FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ________ to ________
Commission File #0-11078
THE AMERICAN EDUCATION CORPORATION
(Exact name of registrant as specified in its charter)
Colorado
(State or other jurisdiction of incorporation, or organization)
84-0838184
(IRS Employer Identification number)
7506 North Broadway Extension, Suite 505, Oklahoma City, OK 73116
(Address of principal executive offices)
(405) 840-6031
(Registrant's telephone number, including area code)
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 registrant's common stock outstanding as of June 30,
1997: 12,127,393
Transitional Small Business Disclosure Format
YES [ ] NO [X]
THE AMERICAN EDUCATION CORPORATION
INDEX
Page No.
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PART 1 - FINANCIAL INFORMATION
Item 1 Balance Sheets 3
June 30, 1997 and December 31, 1996
Statements of Operations 4
For the Quarter Ended June 30, 1997
and for the Quarter Ended June 30, 1996
For the Six Months Ended June 30, 1997 5
and for the Six Months Ended June 30, 1996
Statements of Cash Flows 6
For the Six Months Ended June 30, 1997
and for the Six Months Ended June 30, 1996
Notes to Interim Financial Statements 7
Item 2 Management's Discussion and Analysis of 9
Financial Conditions and Results of Operations
PART II - OTHER INFORMATION 13
SIGNATURE PAGE 14
Part 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
BALANCE SHEETS
ASSETS 30-Jun-97 31-Dec-96
Current assets:
Cash $ 121,817 $ 193,347
Accounts receivable, net of allowance
for uncollectible accounts of $117,441
and $112,187 1,092,625 408,178
Inventories, net of impairment reserve of 14,457 15,909
$9,645
Prepaid expenses and deposits 13,986 32,442
---------- ----------
Total current assets 1,242,885 649,876
Property and equipment, at cost 187,875 175,097
Less accumulated depreciation and amortization (139,776) (125,838)
----------- -----------
Net property and equipment 48,099 49,259
Other assets:
Capitalized software costs, net of
accumulated amortization of $919,767
and $879,033 446,900 322,036
Goodwill, net of accumulated amortization
of $223,673 and $200,536 23,127 46,264
---------- ----------
Total other assets 470,027 368,300
Total Assets $1,761,011 $1,067,435
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade $ 338,211 $ 280,196
Accrued liabilities 348,286 360,697
Accounts Payable - Affiliate 18,000 18,000
Customer Deposits 119,178 194,480
---------- ----------
Total current liabilities 823,675 853,373
Long-term debt 55,500 53,000
Total liabilities 879,175 906,373
Commitments and contingencies 0 0
Stockholders' Equity
Preferred Stock, $.001 par value;
Authorized-50,000,000 shares-issued and
outstanding-none 0 0
Common stock, $.025 par value
Authorized 15,000,000 shares-issued and
outstanding-12,127,393 shares 304,271 304,271
Additional paid-in capital 5,232,630 5,232,630
Retained Earnings/(Deficit) (5,375,839) (5,375,839)
Current Year Earnings 720,774 0
----------- -----------
Total stockholders' equity 881,836 161,062
Total liabilities and stockholders' equity $1,761,011 $1,067,435
========== ==========
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1997 AND 1996
30-Jun-97 30-Jun-96
Net Sales $ 1,237,332 $ 1,044,698
Cost of goods sold 139,821 141,971
------------ ------------
Gross profit 1,097,511 902,727
Operating expenses:
Sales and marketing 174,038 151,351
General administrative 396,745 203,973
Amortization of capitalized software costs 20,864 61,957
------------ ------------
Total operating expenses 591,647 417,281
------------ ------------
Operating earnings (loss) 505,864 485,446
Other income/(expense)
Interest and Dividend Income 64 27,065
Miscellaneous income 3,375 (18,516)
Interest Expense (1,250) (6,467)
------------- ------------
Net earnings (loss) before taxes 508,053 487,528
Deferred income taxes 182,899 175,510
Valuation allowance - change at
beginning of year (182,899) (175,510)
------------- ------------
Net earnings (loss) $ 508,053 $ 487,528
Weighted average common shares outstanding 12,083,359 9,128,089
Earnings (loss) per share $ 0.042 $ 0.053
Weighted average common shares
outstanding-assuming dilution 14,086,576 13,785,204
Earnings (loss) per share-assuming dilution $ 0.036 $ 0.035
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
30-Jun-97 30-Jun-96
Net Sales $ 2,010,073 $ 1,359,937
Cost of goods sold 227,412 198,599
----------- -----------
Gross profit 1,782,661 1,161,338
Operating expenses:
Sales and marketing 348,133 236,070
General administrative 677,075 369,199
Amortization of capitalized software costs 40,734 120,797
----------- -----------
Total operating expenses 1,065,942 726,066
----------- -----------
Operating earnings (loss) 716,719 435,272
Other income/(expense)
