SEC Form 3

FORM 3

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person* Follett CORP (Last) (First) (Middle) 2233 WEST STREET (Street) RIVER GROVE IL 60171 (City) (State) (Zip)	2. Date of Event Requiring Statement (Month/Day/Year) 02/22/2008	3. Issuer Name and Ticker or Trading Symbol VARSITY GROUP INC [ VSTY ]
		4. Relationship of Reporting Person(s) to Issuer (Check all applicable) Director X 10% Owner Officer (give title below) Other (specify below) See Remarks	5. If Amendment, Date of Original Filed (Month/Day/Year)
			6. Individual or Joint/Group Filing (Check Applicable Line) Form filed by One Reporting Person X Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Beneficially Owned
1. Title of Security (Instr. 4)	2. Amount of Securities Beneficially Owned (Instr. 4)	3. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	4. Nature of Indirect Beneficial Ownership (Instr. 5)

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 4)	2. Date Exercisable and Expiration Date (Month/Day/Year)		3. Title and Amount of Securities Underlying Derivative Security (Instr. 4)		4. Conversion or Exercise Price of Derivative Security	5. Ownership Form: Direct (D) or Indirect (I) (Instr. 5)	6. Nature of Indirect Beneficial Ownership (Instr. 5)
	Date Exercisable	Expiration Date	Title	Amount or Number of Shares
Warrant to Purchase Common Stock	02/22/2008	02/22/2011 ( 1 ) ( 2 )	Common Stock	18,775,930 ( 1 ) ( 2 )	0.2	D

1. Name and Address of Reporting Person* Follett CORP (Last) (First) (Middle) 2233 WEST STREET (Street) RIVER GROVE IL 60171 (City) (State) (Zip)

1. Name and Address of Reporting Person* VGI Financial CORP (Last) (First) (Middle) 2233 WEST STREET (Street) RIVER GROVE IL 60171 (City) (State) (Zip)

Explanation of Responses:

1. On February 22, 2008, Varsity Group Inc. (the "Company") entered into an Amended and Restated Revolving Line of Credit Loan Agreement and Security Agreement (the "New Loan Agreement") with VGI Financial and certain wholly owned subsidiaries of the Company, which amends and restates the Revolving Line of Credit Loan Agreement and Security Agreement with Bank of America, N.A. ("BOA"), entered into by the Company on March 8, 2007 (the "Prior Loan Agreement"). VGI Financial has purchased and assumed from BOA the obligations under the Prior Loan Agreement. VGI Financial has agreed, subject to certain conditions, to forebear from enforcing an event of default that is presently outstanding under the Prior Loan Agreement until April 30, 2008.

2. In connection with the New Loan Agreement, the Company issued the Warrant (as shown in Table II) to VGI Financial for the purchase of the number of shares of the Company's common stock equal to (a) the advances under the New Loan Agreement divided by (b) the exercise price of $0.20 per share, subject to anti-dilution adjustment. The per share exercise price of the Warrant will be reduced by (a) 20% in the event that advances under the New Loan Agreement remain outstanding as of April 7, 2008 and (b) an additional 20% in the event that advances under the New Loan Agreement remain outstanding as of May 7, 2008. As of the date hereof, advances under the New Loan Agreement are approximately $3,755,186. The Warrant expires upon the earlier of (i) 5:00 p.m. (Chicago time) on February 22, 2011 or (ii) the consummation of a sale of the Company. The Warrant has standard anti-dilution provisions.

Remarks:

The reporting persons are VGI Financial Corp. ("VGI Financial"), a Delaware corporation and Follett Corporation ("Follett"), an Illinois corporation. Follett has sole voting and investment power with respect to securities held by VGI Financial and, accordingly, may be deemed for purposes of Rule 13d-3 of the Securities and Exchange Act of 1934, as amended, the beneficial owner of securities held by VGI Financial. The address of the reporting persons is 2233 West Street, River Grove, Illinois 60171.

	/s/ Dennis A. McMahon	03/03/2008
	/s/ Dennis A. McMahon	03/03/2008
	** Signature of Reporting Person	Date
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