UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.


                                   FORM 10-KSB


                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

                       THE SECURITIES EXCHANGE ACT OF 1934


                     FOR THE FISCAL YEAR ENDED JULY 31, 1999

                            THE MILLBROOK PRESS INC.
           (Name of Small Business Issuer as Specified in its Charter)

           Delaware                                         06-1390025
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                             2 Old New Milford Road
                              Brookfield, CT 06804
                    (Address of principal executive offices)
                                 (203) 740-2220
                (Issuer's telephone number, including area code)

Securities Registered pursuant to Section 12 (b) of the Exchange Act:
                                                                   Common Stock

Securities Registered pursuant to Section 12 (g) of the Exchange Act:
                                                                   None

         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  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.Yes /X/ No / /

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained,  to the best of Registrant's
knowledge,  in  definitive  proxy  of  information  statements  incorporated  by
reference in Part III of this form 10-KSB or any  amendment to this Form 10-KSB.
(X)

Revenues for the Fiscal year ended July 31, 1999 were $18.7 million.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant,  based upon  price of the Common  Stock on  October  26,  1999,  was
approximately  $3,780,000.  As of July 31, 1999, the Registrant had  outstanding
3,455,000 shares of Common Stock.

<PAGE>
                            THE MILLBROOK PRESS, INC.
                            FORM 10-KSB ANNUAL REPORT

                                Table of Contents



                                     PART I

                                                                            Page
Item 1.  Description of Business..............................................4



Item 2.  Description of Properties...........................................13

Item 3.  Legal Proceedings...................................................13

Item 4.  Submission of Matters to a Vote of Security Holders.................13

                                     PART II

Item 5.  Market for Common Equity and Related Stockholders Matters...........14

Item 6.  Management's Discussion and Analysis or Plan of Operations..........15

Item 7.  Financial Statements................................................19

Item 8.  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosures.............................33

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act...................33

Item 10. Executive Compensation..............................................33

Item 11. Security Ownership of Certain Beneficial Owners and
         Management..........................................................34

Item 12. Certain Relationships and Related Transactions......................34

Item 13. Exhibits, List and Reports on Form 8-K .............................35


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<PAGE>
Part I

Item 1.  Description of Business

Overview

The  Millbrook  Press Inc.  (the  "Company" or  "Millbrook"),  is a publisher of
children's nonfiction books, in both hardcover and paperback, for the school and
library market and the consumer market. The Company has published more than 1100
hardcover  and 500  paperback  books  under its  Millbrook,  Copper  Beech,  and
Twenty-First Century imprints.  The Company's books have been placed on numerous
recommended   lists   by   libraries,   retail   bookstores,   and   educational
organizations.  Books  published  under the Millbrook  imprint have evolved from
information-intensive  school and  library  books to include  its current mix of
highly graphic,  consumer-oriented  books.  Therefore,  many of its books can be
distributed  to the school and public  library  market as hardcover  books while
being  simultaneously  distributed to the consumer market as either hardcover or
paperback  books.  The majority of Copper Beech books are  published to both the
consumer and library  markets.  Twenty-First  Century Books titles are published
primarily for the library market at a secondary school level.

The consumer market in children's books consists of books purchased by consumers
through the traditional  trade bookstores such as Barnes & Noble and Waldenbooks
and educational  chain stores such as Zainy Brainy and  Learningsmith,  Inc., as
well  as  the  non-traditional  distribution  channels  such  as  direct  sales,
catalogs,  direct mail, book clubs, book fairs, non-book retail stores, and on a
smaller scale, certain museums,  national parks,  historical sites, theme parks,
gift shops and toy stores.

In order to continue as a publisher of children's books for the consumer market,
the  Company  intends to: (i)  continue  publishing  preschool/early  elementary
novelty books, books for beginning readers and early readers,  chapter books for
young readers and children's  popular-reference books; (ii) acquire companies or
develop  strategic  partnerships  that  broaden its product  line and extend its
distribution   in  consumer   market   channels;   (iii)  expand  its  marketing
capabilities  in the  consumer  market;  and  (iv)  develop  books  that  can be
exploited  through  specialized  distribution  channels such as book clubs, book
fairs, direct sales, catalogs,  direct mail, commercial on-line services and the
Internet.  The Company believes that the high quality of its books, its emphasis
on publishing books for multiple markets and its distribution capabilities makes
it well  positioned  to maintain its book sales to the consumer  market while at
the same time  increasing its  established  sales base in the school and library
market.

