional
      covered notebooks **** that
      we
      market under our distribution agreement with Brax3D. Our new customers include
      chains such as Weis Supermarkets, Giant/Eagle and Royal Farms. We hope this
      will
      be a growing area of revenues for us in the near future.





This
      past
      holiday season, we and our joint venture partner, American Sports Ventures,
      worked with 13 mall operators to open 16 kiosks during the months of November
      and December, 2006. Although this was less than our expected number of 25 mall
      kiosks, which reduction was due to funding shortages that lead to delays in
      inventory production, we believe that we have established a framework for future
      mall kiosk stands. These kiosks carried the full line of American Sports
      Ventures as well as Brax3D products as well as our proprietary licensed
      products. Each kiosk was stocked with college and professional sports team
      items
      and concentrated on the local regional teams for that area.




4




**WI-FI
      TV AGREEMENT**





On
      January 3, 2007, we entered into an agreement to purchase a Wi-Fi TV station
      form Wi-Fi TV, Inc. The cost of this station is $12,500 to be financed by Wi-Fi
      TV, Inc. The $12,500 is due in 4 quarterly payments of $3,125 each. We made
      the
      first payment, as required, by March 31, 2007 and our second payment is due
      by
      June 30, 2007. The Wi-Fi TV platform contains live TV, live chat, interactive
      shopping cart and even free online phone calls, combined with multiple
      categories of channels and breaking news about these topics. We believe this
      will provide us with a greater marketing reach, allowing us to reach a larger
      target audience than traditional forms of marketing and advertising. Our TV
      station is available globally on the Internet. Wi-Fi TV allows viewers to chat
      live about the program they are watching and all of our products will be
      included in the Wi-Fi TV Shopping Cart, opening a brand new technologic window
      of sales opportunities. As of this time, our presence on Wi-Fi TV has lead
      to
      numerous retail and wholesale opportunities, which we are currently pursuing.
      We
      plan to add more content, including in-depth discussions about our products.
      The
      current program is merely an overview of our entire product line. Our channel
      can be reach at www.wi-fitv.com, channel 73. A directory by product and type
      is
      available on the site.




**LICENSING
      AGREEMENTS**





In
      October 2006, we renewed our licensing agreement with the NBA, which expires
      on
      September 30, 2007. The agreement includes a 12% royalty paid on sales, and
      an
      extra 4% for the individual players’ image with a minimum royalty for the period
      of $22,500 that was owed upon signing the agreement.





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





**MARKETING
      STRATEGY**





We
      have
      expanded our marketing strategies and now produce unique collectible products
      for the college, military 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.





Additionally,
      our college affinity products are sold through retailers located around the
      main
      campuses of our licensed schools. We are not a manufacturer, but rather source
      our products from a wide range of manufacturing partners. As our new marketing
      plan rolls out, we plan to expand our product line to include more products
      especially in the military and collegiate markets. The current line of
      collegiate and many of our professional sports products are produced for us
      under joint venture or master distributor agreements.





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.




5





As
      of
      February 28, 2007, we had accounts payable and accrued expenses of $2,938,256
      and $3,589,161 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.





**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.





6


**Employees**





As
      of
      June 5, 2007, we had six full time employees, of which three are management;
      two
      are marketing and one shipping and delivery. In addition, we had one part time
      employee and two independent consultants. We consider our relations with our
      employees to be good.





**RISKS
      RELATED TO BUSINESS**





You
      should carefully consider the following risk factors and all other information
      contained herein as well as the information included in this Annual Report
      in
      evaluating our business and prospects. The risks and uncertainties described
      below are not the only ones we face. Additional risks and uncertainties, other
      than those we describe below, that are not presently known to us or that we
      currently believe are immaterial, may also impair our business operations.
      If
      any of the following risks occur, our business and financial results could
      be
      harmed. You should refer to the other information contained in this Annual
      Report, including our consolidated financial statements and the related
      notes.




**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 $60,875,716 for the year ended February 28, 2007 and
      $8,554,857 for the year ended February 28, 2006. 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
      $750,000 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.





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.





7


**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 12, 2007, our independent registered public accounting firm
      stated that our financial statements for the year ended February 28, 2007 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 $6,039,101, shareholders' deficiency of $75,906,484, net loss
      of
      $60,875,716 and net cash used in operations of $1,913,364 for the year ended
      February 28, 2007. 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.





**We
      are Dependent on Certain Licensing Relationships to Generate Revenues, the Loss
      of Which Could Significantly Reduce Revenue**





Our
      sales
      are dependent to a significant degree upon the contractual relationships we
      can
      establish with licensors to exploit, on a generally non-exclusive basis,
      proprietary rights in well-known sports teams and players. Although we believe
      we will continue to meet all of our material obligations under such license
      agreements, there can be no assurance that such licensing rights will continue
      or will be available for renewal on favorable terms. Failure to obtain new
      licenses or extensions on current licenses or to sell such products, for any
      reason, could have a significant negative impact on our revenue.





**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 2006, 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.





8


**If
      We Need to Replace Manufacturers, Our Expenses Could Increase Resulting in
      Smaller Profit Margins or Negative Gross 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:





·  operations
      and financial systems;




·  procedures
      and controls; and




·  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.




9





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




·
            difficulties
                in staffing, managing and integrating international operations due
                to
                language, cultural or other differences;·
            Different
                or conflicting regulatory or legal requirements;·
            foreign
                currency fluctuations; and·
            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 director. We do have an employment
      agreement with Mr. Lipschutz, however, Mr. Lipschutz can give 90 days notice
      prior to each renewal period on January 1. 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 Arrangements** **:**





**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
      June 5, 2007, we had 5,139,143,049 shares
      of common stock issued and outstanding, secured convertible notes outstanding
      that may be converted into an estimated 235,737,320,000 shares of common stock
      at current market prices and outstanding warrants to purchase 22,576,184 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.





10


**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 June 5, 2007 of $0.0001 per share.





Secured
      Convertible Notes at 75% Discount


%
                  Below
                Market
              
              Price
                  Per
                Share
              
              With
                  Discount
                at
                  75%
              
              Number
                of
                  Shares
                Issuable
              
              %
                  of
                Outstanding
                Stock25%
              
              $
              .000075
              
              $
              .00001875
              
              
              260,983,093,333
              
              
              98.07
              %50%
              
              $
              .00005
              
              $
              .0000125
              
              
              391,474,640,000
              
              
              98.70
              %75%
              
              $
              .000025
              
              $
              .00000625
              
              
              782,949,280,000
              
              
              99.35
              %





Secured
      Convertible Notes at 80% Discount


%
                  Below
                Market
              
              Price
                  Per
                Share
              
              With
                  Discount
                at
                  80%
              
              Number
                of
                  Shares
                Issuable
              
              %
                  of
                Outstanding
                Stock25%
              
              $
              .000075
              
              $
              .000015
              
              
              53,333,333,334
              
              
              91.21
              %50%
              
              $
              .00005
              
              $
              .00001
              
              
              80,000,000,000
              
              
              93.96
              %75%
              
              $
              .000025
              
              $
              .000005
              
              
              160,000,000,000
              
              
              96.89
              %





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.




11





**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 4,980,000,000 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.**





Between
      2000 and 2007, we entered into Securities Purchase Agreements for the sale
      of an
      aggregate of $5,248,027 principal amount of secured convertible notes, of which
      $4,993,433 remains outstanding. 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 on or after May 18, 2005) or two years
      (or
      three years for those issued on or after May 18, 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 $4,993,433
      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.





12


**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 2006, 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 in 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. Additionally, in the event that a company
      fails to timely file three of their quarterly and annual reports under Section
      13 within a two year period, the company will be ineligible to have their
      securities quoted on the OTC Bulletin Board for a one year period. We have
      filed
      two reports within the last two years that were not timely. If we fail to remain
      current on our reporting requirements for the next two years, we will 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.





**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:





·
            that
                a broker or dealer approve a person's account for transactions in
                penny
                stocks; and





·
            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:





·
            obtain
                financial information and investment experience objectives of the
                person;
                and





·
            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.






13




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:





·
            sets
                forth the basis on which the broker or dealer made the suitability
                determination; and





·
            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.





**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. The lease is currently month to month and
      is
      currently $2,160, with annual increases of $80. 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.





14


**PART
      II**





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





**MARKET
      INFORMATION**





Our
      common stock is quoted on the OTC 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.





**Fiscal
                Year 2006****High**
            
            **Low**First
                Quarter
            
            $
            0.01
            
            $
            0.01Second
                Quarter
            
            $
            0.01
            
            $
            0.01Third
                Quarter
            
            $
            0.01
            
            $
            0.01Fourth
                Quarter
            
            $
            0.01
            
            $
            0.01





**Fiscal
                Year 2007****High**
            
            **Low**First
                Quarter
            
            $
            0.01
            
            $
            0.01Second
                Quarter
            
            $
            0.01
            
            $
            0.01Third
                Quarter
            
            $
            0.01
            
            $
            0.01Fourth
                Quarter
            
            $
            0.01
            
            $
            0.01





**Fiscal
                Year 2008****High**
            
            **Low**First
                Quarter
            
            $
            0.01
            
            $
            0.01Second
                Quarter (1)
            
            $
            0.01
            
            $
            0.01Third
                Quarter
            
            
            xxx
            
            
            xxxFourth
                Quarter
            
            
            xxx
            
            
            xxx





(1)
      As of
      June 12, 2007





**HOLDERS**





As
      of
      June 7, 2007, we had approximately 950 holders of our common stock. The number
      of record holders was determined from the records of our transfer agent and
      does
      not include beneficial owners of common stock whose shares are held in the
      names
      of various security brokers, dealers, and registered clearing agencies. The
      transfer agent of our common stock is American Registrar & Transfer Co., 342
      East 900 South, Salt Lake City, Utah 84111.





**DIVIDENDS**





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.




15





**RECENT
      SALE OF UNREGISTERED SECURITIES**





None.





16


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





The
      following information should be read in conjunction with the consolidated
      financial statements and the notes thereto contained elsewhere in this report.
      The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
      for forward-looking statements. Information in this Item 6, "Management's
      Discussion and Analysis or Plan of Operation," and elsewhere in this 10-KSB
      that
      does not consist of historical facts, are "forward-looking statements."
      Statements accompanied or qualified by, or containing words such as "may,"
      "will," "should," "believes," "expects," "intends," "plans," "projects,"
      "estimates," "predicts," "potential," "outlook," "forecast," "anticipates,"
      "presume," and "assume" constitute forward-looking statements, and as such,
      are
      not a guarantee of future performance. The statements involve factors, risks
      and
      uncertainties including those discussed in the “Risk Factors” section contained
      elsewhere in this report, the impact or occurrence of which can cause actual
      results to differ materially from the expected results described in such
      statements. Risks and uncertainties can include, among others, fluctuations
      in
      general business cycles and changing economic conditions; changing product
      demand and industry capacity; increased competition and pricing pressures;
      advances in technology that can reduce the demand for the Company's products,
      as
      well as other factors, many or all of which may be beyond the Company's control.
      Consequently, investors should not place undue reliance on forward-looking
      statements as predictive of future results. The Company disclaims any obligation
      to update the forward-looking statements in this report.





**General**





We
      increased revenues this year by 67% compared to the prior year; however, we
      continue to have a negative gross profit margin. We continue
      to pursue our re-evaluated business model. We believe that licenses have evolved
      into less time sensitive and sale spiking properties. Our new business model
      focuses on more evergreen properties and those with a longer window of
      opportunity. We recognize the need to have products that addressed the
      mainstream consumer market where market size and repeat sales opportunities
      could give us a means to stabilize and grow our revenues, while working on
      improving our gross profit margin.





This
      past
      holiday season we worked with 13 mall operators to open 16 kiosks during the
      months of November and December. These kiosks carried the full line of American
      Sports Ventures as well as Brax3D products as well as our proprietary licensed
      products. Each kiosk was stocked with college and professional sports team
      items
      and concentrated on the local regional teams for that area. We have found that
      the more successful kiosk were the ones that were open year round. As a result,
      we plan to expand this program in fiscal 2008, as we will look to own and
      operate kiosks as well as expanding the number of owner-operator kiosks
      concentrating on founding owners who want to run the kiosks year round.





