AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST12, 2003

(MARK ONE)

96 CUMMINGS POINT ROAD, STAMFORD, CONNECTICUT

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

06902

(ZIP CODE)

(203) 358-8000

(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether 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 [ ]

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes [] No [X]

As of August 1, 2003, 17,031,687 shares of Common Stock, 1,046,716 shares of Series I Preferred Stock and 10,984,971 shares of Series J Preferred Stock were outstanding.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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The accompanying notes are an integral part of these condensed consolidated financial statements.

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(Unaudited)

The Company's business activities are organized into two business segments, educational and commercial. The educational segment relates to instructional teaching aids and materials, which are distributed to educational institutions principally in North America, for kindergarten through grade 12 classes, and for nursing school and emergency medical instructors. Products in the educational segment are marketed primarily through catalogs. The growth potential of the educational segment is directly related to school enrollments and the strength of government funding of education. The commercial segment relates to agricultural products, sterile sampling containers and systems, materials for nursing home activities and novelty and gift products. Products in the commercial segment are marketed through catalogs nationwide, and through a worldwide dealer network covering more than 60 countries. Market growth in the commercial segment is principally impacted by the general economic conditions of world agriculture, the increasing size of the aged population, as well as increasing global awareness of food and water quality standards. The Company evaluates the performance of these segments based on segment net sales and gross profit.

The following table presents segment profitability information for the three and six months ended June 30 (in thousands):

Other costs of sales primarily include freight costs incurred in the procurement of inventories and shipment of customer orders not allocable to a particular segment.

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(Unaudited)

The following table presents segment identifiable asset information as of June 30, 2003 and December 31, 2002 (in thousands):

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This discussion and analysis of financial condition and results of operations reviews the results of operations of the Company (after giving effect to the Merger), on a consolidated basis, for the three and six months ended June 30, 2003 as compared to the three and six months ended June 30, 2002. This discussion and analysis of financial condition and results of operations have been derived from, and should be read in conjunction with, the unaudited Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements contained herein.

The following table sets forth selected financial data as a percentage of net sales for the three and six months ended June 30:

Net sales for the three months ended June 30, 2003 decreased slightly to $43.0 million from $43.3 million for the comparable period in 2002. Net sales for the second quarter of 2003 are positively impacted by the inclusion of net sales from Simulaids, which was acquired in the Merger on June 17, 2002. Simulaids contributed $2.1 million in net sales in the second quarter of 2003, compared to $0.2 million in the second quarter of 2002. Excluding the net sales from Simulaids, net sales decreased 5.1% from the second quarter of 2002. Net sales in the educational segment, totaling $36.7 million, increased 2.1% in the second quarter of 2003 from $36.0 million in the second quarter of 2002. Excluding the net sales from Simulaids, educational net sales decreased 5.0% from the second quarter of 2002. The commercial segment recorded net sales of $7.4 million in the second quarter of 2003 as compared to $7.9 million in the second quarter of 2002, decreasing 6.1% versus the prior year. The lack of growth in the educational segment reflects the continuing influence of state budget deficits while the decrease in commercial net sales reflects the general instability of general national and international economic conditions.

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Gross profit for the three months ended June 30, 2003 increased 5.8% to $16.2 million from $15.3 million for the comparable period in 2002 despite the slight decrease in net sales. Gross profit margin increased to 37.8% in the second quarter of 2003 from 35.4% in the second quarter of 2002. The increase in gross profit margin is primarily due to improved purchasing efforts which have reduced merchandise costs and the inclusion of Simulaids in operations for the second quarter of 2003. Excluding the gross profit realized from Simulaids, the gross profit margin would be 36.6% in the second quarter of 2003, compared to the second quarter of 2002 gross profit margin of 35.6%. The educational segment yielded a gross profit margin of 39.9% in the second quarter of 2003, improving on the second quarter of 2002 gross profit margin of 38.8%. Excluding the incremental Simulaids gross profit, the educational segment gross profit margin was 39.3% in the second quarter of 2003 compared to 38.7% in the second quarter of 2002. The commercial gross profit margin decreased to 36.7% in the second quarter of 2003 from 37.3% in the second quarter of 2002.

Selling and administrative expenses include advertising and catalog costs, warehouse and shipping activities, customer service and general administrative functions. Selling and administrative expenses for the three months ended June 30, 2003 increased 2.8% to $10.3 million from $10.1 million in the comparable period in 2002. As a percent of net sales, selling and administrative expenses increased to 24.0% in the second quarter of 2003 from 23.2% in the second quarter of 2002. The increase in selling and administrative expenses is primarily due to the following: (i) inclusion of $0.4 million in expenses of Simulaids in operations for the second quarter of 2003; (ii) a 33.9% increase in group health care costs to $0.8 million in the second quarter of 2003; and (iii) inclusion of non-cash stock compensation expense of $0.2 million in the second quarter of 2003. These increases are partially offset by labor efficiencies and elimination of management fees in the second quarter of 2003. Excluding Simulaids, selling and administrative expenses in the second quarter of 2003 were comparable to the second quarter of 2002.