Interest and Dividend Income 586 27,120
Miscellaneous income 6,412 (34,980)
Interest Expense (2,943) (13,588)
------------ ------------
Net earnings (loss) before taxes 720,774 413,824
Deferred income taxes 259,479 148,977
Valuation allowance - change at
beginning of year (259,479) (148,977)
------------ ------------
Net earnings (loss) $ 720,774 $ 413,824
============ ============
Weighted average common shares outstanding 12,083,359 9,128,089
Earnings (loss) per share $ 0.060 $ 0.045
Weighted average common shares
outstanding-assuming dilution 14,086,576 13,785,204
Earnings (loss) per share-assuming dilution $ 0.051 $ 0.030
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
30-Jun-97 30-Jun-96
Cash flows from operating activities:
Net earnings (loss) $ 720,774 $ 413,824
Adjustments to reconcile net earnings/(loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 77,806 157,459
Gain on debt settlement (27,060)
Reserve for bad debts 5,254 49,534
Changes in assets and liabilities:
Accounts receivable (689,698) (707,283)
Inventories 1,452 2,379
Prepaid expenses and other 18,456 1,593
Accounts payable and accrued liabilities 48,104 124,579
Customer Deposits (75,302) -
------------ -------------
Net cash provided by operation activities 106,846 15,025
Cash flow from investing activities:
Purchase of capitalized software costs (165,598) (123,352)
Purchase of property and equipment (12,778) (12,268)
------------ -------------
Net cash used in investing activities (178,376) (135,620)
Cash flows from financing activities:
Proceeds received from issuance of debt - 42,268
Issuance of common stock for cash - 80,000
------------ -------------
Net cash provided by financing activities - 122,268
Net increase (decrease) in cash (71,530) 1,673
Cash at beginning of the period 193,347 56,882
------------ -------------
Cash at end of the period $ 121,817 $ 58,555
============ =============
Supplemental Cash Flow Disclosures:
Interest paid $ - $ 5,600
The accompanying notes are an integral part of the financial statements.
THE AMERICAN EDUCATION CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1996
Summary of Significant Accounting Policies
- - ------------------------------------------
The summary of significant accounting policies of
The American Education Corporation (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.
1. BASIS OF PRESENTATION
- - ------------------------
The interim financial statements at June 30, 1997, and
for the three and six month periods ended June 30, 1997,
and 1996 are unaudited, but include all adjustments which
the Company considers necessary for a fair presentation.
The December 31, 1996, 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 and 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, 1996. The accompanying unaudited interim
financial statements for the three and six month periods
ending June 30, 1997 is not necessarily indicative of the
results which 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 and 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.
The Company recognizes revenue in accordance with the American
Institute of Certified Public Accountant's Statement of Position
91-1 on software revenue recognition.
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.
Goodwill relates to the acquisition of the Company in 1991 and
prior to 1993 was amortized over a period of 40 years. In 1993
the estimated useful life was revised with the remaining goodwill
amortized over five years.
Inventories are stated at the lower of cost (first-in, first-out),
or market.
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.
In the 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 Company accounts for income taxes in accordance with the
provisions of SFAS No. 109. The Company has a net operating loss
carryforward. A valuation allowance has been assessed for the full
amount of the related deferred tax asset.
Shareholder's Equity
- - --------------------
In 1996 the Company issued 3,599,963 shares as common stock in
exchange for $243,258 cash and $995,755 of debt retirement.
During the first quarter of 1996, the Company adopted a new
non-qualified stock option plan. On March 11, 1996 the company
granted options to employees, officers, and directors, to purchase
1,301,195 shares of common stock at $.50 per share. The options
expire March 11, 1999, or ninety days after termination of employment.
No options have been exercised and 58,000 options have expired due
to termination of employment.
2. 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.
In October 1996, the Company became a party to litigation in
United States District Court for the District of Columbia
entitled Securities and Exchange Commission, Plaintiff v.