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





On
      September 4, 2006, we filed a Certificate of Designation creating 1 million
      shares of Series A Convertible Preferred Stock. The holders of record of the
      Series A Convertible Preferred stock shall have the right, at their option,
      at
      any time subsequent to the date on which the Closing Bid Price of the Company’s
      common stock is at least $0.05, to convert any or all of such holder’s shares of
      Series A Convertible Preferred stock into such number of fully paid and
      non-assessable shares of the Company’s common stock equal to the number of
      shares of Series A - Convertible Preferred stock multiplied by 20. The holders
      of the Series shall have the right to vote, separately, in person or by proxy,
      at a special or annual meeting of the shareholders, on all matters voted on
      by
      the holders of the Common Stock voting together as a single class with other
      shares entitled to vote. With respect to any such vote, each share of Series
      A
      Preferred Stock shall entitle the holder at cast 60 votes per share of Series
      A
      Preferred stock. The Series A Preferred Stock shall, with respect to
      distributions of assets and rights upon the occurrence of a Liquidation rank
      (i)
      senior to all classes of common stock of the Company and (ii) senior to each
      other class of Capital Stock of the Company hereafter created with does not
      expressly rank pari passu or senior to the Series A Preferred Stock.  The
      Series A Preferred Stock shall not be redeemed or subject to redemption, whether
      by option of the Company or any holder thereof, or otherwise. The holders of
      record of the Series A Convertible Preferred shall be entitled to share in
      any
      cash dividends or distributions that my be declared and paid on the Common
      Stock
      on a pro rata basis as if the holders had been converted into shares of Common
      Stock.




17





Effective
      December 14, 2005, we amended our Certificate of Incorporation to effect a
      reverse stock split of our issued and outstanding shares of Common Stock at
      a
      ratio of 100 to 1and reduce the number of authorized shares from
      15,000,000,000 to 10,000,000,000.





**Twelve
      Months Ended February 28, 2007 compared to Twelve Months Ended February 28,
      2006.**





Net
      revenue for the twelve months ended February 28 2007 was $955,218 and primarily
      consisted of sales of our professional and collegiate sports related products,
      and sports related products sold through our distribution agreements with
      Gridworks and Brax-3D. Net revenue for the twelve months ended February 28,
      2006
      was $569,847 and primarily consisted of sales of professional and collegiate
      sports related products, promotional Fanbana sales and E-Bay Internet
      sales.





Sales
      for
      the twelve months ended February 28, 2007 were comprised primarily of products
      offered with our National Basketball & National Hockey League Licenses and
      products sold through distribution agreements with distributors who have
      National Football League & College licenses. Additional revenues were also
      produced from the sale of promotional items. 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, 2007 increased by $385,128 from
      the twelve months ended February 28, 2006.  This
      increase was mainly attributable to the 68% increase in sales volume and the
      additional cost in promoting the new products. Cost of sales as a percentage
      of
      revenues decreased to 105.5% for the twelve months ended February 28, 2007
      as
      compared to 109.3% for the same period last year.





Cost
      of
      sales for the twelve months ended February 28, 2007 were comprised of costs
      associated with the sale of our products related to the National Basketball
      League, National Hockey League and College Licenses and through products
      purchased through our distribution agreements. Our products are contract
      manufactured for us by both domestic and foreign companies to specifications
      developed by us and approved by the various licensors. We do not feel this
      places us at risk for filling future orders on a timely basis because we have
      developed relationships with alternate suppliers for most of our products.
      Several of our manufacturers will also store and ship product directly to a
      customer, thereby reducing shipping time and eliminating the costs we would
      incur if the product was first shipped to our location. We also feels we are
      not
      at risk for any currency fluctuations in our dealing with our foreign
      manufacturers since all orders are based on U.S. dollars and we do not have
      any
      long term purchase commitments.





Selling,
      general and administrative expenses for the twelve months ended February 28,
      2007 increased to $2,353,974 from $1,446,180 for the same period the previous
      year . For
      the
      twelve months ended February 28, 2007 and February 28, 2006 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
      $269,800 and $30,000, 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, 2007, we incurred charges relating to the costs of producing
      the samples as well as the related package design of $38,441 versus charges
      of
      $44,952 for the same period the previous year.




18





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 .





We
      incurred interest expense of $1,616,401 for the twelve months ended February
      28,
      2007 as compared to $1,116,910 for the same period the previous year due to
      increased borrowings and the debt accretion related to the application of SFAS
      133. The accretion of debt calculation added $1,429,999 and $748,306 of interest
      expense respectively for the twelve months ended February 28, 2007 and February
      28, 2006, respectively.





For
      the
      twelve months ended February 28, 2007, we incurred a non-cash loss in adjusting
      the fair value of the debenture and related warrant derivatives relating to
      the
      convertible debentures of $54,412,274 as compared with $6,034,623 during the
      prior year.





As
      a
      result of the above, we had a net loss of $60,875,716 for the twelve months
      ended February 28, 2007 as compared to a net loss of $8,554,857 for the same
      period last year.





**Liquidity
      and Capital Resources**





As
      of
      February 28, 2007, we had a working capital deficiency of
      $6,039,101.  The
      working capital deficit as of  February
      28, 2007 is a direct result of the unprofitable operations for prior years
      as
      well as for the past twelve months ended February 28, 2007 that resulted in
      cash
      used in operating activities of $1,913,364. We had an ending  cash
      balance  of
      $23,171 at February 28, 2007. 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,
      2007, we received the following capital infusions: $1,200,000 from issuance
      of
      secured convertible debentures.





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





While
      we
      have raised capital to meet our working capital and financing needs in the
      past,
      additional financing is required within the next 12 months in order to meet
      our
      current and projected cash flow deficits from operations and development. We
      have sufficient funds to conduct our operations for several months, but not
      for
      12 months or more. There can be no assurance that financing will be available
      in
      amounts or on terms acceptable to us, if at all.




19





As
      of
      February 28, 2007, we had $716,813 in outstanding notes and loans payable,
      (of
      which $67,000 is due to related parties) $34,500 in convertible subordinated
      debentures and $2,837,848 in outstanding convertible secured debentures. As
      of
      February 28, 2007, we had $2,938,256 in accounts payable, accrued expenses,
      accrued payroll, accrued royalties and related taxes. (Some of the accrued
      expenses are for federal withholding taxes and are related to calendar years
      1999, 2000 and 2001. We are currently making payments on our current federal
      payroll tax obligations as well as monthly payments for these prior
      obligations). We have been able to operate based on deferring vendor and
      employee payments, deferring interest and debt repayments and obtaining
      additional borrowings and proceeds from equity. However, there is no guarantee
      that we will continue to be successful with respect to these actions.
      Furthermore, there can be no assurances that we will be able to obtain the
      necessary funding to finance our operations or grow revenue in sufficient
      amounts to fund our operating expenses.





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





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





**Transaction
                Date**
            
            **Secured
                Convertible Notes Sold**
            
            **Interest
                Rate**
            
            **Conversion
                Price**
            
            **Warrants**May
                2000
            
            $
            400,000
              ($145,406
                remaining)
            
            
            10
            %
            
            $4.00
                  or 25% of market value
            
            
            40,000May
                28, 2002
            
            $
            75,000
            
            
            12
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            1,500November
                26, 2002
            
            $
            250,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            5,000May
                15, 2003
            
            $
            25,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            500June
                20, 2003
            
            $
            25,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            500July
                23, 2003
            
            $
            25,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            500November
                14, 2003
            
            $
            50,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            1,000






20






January
                13, 2004
            
            $
            50,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            1,000February
                13, 2004
            
            $
            25,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            500March
                16, 2004
            
            $
            100,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            2,000May
                28, 2004
            
            $
            550,000
            
            
            15
            %
            
            $1.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            16,500September
                30, 2004
            
            $
            250,000
            
            
            15
            %
            
            $0.26
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            12,500May
                18, 2005
            
            $
            400,000
            
            
            10
            %
            
            $0.16
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            473,684July
                7, 2005
            
            $
            850,000
            
            
            10
            %
            
            $0.16
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            17,000September
                29, 2005
            
            $
            302,597
            
            
            2
            %
            
            $0.16
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            -0-January
                20, 2006
            
            $
            400,000
            
            
            10
            %
            
            $0.16
                  or 20% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            4,000March
                23, 2006
            
            $
            400,000
            
            
            8
            %
            
            $3.00
                  or 20% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            1,000,000May
                31, 2006
            
            $
            500,000
            
            
            8
            %
            
            $3.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            1,000,000December
                31, 2006
            
            $
            270,430
            
            
            2
            %
            
            $3.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            -0-January
                23, 2007
            
            $
            250,000
            
            
            8
            %
            
            $3.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            10,000,000February
                22, 2007
            
            $
            50,000
            
            
            8
            %
            
            $3.00
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            5,000,000June
                5, 2007
            
            $
            700,000
            
            
            8
            %
            
            $0.03
                  or 25% of the average of the lowest three intraday trading prices
                  during
                  the twenty trading days immediately preceding
                  conversion
            
            
            5,000,000




The
      secured convertible notes bear interest as described above, typically mature
      two
      to three years from the date of issuance or two to three years from when we
      are
      in compliance with the terms of the securities purchase agreements, and are
      convertible into our common stock, at the investors' option, on the terms as
      described above. As of February 28, 2007, the average of the three lowest
      intraday trading prices for our common stock during the preceding 20 trading
      days as reported on the Over the Counter Bulletin Board was $.0001 and,
      therefore, the conversion price for the secured convertible notes was $.000025
      at 25% or $.00002 at 20%. Based on this conversion price, the $5,693,433 in
      secured convertible notes remaining, excluding interest, would convert into
      235,737,320,000 shares of our common stock. If the price of our common stock
      should decrease, we will be required to issue substantially more shares, which
      will cause dilution to our existing stockholders. There is no upper limit on
      the
      number of shares that may be issued, which will have the effect of further
      diluting the proportionate equity interest and voting power of holders of our
      common stock.




21





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 lenders, of which
      we are currently in default, we do not anticipate filing for bankruptcy
      protection, as all of our assets would be transferred to our lenders pursuant
      to
      our existing security agreements.





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





We
      recently decreased the number of authorized shares of common stock to
      10,000,000,000; this is not a sufficient number of authorized shares of common
      stock available if all debt holders decided to convert their convertible secured
      debentures into our common stock. We are working on rectifying the situation.
      The provisions of the debt instruments call for a 24% penalty on the amount
      of
      debt owed if a noteholder attempts to convert and there are not enough
      authorized shares available. The secured convertible debenture holders have
      informed us that they have not and do not intend to convert any of their debt
      at
      this time into a greater number of shares of common stock than is authorized
      but
      unissued. Therefore, no accrual for the penalty has been made at February 28,
      2007. We do not, however, have any legally binding commitment from the debenture
      holders to waive the default provision of the debenture.




22





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.





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





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





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





**Critical
      Accounting Policies**





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




23





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, 2007, we had an allowance
      for bad debts of $10,517. 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,
      2007, we had inventory of $284,872 on hand.





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





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





Derivative
      Valuations: In
      accordance with SFAS 133, we are required to estimate the fair value of any
      embedded derivatives and detachable warrants relating to our secured convertible
      debentures. These estimates require significant assumptions and management
      judgment which may affect the amounts reported throughout the financial
      statements. This resulted in us recognizing expense of $54,412,274 and
      $6,034,623 for the years ended February 28, 2007 and 2006,
      respectively.





**Inflation**





The
      impact of inflation on our costs, and the ability to pass on cost increases
      to
      our customers over time is dependent upon market conditions. We are not aware
      of
      any inflationary pressures that have had any significant impact on our
      operations over the past quarter, and we do not anticipate that inflationary
      factors will have a significant impact on future operations.




24





**Off
      Balance Sheet Financing Arrangements**





We
      do not
      maintain off-balance sheet arrangements nor do we participate in non-exchange
      traded contracts requiring fair value accounting treatment.





**Recent
      Accounting Pronouncements**





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections"
      ("SFAS 154") which replaces Accounting Principles Board Opinions No. 20
      "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim
      Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154 provides
      guidance on the accounting 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 has elected to adopt SFAS 154 with the current 10-KSB
      financial reporting. The Company changed its accounting policy with how it
      accounts for derivatives and the relating detachable warrants. The impact of
      this adoption resulted in the Company recording additional expense of
      $2,160,086, for the year ended February 28, 2005.





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





In
      March
      2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of
      Financial Assets - an amendment to FASB Statement No. 140. Statement 156
      requires that an entity recognize a servicing asset or servicing liability
      each
      time it undertakes an obligation to service a financial asset by entering into
      a
      service contract under certain situations. The new standard is effective for
      fiscal years beginning after September 15, 2006. The adoption of SFAS No.156
      did
      not have a material impact on the Company's financial position and results
      of
      operations.





In
      July
      2006, the FASB issued Interpretation No. 48 (FIN 48). “Accounting for
      uncertainty in Income Taxes”. FIN 48 clarifies the accounting for Income Taxes
      by prescribing the minimum recognition threshold a tax position is required
      to
      meet before being recognized in the financial statements. It also provides
      guidance on derecognition, measurement, classification, interest and penalties,
      accounting in interim periods, disclosure and transition and clearly scopes
      income taxes out of SFAS 5, “ *Accounting
      for Contingencies”.* FIN
      48 is
      effective for fiscal years beginning after December 15, 2006. We have not yet
      evaluated the impact of adopting FIN 48 on our consolidated financial position,
      results of operations and cash flows.





