FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the Transition Period from ________ to ________
Commission File #0-11078
THE AMERICAN EDUCATION CORPORATION
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(Exact name of small business issuer as specified in its charter)
Colorado
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(State or other jurisdiction of incorporation or organization)
84-0838184
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(IRS Employer Identification No.)
7506 North Broadway Extension, Suite 505, Oklahoma City, OK 73116
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(Address of principal executive offices)
(405) 840-6031
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(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:Common Stock, par
value $.025 per share
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports,
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO__
Number of shares of the issuer's common stock outstanding as of August 1,
2000: 14,083,128
Transitional Small Business Disclosure Format
YES __ NO X
THE AMERICAN EDUCATION CORPORATION
INDEX
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Page No.
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PART I - FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheets 3
June 30, 2000 and December 31, 1999
Consolidated Statements of Income 4
For the Three Months Ended
June 30, 2000 and for the Three
Months Ended June 30, 1999
For the Six Months Ended June 30, 2000 5
and for the Six Months Ended June 30,
1999
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2000 6
and for the Six Months Ended June 30,
1999
Notes to Interim Consolidated Financial 7
Statements
Item 2 Management's Discussion and Analysis 9
Of Financial Conditions and Results of
Operations
PART II - OTHER INFORMATION 13
SIGNATURE PAGE 16
PART 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30 December 31
2000 1999
----------- -----------
unaudited audited
ASSETS
Current assets:
Cash and cash equivalents $ 665,442 $ 1,138,711
Accounts receivable, net of
allowance for returns and
uncollectible accounts of
$140,724 and $116,667 3,819,009 2,215,242
Inventory 155,942 152,344
Prepaid expenses and deposits 266,076 358,597
Deferred tax asset - 123,441
--------- ---------
Total current assets 4,906,469 3,988,335
Property and equipment, at cost 958,761 868,483
Less accumulated depreciation
and amortization (393,850) (307,066)
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Net property and equipment 564,911 561,417
Other assets:
Capitalized software costs,
net of accumulated amortization
of $1,867,442 and $1,635,233 2,373,120 1,889,872
Goodwill, net of accumulated
amortization of $212,261 and
$129,628 2,340,094 2,370,483
Deferred tax asset - 13,587
--------- ---------
Total other assets 4,713,214 4,273,942
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Total assets $ 10,184,594 $ 8,823,694
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade $ 338,866 $ 399,454
Accrued liabilities 820,536 583,958
Accounts payable - Affiliates - 96,529
Notes payable and current
portion of long-term debt 219,577 213,052
Foreign income taxes payable 191,750 117,677
Income taxes payable 8,574 35,674
--------- ---------
Total current liabilities 1,579,303 1,446,344
Long-term debt 1,509,170 1,519,888
Other 35,475 16,125
Deferred income tax 241,385 -
--------- ---------
Total liabilities 3,365,333 2,982,357
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Commitments and contingencies - -
Stockholders' Equity:
Preferred Stock, $.001 par value;
Authorized - 50,000,000 shares
- issued and outstanding - none - -
Common Stock, $.025 par value
Authorized 30,000,000 shares
- issued and outstanding -
14,083,128 shares 351,954 343,877
Additional paid-in capital 6,603,688 6,424,322
Retained Earnings / (Deficit) (926,862) (926,862)
Year-to-date earnings 790,481 -
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Total stockholders' equity 6,819,261 5,841,337
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Total liabilities and
stockholders' equity $10,184,594 $ 8,823,694
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The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited)
2000 1999
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Net Sales $ 3,475,208 $ 2,777,748
Cost of goods sold 579,410 234,787
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Gross profit 2,895,798 2,542,961
Operating expenses:
Sales and marketing 847,160 811,255
Operations 82,844 47,608
General and administrative 825,712 555,610
Amortization of capitalized
software costs 119,877 95,851
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Total operating expenses 1,875,593 1,510,324
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Operating income 1,020,205 1,032,637
Other income(expense):
Interest income 8,815 3,783
Interest expense (38,278) (7,899)
Other - (3,539)
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Net income before income taxes 990,742 1,024,982
Current income taxes 33,040 24,752
Deferred income taxes 330,360 379,737
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Net income $ 627,342 $ 620,493