INDUSTRY BACKGROUND

SCHOOL AND LIBRARY MARKET

The school and public  library  market is undergoing  significant  change due to
long-term social and economic forces.  The United States Department of Education
predicts that the student  population  from  kindergarten  through twelfth grade
will  increase 8% from 1997 to 2006,  with an overall net

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<PAGE>
gain of  approximately  3.8 million  students.  Because  many  school  districts
allocate  instructional  material  funds  on a "per  head"  basis,  the  Company
believes that money allocated to schools for book  acquisitions  should increase
as the student population increases.  In addition to demographic changes, demand
for books has also increased as a result of the school and public library market
becoming aware of, and responsive  to,  supporting the innovative  instructional
programs being  developed and used in the classroom.  New teaching  philosophies
such as the "reading initiative," and  "cross-curriculum  teaching" developed in
the 1980s and 1990s have  increased  the demand for  different and better books.
Librarians  are  working  with  classroom  teachers  to select  books  that meet
classroom criteria of being multicultural,  visually  stimulating,  interesting,
curriculum-related and suitable for a range of reading ability.

CONSUMER MARKET

Demand for children's  books should also increase in the consumer  market due to
the  projected  increase  in the  number of  school-age  children.  The  Company
believes  that,  in  addition  to the  larger  school-age  population  the  most
important factors that will sustain larger sales of children's books include the
increased  availability of quality books,  particularly paperback books, and the
convenience of being able to purchase inexpensive  paperback books as opposed to
traveling  to  libraries.  In addition,  the Company  believes the growth in the
number of affluent,  better-educated  parents and the  increased  emphasis  they
place on education as a whole has also contributed to this trend.

Demand for children's  books in the consumer  market has also increased  because
the methods by which hardcover and paperback books are distributed  have changed
significantly in the past five years, leading to greater accessibility and shelf
space  for  books.  Traditionally,  books  were  primarily  sold at small  local
bookstores with limited selections. Many such bookstores were replaced by larger
mall bookstores which in turn were replaced by book superstores  (such as Barnes
& Noble).  Concurrently,  alternate  means of distribution  have developed.  For
example,  books are now sold by certain  retailers such as TJ Maxx,  educational
chain stores such as Learningsmith and Zany Brainy,  outlets and warehouse clubs
such as Sam's  Warehouse,  Costco,  and B.J.'s and on a smaller  scale,  certain
museums,  national  parks,  historical  sites,  theme parks,  gift shops and toy
stores.  Books are also more  accessible  to children  and  parents  through the
expansion of direct sales channels such as book fairs,  school and consumer book
clubs,  display sales and catalogs.  Book fairs are generally  week-long  events
conducted  on  school  premises  and  sponsored  by  school   librarians  and/or
parent-teacher  organizations  and are intended to provide students with quality
books at  reasonable  prices in order to help them  become  more  interested  in
reading.  The Company has identified more than 600 catalogs that sell children's
books.


CROSSOVER OF SALES

Demand for children's books has also increased because a book can now be sold to
both the school and  public  library  and the  consumer  market.  Traditionally,
hardcover library books addressed topics typical for school reports and research
and were created with the purpose of maximizing  information content rather than
appealing  to  consumers.  Because  books sold in the school and public  library
market  in the past  were  sold to  librarians/teachers  based on  content,  the
product was often informationally rich, but somewhat aesthetically  unappealing.
Conversely,  a



                                       5
<PAGE>

paperback  book sold in the consumer  market was not designed as an  information
source,  but rather to attract a  consumer's  attention  and thereby sell itself
from the shelf.  Accordingly  these books failed to address  certain  topics and
lacked the  informational  content of library books.  The Company's  books,  and
books for the children's  book market in general,  are now designed to appeal to
both  markets.  A book filled with  information  is combined  with an attractive
title,  cover and internal design to catch the eye of the consumer  browsing the
shelf.  The same book can then be bound as a  hardcover  book and sold to school
and public libraries.  Additionally,  as either a hardcover or a paperback,  the
book  appeals  to  teachers  and  can be  used as  supplemental  reading  in the
classroom.



COMPANY STRATEGY

The Company's goal is to be a "one-stop  publisher,"  publishing and marketing a
diverse product line servicing most of the major segments of the children's book
market.  The  Company's  strategy is to continue to  diversify  its products and
distribution  channels for those products by  capitalizing  on the long-term and
short-term changes occurring in the children's book publishing  industry in both
the school and public library market and in the consumer market.