In
      September 2006 the Financial Account Standards Board (the “FASB”) issued its
      Statement of Financial Accounting Standards 157, Fair Value Measurements. This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. FAS 157 effective date is for fiscal
      years beginning after November 15, 2007. The Company does not expect adoption
      of
      this standard will have a material impact on its financial position, operations
      or cash flows.




25





In
      September 2006 the FASB issued its Statement of Financial Accounting Standards
      158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans”. This Statement improves financial reporting by requiring an employer to
      recognize the overfunded or underfunded status of a defined benefit
      postretirement plan (other than a multiemployer plan) as an asset or liability
      in its statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through comprehensive income
      of a
      business entity or changes in unrestricted net assets of a not-for-profit
      organization. This Statement also improves financial reporting by requiring
      an
      employer to measure the funded status of a plan as of the date of its year-end
      statement of financial position, with limited exceptions. The effective date
      for
      an employer with publicly traded equity securities is as of the end of the
      fiscal year ending after December 15, 2006. The Company does not expect adoption
      of this standard will have a material impact on its financial position,
      operations or cash flows.




In
      December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
      Payment Arrangements (" FSP
      00-19 -2")
      which addresses accounting for registration payment arrangements. FSP
      00-19 -2
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement, whether issued
      as a separate agreement or included as a provision of a financial instrument
      or
      other agreement, should be separately recognized and measured in accordance
      with
      FASB Statement No. 5, Accounting for Contingencies. FSP
      00-19 -2
      further clarifies that a financial instrument subject to a registration payment
      arrangement should be accounted for in accordance with other applicable
      generally accepted accounting principles without regard to the contingent
      obligation to transfer consideration pursuant to the registration payment
      arrangement. For registration payment arrangements and financial instruments
      subject to those arrangements that were entered into prior to the issuance
      of
      EITF 00-19-2, this guidance shall be effective for financial statements issued
      for fiscal years beginning after December 15, 2006 and interim periods within
      those fiscal years. The Company has not yet determined the impact that the
      adoption of FSP
      00-19 -2
      will
      have on its financial statements.





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





26


**ITEM
      7. FINANCIAL STATEMENTS.**





COLLECTIBLE
      CONCEPTS GROUP, INC.





INDEX
      TO
      FINANCIAL STATEMENTS





PageReports
                of Independent Registered Certified Public Accounting
                Firms
            
            F-2Consolidated
                Balance Sheet as of February 28, 2007 and February 28,
                2006
            
            F-4Consolidated
                Statements of Losses for the years endedFebruary
                28, 2007 and 2006
            
            F-5Consolidated
                Statement of Deficiency in Stockholders' Equity for the years ended
                February 28, 2007 and 2006
            
            F-6Consolidated
                Statements of Cash Flows for the years endedFebruary
                28, 2007 and 2006
            
            F-7Notes
                to Consolidated Financial Statements
            
            F-8





F-1





**REPORT
      OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING
      FIRM**





Board
      of
      Directors


Collectible
      Concepts Group, Inc.


Doylestown,
      PA





We
      have
      audited the consolidated balance sheet of Collectible Concepts Group, Inc.
      (the
“Company”) as of February 28, 2007 and the related consolidated statements of
      losses, deficiency in stockholders’ equity, and cash flows for the year ended
      February 28, 2007. These financial statements are the responsibility of the
      Company’s management. Our responsibility is to express an opinion on the
      financial statements based upon our audit.




We
      conducted our audit in accordance with standards of the Public Company
      Accounting Oversight Board (United States of America). Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the 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 our audit
      provides 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 the Company at February
      28,
      2007 and the results of its operations and its cash flows for the year ended
      February 28, 2007 in conformity with accounting principles generally accepted
      in
      the United States of America.





As
      discussed in Note A to the consolidated financial statements, the Company
      adopted the provisions of Statement of Financial Accounting Standards No.
      123(R), "Share-Based Payment" effective March 1, 2006.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note N, the
      Company is experiencing difficulty in generating sufficient cash flow to meet
      its obligations and sustain its operations, which raises substantial doubt
      about
      its ability to continue as a going concern. Management’s plans in regard to
      these matters are also described in Note N. The accompanying statements do
      not
      include any adjustments that might result from the outcome of this
      uncertainty.





/s/ RBSM
              LLP








New
      York,
      New York


June
      12,
      2007





F-2


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors of Collectible Concepts Group, Inc.





We
      have
      audited the accompanying consolidated balance sheet of Collectible Concepts
      Group, Inc. and Subsidiaries  (the
      "Company"), as of February 28, 2006 and the related consolidated statements
      of
      losses, deficiency in stockholders' equity and cash flow for the year then
      ended. These financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the 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 audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, such 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, 2006, and the results of their
      operations and their cash flow for the year then ended, 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. At February 28, 2006 the Company had a working
      capital deficiency, a deficiency in stockholders’ equity and accumulated
      deficit. The Company also had negative cash used in operating activities for
      the
      year ended February 28, 2006. All these raise substantial doubt about its
      ability to continue as a going concern. These
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.








/s/
      WEINBERG & COMPANY, P.A.





Boca
      Raton, Florida


June
      23,
      2006





F-3





**COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIES****CONSOLIDATED
                BALANCE SHEETS**February
                28, 2007 and 2006




2007
            
            2006ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            23,171
            
            $
            73,992Accounts
                receivable, net of allowance of $30,516 and $10,517,
                respectively
            
            
            144,162
            
            
            57,835Inventories,
                net of allowance of $116,573 and $-0-
            
            
            204,973
            
            
            189,844Advances
                related party
            
            
            79,899
            
            
            -Advance
                officer
            
            
            14,619
            
            
            746Prepaid
                interest
            
            
            -
            
            
            20,625Prepaid
                royalties
            
            
            21,392
            
            
            62,416Other
                prepaid expenses
            
            
            100
            
            
            2,865Total
                current assets
            
            
            488,316
            
            
            408,323Property
                and equipment, net
            
            
            7,390
            
            
            1,130Other
                assets:Film
                library, net
            
            
            -
            
            
            245,800Trademarks
            
            
            1,300
            
            
            1,300Deposits
            
            
            3,200
            
            
            3,200Total
                other assets
            
            
            4,500
            
            
            250,300TOTAL
                ASSETS
            
            $
            500,206
            
            $
            659,753LIABILITIES
                AND DEFICIENCY IN STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                payable and accrued expenses
            
            $
            2,938,256
            
            $
            2,898,725Accrued
                expenses, related party
            
            
            -
            
            
            744,513Notes
                and loans payable
            
            
            649,813
            
            
            483,459Loans
                payable, related party
            
            
            67,000
            
            
            1,878Convertible
                subordinated debentures
            
            
            34,500
            
            
            127,300Convertible
                secured debentures
            
            
            2,837,848
            
            
            1,887,399Total
                current liabilities
            
            
            6,527,417
            
            
            6,143,274Long
                term debt, less current maturitiesNotes
                payable
            
            
            200,000
            
            
            200,000Derivative
                liability related to convertible debentures
            
            
            69,667,000
            
            
            13,743,000Warrant
                liability related to convertible debentures
            
            
            12,273
            
            
            53,569Total
                long term liabilities
            
            
            69,879,273
            
            
            13,996,569Total
                liabilities
            
            
            76,406,690
            
            
            20,139,843COMMITMENTS
                AND CONTINGENCIESDEFICIENCY
                IN STOCKHOLDERS' EQUITYPreferred
                stock, Series A; par value $0.001 per share; 1,000,000 shares authorized,
                1,000,000 and -0- issued and outstanding, respectively
            
            
            1,000
            
            
            -Common
                stock, par value $0.001 per share; 10,000,000,000 shares authorized,
                1,519,292,086 and 6,996,950 issued and outstanding, respectively
                (Note
                H)
            
            
            1,519,200
            
            
            7,000Common
                stock to be issued, 1,091,191 per SSE and 3,135,738, respectively
                (Note
                H)
            
            
            67,384
            
            
            149,714Common
                stock subscription
            
            
            -
            
            
            15,000Subscription
                receivable
            
            
            -
            
            
            (15,000
            )Additional
                paid in capital (Note H)
            
            
            17,778,261
            
            
            14,799,809Deferred
                equity based expense
            
            
            -
            
            
            (40,000
            )Accumulated
                deficit
            
            
            (95,272,329
            )
            
            (34,396,613
            )Total
                deficiency in stockholders' equity
            
            
            (75,906,484
            )
            
            (19,480,090
            )TOTAL
                LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
            
            $
            500,206
            
            $
            659,753





See
        the
        accompanying notes to the consolidated financial statements
  F-4





**COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF LOSSES**




Year
                ended February 28,2007
            
            2006REVENUES:Net
                sales
            
            $
            955,218
            
            $
            569,847Cost
                of sales
            
            
            1,007,990
            
            
            622,862Gross
                profit (loss)
            
            
            (52,772
            )
            
            (53,015
            )OPERATING
                EXPENSESSelling
                and administrative
            
            
            2,353,974
            
            
            1,446,180Impairment
                loss
            
            
            233,200
            
            
            -Depreciation
                and amortization
            
            
            14,986
            
            
            9,115Total
                operating expenses
            
            
            2,602,160
            
            
            1,455,295LOSS
                FROM OPERATIONS
            
            
            (2,654,932
            )
            
            (1,508,310
            )Other
                income (expense)
            
            
            40,526
            
            
            104,986Financing
                costs related to conversion of convertible debt
            
            
            (2,232,635
            )
            
            -Loss
                on adjustment of derivative and warrant liability to fair value
            
            
            (54,412,274
            )
            
            (6,034,623
            )Interest
                expense
            
            
            (1,616,401
            )
            
            (1,116,910
            )Net
                loss before income taxes
            
            
            (60,875,716
            )
            
            (8,554,857
            )Income
                taxes
            
            
            -
            
            
            -NET
                LOSS
            
            $
            (60,875,716
            )
            $
            (8,554,857
            )Net
                loss per common shares outstanding (basic and assuming fully
                diluted)
            
            $
            (0.45
            )
            $
            (1.22
            )Weighted
                average common shares outstanding (basic and diluted)-(Note
                H)
            
            
            136,348,519
            
            
            6,996,950





See
        the
        accompanying notes to the consolidated financial statements
  F-5


**COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIES****CONSOLIDATED
                STATEMENT OF DEFICIENCY IN STOCKHOLDERS'
                EQUITY**For
                the years ended February 28, 2007 and
                2006




Preferred
            
            Stock
            
            Common
            
            Stock
            
            Common
                stock to be issued:
            
            Common
                Stock
            
            Additional
                Paid
                  in
            
            Subscription
            
            Deferred
                Equity
                  based
            
            AccumulatedShares
            
            Amount
            
            Shares
            
            Amount
            
            Shares
            
            Amount
            
            Subscription
            
            Capital
            
            Receivable
            
            Compensation
            
            Deficit
            
            TotalBalance
                as of February 28, 2005-Note H
            
            
            -
            
            
            -
            
            
            6,996,950
            
            $
            7,000
            
            
            71,620
            
            $
            24,802
            
            $
            -
            
            $
            14,795,638
            
            
            -
            
            
            -
            
            $
            (25,841,756
            )
            $
            (11,014,316
            )Acquisition
                of treasury stock from CEO
            
            
            -
            
            
            -
            
            
            (150,000
            )
            
            (200
            )
            
            -
            
            
            -
            
            
            -
            
            
            (29,800
            )
            
            -
            
            
            -
            
            
            -
            
            
            (30,000
            )Common
                stock issued for services rendered
            
            
            -
            
            
            -
            
            
            150,000
            
            
            200
            
            
            -
            
            
            -
            
            
            -
            
            
            29,800
            
            
            -
            
            
            -
            
            
            -
            
            
            30,000Common
                stock to be issued for services rendered
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            500,000
            
            
            60,000
            
            
            -
            
            
            -
            
            
            -
            
            
            (40,000
            )
            
            -
            
            
            20,000Common
                stock subscription
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            75,000
            
            
            -
            
            
            (75,000
            )
            
            -
            
            
            -
            
            
            -Cash
                received on subscription
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,080,000
            
            
            60,000
            
            
            (60,000
            )
            
            -
            
            
            60,000
            
            
            -
            
            
            -
            
            
            60,000Common
                stock to be issued under late issuance stock subscription
                provisions
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,435,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Issuance
                of options for services rendered
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            9,083
            
            
            -
            
            
            -
            
            
            -
            
            
            9,083Common
                stock to be issued for anti-dilution note provisions
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            49,118
            
            
            4,912
            
            
            -
            
            
            (4,912
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (8,554,857
            )
            
