~~UNITED STATES~~Table ~~SECURITIES~~of ~~AND EXCHANGE COMMISSION Washington, D.C. 20549~~Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)	~~(Mark One)~~
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
x		QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2006
For the quarterly period ended March 31, 2009
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 0 000-17840

NEW HORIZONS WORLDWIDE, INC. ~~(Exact name of registrant as specified in its charter)~~

(Exact name of registrant as specified in its charter)

Delaware		22-2941704
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

~~1900 S~~One W. ~~State~~Elm ~~College Boulevard~~Street, Suite 125, ~~650~~Conshohocken, ~~Anaheim,~~ ~~CA 92806~~PA 19428

(Address of principal executive offices)

(~~714~~484) ~~940~~ 567-~~8000~~3000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by ~~Section~~ Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 12 months or for such shorter period that the registrant was required to file ~~such~~ such reports, and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

~~Yes~~Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x o

Indicate by check mark whether the registrant is a large ~~acclerated~~accelerated filer, an accelerated filer, or non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in ~~Rule~~ Rule 12b-2 of the Exchange Act. (Check one):

Large ~~acclerated~~ accelerated filer o ~~Large acclerated~~ Accelerated filer o Non-accelerated filer o Smaller reporting company x

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

Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities and Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Number of shares of common stock outstanding at ~~September 30~~May 7, ~~2006~~ 2009: 1011,~~745~~570,~~353~~269

~~NEW~~Table ~~HORIZONS WORLDWIDE,~~of ~~INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q~~Contents

PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets as of Sepetmber 30, 2006 (UNAUDITED) and December 31, 2005
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and 2005 (UNAUDITED)
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2005 (UNAUDITED)
		Notes to Condensed Consolidated Financial Statements
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.		Quantitative and Qualitative Disclosures About Market Risk
Item 4.		Controls and Procedures
PART II. OTHER INFORMATION
Item 1A.		Risk Factors
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.		Defaults Upon Senior Securities
Item 4.		Submission of Matters to a Vote of Security Holders
Item 6.		Exhibits and Reports on Form 8-K
Signature
Certifications

NEW HORIZONS WORLDWIDE, INC.

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2009 (UNAUDITED) and December 31, 2008	4

	Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008 (UNAUDITED)	5

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008 (UNAUDITED)	6

	Notes to Interim Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 4.	Controls and Procedures	18

PART II. OTHER INFORMATION

Item 6.	Exhibits	19

Signatures		20

Table of Contents

Information About Forward-Looking Statements

This Quarterly Report on ~~Form~~ Form 10-Q contains “forward-looking statements”, within the meaning of the ~~Private~~ Private Securities Reform Act of 1995, which involve risks and uncertainties. Any statements about expectations, beliefs, plans, objectives, assumptions, future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, preceded by words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “projection,” “would,” “outlook” and other similar expressions. The forward-looking statements in this report are based upon beliefs, assumptions and expectations of the Company’s management as to the Company’s future operations and economic performance, taking into account the information currently available. ~~These statements are not statements of historical fact. The Company’s actual results may differ significantly from the results discussed in the forward~~Forward-looking statements~~. Readers~~ should not place undue reliance on these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Forward-looking involve certain factors including risks and uncertainties, that may cause actual results to differ materially from those contained in ~~any~~this ~~forward-looking statements. These~~report ~~factors~~ include but ~~are~~ are not limited to other risks and uncertainties as discussed under the heading Item 1A “Risk Factors, “ contained within our Annual Report on Form 10-K for the year ended December 31, 2006 and other risks and uncertainties detailed from time to time in our pubic announcements and SEC filings.:

· the Company’s opinion regarding various franchising and legal actions;

· the Company’s critical accounting policies and management’s accounting and financial estimates; and

· the Company’s reporting of changes in internal control over financial reporting.

The Company’s results may differ significantly from the results discussed in the forward-looking statements. Readers should not place undue reliance on these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Forward-looking statements involve certain factors, including risks and uncertainties that may cause actual results to differ materially from those contained in any forward-looking statements. These factors include but are not limited to other risks and uncertainties as discussed under the heading Item 1A, “Risk Factors,” contained within our Annual Report on Form 10-K for the year ended December 31, 2008 and other risks and uncertainties detailed from time to time in our public announcements and SEC filings.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES ~~Condensed Consolidated Balance Sheets September 30, 2006 and December 31, 2005 (Dollars in thousands, except per share data)~~

	September 30,			December 31,
	2006			2005
	(UNAUDITED)
Assets
Current assets:
Cash and cash equivalents	$	2,842		$	3,798
Accounts receivable, net	9,925			13,828
Inventories, net	275			538
Prepaid expenses	2,022			3,953
Refundable income taxes	506			793
Other current assets	266			223
Total current assets	15,836			23,133
Property and equipment, net	1,649			3,366
Restricted cash	1,491			854
Goodwill	11,408			11,408
Other assets	1,185			492
Total assets	$	31,569		$	39,253
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	3,927		$	4,303
Current portion of long-term debt	—			980
Deferred revenue	6,111			12,163
Other current liabilities	18,308			22,355
Total current liabilities	28,346			39,801
Long term debt	4,000			—
Deferred rent	2,012			2,464
Other long-term liabilities	37			271
Total liabilities	34,395			42,536
Commitments and contingencies	—			—
Stockholders’ deficit:
Convertible Preferred stock, $.01 stated value, 200,000 authorized, 174,693 issued and outstanding at September 30, 2006. No shares issued or outstanding at December 31, 2005. Liquidation preference of $37.50 per share	17			—
Convertible Preferred stock, $.01 stated value, 2,000,000 shares authorized and 1,638,393 shares issued and outstanding at December 31, 2005 No shares issued or outstanding at September 30, 2006. Liquidation preference of $3.95 per share	—			16
Common stock, $.01 par value, 20,000,000 shares authorized; 10,636,158 shares issued; 10,451,658 shares outstanding at September 30, 2006 and December 31, 2005	107			106
Additional paid-in capital	54,130			53,809
Accumulated deficit	(55,782		)	(55,616		)
Note from officer	—			(300		)
Treasury stock at cost—185,000 shares at September 30, 2006 and December 31, 2005	(1,298		)	(1,298		)
Total stockholders’ deficit	(2,826		)	(3,283		)
Total liabilities and stockholders’ deficit	$	31,569		$	39,253

Consolidated Balance Sheets

~~See~~(Dollars in ~~accompanying~~thousands, ~~notes~~except ~~to condensed~~per ~~consolidated~~share ~~financial statements.~~data)

	March 31,			December 31,
	2009			2008
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	434		$	639
Accounts receivable, net	6,213			5,340
Prepaid expenses	1,128			1,001
Deferred tax asset	2,429			2,429
Refundable income taxes	175			158
Other current assets	121			134
Total current assets	10,500			9,701

Property and equipment, net	4,838			4,873
Goodwill and other intangibles, net	12,909			11,865
Debt issuance costs, net	36			40
Other assets	252			252
Total assets	$	28,535		$	26,731

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	1,060		$	853
Deferred revenue	4,441			3,513
Other current liabilities	5,948			7,840
Total current liabilities	11,449			12,206

Revolving credit facility, net	3,215			754
Deferred rent	607			658
Deferred tax liability	457			457
Other long-term liabilities	306			48
Total liabilities	16,034			14,123

Commitments and contingencies	—			—

Shareholders’ equity:
Convertible preferred stock Series C, no par value, 200,000 shares authorized, 143,369 and 172,043 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively. Liquidation preference of $23.25 per share	3,168			3,802
Convertible preferred stock Series B, no par value, 200,000 shares authorized, 174,693 shares issued and outstanding at March 31, 2009 and December 31, 2008. Liquidation preference of $37.50 per share	5,611			5,611
Common stock, $.01 par value, 30,000,000 shares authorized 11,755,269 and 11,635,269 shares issued; 11,570,269 and 11,450,269 shares outstanding at March 31, 2009 and December 31, 2008, respectively	118			116
Additional paid-in capital	50,591			49,920
Accumulated deficit	(45,689		)	(45,543		)
Treasury stock at cost - 185,000 shares of common stock at March 31, 2009 and December 31, 2008, respectively	(1,298		)	(1,298		)
Total shareholders’ equity	12,501			12,608
Total liabilities and shareholders’ equity	$	28,535		$	26,731

See accompanying notes to interim unaudited consolidated financial statements.

~~NEW~~Table ~~HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES Condensed Consolidated Statements~~ of ~~Operations (Dollars in thousands, except per share data) (UNAUDITED)~~Contents

	Three months ended September 30,						Nine months ended September 30,
	2006			2005			2006			2005
Revenues
Franchising
Franchise fees	$	158		$	101		$	536		$	444
Royalties	4,283			3,488			12,435			11,526
Courseware sales and other	1,706			3,742			8,904			11,434
Total franchising revenues	6,147			7,331			21,875			23,404
Company-owned training centers	9,443			18,983			39,719			56,879
Total revenues	15,590			26,314			61,594			80,283
Cost of revenues	8,559			14,606			34,023			44,674
Selling, general and administrative expenses	8,133			11,868			29,290			38,348
Impairment of property and equipment	—			—			—			2,351
Operating loss	(1,102		)	(160		)	(1,719		)	(5,090		)
Other income (expense)	(1		)	—			4			(25		)
Gain (loss) on sale of company-owned training centers	(12		)	(112		)	2,325			(321		)
Interest expense	(75		)	(49		)	(156		)	(184		)
Interest income	55			88			110			302
Income (loss) before income taxes	(1,135		)	(233		)	564			(5,318		)
Provision for income taxes	224			117			731			625
Net loss	(1,359		)	(350		)	(167		)	(5,943		)
Dividends on preferred stock	—			(92		)	—			(2,036		)
Net loss attributable to common stockholders	$	(1,359	)	$	(442	)	$	(167	)	$	(7,979	)
Weighted average number of common shares outstanding—Basic	10,678			10,451			10,678			10,451
Weighted average number of common shares outstanding—Diluted	10,678			10,451			10,678			10,451
Basic loss per common share
Loss per share attributable to common stockholders	$	(0.13	)	$	(0.04	)	$	(0.02	)	$	(0.76	)
Diluted loss per common share
Loss per share attributable to common stockholders	$	(0.13	)	$	(0.04	)	$	(0.02	)	$	(0.76	)

NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES

~~See~~Consolidated ~~accompanying~~Statements ~~notes~~of ~~to condensed consolidated financial statements.~~Operations

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended
	March 31,
	2009			2008
Revenues
Franchising
Franchise fees	$	92		$	267
Royalties	4,213			5,090
Courseware sales and other	659			783
Total franchising revenues	4,964			6,140

Company-owned training center revenues	2,902			3,269
Total revenues	7,866			9,409

Cost of revenues	3,447			3,727
Selling, general and administrative expenses	4,396			4,179
Operating income	23			1,503

Loss on disposal of property and equipment	(14		)	—
Interest expense	(19		)	(106		)
Investment income	12			23

Income before provision for income taxes	2			1,420
Provision for income taxes	(148		)	(59		)
Net (loss) / income	(146		)	1,361
Dividends payable on preferred stock	(171		)	(171		)
Net (loss) / income attributable to common shareholders - basic	$	(317	)	$	1,190
Dividends payable addback	—			171
Net (loss) / income attributable to common shareholders - diluted	$	(317	)	$	1,361

Net (loss) / income per share:
Basic	$	(0.03	)	$	0.11
Diluted	$	(0.03	)	$	0.06
Weighted average shares outstanding:
Basic	11,477			11,260
Diluted	11,477			23,150

See accompanying notes to interim unaudited consolidated financial statements.

Table of Contents

NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES

~~Condensed~~ Consolidated Statements of Cash Flows

(Dollars in thousands)

(UNAUDITED)

	Nine months ended September 30,
	Three Months Ended March 31,
	2006			2005
	2009			2008
Cash flows from operating activities:
Net loss	$	(167	)	$	(5,943	)
Net (loss) / income	$	(146	)	$	1,361
Adjustments to reconcile net loss to net cash and cash equivalents used in operating activities:
Adjustments to reconcile net (loss) / income to net cash used in operating activities:
Depreciation and amortization	~~1,374~~364			~~2,446~~174
Gain on sale of company-owned training centers	(2,325		)	—
Amortization of debt issuance costs	4			—
Impairment of fixed assets	—			2,351
Amortization of reacquired franchise rights	3			—
Provision for bad debts	698			1,101
Stock-based compensation	74			64
Stock-based compensation	51			—
Director fees paid by the issuance of common stock	180			—
Provision for losses on doubtful accounts	150			29
Cash (used in) provided by the change in:
Restricted cash	(637		)	(102		)
Accounts receivable	(629		)	(417		)
Accounts receivable	(333		)	(3,446		)
Prepaid expenses and other assets	(35		)	231
Inventories	(80		)	228
Refundable income taxes	(17		)	(32		)
Prepaid expenses and other assets	784			(15		)
Accounts payable	111			(1,030		)
Refundable income taxes	287			—
Deferred revenue	60			(46		)
Accounts payable	(34		)	3,891
Other liabilities	(2,467		)	(1,762		)
Deferred revenue	(3,008		)	(1,654		)
Deferred rent	(51		)	(71		)
Other liabilities	(1,273		)	(5,498		)
Net cash used in operating activities	(2,399		)	(1,499		)
Deferred rent	(452		)	(178		)
Net cash used in operating activities	(5,115		)	(6,819		)
Cash flows from investing activities:
Additions to property and equipment	(~~397~~232		)	(239		)
Proceeds from sale training centers	1,447			75
Acquisition of business, net cash acquired	166			—
Proceeds from cash surrender value of life insurance	—			730
Proceeds from sale of property and equipment	14			—
Net cash provided by investing activities	1,050			566
Restricted cash	—			(1		)
Net cash used in investing activities	(52		)	(240		)
Cash flows from financing activities:
Proceeds from issuance of preferred stock	—			5,440
Net increase in revolving credit facilities	2,461			—
Cash dividends on preferred stock	—			(95		)
Purchase of Series C Preferred Stock	(215		)	—
Proceeds from sale of common stock	100			—
Net cash provided by financing activities	2,246			—
Costs from issuance of debt	(11		)
Net decrease in cash and cash equivalents	(205		)	(1,739		)
Proceeds from issuance of debt	4,000			—
Cash and cash equivalents at beginning of period	639			4,101
Principal payments on debt obligations	(980		)	(1,801		)
Cash and cash equivalents at end of period	$	434		$	2,362
Net cash provided by financing activities	3,109			3,544
Net decrease in cash and cash equivalents	(956		)	(2,709		)
Cash and cash equivalents at beginning of period	3,798			6,652
Cash and cash equivalents at end of period	$	2,842		$	3,943
Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	~~110~~17		$	~~181~~101
Income taxes	$	95224		$	~~107~~288
Noncash investing and financing activities:
Forgivness of officer note	$	300		$	—
Deemed dividends on preferred stock	$	171		$	171
Stock dividends and deemed dividends on preferred stock	$	204		$	2,036
Schedule of non-cash investing activities — business acquisitions (see Note 3)
Estimated fair value of assets acquired	$	585		$	—
Goodwill and other intangibles	1,047			—
Liabilities assumed	(1,798		)	—
Net cash acquired	$	166		$	—

See accompanying notes to ~~condensed~~interim unaudited consolidated financial statements.