The Company believes that this diversified  approach to its product line enables
it to achieve market  penetration in the children's book market and minimize the
risk of  fluctuations  or weakness in any one  particular  segment.  The Company
believes that its experience in publishing  children's  books and its reputation
for quality  gained over the past nine years,  combined  with the  evolution and
anticipated  growth rates for children's  books in the school and public library
and consumer markets,  creates an opportunity for the Company to expand the list
of books in which it maintains a significant ownership interest and increase the
recognition of its brand names. The Company believes that the elements  required
to achieve this goal are (i) publishing books of the highest quality, created in
house, through packaging  arrangements or licensed,  with the ability to satisfy
two or more of the markets  which it now  services,  (ii)  expanding its product
offerings to take advantage of its investments in distribution  and its exposure
to the consumer market and (iii) enhancing its existing marketing  operations to
support its  product-line  expansion  initiatives.  The Company  also intends to
explore  opportunities  in  electronic  media by  selectively  participating  in
publishing and marketing opportunities in commercial on-line services and on the
Internet. Key elements of the Company's strategy are:

o        CROSSOVER OF SALES. The Company believes that significant opportunities
         exist to market products typically  developed for one market into other
         markets.  To initiate its strategy of selling  books that can crossover
         into two or more markets,  in 1995 the Company began  reformatting many
         of its  previously  published  ("backlist")  school and public  library
         books under its Millbrook imprint into paperback books, selling them in
         the consumer market.  In addition,  the Company's  paperback books have
         also been sold as supplemental materials for the classroom.  Similarly,
         the Company's  books under the Copper Beech imprint are also  published
         in hardcover  format to sell to the school and public  library  market.
         The Company will seek to continue to produce  books in the future under
         both the Millbrook and Copper Beech imprints that will appeal to two or
         more markets in order to fully exploit a book's sales potential.

                                       6
<PAGE>

o        TARGET  NEW MARKET  NICHES/ACQUISITION  OPPORTUNITIES.  The  Company is
         continually  seeking  new market  niches that offer  opportunities  for
         achieving  significant sales growth. The Company has published and will
         continue to expand its list of books for the beginning  reader (four to
         six years old) and early  reader  (five to eight  years old) as well as
         chapter books for ages seven through  eleven.  The Company will publish
         popular  reference  materials  for young  readers  from  seven  through
         fifteen.  In addition,  the Company will seek to expand its penetration
         of the  supplemental  classroom market where its books may also be used
         as instructional  material.  Where possible, the Company will re-format
         existing  books  for  distribution  into new  markets,  leveraging  its
         investments in product  development  over a broader base, and join with
         other companies to achieve critical sales volume.

         The Company has entered into a joint venture with the Magic Attic Press
         to  publish  their  doll-related  fiction  titles,  which  the  Company
         believes  should  provide  growth  in both  the  library  and  consumer
         markets.

         The  Company may also seek  acquisition  opportunities  covering  niche
         markets in which the  Company  does not  currently  compete and product
         extensions in its existing markets.  The Company's product  development
         strategy may include joint ventures with strategic partners to minimize
         up-front  development  costs.  Currently,  however,  the Company has no
         commitments  or  agreements  or  understandings  with  respect  to  any
         acquisitions or joint ventures.

o        ENHANCE  MARKETING AND SALES FORCE.  Since  inception,  the Company has
         increased its  penetration  into the school and public library  market.
         The management of the school and library marketing department and sales
         force has been significantly  strengthened in fiscal 1999, which allows
         for growth in future years.

o        EXPAND  DISTRIBUTION.  The Company believes that  decision-making  with
         respect  to  purchasing  books  is  becoming  more  complex  due to the
         expansion in types of outlets  selling books and that expanding the use
         of marketing  techniques to put the Millbrook imprint in direct contact
         with children,  parents and teachers will increase  sales.  The Company
         intends to  increase  its  participation  in book  fairs,  book  clubs,
         catalogs and to distribute its books to  alternative  retail outlets as
         well as increase  its direct  selling and direct mail  activities.  The
         Company may also seek to enter into additional  strategic  partnerships
         to extend  its  distribution  in both the  consumer  and in school  and
         public library market channels.

o        ADAPT TO NEW TECHNOLOGIES.  The Company has begun digitally storing the
         text and  graphics  of its  books so as to be well  positioned  to take
         advantage of opportunities in the electronic media industry,  including
         commercial  on-line  services  and  the  Internet,  if  and  when  such
         opportunities become available.

o        CONTINUE TO DEVELOP HIGH QUALITY BOOKS.  The Company intends to develop
         additional books through internal development in collaboration with its
         network of authors and artists. The Company is now selectively entering
         into agreements with certain  high-profile  authors and illustrators to
         increase the recognition of its brand names.