            (8,554,857
            )Balance
                as of February 28, 2006-Note H
            
            
            -
            
            
            -
            
            
            6,996,950
            
            
            7,000
            
            
            3,135,738
            
            
            149,714
            
            
            15,000
            
            
            14,799,809
            
            
            (15,000
            )
            
            (40,000
            )
            
            (34,396,613
            )
            
            (19,480,090
            )Conversion
                of secured convertible debentures to common stock
            
            
            -
            
            
            -
            
            
            229,630,006
            
            
            229,600
            
            
            
            
            
            
            
            
            
            
            
            494,243
            
            
            
            
            
            
            
            
            
            
            
            723,843Conversion
                of subordinated convertible debentures to common stock and interest
                to
                common stock
            
            
            -
            
            
            -
            
            
            4,525,390
            
            
            4,500
            
            
            
            
            
            
            
            
            
            
            
            176,513
            
            
            
            
            
            
            
            
            
            
            
            181,013Conversion
                of notes and loans payable to common stock
            
            
            -
            
            
            -
            
            
            906,340,942
            
            
            906,300
            
            
            
            
            
            
            
            
            
            
            
            1,235,343
            
            
            
            
            
            
            
            
            
            
            
            2,141,643Amortization
                of deferred compensation expenses
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40,000
            
            
            
            
            
            40,000Common
                stock issued for services rendered
            
            
            -
            
            
            -
            
            
            344,887,000
            
            
            344,900
            
            
            
            
            
            
            
            
            
            
            
            284,898
            
            
            
            
            
            
            
            
            
            
            
            629,798Cash
                received on subscription
            
            
            -
            
            
            -
            
            
            270,000
            
            
            300
            
            
            
            
            
            
            
            
            (15,000
            )
            
            14,700
            
            
            15,000
            
            
            
            
            
            
            
            
            15,000Common
                stock issued for subscribed shares
            
            
            -
            
            
            -
            
            
            1,080,000
            
            
            1,100
            
            
            (1,080,000
            )
            
            (60,000
            )
            
            
            
            
            58,700
            
            
            
            
            
            
            
            
            
            
            
            -Common
                stock issued under late issuance stock subscription
                provisions
            
            
            -
            
            
            -
            
            
            1,435,000
            
            
            1,400
            
            
            (1,435,000
            )
            
            
            
            
            
            
            
            (1,400
            )
            
            
            
            
            
            
            
            
            
            
            -Common
                stock to be issued for anti-dilution note provisions
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            24,597,251
            
            
            17,080
            
            
            
            
            
            (17,080
            )
            
            
            
            
            
            
            
            
            
            
            -Common
                stock issued for anti-dilution note provisions
            
            
            -
            
            
            -
            
            
            24,126,798
            
            
            24,100
            
            
            (24,126,798
            )
            
            (39,410
            )
            
            
            
            
            15,069
            
            
            
            
            
            
            
            
            
            
            
            -Fair
                value of options issued
            
            
            -
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3,100
            
            
            
            
            
            
            
            
            
            
            
            3,100Conversion
                of loans payable to preferred stock
            
            
            1,000,000
            
            
            1,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            713,924
            
            
            -
            
            
            -
            
            
            -
            
            
            714,924Net
                loss
            
            
            -
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (60,875,716
            )
            
            (60,875,716
            )Balance
                at February 28, 2007
            
            
            1,000,000
            
            $
            1,000
            
            
            1,519,292,086
            
            $
            1,519,200
            
            
            1,091,191
            
            $
            67,384
            
            $
            -
            
            $
            17,778,261
            
            $
            -
            
            $
            -
            
            $
            (95,272,329
            )
            $
            (75,906,484
            )





See
        the
        accompanying notes to the consolidated financial statements
  F-6


**COLLECTIBLE
                CONCEPTS GROUP, INC AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF CASH FLOWS**




For
                the year ended February 28,2007
            
            2006CASH
                FLOW FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (60,875,716
            )
            $
            (8,554,857
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            14,986
            
            
            9,115Provision
                for bad debt expense
            
            
            19,958
            
            
            48,630Provision
                for inventory obsolescence
            
            
            116,573
            
            
            -Impairment
                of film library
            
            
            233,200
            
            
            -Common
                stock issued in connection with services rendered, net of
                cancellations
            
            
            269,800
            
            
            50,000Options
                issued for services rendered
            
            
            3,100
            
            
            -Debt
                forgiveness
            
            
            9,785
            
            
            (104,986
            )Amortization
                of deferred equity based expense
            
            
            40,000
            
            
            9,083Accretion
                of convertible notes payable
            
            
            1,429,999
            
            
            748,305Loss
                on conversion of notes and loans payable
            
            
            1,609,668
            
            
            -Loss
                on conversion of secured convertible debt
            
            
            580,505
            
            
            -Loss
                on conversion subordinate debt and interest
            
            
            42,463
            
            
            -Unrealized
                loss on adjustment of derivative and warrant liability to fair value
                of
                underlying securities
            
            
            54,412,274
            
            
            6,034,623(Increase)
                decrease in:Accounts
                receivable
            
            
            (106,284
            )
            
            110,329Advances
                officer
            
            
            (13,873
            )
            
            (746
            )Loans
                receivable
            
            
            -
            
            
            1,245Trade
                credits
            
            
            39,928
            
            
            -Inventories
            
            
            (131,702
            )
            
            (189,844
            )Advances
                related party
            
            
            (79,899
            )
            
            -Prepaid
                interest
            
            
            20,625
            
            
            6,043Prepaid
                royalties
            
            
            40,924
            
            
            (62,416
            )Other
                prepaid expenses
            
            
            2,865
            
            
            (2,865
            )Increase
                (decrease) in:Cash
                overdraft
            
            
            -
            
            
            -Accounts
                payable and accrued expenses
            
            
            407,457
            
            
            285,597Net
                cash used in operating activities
            
            
            (1,913,364
            )
            
            (1,612,744
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Investment
                in film library
            
            
            -
            
            
            (50,000
            )Purchase
                of fixed assets
            
            
            (8,645
            )
            
            -Net
                cash used in investing activities
            
            
            (8,645
            )
            
            (50,000
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from common stock subscribed
            
            
            15,000
            
            
            60,000Proceeds
                from issuance of convertible secured debentures
            
            
            1,200,000
            
            
            1,726,457Repayments
                of notes and loans payable
            
            
            (170,934
            )
            
            (70,109
            )Proceeds
                from notes and loans payable
            
            
            765,000
            
            
            51,767Repayments
                of subordinated convertible debentures
            
            
            (3,000
            )
            
            -Repayments
                of notes payable-related party
            
            
            (50,189
            )
            
            (34,619
            )Proceeds
                from notes payable-related party
            
            
            115,311
            
            
            2,200Net
                cash provided from financing activities
            
            
            1,871,188
            
            
            1,735,696Net
                (decrease) increase in cash and cash equivalents
            
            
            (50,821
            )
            
            72,952Cash
                and cash equivalents at beginning of period
            
            
            73,992
            
            
            1,040Cash
                and cash equivalents at end of period
            
            $
            23,171
            
            $
            73,992SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Cash
                paid during the period for interest
            
            $
            -
            
            $
            -Cash
                paid during the period for taxes
            
            $
            -
            
            $
            -


See
        the
        accompanying notes to the consolidated financial statements
  F-7


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**




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





Business
      and Basis of Presentation





Collectible
      Concepts Group, Inc. (the “Company”) was formed on March 1, 1986 as “Amour
      Corporation” under the laws of Delaware. The name was changed in September 1988
      to Bard Sports Group. On February 28, 1993, the name was changed to “USA Sports
      Corp”. On April 27, 1999, the name was changed to “Collectible Concepts Group,
      Inc.”





Principles
      of Consolidation




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





Revenue
      Recognition





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




Determination
      of criteria (3) and (4) are based on management’s judgments regarding the fixed
      nature of the selling prices of the products delivered and the collectibility
      of
      those amounts. Provisions for discounts and rebates to customers, estimated
      returns and allowances, and other adjustments are provided for in the same
      period the related sales are recorded. The Company defers any revenue for which
      the product has not been delivered or is subject to refund until such time
      that
      the company and the customer jointly determine that the product has been
      delivered or no refund will be required. At February 28, 2007 and 2006; the
      Company did not have any deferred revenues. SAB 104 incorporates Emerging Issues
      Task Force 00-21 (“EITF 00-21"), Multiple-Deliverable Revenue Arrangements. EITF
      00-21 addresses accounting for arrangements that may involve the delivery or
      performance of multiple products, services and/or rights to use assets. The
      effect of implementing EITF 00-21 on the Company’s financial position and
      results of operations was not significant.





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





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




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




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




4.
      The
      customer has provided a delivery schedule;




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




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




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





The
      remittance terms for these “bill and hold” transactions are consistent with all
      other sale by the company. There were no bill and hold transactions at February
      28, 2007 and 2006.





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





F-8




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**




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





Estimates





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





Cash
      and cash equivalents





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





Concentration
      of Credit Risk





Financial
      instruments and related items, which potentially subject the Company to
      concentrations of credit risk, consist primarily of cash, cash equivalents
      and
      trade receivables. The Company places its cash and temporary cash investments
      with high credit quality institutions. At times, such investments may be in
      excess of the FDIC insurance limit. The Company periodically reviews its trade
      receivables in determining its allowance for doubtful accounts. At February
      28,
      2007 and 2006, allowance for doubtful account balance was $30,516 and $10,517,
      respectively.





Cash
      Equivalents





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





Advances
      Officer





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





Inventories





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





Components
      of inventories as of February 28, 2007 and 2006 are as follows:





2007
            
            2006Finished
                goods
            
            $
            321,546
            
            $
            189,844Less:
                allowance for obsolescence
            
            
            (116,573
            )
            
            -Net
            
            $
            204,973
            
            $
            189,844





Property
      and Equipment





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





F-9




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**




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


Computer
              5
                  yearsOffice
                  equipment
              3
                  to 5 years


Impairment
        of Long-Lived Assets





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




Advertising





The
      Company follows the policy of charging the costs of advertising to expense
      as
      incurred. The Company charged to operations $121,905 and $12,950 as advertising
      costs for the years ended February 28, 2007 and 2006,
      respectively.





Fair
      Value of Financial Instruments





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





Segments





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





Shipping
      and Handling Fees





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





Loss
      per Share




Basic
      and
      diluted loss per share amounts are computed based on net loss divided by the
      weighted average number of common shares outstanding. The assumed conversion
      of
      convertible debt into 101,791,424,914 common shares and 150,578,931 common
      shares as of February 28, 2007 and 2006, respectively, and the exercise of
      outstanding options and warrants to purchase 17,536,184 common shares and
      826,152 common shares as of February 28, 2007 and 2006, respectively, were
      not
      included in the computation of diluted loss per share because the assumed
      conversion and exercise would be anti-dilutive for all periods presented-See
      Note H. As of February 28, 2007, the Company does not have enough common shares
      available to convert all the eligible debt to shares if the debt holders elected
      to convert all of their notes and to issue the required number of shares of
      common stock to be issued per the statement of stockholders' deficiency.





F-10




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





The
      Company computes earnings per share under Financial Accounting Standard No.
      128,
      "Earnings Per Share" ("SFAS 128"). Net loss per common share is computed by
      dividing net loss by the weighted average number of shares of common stock
      and
      dilutive common stock equivalents outstanding during the year. Dilutive
      common stock equivalents consist of shares issuable upon conversion of
      convertible preferred shares and the exercise of the Company's stock options
      and
      warrants (calculated using the treasury stock method). For the year ended
      February 28, 2007 and 2006, common stock equivalents derived from shares
      issuable in conversion of the Callable Secured Convertible Notes are not
      considered in the calculation of the weighted average number of common shares
      outstanding because they would be anti-dilutive, thereby decreasing the net
      loss
      per share.





Non
      monetary/barter transactions





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





Stock
      based compensation





In
      December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based
      Compensation-Transition and Disclosure-an amendment of SFAS 123.” This statement
      amended SFAS 123, “Accounting for Stock-Based Compensation,” to provide
      alternative methods of transition for a voluntary charge to the fair value
      based
      method of accounting for stock-based employee compensation. In addition, this
      statement amended the disclosure requirements of SFAS No. 123 to require
      prominent disclosures in both annual and interim financial statements about
      the
      method of accounting for stock-based employee compensation and the effect of
      the
      method used on reported results. Effective for the year ended February 28,
      2007
      the Company has adopted SFAS 123 (R) which supersedes APB Opinion No. 25,
“Accounting for Stock Issued to Employees” and eliminates the intrinsic value
      method that was provided in SFAS 123 for accounting of stock-based compensation
      to employees. The Company made no employee stock-based compensation grants
      before February 28, 2006 and during the year ended February 28, 2007 and
      therefore has no unrecognized stock compensation related liabilities or expense
      unvested or vested prior to 2006 and for year ended February 28, 2007.





