<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] 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: 0-16310
-------
AMERICAN EDUCATIONAL PRODUCTS, INC.
----------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Colorado 84-1012129
- ---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
5350 Manhattan Circle, Suite 210, Boulder, Colorado 80303
- --------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
(303) 543-0123
---------------------------
(Issuer's telephone number)
- -----------------------------------------------------------------------Former
name, former address, and former fiscal year, if changed since last report
Check whether the Issuer (1) 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 Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the Registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 12, 1997 the Company had 916,200 shares of its $.05 par value common
stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ]
No [ X ]
<PAGE>
<PAGE>
INDEX
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
----
Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996 2
Consolidated Statements of Operations for the three months ended
March 31, 1997 and March 31, 1996 3
Consolidated Statements of Cash Flows for the three months ended
March 31, 1997 and March 31, 1996 4
Consolidated Statement of Stockholders' Equity from
January 1, 1997 through March 31, 1997 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources 7
Results of Operations 9
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
<PAGE>
<PAGE>
<TABLE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
----------------------------
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
____________ ____________
<S> <C> <C>
ASSETS
-------
CURRENT ASSETS
Cash $ 75,000 $ 107,000
Trade receivables, net of
allowance of $56,000 and $64,000 1,189,000 840,000
Royalty receivable 117,000 144,000
Inventories 2,321,000 2,475,000
Prepaid advertising costs 59,000 ---
Other 99,000 82,000
---------- ----------
TOTAL CURRENT ASSETS 3,860,000 3,648,000
PROPERTY AND EQUIPMENT, net of
accumulated depreciation of
$3,505,000 and $3,327,000,
respectively 2,569,000 2,681,000
VIDEO LIBRARY, net of accumulated
amortization of $476,000 and
$443,000, respectively 479,000 512,000
INTANGIBLE ASSETS, net 320,000 361,000
OTHER ASSETS 363,000 354,000
---------- ----------
TOTAL ASSETS $ 7,591,000 $ 7,556,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
-------------------
Note payable $ 1,250,000 $ 1,080,000
Current maturities of long term debt 1,184,000 428,000
Accounts payable 867,000 752,000
Accrued expenses 173,000 221,000
---------- ----------
TOTAL CURRENT LIABILITIES 3,474,000 2,481,000
LONG TERM DEBT, less current maturities --- 907,000
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value;
50,000,000 shares authorized;
none issued or outstanding --- ---
Common stock; $0.05 par value;
100,000,000 shares authorized;
916,250 and 915,400 shares
issued and outstanding, see
Note 3 46,000 46,000
Additional paid in capital 6,472,000 6,468,000
Accumulated deficit (2,401,000) (2,346,000)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 4,117,000 4,168,000
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,591,000 $ 7,556,000
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
<CAPTION>
March 31, March 31,
1997 1996
____________ ____________
<S> <C> <C>
INCOME:
Net sales $ 1,621,000 $ 2,047,000
Cost of goods sold 1,110,000 1,196,000
---------- ----------
Gross profit 511,000 851,000
OPERATING EXPENSES:
Advertising and catalog costs 10,000 24,000
Other marketing 185,000 534,000
---------- ----------
Total marketing 195,000 558,000
General and administrative 308,000 357,000
---------- ----------
Total operating expenses 503,000 915,000
---------- ----------
OPERATING INCOME (LOSS) 8,000 (64,000)
Interest expense (63,000) (137,000)
---------- ----------
INCOME BEFORE INCOME TAXES (55,000) (201,000)
Income tax benefit (expense) --- ---
---------- ----------
NET (LOSS) $ (55,000) $ (201,000)
========== ==========
Net (loss) per common share
and common share equivalent,
see Note 3 ($0.06) ($0.24)
========== ==========
Average number of common and common
equivalent shares outstanding,
see Note 3 915,400 831,000
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
<CAPTION>
March 31, March 31,
1997 1996
____________ ____________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (55,000) $ (201,000)
Adjustments to reconcile net (loss)
to cash provided by operating
activities:
Depreciation 178,000 188,000
Amortization 78,000 131,000
Bad debt expense 2,000 2,000
Changes in operating assets and
liabilities:
Decrease (increase) in
operating assets:
Accounts receivable (351,000) 34,000
Income tax refunds receivable --- 304,000
Inventories 154,000 (260,000)
Prepaid advertising costs (59,000) (178,000)
Other (3,000) 43,000
Increase (decrease) in
operating liabilities:
Accounts payable 115,000 258,000
Accrued expenses (48,000) (26,000)
---------- ----------