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Basic 14,060,709 13,693,256
Earnings per share $ 0.045 $ 0.045
Diluted 14,271,650 14,374,739
Earnings per share $ 0.044 $ 0.043
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited)
2000 1999
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Net Sales $ 5,999,506 $ 4,347,893
Cost of goods sold 1,304,092 527,251
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Gross profit 4,695,414 3,820,642
Operating expenses:
Sales and marketing 1,507,818 1,326,326
Operations 131,055 104,685
General and administrative 1,531,396 1,022,396
Amortization of capitalized
software costs 230,471 184,280
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Total operating expenses 3,400,740 2,637,687
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Operating income 1,294,674 1,182,955
Other income(expense):
Interest income 17,604 8,887
Interest expense (73,770) (14,592)
Other 88 5,039
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Net income before income taxes 1,238,596 1,182,289
Current income taxes 74,772 52,514
Deferred income taxes 373,343 395,057
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Net income $ 790,481 $ 734,718
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Basic 13,986,048 13,589,125
Earnings per share $ 0.057 $ 0.054
Diluted 14,196,989 14,670,208
Earnings per share $ 0.056 $ 0.050
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(unaudited)
2000 1999
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Cash flows from operating activities:
Net income $ 790,481 $ 734,718
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Deferred income taxes 378,413 395,057
Depreciation and amortization 401,626 257,183
Reserve for bad debts and returns 24,057 (5,728)
Stock issued for compensation 11,500 91,040
Other 8,414 (7,718)
Changes in assets and liabilities:
Accounts receivable (1,627,824) (944,330)
Inventories (3,598) (100,879)
Prepaid expenses and other 92,521 (16,095)
Other assets - (21,036)
Accounts payable and accrued
liabilities 175,990 130,705
Accounts payable - Affiliate (96,529) (80,297)
Income taxes payable 46,973 47,737
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Net cash provided by operating
activities 202,024 480,357
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Cash flow from investing activities:
Increase in goodwill (14,528) (30,233)
Purchase of capitalized software
costs (715,457) (495,657)
Purchase of property and
equipment (90,278) (179,016)
----------- ----------
Net cash used in investing
activities (820,263) (704,906)
Cash flows from financing activities:
Proceeds received from issuance
of debt 46,584 250,384
Principal payments on notes (50,777) (127,402)
Issuance of common stock 149,163 115,575
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Net cash provided by
financing activities 144,970 238,557
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Net increase (decrease) in cash (473,269) 14,008
Cash at beginning of the period 1,138,711 720,838
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Cash at end of the period $ 665,442 $ 734,846
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The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
Part I
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 2000 AND 1999
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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1. Nature of Business:
----------------------
The American Education Corporation's ("the Company") business is the development
and marketing of educational software to elementary, middle and secondary
schools, adult literacy centers and vocational, junior and community colleges.
In addition, the Company has three subsidiaries, Projected Learning Programs,
Inc. ("PLP") , Learning Pathways, Ltd. ("LPL") and Dolphin, Inc. ("Dolphin").
PLP is a direct mail catalog reseller of primarily other publishers' products
to high schools and colleges. LPL is the exclusive schools and libraries
distributor of the print, multimedia and online versions of the World Book
Encyclopedia in Great Britain. Dolphin is a developer of educational software
for many of the nation's leading textbook and electronic publishers.
2. Basis of Presentation:
-------------------------
The summary of significant accounting policies of the Company is presented to
assist in understanding the Company's financial statements. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
The Company's consolidated financial statements include the Company and its
wholly-owned subsidiaries. All material intercompany transactions have been
eliminated.
The interim consolidated financial statements at June 30, 2000, and for the
three and six month periods ended June 30, 2000 and 1999 are unaudited, but
include all adjustments that the Company considers necessary for a fair
presentation. The December 31, 1999 balance sheet was derived from the
Company's audited financial statements.
The accompanying unaudited financial statements are for the interim periods and
do not include all disclosures normally provided in annual financial statements.
