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, 2000
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)
6550 Gunpark Drive, Suite 200, Boulder, Colorado 80301
- ------------------------------------------------ -------------
(Address of principal executive officers) (Zip Code)
(303) 527-3230
---------------------------
(Issuer's Telephone Number)
- -------------------------------------------------------------------
Former name, former address, and formal 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
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 4, 2000, the Company had 1,084,270 shares of its $0.05
par value common stock outstanding.
Transitional Small Business Disclosure Format (Check one).
Yes No X
<PAGE>
INDEX
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements Page
Consolidated Balance Sheets as of March 31,
2000 and December 31, 1999 2
Consolidated Statements of Operations for the
three months ended March 31, 2000 and March 31, 1999 3
Consolidated Statements of Cash Flows for the three
months ended March 31, 2000 and March 31, 1999 4
Consolidated Statement of Stockholders' Equity from
January 1, 2000 through March 31, 2000 5
Notes to Consolidated Financial Statements 6
Item 2. Management's discussion and analysis of financial
condition and results of operations
Results of Operations 9
Liquidity and Capital Resources 11
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security
Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
1
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
as of March 31, 2000 and December 31, 1999
March 31, December 31,
2000 1999
ASSETS (Unaudited)
------ ----------- ------------
CURRENT ASSETS
Cash $ 146,000 $ 94,000
Trade receivables, net of allowance
of $118,000 and $95,000 2,558,000 2,018,000
Inventories 4,653,000 4,108,000
Prepaid advertising costs 1,176,000 1,171,000
Other 452,000 287,000
---------- ----------
TOTAL CURRENT ASSETS 8,985,000 7,678,000
PROPERTY AND EQUIPMENT, net 2,340,000 2,459,000
INTANGIBLE ASSETS, net 1,674,000 1,732,000
DEFERRED TAXES, net 596,000 575,000
VIDEO LIBRARY, net 70,000 94,000
OTHER ASSETS 110,000 93,000
---------- ----------
TOTAL ASSETS $13,775,000 $12,631,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Note payable $ 3,458,000 $ 2,227,000
Current maturities of long-term debt 460,000 430,000
Accounts payable 1,248,000 1,349,000
Accrued expenses and taxes 302,000 342,000
---------- ----------
TOTAL CURRENT LIABILITIES 5,468,000 4,348,000
LONG - TERM DEBT, less current maturities 808,000 894,000
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;
1,084,270 and 1,076,070 shares
issued and outstanding 54,000 54,000
Additional paid in capital 7,358,000 7,215,000
Retained earnings 87,000 120,000
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 7,499,000 7,389,000
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $13,775,000 $12,631,000
========== ==========
See accompanying notes to consolidated financial statements
2
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months ended March 31, 2000 and 1999
(Unaudited)
March 31, March 31,
2000 1999
--------- ---------
INCOME:
Net sales $3,783,000 $3,301,000
Cost of goods sold 2,334,000 1,998,000
--------- ---------
Gross profit 1,449,000 1,303,000
OPERATING EXPENSES:
Advertising and catalog costs 428,000 306,000
Other marketing 358,000 313,000
--------- ---------
Total marketing 786,000 619,000
General and administrative 614,000 521,000
--------- ---------
Total operating expenses 1,400,000 1,140,000
--------- ---------
OPERATING INCOME 49,000 163,000
INTEREST EXPENSE, net (103,000) (98,000)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (54,000) 65,000
Deferred income tax benefit 21,000 -
--------- ---------
NET INCOME (LOSS) $ (33,000) $ 65,000
========= =========
Basic Earnings (Loss) per Share $ (0.03) $ 0.06
========= =========
Diluted Earnings (Loss) per Share $ (0.03) $ 0.05
========= =========
See accompanying notes to consolidated financial statements
3
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months ended March 31, 2000 and 1999
(Unaudited)
March 31, March 31,
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (33,000) $ 65,000
Expenses not requiring cash outlays:
Depreciation 155,000 161,000
Amortization 82,000 79,000
Provision for bad debts 23,000 21,000
Provision for inventory obsolescence 21,000 20,000
Imputed interest expense 11,000 16,000
Imputed cost of options and warrants 30,000 -
Provision for deferred taxes (21,000) -
Changes in working capital items:
Accounts receivable (563,000) (577,000)
Inventories (566,000) (381,000)
Prepaid advertising costs (5,000) 226,000
Accounts payable (101,000) 376,000
Accrued expenses (40,000) 13,000
Other (92,000) (86,000)
--------- --------
Net cash provided (used) by operating
activities (1,099,000) (67,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (36,000) (210,000)
Net cash (used) by investing --------- --------
activities (36,000) (210,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long