~~NEW~~Table ~~HORIZONS~~of ~~WORLDWIDE, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements For the Nine Months Ended September 30, 2006 and 2005 (Dollars in thousands, except per share data)~~Contents

NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

For the Three Months Ended March 31, 2009 and March 31, 2008

(Dollars in thousands, except per share data)

(UNAUDITED)

1. Description of Business

New Horizons Worldwide, Inc. (“New Horizons,” or the “Company”) ~~owns~~franchises and ~~franchises~~owns computer-training centers. The Company has two reporting units: ~~company~~Franchising operations and Company-owned training centers ~~and franchising operations~~, both of which operate principally within the information technology (“IT”) training industry. The company-owned training centers reporting unit generates revenue through the sale and delivery of personal computing (“PC”) applications, technical software training courses, business skills, and healthcare information management. The franchising operations reporting unit earns revenue through the sale of New Horizons master and unit franchises within the continental United States and ~~abroad~~internationally, on-going royalties received in return for providing franchises with systems of instruction, sales and management concepts concerning computer training, and the sale of courseware materials, ~~English Language courses~~ and e-learning products. The Company-owned ~~franchising~~training ~~operations~~centers reporting unit ~~has~~generates ~~places~~revenue through the sale and delivery of ~~business~~training infor ~~Anaheim~~personal computing (“PC”) applications, ~~California;~~technical ~~Leiden~~software, ~~The~~business ~~Netherlands;~~skills and ~~Singapore~~healthcare information management.

2. Basis of Presentation

Unaudited Interim ~~Condensed~~ Consolidated Financial Statements

The accompanying interim ~~condensed~~ consolidated financial statements for the three ~~and nine~~ months ended ~~September~~ 30March 31, 2009 ~~2006~~ and ~~2005~~March 31, 2008 have been prepared by the Company pursuant to the ~~rules~~ rules and regulations of the Securities and Exchange Commission (“SEC”) for ~~interim~~ interim financial reporting. These interim ~~condensed~~ consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the ~~condensed~~ consolidated balance sheets, ~~condensed~~ consolidated operating results, and ~~condensed~~ consolidated cash flows for the periods presented in accordance with ~~accounting~~ accounting principles generally accepted in the United States of America (“GAAP”). Operating results for the ~~nine~~three months ended ~~September~~ 30March 31, ~~2006~~2009 are not necessarily indicative of the results that may be expected for the year ~~ended~~ending December 31, 2009 ~~2006~~ or for any other interim period during such year. Certain information ~~and~~ and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. These interim ~~condensed~~ consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2006~~ 2008 (the “2008 Form 10-K”). ~~Amounts~~ Amounts related to disclosure of ~~December~~ December 31, ~~2005~~2008 balances within these interim ~~condensed consolidated~~ consolidated financial statements were derived from the audited ~~2005~~ 2008 consolidated financial statements and notes thereto included in the ~~Company’s Current~~2008 ~~Report on~~ Form 8 10-K, which ~~dated~~was ~~February~~filed 20with the SEC on March 25, ~~2007~~ 2009.

Certain 2005 items have been reclassified to conform to their 2006 presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and such differences could be material to the ~~condensed~~ consolidated financial statements. The Company believes its estimates related to revenue recognition, deferred costs, allowance for doubtful accounts and valuation of deferred tax assets to be the most sensitive estimates impacting financial position and results of operations.

~~Going Concern~~Principles ~~Basis~~ of ~~Presentation~~Consolidation

The ~~Company has~~accompanying ~~experienced~~consolidated ~~recurring~~financial ~~losses~~statements ~~and~~include ~~has~~the anaccounts ~~accumulated deficit and negative working capital. The Company has incurred losses in 2005 and prior years and has an accumulated deficit~~ of ~~$55,782~~ ~~as of September 30, 2006. The Company’s unencumbered assets are limited as is its ability to meet some short term obligations. During 2006 and 2007,~~ the Company ~~raised $6,725 through a secured loan agreement~~ and ~~the sale of~~its ~~several~~wholly ~~of its company-~~owned ~~training~~subsidiaries. ~~centers~~All ~~which,~~significant inintercompany ~~addition~~accounts ~~to cost~~and ~~cutting~~transactions ~~initiatives in 2006 and 2007,~~ have ~~allowed~~been ~~the~~eliminated ~~Company~~in ~~to continue operating through the~~consolidation.

3. Acquisitions

On February 1, 2009, the Company acquired substantially all of the assets of Computer Education International, Inc. (“CEI”), the independently owned New Horizons Franchisee in Portland, Oregon. The transaction was accounted for as a purchase transaction in accordance with SFAS 141(R), “Business Combinations.” The purchase price includes cash payments of $21 to be paid in installments from July through December 2009, earn-out payments due in February 2011 and 2012 that are contingent on operating income of the business acquired and the assumption of certain liabilities. The purchase price of $21 and an estimate for the potential earn-out payments have been recorded in Purchase Price Liabilities. The assets of CEI have been recorded at their fair value, with the excess purchase price over the fair value of the assets acquired allocated to goodwill. The Company recorded $972 of goodwill in relation to the purchase. In addition, the Company recorded $75 for the reacquired franchise rights generated in relation to the purchase. The reacquired franchise rights were recorded separately from goodwill and will be amortized, on a straight-line basis, over the remaining 3 ½ year life of the purchased franchise agreement. The CEI acquisition was funded by the Company’s revolving credit facility. (See Note 8 “Debt” in the Company’s Notes to Consolidated Financial Statements for further information about the Company’s new revolving credit facility.)

The two (2) earn-out payments, payable annually each year on February 28, 2011 and February 28, 2012, will be equal to forty-five percent (45%) of the cumulative net operating income of CEI for the period from (i) January 1, 2010 through December 31, 2010 and (ii) forty percent (40%) of the cumulative net operating income of CEI for the period from January 1, 2011 through December 31, 2011, in each case as determined using GAAP consistently applied.

~~filing~~Table ~~date~~ of ~~this~~ report. However, there can be no assurance that capital can be raised in the future or that cost cutting by itself can sustain the Company until such time as operating performance improves. The need for additional liquidity will depend on future operating performance, which is itself dependent on a number of factors, many of which the Company cannot control, including prevailing economic conditions, availability of other sources of liquidity, and financial, business, regulatory and other factors affecting the Company’s business and operation. The financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.Contents

~~3. Inventories~~The purchase price has been allocated based on the estimated fair values of the assets acquired as follows:

Inventories are stated at the lower of cost or market. Inventory costs are determined using the first-in, first-out (FIFO) method. Inventories consist primarily of courseware materials, books, and kits. At September 30, 2006 and 2005, the Company maintained an inventory valuation allowance of $99 and $276, respectively.

	Assets of
	CEI

Trade receivables	$	393
Prepaid and other current assets	77
Property and equipment	111
Goodwill	972
Reacquired franchise rights	75
Long-term deposits	4
Total assets acquired	1,632

Accounts payable	96
Accrued liabilities and other current liabilities	263
Secured notes	339
Long-term liabilities	65
Purchase price liabilities	167
Deferred revenue	868
Current liabilities assumed	1,798
Net cash acquired	$	166

4Pro forma results of operations are not necessarily indicative of the results of operations that would have occurred had the purchase been made on the date above or the results which may occur in the future. ~~Stock-Based~~ ~~Compensation~~The pro forma consolidated results of operations, as if the acquisition of CEI had occurred on January 1, 2008, are as follows:

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payments” (“SFAS 123R”), using the modified prospective application transition method. The modified prospective application transition method requires compensation cost to be recognized beginning on the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123R for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date. All Company options awards granted prior to the effective date of adoption are fully vested. The adoption of SFAS 123R did not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

	Three months ended
	March 31,
	2009			2008
	(Unaudited, in thousands except per share amounts)
Revenue	$	8,145		$	10,060
Net (loss)/income	$	(141	)	$	1,104
Net (loss)/income attributable to common stock - Basic	$	(0.03	)	$	0.09
Net (loss)/income attributable to common stock - Diluted	$	(0.03	)	$	0.05

~~During~~On November 26, 2008, the ~~nine~~Company ~~months~~acquired ~~ended~~substantially ~~September~~all ~~30,~~the ~~2006,~~assets ~~the~~of ~~Company~~Technology ~~granted~~Training & ~~916,000~~Services ~~stock~~Corporation ~~options~~(“TTSC”) pursuant to ~~employees~~a Business Combination Agreement (“the Acquisition”). The Acquisition was consummated to provide additional Online IT training and ~~recognized~~consulting ~~approximately~~services. The Company also purchased a perpetual ~~$57~~license from Terillian, an affiliate of ~~stock~~TTSC, for the semi-~~based~~exclusive ~~compensation~~use ~~expense~~of ~~which~~its proprietary issoftware. The ~~included~~transaction was accounted for as a purchase transaction in accordance with SFAS 141, “Business Combinations” and the Company’s consolidated financial statements include the results of operations since the date of the Acquisition. ~~Total~~As a result, the assets of ~~unrecognized~~TTSC ~~compensation~~were ~~expense~~recorded ~~related~~at their fair value, with the excess purchase price over the fair value of the assets acquired allocated to ~~stock~~goodwill. The ~~options~~total ~~granted~~purchase isprice was $~~145~~1, 581 of which, $681was paid in 2008 and $900 is ~~expected~~payable toin beinstallments ~~recognized~~by ~~over~~April 15, 2009. The amount payable is included in Other Current Liabilities at December 31, 2008. The Acquisition was funded by the ~~next~~Company’s new 2revolving credit facility.5 (See ~~years~~Note 8 “Debt” in the Company’s Notes to Consolidated Financial Statements for further information about the Company’s new revolving credit facility.)

The total ~~2006~~purchase ~~compensation expense~~price ~~was~~includes ~~determined~~a bynon-refundable ~~calculating~~payment of $500 related to the future ~~fair~~annual ~~value~~earn-out ofpayments ~~each~~commencing ~~option~~December 31, ~~grant~~2009 ~~using~~and ending December 31, ~~the~~2013. The ~~Black-Scholes~~payout ~~option-pricing~~is ~~model~~equal ato ~~assuming~~fifty percent ~~risk-free~~of ~~interest~~the ~~rate~~cumulative net income of the Online IT training and consulting ~~4.5%~~services as determined using GAAP consistently applied, ~~volatility~~from ofthe ~~98%~~acquisition date through that calendar year-end, ~~and~~less ~~zero~~all ~~dividend~~earn-out ~~yield~~payments made to TTSC previously..

~~Prior to~~The ~~January 1,~~purchase ~~2006,~~price ~~the~~has Company accounted for stock options consistent with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and provided pro forma disclosures of net income (loss) and earnings per share as if the fair value based method had been ~~applied. Under~~ ~~the~~allocated ~~fair value~~ based ~~method,~~ ~~compensation cost is recorded based~~ on the estimated fair ~~value~~values of the ~~award at~~ ~~the~~assets ~~grant~~acquired ~~date~~as ~~and is recognized over the service period. No stock-based employee compensation expense related to stock options was reflected in net loss prior to January 1, 2006.~~follows:

Had compensation expense been recognized in 2005, net loss and loss per share would have been adjusted to the pro forma amounts indicated below:

	Nine Months Ended
	September 30, 2005
Net loss, as reported	$	(5,943	)
Less: Stock and deemed dividend on Series A Preferred stock	(2,036		)
Net loss attributable to common stockholders	(7,979		)
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(978		)
Net loss attributable to common stockholders, pro forma	$	(8,957	)
Basic loss per common share attributable to common stockholders
As reported	$	(0.76	)
Pro forma	$	(0.86	)
Diluted loss per common share attributable to common stockholders
As reported	$	(0.76	)
Pro forma	$	(0.86	)

Table of Contents

The fair value of each option grant was calculated using the Black-Scholes-Merton option-pricing model assuming risk-free interest rates of 3.3%, volatility of 98%, and zero dividend yield for 2005.

	Assets of
	TTSC
Property and equipment	$	1,124
Goodwill	457
Total assets acquired	$	1,581

54. ~~Business~~Goodwill ~~Segment~~and ~~Information~~Other Intangibles

The ~~Company’s~~ ~~business~~following ~~units have been segregated into two reportable segments,~~table ~~company-owned~~reflects training centers and franchising. The two segments are managed separately due to differences in their sources of revenues and services offered. The company-owned training centers segment operates wholly-owned computer training centers in six metropolitan cities within the ~~continental United~~components ~~States~~ and ~~generates revenue through~~ the ~~sale~~carrying ~~and~~amounts ~~delivery~~ of ~~personal computing~~intangible applications, technical software training courses and business skills courses. The franchising segment franchises domestic and international computer training centers and provides computer training instruction, sales, and management concepts to franchisees. The franchising segment earns revenues from initial franchise fees, on-going royalties from franchise operations, and the sale of courseware and other products to franchisees.assets:

Summarized financial information concerning the Company’s reportable segments is shown in the following tables (in thousands):

	March 31,			December 31,
	2009			2008

Goodwill	$	12,837		$	11,865

Reacquired franchise rights	75			—
Amortization of reacquired franchise rights	(3		)	—
Total goodwill and other intangibles	$	12,909		$	11,865

~~For~~The Company accounts for goodwill and other intangible assets in accordance with SFAS 142. Goodwill is the ~~three~~excess ~~months~~of ~~ended~~cost ~~September~~over ~~30,~~fair value ~~2006:~~of the net assets of the business acquired. Intangible assets consist of reacquired franchise rights and are amortized over the remaining life of the original franchise agreement.

	Franchising			Company- owned training centers			Consolidated
Revenues-domestic	$	4,806		$	9,443		$	14,249
Revenues-international	1,341			—			1,341
Depreciation and amortization	302			85			387
Gain (loss) on sale of company-owned training centers	2,062			(2,074		)	(12		)
Interest expense	(65		)	(10		)	(75		)
Interest income	55			—			55
Income tax provision	204			20			224
Net income (loss) attributable to common stockholders	1,754			(3,113		)	(1,359		)
Goodwill	11,408			—			11,408
Total assets	22,325			9,244			31,569

The Company ceased amortizing goodwill as of January 1, 2002. Goodwill balances are tested for impairment annually as of December 31 of each year and on an interim basis, if events or circumstances exist which suggest that goodwill may be impaired. Factors the Company considers important, the presence of which could trigger an impairment review, include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of acquired assets or the strategy for the overall business, and significant negative industry or economic trends. Both the income approach and the market approach are utilized.