They should be read in conjunction with the Company's audited financial
statements included in the Company's Form 10-KSB for the year ended December
31, 1999. The accompanying unaudited interim financial statements for the
three and six month periods ending June 30, 2000 are not necessarily indicative
of the results that can be expected for the entire year.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Revenue Recognition:
--------------------------
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountant's Statement of Position 97-2 on software revenue
recognition.
4. Capitalized Software Costs:
---------------------------------
Capitalized software costs consist of licenses for the rights to produce and
market computer software, salaries and other direct costs incurred in the
production of computer software. Costs incurred in conjunction with
product development are charged to research and development expense until
technological feasibility is established. Thereafter, all software development
costs are capitalized and amortized on a straight-line basis over the product's
estimated economic life of between three and five years.
5. Goodwill:
------------
Goodwill relates to the acquisitions in 1998 of PLP and LPL, and in 1999 for
Dolphin, and is amortized over a period of fifteen (15) years.
6. Inventories:
---------------
Inventories are stated at the lower of cost (first-in, first-out), or market,
and consist primarily of educational software materials, packing materials and
World Book Encyclopedia print and multimedia products.
7. Property and Equipment:
-----------------------------
Property and equipment is stated at cost. Depreciation is provided on the
straight-line basis over the estimated useful life of the assets, which is
five years.
8. Statements of Cash Flows:
-------------------------------
In the Consolidated Statements of Cash Flows, cash and cash equivalents may
include currency on hand, demand deposits with banks or other financial
institutions, treasury bills, commercial paper, mutual funds or other
investments with original maturities of three months or less. The carrying
values of the Company's assets and liabilities approximate fair value due to
their short-term nature.
9. Income Taxes:
-------------------
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns, determined by using the enacted tax rates in effect for the year
in which the differences are expected to reverse.
10. Computation of Earnings Per Share:
--------------------------------------
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" (SFAS 128). SFAS 128 requires presentation of basic and
diluted earnings per share. Basic earnings per share are calculated based only
upon the weighted average number of common shares outstanding during the
period. Diluted earnings per share are calculated based upon the weighted
average number of common and, where dilutive, potential common shares
outstanding during the period, utilizing the treasury stock method. Potential
common shares include options to purchase common stock.
11. Stockholders' Equity:
-------------------------
During the quarter ended June 30, 2000, the Board of Directors granted options
to purchase 91,000 shares of the Company's common stock at $.73 per share.
At June 30, 2000, paid-in capital includes $377 of foreign currency translation
adjustments.
12. Commitments and Contingencies:
------------------------------------
The Company amortizes capitalized software costs over the product's estimated
useful life. Due to inherent technological changes in the software development
industry, the period over which such capitalized software cost is being
amortized may have to be accelerated.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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This report contains forward-looking statements. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "plans," "intends,"
"anticipates," "expects" or words of similar import. Similarly, statements
that describe the Company's future plans, objectives, estimates or goals are
also forward-looking statements. Such statements address future events and
conditions concerning capital expenditures, earnings, litigation, liquidity,
capital resources and accounting matters. Actual results in each case could
differ materially from those currently anticipated in such statements by reason
of factors such as economic conditions, including changes in customer demands;
future legislative, regulatory and competitive developments in markets in
which the Company operates; and other circumstances affecting anticipated
revenues and costs.
Liquidity and Capital Resources
-------------------------------
As of June 30, 2000 the Company's principal sources of liquidity included cash
and cash equivalents of $665,442, net accounts receivable of $3,819,009 and
inventory of $155,942. The Company's net cash provided by operating activities
during the six months ended June 30, 2000 was $202,024 and an additional
$144,970 was provided from financing activities, primarily the issuance of
common stock resulting from the exercise of stock options. Net cash used in
investing activities for the six months ended June 30 increased by 16% from
$704,906 in 1999 to $820,263 in 2000, and was comprised primarily of investment
in capitalized software development costs. The majority of the cash for the
Dolphin acquisition in late 1999 was borrowed under a portion of the Company's
lines of credit, and is recorded as long-term debt as of June 30, 2000.