Net cash provided (used) by
operating activities 11,000 295,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (66,000) (60,000)
Cost incurred for video production --- (77,000)
---------- ----------
Net cash provided (used) by
investing activities (66,000) (137,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and
long term debt 170,000 264,000
Payments on notes payable and
long term debt (151,000) (370,000)
Net proceeds from the sale of stock 4,000 22,000
---------- ----------
Net cash provided (used) by
financing activities 23,000 (84,000)
---------- ----------
NET INCREASE (DECREASE) IN CASH (32,000) 74,000
Cash, at beginning of period 107,000 146,000
---------- ----------
Cash, at end of period $ 75,000 $ 220,000
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for:
Interest $ 61,000 $ 144,000
========== ==========
Income taxes $ --- $ ---
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
JANUARY 1, 1997 THROUGH MARCH 31, 1997
(UNAUDITED)
<CAPTION>
COMMON STOCK Additional
Number Paid
of Common in (Accumulated
Shares Stock Capital Deficit) Total
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
See Note 3
Balance as of
January 1, 1997 915,400 $ 46,000 $ 6,468,000 $ (2,346,000) $ 4,168,000
Sale of common stock under
the employee stock
purchase plan 850 --- 4,000 --- 4,000
Net loss --- --- --- (55,000) (55,000)
Balance as of
March 31, 1997 916,250 $ 46,000 $ 6,472,000 $ (2,401,000) $ 4,117,000
</TABLE>
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
---------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(UNAUDITED)
Note 1 -- Presentation
- ----------------------
In the opinion of the Company, these unaudited consolidated financial
statements contain all adjustments (consisting of normal accruals) necessary
to present fairly the financial position as of December 31, 1996 and March 31,
1997, and the results of operations for the three months ended March 31, 1997
and 1996. These statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1996.
Note 2 -- Notes Payable and Long Term Debt
- ------------------------------------------
The Company has a $1,500,000 revolving line of credit (LOC) pursuant to a loan
agreement which expires April 30, 1997. Borrowing under this line of credit
bears interest at the prime rate plus 2% (totaling 10.5% as of March 31,
1997). Interest is payable monthly. The principal balance was $1,250,000 at
March 31, 1997. The amounts available to be borrowed under the agreement are
derived from a borrowing base as defined in the agreement relating to
allowable inventory and accounts receivable. In addition, the loan agreement
contains covenants which restrict the payment of dividends and requires, among
other things, that the Company achieve certain operating income levels. As of
March 31, 1997, the Company was in compliance with all of the requirements.
The Company's primary lender has also extended credit under various term loan
agreements. The term loan agreements have a final maturity date of January
31, 1998, at which time a final "balloon" payment will be due. The line of
credit and the term loans are collateralized by substantially all of the
Company's assets.
As of and subsequent to March 31, 1997, the Company was negotiating with its
lender to extend the maturity dates of the debt and increase the amount of
credit available. Preliminary agreement has been reached on a credit facility
that would expire in the year 2000. It is anticipated that final agreement
will be reached during the second quarter. Accordingly, the primary lender
has extended the expiration date of the LOC to accommodate the ongoing
negotiations.
Note 3 -- Stockholders' equity and retroactive adjustment
- ---------------------------------------------------------
On April 4, 1997, the Company's shareholders approved a one-for-five (1-for-5)
reverse split of its $0.01 par value common stock. The reverse split became
effective on April 22, 1997. As of that date, the par value of the Company's
common stock was increased to $0.05 per share and the number of common shares
outstanding was reduced from 4,581,000 to 916,250.
The reverse split has been shown in the accompanying financial statements as a
retroactive adjustment giving effect to the split for all periods presented.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion addresses the financial condition and results of
operation for American Educational Products, Inc. and Subsidiaries ("AMEP" or
the "Company"). AMEP currently has two operating subsidiaries: Hubbard
Scientific, Inc. ("Hubbard") and Scott Resources, Inc. ("Scott"). As
discussed below, the Company recently sold the operating assets of its wholly-
owned subsidiary, AEP Media Corporation, d.b.a. Churchill Media ("Churchill").
Effective June 17, 1996, AMEP sold the assets of Churchill for a cash payment
of $1,000,000 plus future royalties. Accordingly, the operating results of
Churchill were consolidated with the Company only through June 17, 1996.
Comparisons between 1997 and 1996 are affected by this divestiture.