Accounting
      for investments





As
      more
      fully described in Note H, the Company owns 37.5% of Andrew Sports Venture,
      a
      Joint Venture operation. The Company accounts for their investment using the
      Equity method of accounting. For the year ended February 28, 2007 and 2006,
      the
      Joint Venture did not recognize any income or loss requiring the Company to
      record its pro-rata portion. The Company received $30,740 in management fees
      from the Joint Venture operation.





Recent
      accounting pronouncements





In
      February 2006, the FASB issued SFAS No. 155. “ *Accounting
      for certain Hybrid Financial Instruments an amendment of FASB Statements No.
      133
      and 140,”* or SFAS
      No. 155. SFAS No. 155 permits fair value remeasurement for any hybrid financial
      instrument that contains an embedded derivative that otherwise would require
      bifurcation, clarifies which interest-only strips and principal-only strips
      are
      not subject to the requirements of Statement No. 133, establishes a requirement
      to evaluate interests in securitized financial assets to identify interests
      that
      are freestanding derivatives or that are hybrid financial instruments that
      contain an embedded derivative requiring bifurcation, clarifies that
      concentrations of credit risk in the form of subordination are not embedded
      derivatives, and amends SFAS No. 140 to eliminate the prohibition on a
      qualifying special purpose entity from holding a derivative financial instrument
      that pertains to a beneficial interest other than another derivative financial
      instrument. SFAS 155 is effective for all financial instruments acquired or
      issued after the beginning of an entity’s first fiscal year that begins after
      September 15, 2006. We did not have a material impact on our consolidated
      financial position, results of operations or cash flows.





F-11




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





In
      March
      2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of
      Financial Assets - an amendment to FASB Statement No. 140. Statement 156
      requires that an entity recognize a servicing asset or servicing liability
      each
      time it undertakes an obligation to service a financial asset by entering into
      a
      service contract under certain situations. The new standard is effective for
      fiscal years beginning after September 15, 2006. The adoption of SFAS No.156
      did
      not have a material impact on the Company's financial position and results
      of
      operations.





In
      July
      2006, the FASB issued Interpretation No. 48 (FIN 48). “ *Accounting* *for
      uncertainty in Income Taxes”.* FIN 48
      clarifies the accounting for Income Taxes by prescribing the minimum recognition
      threshold a tax position is required to meet before being recognized in the
      financial statements. It also provides guidance on derecognition, measurement,
      classification, interest and penalties, accounting in interim periods,
      disclosure and transition and clearly scopes income taxes out of SFAS 5, “ *Accounting
      for Contingencies”.* FIN 48
      is effective for fiscal years beginning after December 15, 2006. We have not
      yet
      evaluated the impact of adopting FIN 48 on our consolidated financial position,
      results of operations and cash flows.





In
      September 2006 the Financial Account Standards Board (the “FASB”) issued its
      Statement of Financial Accounting Standards 157, Fair Value Measurements. This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles (GAAP), and expands disclosures
      about fair value measurements. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the Board having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. FAS 157 effective date is for fiscal
      years beginning after November 15, 2007. The Company does not expect adoption
      of
      this standard will have a material impact on its financial position, operations
      or cash flows.





In
      September 2006 the FASB issued its Statement of Financial Accounting Standards
      158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans”. This Statement improves financial reporting by requiring an employer to
      recognize the overfunded or underfunded status of a defined benefit
      postretirement plan (other than a multiemployer plan) as an asset or liability
      in its statement of financial position and to recognize changes in that funded
      status in the year in which the changes occur through comprehensive income
      of a
      business entity or changes in unrestricted net assets of a not-for-profit
      organization. This Statement also improves financial reporting by requiring
      an
      employer to measure the funded status of a plan as of the date of its year-end
      statement of financial position, with limited exceptions. The effective date
      for
      an employer with publicly traded equity securities is as of the end of the
      fiscal year ending after December 15, 2006. The Company does not expect adoption
      of this standard will have a material impact on its financial position,
      operations or cash flows.





In
      December 2006, the FASB issued FSP EITF 00-19-2, Accounting for Registration
      Payment Arrangements (" FSP
      00-19 -2")
      which addresses accounting for registration payment arrangements. FSP
      00-19 -2
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement, whether issued
      as a separate agreement or included as a provision of a financial instrument
      or
      other agreement, should be separately recognized and measured in accordance
      with
      FASB Statement No. 5, Accounting for Contingencies. FSP
      00-19 -2
      further clarifies that a financial instrument subject to a registration payment
      arrangement should be accounted for in accordance with other applicable
      generally accepted accounting principles without regard to the contingent
      obligation to transfer consideration pursuant to the registration payment
      arrangement. For registration payment arrangements and financial instruments
      subject to those arrangements that were entered into prior to the issuance
      of
      EITF 00-19-2, this guidance shall be effective for financial statements issued
      for fiscal years beginning after December 15, 2006 and interim periods within
      those fiscal years. The Company has not yet determined the impact that the
      adoption of FSP
      00-19 -2
      will
      have on its financial statements.





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





F-12




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





Reclassifications





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





**NOTE
      B - FILM LIBRARY**





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





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





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





**NOTE
      C - PROPERTY AND EQUIPMENT**





Property
      and equipment at February 28, 2007 and 2006 are as follows:





2007
            
            2006Computer
                and office equipment
            
            $
            134,825
            
            $
            126,179Less:
                accumulated depreciation
            
            
            (127,435
            )
            
            (125,049
            )Net
                property and equipment
            
            $
            7,390
            
            $
            1,130





The
      total
      depreciation expense for the years ended February 28, 2007 and 2006 amounted
      to
      $14,986 and $4,915, respectively.





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





Accounts
      payable and accrued liabilities at February 28, 2007 and 2006 are as
      follows:





2007
            
            2006Accounts
                payable
            
            $
            1,452,267
            
            $
            1,378,816Accrued
                interest, of which $77,456 is for related party
            
            
            618,010
            
            
            576,093Accrued
                payroll and payroll taxes
            
            
            255,364
            
            
            323,157Accrued
                royalties
            
            
            314,747
            
            
            335,344Other
                accrued expenses
            
            
            297,868
            
            
            285,315Total
            
            $
            2,938,256
            
            $
            2,898,725





F-13




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


**NOTE
      E - CONVERTIBLE SECURED DEBENTURES**





Notes
      payable at February 28, 2007 and 2006 are as follows:





2007
            
            200610%
                convertible debenture dated May 2000, face value of $400,000, due
                one year
                from the date of the note with interest payable quarterly during
                the life
                of the note. The note is convertible into the Company’s common stock at
                the lower of a) $4.00 (See Note H) or b) 25% of market value. The
                Company
                has granted the note holder a security interest in substantially
                all of
                the Company’s assets and intellectual property. Additionally, the note
                holder has certain registration rights. The Company is in violation
                of the
                loan covenants (see below)
            
            $
            145,406
            
            $
            258,82012%
                convertible debenture dated May 28, 2002, face value of $75,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            75,000
            
            $
            75,00015%
                convertible debenture dated November 26, 2002, face value of $250,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            250,000
            
            
            250,00015%
                convertible debenture dated May 15, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture dated June 20, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,000








F-14








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





2007
            
            200615%
                convertible debenture dated July 23, 2003, face value of $25,000,
                due one
                year from date of the note with interest payable per annum. The note
                is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture dated November 14, 2003, face value of $50,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            50,000
            
            $
            50,00015%
                convertible debenture dated January 13, 2004, face value of $50,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            50,000
            
            
            50,00015%
                convertible debenture dated February 13, 2004, face value of $25,000,
                due
                one year from date of the note with interest payable per annum. The
                note
                is convertible into the Company’s common stock at the lower of a) $1.00
                (See Note H) or b) 25% of the average of the three lowest intraday
                trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            25,000
            
            
            25,00015%
                convertible debenture March 16, 2004, face value of $100,000, due
                one year
                from date of the note with interest payable per annum. The note is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            100,000
            
            
            100,000







F-15
 
  **COLLECTIBLE
          CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
          28, 2007 AND 2006**


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





2007
            
            200615%
                convertible debenture dated May 28, 2004, face value of $550,000,
                due two
                years from date of the note with interest payable per annum. The
                note is
                convertible into the Company’s common stock at the lower of a) $1.00 (See
                Note H) or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            550,000
            
            
            482,94515%
                convertible debenture dated September 30, 2004, face value of $250,000,
                due two years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.26 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            250,000
            
            $
            176,71210%
                convertible debenture dated May 18, 2005, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            237,808
            
            
            104,47510%
                convertible debenture dated July 7, 2005, face value of $850,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            466,530
            
            
            183,1962%
                convertible debenture dated September 29, 2005, face value of $302,597,
                due three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            142,870
            
            
            42,004






F-16


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





2007
            
            200610%
                convertible debenture dated January 20, 2006, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.16 (See Note H) or b) 20% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            147,580
            
            
            14,2478%
                convertible debenture dated March 23, 2006, face value of $400,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $3.00 (See Note H) or b) 20% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            $
            124,932
            
            
            -0-8%
                convertible debenture dated May 31, 2006, face value of $500,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $3.00 (See Note H) or b) 25% of the average of the three lowest intraday
                trading prices for the common stock on a principal market for twenty
                days
                before, but not including, conversion date. The Company granted the
                note
                holder a security interest in substantially all of the Company’s assets
                and intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            124,658
            
            
            -0-2%
                convertible debenture dated December 31, 2006, face value of $270,430,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.0016 or b) 25% of the average of the three lowest intraday trading
                prices for the common stock on a principal market for twenty days
                before,
                but not including, conversion date. The Company granted the note
                holder a
                security interest in substantially all of the Company’s assets and
                intellectual property. Additionally, the note holder has certain
                registration rights. The Company is in violation of the loan covenants
                (see below)
            
            
            14,571
            
            
            -0-8%
                convertible debenture dated January 23, 2007, face value of $250,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            8,219
            
            
            -0-






F-17


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





2007
            
            20068%
                convertible debenture dated February 22, 2007, face value of $50,000,
                due
                three years from date of the note with interest payable per annum.
                The
                note is convertible into the Company’s common stock at the lower of a)
                $0.03 or b) 25% of the average of the three lowest intraday trading
                prices
                for the common stock on a principal market for twenty days before,
                but not
                including, conversion date. The Company granted the note holder a
                security
                interest in substantially all of the Company’s assets and intellectual
                property. Additionally, the note holder has certain registration
                rights.
                The Company is in violation of the loan covenants (see
                below)
            
            
            274
            
            
            -0-2,837,848
            
            
            1,887,399Less
                current portion
            
            
            2,837,848
            
            
            1,887,399Long
                term portion
            
            $
            -0-
            
            $
            -0-





The
      Company entered into a Securities Purchase Agreement with accredited investors
      in May 2000 for the issuance of an aggregate of $400,000 of convertible notes
      (“Convertible Notes”) and attached to the Convertible Notes was warrants to
      purchase 40,000 shares (See Note H) of the Company’s common stock at an exercise
      price of $20.00 (See Note H) for five years. The Convertible Notes accrue
      interest at 10% per annum, payable quarterly, and were due one year from the
      date of the note. The note holder has the option to convert any unpaid note
      principal to the Company’s common stock at a rate of the lower of a) $4.00 (See
      Note H) or b) 25% of the current market value. The Company issued to the
      investors Convertible Notes of $400,000 in exchange for net proceeds of
      $400,000. As of February 28, 2007, the remaining balance of these debentures
      of
      $145,406 is still unpaid and in default.





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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on November 26, 2002 for the issuance of an aggregate of $250,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.45 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $250,000 in exchange for net proceeds of $250,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $250,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 15, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes
      (“Convertible Notes”) and attached to the Convertible Notes were warrants to
      purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.40 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of February 28, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.