term debt 1,340,000 499,000
Payments on notes payable and long
term debt (176,000) (372,000)
Net proceeds from common stock
transactions 23,000 121,000
--------- --------
Net cash provided by financing
activities 1,187,000 248,000
--------- --------
NET INCREASE (DECREASE) IN CASH 52,000 (29,000)
Cash, at beginning of period 94,000 124,000
--------- --------
Cash, at end of period $ 146,000 $ 95,000
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for:
Interest $ 68,000 $ 61,000
========= ========
Income taxes $ - $ -
========= ========
See accompanying notes to consolidated financial statements
4
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
January 1, 2000 through March 31, 2000
(Unaudited)
COMMON STOCK
------------------ Additional
Number Paid
of Common in Retained
Shares Stock Capital Earnings Total
-------- ------- --------- ---------- -----
Balance as of
January 1, 2000 1,076,070 $54,000 $7,215,000 $120,000 $7,389,000
Exercise of
options 8,200 - 23,000 - 23,000
Issuance of
warrants - - 120,000 - 120,000
Net loss - - - (33,000) (33,000)
--------- ------ --------- ------- ---------
Balance as of
March 31, 2000 1,084,270 $54,000 $7,358,000 $87,000 $7,499,000
========= ====== ========= ====== =========
See accompanying notes to consolidated financial statements
5
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of
American Educational Products, Inc. ("AMEP" or the "Company")
have been prepared in accordance with generally accepted
accounting principles for interim financial information. 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 March 31, 2000, and the results of operations for the three
months ended March 31, 2000 and 1999. The results for interim
periods are not necessarily indicative of results that may be
expected for any other interim period or for the full year.
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,
1999.
Note 2 - Forward-Looking Statements
In addition to historical information, this Quarterly Report
contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, and is thus
prospective. The forward-looking statements contained herein are
subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a
difference include, but are not limited to, competitive
pressures, changing economic conditions, those discussed in the
section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the
Company. Readers are cautioned not to place undue reliance on
these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Readers should
refer to and carefully review the information in future documents
the Company files with the Securities and Exchange Commission.
Note 3 - Change in Beneficial Ownership
On March 28, 2000, G.C. Associates Holdings Corp. purchased
211,731 shares of common stock of American Educational Products,
Inc., increasing their ownership percentage from 36% to 57%.
Subsequent to March 31, 2000, G.C. Associates purchased an
additional 34,540 shares, further increasing their ownership to
approximately 61%. On April 20, 2000, the Company's Board of
Directors was restructured from seven members to three members.
Two of the three remaining members are representatives of G.C.
Associates Holdings Corp. In connection with the restructuring
of the Board of Directors, the Company incurred costs
approximating $350,000, which will be recognized in the quarter
ending June 30, 2000.
Note 4 - Income Taxes
The provision for deferred income taxes for the three months
ended March 31, 2000 was computed at the effective rate that the
Company expects to use for the entire year. The effective rate
is greater than the statutory federal rate of 34% primarily
because of the addition of state taxes. For the three months
ended March 31, 1999, the Company was able to offset all of its
taxable income with its net operating loss carryforward.
6
<PAGE>
Note 5 - Earnings per Share
The following is a reconciliation of basic and diluted earnings
per share:
Three months ended March 31, 2000
--------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic EPS ----------- ------------- ----------
Net loss ($33,000) 1,082,000 ($0.03)
Effect of dilutive securities ==========
Stock options *
Warrants *
Convertible debt *
Diluted EPS
----------- ------------
Net loss plus assumed
conversions ($33,000) 1,082,000 ($0.03)
=========== ============ ==========
Three months ended March 31, 1999
---------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
Basic EPS ----------- ------------ ---------
Net income $65,000 1,062,000 $0.06
Effect of dilutive securities =========
Stock options 64,000
Warrants 75,000
Convertible debt *
Diluted EPS ----------- ------------
Net income plus assumed
conversions $65,000 1,201,000 $0.05
=========== ============ =========
*For the first quarter of 2000, common shares underlying stock
options of 134,000, warrants of 1,067,000, and convertible debt
of 71,000 were excluded, as they were anti-dilutive. For the
first quarter of 1999, common shares underlying convertible debt
of 95,000 were excluded, as they were anti-dilutive.