                                       7

<PAGE>

PRODUCTS

The Company  publishes  children's books in hardcover and paperback  formats for
the school and public library market and the consumer  market.  When the Company
began  publishing  books in 1991, the books created were mainly series books and
were intended to be sold singularly and in sets to the school and public library
market.  Since then,  the Company's  products have evolved into a diverse set of
highly-graphic,  consumer-oriented single books. The Company's Millbrook imprint
primarily targets the school and public library,  while its Copper Beech imprint
primarily  targets  the  consumer  market.  Nevertheless,  the  Company  designs
virtually all of its books to appeal to teachers and  librarians,  as well as to
children and parents.  This approach allows the Company's books to be introduced
simultaneously in more than one market, with the intent of increasing sales. For
example,  in fiscal 1999,  the Company  published 104 hardcover  books under the
Millbrook  imprint for the school and public library  market,  of which 46 books
were suitable for and published simultaneously as hardcovers or paperbacks to be
sold in the  consumer  market,  and 53  hardcover  books under the Copper  Beech
imprint for the school and library  market,  of which 28 books were suitable for
and published  simultaneously  as hardcovers  or  paperbacks,  to be sold in the
consumer market.

PRODUCT DEVELOPMENT

The Company develops books through internal and external resources.  The Company
may also acquire books through co-publishing arrangements and/or the acquisition
of other licenses.

INTERNAL DEVELOPMENT

Nearly 75% of the books  published  under the Millbrook  imprint are produced by
the Company's  editorial  staff.  A book concept can originate  from a number of
sources such as (i) analysis of the Company's  sales  statistics for an existing
book to help assess how a similar book  targeting a similar age group will fair,
(ii) analysis of school age  demographics  and other social and economic factors
from  current  philosophical  trends  in  education  (i.e.  the  whole  language
movement) to the globalization of education,  (iii) review of competitors' books
to  determine  if and how the Company  can publish a superior  book on a similar
topic,  (iv) reading  children's  magazines  to determine  what young people are
interested in and (v) maintaining  personal contact with  librarians,  teachers,
and  booksellers.  Once  conceived,  a book  proposal  is  circulated  to sales,
production, marketing, design and financial departments of the Company for their
input  and  depending  on  their  input,  the  proposal  will go  forward  or be
terminated.  A favorable  decision  causes the editorial  department to contract
with an  appropriate  author  and/or artist from its pool of  approximately  350
authors and artists.  The Company believes it has excellent  relationships  with
its authors and artists, including many well-known names in the field.

Authors and artists  are  typically  engaged on a royalty  basis.  Royalties  on
hardcover and paperback  editions are paid on the net sales and range from 6% TO
10% OF net sales with an average of 7% of net sales for  hardcover and paperback
books.  The Company  believes its average  royalty rates are slightly lower than
overall industry standards.  Virtually all of Millbrook's


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<PAGE>

contracts call for an advance payment against future  royalties.  Advances range
from  $1,000 for a simple  series  book to as much as  $19,000  to a  well-known
artist for a picture book. In almost all cases,  the Company  retains control of
all book club,  reprint,  electronic,  foreign,  serialization,  and  commercial
rights.  The income generated from such  arrangements is divided equally between
the Company and the author.

Upon the delivery of a manuscript from an author/illustrator  and after editing,
fact-checking and approval,  the Company's in-house staff plans and prepares the
layout,  illustrations and cover to be used for the book. Upon completion of the
editing,  graphics and layout, a computer produces a mechanical of the book with
all elements in place. A cost estimate is then prepared which  determines  print
quantity  and  retail  price of the book.  Book  printing  is done by an outside
supplier,  usually in the United States,  on a bid contract basis. The Company's
products  require  varying  periods  of  development  time  depending  upon  the
complexity  of the  graphics  and design and the  editing  process.  Most of the
Company's  books can be  developed in a period that ranges from nine to eighteen
months.  Millbrook  is  often  cited in  reviews  of its  books  for one or more
outstanding design elements (cover,  layout,  type, etc.).  Jackets and interior
design are either  created  in-house or assigned to freelance  artists under the
supervision  of the  Company's  art  department.  The  use of  outside  authors,
illustrators and freelancers for jacket design,  fact-checking  and copy editing
allows the Company to produce a large number of books per year with a relatively
small staff and generally  allows for the flexibility  needed for the Company to
continue to produce a broad product line.