The American Education Corporation, Defendant (the "Action").
In the Action, the Company admitted that, in violation of
certain provisions of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), it failed to file, among other
things, certain annual and quarterly reports. The Company
voluntarily entered into a Consent and Undertaking pursuant
to which the Court will issue a Final Judgment of Permanent
Injunction requiring the Company to (i) file all its delinquent
Exchange Act reports and (ii) in the future, timely file all of
its Exchange Act reports. The failure to file any required report
could result in a contempt citation, the assessment of fines
against the Company, or an action by the Securities and Exchange
Commission to deregister the Company's common stock.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- - ------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
This document may contain 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.
The Company has invested significantly in personnel additions,
the development of new products, and the acquisition and licensing
of new products, to improve the ability of the organization and
its published products to meet the needs of the marketplace. These
changes were required to update the Company's product offerings. To
finance the business, management has utilized long-term, subordinated
debt from private investment sources, secured bank revolving credit
lines, and accounts receivable financing sources. Management
anticipates that additional financing will be required to continue
to develop and position the Company for the growth opportunities
that exist in the electronic media for education industry.
At December 31, 1995, the Company had $791,989 of unpaid principal
outstanding on convertible notes, including $33,201 owed to a vendor.
Effective June 30, 1996, the Company exchanged 2,651,274 shares of
common stock for $731,989 of principal and $233,471 of accrued interest
related to these convertible notes. At December 31, 1996 and June 30,
1997, $50,000 of convertible notes, with a conversion price per share
of $.136, remained outstanding.
The Company's working capital was $419,210 at June 30, 1997, an
improvement of $622,689 from a deficit of $203,479 at December 31,
1996. This improvement is associated with higher levels of sales
and subsequent cash flow during the period.
Additional working capital beyond that available within the Company
has been and may be required to expand operations. Management has
and will consider options available in providing such funding,
including debt and/or equity financing to provide necessary expansion
capital. Management may also seek to raise additional equity capital
to provide for the financial resources to acquire other organizations
or intellectual property content that can accelerate the Company's
growth and strategic position.
The Company has been constrained by the lack of adequate capital
and proper financing for the past several years. In 1997, as
sales of the A+dvanced Learning System registered product line have
improved, and the Company has achieved both profitability and
positive cash flows from operations, while management has taken
action to reduce debt and improve the financial strength of the
Company. The Company's financial position has been further improved
through the private sale of restricted common stock and conversion
of convertible debt to common stock by its principal shareholders.
RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1997
AS COMPARED TO THE QUARTER ENDED JUNE 30, 1996
- - ---------------------------------------------------
Net software revenues for the three months ended June 30, 1997,
totaled $1,237,332 compared to net software revenues of $1,044,698
for the same period in 1996. This represents an increase of
approximately 18% in the 1997 quarter. The rate of sales increase
in revenues for the second quarter 1997 over the comparable quarter
1996 was adversely affected by unusually large shipments in the
second quarter of 1996. The 1996 second quarter revenues were
unusually high because of the initial shipments of an existing
backlog of orders for new subject titles that were released in the
second quarter of 1996.
Cost of goods sold for the three months ended June 30, 1997,
decreased by approximately 1.5%, even though sales increased by 18%.
This disproportionately low increase in direct costs reflects the
efficiency in which software products are now produced on CD-ROM.
The use of this medium also positively effects the cost of packaging,
handling and freight associated with products that are marketed
primarily to the school market, as opposed to traditional retail
outlets. Cost of goods sold represents the actual cost to produce
the software products, including certain allocated overhead costs,
a portion of which is fixed. Actual component costs as well as the
direct labor costs associated with the assembly of software products
are now very low. Excluding the costs of allocated overhead, product
costs provide gross profit margins ranging from 75 to 95 percent on
the Company's principal products. As sales volumes increase,
overall gross profit margins are expected to continue to increase,
as total allocable overhead costs remain relatively fixed in relation
to net revenues.
Total operating expenses recorded for the three months ended June
30, 1997, were $591,647, compared to $417,281 for the previous year.
This represents an increase of approximately 42%. Operating expenses
for the quarter were impacted by the development costs associated
with the release of 6 new secondary grade level titles and the
expenses associated with the development costs attributable to the
translation of 8 mathematics titles into Spanish.