In conjunction with its year 2000 public relations program, the
Company agreed to issue 75,000 warrants. The warrants have an
exercise price of $8.00 per share and an expiration date of
August 15, 2000. Under the provision of SFAS 123, the Company
will impute a monthly expense of $10,000 during the year.
Note 6 - Segment Information
The Company's reportable segments are integrated business units
that design, develop, assemble and distribute similar products.
The difference between the two segments is the type of customer.
The manufacturing segment sells primarily to wholesalers. The
distribution segment sells primarily to the end user. Although
all segments are managed as part of an integrated enterprise,
they are reported herein in a manner consistent with the internal
reports prepared for management.
Transactions between reportable segments are recorded at cost.
Substantially all general and administrative services are
provided by the Company to the segments without charge.
7
<PAGE>
Acquisition related expenses, including amortization of
acquisition costs, are considered a corporate expense. All of
the Company's assets are located in the United States of America.
AMEP is operated as an integrated enterprise and the segment
amounts reported herein would not necessarily be indicative of
operating results if the segments were operated independently.
Three months ended March 31:
Description Manufacturing Distribution Corporate Total
- ----------- ------------- ------------ --------- -----
Net sales 2000 $ 2,139,000 $ 1,644,000 $ 0 $ 3,783,000
1999 2,145,000 1,156,000 0 3,301,000
Operating
income (loss) 2000 475,000 196,000 (622,000) 49,000
1999 590,000 100,000 (527,000) 163,000
Interest
expense 2000 50,000 18,000 35,000 103,000
1999 42,000 9,000 47,000 98,000
Assets 2000 1,973,000 244,000 123,000 2,340,000
1999 2,203,000 153,000 103,000 2,459,000
Depreciation
and
amortization 2000 132,000 14,000 91,000 237,000
1999 155,000 0 85,000 240,000
8
<PAGE>
Item 6. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------
The following discussion addresses the financial condition and
results of operations for American Educational Products, Inc. and
its Subsidiaries ("AMEP" or the "Company"). AMEP currently uses
several tradenames in marketing its products, including Hubbard
Scientific ("Hubbard"), National Teaching Aids ("NTA"), Scott
Resources ("Scott"), Summit Learning ("Summit"), and To-Sew
("To-Sew").
On March 28, 2000, G.C. Associates Holdings Corp. ("GC")
purchased 211,731 shares of AMEP common stock, increasing their
ownership to approximately 57% of outstanding shares. On April
20, 2000, GC purchased 34,540 additional shares, which increased
their ownership percentage to over 60%. In conjunction
therewith, the Company's Board of Directors was restructured from
seven to three members, two of whom represent GC. The Company
agreed to redeem common stock options owned by the departing
directors and to pay the departing directors a stipend as part of
the restructuring. Costs incurred by the Company of
approximately $350,000 will be recorded during the three months
ending June 30, 2000.
Effective September 1, 1999, the Company acquired To-Sew for a
purchase price of $1,270,000. To-Sew is a mail order manufacturer
and distributor of sewing kits. The To-Sew acquisition was
recorded using the purchase method of accounting and the
operating results of To-Sew were consolidated with the Company
commencing September 1, 1999.
The Company has actively pursued acquisitions that have enabled
the Company to provide a broader product line and expand its
presence in the educational marketplace. Acquisitions involve
numerous risks in assimilating the acquired company's personnel,
know-how, and products and services. Other risks include limited
experience in new markets and competition from companies that
have stronger positions in those markets. There can be no
assurance that the Company will be able to successfully integrate
newly acquired businesses. Such a failure could have a material
adverse effect on the Company's financial condition and results
of operations. In undertaking any acquisition, management
resources will be partially diverted from the day-to-day business
of the Company.
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto
included in this quarterly report.
Results of Operations - March 31, 2000 Compared to March 31, 1999
- -----------------------------------------------------------------
The acquisition of To-Sew affects the comparisons of operating
results for three months ending March 31, 2000, to three months
ending March 31, 1999.
The Company reported a net loss of ($33,000) for the first
quarter of 2000, compared to a net income of $65,000 for same
period of 1999. Basic and diluted loss per share for the first
quarter of 2000 was ($0.03) per share. For the first quarter of
1999, basic earnings per share were $0.06 and diluted earnings
per share were $0.05.
The Company's revenues in first quarter 2000 were $3,783,000, an
increase of $482,000 or 15% from the $3,301,000 of first quarter
1999. The cost of goods sold for first quarter ended March 31,
9
<PAGE>
2000, was $2,334,000, an increase of 17% over $1,998,000 in
first quarter 1999. Consolidated gross profits for first quarter
2000 were $1,449,000, an increase of $146,000 or 11% from
$1,303,000 in first quarter 1999.