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included in this quarterly
report.
LIQUIDITY AND CAPITAL RESOURCES -- MARCH 31, 1997, COMPARED TO DECEMBER 31,
1996
- ---------------------------------------------------------------------------
The Company's lack of liquidity continued during the first quarter of 1997.
As a result, the Company continued its efforts to reduce expenditures and
conserve cash. Those efforts resulted in decreased raw material purchases and
decreased operating expenses. It is believed that these actions reduced the
severity of the liquidity shortfall experienced by the Company.
Nevertheless, the Company was unable to make timely payments to its trade
creditors during this period. Some creditors have responded by granting the
Company extended credit terms. Other creditors have placed the Company on
"credit hold" and refuse to ship to the Company without an advance payment.
Those actions make it more difficult to conduct business.
To further improve its capital resources in 1997, the Company commenced
negotiations with its lender to increase available borrowings. A tentative
agreement has been reached under which additional amounts could be borrowed to
fund inventory purchases and the final maturity dates of all borrowings would
be extended until the year 2000. It is anticipated that future principal
payments required under the agreement will approximate $100,000 per quarter.
The Company anticipates that the agreements will be finalized during the
second quarter of fiscal 1997.
During 1996, management devoted considerable time and effort to reducing the
Company's borrowings and improving its financial condition. It is believed
that the funds available to the Company are sufficient to allow its continued
operation. However, it is still unable to make all payments on a timely basis
and this trend is expected to continue until the Company is profitable.
Should the Company fail to achieve consistently profitable operations, it will
need to sell additional assets or obtain additional financing. There are no
guarantees that it can accomplish those objectives.
The Company reported a 67% working capital decrease during the first quarter
of 1997. To a great extent, this decrease reflects the reclassification of
$609,000 of debt from non-current liabilities in recognition of the balloon
payment due in January, 1998. As reported, current assets of $3,860,000
increased by $212,000 from December 31, 1996 and current liabilities increased
by $993,000 from $2,481,000 to $3,474,000. As a result, working capital
decreased from $1,167,000 to $386,000 and the current ratio fell from 1.5 to
1.1. Since the Company anticipates refinancing its long term debt to obtain a
final maturity date of April 30, 2000, it is also useful to calculate working
capital amounts on a pro-forma basis as if $609,000 had been classified as a
non-current liability as of March 31, 1997. On a pro-forma basis, working
capital would have decreased 15% from $1,167,000 to $995,000 and the current
ratio would have declined from 1.5 to 1.3. This decrease is considered normal
for the first quarter given the seasonal nature of the Company's business. In
comparison, working capital at March 31, 1996, was $404,000 and the current
ratio was 1.1.
Total assets remained virtually unchanged, increasing by $35,000 from
$7,556,000 at December 31, 1996, to $7,591,000 at March 31, 1997. During the
same period, total liabilities increased from $3,388,000 to $3,474,000, an
increase of 3%. Stockholders' equity decreased $51,000, or 1%, from
$4,168,000 to $4,117,000, primarily as a result of the net loss for the
period.
Accounts receivable increased from $840,000 at December 31, 1996, to
$1,189,000 at March 31, 1997, an increase of $349,000 or 42%. This increase
is consistent with seasonal sales patterns under which March sales exceed
December sales.
The royalty receivable of $117,000 as of March 31, 1997 results from the sale
of Churchill and represents royalties expected to be received during the next
twelve months.
Inventories decreased from $2,475,000 at the end of 1996 to $2,321,000 at
March 31, 1997, a decrease of $154,000 or 6%. The Company worked diligently
during the first quarter to reduce its inventory balances. Stricter
purchasing controls were implemented to reduce raw material intake. These
controls have resulted in more frequent purchases of smaller quantities,
sometimes at higher per unit costs, compared to previous purchases. The
Company continues to evaluate the optimum balance between purchase quantities
and per unit costs.
Prepaid advertising costs increased from zero at December 31, 1996, to $59,000
at March 31, 1997. This increase is due to investment in the spring 1997
catalog program offset by partial amortization of this program.
Net property and equipment decreased from $2,681,000 at December 31, 1996, to
$2,567,000 at March 31, 1997, a decrease of $112,000 or 4%. The decrease
represents depreciation of $178,000 offset by net additions of $66,000.
Video and film library costs decreased from $512,000 at December 31, 1996, to
$479,000 at March 31, 1997, a decrease of $33,000 or 6%. The decrease
consists entirely of regular monthly amortization.