At June 30, 2000, the Company had working capital of $3,327,166 compared to
$2,541,991 at December 31, 1999. The Company believes that cash flows from
operations will be adequate to finance its normal financing and investing
activities for the remainder of 2000.
Additional working capital beyond that existing within the Company is available,
if required, to expand operations. Management has and will consider options
available in providing such funding, including debt financing and capital
enhancement. At June 30, 2000, the Company had available bank credit lines
for working capital totaling $1,000,000, subject to borrowing base limitations,
which were unused.
Impact of The Year 2000
-----------------------
The Company's Year 2000 compliance program consisted of review and assessment
of the Company's information technology systems, software systems it produces
for sale, and potential risk if suppliers of products or services could not
resolve their own Year 2000 issues. It was determined that no major remediation
efforts would be necessary. As of the date of this report, the Company has not
experienced any significant impact on operations from Year 2000 issues, nor
have there been any significant disturbances or interruptions in the Company's
ability to transact business with customers, suppliers or service providers.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000
AS COMPARED TO THE THREE MONTHS ENDED JUNE 30, 1999
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Net sales for the three months ended June 30, 2000, totaled $3,475,208 compared
to $2,777,748 for the same period in 1999. This represents an increase of
25.1% over the comparable 1999 quarter. This increase is attributable to
sales increases in the Company's core profit-generating units of the business,
American Education and Learning Pathways, and the inclusion of the results of
Dolphin, Inc. that was acquired in late 1999.
Cost of goods sold as a percentage of sales revenue for the three months ending
June 30, 2000 increased to 16.7% from 8.5% for the same period in 1999. This
change is attributed to the increase of lower gross margin products sold by
Learning Pathways, Limited as a percentage of consolidated revenues, and the
inclusion of the results of Dolphin, Inc. ("Dolphin"), which also has lower
gross margins than the Company's primary business. Cost of goods sold represents
the actual cost to produce the software products, or in the case of Projected
Learning Programs ("PLP") or Learning Pathways, Ltd. ("LPL") the cost to
acquire software from other publishers, and includes certain allocated overhead
costs. The Company's principal product family, A+dvanced Learning System
registered trademark (A+LS), provided gross profit margins of 96% in the
second quarter of 2000. Consolidated Company gross margins are expected to
trend down slightly in the future as lower gross margins on LPL sales of World
Book products and Dolphin's sales of software become a higher percentage of
total corporate revenues.
Total operating expenses, which include selling and marketing, general and
administrative, operations, and amortization of product development costs,
were $1,875,593 for the three months ended June 30, 2000, compared to
$1,510,324 for the same 1999 quarter. As a percentage of sales revenue,
operating expenses decreased to 54.0% in 2000 compared to 54.4% in 1999. As a
component of total operating expenses, selling and marketing costs increased
by 4.4%, from $811,255 for the three months ended June 30, 1999, to $847,160
for the current period. As a percentage of net revenues, however, these costs
decreased from 29.2% to 24.4%. This decrease in selling and marketing expenses
as a percentage of revenues is primarily due to volume-related efficiencies
where a higher sales volume can be supported by the personnel and infrastructure
put in place during 1999.
General and administrative expenses, including operations, increased from
$603,218 to $908,556, and as a percentage of net revenues increased from
21.7% to 26.1% for the quarter. This increase is primarily attributable to
the inclusion of the administrative costs of Dolphin in the consolidated
corporate results in the quarter ended June 30, 2000 and planned increases in
support staff added over the prior year to handle the increased net revenues
that have occurred and that management believes will continue to occur during
the balance of the 2000 fiscal year.
Interest expense for the quarter ended June 30, 2000 increased from $7,899 in
1999 to $38,278 in 2000 reflecting the cost of the debt incurred in late 1999
for the acquisition of Dolphin. Net income for the three months ended June 30,
2000, was $627,342 compared to $620,493 for the same period in 1999, an
increase of 1.1%.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2000
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1999
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Net sales for the six months ended June 30, 2000, totaled $5,999,506 compared
to $4,347,893 for the same period in 1999. This represents an increase of
38.0% over the comparable 1999 quarter. This increase is attributable to
sales increases in the Company's core profit-generating units of the business,
American Education and Learning Pathways, and the inclusion of the results of
Dolphin, Inc. that was acquired in late 1999.