In 2002, the Company adopted a change in accounting principle to recognize the fair value of stock options granted on or after January 1, 2002 as an expense on its Condensed Consolidated Statement of Earnings over the service period. In the second quarter of 2003, the Company recorded $0.2 million in compensation expense related to grants of stock options to certain employees and directors compared to less than $0.1 million in the second quarter of 2002.

Prior to the Merger, the Company paid a management fee to Holdings pursuant to a management agreement (the "Management Agreement"). Under the terms of the Management Agreement, Holdings provided to the Company specified legal, tax and other corporate services. In the second quarter of 2002, the management fee accrued and payable to Holdings was $0.5 million. The Management Agreement was terminated upon consummation of the Merger.

Interest expense decreased 27.0% to $.4 million for the three months ended June 30, 2003, compared to $.5 million for the comparable period in 2002. The decrease in interest expense is due to the decline in the average interest rate on the Company's debt to 3.6% in the second quarter of 2003 from 4.5% in the second quarter of 2002 and scheduled reductions in the Company's credit facility. At March 31, 2003, the Company's credit agreements assessed interest at an annual average rate of 3.4%. The applicable interest rate increased slightly during the second quarter of 2003, to 3.8% by June 30, 2003. The increase in the applicable interest rate is due to the assumption of a mortgage bearing interest at 5.8% per annum and certain notes payable and capital lease entered into by the Company during the three months ended June 30, 2003, which carry an average interest rate of 5.4% at June 30, 2003.

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An extraordinary gain of $20.2 million was recognized during the three months ended June 30, 2002, which represented the negative goodwill arising principally from the deferred tax benefits recognized at the date of the Merger.

Net sales for the six months ended June 30, 2003 increased to $78.4 million from $77.8 million for the comparable period in 2002. Net sales for the first six months of 2003 are positively impacted by the inclusion of net sales from Simulaids. Simulaids contributed $4.0 million in net sales in the first six months of 2003, compared to $0.2 million in the first six months of 2002. Excluding the net sales from Simulaids, net sales decreased 4.1% from the first six months of 2002. Net sales in the educational segment, totaling $65.7 million, increased 3.9% in the first six months of 2003 from $63.2 million in the first six months of 2002. Excluding the net sales from Simulaids, educational net sales decreased 4.5% from the first six months of 2002. The commercial segment recorded net sales of $15.1 million in the first six months of 2003 versus $15.4 million for the comparable period in 2002. The lack of growth in the educational segment reflects the continuing influence of state budget deficits while the decrease in commercial net sales reflects the general instability of general national and international economic conditions.

Gross profit for the six months ended June 30, 2003 increased 6.8% to $29.5 million from $27.6 million for the comparable period in 2002, exceeding the net sales growth rate for this period. The gross profit margin increased to 37.6% in the first six months of 2003 from 35.4% in the first six months of 2002. The increase in the gross profit margin is primarily due to the improved purchasing efforts to reduce merchandise costs and the inclusion of Simulaids in operations for the first six months of 2003. Excluding the gross profit realized from Simulaids, the gross profit margin would be 36.2% in the first six months of 2003, compared to the first six months of 2002 gross profit margin of 35.5%. The educational segment yielded a gross profit margin of 40.1% in the first six months of 2003, improving on the first six months of 2002 gross profit margin of 39.1%. Excluding the incremental Simulaids gross profit, educational gross profit margin was 39.4% in the first six months of 2003 compared to 39.0% in the first six months of 2002. The commercial gross profit margin of 36.6% for the first six months of 2003 remained consistent with the comparable period in 2002.

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Selling and administrative expenses for the six months ended June 30, 2003 increased 3.1% to $20.1 million from $19.5 million in the comparable period in 2002. As a percent of net sales, selling and administrative expenses increased to 25.7% in the first six months of 2003 from 25.1% in the first six months of 2002. The increase in selling and administrative expenses is primarily due to the following: (i) inclusion of $0.8 million in expenses of Simulaids in operations for the first six months of 2003; (ii) a 54.1% increase in group health care costs to $1.6 million in the first six months of 2003; and (iii) an increase of $0.2 million in non-cash stock compensation expense related to grants of stock options to certain employees and directors in the first six months of 2003. These increases are partially offset by labor efficiencies and elimination of management fees in the first six months of 2003. Excluding Simulaids, selling and administrative expenses in the first six months of 2003 were comparable to the first six months of 2002.