F-18





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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**






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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on June 20, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.20 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of February 28, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on July 23, 2003 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares of the Company’s common stock at an exercise price of
      $0.10 (See Note H) for five years. The Convertible Notes accrue interest at
      15%
      per annum and were due one year from the date of the note. The note holder
      has
      the option to convert any unpaid note principal to the Company’s common stock at
      a rate of the lower of a) $1.00 (See Note H) or b) 25% of the average of the
      three lowest intraday trading prices for the common stock on a principal market
      for the 20 trading days before, but not including, conversion date. The Company
      issued to the investors Convertible Notes of $25,000 in exchange for net
      proceeds of $25,000. As of February28, 2007, the remaining balance of these
      debentures of $25,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on November 14, 2003 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.10 for five years. The Convertible Notes accrue interest
      at
      15% per annum and were due one year from the date of the note. The note holder
      has the option to convert any unpaid note principal to the Company’s common
      stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the average
      of the three lowest intraday trading prices for the common stock on a principal
      market for the 20 trading days before, but not including, conversion date.
      The
      Company issued to the investors Convertible Notes of $50,000 in exchange for net
      proceeds of $50,000. As of February 28, 2007, the remaining balance of these
      debentures of $50,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 13, 2004 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.10 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $50,000 in exchange for net proceeds of $50,000. As of February 28, 2007, the
      remaining balance of these debentures of $50,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on February 13, 2004 for the issuance of an aggregate of $25,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 500 shares (See Note H) of the Company’s common stock at an exercise
      price of $0.15 (See Note H) for five years. The Convertible Notes accrue
      interest at 15% per annum and were due one year from the date of the note.
      The
      note holder has the option to convert any unpaid note principal to the Company’s
      common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25% of the
      average of the three lowest intraday trading prices for the common stock on
      a
      principal market for the 20 trading days before, but not including, conversion
      date. The Company issued to the investors Convertible Notes of $25,000 in
      exchange for net proceeds of $25,000. As of February 28, 2007, the remaining
      balance of these debentures of $25,000 is still unpaid and in
      default.





F-19


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**


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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on March 16, 2004 for the issuance of an aggregate of $100,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 2,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.15 (See Note H) for five years. The Convertible Notes
      accrue interest at 15% per annum and were due one year from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $1.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $100,000 in exchange for net proceeds of $100,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $100,000 is still unpaid and in
      default.





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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on September 30, 2004 for the issuance of an aggregate of $250,000 of
      convertible notes (“Convertible Notes”) and attached to the Convertible Notes
      were warrants to purchase 12,500 shares (See Note H) of the Company’s common
      stock at an exercise price of $3.00 for seven years. The Convertible Notes
      accrue interest at 15% per annum and were due two years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $0.26 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $250,000 in exchange for net proceeds of $250,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $250,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 18, 2005 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 473,684 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.16 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum (current default rate of 15%) and were due
      three years from the date of the note. The note holder has the option to convert
      any unpaid note principal to the Company’s common stock at a rate of the lower
      of a) $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
      trading prices for the common stock on a principal market for the 20 trading
      days before, but not including, conversion date. The Company issued to the
      investors Convertible Notes of $400,000 in exchange for net proceeds of
      $400,000. As of February 28, 2007, the remaining balance of these debentures
      of
      $400,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on July 7, 2005 for the issuance of an aggregate of $850,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 17,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.16 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum (current default rate of 15%) and were due
      three years from the date of the note. The note holder has the option to convert
      any unpaid note principal to the Company’s common stock at a rate of the lower
      of a) $0.16 (See Note H) or b) 25% of the average of the three lowest intraday
      trading prices for the common stock on a principal market for the 20 trading
      days before, but not including, conversion date. The Company issued to the
      investors Convertible Notes of $850,000 in exchange for net proceeds of
      $850,000. As of February 28, 2007, the remaining balance of these debentures
      of
      $850,000 is still unpaid and in default.





F-20




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on September 29, 2005 for the issuance of an aggregate of $302,597 of
      convertible notes (“Convertible Notes”) in exchange for accrued interest due
      said accredited investors. The Convertible Notes accrue interest at 2% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.16 (See Note H) or b) 25% of the average of the
      three
      lowest intraday trading prices for the common stock on a principal market for
      the 20 trading days before, but not including, conversion date. The Company
      issued to the investors Convertible Notes of $302,597 in exchange for net
      proceeds of $302,597. As of February 28, 2007, the remaining balance of these
      debentures of $302,597 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 20, 2006 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 4,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.20 (See Note H) for five years. The Convertible Notes
      accrue interest at 10% per annum and were due three years from the date of
      the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $0.16 (See Note H) or b) 20%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $400,000 in exchange for net proceeds of $400,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $400,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on March 23, 2006 for the issuance of an aggregate of $400,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.50 (See Note H) for seven years. The Convertible Notes
      accrue interest at 8% per annum and were due three years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $3.00 (See Note H) or b) 20%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $400,000 in exchange for net proceeds of $400,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $400,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on May 31, 2006 for the issuance of an aggregate of $500,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 1,000,000 shares (See Note H) of the Company’s common stock at an
      exercise price of $0.50 (See Note H) for seven years. The Convertible Notes
      accrue interest at 8% per annum and were due three years from the date of the
      note. The note holder has the option to convert any unpaid note principal to
      the
      Company’s common stock at a rate of the lower of a) $3.00 (See Note H) or b) 25%
      of the average of the three lowest intraday trading prices for the common stock
      on a principal market for the 20 trading days before, but not including,
      conversion date. The Company issued to the investors Convertible Notes of
      $500,000 in exchange for net proceeds of $500,000. As of February 28, 2007,
      the
      remaining balance of these debentures of $500,000 is still unpaid and in
      default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on December 31, 2006 for the issuance of an aggregate of $270,430 of convertible
      notes (“Convertible Notes”). Convertible Notes accrue interest at 2% per annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $0.0016 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $270,430 in exchange for accrued interest
      owed of $270,430. As of February 28, 2007, the remaining balance of these
      debentures of $270,430 is still unpaid and in default.





F-21




**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on January 23, 2007 for the issuance of an aggregate of $250,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for seven years. The Convertible Notes accrue interest at 2% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $250,000 in exchange for net proceeds of
      $250,000. As of February 28, 2007, the remaining balance of these debentures
      of
      $250,000 is still unpaid and in default.





The
      Company entered into a Securities Purchase Agreement with accredited investors
      on February 22, 2007 for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”) and attached to the Convertible Notes were warrants
      to purchase 5,000,000 shares of the Company’s common stock at an exercise price
      of $0.009 for seven years. The Convertible Notes accrue interest at 2% per
      annum
      and were due three years from the date of the note. The note holder has the
      option to convert any unpaid note principal to the Company’s common stock at a
      rate of the lower of a) $03 or b) 25% of the average of the three lowest
      intraday trading prices for the common stock on a principal market for the
      20
      trading days before, but not including, conversion date. The Company issued
      to
      the investors Convertible Notes of $50,000 in exchange for net proceeds of
      $50,000. As of February 28, 2007, the remaining balance of these debentures
      of
      $50,000 is still unpaid and in default.





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





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





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





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





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





The
      following table summarizes the various components of the convertible debentures
      as of February 28, 2007 and 2006:





2007
            
            2006Convertible
                debentures described above (net of conversions)
            
            $
            4,993,433
            
            $
            3,636,417Less:
                discount
            
            
            (2,155,585
            )
            
            (1,749,018
            )Convertible
                debentures as reported
            
            $
            2,837,848
            
            $
            1,887,399






F-22


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**


**NOTE
      F - CONVERTIBLE SUBORDINATED DEBENTURES**





Convertible
      subordinated debentures as of February 28, 2007 and 2006 are as
      follows:





2007
            
            200612%
                convertible debenture, unsecured with a maturity of August 2001.
                The
                debenture is convertible into the Company’s common stock at $5.00 (See
                Note H) per share. The note is currently in default.
            
            $
            -
            
            $
            40,00012%
                convertible debenture, unsecured with a maturity at August 2001.
                The
                debenture is convertible into the Company’s common stock at $7.50 (See
                Note H) per share. The note is currently in default.
            
            
            25,000
            
            
            31,80012%
                convertible debenture, unsecured with an original one year maturity
                at May
                2004. The debenture is convertible into the Company’s common stock at
                $4.00 (See Note H) or 50% of the average of the lowest three intraday
                trading prices during the twenty trading days immediately preceding
                conversion. The note is currently in default
            
            
            9,500
            
            
            55,500Total
            
            
            34,500
            
            
            127,300Less:
                current portion
            
            
            (34,500
            )
            
            (127,300
            )Long
                term debt
            
            $
            -
            
            $
            -


**NOTE
        G - LOAN AGREEMENTS**
 
 In
        March
        2006, the Company entered into an agreement with an individual investor whereby
        the investor agreed to provide up to $750,000 with an interest rate of 10%
        per
        annum, payable annually, maturing one year from each draw. The Company, at
        its
        option, can repay the debt in cash or may elect to convert any of the loans
        into
        shares of its common stock at 50% of the closing bid of the previous day.
        As of
        February 28, 2007, the Company has borrowed $340,750, net, from this facility,
        which is included in notes and loans payable.
 
 The
        Company has various unsecured notes and loans payable to certain individuals
        and*investors with interest ranging from 8% to 12% per annum with various
        maturity dates up through January 2007, the Company currently owes $309,063
        and
        is in default with the balances remaining unpaid as of February 28, 2007,
        the
        Company owed $483,459 as of February 28, 2006.




**NOTE
      H - CAPITAL STOCK**





Series
      A - Convertible Preferred Stock





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





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





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





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




F-23


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**


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





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





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





Common
      Stock





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





In
      October 2001, the Company entered into an agreement with a third party whereby
      the third party has an anti-dilution ownership of 1.603% of the Company. For
      the
      nine months ended November 30, 2006, the Company issued 893,247 (See above)
      under this provision to the third party. An additional 668,569 (See above)
      has
      not been issued. These shares are shown as common stock to be issued with a
      corresponding decrease to additional paid in capital as of November 30, 2006.
      On
      February 28, 2005, ownership of the 1.603% anti-dilution agreement was sold
      to
      another company.





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





During
      the year ended February 28, 2007, the Company issued 1,080,000 (See above)
      shares of common stock for $60,000 received in fiscal 2006 and 270,000 (See
      above) shares of common stock for $15,000 received in first quarter of fiscal
      2007. In addition, the Company issued 1,435,000 (See above) common shares under
      a late issuance stock subscription provision.





During
      the year ended February 28, 2007, the Company issued 344,887,000 (See above)
      shares of its common stock for $629,800 of services rendered.





During
      the three months ended May 31, 2006, the Company converted $63,804 of
      convertible secured debentures into 6,042,000 (See above) shares of common
      stock
      having a fair value of $417,071. The conversion of debt to stock was based
      upon
      conversion prices set forth in the Securities Purchase Agreement (see Note
      E).
      The loss of $353,267 on these conversions was included in the Loss on adjustment
      of derivative and warrant liability to fair value.





During
      the three months ended May 31, 2006, the Company converted $89,800 of
      convertible subordinated debentures and $48,749 in related interest into
      4,525,390 (See above) shares of common stock. The conversions of debt to stock
      were based upon negotiated conversion prices with debtors (See note F) for
      prices below the conversion prices at date of original issuance. The Company
      recognized a financing cost of $42,464 on these conversions.





During
      the three months ended May 31, 2006, the Company converted $147,150 of notes
      and
      loans payable into 11,341,610 (See above) shares of common stock. The
      conversions of debt to stock were based upon negotiated conversion prices with
      debtors. The Company recognized a financing cost of $411,917 on these
      conversions.





During
      the three months ended August 31, 2006, the Company converted $152,500 of loans
      payable into 45,000,000 (See above) shares of common stock. The conversions
      of
      debt to stock were based upon negotiated conversion prices with debtors. The
      Company recognized a financing cost of $477,500 on these
      conversions





F-24


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**


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





During
      the three months ended August 31, 2006, the Company converted $21,444 of
      convertible secured debentures into 6,889,054 (See above) shares of common
      stock
      having a fair value of $93,791. The conversion of debt to stock was based upon
      conversion prices set forth in the Securities Purchase Agreement (see Note
      E).
      The loss of $72,347 on these conversions was included in the Loss on adjustment
      of derivative and warrant liability to fair value.





During
      the three months ended November 30, 2006, the Company converted $25,000 of
      loans
      payable into 9,000,000 (See above) shares of common stock. The conversions
      of
      debt to stock were based upon negotiated conversion prices with debtors. The
      Company recognized a financing cost of $75,000 on these conversions





During
      the three months ended November 30, 2006, the Company converted $3,900 of
      convertible secured debentures into 1,500,000 (See above) shares of common
      stock
      having a fair value of $15,000. The conversion of debt to stock was based upon
      conversion prices set forth in the Securities Purchase Agreement (see Note
      E).
      The loss of $11,100 on these conversions was included in the Loss on adjustment
      of derivative and warrant liability to fair value.





During
      the three months ended February 28, 2007, the Company converted $24,266 of
      convertible secured debentures into 215,198,952 (See above) shares of common
      stock having a fair value of $130,992. The conversion of debt to stock was
      based
      upon conversion prices set forth in the Securities Purchase Agreement (see
      Note
      E). The loss of $106,726 on these conversions was included in the Loss on
      adjustment of derivative and warrant liability to fair value.