5. Stock-Based Compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payments” (“SFAS 123R”), using the modified prospective application transition method. The modified prospective application transition method requires compensation cost to be recognized beginning on the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123R for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date. All Company option awards granted prior to January 1, 2006 were fully vested.

In calculating the compensation expense related to stock options, the weighted average fair value of each employee option grant was estimated on the date of the grant using the Black-Scholes-Merton option pricing model with the following weighted-average assumptions used for grants during the three months ended March 31, 2009 and 2008:

	March 31,
	2009		2008
Expected volatility	99.9	%	92.1	%
Expected life (years)	4.6		4.6
Risk-free interest rate	1.8	%	2.8	%
Expected dividends	None		None

The compensation expense related to the restricted common stock was calculated based on the market price of the Company’s common stock on the grant date of the restricted shares.

During the three months ended March 31, 2009, the Company recognized approximately $74 of share-based compensation expense, which was entirely for vested stock options. During the three months ended March 31, 2008, the Company recognized approximately $57 for vested stock options and $7 for unvested restricted common stock. Unrecognized compensation expense for stock options and restricted common stock granted was as follows:

	March 31,		March 31,
	2009		2008
Unrecognized compensation cost:
Stock options	$	525	$	686
Restricted stock	$	—	$	353
Weighted-average remaining periods for recognition (years):
Stock options	2.43		2.59
Restricted stock	—		1.32

~~For~~Table ~~the~~of ~~nine months ended September 30, 2006:~~Contents

	Franchising			Company- owned training centers			Consolidated
Revenues-domestic	$	17,479		$	39,719		$	57,198
Revenues-international	4,396			—			4,396
Depreciation and amortization	960			414			1,374
Gain on sale of company-owned training centers	1,068			1,257			2,325
Interest expense	(93		)	(63		)	(156		)
Interest income	105			5			110
Income tax provision	621			110			731
Net income (loss) attributable to common stockholders	1,809			(1,976		)	(167		)
Total assets	22,325			9,244			31,569

During the three months ended March 31, 2009, no stock options were exercised.

~~For~~The Company has a net operating loss carry-forward as of March 31, 2009, and no excess tax benefits for the tax deductions related to stock-based awards were recognized in the Consolidated Statements of Operations for the three months ended ~~September~~March 31, 2009 30and 2008. Additionally, ~~2005:~~no incremental tax benefits were recognized from stock options exercised in 2008 that would have resulted in a reclassification to reduce net cash provided by operating activities with an offsetting increase in net cash provided by financing activities.

	Franchising			Company- owned training centers			Consolidated
Revenues-domestic	$	6,040		$	18,983		$	25,023
Revenues-international	1,291			—			1,291
Depreciation and amortization	378			272			650
Gain (loss) on sale of company-owned training centers	21			(133		)	(112		)
Interest expense	(48		)	(1		)	(49		)
Interest income	566			(799		)	88
Income tax provision	117			—			117
Net income (loss) attributable to common stockholders	362			(804		)	(442		)
Total assets	30,543			12,887			43,430

The Company provides for the grant of stock options and the award of restricted common stock to key employees and non-employee directors under its 2007 Omnibus Equity Plan. The Company will not grant any further stock options under its 1997 Omnibus Equity Plan as the period to grant stock options under this plan expired on March 20, 2008. A summary of award activity is described in further detail below.

~~For the nine months ended September 30, 2005:~~Stock Options

	Franchising			Company- owned training centers			Consolidated
Revenues-domestic	$	18,933		$	56,879		$	75,812
Revenues-international	4,471			—			4,471
Depreciation and amortization	1,306			1,140			2,446
Gain (loss) on sale of company-owned training centers	1,509			(1,830		)	(321		)
Interest expense	(181		)	(3		)	(184		)
Interest income	286			16			302
Income tax provision	620			5			625
Net loss attributable to common stockholders	(106		)	(7,873		)	(7,979		)
Total assets	30,543			12,887			43,430

A summary of stock option activity as of March 31, 2009 and changes during the three months then ended is presented as follows:

						Weighted Average
			Weighted			Remaining
	Number of		Average			Contractual Term	Aggregate
	Shares		Price			(in years)	Intrinsic Value
Options outstanding at December 31, 2008	1,520,834		$	1.71		7.58	$	23
Granted	317,500		$	0.60
Exercised	—		$	—
Forfeited and expired	(14,666	)	$	(10.20	)
Options outstanding at March 31, 2009	1,823,668		$	1.44		7.84	$	54

Exercisable at March 31, 2009	869,173		$	1.83		6.83	$	6

Restricted Stock Awards

As of March 31, 2009, the Company did not have any outstanding restricted stock awards.

As of the quarter ended March 31, 2008, the Company recognized $7 of compensation expense for the remaining 175,000 restricted shares outstanding. The Company achieved certain performance targets in fiscal 2008 and the 175,000 shares of restricted stock vested on December 31, 2008. The Company recognized $140 of compensation expense for these vested restricted stock shares for the fiscal year 2008.

6. Business Segment Information

In accordance with SFAS 131, “Disclosures about Segments of an Enterprise and Related Information”, the Company’s business units have been segregated into two reportable segments, Company-owned locations and franchising. The franchising segment includes certain corporate overhead costs. The two segments are managed separately due to differences in their sources of revenues and services offered. At March 31, 2009, the Company-owned locations segment operates wholly-owned computer training centers in three metropolitan areas (two metropolitan areas at March 31, 2008) within the continental United States and generates revenue through the sale and delivery of training for PC applications and technical software training courses and business skills courses. The franchising segment earns revenue through the sale of New Horizons master and unit franchises within the continental United States and internationally, on-going royalties received in return for providing franchises with systems of instruction, sales and management concepts concerning computer training and the sale of courseware materials and e-learning products. As of January 1, 2009, the Company began charging the Company-owned locations a 6% royalty fee that the Company would charge to a franchise. This royalty fee is shown as an expense for the Company-owned locations in S,G,&A, with an offset in S,G,&A for the franchising segment to eliminate this intercompany transaction.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables:

For the three months ended March 31, 2009:

~~6. Loss~~Table ~~Per~~of ~~Share~~Contents

Earnings per share is computed in accordance with SFAS 128, “Earnings per Share”. Basic earnings per common share (“Basic EPS”) is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Shares issued and shares reacquired during the period are weighted for the portion of the period they were outstanding.

	Franchising			Company-owned
	and Corporate			training centers			Consolidated
Total revenues - domestic	$	3,555		$	2,902		$	6,457
Total revenues - international	1,409			—			1,409
Depreciation and amortization	286			81			367
Amortization of debt issuance costs	(4		)	—			(4		)
Interest expense	(11		)	(4		)	(15		)
Investment income	4			8			12
Income / (loss) before income taxes	113			(111		)	2
Income tax provision	(148		)	—			(148		)
Net (loss) / income	$	(35	)	$	(111	)	$	(146	)
Goodwill and other intangibles	$	11,865		$	1,044		$	12,909
Total assets	$	24,348		$	4,187		$	28,535

~~Diluted~~For ~~earnings per common share (“Diluted EPS”) is computed similarly to Basic EPS except that~~ the ~~weighted~~three ~~average number of shares outstanding is increased to include the~~months ~~number~~ended ofMarch 31, additional common shares that would have been outstanding if potentially dilutive common shares had been issued. The Company’s potentially dilutive common shares consist of those shares issued upon exercise of unexercised stock options and conversion of the Company’s Convertible preferred stock.2008:

The computation of Diluted EPS does not assume conversion, exercise or contingent issuance of securities that may have an antidilutive effect on earnings per share. Consequently, Convertible preferred stock and stock options with a conversion or exercise price greater than the average market price for the period are not included in the computation of potentially dilutive common shares. As of September 30, 2006 and 2005, Convertible preferred stock and stock options that have not been included in the Diluted Loss Per Share computation because they would have produced an anti-dilutive effect totaled 4,105,258 and 2,780,239, respectively.

	Franchising			Company-owned
	and Corporate			training centers			Consolidated
Total revenues - domestic	$	4,303		$	3,269		$	7,572
Total revenues - international	1,837			—			1,837
Depreciation and amortization	140			34			174
Interest expense	(101		)	(5		)	(106		)
Investment income	23			—			23
Income before income taxes	998			422			1,420
Income tax provision	(41		)	(18		)	(59		)
Net income	$	957		$	404		$	1,361
Goodwill	$	11,408		$	—		$	11,408
Total assets	$	20,823		$	2,968		$	23,791

7. ~~Debt~~(Loss) / Income Per Share

OnEarnings ~~July 19, 2006,~~per ~~the~~share ~~Company~~is computed ~~entered~~in ~~into~~accordance awith ~~Credit~~SFAS No. 128, ~~Agreement (the~~ “~~Credit~~Earnings ~~Agreement~~per Share.”) Basic ~~among~~earnings ~~the~~per ~~Company,~~common ~~Camden~~share ~~Partners Strategic III, LLC~~ (“~~Camden~~Basic ~~LLC~~EPS”), ~~as administrative~~is ~~agent,~~computed ~~Camden~~by ~~Partners~~dividing ~~Strategic~~net ~~Fund~~income attributable ~~III,~~to ~~L.P.~~common ~~(“Camden~~shareholders ~~III”), Camden~~by ~~Partners~~the ~~Strategic~~weighted ~~Fund~~average ~~III-A,~~number ~~L.P.~~of ~~(“Camden~~common shares ~~III-A”,~~outstanding ~~with~~during ~~Camden~~the ~~LLC~~period. ~~and Camden~~Shares ~~III,~~issued ~~“Camden”),~~and ~~George~~shares S.reacquired during ~~Rich~~the ~~and~~period ~~Alkhaleej~~are ~~Training~~weighted ~~and~~for ~~Education Corporation~~the ~~(“Alkhaleej”),~~portion ~~(collectively,~~of “the ~~Lenders”)~~period they were outstanding.

~~The~~Diluted ~~Credit~~earnings ~~Agreement~~per ~~provides~~common ~~for~~share a(“Diluted ~~$4 million~~EPS”) ~~term~~is ~~loan,~~computed ~~comprised~~similarly ofto aBasic ~~single~~EPS ~~advance~~except ~~from each~~that of the ~~Lenders, which matures on July 19, 2009 (the~~ ~~“Financing”). Under~~weighted ~~the~~average ~~terms~~number of ~~the Credit~~shares ~~Agreement,~~outstanding ~~interest~~ is ~~paid~~increased ~~quarterly,~~to atinclude the ~~annual rate of 10% per~~ ~~year. Concurrent~~number ~~with the execution~~ of ~~the~~ ~~Credit~~additional ~~Agreement, the Company converted all outstanding Preferred Series A Stock (“Series A Shares”) and accrued dividends and interest into 174,693~~ shares of ~~Preferred~~common ~~Series~~stock ~~B Stock (“Series B Shares”). In the event~~ that ~~any~~would ~~payment~~have isbeen ~~not made when due, all~~ outstanding ~~obligations under the Credit Agreement will accrue~~if ~~interest~~potentially atdilutive ~~the~~shares ~~default~~had ~~rate~~been ~~equal to 12% per year~~issued. ~~Accrued~~ ~~and unpaid interest on past due amounts will compound monthly.~~ The ~~indebtedness~~ ~~may be required to be prepaid in the event of certain receipts by the~~ Company~~. No~~’s ~~prepayment~~potentially ~~shall be~~dilutive ~~required~~common ~~upon~~shares ~~the~~consist ~~disposition~~ of ~~any~~shares ~~location~~issuable ~~owned~~upon by the ~~Company. All~~conversion ~~or any portion~~ of the ~~outstanding~~Company’s ~~principal~~convertible ~~may~~preferred bestock ~~prepaid~~and ~~in whole or in part subject to restrictions. As of September 30, 2006,~~ the ~~Company~~exercise ~~was in default~~ of ~~various~~unexercised ~~technical~~stock ~~matters~~options ofand ~~the Credit Agreement~~warrants. ~~The Company has obtained a waiver of these events of default.~~

The following data show the amounts used in computing the (loss)/income per share and the effect on income and the weighted average number of shares of common stock for the three months ended March 31, 2009 and 2008:

	For the Three Months Ended March 31,
	2009							2008
	Income				Per Share			Income				Per Share
	(Loss)			Shares	Amount			(Loss)			Shares	Amount
Net (loss) / income	$	(146	)					$	1,361
Less: Series B preferred dividends	(131		)					(131		)
Less: Series C preferred dividends	(40		)					(40		)

Basic (loss) / income available to common shareholders	$	(317	)	11,477	$	(0.03	)	$	1,190		11,260	$	0.11

Add: Preferred dividends	—							171
Add: Dilutive impact of preferred stock	—			—				—			9,587
Add: Impact of expired and exercised options	—			—				—			—
Add: Dilutive impact of options and warrants	—			—				—			2,303

Diluted (loss) / income available to common shareholders	$	(317	)	11,477	$	(0.03	)	$	1,361		23,150	$	0.06

~~Wells Fargo~~Table ~~Credit~~of ~~Agreement~~Contents

OnThe ~~February~~computation ~~27,~~of ~~2003,~~Diluted ~~the~~EPS ~~Company~~does ~~consummated~~not aassume ~~credit~~conversion, ~~agreement~~exercise ~~with~~or ~~Wells~~contingent ~~Fargo~~issuance ~~Bank,~~of securities ~~National~~that ~~Association~~may ~~(the~~have ~~“Wells~~an ~~Fargo~~anti-dilutive ~~Credit~~effect ~~Agreement”). The~~on ~~Wells~~earnings ~~Fargo~~per ~~Credit~~share. ~~Agreement~~Adding isthe ~~secured~~effect byof the Company’s ~~cash~~potentially ~~and~~dilutive ~~cash~~common ~~equivalents,~~shares ~~accounts~~would ~~receivable,~~be ~~intangible~~anti-dilutive. ~~assets~~Convertible preferred stock, ~~and~~stock ~~investments~~options, ifand ~~any. On~~warrants ~~May~~that have not been 3,included ~~2006~~in the diluted (loss) income per share computation totaled 12,312,217 shares of common stock for the ~~Company~~three ~~paid~~months inended ~~full~~March 31, ~~all~~2009, ~~amounts~~and 1,635,166 ~~owed~~shares ~~under~~of common stock for the ~~Wells~~three ~~Fargo~~months ~~Credit~~ended March 31, ~~Agreement~~2008.