Cost of goods sold as a percentage of sales revenue for the six months ending
June 30, 2000 increased to 21.7% from 12.1% for the same period in 1999. This
change is primarily attributed to the inclusion in 2000 of the results of
Dolphin, which has lower gross margins than the Company's primary business.
The Company's principal product family, A+dvanced Learning System registered
trademark (A+LS), provided gross profit margins of 95% in the first six months
of 2000. Consolidated Company gross margins are expected to trend down slightly
in the future as lower gross margins on LPL sales of World Book products and
Dolphin's sales of software become a higher percentage of total corporate
revenues.
Total operating expenses, which include selling and marketing, general and
administrative, operations, and amortization of product development costs,
were $3,400,740 for the six months ended June 30, 2000, compared to $2,637,687
for the same 1999 fiscal period. As a percentage of sales revenue, operating
expenses decreased from 60.7% in 1999 to 56.7% in 2000. This decrease in
operating expenses as a percentage of revenues is primarily due to volume-
related efficiencies where a higher sales volume can be supported by the
personnel and infrastructure put in place during 1999. As a component of total
operating expenses, selling and marketing costs increased by 13.7 %, from
$1,326,326 for the six months ended June 30, 1999, to $1,507,818 for the
current period. As a percentage of net revenues, however, these costs
decreased from 30.5% to 25.1%. The increase in 2000 selling expenses is a
direct result of increased selling efforts required to support the higher
sales levels attained.
General and administrative expenses, including operations, increased from
$1,127,081 to $1,662,451, and as a percentage of net revenues increased from
25.9% to 27.7% for the six month period. The dollar increase is primarily
attributable to the inclusion of the administrative costs of Dolphin in the
consolidated corporate results in the six months ended June 30, 2000 and
planned increases in support staff added over the prior year to handle the
increased net revenues.
Interest expense for the six months ended June 30, increased from $14,592 in
1999 to $73,770 in 2000 reflecting the cost of the debt incurred in late 1999
for the acquisition of Dolphin. Net income for the six months ended June 30,
2000, was $790,481 compared to $734,718 for the same period in 1999, an
increase of 7.6%.
Company management believes that significant future growth opportunities exist
in the school, adult literacy and home or self-directed education markets on a
worldwide basis. These markets may be accessed by not only the Company's
traditional distribution-based methods of selling and marketing, but also by
new, rapidly emerging electronic learning delivery of content business models,
or elearning. The Company's ongoing investment in content, academic assessment
tools, programming technology, and server infrastructure provide a broad
platform to secure new business partners and address the many opportunities
that are believed to be emerging in the educational technology industry on a
global basis. The Company's investment into the United Kingdom through its
acquisition of Learning Pathways, Ltd. in 1998 underscores management's
conviction that the Company is engaged in a global marketplace. In this global
market, the Company's English-language content, suitable for both the U.S.
and the UK's instructional systems, will meet the instructional requirement for
many countries where English is a primary instructional requirement. The
Company's investment into technology and the elearning business model should
provide for expanded growth opportunities on a worldwide basis.
The Company's future competitive position has been enhanced as a result of its
investment in personnel, facilities, additional content and infrastructure as
well as its entry into international markets. The most significant of these
investments has been the sustained spending on the Company's new Java2-based
A+nyWhere Learning System trademark. In its planning of the future, management
believes that the Internet will become a principal method for the future
delivery of its products to its customers. These investments combine to form
a stronger overall corporate foundation that, combined with what management
believes to be favorable world market conditions, provide a basis for sustained
growth.
THE AMERICAN EDUCATION CORPORATION
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
-----------------------------
Management knows of no pending or threatened litigation involving the Company
that is considered material to the on-going operations and viability of the
Company.
Item 2. Changes in Securities
---------------------------------
During the quarter ended June 30, 2000, the Board of Directors granted options
to purchase 91,000 shares of the Company's common stock at $.73 per share.
Item 3. Default Upon Senior Securities
------------------------------------------
Omitted from this report as inapplicable.