EXTERNAL DEVELOPMENT

Approximately 25% of books published under the Millbrook imprint are produced by
outside  sources.  Most of these books are  produced by outside  packagers  that
cooperate  and  consult  with  Millbrook  during  the  development  process  but
otherwise provide the full range of services needed to publish children's books.
At present,  the Company has six regular  suppliers  from England and two United
States companies with whom it has ongoing projects. The Company has entered into
an exclusive,  long-term joint venture with Aladdin Books Limited ("Aladdin"), a
major children's packager for the international market, which expires on January
1, 2002, but can be renewed thereafter, to produce 50 nonfiction titles per year
to be  published  under  the  Company's  Copper  Beech  imprint.  The  exclusive
agreement  between the Company  and Aladdin was  designed to produce  books with
strong  consumer  market appeal in popularly  priced  paperback books as well as
content  suitable  for  hardcover  books  for  sales to  libraries.  Aladdin  is
responsible  for the  production,  printing and binding of such books,  although
development costs for such books are shared by Aladdin and the Company.  Aladdin
retains  the sales  rights for these  books to  countries  other than the United
States,  Canada and the Philippines.  Royalties are paid to Aladdin based on the
Company's sales.  Development  recovery amounts are paid to the Company based on
sales by Aladdin to other parts of the world.

LICENSES

In the normal course of its business, the Company acquires licenses from foreign
book  publishers  for the rights to market and sell in the United  States  books
that were created  either with or without input from the Company.  The licensing
usually includes all subsidiary  rights such as first



                                       9
<PAGE>

and second  serialization,  commercial rights,  electronic  rights,  foreign and
translation  rights,  reprint rights and rights to any means yet to be developed
for transmitting information.

MARKETING AND DISTRIBUTION

The  Company's  sales and  marketing  efforts are  designed  to broaden  product
distribution,  increase the number of first-time and repeat purchasers,  promote
brand-name  recognition,  assist  retailers and properly  position,  package and
merchandise  the Company's  products.  The Company  utilizes  various  marketing
techniques  designed to promote brand  awareness and recognition and to maximize
the  amount of shelf  space  devoted  to its  product  line in  retail  outlets,
including   complimentary   copies,   reviews  and  recommendations,   catalogs,
advertising,  brochures,  exhibits, publicity campaigns and in-store promotions.
The Company's marketing efforts are geared toward its two major markets: (i) the
school and public library market and (ii) the consumer market.

SCHOOL AND PUBLIC LIBRARY

The Company  targets the school and public  library  market  through  three main
channels:  wholesalers,  telemarketing and direct sales. Large school and public
library systems tend to purchase their books through wholesalers on a bid basis,
while smaller systems purchase  directly from a commission sales  representative
or through a telemarketing program such as the one the Company conducts.  During
the fiscal year ended July 31, 1999, approximately 58% of the Company's sales in
the school and public library market were made through  wholesalers.  While most
wholesalers  do not  engage  in sales  and  marketing  efforts  on behalf of the
Company's products,  they provide schools and public libraries with a wide range
of selection  and  convenience  as well as  discounts  on bulk  orders.  Baker &
Taylor, one of the largest  wholesalers in the school and public library market,
accounted  for 10% of the  Company's net sales in the fiscal year ended July 31,
1999.  While  the  Company  believes  that  there  are  alternative  wholesalers
available,  a  significant  reduction  in sales to Baker & Taylor  would  have a
material  adverse  effect on the  Company's  results  of  operations.  Through a
complementary marketing program of telemarketing,  advertising,  review programs
and direct sales calls, the Company believes that one of its greatest  strengths
is its ability to reach the individual  teacher,  principal or librarian  making
the purchase decision. Telemarketing generates 28% of the Company's sales in the
school and public library  market.  Telemarketing  penetrates the market through
its  "preview  program"  where  books  are given on loan to  teachers  and other
decision-makers on the premise that the quality of the book will sell itself. In
September  1998, the Company  initiated a website that will allow  librarians to
participate  in the "preview  program"  electronically.  This should  extend the
reach of the program significantly.  The remaining 14% of the Company's sales in
this area results from  direct-selling  efforts where commissioned  salespersons
conduct face-to-face meetings at school and libraries with decision-makers or by
purchase from the Company's catalogs and advertising. Direct purchases by school
and public libraries is the fastest growing area of the Company's sales.