Selling and marketing costs increased by approximately 15%, from
$151,351 for the three months ended June 30, 1996 to $174,038 for
the current period. The increase in 1997 is related to expanded
sales, marketing, distributor training and commission costs related
to the higher sales levels.
General and administrative expenses increased by approximately 95%
during 1997, from $203,973 to $396,745. This increase is primarily
related to unusual expenses related to the previously mentioned
product development costs associated with the final development
efforts associated with a total of 6 secondary grade level and 8
Spanish language subject titles. Research and development cost
totaled $107,344 for the quarter.
Net income for the three months ended June 30, 1997, improved by
approximately 4% as compared to the prior year. This improvement
from net income of $487,528 in 1996 to net income of $508,054 in
1997, reflects the higher revenue levels providing coverage of
essential fixed operating costs, as well as the improving gross
margins related to previously described manufacturing efficiencies.
Earnings per share (on a fully diluted basis) was $0.036 for the
quarter ending June 30, 1997 compared to $0.035 for the same period
in 1996. The number of fully diluted shares outstanding
increased from 13,785,204 to 14,086,576 during the same period.
Total stockholder's equity improved substantially as a result of
the accumulation of earnings during the quarter ended June 30, 1997.
Shareholders' equity as a percent of total assets at December 31, 1996
was 15% compared to 50% at June 30, 1997. Other measures of liquidity
and solvency - total debt as a percent of total assets declined from
85% at December 31, 1996 to 50% at the end of the second quarter 1997;
while current ratios have improved from 0.76 to 1.51 over the same
period.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996
- - ------------------------------------------------------
Net software revenues for the six months ended June 30, 1997, totaled
$2,010,073 compared to net software revenues of $1,359,937 for the
comparable 1996 period. This represents an increase of approximately
48% for the 1997 six-month period. This significant increase in the
1997 six month period total company revenues highlights the order
backlog and rate of second quarter growth issues contained in the
preceding quarterly discussion.
Cost of goods sold for the six months ended June 30, 1997, increased
by approximately 15%, even though sales increased by 48%. This
disproportionately low increase in direct costs reflects the
efficiency in which software products are now produced on CD-ROM.
The use of this medium also reduces the cost of packaging, handling,
and freight associated with products that are marketed primarily
to the school market, as opposed to traditional retail outlets.
Cost of goods sold represents the actual cost to produce the
software products, including certain allocated overhead costs, a
portion of which is fixed. Actual component costs as well as the
direct labor costs associated with the assembly of software products
are now very low. Excluding the costs of allocated overhead, product
costs provide gross profit margins ranging from 75 to 95 percent on
the Company's principal products. As sales volumes increase, overall
gross profit margins are expected to continue to increase,as total
allocable overhead costs remain relatively fixed relative to sales.
Total operating expenses recorded for the six months ended June 30,
1997, were $1,065,942, compared to $726,066 for the previous year.
This represents an increase of approximately 47%. Total operating
expenses for the six month period were also impacted by the development
costs associated with the release of 6 new secondary grade level titles
and the expenses associated with the development costs attributable to
the translation of 8 mathematics titles into Spanish.
Selling and marketing costs increased by approximately 47%, from
$236,070 for the six months ended June 30, 1996 to $348,133 for
the comparable 1997 period. The increase in the 1997 six month
period is attributable to expanded sales, marketing, distributor
training and commission costs related to the higher sales levels
and the release of 14 new titles.
General and administrative expenses increased by approximately
83% during the 1997 six-month period from $369,199 to $677,075.
This increase is primarily related to higher expenses associated
with the final development efforts associated with the 6 secondary
grade level and 8 Spanish language subject titles completed during
the period. Research and development cost totaled $236,533 for the
1997 six-month period representing an increase of 92% over the
comparable 1996 period. The Company plans to invest in an
aggressive new title development schedule, which will position the
Company to take advantage of new and existing markets.
Net earnings for the six months ended June 30, 1997, improved by
approximately 74% as compared to the prior 1996 period. This
improvement from net income of $413,824 in 1996 to net income of
$720,774 in 1997, reflects the higher revenue levels providing
coverage of essential fixed operating costs, as well as the
improving gross margins related to previously described
manufacturing efficiencies.
Earnings per share (on a fully diluted basis) were $0.051 for the
six months ending June 30, 1997 compared to $0.030 for the same
period in 1996 which is an increase of 70%. The number of fully
diluted shares outstanding increased from 13,785,204 to 14,086,576
during the same period.