Intangible assets decreased from $361,000 at December 31, 1996, to $320,000 at
March 31, 1997, a decrease of $41,000 or 11%. The decrease results from
regular monthly amortization of the assets.
Other assets increased from $354,000 at December 31, 1996, to $363,000 at
March 31, 1997. Other assets includes estimated royalties to be received in
future years from the purchaser of Churchill in the amount of $318,000.
Accounts payable and accrued expenses increased by $67,000 from $973,000 at
December 31, 1996, to $1,040,000 at March 31, 1997. The Company has not been
able to make all payments to trade creditors in a timely fashion during the
first three months of 1997. Although the Company believes that its ability to
pay trade creditors on a timely basis will improve in the latter part of 1997,
there are no guarantees that it will be able to do so.
At March 31, 1997, the Company had increased its borrowings under the working
capital line of credit facility by $170,000 to reflect the increased needs and
borrowing capacity generated by first quarter sales. As of and subsequent to
March 31, 1997, the Company had borrowed substantially all funds available to
it under the various borrowing agreements.
Long-term debt, including current maturities, decreased $151,000 as a result
of normal monthly and quarterly long-term debt payments.
Other than the foregoing, management knows of no trends, demands, or
uncertainties that are reasonably likely to have a material impact on the
Company's short-term liquidity or capital resources.
RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1997, COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1996
As previously discussed, the comparison of operating results for the first
quarter of 1997 to the first quarter of 1996 is affected by the sale of
Churchill in 1996.
The Company's revenues were $1,621,000 in the first quarter of 1997, a
decrease of $426,000 or 21% from the same period 1996 revenues of $2,047,000.
Churchill's impact on revenues during this period in 1996 was $501,000. After
adjusting for Churchill, sales at Hubbard and Scott increased by $75,000 or 5%
from first quarter 1996 sales of $1,546,000.
The cost of goods sold for the quarter ended March 31, 1997, was $1,110,000, a
decrease of $86,000 or 7% from the same period 1996 amount of $1,196,000.
Churchill's impact on cost of goods sold during this period in 1996 was
$219,000.
Consolidated gross profits for the first quarter of 1997 were $511,000, a
decrease of $340,000 or 40% from the same period 1996 gross profits of
$851,000. Churchill's impact on consolidated gross profits during this period
in 1996 was $282,000. After adjusting for Churchill, gross profits at Hubbard
and Scott decreased by $58,000 from first quarter 1996 gross profits of
$569,000. As a percentage of sales for Hubbard and Scott, the first quarter
gross margin decreased from 37% in 1996 to 32% in 1997. The gross margin
decrease is an area of concern for the Company. It was caused primarily by
low utilization of factory capacity during the quarter. Management made a
concerted effort to reduce inventories during the period. This decision
resulted in actual factory production levels less than planned and
significantly less than capacity. The Company incurs certain operating
expenses, such as depreciation, occupancy, and indirect personnel costs each
period. When production levels are lower than normal, such costs are not
applied to inventory and the result is an unfavorable cost variance in cost of
sales. Since second and third quarter production is scheduled to be greater
than the first quarter, the Company believes that the gross margin percent
will improve during those quarters. The reader is reminded that the actual
gross margin percent is sensitive to actual production levels and can vary
significantly between periods.
The advertising component of marketing costs for the first quarter of 1997 was
$10,000, a decrease of $14,000 or 58% from the same period 1996 cost of
$24,000. Churchill's advertising costs for the first quarter of 1996 were
$19,000. After adjusting for Churchill, advertising costs as percent of sales
at Hubbard and Scott were less than 1% of sales in the first three months of
both 1997 and 1996. Hubbard and Scott produce direct mail catalogs featuring
their manufactured products.
Other marketing costs for the first quarter of 1997 were $185,000, a decrease
of $349,000 or 65% from the same period 1996 cost of $534,000. Churchill's
other marketing costs for the first quarter of 1996 were $252,000. After
adjusting for Churchill, other marketing costs as a percentage of sales at
Hubbard and Scott were 11% in the first three months of 1997, and 18% in the
first three months of 1996.
General and administrative expenses were $308,000, a decrease of $49,000 or
14% from the first quarter 1996 G & A expense of $357,000. Churchill's G & A
expense for the first quarter of 1996 was $67,000. After adjusting for
Churchill, G & A costs as a percent of Hubbard and Scott sales were 19% in the
first quarter of both 1997 and 1996. During 1996, G & A expenses were reduced
by $100,000 to reflect proceeds received from a litigation settlement. Had
the Company not recognized those proceeds in 1996, G & A expenses would have
been $390,000, or 25% of sales, at Hubbard and Scott.