The Company markets its books in numerous ways to support the foregoing efforts.
The Company sends  complementary  copies of each newly published book to library
media  reviewers and columnists and major county or district school systems that
have their own review and  recommendation  process.  The Company believes that a
favorable review in a respected library journal can significantly  influence the
sales  prospects of a particular  book.  Many of the Company's  books  published
under the Millbrook imprint have received favorable reviews, but



                                       10
<PAGE>

there can be no assurance  that the Company will  continue to receive  favorable
reviews in the future. The Company produces six catalogs and one magazine insert
per year.  For its  school  and  library  accounts,  the  Company  produces  one
full-line  catalog,  consisting of a complete  annotated backlist as well as new
publications  for the Fall that is mailed to  100,000  current  and  perspective
accounts.  The Company  produces a Spring  list  catalog for mailing to the same
audience.  An eight-page insert is produced in January to introduce the new list
for Spring for  distribution in School Library  Journal (the major  professional
journal  from which  librarians  make  purchase  decisions)  and at  conventions
throughout  the year. The Company  produces two full-line  catalogs per year for
the consumer  market in May and  December.  The Company also  advertises in many
consumer journals,  newsletters and newspapers. The Company produces promotional
materials for  individual  titles,  themes,  authors and  illustrators.  It also
produces  standard   "leave-behind"  sell  sheets  that  refresh  a  librarian's
recollection of a sales presentation. Finally, the Company exhibits its books at
many national  conventions  covering the school and public  library and consumer
markets.

The expanding use of children's books in the classroom,  especially in paperback
formats, has complicated the traditional  distribution networks since contacting
the particular teacher or other individual in charge of curriculum decisions can
be more difficult than contacting the school librarian.  The Company has created
marketing  programs  to extend  school  sales  beyond the  library  and into the
classroom.

CONSUMER

The sales  channels in the consumer  market are more diverse than the school and
public library market and require a different  marketing  approach.  The Company
has recently attracted  experienced and talented sales and marketing  personnel.
The  in-house  consumer  sales  group  covers the two major  areas:  traditional
consumer book markets and non-traditional  consumer book markets.  The Company's
merchandising  and  marketing   programs  have  increased  its  traditional  and
non-traditional  consumer  sales from $5.7  million in fiscal  year 1998 to $8.2
million in fiscal 1999.

The Company has three sales groups:  the in-house sales group,  the commissioned
sales group and the special sales group. The in-house sales group consists of an
in-house sales director and an assistant  responsible  for sales,  promotion and
merchandising   to  the  major  national  and  large  regional   accounts.   The
commissioned  sales group currently  consists of  approximately  30 commissioned
representatives who are responsible for sales to independent  bookstores,  small
regional  chains and certain  special  sales outlets and regional  jobbers.  The
special sales group managed by a sales director  markets to  specialized  retail
outlets such as museums,  national parks,  historical  sites,  theme parks, gift
shops and toy stores,  consumer and school  catalogs,  direct mail,  book fairs,
book clubs,  and display sales  companies.  The Company's sales  representatives
sell the full range of the  Company's  products.  The sales  groups  provide the
Company with highly  valuable  insight by obtaining  feedback from  customers on
current product  performance and potential  acceptance of proposed products.  In
addition  to the  marketing  efforts  discussed  with  respect to the school and
public library market,  the Company conducts  additional  marketing  designed to
increase  brand name  recognition  in the  consumer  market.  The Company  makes
certain that good reviews, which can stimulate sales, are sent to the news media
on a regular basis. The Company participates with various outlets in advertising
directly to individuals through media and catalogs.


                                       11

<PAGE>

In-store promotions,  such as posters,  points of purchase displays,  brochures,
holiday  end-of-counter  and front-of-store  displays,  are also utilized by the
Company to further enhance its sales in the consumer market.

MANUFACTURING AND SHIPPING

All of the Company's  books are printed and bound by third-party  manufacturers.
During fiscal year 1999, approximately 30% of the Company's printing and binding
needs were provided by Worzalla  Publishing  Company  ("Worzalla"),  an industry
leader in  library-bound,  short-run  printing and binding.  Manufacturing  is a
significant  expense  item for the  Company,  with a total of $4.5  million  (or
approximately  25% of net sales) spent in 1999. The Company has used  Worzalla's
services  since the Company's  inception and enjoys a good working  relationship
with Worzalla.  The Company  believes it has sufficient  alternative  sources of
manufacturing  services to meet its foreseeable needs should Worzalla's services
no longer be  available to the Company,  although  manufacturing  costs could be
adversely impacted.

Shipping  orders  accurately  and  promptly  upon their  receipt is an important
factor in the Company's  customer service and in closing a sale. Most publishing
companies ship products within one week of receipt of a customer  order,  and in
general the  Company  meets or reduces  this  timetable.  The Company  processes
customer orders through an in-house  processing  department.  The Company leases
warehouse  space from,  and its products are shipped from Mercedes  Distribution
Center of Brooklyn, New York.