Operating expenses increased 23% from $1,140,000 in 1999 to
$1,400,000 in 2000. Operating expenses were 37% of sales in 2000
and 35% of sales in 1999.
Manufacturing Segment - For the manufacturing segment, revenues
were $2,139,000 in 2000 and $2,145,000 in 1999. There were no
unusual revenue items in either year. Manufacturing gross
margins declined to $792,000 in 2000 from $869,000 in 1999.
Inflationary pressure in labor costs, transportation
(particularly fuel), and production supplies reduced current year
margins. Operating expenses increased to $317,000 from $279,000
in 1999 primarily because of an increased catalog mailing
program. As a result, operating income for the manufacturing
segment declined from $590,000 in 1999 to $475,000 in 2000.
Distribution Segment - Revenues for the distribution segment
increased from $1,156,000 in 1999 to $1,644,000 in 2000 primarily
because of the To-Sew acquisition. The increased gross margins
of $223,000 (from $434,000 in 1999 to $657,000 in 2000) are the
result of the To-Sew acquisition. Similarly, operating expenses
increased from $334,000 to $461,000 because of the To-Sew
acquisition. As a percentage of sales, operating expenses were
28% in 2000 and 29% in 1999. Operating income for the
distribution segment was $196,000 in 2000 and $100,000 in 1999.
Consolidated interest expense increased 5% from $98,000 in 1999
to $103,000 in 2000 primarily as a result of increased borrowings
used to fund the To-Sew acquisition.
The Company recorded a deferred income tax benefit of $21,000 during
the three months ended March 31, 2000. The 37% effective tax rate is
consistent with the rate expected to be in effect for the entire
year and includes Federal taxes at the statutory rate of 34% plus
the net impact of state taxes. During the three months ended
March 31, 1999, the Company was able to offset its taxable income
with its net operating loss carryforward.
Operating cost increases had a negative effect on the Company
during the first quarter of 2000. Although there has been little
inflation in the cost of raw materials, operating margins were
decreased by inflationary pressures in fuel and transportation,
wages, employee benefits, and packaging. While the Company
attempts to mitigate the impact of cost increases, there are no
guarantees that cost increases will not have an adverse impact on
the year 2000. Inflation did not have a material effect on the
Company's operations for 1999.
The Company historically has experienced significant seasonality
in its sales primarily due to the purchasing cycle of educational
institutions. Historical trends indicate that the first and
fourth fiscal quarters will each generate approximately 20% of
annual sales and the second and third fiscal quarters will each
generate approximately 30% of annual sales. The 1999 acquisition
is not expected to change this pattern.
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.
10
<PAGE>
Liquidity and Capital Resources - March 31, 2000 Compared to
December 31, 1999
- -------------------------------------------------------------
The Company's operations are highly seasonal. Educational
institutions purchase the majority of their curriculum materials
during the summer months in anticipation of the new school year
commencing in September. Thus, the Company records the majority
of its sales during its second and third quarters.
The Company's cash requirements typically reach their peak during
the first quarter. In addition to building inventory for the
summer season, the Company mails the majority of its catalogs
during the late winter/early spring season.
Working capital increased 6% from $3,330,000 as of December 31,
1999 to $3,517,000 on March 31, 2000. The current ratio declined
from 1.77 at December 31, 1999 to 1.64 at March 31, 2000. Cash
used in operating activities for the first three months ended
March 31, 2000 was $1,099,000, all of which was provided by
borrowings under the Company's financing arrangement. Earnings
before interest, taxes, depreciation, and amortization were
$286,000 for the first quarter of 2000.
The Company has an asset based financing arrangement with U.S.
Bank Business Finance, an affiliate of U.S. Bancorp. The
arrangement expires on April 30, 2002, and provides for
borrowings up to $4,050,000. Certain 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. As of March 31, 2000, the borrowing base
formula allowed for borrowing up to the limit of $4,050,000 and
the loan balance on that date was $3,458,000. Borrowings are
collateralized by substantially all the Company's assets.
Interest, computed at a floating rate plus 1%, is payable
monthly. In addition, the Company is required to make minimum
monthly principal payments of $36,000.