The Company has several marketing partnerships that were entered
into in the fiscal 1996 and 1997 periods. Since mid 1995, the
Company has been a Compaq/Microsoft Educational Partner and a
Microsoft NT Solutions Partner. These two relationships provide
the Company with significant advertising and promotional exposure
in literature and various promotions directed to the school market
place. On June 29, 1996, the Company entered into a marketing
agreement with HomeQuest, Inc. to provide a private brand version
of its A+dvanced Learning System? product family for the home market.
HomeQuest is a direct seller of educational products to the home
with approximately 400 marketing consultants. An agreement was
entered into with Davidson & Associates, (a subsidiary of CUC
International [NYSE]) on August 29, 1996, to provide certain
elements of A+dvanced Learning System software technology and
curriculum content to Davidson. By mutual agreement, the Company
and Davidson agreed to withdraw from their initial agreement to
modify certain of the Company content and technology under a private
label agreement with Davidson. The Company was not willing under the
terms of the initial agreement to undertake modification of its
product to the degree and extent requested by Davidson for the
compensation terms stipulated in the agreement. The Company's
agreement to effect conversion of English to Spanish-language
translation of certain of its current titles with National School
Services (NSS) has been executed. The translation of 8-grade level
1-9 A+dvanced Learning System mathematics subject titles into Spanish
is complete, along with the sale and installation of these products in
a number of schools.
Company management believes that significant, future opportunities
exist in both the school and home markets. The Company is now
equipped with Macintosh, DOS and Windows program shells that
facilitate the rapid and less expensive development of new subject
titles. Management also believes that the Company is better
positioned to compete in the educational software market as a
result of its software development tools and capabilities, growing
marketing strengths and its position within the school and home
market places. In addition, the Company is investigating sources
for intellectual property and potential partnerships with other
publishers on which it may base future publications and Internet
commercial activities. Management believes that the Company can
make significant progress within its existing product development
and marketing budgets to position the Company to maintain the
continued, profitable expansion of the business.
THE AMERICAN EDUCATION CORPORATION
PART II - OTHER INFORMATION
- - ---------------------------
Item 1. Legal Proceedings
In October 1996, the Company became a party to litigation in
United States District Court for the District of Columbia entitled
Securities and Exchange Commission, Plaintiff v. The American
Education Corporation, Defendant (the "Action"). In the Action,
the Company admitted that, in violation of certain provisions of
the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), it failed to file, among other things, certain annual and
quarterly reports. The Company voluntarily entered into a Consent
and Undertaking pursuant to which the Court will issue a Final
Judgment of Permanent Injunction requiring the Company to (i)
file all its delinquent Exchange Act reports and (ii) in the
future, timely file all of its Exchange Act reports. The failure
to file any required report could result in a contempt citation,
the assessment of fines against the Company, or an action by the
Securities and Exchange Commission to deregister the Company's
common stock. As of June 30, 1997 the Company was current with
all filings with the SEC through the end of the fiscal year
December 31, 1996 and the quarter ending March 30, 1997.
The Company filed a complaint on July 8, 1997 in The United
States District Court for the Western District of Oklahoma against
Jostens Learning Corporation ("Jostens"). The complaint alleges,
among other things, that Jostens has improperly adopted and used
the mark "A+dvantage" in connection with its educational computer
programs. The complaint alleges, among other things, that Jostens'
confusingly similar mark has caused damage to the Company. The
complaint requests, among other things, monetary damages and
injunctive relief. Jostens has continued the unauthorized use of
this mark.
Item 2. Changes in Securities
- - -----------------------------
Omitted from this report as inapplicable.
Item 3. Default Upon Senior Securities
- - ---------------------------------------
Omitted from this report as inapplicable.
Item 4. Submission of Matters to Vote of Securities Holders
- - ------------------------------------------------------------
No matters were submitted to a vote of security holders during the period.
Item 5. Other Information
- - --------------------------
Omitted from this report as inapplicable.
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
A. Exhibits
Omitted from this report as inapplicable.
B. Reports on Form 8-K
In November 1996, the Company filed Form 8-K describing the
pertinent factors associated with a change in the Company's
independent auditing firm.
SIGNATURES
Pursuant to the requirements of Section 13, or 15(d) 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
July 30, 1997
By: /s/Jeffrey E. Butler
--------------------
Chief Executive Officer
Chairman of the Board
Treasurer