COMPETITION

The  children's  book  publishing  marketplace  in the school and public library
market  and  in  the  consumer  market  is  fragmented  and  very   competitive.
Competition  in the school and public  library  market is based upon  quality of
products,  brand name recognition and book content.  In the consumer market, the
primary  factors are brand name  recognition,  book  content,  availability  and
price.

There  are  many  publishers  of  material  similar  to  the  Company's  product
offerings.  The Company's chief and direct  competitors in the school and public
library market include  Childrens  Press,  Dorling  Kindersley  Publishing Inc.,
Franklin  Watts Inc.,  Lerner  Publications  Co. and Troll  Communications.  The
Company's chief and direct  competitors in the consumer market include  Barron's
Educational Series Inc.,  Candlewick Press,  Dorling  Kindersley Inc.,  Larousse
Kingfisher Chambers Inc., Random House Inc. and Usborne Publishing Ltd.

The Company also  competes  with a large number of other  publishers  for retail
shelf  space in large  bookstore  chains  such as  Barnes & Noble,  Borders  and
Waldenbooks. In addition to competition among like types of publishing programs,
the overall  competition for limited  educational  budgets is intense when other
producers of materials used in classrooms and libraries are included, especially
producers  and  distributors  of electronic  hardware and software.  A number of
these  competitors have considerably  greater financial and marketing  resources
than  the  Company.  Nevertheless,  the  Company  believes  that  the  depth  of
experience of its management and its  relationships in the education sector give
the Company a competitive edge not only in producing quality books marketable in
the school and library and consumer  markets,  but also in foreseeing



                                       12
<PAGE>

long-term and short-term  social and economic forces  influencing the children's
book industry.

PROTECTION OF PROPRIETARY RIGHTS

Nearly all the Company's  books have been  copyrighted in the United States,  in
the name of the author or artist and then all such copyrights have been assigned
to the Company. As a result, the Company owns the exclusive right to exploit the
copyright in the marketplace.  On books created in-house by the Company, it owns
world  rights  for  all  aspects  of the  market,  including  first  and  second
serialization,  commercial rights,  electronic  rights,  foreign and translation
rights,  reprint  rights,  and  rights  to any  means  yet to be  developed  for
transmitting information.  There are a limited number of books for which foreign
rights and  electronic  rights will revert to the author if the Company does not
exploit them in a given period of time, usually two years after publication.  On
books that are imported under the Millbrook  imprint,  the Company has exclusive
rights for all United States markets and the  Philippines.  On more than half of
the  imported  titles,  the  Company  holds the  Canadian  rights  as well.  The
Company's trade names,  Millbrook,  Twenty-First  Century and Copper Beech,  are
used to publish books  primarily for the school and library  market and consumer
market  respectively.  The Company  considers  these trade names material to its
business.

For the Copper Beech titles, the Company has exclusive rights for all markets in
the United States and Canada.  World rights are retained for books originated by
Aladdin and the Company participates in the profits generated from such sales on
a 25% basis.

EMPLOYEES

As of July 31, 1999, the Company had  approximately  50 employees,  80% of which
were full-time and 20% were part-time.  The Company has never experienced a work
stoppage and its employees are not covered by a collective bargaining agreement.
The Company believes its relations with its employees are good.

ITEM 2.  DESCRIPTION OF PROPERTIES

The Company owns no real property.  The Company  conducts its operation  through
two  facilities.  The Company leases  approximately  5,500 square feet of office
space in  Brookfield,  Connecticut at a current rental of $112,000 per year plus
utilities  and taxes.  This lease  expires in DECEMBER  2002.  The Company  also
leases  approximately  1,900 square feet in New York City at a rental of $34,600
per year plus utilities and taxes. This lease expires in APRIL 2004. The Company
also  leases  office  space in  Southhampton,  New York at a  current  rental of
$12,000 per year plus utilities and taxes.  This lease expires in September 1999
with renewal  option for another three years.  It is the Company's  intention to
renew this lease.

ITEM 3.   LEGAL PROCEEDINGS

The Company is not currently a party to any material legal proceedings

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                    None


                                       13
<PAGE>
PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

The Common Stock of The Millbrook  Press Inc. is traded under the symbol MILB on
the NASDAQ  SmallCap  Market.  The Company's  Common Stock is also traded on the
Boston Stock Exchange under the symbol MILB. The following  table sets forth the
ranges of the high and low  closing  bid  prices  for the  Common  Stock for the
fiscal  years ended July 31, 1998 and July 31,  1999,  as reported on the NASDAQ
SmallCap  Market,  the  principal  trading  market  for the  Common  Stock.  The
quotations  are  interdealer  prices  without  adjustment  for  retail  markups,
markdowns, or commission and do not necessarily represent actual transactions.