During
      the three months ended February 28, 2007, the Company converted $235,750 of
      loans payable into 840,999,332 (See above) shares of common stock. The
      conversions of debt to stock were based upon negotiated conversion prices with
      debtors. The Company recognized a financing cost of $707,250 on these
      conversions





**NOTE
      I - STOCK OPTIONS**





In
      December 2003, the Company issued 200,000 options to a consultant having a
      ten-year term. The exercise price is $0.10 for the first 50,000 options, $0.20
      for the next 50,000 options, $0.30 for the next 50,000 options and $0.40 for
      the
      last 50,000 options. The only restriction is that no more than 50,000 options
      can be exercised in any one year. The total expense associated with issuing
      the
      options of $40,000 is being recognized over the earliest periods that the
      options may be exercised. The expense associated with these options was $7,083
      and $15,833 for the year ended February 28, 2007 and 2006,
      respectively.





In
      September 2004, the Company issued 200,000 options to an advisor having a
      five-year term. The exercise price is $0.15. The options are immediately
      exercisable. The fair value of the options of $3,000 was expensed during the
      year ended February 28, 2005. This agreement including the options was cancelled
      during fiscal year ended February 28, 2007.





In
      May
      2005, the Company issued 1,200,000 options to an advisor having a three-year
      term. The exercise price is $0.30. The options are immediately exercisable.
      The
      fair value of the options of $7,200 is being amortized over the life of the
      contract. The expense associated with these options was $2,000 for the year
      ended February 28, 2006. The advisor is also to receive 5% of sales on certain
      licensing agreements. This
      agreement including the options was cancelled during fiscal year ended February
      28, 2007.





The
      weighted average fair value of the options granted during the year, using the
      Black-Scholes option pricing model, was $0.06. The significant assumptions
      used
      to determine the fair value are as follows:


Risk-free
                  interest rate:
              
              
              5.25
              %Expected
                  stock price volatility:
              
              
              108
              %Expected
                  dividend payout
              
              
              -Expected
                  option life-years (a)
              
              
              1


(a)
      The
      expected option life is based on contractual expiration dates





The
      following is a summary of the status of stock option activity for the fiscal
      years ended February 28, 2007 and 2006:




F-25


**COLLECTIBLE
        CONCEPTS GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FEBRUARY
        28, 2007 AND 2006**
  **NOTE
      I - STOCK OPTIONS (continued)**





Options
            
            Weighted
                Average Exercise PriceOutstanding
                as of February 29, 2005
            
            
            220,071
            
            $
            .3Granted
            
            
            120,000
            
            $
            .3Exercised
            
            
            -
            
            
            -Forfeited
            
            
            -
            
            
            -Expired
            
            
            (71
            )
            $
            7.00Outstanding
                as of February 28, 2006
            
            
            340,000
            
            $
            .3Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
            
            
            (140,000
            )Expired
            
            
            ________
            
            
            -Outstanding
                as of February 28, 2007
            
            
            200,000
            
            $
            .3


**NOTE
          J - INCOME TAXES**
 
 The
          components of the (benefit) provision for income taxes from continuing
          operations are as follows:
 
 2007
                
                2006Current
                    (benefit) provision: federal
                
                $
                —
                
                $
                —Current
                    provision: state
                
                
                —
                
                
                —Total
                    current provision
                
                
                —
                
                
                —Deferred
                    provision: federal
                
                
                —
                
                
                —Deferred
                    provision: state
                
                
                —
                
                
                —Total
                    deferred provision
                
                
                —
                
                
                —Total
                    provision (benefit) for income taxes from continuing
                    operations
                
                $
                —
                
                $
                —
  Significant
          items making up the deferred tax assets and deferred tax liabilities are
          as
          follows:
 
 2007
                
                2006Long-term
                    deferred taxes:Unrealized
                    losses on change fair value of the derivative and warrant
                    Liabilities
                
                $
                11,135,962
                
                $
                4,672,620Operating
                    loss carryforwards and tax credits
                
                
                (21,758,025
                )
                
                (13,097,147
                )Less
                    valuation allowance
                
                
                (10,622,063
                )
                
                (8,424,527
                )Total
                    net deferred tax liabilities
                
                $
                —
                
                $
                —
 
 A
          valuation allowance is established if it is more likely than not that all
          or a
          portion of the deferred tax asset will not be realized.  Accordingly, a
          valuation allowance was established in 2007 and 2006 for the full amount
          of the
          deferred tax asset due to the uncertainty of realization.  Management
          believes that based upon its projection of future taxable operating income
          for
          the foreseeable future, it is more likely than not that the Company will
          not be
          able to realize the benefit of the deferred tax asset at February 28,
          2007.  The valuation allowance as of March 1, 2006 was $8,424,527. 
The net change in the valuation allowance during the year ended February
          28,
          2007 was a increase of $2,197,536. The valuation allowance as of March
          1, 2007
          was $10,622,063.
 
 The
          Company had net operating loss carry-forwards for federal income tax purposes
          of
          approximately $29,641,900 at February 28, 2007.  These net operating loss
          carry-forwards expire at various dates from 2013 through 2025.
  The
          Company’s effective income tax (benefit) rate for continuing operations differs
          from the statutory federal income tax benefit rate as follows:
  2007
                
                2006Federal
                    Statutory Rate
                
                
                35
                %
                
                35
                %State
                    taxes, net
                
                
                10
                %
                
                10
                %Permanent
                    differences
                
                
                -32
                %
                
                -11
                %Valuation
                    allowance
                
                
                13
                %
                
                34
                %Effective
                    income tax (benefit) provision rate from continuing
                    operations
                
                
                -
                %
                
                -
  
 F-26




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**




**NOTE
      K - COMMITMENTS AND CONTINGENCIES**





Lease





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





Employment
      agreement





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


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





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





Licenses





The
      Company has entered into various licensing agreements (the “Agreements”) for the
      right to manufacture, sell and distribute certain collectibles and novelties
      relating to current and future movie characters, as well as certain accessories
      containing logos and names of professional, minor league and college sports
      teams. The Agreements for the collectibles initially expired at various dates
      through 2004 and generally require the Company to pay a royalty of between
      9%
      and 12% of sales, with certain minimum royalty payments required. The Company
      has decided not to renew royalty agreements as they pertain to college sports
      teams and current and future movie characters. The unpaid minimum royalty fees
      of $310,390 ($209,750 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 $55,485 and $154,617
      for the years ended February 28, 2007 and 2006, respectively.





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





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





F-27




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**





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





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





Payroll
      Related Taxes





The
      Company is non-compliant with respect to payment of employee and employer
      payroll-related taxes. The estimated liability that is included in accrued
      expenses was approximately $196,000 as of February 28, 2006 and 2007 which
      includes penalties and interest.





Other
      Contingencies





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





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





Agreements





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





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





F-28




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**





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





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





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





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





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





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





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





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





Concentrations





For
      the
      year ended February 28, 2007 and 2006, 26% and 72%, of the Company’s revenues
      were derived from its three largest customers, respectively.





For
      the
      year ended February 28, 2007 and 2006, 95% and 84%, of the Company’s purchases
      were made from its 3 and 4 largest vendors, respectively, of which 32% and
      30%
      of the total 2007 and 2006 purchases respectively, were from American Sports
      Venture, Inc., a related party (See Note H).





F-29




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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**





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





The
      Company obtains a significant portion of its new borrowings from one investment
      group. During the year ended February 28, 2007, the Company borrowed $300,000
      from this investment group. As of February 28, 2007, a total of $4,993,433
      was
      owed to this investment group (See Note E).





Debt
      Conversions





As
      of
      February 28, 2007, the Company did not have a sufficient number of authorized
      shares of common stock available if all of the convertible secured and
      convertible subordinated debenture holders decided to convert their debt into
      the Company’s common stock. The Company has increased the number of authorized
      shares to 10,000,000,000 (See Note H) to partly rectify the situation but a
      possible shortfall may exist. The provisions of the convertible secured
      debentures call for a 24% penalty on the amount of debt a note holder attempts
      to convert and if there are not enough authorized shares available to do so
      (See
      Note H with regard to the convertible secured debentures). However the
      convertible subordinated debenture agreements do not contain a provision to
      address the inability of the debt holders to convert and the possible financial
      effects of this are unknown (See Notes I).





In
      the
      year ended February 28, 2007, the Company recorded a discount on convertible
      secured debentures with a corresponding increase in the derivative and warrant
      liabilities.





**NOTE
      L - RELATED PARTY TRANSACTIONS**





The
      Company has an employment agreement with its president, who has elected in
      the
      past to defer a portion of his salary in support of the cash needs of the
      Company. As of February 28, 2007 and 2006, the amount of salary deferred was
      $-0- and $575,537, respectively, which is included in accrued expenses - related
      parties. Also $-0- and $168,975 of accrued compensation were due to the
      Company’s President’s wife as of February 28, 2007 and 2006, respectively. On
      September 4, 2006 the Company issued 1,000,000 shares of Series A Preferred
      Stock in settlement of the accrued salary obligations (See Note H).





The
      Company has loans payable of $67,000, which are included as loans payable -
      related party in the accompanying consolidated balance sheet, due to a related
      party as of February 28, 2007. During the year ended February 28, 2007, the
      Company recorded interest expense of $1,501 relating to loans from its president
      and other related parties and $41,225 in accrued interest was payable relating
      to these loans as of February 28, 2007, which is included in accrued expenses
      in
      the accompanying consolidated balance sheet.





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





During
      the year ended February 28, 2007, the Company converted $113,414 of convertible
      secured debentures into 229,630,006 (See Note H) shares of common stock and
      a
      $604,271 loss on adjustment of derivative and warrant liability to fair value
      was recognized accordingly.





During
      the year ended February 28, 2007, the Company converted $89,800 of convertible
      subordinated debentures and $48,749 of related interest into 4,525,390 (See
      Note
      H) shares of common stock and $42,464 financing cost was recognized
      accordingly.





During
      the year ended February 28, 2007, the Company converted $560,400 of notes and
      loans payable into 906,340,942 (See Note H) shares of common stock and a
      $1,609,668 financing cost was recognized accordingly.





During
      the year ended February 28, 2007, the Company received $376,227 in trade credits
      for sale of inventory included in revenue. As of February 28, 2007, the Company
      has reserved fully against these trade credits against sales
      revenue.





F-30


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


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**FEBRUARY
      28, 2007 AND 2006**


**NOTE
      N - 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, 2007, the Company had a working
      capital deficiency of $6,039,101, a stockholders’ deficiency of $75,906,484 a
      net loss of $60,875,716 and net cash used in operations of $1,913,364. The
      Company has minimal cash available for operations and is in default with respect
      to repayment provisions of certain convertible secured and convertible
      subordinated debentures, and notes and loans payables. In addition, the Company
      was not able to complete an effective registration statement within 150 days
      as
      required in connection with the sale of certain convertible secured debentures
      to a group of investors and, as a result, the Company is in default of the
      debenture agreement. These matters raise substantial doubt about the Company’s
      ability to continue as a going concern. The consolidated financial statements
      do
      not include any adjustments relating to the recoverability and classification
      of
      recorded assets, or the amounts and classification of liabilities that might
      be
      necessary in the event the Company cannot continue in existence.





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





**NOTE
      O - SUBSEQUENT EVENTS**





On
      March
      14, 2007, the Company entered into a Securities Purchase Agreement with
      accredited investors for the issuance of an aggregate of $50,000 of convertible
      notes (“Convertible Notes”). The Convertible Notes accrue interest at 8% per
      annum and were due three years from the date of the note. The note holder has
      the option to convert any unpaid note principal to the Company’s common stock at
      a rate of the lower of a) $0.03 (See Note F) or b) 25% of the average of the
      three lowest intraday trading prices for the common stock on a principal market
      for the 20 trading days before, but not including, conversion date.





On
      June
      5, 2007, the Company entered into a Securities Purchase Agreement with
      accredited investors for the issuance of an aggregate of $700,000 of convertible
      notes (“Convertible Notes”). The Convertible Notes accrue interest at 8% per
      annum and were due three years from the date of the note. The note holder has
      the option to convert any unpaid note principal to the Company’s common stock at
      a rate of the lower of a) $0.03 (See Note F) or b) 25% of the average of the
      three lowest intraday trading prices for the common stock on a principal market
      for the 20 trading days before, but not including, conversion date.





Subsequent
      to February 28, 2007, the Company converted $139,166 in loans payable into
      1,749,999,997 shares of its common stock, $46,447 in secured convertible
      debentures into 1,498,261,000 shares of its common stock and has issued
      47,567,884 common stock shares as payment towards an anti-dilution agreement
      (Note F).





F-31


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





On
      July
      28, 2006, Collectible Concepts Group, Inc. (the “Company”) engaged the firm of
      RBSM LLP, formerly Russell
      Bedford Stefanou Mirchandani LLP (“Russell Bedford”) to serve as its independent registered public accountants
      for the fiscal year ending February 28, 2007. On July 26, 2006, the Company
      received notice from Weinberg & Company, PC (“Weinberg”) that it was
      resigning as the Company’s independent registered public accountants. The
      decision to hire Russell Bedford was recommended and approved by the Company’s
      Board of Directors.