8. ~~Other Current Liabilities~~Debt

On October 1, 2008, the Company entered into a revolving credit facility (the “Revolver”) with PNC Bank (“PNC”) which replaced the Company’s previous secured credit facility. The Revolver consists of a secured revolving credit facility available to the Company in an aggregate principal amount of $6,000. The purpose of the Revolver is to, among other things, (i) terminate the previous $4,000 credit facility and (ii) support the daily operations of the Company.

The Revolver has a current interest rate of the London Interbank Offering Rate (“LIBOR”) plus 2.25% or the alternate base rate (the PNC prime rate). The Revolver will mature and the commitments will terminate on September 30, 2011. The Company will remit monthly payments to PNC for interest only, and excess cash, as defined in the Revolver Agreement, will be used to reduce outstanding balances, if any, on the Revolver. The Company can borrow, repay, and re-borrow under the terms of the Revolver, subject to availability and compliance with covenants. Any outstanding principal will be due upon maturity. The obligations under the Revolver are guaranteed by the Company and certain direct and indirect domestic subsidiaries of the Company. The obligations of the Company under the Revolver are secured by substantially all the assets of the Company.

The Company incurred issuance costs, related to the Company entering into the Revolver, of $43. At March 31, 2009, the Company had an unamortized issuance cost balance of $36 which is shown on the consolidated balance sheet in Debt Issuance Costs. These costs are being amortized on a straight-line basis, over the term of the Revolver. As of March 31, 2009, the Company had an outstanding balance of $3,215 under the Revolver.

The Revolver contains customary covenants, representations and warranties, and events of default. As of March 31, 2009, the Company was in compliance with all of the covenants.

9. Other Current Liabilities

Other current liabilities consist of:

	September 30,		December 31,
	March 31,		December 31,
	2006		2005
	2009		2008
Accounts payable to franchisees	$	41,~~807~~545	$	51,~~133~~378
Salaries, wages and commissions payable	21,~~851~~433		3,~~572~~203
Royalties and fees payable to courseware partners	1,531		3,283
Undelivered future training liability	433		297
Deferred revenue	1,911		2,811
Accrued operating expenses and other liabilities	2,537		2,962
Accrued operating expenses and other	7,208		7,556
Total	$	5,948	$	7,840
	$	18,308	$	22,355

910. ~~Stockholders’ Deficit~~ Provision for Income Taxes

In June 2006, the Financial Accounting Standards Board (a“FASB”) ~~Preferred~~ issued FASB Interpretation No. 48 ~~Stock~~“Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109” (“FIN 48”). FIN 48 establishes a single model to address accounting for uncertain tax positions. FIN 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.

~~Convertible~~The ~~Series~~Company Badopted the provisions of FIN 48 on January 1, 2007. Upon adoption, the Company recognized no adjustment in the amount of unrecognized tax benefits. As of the date of adoption, the Company had no increase to the liability for unrecognized tax benefits. The Company’s policy is to recognize interest and penalties that would be assessed in relation to the settlement value of unrecognized tax benefits as a component of income tax expense.

OnUtilization ~~July 19,~~of ~~2006,~~ the ~~Company~~net operating ~~entered~~losses ~~into~~(“NOL”) carryforwards may be subject to a substantial annual ~~Credit~~limitation ~~Agreement~~due ~~(the~~to ~~“Credit~~ownership ~~Agreement”)~~change ~~among~~limitations that may have occurred or that could occur in the ~~Company~~future, ~~Camden~~as ~~Partners~~required by Section 382 of the Internal ~~Strategic~~Revenue ~~III~~Code of 1986, ~~LLC~~as amended (~~“Camden~~the ~~LLC~~“Code”), asand ~~administrative~~similar ~~agent,~~state ~~Camden~~and ~~Partners~~foreign ~~Strategic~~provisions. ~~Fund~~These ~~III,~~ownership Lchanges may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively.P. (In general, an “~~Camden~~ownership ~~III~~change”), ~~Camden~~as ~~Partners~~defined ~~Strategic~~by ~~Fund~~Section 382 of ~~III~~the Code results from a transaction or series of transactions over a three-A,year period resulting in an ownership change of more than L50 percentage points of the market value of a company by certain stockholders or public groups.P. ~~(“Camden~~Since ~~III-A”~~the Company’s formation, ~~with~~the Company has raised capital through the issuance of preferred stock on several occasions which has resulted in such an ownership change.

~~Camden~~Table ~~LLC~~of ~~and Camden III, “Camden”), George S. Rich and Alkhaleej Training and Education Corporation (“Alkhaleej”), (collectively, “the Lenders”)~~Contents

~~The~~Consequently, ~~Credit~~the ~~Agreement~~Company’s ~~provides~~utilization ~~for~~of athe ~~$4 million~~NOL ~~term~~carryforwards ~~loan,~~are ~~comprised~~subject ofto aan ~~single~~annual ~~advance~~limitation ~~from each~~under Section 382 of the ~~Lenders~~Code, which ~~matures~~is ondetermined ~~July 19,~~by ~~2009~~first ~~(the “Financing”). Under~~multiplying the ~~terms~~value of the Company’s ~~Credit~~stock ~~Agreement,~~at ~~interest~~the istime ~~paid~~of ~~quarterly,~~the atownership change by the ~~annual~~applicable long-term, tax-exempt rate, ofand ~~10%~~then ~~per~~could be subject to additional adjustments, as ~~year~~required. ~~Concurrent~~ Due ~~with~~to the ~~execution~~existence of the valuation ~~Credit Agreement~~allowance, future changes in the Company’s ~~converted~~unrecognized ~~all~~tax ~~outstanding~~benefits will ~~Preferred~~not ~~Series~~impact Aits effective tax rate. ~~Stock~~Any ~~(“Series~~carryforwards Athat ~~Shares”)~~will ~~and~~expire ~~accrued~~prior ~~dividends~~to ~~and~~utilization ~~interest~~as ~~into~~a ~~174,693 shares~~result of such ~~Preferred~~limitations ~~Series~~will Bbe ~~Stock. See Note~~removed 7from ~~“Debt”~~deferred totax ~~the~~assets ~~Company’s~~with ~~consolidated~~a ~~financial~~corresponding reduction ~~statements~~of ~~for~~the ~~additional discussion~~valuation allowance.

InThe ~~connection with the Financing discussed in Note 7 - “Debt”, the~~ Company ~~entered into an Amended~~ and ~~Restated Stockholders’ Agreement with Camden, Alkhaleej, and the holders of~~its ~~Warrants~~subsidiaries ~~(the~~are ~~“Warrant~~subject ~~Holders”),~~to ~~dated as of July 19, 2006 (the “Amended Stockholders’ Agreement”)~~U. ~~The~~S. ~~Amended Stockholders’~~federal ~~Agreement~~income ~~amends~~tax ~~and restates the Stockholders’ Agreement, dated~~ as ofwell ~~February 7, 2005, and filed~~ as ~~Exhibit 10.2~~income totax ~~the Company’s~~in ~~Current~~multiple ~~Report~~state onand ~~Form~~foreign ~~8-K dated February 11, 2005~~jurisdictions. With ~~Pursuant~~few ~~to the Amended Stockholders’ Agreement and the Certificate of Designation~~exceptions, the ~~Series B~~ ~~Stockholders~~Company ~~are~~is ~~entitled~~no tolonger ~~elect~~subject ~~three directors~~ to ~~the Board of Directors (the “Series B Preferred Directors”)~~U. ~~All other directors of the Company will be elected by holders of Common Stock and the Series B Stockholders voting as a single class, on an as-converted basis~~S. ~~Pursuant~~ tofederal ~~the Amended~~income ~~Stockholders’~~tax ~~Agreement,~~examinations for ~~so long as the Series B Stockholders~~years ~~are~~before ~~entitled~~2004; tostate ~~elect Series B Preferred Directors, the Company, each Series B Stockholder~~ and ~~each~~local ~~Warrant~~income ~~Holder~~tax ~~are~~examinations ~~required~~before to2003; take certain actions, including, without limitation, to establish the size of the Board at nine directors, to elect the Series B Preferred Directors, with such directors initially being Donald W. Hughes, David L. Warnock and ~~Alwaleed~~foreign ~~Aldryann,~~income ~~and,~~tax ~~within~~examinations ~~eighteen~~before ~~(18) months of the date of the Amended Stockholders’ Agreement, to elect an independent director to replace an incumbent director~~2002. ~~Additionally~~However, ~~Camden is required~~ to ~~vote all of its shares in favor of~~ the ~~Common~~extent ~~Directors~~allowed ~~proposed~~ by ~~the Board of Directors’ Governance Committee. Under the terms of the Amended Stockholders’~~ ~~Agreement~~law, ~~for as long as~~ the ~~loan~~tax isauthorities ~~outstanding~~may orhave ~~Alkhaleej beneficially holds not less than seventy-five percent (75%) of~~ the ~~Series A~~right ~~Warrants issued, or the Common Stock issued pursuant~~ to ~~the~~examine ~~Warrants,~~prior ~~the~~periods ~~Company,~~where ~~the~~net ~~holders~~operating oflosses ~~Series B~~were ~~Shares~~generated and ~~Alkhaleej~~carried ~~shall take all steps necessary to retain Mr. Aldryann as a Director. The Amended Stockholders’ Agreement also provides that so long as Camden holds at least 25% of the Series B Shares~~forward, itand ~~will~~make ~~have~~adjustments ~~board~~up ~~observation rights. Under the terms of the Amended Stockholders’ Agreement, the Series B Stockholders may transfer Series B shares subject~~ to ~~a right~~ ~~of first refusal by~~ the ~~Company. Under the~~amount ~~terms~~ of the ~~Amended~~net ~~Stockholders’~~operating ~~Agreement,~~loss ~~the~~carry-forward Company granted preemptive rights with respect to future issuances of equity securities by the Company to each holder of at 10,000 Series B Shares and each Warrant Holder, subject to customary exceptionsamount.

~~Amended~~The ~~and~~Company ~~Restated~~is ~~Registration~~not currently ~~Rights~~under ~~Agreement~~Internal Revenue Service, state, local or foreign jurisdiction tax examinations.

InFor ~~connection with~~ the ~~Credit~~three ~~Agreement, the Company entered into an Amended and Restated~~months ~~Registration~~ended ~~Rights Agreement~~March 31, ~~dated July 19~~2009, ~~2006, by and among~~ the Company~~, Camden,~~ ~~Alkhaleej~~recorded ~~and~~a ~~the~~provision ~~Warrant~~for ~~Holders~~income ~~(the~~taxes ~~“Amended Registration Rights~~of ~~Agreement”)~~$148. The ~~Amended~~current ~~Registration Rights~~income ~~Agreement~~tax ~~amends and restates the Registration Rights Agreement, dated~~provision asconsists primarily of ~~February~~foreign 8,income ~~2005,~~taxes ~~and~~in ~~filed as Exhibit 10.3 to~~ the ~~Company’s~~amount ~~Current Report~~of on$146 ~~Form~~resulting ~~8-K dated February 11, 2005.~~ from ~~Pursuant~~taxes towithheld ~~the~~at ~~terms~~statutory ofrates ~~the~~in ~~Amended~~foreign ~~Registration~~countries ~~Rights~~where ~~Agreement,~~ the ~~Company~~ ~~agreed to register the resale of the shares of Common Stock issuable~~Company ~~upon~~derives ~~conversion~~royalty ofincome ~~the Series B Shares~~ and ~~the~~$2 ~~Warrants under the Securities Act~~ of ~~1933~~domestic ~~(the~~federal ~~“Securities~~and ~~Act”)~~state ~~under~~income ~~certain~~taxes ~~circumstances. These rights include two opportunities to require registration by the Company, at any time after the Company is eligible to file a registration statement~~ on ~~Form S~~ pre-3,tax asincome ~~well~~of ~~as the right to participate in other registrations initiated by the Company or other stockholders~~$2. The ~~Amended~~income ~~Registration~~tax ~~Rights~~expense ~~Agreement provides~~ for ~~customary~~the ~~indemnifications~~three ~~between~~months ~~the~~ended ~~Company~~March 31, ~~Camden~~ ~~and~~2008 ~~the~~included ~~Warrant Holders. Under the Amended Registration Rights Agreement~~$26, ~~the~~due ~~Company agreed not~~ to ~~grant~~a ~~registration~~$106 ~~rights~~refund, ~~with~~of ~~respect~~foreign totaxes ~~Common~~withheld ~~Stock~~at tostatutory ~~any~~rates ~~other~~in ~~person~~foreign ~~unless~~countries ~~such~~where ~~rights are subordinate to those granted under~~ the ~~Amended~~Company ~~Registration Rights~~derives ~~Agreement.~~royalty income. The Company’s ~~has~~practice ~~concluded~~is ~~that the registration rights agreement does not meet the definition of a derivative because it does not require the Company~~ to ~~have~~expense ~~the~~these ~~registration~~foreign ~~statement~~taxes ~~declared effective by the end of a specified period or pay liquidating damages~~ to the ~~Series B shares~~extent ifsuch ~~the~~taxes ~~registration~~are ~~statement~~paid isthrough ~~not declared effective or effectiveness is not maintained for a prescribed period~~withholding. ~~In reaching its conclusion, the Company utilized the guidance in FASB Staff Position No. EITF 00-19-2 “Accounting for Registration Payment Arrangements”.~~

~~Certificate~~11. Shareholders’ ~~of Decrease~~Equity

InOn ~~connection~~March 25, ~~with~~2009, the ~~Exchange,~~Company oncompleted ~~July~~a ~~10,~~Stock ~~2006~~Purchase Agreement with Utopia Growth Fund, Utopia ~~the~~Core ~~Company~~Fund, ~~filed~~Utopia aCore ~~Certificate~~Conservative ofFund ~~Decrease relating~~and toUtopia ~~the~~Yield ~~Certificate~~Income ofFund (collectively ~~Designation,~~“Utopia”) ~~Preferences~~to ~~and~~purchase ~~Rights~~(i) 28,674 shares of Series A C Convertible Preferred Stock, ofwithout ~~the~~par ~~Company~~value and (~~the~~ii) warrants ~~“Certificate~~to ofpurchase up ~~Decrease”)~~to ~~with the~~177,778 ~~Secretary~~shares of ~~State~~common stock of the ~~State~~Company at an exercise price of $0.75 ~~Delaware~~per share. The Company paid $215 in cash to ~~decrease~~complete the ~~number~~Stock ofPurchase Agreement with Utopia and subsequently ~~designated~~retired the 28,674 shares of Series C AConvertible Preferred ~~from~~Stock 2and the 177,~~000,000~~778 ~~shares~~of ~~to 1,638,398 shares~~warrants.