The borrowing arrangement contains a demand provision such that
the lender can demand repayment at any time. Accordingly, the
entire balance of outstanding borrowings is reflected as a
current liability. The lender has not indicated that it will
demand payment during 2000 and management does not expect to
receive such a demand. Should such a demand be made, the Company
would not have the funds available. However, the Company's
improved financial condition should allow it to obtain the
necessary funds via either an equity placement or alternate
borrowing arrangements.
The Company believes that the funds available to it in 2000 will
be adequate to meet its operating requirements. The source of
those funds will be cash flow from operations and additional
borrowings available under the arrangement with its lender.
Current assets of $8,985,000 increased $1,307,000 from December
31, 1999, and current liabilities increased $1,120,000 to
$5,468,000.
Total assets increased from $12,631,000 on December 31, 1999, to
$13,775,000 on March 31, 2000. During the same period, total
liabilities increased from $5,242,000 to $6,276,000.
Accounts receivable increased from $1,952,000 at December 31,
1999, to $2,492,000 at March 31, 2000, an increase of $540,000 or
28%. Inventories increased from $4,108,000 at December 31, 1999,
to $4,653,000 at March 31, 2000, an increase of $545,000 or 13%.
The increases for both accounts receivable and inventories can be
attributed to the seasonal nature of the business and the
acquisition of To-Sew.
11
<PAGE>
Prepaid advertising costs of $1,176,000 at March 31, 2000
represent deferred costs associated with mailing the 2000 spring
catalogs. The Company commences its spring catalog mailing in
late December and continues mailings throughout first quarter.
The costs of the mailings are charged against income on a
pro-rata basis using estimated monthly revenues for each catalog.
The Company has a deferred tax asset of $596,000. Included in
the net deferred tax asset is a net operating loss carryforward
approximating $2,450,000, which can be used to offset future
taxable income. Under the Tax Reform Act of 1986, the amounts of
and the benefits from NOL carryforwards are subject to certain
limitations. Thus, ultimate realization of the NOL carryforward
is not guaranteed. Nevertheless, the Company believes that it is
more likely than not to be able to utilize the NOL carryforwards
before they expire in 2009, 2010, and 2011.
Borrowings under the Company's working capital line of credit
were increased from $2,227,000 at December 31, 1999, to
$3,458,000 at March 31, 2000, an increase of $1,231,000 or 55%.
The Company's borrowing needs typically increase during the first
quarter to fund the mailing of spring catalogs and the seasonal
increase in business.
Management continually assesses the Company's need for capital
resources. From time to time, the Company may evaluate and
pursue additional sources of capital.
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.
Year 2000 Issue
- ---------------
As previously reported in its Form 10-KSB, the Company did not
experience any Year 2000 related incidents and continues to
operate without any apparent negative impact from the Year 2000
Issue. Furthermore, the Company has not received any reports from
its customers, suppliers, or other business counterparts related
to Year 2000 incidents.
12
<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
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits: None.
Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended March
31, 2000.
Subsequent to March 31, 2000, the Company filed two reports on
Form 8-K, as follows:
1. On April 24, 2000, the Registrant filed a Current Report on
Form 8-K dated April 20, 2000, related to a change in control and
restructuring of the Board of Directors. The report included:
Item 1. Changes in Control of Registrant
Item 7. Exhibits - Indemnification Agreements and
Releases
2. On May 4, 2000, the Registrant filed a Current Report on Form
8-K dated April 28, 2000, related to a change in control and
commitment to acquire certain exercisable stock options. The
report included:
Item 1. Changes in Control of Registrant
13
<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 4, 2000 By: /s/ Clifford C. Thygesen
------------------------
Clifford C. Thygesen, President
Dated: May 4, 2000 By: /s/ Frank L. Jennings
------------------------
Frank L. Jennings, Chief Financial
Officer and Vice President of Finance
14
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 146
<SECURITIES> 0
<RECEIVABLES> 2,676
<ALLOWANCES> (118)
<INVENTORY> 4,653
<CURRENT-ASSETS> 8,985
<PP&E> 7,702
<DEPRECIATION> (5,362)
<TOTAL-ASSETS> 13,775
<CURRENT-LIABILITIES> 5,468
<BONDS> 808
0
0
<COMMON> 54
<OTHER-SE> 7,445
<TOTAL-LIABILITY-AND-EQUITY> 13,775
<SALES> 3,783
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<CGS> 2,334
<TOTAL-COSTS> 2,334
<OTHER-EXPENSES> 1,377
<LOSS-PROVISION> 23
<INTEREST-EXPENSE> 103
<INCOME-PRETAX> (54)
<INCOME-TAX> (21)
<INCOME-CONTINUING> (33)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