During
      the two fiscal years ended February 28, 2005 and 2006, and through July 26,
      2006, (i) there were no disagreements between the Company and Weinberg on any
      matter of accounting principles or practices, financial statement disclosure
      or
      auditing scope or procedure which, if not resolved to the satisfaction of
      Weinberg would have caused Weinberg to make reference to the matter in its
      reports on the Company’s financial statements, and (ii) except for Weinberg’s
      report on the Company's February 28, 2006 and 2005 financial statements dated
      June 23, 2006 and June 6, 2005, respectively, which included an explanatory
      paragraph wherein they expressed substantial doubt about the Company's ability
      to continue as a going concern, Weinberg’s reports on the Company’s financial
      statements did not contain an adverse opinion or disclaimer of opinion, or
      was
      modified as to audit scope or accounting principles. During the two fiscal
      years
      ended February 28, 2006 and 2005 and through July 26, 2006, there were no
      reportable events as the term described in Item 304(a)(1)(iv) of Regulation
      S-B.





During
      the two fiscal years ended February 28, 2006 and 2005 and through July 26,
      2006,
      the Company has not consulted with Russell Bedford regarding either:





1.
            The
                application of accounting principles to any specific transaction,
                either
                completed or proposed, or the type of audit opinion that might be
                rendered
                on the Company’s financial statements, and neither a written report was
                provided to Russell Bedford nor oral advice was provided that Russell
                Bedford concluded was an important factor considered by the Company
                in
                reaching a decision as to the accounting, auditing or financial reporting
                issue; or


2.
            Any
                matter that was either subject of disagreement or event, as defined
                in
                Item 304(a)(1)(iv) of Regulation S-B and the related instruction
                to Item
                304 of Regulation S-B, or a reportable event, as that term is explained
                in
                Item 304(a)(1)(iv) of Regulation S-B.





**ITEM
      8A - CONTROLS AND PROCEDURES**





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





Our
      management, with the participation of our chief executive officer and chief
      financial officer, evaluated the effectiveness of our disclosure controls and
      procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934
      as
      of February 28, 2007. In designing and evaluating the disclosure controls
      and procedures, management recognizes that any controls and procedures, no
      matter how well designed and operated, can provide only reasonable assurance
      of
      achieving the desired control objectives. In addition, the design of disclosure
      controls and procedures must reflect the fact that there are resource
      constraints and that management is required to apply its judgment in evaluating
      the benefits of possible controls and procedures relative to their costs.





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




27





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





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





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





**ITEM
      8B - OTHER INFORMATION**





None. ****




28


**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS.**





**DIRECTORS
      AND EXECUTIVE OFFICERS**





**Names:**
            
            **Ages**
            
            **Titles:**
            
            **Board
                of Directors**Paul
                Lipschutz
            
            61
            
            Chief
                Executive Officer
            
            DirectorJay
                Lipschutz
            
            39
            
            Secretary
            
            Director





Directors
      are elected to serve until the next annual meeting of stockholders and until
      their successors are elected and qualified. Currently there are two seats on
      our
      board of directors.





Currently,
      our Directors are not compensated for their services, although their expenses
      in
      attending meetings are reimbursed. Officers are elected by the Board of
      Directors and serve until their successors are appointed by the Board of
      Directors. Biographical resumes of each officer and director are set forth
      below.





**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 and a director since March
      2006. 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 SECURITIES EXCHANGE ACT OF 1934**





Section
      16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
      Company's directors and executive officers, and persons who own more than ten
      percent of a registered class of the Company's equity securities, to file with
      the Commission initial reports of ownership and reports of changes in ownership
      of the Company's Common Stock and other equity securities of the Company.
      Officers, directors and greater than ten percent shareholders are required
      by
      the Commission's regulations to furnish the Company with copies of all Section
      16(a) forms they filed.





We
      have
      been provided with copies of all forms (3, 4 and 5) filed by officers,
      directors, or ten percent shareholders within three days of such filings. Based
      on our review of such forms that we received, or written representations from
      reporting persons that no Forms 5s were required for such persons, we believe
      that, during fiscal 2006, all Section 16(a) filing requirements have been
      satisfied on a timely basis for members of the Board of Directors and Executive
      Officers.





**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;






29






(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.





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 the annual and long-term compensation paid to our
      Chief Executive Officer and the other executive officers who earned more than
      $100,000 per year at the end of the last completed fiscal year. We refer to
      all
      of these officers collectively as our "named executive officers."





**Summary
      Compensation Table**





Name
                & Principal Position
            
            Year
            
            Salary
                ($)
            
            Bonus
                ($)
            
            Stock
                Awards($)
            
            Option
                Awards ($)
            
            Non-Equity
                Incentive Plan Compensation ($)
            
            Change
                in Pension Value and Non-Qualified Deferred Compensation Earnings
                ($)
            
            All
                Other Compensation ($)
            
            Total
                ($)Paul
                S. Lipschutz, CEO (1)
            
            
            2007
            
            $
            165,375
            
            
            
            
            $
            505,800
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            671,175





(1)
      Mr.
      Lipschutz received an aggregate 626,000,000 shares of common stock as
      compensation for services in fiscal year 2007. For the fiscal year ended
      February 28, 2007, Mr. Lipschutz received $46,000 in salary and agreed to defer
      the remaining portion of his salary due to our financial condition.





**Outstanding
      Equity Awards at Fiscal Year-End Table.**





None.





**Employment
      Agreements**





*Paul
      Lipschutz*





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 has been given to date, therefore the Employment Agreement has been
      extended to January 1, 2007.





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:




30




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


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





**Director
      Compensation**





Our
      Directors are elected by the vote of a majority in interest of the holders
      of
      our voting stock and hold office until the expiration of the term for which
      he
      or she was elected and until a successor has been elected and qualified.





A
      majority of the authorized number of directors constitutes a quorum of the
      Board
      for the transaction of business. The directors must be present at the meeting
      to
      constitute a quorum. However, any action required or permitted to be taken
      by
      the Board may be taken without a meeting if all members of the Board
      individually or collectively consent in writing to the action. Each director
      receives 50,000 shares of our common stock per quarter for their
      services.




31


**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS.**





The
      following table sets forth certain information regarding beneficial ownership
      of
      our common stock as of June 5, 2007.





·
            by
                each person who is known by us to beneficially own more than 5% of
                our
                common stock;


·
            by
                each of our officers and directors; and


·
            by
                all of our officers and directors as a group.






NAME
                AND ADDRESS
              OF
                OWNER
            
            TITLE
                OF
              CLASS
            
            NUMBER
                OF
              SHARES
                OWNED(1)
            
            PERCENTAGE
                OF
              CLASS
                (2)Paul
                Lipschutz
            
            
            Common
                Stock
            
            
            319,011,475
            (3)
            
            6.18
            %1600
                Lower State RoadDoylestown,
                PA 18901Jay
                Lipschutz
            
            
            Common
                Stock
            
            
            26,015,000
            (4)
            
            *1600
                Lower State RoadDoylestown,
                PA 18901All
                Officers and Directors
            
            
            Common
                Stock
            
            
            345,026,475
            (5)
            
            6.69
            %As
                a Group (2 persons)Paul
                Lipschutz
            
            
            Series
                A Preferred Stock
            
            
            750,000
            
            
            75.00
            %Jay
                Lipschutz
            
            
            Series
                A Preferred Stock
            
            
            50,000
            
            
            5.00
            %Marilyn
                Lipschutz
            
            
            Series
                A Preferred Stock
            
            
            200,000
            
            
            20.00
            %




*
      Less
      than 1%.





(1)
      Beneficial Ownership is determined in accordance with the rules of the
      Securities and Exchange Commission and generally includes voting or investment
      power with respect to securities. Shares of common stock subject to options
      or
      warrants currently exercisable or convertible, or exercisable or convertible
      within 60 days of June 5, 2007 are deemed outstanding for computing the
      percentage of the person holding such option or warrant but are not deemed
      outstanding for computing the percentage of any other person.





(2)
      Based
      upon 5,139,143,049 shares issued and outstanding on June 5, 2007.





(3)
      Include 295,184 shares and 200,000 shares of Series A Convertible Preferred
      Stock convertible into 4,000,000 shares of common stock owned by Paul Lipschutz
      wife, as to which Mr. Lipschutz disclaims beneficial ownership. Also includes
      4
      shares owned by the estate of Harvey Benson, of which Mr. Lipschutz serves
      as
      Executor and 750,000 shares of Series A Convertible Preferred Stock convertible
      into 15,000,000 shares of common stock.





(4)
      Includes 50,000 shares of Series A Convertible Preferred Stock convertible
      into
      1,000,000 shares of common stock.





(5)
      Includes 1,000,000 shares of Series A Convertible Preferred Stock convertible
      into 20,000,000 shares of common stock.




32





**STOCK
      OPTION PLANS**





We
      currently have a 2005 Incentive Stock Plan, which has been approved by our
      directors and shareholders, which provides 50,000,000 shares of common stock
      to
      be issued pursuant to stock options or stock grants. The stock option plan
      is
      administered directly by our board of directors.





Subject
      to the provisions of the stock option plan, the board will determine who shall
      receive stock options and stock grants, the number of shares of common stock
      that may be purchased under the options or the number of shares of common stock
      granted, the time and manner of exercise of options and exercise prices.





As
      of
      June 5, 2007, we have not issued any stock or options to purchase shares of
      our
      common stock pursuant to our Incentive Stock Plan.





**Equity
      Compensation Plan Information**




The
      following table sets forth certain information about the common stock that
      may
      be issued upon the exercise of options, warrants and rights under all of the
      existing equity compensation plans as of June 5, 2007.





**Plan
                Category**
            
            **Number
                of Shares**
              **to
                be Issued**
              **Upon
                Exercise of**
              **Outstanding**
              **Options,**
              **Warrants
                and**
              **Rights**
            
            **Weighted-Average**
              **Exercise**
              **Price
                of**
              **Outstanding**
              **Options,**
              **Warrants
                and**
              **Rights**
            
            **Number
                of Shares**
              **Remaining**
              **Available
                for**
              **Future
                Issuance**
              **Under
                Equity**
              **Compensation**
              **Plans
                (Excluding**
              **Shares
                Reflected**
              **in
                the First**
              **Column)**Equity
                compensation plans approved by shareholders
            
            
            0
            
            
            —
            
            
            50,000,000Equity
                compensation plans not approved by shareholders
            
            
            —
            
            
            —
            
            
            —Total
            
            
            0
            
            
            —
            
            
            50,000,000





**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, 2007, the principal amount of Mr. Lipschutz’s loan has increased to
      $57,334 through net borrowings. The loan accumulated $1,501 in interest during
      fiscal year 2007, and the loan had total accrued interest of $41,225 at February
      28, 2007. The total amount owed to Mr. Lipschutz, with interest and principal
      on
      the loan, at February 28, 2007 was $98,559. ****





We
      have
      no policy regarding entering into transactions with affiliated
      parties.


33




**ITEM
      13. EXHIBITS.**


Exhibit
                  No.
              
              Description3.1
              
              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.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.
  34
   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
                  amended31.2
              
              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
                  amended32.1
              
              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)
 35
  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, 2007 and 2006, and for the reviews of the financial statements
      included in the Company's Quarterly Reports on Form 10-QSB during the fiscal
      years were $87,500 and $114,107, respectively.





**Audit-Related
      Fees**





Our
      independent registered public accounting firm did not bill the Company for
      any
      other audit-related work during fiscal years ended February 28, 2007 or
      2006.





**Tax
      Fees**





Our
      independent registered public accounting firm did not bill the Company for
      tax
      related work during fiscal years ended February 28, 2007 or 2006.





**All
      Other Fees**





Our
      independent registered public accounting firm did not bill the Company for
      other
      services during fiscal years ended February 28, 2007 and 2006
      respectively.





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


36


**SIGNATURES**





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






**COLLECTIBLE
              CONCEPTS GROUP, INC.**Date:
                June 13, 2007
            By:
            /s/ PAUL S. LIPSCHUTZPaul
                S. LipschutzChief
                Executive Officer (Principal Executive Officer), Principal Financial
                Officer and Principal Accounting
                Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.





Name
            
            Position
            
            Date/s/
                PAUL S. LIPSCHUTZ
              Paul
                S. Lipschutz
            
            Chief
                Executive Officer (Principal Executive Officer), Principal Financial
                Officer and Principal Accounting Officer
            
            June
                13, 2007/s/
                JAY LIPSCHUTZ
              Jay
                Lipschutz
            
            Director
            
            June
                13, 2007




37