Dividends

The Company has not declared or paid any cash dividends on its common stock or on its Series B Shares and Series C Shares. At March 31, 2009, cumulative, undeclared and unaccrued dividends on the Series B Shares and Series C Shares totaled $1,418 and $233, respectively. At March 31, 2008, cumulative, undeclared and unaccrued dividends on the Series B Shares and Series C Shares totaled $894 and $120, respectively. The dividends totaled $171 for both the quarters ended March 31, 2009 and 2008, respectively.

12. Gain on Sale of Company-owned training centers

During 2007, the Company sold and re-franchised four of its Company-owned training centers in Chicago, Cleveland, Anaheim and New York pursuant to asset sale agreements under which the buyers assumed net liabilities of $2,541. In addition, the buyers paid $300 of franchise fees and prepaid $850 of royalties to be earned over the term of the franchise agreements. The Company determined that the sale of these centers did not meet all necessary criteria to be classified as discontinued operations within the Company’s consolidated financial statements at any time during the twelve months ended December 31, 2007. In addition, due to significant continuing involvement between the Company and these re-franchised centers, the Company deferred $1,269 of the gross gain on the sale of these centers. The deferred gain at the date of sale consisted of a discount to the buyer on royalty revenue over a defined term in each respective agreement and is included in deferred revenue on the balance sheet. This deferred royalty is being recognized over the defined term in each respective agreement. The Company recognized $42 and $140 of royalty revenues related to the deferred royalty for the quarters ended March 31, 2009 and 2008, respectively.

13. Legal Proceedings

The Company is involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.

~~Certificate~~ Table of ~~Designation of Series B Shares~~Contents

Subsequent to filing the Certificate of Decrease, on July 10, 2006, the Company filed a Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock (the “Certificate of Designation”), pursuant to which the Series B Shares are entitled to receive cumulative quarterly dividends at an initial rate of 8% per annum when, as and if declared by the Company’s Board of Directors. On the fourth anniversary of the date of issuance, the dividend rate will increase to 12% per annum. Upon any liquidation, dissolution or winding up of the corporation, either voluntary or involuntary, the Series B Shares are entitled to a liquidation preference in an amount equal to $37.50 per share, plus any accrued but unpaid dividends. At December 31, 2006, cumulative, undeclared and unaccrued dividends equaled approximately $240. A Change of Control (as defined in the Certificate of Designation) will be considered a liquidation event, unless a majority of the outstanding Series B Shares elect otherwise. The Series B Shares are convertible at any time, at the option of each holder of Preferred Series B Shares, into fully paid and non-assessable shares of Common Stock, initially at the conversion rate is 20.8333 shares of Common Stock for one Series B Share. The conversion price of the Series B Shares is subject to adjustment in the event of a consolidation, merger subdivision or combination of shares or the issuance of stock dividends, in the event that the Company issues additional shares of Common Stock at a price per share which is less than the conversion price, or in the event that the Company issues warrants, options or other stock purchase rights for which the purchase price for the Common Stock is less than the conversion price. The Company has concluded that the embedded conversion feature in the Series B Shares does not qualify for bifurcation as it meets the scope exception of paragraph 11 a of SFAS No. 133 “Derivatives and Hedging Activities”. The conversion feature is indexed to the Company’s own common stock and meets the criteria of EITF 00-19- Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”. At any time after February 7, 2007, the Company may convert all the Series B Shares into shares of Common Stock at the then-applicable conversion price; provided that the Common Stock meets certain requirements with respect to trading volume and price on the market or exchange on which the Common Stock is trading, or if none, by a nationally recognized quotation reporting service, and there is then in effect a registration statement permitting the resale of the Common Stock received upon conversion of the Series B Shares. At any time after February 7, 2009, the Company may convert fifty percent (50%) of the Series B Shares into shares of Common Stock at the then-applicable conversion price; provided that the Common Stock meets a certain requirement with respect to its trading price on the market or exchange on which the Common Stock is trading, or if none, by a nationally recognized quotation reporting service, and there is then in effect a registration statement permitting the resale of the Common Stock received upon conversion of the Series B Shares. The Company may convert all Preferred Series B Shares not previously converted any time after February 7, 2011; provided that the Common Stock meets a certain trading price requirement on the market or exchange on which the Common Stock is trading, or if none, by a nationally recognized quotation reporting service and there is then in effect a registration statement permitting the resale of the Common Stock received upon conversion of the Series B Shares. At any time after the sixth anniversary of the date that Series B Shares are first issued, the Company may redeem the Series B Shares, in whole or in part, at a redemption price equal to 2.25 times the original issue price of the Series B Shares, $37.50, plus an amount equal to the accrued but unpaid dividends thereon. Until the holders of Series B Shares own less

than 50% of the Series B Shares originally issued, the Company cannot take certain actions without obtaining the approval of the holders of a majority of the outstanding Series B Shares, including the issuance, creation, designation or authorization of any new equity securities having rights or preferences senior to or on parity with the Series B Shares, incur indebtedness in excess of $5 million, effect a single capital expenditure in excess of $2,500, or enter into an acquisition or joint venture for which the consideration is in excess of $2,500. As long as at least fifty percent (50%) of the Series B Shares issued upon the closing of the Exchange Agreement remain outstanding, the holders thereof shall be entitled to elect, at a meeting of such stockholders, three Series B Directors, who will not serve a classified term with the directors elected by the holders of Common Stock together with the holders of any other class or series of capital stock entitled to vote thereon. In addition, holders of the Preferred Series B Shares are entitled to vote with the Common Stock as a single class at stockholders’ meetings, on an as-converted basis. The rights of the Series A Shares have been eliminated and replaced by the rights granted under the Series B Shares. The rights of the Common Stock have been materially limited by the issuance of the Series B Shares. The general effect of the issuance of the Series B Shares upon the rights of the holders of the Common Stock is more fully described in the Certificate of Designation, as described above.

Certificate of Elimination

On July 20, 2006, the Company filed with the Secretary of State of the State of Delaware a Certificate of Elimination of Series A Convertible Preferred Stock to eliminate all matters set forth in the Certificate of Designation with respect to the Series A Shares from the Company’s Certificate of Incorporation.

Convertible Series A

On February 7, 2005, the Company entered into the Series A Stock Purchase Agreement (the “Purchase Agreement”) with Camden Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund III-A, L.P (together “Camden Partners”) to issue and sell in an offering exempt from registration under the Securities Act of 1933, as amended, 1,600,000 shares of its Series A Convertible Preferred Stock (“Series A Shares”), without par value, at a per share price of $3.75, for an aggregate offering price of $6,000. The Series A Shares were issued on February 8, 2005. Each Series A Share is convertible into one share of the Company’s common stock, subject to adjustment as set forth in the Certificate of Designation, Preferences and Rights of Series A Shares filed with the Secretary of State of the State of Delaware, dated as of February 7, 2005. The net proceeds of the Series A Share offering was $5,440, and were used for working capital and other general corporate purposes. Pursuant to the Purchase Agreement, the Company has agreed to indemnify Camden Partners for breaches of representations, warranties and covenants contained in the Purchase Agreement and the other agreements relating to the Series A Share offering. The Series A Shares are entitled to receive cumulative quarterly dividends at an initial rate of 6% per annum at the end of each fiscal quarter. The dividend rate has an annual escalation based on specific terms and conditions included in the Purchase Agreement. In connection with the Series A Share offering, the Company entered into a Stockholders’ Agreement with Camden Partners, dated February 8, 2005. Both of these agreements have been amended and the Series A Shares exchanged as per the Credit Agreement dated July 19, 2006 as discussed above.

Beneficial Conversion Feature Associated with Series A Preferred Stock

The Series A Preferred Stock Shares contain a beneficial conversion feature. In accordance with the FASB’s Emerging Issues Task Force (EITF) Issue No. 00-27, “Application of EITF 98-5 to Certain Convertible Instruments”, the Company recorded an imputed dividend to the Series A Preferred shareholders as a reduction of additional paid in capital of $1,808 during the quarter ended March 31, 2005 because the conversion price was below the fair value of the Company’s common stock at issuance. The Series A preferred shares were exchanged per the Credit Agreement as noted above.

(b) Restricted Stock

Pursuant to the terms of the restricted stock agreement (the “Restricted Stock Agreement”), the Company granted the Company’s Chief Executive Officer (“CEO”) 350,000 shares of Common Stock (the “Restricted Shares”), subject to the Company’s reaching certain performance goals. As of December 31, 2006, none of the restricted stock had vested and compensation expense has not been recognized in the Company’s consolidated financial statements.

The Company maintains an Omnibus Equity Plan, which provides for the issuance of non-qualified options, incentive stock options, and stock appreciation rights. The Omnibus Equity Plan provides for the granting of options to purchase up to 2,250,000 shares of common stock. Incentive stock options are exercisable for up to ten years, at an option price of not less than the fair market value on the date the option is granted, or at a price of not less than 110% of the fair market price in the case of an option granted to an individual who, at the time of grant, owns more than 10% of the Company’s common stock. Non-qualified stock options may be issued at such exercise price and on such other terms and conditions as the Compensation Committee of the Board of Directors may determine. Optionees may also be granted stock appreciation rights under which they may, in lieu of exercising an option, elect to receive cash or common stock, or a combination thereof, equal to the excess of the fair market value of the common stock over the option price at the date of exercise. All options were granted at the average of the Company’s opening and closing price of its common stock as of the date of grant.

(d) Series A Warrants

The Company issued Series A Warrants (the “Series A Warrants”) to the Lenders to purchase, in the aggregate, 2,000,000 shares of common stock of the Company. The Series A Warrants entitle the warrant holder to exercise the warrant to purchase common shares beginning after July 19, 2006, until July 19, 2011, at an exercise price of $1.50 per common share. The exercise price is subject to adjustment under certain circumstances specified in the Series A Warrants.

Series B Warrants

The Company issued Series B Warrants (the “Series B Warrants”) and together with the Series A Warrants, (the “Warrants”) to the Lenders to purchase, in the aggregate, 666,667 shares of common stock of the Company. The Series B Warrant entitles the warrant holder to exercise the warrant to purchase common shares (the “Series B Warrant Shares”) beginning August 15, 2007, until July 19, 2011, at an exercise price of $1.50 per share. The Series B Warrants are subject to cancellation in full, in the event that both of the following occur: (i) the Adjusted EBITDA (as defined in the Credit Agreement) for the three-month period ending June 30, 2007 is greater than $750,000, as determined under the terms of the Series B Warrant, and (ii) certain claims have been resolved in accordance with the terms of the Series B Warrant. The number of Series B Warrant shares to be issued are subject to cancellation in part in the event that condition (i) above is satisfied, but condition (ii) above is not. The exercise price of the Series B Warrants is subject to adjustment under certain circumstances as specified in the Series B Warrants.

10. Change in Estimates

Revenue recognition rates utilized for certain training vouchers, club memberships, and technical certification programs are based on the results of student attendance analyses performed by the Company. The Company’s student attendance analyses have been derived from historical experience over the past eight quarterly analyses, or two years of trailing data. For training vouchers, club memberships, and technical certification programs for which the Company does not perform student attendance analysis, the Company recognizes revenue on a straight-line basis. Generally, the student attendance analyses indicate a greater percentage of attendance in the earlier months and the last month of the time periods associated with training vouchers, club memberships, and technical certification programs. Thus, a greater percentage of revenues are recognized in these time periods than if the straight-line method were applied.

The continual revision of estimated student attendance rates results in cumulative adjustments to revenue recognized for sales transactions consummated in prior periods. Upon completion of the historical student attendance analyses in the third quarter of 2006, the Company adjusted its revenue recognition rates and recorded a decrease in deferred revenue and an increase in revenue of $202. Upon completion of the historical student attendance analyses in the third quarter of 2005, the Company adjusted its revenue recognition rates and recorded an increase in deferred revenue and a decrease in revenue of $617.

Although the Company believes its current revenue recognition rates are consistent with current student attendance patterns, no assurance can be given that such rates will not change in the future.

11. Gain/Loss on Sale of Company-Owned Training Centers

During 2006, the Company sold and re-franchised its wholly owned company-owned training centers in San Antonio, Charlotte, Memphis, Nashville, Atlanta, Hartford and Albuquerque in asset sale agreements for $1,650 in cash and notes plus assumption of liabilities of $2,439. The unsecured notes receivable totaled $203, bear interest at rates of 6% to 8% per annum and have maturity dates over the next 12 to 24 months. The Company determined that the sale of these centers did not meet all necessary criteria to be classified as discontinued operations within the Company’s consolidated financial statements at any time during the nine months ended September 30, 2006. Due to significant continuing involvement between the Company and these re-franchised centers, the Company deferred a portion of the gross gain on the sale of these centers of $1,364.

The deferred gain on sale amount at the date of sale consisted of discount to buyers on royalty revenue over periods of 1 to 2 years and an estimate of the Company’s continuing obligation for future refunds (based on historical experience at each center sold). Subsequent to the sales, a portion of the deferred royalty revenue was earned and recognized, totaling $377 through September 30, 2006.

During 2005, the Company sold its wholly owned company-owned training center in Sacramento in an asset sale agreement for $75 in cash. As a result of this sale, the Company recorded a loss on sale of $321 as of September 2006.

12. Legal Proceedings

On February 24, 2006, the Company reached a settlement in the amount of $850 with a plaintiff who was a former employee of the Company. The settlement was paid in installments during 2006. The Company’s insurance carrier contributed $192 to the settlement. In connection with this case, the Company accrued a loss on legal settlement of $658, which is included within other current liabilities in the Company’s consolidated balance sheet as of December 31, 2005.

The Company also is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~The~~Management’s Discussion ~~following~~and ~~discussion~~Analysis ~~should~~of beFinancial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We encourage you to read this MD&A in conjunction with the financial information (and notes thereto) contained in this Form 10-Q for the ~~nine~~three months ended ~~September 30~~March 31, 2009 ~~2006~~ and the Company’s ~~Annual~~2008 ~~Report on~~ Form 10-K, ~~for~~which was filed with the ~~year~~ ~~ended~~SEC ~~December~~on 31March 25, ~~2006~~ 2009.

(Dollars in thousands)

General

New Horizons Worldwide, Inc. and its various wholly-owned subsidiaries (collectively, the “Company” or “New Horizons”) own and franchise computer training centers.

The Company has two reporting segments: ~~company-owned~~Franchising ~~training~~operations ~~centers~~ and ~~franchising~~ ~~operations. As of September 30, 2006, the company~~Company-owned training ~~centers reporting unit operated six wholly-owned~~ ~~computer training~~ centers within the continental United States and generates revenue through the sale and delivery of personal computing (“PC”) applications, technical software training courses, business skills and healthcare information management. The franchising ~~operations~~ operations reporting unit earns revenue through the sale of New Horizons master and unit franchises within the Continental United States and ~~abroad~~internationally, on-going royalties in return for providing franchises with systems of instruction, sales, and management concepts concerning computer training, and the sale of ~~courseware~~ courseware materials and e-learning products. ~~The~~ As of March 31, 2009, the ~~franchising~~Company-owned ~~operations~~training centers reporting unit ~~has~~operated ~~places~~three ofwholly-owned computer ~~business~~training incenters ~~Anaheim~~(two at March 31, 2008) within the continental ~~California;~~United ~~Leiden~~States and generated revenue through the sale and delivery of training for personal computing (“PC”) applications, ~~The~~technical ~~Netherlands;~~software, business skills and healthcare ~~Singapore~~information management. Both reporting units operate principally within the information technology (“IT”) training industry.

