Maryland (State or other jurisdiction of incorporation or organization)

52-2257470 (I.R.S. Employer Identification No.)

506 South Central Avenue, Baltimore, Maryland (Address of principal executive offices)

21202 (ZIP Code)

				PAGE
PART I.
ITEM 1.		Financial Statements (Unaudited)
		Balance Sheets—September 30, 2002 and December 31, 2001		2
		Statements of Operations—Three Months Ended September 30, 2002 and 2001		4
		Statements of Operations—Nine Months Ended September 30, 2002 and 2001		5
		Statements of Cash Flows—Nine Months Ended September 30, 2002 and 2001		6
		Notes to Financial Statements—September 30, 2002		7
ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
ITEM 4.		Controls and Procedures		15
PART II.
ITEM 2.		Changes in Securities and Use of Proceeds		17
ITEM 5.		Other Information		17
ITEM 6.		Exhibits and Reports on Form 8-K		17
SIGNATURES				17
CERTIFICATIONS

		September 30, 2002				December 31, 2001
		(Unaudited)
ASSETS
Current assets:
Cash		$	281,088			$	250,880
Accounts receivable, net of allowance of $48,417and $32,713 at September 30, 2002 and December 31, 2001, respectively			288,027				85,475
Prepaid expenses			174,733				127,456
Prepaid royalties to Sylvan			539,153				839,153
Total current assets			1,283,001				1,302,964
Property and equipment:
Furniture and equipment			1,641,703				1,532,672
Software			2,516,849				2,430,969
Educational content			969,427				969,427
Leasehold improvements			5,897				4,374
			5,133,876				4,937,442
Accumulated depreciation and amortization			(3,854,212	)			(2,414,992	)
			1,279,664				2,522,450
Intangible assets:
Participation agreements, net of accumulated amortization of $536,480 and $268,240 at September 30, 2002 and December 31, 2001, respectively			1,609,443				1,877,683
Total assets		$	4,172,108			$	5,703,097

		September 30, 2002				December 31, 2001
		(Unaudited)
LIABILITIES AND DEFICIENCY OF ASSETS
Current liabilities:
Accounts payable and accrued expenses		$	1,168,228			$	979,788
Fees payable to Sylvan			210,900				201,740
Borrowings under line of credit with Sylvan Ventures			3,119,449				4,469,673
Deferred revenue			264,243				387,122
Total current liabilities			4,762,820				6,038,323
Commitments and contingent liabilities			—				—
Deficiency of assets:
Series A Convertible Preferred Stock, par value $.001 per share—20,000,000 shares authorized, 15,473,684 and 10,526,316 shares issued and outstanding as of September 30, 2002 and December 31, 2001, respectively			15,474				10,526
Class A Convertible Common Stock, par value $.001 per share—10,000,000 shares authorized, 2,512,484 and 2,452,484 shares issued and outstanding as of September 30, 2002 and December 31, 2001, respectively			2,512				2,452
Common stock, par value $.001 per share—authorized 70,000,000 shares, 14,000,000 shares issued and outstanding as of September 30, 2002 and December 31, 2001			14,000				14,000
Additional paid-in capital			33,472,424				24,019,228
Accumulated deficit			(34,095,122	)			(24,381,432	)
Total deficiency of assets			(590,712	)			(335,226	)
Total liabilities and deficiency of assets		$	4,172,108			$	5,703,097

		Three months ended September 30,
		2002				2001
Revenues		$	858,336			$	140,738
Costs and expenses
Direct costs of services provided			766,029				271,232
Sales and marketing			1,007,632				341,435
General and administrative			1,459,420				1,431,008
Research and development			494,835				479,608
Management services and facilities usage charges from Sylvan			343,425				323,620
Total operating costs and expenses			4,071,341				2,846,903
Loss from operations			(3,213,005	)			(2,706,165	)
Interest expense			—				91,100
Net loss		$	(3,213,005	)		$	(2,797,265	)
Basic and diluted loss per common share		$	(0.19	)		$	(0.17	)

		Nine months ended September 30,
		2002				2001
Revenues		$	2,104,309			$	203,592
Costs and expenses
Direct costs of services provided			1,931,800				662,248
Sales and marketing			2,743,579				1,515,461
General and administrative			4,717,910				5,009,278
Research and development			1,349,922				1,970,976
Management services and facilities usage charges from Sylvan			1,074,788				848,608
Total operating costs and expenses			11,817,999				10,006,571
Loss from operations			(9,713,690	)			(9,802,979	)
Interest expense			—				320,105
Net loss		$	(9,713,690	)		$	(10,123,084	)
Basic and diluted loss per common share		$	(0.59	)		$	(0.64	)

		Nine months ended September 30,
		2002				2001
Operating activities
Net loss		$	(9,713,690	)		$	(10,123,084	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			1,707,460				1,610,462
Non-cash compensation expense			58,204				—
Changes in operating assets and liabilities:
Accounts receivable, net			(202,552	)			(32,732	)
Prepaid expenses			(47,277	)			(23,043	)
Prepaid royalties to Sylvan			300,000				(858,385	)
Other assets			—				7,246
Accounts payable and accrued expenses			188,440				(963,837	)
Fees payable to Sylvan			9,160				630,962
Deferred revenue			(122,879	)			96,488
Net cash used in operating activities			(7,823,134	)			(9,655,923	)
Investing activities
Purchase of property and equipment			(237,932	)			(818,735	)
Proceeds from sale of property and equipment			41,498				111,335
Net cash used in investing activities			(196,434	)			(707,400	)
Financing activities
Payment of direct costs incurred in connection with Class A Convertible Common Stock offering			—				(173,236	)
Proceeds from borrowings under line of credit with Sylvan Ventures			4,855,444				10,847,040
Payments on line of credit with Sylvan Ventures			(6,205,668	)			(10,000,000	)
Sale of Series A Convertible Preferred Stock to Sylvan Ventures			9,400,000				10,000,000
Net cash provided by financing activities			8,049,776				10,673,804
Net change in cash			30,208				310,481
Cash at beginning of period			250,880				—
Cash at end of period		$	281,088			$	310,481