Total operating costs decreased 45% from $915,000 in the first three months of
1996 to $503,000 in the first three months of 1997. Churchill's total
operating costs during this period in 1996 were $338,000. After adjusting for
Churchill, operating costs as a percentage of Hubbard and Scott sales
approximated 31% in 1997 and 37% in 1996.
Interest expense decreased from $137,000 in the first quarter of 1996 to
$63,000 in the first quarter of 1997, a decrease of $74,000 or 54%. The
decreased interest expense is the result of lower debt levels made possible by
proceeds from the sale of Churchill assets.
The Company did not recognize any income tax benefit or expense for the first
quarter of 1997. During preceding quarters, all income tax liabilities had
been offset against operating losses. The Company has net operating loss
carryovers of approximately $4,100,000 available for income tax purposes.
Subject to certain restrictions imposed by the Internal Revenue Code, the
Company will be able to offset those carryforwards against future taxable
income, if any, and will be able to record a benefit from those carryforwards
when they appear to be realizable.
The net loss for the first quarter of 1997 was $55,000, compared with a net
loss of $201,000 in the same period of 1996. After giving effect to the 1-
for-5 reverse stock split, the loss per share was $0.06 for the first quarter
of 1997, compared to a loss per share of $0.24 for the first quarter of 1996.
Inflation has not had any material effect on the Company's operations during
1997. The Company attempts to reduce the impact of cost increases through
design changes and improved factory efficiencies. There is no guarantee that
it will be successful in these attempts.
The Company historically has experienced significant seasonality in its sales
primarily due to the purchasing cycle of educational institutions. Typically,
the first and fourth fiscal quarters each generate approximately 20% of annual
sales, with the second and third fiscal quarters each generating approximately
30% of annual sales. This distribution of sales is likely to continue
throughout 1997.
Other than the foregoing, management knows of no trends, demands, or
uncertainties that are reasonably likely to have a material impact on the
Company's results of operations.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings have been filed on behalf of or against the
Company nor have any claims been made.
ITEM 2. CHANGES IN SECURITIES
See Item 4 below.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 4, 1997, the Company held a Special Meeting of Shareholders
(the "Meeting"), to vote upon the following matter:
The adoption and approval of a reverse split of the issued and
outstanding shares of the Company's Common Stock and issued and
outstanding options, warrants, and other rights convertible into
shares of Common Stock of up to one-for-five (1-for-5) at the future
discretion and subject to the determination of the Board of
Directors (the "Reverse Stock Split"). The results of the vote at
the Meeting were:
For Against Abstain
--------- ------- -------
2,398,439 208,935 169,074
On April 22, 1997, the one-for-five Reverse Stock Split became
effective.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: None.
Reports on Form 8-K: None
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities and Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN EDUCATIONAL PRODUCTS, INC.
Dated: May 15, 1997 By: /s/ Clifford C. Thygesen
------------------- -------------------------
Clifford C. Thygesen, President
Dated: May 15, 1997 By: /s/ Frank L. Jennings
------------------- -------------------------
Frank L. Jennings, Chief
Financial Officer and
Vice President of Finance
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON
PAGES 2 AND 3 OF THE COMPANY'S FORM 10QSB FOR THE THREE MONTHS ENDED MARCH 31,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 75,000
<SECURITIES> 0
<RECEIVABLES> 1,362,000
<ALLOWANCES> 56,000
<INVENTORY> 2,321,000
<CURRENT-ASSETS> 3,860,000
<PP&E> 6,074,000
<DEPRECIATION> 3,505,000
<TOTAL-ASSETS> 7,591,000
<CURRENT-LIABILITIES> 3,474,000
<BONDS> 0
0
0
<COMMON> 46,000
<OTHER-SE> 4,071,000
<TOTAL-LIABILITY-AND-EQUITY> 7,591,000
<SALES> 1,621,000
<TOTAL-REVENUES> 1,621,000
<CGS> 1,110,000
<TOTAL-COSTS> 1,110,000
<OTHER-EXPENSES> 503,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,000
<INCOME-PRETAX> (55,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (55,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,000)
<EPS-PRIMARY> ($0.01)
<EPS-DILUTED> ($0.01)
</TABLE>