In the first six months of 2002, the management fee accrued and payable to Holdings under the Management Agreement was $0.9 million. The Management Agreement was terminated upon consummation of the Merger.

Interest expense decreased 29.7% to $.7 million for the six months ended June 30, 2003, compared to $1.0 million for the comparable period in 2002. The decrease in interest expense is due to the decline in the average interest rate on the Company's debt to 3.5% in the first six months of 2003 from 4.3% in the first six months of 2002 and scheduled reductions in the Company's credit facility. At December 31, 2002, the Company's credit agreements assessed interest at an annual average rate of 3.3%. The applicable interest rate increased slightly during the first six months of 2003, to 3.8% by June 30, 2003. The increase in the applicable interest rate is due to the following:

• Mortgages entered into and assumed by the Company on March 12, 2003 and May 31, 2003, respectively, which carry an average interest rate of 6.1% at June 30, 2003.

An extraordinary gain of $20.2 million was recognized during the six months ended June 30, 2002, which represented the negative goodwill arising principally from the deferred tax benefits recognized at the date of the Merger.

Cash and cash equivalents decreased $2.4 million in the first six months of 2003, ending the period at $8.9 million. This decrease in cash and cash equivalents is primarily due to the following activities:

• During the first six months of 2003, cash generated from operations was principally the result of net earnings plus deferred income taxes of $2.4 million, depreciation of $0.9 million and stock option compensation of $0.3 million less changes in current assets and liabilities of $4.6 million. For the first six months of 2002, cash generated from operations was principally the result of net earnings plus deferred income taxes of $0.3 million and depreciation of $0.8 million less changes in current assets and liabilities of $2.9 million. These changes in current assets and liabilities are typical for the first six months of the fiscal year as the Company is preparing for its peak business cycle, which occurs during the second and third quarters of the fiscal year, primarily due to increased educational shipments coinciding with the Fall start of the new school year. Inventory levels increase in March through June in anticipation of the peak shipping season. The majority of shipments are made between June and August and the majority of cash receipts are collected from August through October.

• Financing activities used less than $0.1 million in the first six months of 2003 versus $0.4 million for the comparable period in 2002. For the first six months of 2003, the debt proceeds of $4.4 million were primarily related to a certain mortgage and note payable entered into by the Company, which carry an average interest rate of 5.7% at June 30, 2003. The Company paid cash dividends of $4.3 million on its Series I and Series J Preferred Stock in the first six months of 2003 compared to none in the first six months of 2002. Of the cash dividends paid, $2.1 million and $2.2 million were accreted in the fourth quarter of 2002 and first quarter of 2003, respectively.

The Company's current credit facility, with an outstanding balance of $36.0 million at June 30, 2003, is supported by variable rate promissory notes due in scheduled reductions of $4.5 million on each September 30 and December 31, with a final installment of $9.0 million due in March 2006. The Company's credit facility is collateralized by certain property, plant and equipment, certain accounts receivable, shares of certain of the Company's subsidiaries' capital stock outstanding and ownership interests of certain of the Company's limited liability subsidiaries. This debt carries a variable rate of interest that is based on LIBOR rates and is adjusted from time to time within a one to six month term based on LIBOR rates in effect at the dates of rate adjustment. At June 30, 2003, the weighted average interest rate on this debt was 3.2%. The credit facility currently has a committed LIBOR rate of interest (including applicable margins) of approximately 3.0% which is effective until August 29, 2003.

The Company maintains a $2.5 million secured bank line of credit for working capital purposes, of which no amount was outstanding at June 30, 2003. No draws were made against the facility during the first six months of 2003 and 2002. The line of credit, which expires on June 14, 2004, is also collateralized by certain property, plant and equipment, certain accounts receivable, shares of certain of the Company's subsidiaries' capital stock outstanding and ownership interests of certain of the Company's limited liability subsidiaries.

Capital resources in the future are expected to be used for the development of catalogs and product lines, and to acquire additional businesses. The Company anticipates that there will be sufficient financial resources to meet projected working capital and other cash requirements for at least the next twelve months.

The Company believes the following accounting policies affect the more significant judgments and estimates used in the preparation of the Condensed Consolidated Financial Statements:

Revenues - Customarily applying FOB-shipping point terms, the Company recognizes revenue upon shipment of products to its customer, which corresponds to the time when risk of ownership transfers. The point of shipment is typically from one of the distribution centers or, on occasion, a vendor's location as a drop shipment. All drop shipment sales are recorded at gross selling price. An allowance is provided for estimated future returns.

Prepaid Catalog Costs and Amortization - The Company accumulates all direct costs, less vendor rebates, incurred in the development, production and circulation of catalogs on the Condensed Consolidated Balance Sheet until the related catalog is mailed, at which time they are amortized into Selling and Administrative Expense over the estimated sales realization cycle of one year, using the straight-line method.