Critical Accounting Policies and Management’s Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Preparation of financial ~~statements~~ statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. The ~~following~~ critical accounting policies include: (a) accounting estimates made by management that were highly uncertain at the time of estimation, and (b) accounting estimates in which there were a range of potential reasonable estimates the Company could have used in the current period and changes in these estimates are reasonably likely to occur from period to period. On an ongoing basis, management evaluates its estimates and judgments in these areas based

1814

onTable ~~its historical experience and other relevant factors. The Company’s estimates as~~ of ~~the~~ date of the financial statements reflect its best judgment giving consideration to all currently available facts and circumstances. As such, these estimates may require adjustment in the future, as additional facts become known or as circumstances change. Changes in these estimates could potentially have a material impact on the Company’s financial position or results of operations.Contents

~~Revenue~~accounting ~~Recognition~~policies involve accounting estimates made by management that were highly uncertain at the time of estimation, and accounting estimates in which there were a range of potential reasonable estimates the Company could have used in the current period and changes in these estimates are reasonably likely to occur from period to period. On an ongoing basis, management evaluates its estimates and judgments in these areas based on its historical experience and other relevant factors. The Company’s estimates as of the date of the financial statements reflect its best judgment giving consideration to all currently available facts and circumstances. As such, these estimates may require adjustment in the future, as additional facts become known or as circumstances change. Changes in these estimates could potentially have a material impact on the Company’s financial position or results of operations.

~~The~~ Refer to the Company’s Annual ~~earns~~Report ~~revenue~~on ~~from~~Form 10-K for the ~~delivery~~year ended December 31, 2008 for a discussion of ~~instructor-led~~critical ~~and~~accounting ~~e-Learning~~policies which include revenue recognition, ~~training~~deferred ~~courses~~costs, byallowance ~~its~~for ~~company-owned~~losses ~~training~~on ~~centers~~accounts receivable, deferred tax assets and ~~through~~accounting ~~its~~for goodwill. During the three months ended March 31, ~~franchising~~2009, ~~operations~~there were no material changes to these policies.

The Company recognizes company-owned training center revenues for training vouchers, club memberships, and technical certification tracks of certain durations based on estimates of how the Company will deliver training to customers over the service period. These estimates differ from the straight-line method. Combined, these products comprise a material amount of the Company’s consolidated revenues. Management has determined that historical student attendance pattern rates are the best estimate of how the Company will deliver training to customers in the future.

The Company performs historical student attendance analyses on a quarterly basis. In these analyses, the Company reviews approximately 15% of the sales transactions for these products, selected randomly, to determine the number of courses delivered under each arrangement and the time period between each course date and the invoice date. Based on this data, the Company is able to determine the historical rates at which customers have attended class for each product type. In order to provide customers with adequate time to take courses, the Company allows a period of one-year from the date of sale before performing student attendance analyses. Historical student attendance data from the past eight quarterly analyses, or two years of trailing data, are combined to determine the estimates used in revenue recognition.

Due to the use of estimated delivery rates rather than actual delivery, revenue recognition for training vouchers, technical tracks and programs, and club arrangements based on estimated delivery rates could differ materially from that of actual course delivery. Additionally, the Company’s estimates based on historical student attendance patterns may not accurately forecast future attendance patterns. Generally, the student attendance analyses indicate a greater percentage of attendance in the earlier months and the last month of the time periods associated with training vouchers, club memberships, and technical certification programs. Thus, a greater percentage of revenues are recognized in these time periods than if a straight-line method were applied.

The continual revision of estimated student attendance rates results in cumulative adjustments to revenue recognized for sales transactions consummated in prior periods.

Upon completion of the historical student attendance analyses in the third quarter of 2006, the Company adjusted its revenue recognition rates and recorded a decrease in deferred revenue and an increase in revenue of $202. Upon completion of the historical student attendance analyses in the third quarter of 2005, the Company adjusted its revenue recognition rates and recorded an increase in deferred revenue and a decrease in revenue of $617.

Although the Company believes its current revenue recognition rates are consistent with current student attendance patterns, no assurance can be given that such rates will not change in the future.

Deferred Costs

The Company defers those direct and incremental costs associated with the sale of products and services for which revenue is deferred. Direct and incremental costs associated with the sale of products and services for which revenue is deferred include commissions paid to sales persons and technology and hosting costs associated with the Company’s e-Learning products. Deferred costs are charged to earnings at the same rate that the associated product revenues are recorded to earnings. At September 30, 2006 and 2005, the Company’s deferred costs totaled $1,328 and $2,733, and is reported in prepaid expenses in the accompanying Condensed Consolidated Balance Sheet.

Accounts Receivable

Accounts receivable are shown net of allowances for doubtful accounts. The Company records an allowance for bad debts based on the age of individual invoices. For the company-owned training centers, the percentage applied reflects each center’s historical experience of bad debts and mix of business. At September 30, 2006 and 2005, the Company’s allowance for doubtful accounts was $1,833 and $2,270, respectively.

Deferred Tax Asset

In preparing the consolidated financial statements, the Company is required to estimate its income taxes for federal and state purposes. This process involves estimating the actual current taxes together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue or the allowance for doubtful accounts, for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes that recovery is not likely, must establish a valuation allowance. To the extent a valuation allowance is established or this allowance is increased in a period, an expense must be included within the tax provision in the consolidated statements of operations.

Accounting for Goodwill

The goodwill balance attributable to the Company’s franchising reporting unit is tested for impairment annually as of December 31 of each year and on an interim basis in the event of an impairment indicator. The Company utilizes an outside valuation consultant in determining the fair value of its reporting units. The consultant utilizes both the income approach and the market approach in determining fair value. The consultant’s fair value estimates using the income approach utilize the Company’s best estimates of future operating performance. There were no impairment indicators at September 30, 2006.

Liquidity And Capital Resources

The Company’s cash and cash equivalents was $~~2,842~~434 as of ~~September 30~~March 31, ~~2006~~ 2009 compared to $~~3,798~~639 as of December 31, ~~2005.~~ 2008. The $205 decrease is ~~primarily~~ due to ~~(i)~~cash consumed ~~net operating losses sustained~~ by ~~the~~ ~~Company~~normal ~~for~~operating ~~the nine months ended September 30, 2006, (ii) capital expenditures, and (iii) principal payments on the Company’s credit facility with Wells Fargo Bank (“Wells Fargo”)~~activities.

Cash used ~~by operations~~in operations was $52,~~115~~399 for the quarter ended ~~September 30~~March 31, ~~2006~~2009, $~~1,704~~900 ~~below~~ more than the ~~2005~~amount used ~~level~~in ~~primarily~~the ~~due~~comparable toperiod afor ~~decrease~~2008. The inincrease ~~net~~compared ~~operating~~to ~~losses~~the ~~partially offset~~prior byyear ~~non-cash~~is ~~charges~~due ~~for~~primarily ~~depreciation~~to a $1,507 lower ~~amortization~~net ~~and~~income, ~~changes~~payments intotaling ~~other assets~~$300 ~~and~~pursuant ~~liabilities. During~~to the ~~nine~~TTSC purchase ~~months~~agreement ~~ended~~(see ~~September~~Note ~~30,~~3 ~~2006~~“Acquisitions” ~~and~~in ~~2005,~~ the Company’s ~~spent~~Notes ~~$397~~to ~~and $239 on~~Consolidated ~~capital~~Financial ~~equipment. The~~Statements) ~~Company~~and ~~has~~an ~~no material~~increase ~~commitments~~in tobonus ~~purchase~~payments ~~property~~made ~~and equipment~~ in ~~2006.~~2009 ~~The~~for ~~Company~~2008 ~~made~~of ~~principal~~$253 ~~and~~over ~~interest~~the ~~payments~~amount onof ~~its~~bonus ~~credit~~payments ~~facility~~made ~~with~~in ~~Wells~~2008 ~~Fargo~~for ~~of $1~~2007,~~007~~ ~~and~~offset by a $~~1,968~~111 ~~for~~increase ~~the~~in ~~nine~~accounts ~~months~~payable ~~ended~~compared ~~September~~to 30a $1,030 ~~2006~~decrease ~~and~~in ~~2005,~~accounts ~~respectively~~payable in the prior year.

~~The~~Cash ~~Company maintains~~used ain ~~credit~~investing activities ~~facility~~was ~~with~~$52 ~~Wells~~for ~~Fargo,~~the ~~pursuant~~quarter toended ~~the~~March 31, ~~terms~~2009, of$188 alower ~~Credit~~than ~~Agreement (~~the ~~“Credit~~amount ~~Agreement”),~~used ~~dated~~in ~~February~~investing ~~27,~~activities ~~2003,~~in ~~by and between~~ the ~~Company~~ ~~and~~comparable ~~Wells~~period ~~Fargo~~for 2008. OnThe ~~May~~decrease 3,is ~~2006, the~~primarily ~~Company~~due ~~paid~~to ~~in full~~ the ~~remaining~~cash acquired ~~principal amount~~ of $~~260~~166 ~~plus~~from ~~interest on~~ the ~~term~~CEI ~~note~~acquisition. (See ~~due~~Note ~~pursuant~~3 to“Acquisitions” in the ~~Credit~~Company’s ~~Agreement~~Notes to Consolidated Financial Statements.)

Net cash provided by financing activities was $2,246 for the quarter ended March 31, 2009, $2,246 greater than the amount in the comparable period, principally due an increase in the borrowings under the revolving credit facility of $2,461, offset by a $215 decrease for the purchase of 28,674 shares of Series C Convertible Preferred Stock from Utopia. (See Note 11 “Shareholder Equity” in the Company’s Notes to Consolidated Financial Statements.)

As stated above, during the quarter ended March 31, 2009, the Company borrowed $2,461 under the revolving credit facility. The Company borrowed these funds principally for the payments related to acquisitions, preferred stock repurchase and working capital requirements.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company’s off-balance sheet arrangements and contractual obligations consist primarily of operating leases.

~~The Company~~On ~~has~~March 25, $12009,~~491~~ the inCompany ~~restricted~~completed ~~cash~~a ~~comprised~~Stock ofPurchase ~~$490~~Agreement ~~deposited~~ with ~~state~~Utopia Growth Fund, ~~agencies~~Utopia toCore ~~guarantee~~Fund, ~~performance~~Utopia inCore ~~various~~Conservative ~~states~~Fund inand ~~respect~~Utopia toYield ~~providing~~Income Fund ~~training~~(collectively “Utopia”) to ~~consumers~~purchase ~~and~~(i) 28,674 $1shares of Series C Convertible Preferred Stock,~~001~~ ~~deposited~~without ~~with~~par ~~landlords~~value and ~~banks~~(ii) warrants to purchase ~~comply~~up to 177,778 shares of common stock of the Company at an exercise ~~with~~price ~~contractual~~of ~~obligations~~$0.75 per share. InThe ~~the~~Company ~~event~~paid ~~the~~$215 ~~Company~~in ~~were~~cash to ~~abandon~~complete ~~training~~the inStock aPurchase ~~state~~Agreement with Utopia and subsequently retired the 28,674 Series C Convertible Preferred Stock and the ~~state~~177,778 ~~agency~~of ~~could~~warrants. (See Note 11 “Shareholder ~~draw~~Equity” ~~against~~in the ~~deposits~~Company’s Notes to ~~satisfy~~Consolidated ~~undelivered~~Financial ~~training obligations~~Statements.)

20On February 1, 2009, the Company acquired substantially all of the assets of Computer Education International, Inc. (“CEI”), the independently owned New Horizons Franchisee in Portland, Oregon. The transaction will be accounted for as a purchase transaction in accordance with SFAS 141(R), “Business Combinations” and the Company’s consolidated financial statements include the results of operations of the CEI acquisition since the date of the acquisition. The purchase price includes cash payments of $21 to be paid in installments from July through December 2009, earn-out payments due in February 2011 and 2012 that are contingent on operating income of the business acquired and the assumption of certain liabilities. The assets of CEI will be recorded at their fair value, with the excess purchase price over the fair value of the assets acquired allocated to goodwill. The CEI acquisition was funded by the Company’s new revolving credit facility. (See Note 3 “Acquisitions” in the Company’s Notes to Consolidated Financial Statements.)

~~There~~On ~~can~~November 26, be2008, nothe ~~assurance~~Company ~~that~~acquired ~~existing~~substantially ~~capital~~all the assets of TTSC. The acquisition was consummated to provide Online IT training and ~~anticipated~~consulting ~~cash~~services. The ~~flows~~Company also purchased a perpetual license from Terillian, an affiliate of TTSC, for the semi-exclusive use of its ~~operations~~proprietary ~~will~~software. The betransaction was ~~adequate~~accounted tofor ~~support~~as a purchase transaction in accordance with SFAS 141, “Business Combinations,” and the Company’s ~~current~~consolidated financial ~~and~~statements ~~anticipated~~include the results of operations since the date of the ~~capital~~acquisition. As a result, the assets of TTSC were recorded at their fair value, with the excess purchase price over the fair value of the assets acquired allocated to goodwill. The total purchase price was $1,581 of which, $681was paid in 2008 and ~~operating~~$900 ~~expenditures~~is ~~for~~payable in installments by April 15, 2009. (See Note 3 “Acquisitions” in the ~~foreseeable~~Company’s ~~future~~Notes to Consolidated Financial Statements.)

~~RESULTS OF OPERATIONS~~15

~~Three~~Table ~~Months~~of ~~Ended September 30, 2006 vs. September 30, 2005~~Contents

~~The~~On ~~following~~October 1, ~~table~~2008, the ~~sets~~Company ~~forth~~entered ~~certain~~into a $6,000 revolving credit facility with PNC Bank which ~~consolidated~~replaced ~~income~~the ~~statement~~Company’s ~~data~~previous as$4,000 asecured ~~percentage~~credit facility. The revolving credit facility contains customary covenants, representations and warranties and events of ~~net~~default. (See ~~revenues:~~Note 8 “Debt” in the Company’s Notes to Consolidated Financial Statements.)