Item 4. Submission of Matters to Vote of Securities Holders
---------------------------------------------------------------
On July 28, 2000, the Company held its annual meeting of shareholders. There
were three proposals submitted to the shareholders for approval; one of which
was the election of directors. The following five nominees, who were all of
the current directors of the Company, were re-elected to serve on the Board of
Directors until their successors are duly elected and qualified: Jeffrey E.
Butler, Monty C. McCurry, Newton Fink, Stephen E. Prust and Geoffrey Glossop.
The following is a tabulation with respect to the votes for each nominee for
office:
FOR WITHHELD
Jeffrey E. Butler 11,077,616 185,840
Monty C. McCurry 11,252,088 11,368
Newton Fink 11,252,186 11,270
Stephen E. Prust 11,078,496 184,960
Geoffrey Glossop 11,078,804 184,652
The second proposal was a proposal to ratify the selection of Steakley &
Gilbert P.C. as the independent accountants for the Company for the fiscal
year ending December 31, 2000. The selection of Steakley & Gilbert, P.C. was
ratified by the following vote:
FOR AGAINST ABSTAIN
11,238,499 22,721 2,236
The third proposal was a proposal to amend the Company's Stock Option Plan for
Employees to increase the number of options in the Plan from 1,050,000 to
1,650,000. The amendment was approved by the following vote:
FOR AGAINST ABSTAIN
10,999,372 251,876 12,208
Item 5. Other Information
-----------------------------
Omitted from this report as inapplicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------------------
The following exhibits have been filed as a part of this report:
Exhibit
No. Description of Exhibits
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3.1 Amended and Restated Articles of Incorporation of The
American Education Corporation (incorporated by
reference to the exhibit in the Current Report on Form
8-K filed with the Securities and Exchange Commission
on June 25, 1998)
3.2 Bylaws of The American Education Corporation
(incorporated by reference to the Company's
registration statement on Form S-8 filed with the
Securities and Exchange Commission on October 22, 1999)
4.1 Form of Stock Certificate (incorporated by reference to
the Company's registration statement on Form S-8 filed
with the Securities and Exchange Commission on October
22, 1999)
4.2 Directors' Stock Option Plan (incorporated by reference
to Exhibit B to the Definitive Proxy Statement filed
with the Securities and Exchange Commission on April
24, 1998)
4.3 First Amendment to the Directors' Stock Option Plan
(incorporated by reference to the Company's
registration statement on Form S-8 filed with the
Securities and Exchange Commission on October 22, 1999)
4.4 Stock Option Plan for Employees (incorporated by
reference to Exhibit C to the Definitive Proxy
Statement filed with the Securities and Exchange
Commission on April 24, 1998)
4.5 First Amendment to the Stock Option Plan for Employees
(incorporated by reference to the Company's
registration statement on Form S-8 filed with the
Securities and Exchange Commission on October 22, 1999)
4.6 Second Amendment to the Stock Option Plan for Employees
(filed herewith)
10.1 Purchase Agreement for the acquisition by the Company
of Learning Pathways, Limited (incorporated by
reference to the exhibit in the Current Report on Form
8-K filed with the Securities and Exchange Commission
on December 15, 1998)
10.2 Stock Purchase Agreement for the acquisition by the
Company of Dolphin, Inc. (incorporated by reference to
the exhibit in the Current Report on Form 8-K filed
with the Securities and Exchange Commission on January
10, 2000)
27 Financial Data Schedule (filed herewith; electronic
filing only)
(b) Reports on Form 8-K
None.
SIGNATURES
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.
The American Education Corporation
August 11, 2000
By: /s/Jeffrey E. Butler
------------------------
Jeffrey E. Butler,
Chief Executive Officer
Chairman of the Board
Treasurer
Exhibit 4.6
SECOND AMENDMENT TO 1998 STOCK OPTION PLAN FOR EMPLOYEES
--------------------------------------------------------
The following amendment to the 1998 Stock Option Plan For Employees was
approved by (I) the Board of Directors of The American Education Corporation
on May 22, 2000 and (ii) the shareholders on July 28, 2000:
1. Section 4.1 was amended by substituting "1,650,000" for "1,050,000."