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Goodwill - The Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), effective January 1, 2002. Under SFAS 142, goodwill is no longer subject to amortization over its estimated useful life. Instead, SFAS 142 requires that goodwill be evaluated for impairment at least annually or more frequently if events or circumstances indicate that the assets may be impaired, by applying a fair value based test and, if impairment occurs, the amount of impaired goodwill must be written off immediately. The Company evaluates goodwill for impairment based on the expected future cash flows or earnings projections. Goodwill is deemed impaired if the discounted cash flows or earnings projections generated do not substantiate the carrying value. The estimation of such amounts requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and selection of an appropriate discount rate, as applicable. The use of different assumptions would increase or decrease discounted future operating cash flows or earnings projections and could, therefore, change impairment determination. The Company has evaluated its goodwill at December 31, 2002, and determined that there has been no impairment of goodwill.

Taxes - At June 30, 2003, the balance sheet contains a net deferred tax asset of approximately $26.6 million, net of a valuation allowance of approximately $12.3 million, related primarily to Federal net operating tax loss carryforwards. The realizability of this asset is dependent upon the Company's generation of approximately $76.0 million in future taxable income and the ability to retain its Federal net operating tax loss carryforward position. However, events may limit the use of all or a portion of these Federal net operating tax loss carryforwards, thus potentially resulting in a higher tax liability for the Company in the future. The net deferred tax asset at June 30, 2003 is subject to future adjustment based upon changes in management's evaluation of the realizability of the deferred tax asset.

As described below, credit risk and interest rate risk are the primary sources of market risk in the Company's accounts receivable and long-term borrowings, respectively.

The Company's long-term borrowings as of June 30, 2003 are as follows (in millions, except percentage data):

The fair market value of long-term borrowings equals the face amount of long-term borrowings outstanding because the underlying rate of interest is variable based upon LIBOR rates that reflect current market rates of interest.

Interest Rate Risk: Changes in interest rates can potentially impact the Company's profitability and its ability to realize assets and satisfy liabilities. Interest rate risk is resident primarily in long-term borrowings, which have variable interest rates based on LIBOR rates. Assuming no other change in financial structure, an increase of 1% in the variable interest rate for long-term borrowings would decrease pre-tax earnings by approximately $0.4 million. This amount is determined by considering a 1% increase in interest on the average variable rate long-term borrowings estimated to be outstanding in 2003.

Credit Risk: The Company provides credit in the normal course of business to its customers in both the educational and commercial segments. No single customer accounted for more than 10% of sales in the three and six months ended June 30, 2003 and 2002. The Company performs ongoing credit evaluations of its customers, maintains allowances for potential credit losses and generally does not require collateral to support the accounts receivable balances.

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The Company's management, including its President and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Rules 13a-14 and 15d-14 of the Exchange Act. Based on that evaluation, each of the President and the Chief Financial Officer has concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date that each of the President and the Chief Financial Officer completed his respective evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

To the extent that any of the statements contained in this Form 10-Q are forward-looking, such statements are based on current expectations that involve a number of uncertainties and risks. The Company cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: (i) the ability of the Company to obtain financing and additional capital to fund its business strategy on acceptable terms, if at all; (ii) the ability of the Company on a timely basis to find, prudently negotiate and consummate additional acquisitions; (iii) the ability of the Company to manage any to-be acquired companies; (iv) the ability of the Company to retain and utilize its Federal net operating tax loss carryforward position; and (v) general economic conditions. As a result, the Company's future development efforts involve a high degree of risk. For further information, please see the Company's filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K.

Reference is also made to the risk factors set forth in the Company's final prospectus dated May 15, 2002 which was filed in connection with the Merger with Nasco International, Inc.

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1. On June 20, 2003, the Company held its annual meeting of stockholders.
2. At the annual meeting of stockholders, John J. Crawford, John L. Lahey, Steven B. Lapin, Donald T. Netter, Edward Netter, Sharon M. Oster, James G. Tatum and Roy T.K. Thung were elected as directors. Following the annual meeting of stockholders, the Board of Directors of the Company was comprised of John J. Crawford, John L. Lahey, Steven B. Lapin, Donald T. Netter, Edward Netter, Sharon M. Oster, James G. Tatum and Roy T.K. Thung.
3. The following matters were voted upon at the annual meeting of stockholders of the Company held on June 20, 2003:

See Page 20 for the Exhibit index.

The Company has filed the following reports on Form 8-K during the quarter ended June 30, 2003:

1. On May 2, 2003, the Company filed a Current Report on Form 8-K under Item 5 and Item 7, announcing its financial results for the three months ended March 31, 2003.

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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.