	2006		2005
Revenues:
Franchising	1	%	—	%
Royalties	27	%	13	%
Courseware sales and other	11	%	14	%
Total franchising revenue	39	%	27	%
Company-owned training center revenues	61	%	73	%
Total revenue	100	%	100	%
Cost of revenue	55	%	56	%
Selling, general and administrative expenses	52	%	45	%
Impairment of fixed assets	—	%	—	%
Impairment of goodwill	—	%	—	%
Operating loss	(7	)%	(1	)%
Other income	—	%	—	%
Gain on sale of company-owned training centers	—	%	—	%
Interest expense	—	%	—	%
Interest income	—	%	—	%
Loss before income taxes	(7	)%	(1	)%
Provision (benefit) for income taxes	2	%	—	%
Net loss	(9	)%	(1	)%

RESULTS OF OPERATIONS

~~Balances~~Three ofMonths ~~less~~Ended March 31, ~~than~~2009 1%vs. ofMarch 31, ~~revenues are not disclosed in this table~~2008.

~~Revenues~~The following table sets forth certain consolidated income statement data in thousands of dollars and as a percentage of net revenue:

Revenues totaled $15,590 for the three months ended September 30, 2006, a decrease of $10,724, or 41%, from $26,314 for the same period in 2005. The decrease in revenue is the result of a decrease in company-owned training center revenue of $9,540 and a decrease in franchising revenues of $1,184.

				% of					% of
	2009			Revenues		2008			Revenues
Revenues
Franchising
Franchise fees	$	92		1.2	%	$	267		2.8	%
Royalties	4,213			53.6	%	5,090			54.1	%
Courseware sales and other	659			8.4	%	783			8.3	%
Total franchising revenues	4,964			63.2	%	6,140			65.3	%

Company-owned training center revenues	2,902			36.8	%	3,269			34.7	%
Total revenues	7,866			100.0	%	9,409			100.0	%

Cost of revenues	3,447			43.8	%	3,727			39.6	%
Selling, general and administrative expenses	4,396			55.9	%	4,179			44.4	%
Operating income	23			0.3	%	1,503			16.0	%

Loss on disposal of property and equipment	(14		)	-0.2	%	—			0.0	%
Interest expense	(19		)	-0.2	%	(106		)	-1.1	%
Investment income	12			0.1	%	23			0.2	%

Income before provision income taxes	2			0.0	%	1,420			15.1	%
Provision for income taxes	(148		)	-1.9	%	(59		)	-0.6	%
Net (loss) / income	$	(146	)	-1.9	%	$	1,361		14.5	%

~~Company-Owned Training Centers~~Revenues

~~Company-owned~~Revenues ~~training centers~~totaled ~~earned revenue of~~ $97,~~443~~ 866 for the three months ended ~~September 30~~March 31, ~~2006~~2009, a decrease of $91,~~540~~543, or 5016.4%, from $189,~~983~~409 for the same period in ~~2005~~2008. The decrease isin ~~primarily~~revenue ~~due~~is to the result ~~sale~~ of ~~company-owned~~ ~~training~~a ~~centers~~decrease in ~~San~~Company-owned ~~Antonio,~~training ~~Charlotte,~~center ~~Hartford,~~revenue ~~Atlanta, Memphis,~~of ~~Nashville~~$367 and franchising ~~Albuquerque~~revenues as of ~~September 30~~$1, ~~2006, decreased consumer~~176. The ~~sales~~decline ~~resulting from difficulty~~ in ~~obtaining~~revenues ~~third~~was ~~party~~primarily ~~financing~~due ~~solutions, and~~to ~~lower~~the ~~corporate~~recessionary ~~spending~~economic ~~on IT training.~~ environment ~~Management~~and ~~expects to continue~~ the ~~sale~~effects of ~~company-owned~~foreign ~~training centers~~currency toexchange ~~enable~~rate afluctuations, ~~refocus of its resources on~~ partially ~~franchising~~offset ~~operations. Consumer sales~~by ~~accounted~~$418 ~~for approximately 17% and 23%~~ of ~~company-owned~~revenue ~~training~~in ~~center sales~~2009 ~~for~~from the ~~three~~Company’s ~~months~~new ~~ended September 30, 2006 and 2005, respectively, and corporate sales accounted for approximately 83% and 77% of company~~Company-owned training center ~~sales~~in ~~for~~Portland, ~~the~~Oregon, ~~three~~which ~~months~~was ~~ended~~acquired ~~September~~on 30February 1, ~~2006 and 2005, respectively~~2009.

21Franchising Operations

Franchising ~~Operations~~revenues totaled $4,964 for the three months ended March 31, 2009, a decrease of $1,176, or 19.2%, from $6,140 for the same period in 2008. The decrease in franchising revenues resulted primarily from decreases in royalties reflecting the weakened economies in markets served by New Horizons franchisees worldwide, and a negative impact due to the strengthened US dollar in 2009 versus the same period in 2008.

~~Franchising revenues~~Franchise ~~totaled~~fees totaled $~~6,147~~92 for the three months ended ~~September 30~~March 31, ~~2006~~2009, a decrease of $1175,~~184,~~ or 16 65.5%, from $~~7,331~~267 for the same period in ~~2005~~2008. The decrease in ~~franchising~~franchise fees ~~revenues~~is ~~resulted primarily~~due ~~from~~to afewer ~~decline~~agreements infor ~~courseware~~new ~~sales~~franchisees ~~partially~~being ~~offset~~sold bydue ~~increases~~to inthe ~~franchis~~global ~~fees~~economic ~~and royalties~~recession.

Franchise ~~fees~~ royalties totaled $~~158~~4,213 for the three months ended ~~September 30~~March 31, ~~2006~~2009, a ~~increase~~decrease of $57877, or 5617.2%, from $~~101~~5,090 for the same period in ~~2005~~2008. The ~~increase~~decrease isin ~~primarily~~franchise royalties is due to ~~decreased~~ lower franchise ~~sales~~revenues ingenerated ~~international~~throughout ~~markets~~the ~~offset~~Company’s byglobal ~~fees~~network ~~from refranchising~~due ~~company-owned~~to ~~training~~the ~~centers~~global economic recession in 2009.

~~Franchise~~Courseware sales and ~~royalties~~other revenues totaled $~~4,283~~659 for the three months ended ~~September 30~~March 31, ~~2006~~2009, ana ~~increase~~decrease of $~~795~~124, or 2315.8%, from $~~3,488~~783 for the same period in ~~2005~~2008. ~~The increase is due to (i) an increase in~~ ~~North~~Courseware ~~American~~sales ~~royalties as a result of refranchising seven company owned training centers during 2006~~ and ~~increasing~~other ~~royalty~~revenues ~~rates~~is ~~and~~comprised ~~minimums~~primarily ~~required under terms~~ of ~~the~~revenues ~~franchise agreement; (ii) an increase in international royalties;~~from ~~and~~licensed ~~(iii)~~software ~~recognizing~~training ~~deferred~~courseware, ~~revenue on the company~~e-~~owned~~Learning ~~training~~products, ~~centers~~enterprise learning ~~that~~fees ~~were~~and ~~refranchised~~other ~~during~~revenues ~~2006~~and fees. The ~~North~~ ~~American~~decrease ITis ~~training~~primarily ~~market~~due ~~has~~to ~~remained soft as corporate spending on IT~~a ~~training~~decline ~~and~~in ~~infrastructure~~revenues ~~has~~from ~~been~~the ~~weak~~Company’s ~~and~~eLearning ~~available consumer training financing on acceptable terms has been limited~~offerings.

Courseware sales and other revenues totaled $1,706 for the three months ended September 30, 2006, a decrease of $2,036, or 54%, from $3,742 for the same period in 2005. Courseware sales and other revenues is comprised primarily of revenues from licensed software training courseware, e-Learning products, enterprise learning fees and other revenues and fees. The decrease is primarily due to the cancellation of the Company’s main licensed software training courseware contract.16

~~System-wide~~Table ~~Revenues~~of Contents

~~System~~Company-wide revenues, totaled $90,537 for the three months ended September 30, 2006, a decrease of $1,705, or 2%, from $92,242 in 2005. North American and internation system-wide revenues decreased during the period. System-wide revenues are defined as the revenues from company-owned ~~training~~ ~~centers~~training ~~and revenues reported to the Company by its domestic and international franchises.~~centers

~~Cost~~Company-owned training centers earned revenue of $2,902 for the three months ended March 31, 2009, a decrease of $367, or 11.2%, from $3,269 for the same period in 2008. Revenues in 2009 include $418 from the Company’s new Company-owned training center in Portland, OR, which the Company acquired as of February 1, 2009. Revenues from the Company’s two training centers that were open in both 2008 and 2009 declined $744 or 23.0%, due to the economic recession. Consumer sales accounted for approximately 30.9% and 26.0%, and corporate sales accounted for approximately 69.1% and 74.0%, respectively, of Company-owned training center sales for the three months ended March 31, 2009 and 2008, respectively.

Cost of revenues totaled $8,559, or 55% of revenue for the three months ended September 30, 2006, a decrease of $6,047, or 41% from $14,606, or 56%, of revenue for the same period in 2005. The decrease is primarily due to the sale of seven companySystem-~~owned training centers~~wide ~~through September 30, 2006 and lower training activity at the company-owned training centers.~~Revenues

~~Selling~~System-wide revenues, totaled ~~General~~$78,293 for the three months ended March 31, 2009, a decrease of $21,684, or 21.7%, from $99,977 in 2008. The decrease in revenue was experienced across the network and ~~Administrative~~reflects ~~Expenses~~the weakened economies in markets served by New Horizons franchisees worldwide, and a negative impact due to the strengthened US dollar in 2009 versus the same period in 2008. System-wide revenues are defined as the revenues from Company-owned training centers and revenues reported to the Company by its domestic and international franchises, and is provided as a statistical indicator of growth of the New Horizons network. The Company believes that the franchise network has a significant and direct impact on the amount of franchise royalty revenue generated for the Company.

~~Selling, general~~Cost ~~and administrative expenses totaled $8,133, or 54%~~ of ~~revenue for the~~ three months ended September 30, 2006, a decrease of $3,745, or 31% from $11,868, or 45% of revenue for the same period in 2005. The decrease is primarily due to the sale of seven company-owned training centers through September 30, 2006 and lower commissions due to lower sales volumes.Revenues

~~Gain/Loss~~Cost of revenues totaled on$3,447, ~~Sale~~or 43.8% of revenue, for the three months ended March 31, 2009, a decrease of $280, or 7.5% from $3,727, or 39.6% of revenue, for the same period in 2008. The decrease in costs of sales is primarily due to lower training expenses at Company-~~Owned~~owned ~~Training~~training ~~Centers~~centers and enhanced cost cutting initiatives in response to the revenue decline which was partially offset by the $250 of costs from the Portland Company-owned training center acquired in February 2009.

~~Loss on sale of company-owned training centers totaled $12 for the three months ended September 30~~Selling, ~~2006, a~~ ~~decrease~~General from a loss of $112 for the same period in 2005. The decrease is attributable to adjustments to the gain calculations in the sales of the San Antonio, Charlotte, Hartford, Atlanta, Nashville, Memphis and ~~Albuquerque~~Administrative ~~company-owned training centers through September 30, 2006.~~Expenses

~~Interest~~Selling, ~~Expense~~general and administrative expenses totaled $4,396, or 55.9% of revenue, for the three months ended March 31, 2009, an increase of $217, or 5.2%, from $4,179, or 44.4% of revenue, for the same period in 2008. The increase is primarily due to the additional selling, general, and administrative costs of $199 generated from the Portland Company-owned training center that was acquired on February 1, 2009, the acquisition of the Online IT training business from TTSC on November 26, 2008, and directions fees paid by the issuance of common stock..

Interest expense totaled $75 for the three months ended September 30, 2006, an increase of $26, or 53% from $49 in the comparable period in 2005. The increase is primarily due to a higher average debt balances maintained during the period.Expense

22Interest expense totaled $19 for the three months ended March 31, 2009, a decrease of $87, or 82.1%, from $106, or 1.1% of revenue, in the comparable period in 2008. The decrease is primarily due to a relatively low average outstanding balance on the revolving credit facility for in 2009.

~~Interest~~ Investment Income

~~Interest~~ Investment income totaled $5512 for the three months ended ~~September 30~~March 31, ~~2006~~2009, a decrease of $3311, or 38 47.8%, from $8823, inor 0.2% of revenue, in the comparable period in ~~2005. The~~2008 ~~decrease~~due isto ~~primarily~~ the ~~result~~Company’s ofnew ~~lower~~revolving credit ~~average~~facility ~~cash~~that ~~balances~~utilizes ~~during~~available ~~the~~cash ~~three months ended September 30, 2006 compared~~ to ~~the~~reduce ~~three~~outstanding ~~months ended September 30, 2005~~borrowings.

Provision for Income ~~Tax Expense~~Taxes

Provision for income tax expense totaled $~~224~~148 for the three months ended ~~September 30~~March 31, ~~2006~~2009, an increase of $~~107~~89 or 150.9% from $~~117~~59 for the same period in ~~2005~~2008. During the first quarter of 2008, the Company received a refund of $106 of foreign source withholding taxes. The majority of income tax expense represents foreign source withholding taxes on royalties remitted to the Company by its international franchisees.

~~Nine Months Ended September 30, 2006 vs. September 30, 2005~~17

~~The~~Table ~~following table sets forth certain consolidated income statement data as a percentage~~ of ~~net revenues:~~Contents

	2006		2005
Revenues:
Franchising	1	%	1	%
Royalties	20	%	14	%
Courseware sales and other	15	%	14	%
Total franchising revenue	36	%	29	%
Company-owned training center revenues	64	%	71	%
Total revenue	100	%	100	%
Cost of revenue	55	%	56	%
Selling, general and administrative expenses	48	%	44	%
Impairment of fixed assets	—	%	3	%
Impairment of goodwill	—	%	—	%
Operating loss	(3	)%	(6	)%
Other income	—	%	—	%
Gain on sale of company-owned training centers	4	%	—	%
Interest expense	—	%	—	%
Interest income	—	%	—	%
Loss before income taxes	1	%	(7	)%
Provision for income taxes	1	%	—	%
Net loss	—	%	(7	)%

Balances of less than 1% of revenues were not disclosed in this table.

Revenues

Revenues totaled $61,594 for the nine months ended September 30, 2006, a decrease of $18,689, or 23%, from $80,283 for the same period in 2005. The decrease in revenue is the result of a decrease in company-owned training center revenue of $17,160 and a decrease in franchising revenues of $1,529.

Company-Owned Training Centers

Company-owned training centers earned revenue of $39,719 for the nine months ended September 30, 2006, a decrease of $17,160, or 30%, from $56,879 for the same period in 2005. The decrease is primarily due to the sale of company-owned training centers in San Antonio, Charlotte, Hartford, Atlanta, Memphis, Nashville and Albuquerque as of September 30, 2006, decreased consumer sales resulting from difficulty in obtaining third party financing solutions, and lower corporate spending on IT training. The Company has decided to reduce significantly the number of company-owned training centers and to refocus its

resources and managerial energies on franchising operations. Consumer sales accounted for approximately 18% and 22% of company-owned training center sales for the nine months ended September 30, 2006 and 2005, respectively, and corporate sales accounted for approximately 82% and 78% of company-owned training center sales for the nine months ended September 30, 2006 and 2005, respectively.

Franchising Operations

Franchising revenues totaled $21,875 for the nine months ended September 30, 2006, a decrease of $1,529, or 7%, from $23,404 for the same period in 2005. The decrease in franchising revenues resulted primarily from a decline in courseware sales partially offset by an increase in royalties and franchise fees.

Franchise fees totaled $536 for the nine months ended September 30, 2006, a increase of $92, or 21%, from $444 for the same period in 2005. The increase is primarily due to decreased franchise sales in international markets offset by fees from refranchising company-owned training centers.

Franchise royalties totaled $12,435 for the nine months ended September 30, 2006, an increase of $909, or 8%, from $11,526 for the same period in 2005. The increase is due to (i) an increase in North American royalties as a result of refranchising seven company owned training centers during 2006 and increasing royalty rates and minimums required under terms of the franchise agreement; (ii) an increase in international royalties; and (iii) recognizing deferred revenue on the company-owned training centers that were refranchised during 2006. The North American IT training market has remained soft as corporate spending on IT training and infrastructure has been weak and available consumer training financing on acceptable terms has been limited.

Courseware sales and other revenues totaled $8,904 for the nine months ended September 30, 2006, a decrease of $2,530, or 22%, from $11,434 for the same period in 2005. Courseware sales and other revenues is comprised primarily of revenues from licensed software training courseware, e-Learning products, enterprise learning fees and other revenues and fees. The decrease is primarily due to the cancellation of the Company’s main licensed software training courseware contract.

System-wide Revenues

System-wide revenues, totaled $275,489 for the nine months ended September 30, 2006, a decrease of $5,135, or 2%, from $280,624 in 2005. North American and international system-wide revenues decreased during the period. System-wide revenues are defined as the revenues from company-owned training centers and revenues reported to the Company by its domestic and international franchises.

Cost of Revenues

Cost of revenues totaled $34,023, or 55% of revenue for the nine months ended September 30, 2006, a decrease of $10,651, or 24% from $44,674, or 56%, of revenue for the same period in 2005. The decrease is primarily due to the sale of seven company-owned training centers through September 30, 2006 and lower training activity at the company-owned training centers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses totaled $29,290, or 48% of revenue for the nine months ended September 30, 2006, a decrease of $9,058, or 24% from $38,348, or 48% of revenue for the same period in 2005. The decrease is primarily due to the sale of seven company-owned training centers through September 30, 2006 and lower commissions due to lower sales volumes.

Impairment of Fixed Assets

The 2005 non-cash impairment charge is the result of operating and cash flow losses at several company-owned training centers and a resulting decrease in the estimated fair value of each company-owned training center. The estimated fair value of each company-owned training center was determined based on the greater of the estimated discounted cash flows of the company-owned training center or recent sales of comparable locations within the Company’s franchise network. Impairment testing was performed during 2006 and no impairment charge was considered necessary at the franchising or company-owned training centers segments.

Gain/Loss on Sale of Company-Owned Training Centers

Gain on sale of training centers totaled $2,325 for the nine months ended September 30, 2006, an increase from a $321 loss for the same period in 2005. The increase is attributable to recognized gains from the sales of the San Antonio, Charlotte, Hartford, Atlanta, Nashville, Memphis and Albuquerque company-owned training centers through September 30, 2006.

Interest Expense

Interest expense totaled $156 for the nine months ended September 30, 2006, a decrease of $28, or 15% from $184 in the comparable period in 2005. The decrease is primarily due to a lower average debt balances maintained during the period.

Interest Income

Interest income totaled $110 for the nine months ended September 30, 2006, a decrease of $192 or 64% from $302 in the comparable period in 2005. The decrease is primarily the result of lower average cash balances during the nine months ended September 30, 2006 compared to the nine months ended September 30, 2005.

Income Tax Expense

Provision for income tax expense totaled $731 for the nine months ended September 30, 2006, an increase of $106 from $625 for the same period in 2005. The majority of income tax expense represents foreign source withholding taxes on royalties remitted to the Company by its international franchisees.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to changes in interest rates. A discussion of the Company’s accounting policies for financial instruments and further disclosures relating to financial instruments are included in the notes to the Company’s consolidated financial statements. The Company monitors the risks associated with interest rates and financial instrument positions and does not believe these risks will result in a material adverse affect on the Company’s financial position or results of its operations.

As of September 30, 2006, the Company did not consider there to be any significant interest rate risk related to its credit agreement with the lenders. See additional discussion in Note 7 “Debt” to the Company’s consolidated financial statements.

The Company’s risk exposure to fluctuations in foreign currency exchange rates is not material.

ITEM 4. CONTROLS AND PROCEDURES

~~Our current Chief~~Evaluation ~~Executive Officer and Chief Financial Officer evaluated the effectiveness~~ of ~~the~~ ~~design~~Disclosure ~~and~~Controls ~~operation of our disclosure controls~~ and ~~procedures for the nine months ended September 30, 2006.~~Procedures

~~Disclosure~~We maintain disclosure controls and procedures that are ~~defined in SEC rules as controls and other procedures~~ designed to ensure that information required to be disclosed in ~~Exchange~~ ~~Act~~our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and ~~forms~~that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. ~~These~~ In designing and evaluating our disclosure controls ~~were~~and ~~not~~procedures, ~~effective~~our management asrecognized that any system of controls and procedures, no matter how ~~September~~well 30designed and operated, ~~2006~~can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

WeIn ~~have~~connection ~~not~~with ~~filed~~the ~~our~~preparation ~~periodic~~of ~~reports~~this ~~timely~~Quarterly ~~since~~Report on Form 10-Q, an evaluation was performed under the ~~third~~supervision ~~quarter~~and with the participation of ~~2004~~our management, including ~~primarily~~our ~~due~~chief toexecutive officer and chief financial officer, of the ~~turnover~~effectiveness inof ~~key~~the ~~finance~~design ~~roles~~and operation of our disclosure controls and procedures ~~other~~(as ~~internal~~defined ~~control~~in ~~matters~~Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as ~~reported~~of the end of the period incovered aby ~~Current~~this Quarterly Report on Form 8 10-K,Q ~~dated~~to ~~November~~ensure 6that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, ~~2006~~processed, ~~which~~summarized ~~contains~~and ~~our~~reported ~~2004~~within the ~~consolidated~~time ~~financial~~periods ~~statements~~specified ~~and~~in ~~management~~the SEC’s ~~assessment~~rules and offorms, ~~internal~~and to ensure that ~~control~~the ~~over~~information ~~financial~~required ~~reporting.~~to ~~The~~be ~~Company~~disclosed ~~expects~~by us in reports that we file or submit under the Exchange Act is accumulated and communicated to beour management, ~~current~~including ~~with~~our ~~all~~chief executive officer and chief financial officer, ~~required~~as ~~SEC~~appropriate, ~~filings~~to ~~during~~allow ~~the~~timely ~~third~~decisions ~~quarter~~regarding ofrequired ~~2007~~disclosures.

Changes in Internal Control Over Financial Reporting

~~Since~~There ~~December~~were ~~31,~~no ~~2005,~~significant changes wein ~~have~~the ~~taken~~Company’s ~~the~~internal ~~following remedial~~controls ~~actions~~over ~~designed~~financial toreporting ~~improve~~that occurred during our ~~internal~~most ~~control~~recent ~~over~~fiscal ~~financial~~quarter that have materially affected, ~~reporting~~or ~~and~~are ~~remediate~~reasonably ~~material~~likely ~~weaknesses~~to ~~identified~~materially inaffect, our ~~Current~~internal ~~Report~~control onover ~~Form 8-K~~financial ~~dated November 6, 2006:~~reporting.

2518

~~· We have~~Table ~~hired or contracted additional qualified financial reporting and accounting personnel including an executive vice president~~ of ~~finance and administration and a chief financial officer , both certified public accountants.~~Contents

~~· Accounting policies and procedures have been revised, documented and implemented to address weaknesses identified during our initial testing phase in 2005~~PART II. OTHER INFORMATION

~~· We have~~ITEM instituted a formal program of remediation to correct all material weaknesses and significant deficiencies under the direction of a newly hired Director of Internal Audit and with the full support of our current Chief Executive Officer and Chief Financial Officer6. EXHIBITS

· We have put in place a series of manual controls specifically designed to compensate for known or suspected weaknesses in our internal control environment. As a result, our auditors have been able to complete audits of our financial statements for 2004 and 2005.

EXHIBIT NO.		EXHIBIT DESCRIPTION

31.1	#	Rule 13a - 14(a) Certification of the Company’s Chief Executive Officer

31.2	#	Rule 13a - 14(a) Certification of the Company’s Chief Financial Officer

32.1	#	Section 1350 Certification of the Company’s Chief Executive Officer

32.2	#	Section 1350 Certification of the Company’s Chief Financial Officer

We# ~~believe that~~Filed ~~through the addition of remedial actions, including the hiring of qualified personnel and the addition of manual compensating controls, we have improved our current control over financial reporting~~herewith. ~~On-going remediation will continue to strengthen the internal control environment of the Company.~~

~~Limitations on the Effectiveness of Internal Controls~~ 19

~~Our management, including the Chief Executive Officer, does not~~Table expect that our disclosure controls or internal controls over financial reporting will necessarily prevent or detect all fraud and material errors, if any. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of unintended errors or mistakes.Contents

Additionally, controls can be intentionally circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of internal control is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.SIGNATURES

~~PART~~Pursuant ~~II.~~to ~~OTHER~~the requirements ~~INFORMATION~~of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ITEM 1A. RISK FACTORS

	NEW HORIZONS WORLDWIDE, INC.


Date: May 14, 2009	By:	/s/ Mark A. Miller
	Mark A. Miller
	President and Chief Executive Officer

Date: May 14, 2009	By:	/s/ Charles J. Mallon
	Charles J. Mallon
	Executive Vice President and Chief Financial Officer

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006, all of which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.20

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

c) Recent Sale of Unregistered Securities

In August 2006, the Company sold 108,695 shares of common stock at $0.92 per share which represented the Pink Sheet’s market price of our common stock on the date of sale. The sale was made to the Company’s Chief Executive Officer per the terms of his employment agreement dated July 5, 2006.

In July 2006, the Company entered into a debt agreement for $4,000 which included the conversion of 1,638,398 shares of outstanding Series A preferred stock for 174,693 shares of Series B preferred stock along with the issuance of warrants to purchase 2,666,667 shares of common stock at $1.50.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

As of September 30, 2006, the Company was in default for various technical matters of the Credit Agreement. The Company has obtained a waiver of these events of default.

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

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

EXHIBIT NO.		EXHIBIT DESCRIPTION
4.1		Certificate of Decrease Relating to Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of the Registrant, filed July 10, 2006 (filed as Exhibit 4.1 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.2		Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of the Registrant, filed July 10, 2006 (filed as Exhibit 4.2 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.3		Certificate of Elimination of Series A Convertible Preferred Stock of the Company, dated July 20, 2006 (filed as Exhibit 4.3 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.4		Specimen certificate of the Series B Convertible Preferred Stock of the Registrant (filed as Exhibit 4.3 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.5		Form of Series A Warrant (filed as Exhibit 10.2 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.6		Form of Series B Warrant (filed as Exhibit 10.3 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.7		Amended and Restated Stockholders’ Agreement, dated as of July 19, 2006, by and among the Registrant, Camden Partners Strategic Fund III, L.P., Camden Partners Strategic Fund III-A, L.P., Alkhaleej Training and Education Corporation and the Warrant Holders (filed as Exhibit 10.5 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
4.8		Amended and Restated Registration Rights Agreement, dated as of July 19, 2006, by and among the Registrant, Camden Partners Strategic Fund III, L.P., Camden Partners Strategic Fund III-A, L.P., Alkhaleej Training and Education Corporation and the Warrant Holders (filed as Exhibit 10.6 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
10.1		Credit Agreement, dated as of July 19, 2006, by and among the Registrant, Camden Partners Strategic III, LLC and the Lenders named therein (filed as Exhibit 10.1 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
10.2		Preferred Stock Exchange Agreement, dated as of July 19, 2006, by and among the Registrant, Camden Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund III-A, L.P. (filed as Exhibit 10.4 with the Registrant’s Current Report on Form 8-K filed on July 25, 2006 and incorporated by reference herein).
10.3*		Asset Purchase Agreement, dated July 31, 2006 by and between New Horizons Computer Learning Center of Albuquerque, Inc., a Delaware corporation on the one hand, and R.A.R.E. Technologies, LLC, a New Mexico limited liability company and Robin Dennehey, Eric Lopez, Rick Dennehey and Audra Lopez, each an individual.
10.4**		Employment Agreement, dated July 5, 2006, by and between the Registrant and Mark A. Miller (filed as Exhibit 10.1 with the Registrant’s Current Report on Form 8-K filed on July 11, 2006 and incorporated by reference herein).

10.5**		Nonqualified Stock Option Agreement, dated July 5, 2006, by and between the Registrant and Mark A. Miller (filed as Exhibit 10.2 with the Registrant’s Current Report on Form 8-K filed on July 11, 2006 and incorporated by reference herein).
10.6**		Nonqualified Stock Option Agreement, dated July 5, 2006, by and between the Registrant and Mark A. Miller (filed as Exhibit 10.3 with the Registrant’s Current Report on Form 8-K filed on July 11, 2006 and incorporated by reference herein).
10.7**		New Horizons Worldwide, Inc. Restricted Stock Agreement, dated July 5, 2006, between the Registrant and Mark A. Miller (filed as Exhibit 10.4 with the Registrant’s Current Report on Form 8-K filed on July 11, 2006 and incorporated by reference herein).
31.1		Rule 13a - 14(a) Certification of the Company’s Chief Executive Officer
31.2		Rule 13a - 14(a) Certification of the Company’s Chief Financial Officer
32.1		Section 1350 Certification of the Company’s Chief Executive Officer
32.2		Section 1350 Certification of the Company’s Chief Financial Officer

** Management contract or compensatory plan or arrangement. * Information redacted pursuant to SEC rules and regulations.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		NEW HORIZONS WORLDWIDE, INC.
Date:	June 25, 2007	By:	/s/ Mark A. Miller
		Mark A. Miller
		President and Chief Executive Officer
Date:	June 25, 2007	By:	/s/ Charles M. Caporale
		Charles M. Caporale
		Senior Vice President and Chief Financial Officer

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