                                  COMMON STOCK

                            YEAR ENDED JULY 31, 1999


                               High                Low

First Quarter                  3-1/2               1-3/4

Second Quarter                 6-5/8               1-7/8

Third Quarter                  3-15/16             2-1/2

Fourth Quarter                 3                   2-1/4

                            YEAR ENDED JULY 31, 1998

First Quarter                  6-3/8               4-5/8

Second Quarter                 5-5/8               4-1/2

Third Quarter                  4-1/2               3-3/4

Fourth Quarter                 4-1/4               3

As of  July  31,  1999,  the  Company  had  3,455,000  shares  of  Common  Stock
outstanding and 61 holders of record of the Company's  Common Stock. The Company
believes that at such date, there were in excess of 600 beneficial owners of the
Company's Common Stock.

The  Company  has never paid any  dividends  on its Common  Stock.  The  Company
currently intends to retain all earnings, if any, to support the development and
growth of the Company's business.  In addition,  the Company's revolving line of
credit with People's Bank prohibits the


                                       14

<PAGE>

Company from the declaration or payment of dividends.  Accordingly,  the Company
does not anticipate that any cash dividends will be declared on its Common Stock
in the foreseeable future.

ITEM 6.    MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following  discussion and analysis  should be read in  conjunction  with the
Financial  Statements  of The  Millbrook  Press Inc.  and  related  Notes to the
Financial Statements which are included elsewhere in this Form 10-KSB.


OVERVIEW

         GENERAL

         In February 1994, the Company was  incorporated and acquired the assets
of The Millbrook Press Inc.,  which had commenced  operations in 1989.  Prior to
January  1991,  The Millbrook  Press Inc. had no revenues and incurred  expenses
related to administrative  costs associated with the formation and production of
its first  publication  list.  Subsequent to January  1991,  the Company has had
significant net sales in the school and public library  market.  Books published
under the Millbrook imprint have evolved from  information-intensive  school and
library  books to include its current mix of highly  graphic,  consumer-oriented
books. Therefore,  the Company has incurred significant expenses relating to the
establishment of the infrastructure that can enable the Company to sell books to
the consumer  market and/or develop books that can appeal to both the school and
public library market and the consumer market.

         Sales Incentives and Returns

In  connection  with  the  introduction  of new  books,  many  book  publishers,
including the Company,  discount  prices of existing  products,  provide certain
promotional  allowances and give other sales incentives to their customers.  The
Company  intends to continue  such  practices in the future.  In  addition,  the
practice in the publishing industry is to permit customers including wholesalers
and retailers to return merchandise.  Most books not sold may be returned to the
Company,  and the  Company  gives  credit.  The rate of  return  also can have a
significant  impact on quarterly  results since certain  wholesalers have in the
past  returned  large  quantities  of  products  at  one  time  irrespective  of
marketplace  demand for such  products,  rather than  spreading  out the returns
during the course of the year.  The Company  computes net sales by  concurrently
deducting a reserve for returns from its gross sales.  Return allowance may vary
as a percentage  of gross sales based on actual return  experience.  The Company
believes that as gross sales to the consumer  market increase as a proportion of
its overall sales,  returns will  constitute a greater  proportion of net sales.
Although the Company believes its reserves have been adequate to date, there can
be no  assurance  that  returns  by  customers  in the  future  will not  exceed
historically  observed  percentages or that the level of returns will not exceed
the amount of  reserves  in the  future.  In the event that the amount  reserved
proves to be  inadequate,  the  Company's  operating  results  will be adversely
affected.

                                       15

<PAGE>
         Acquisition

         On December 5, 1997 the Company  completed an  acquisition  to purchase
certain  assets of  Twenty-First  Century Books, a division of Henry Holt & Co.,
Inc.  ("Holt").  The  purchase was  effective as of December 1, 1997.  Under the
agreement, the Company paid Holt $2,013,000 for the assets.

         School and Public Library Market

The  addition of  Twenty-First  Century  Books was one element in  substantially
increasing  school and public  library  sales.  The second  element  was greater
emphasis on telemarketing and direct sales.  Both elements produced  substantial
results in fiscal year 1999.

         Fourth Quarter Adjustments

Due to less than expected  sales on certain  titles during the fourth quarter of
1999,  the Company is writing off related  royalty  advances.  In addition,  the
Company is also increasing its inventory reserve for related product.


         RESULTS OF OPERATIONS

FISCAL 1999 COMPARED TO FISCAL 1998

Fiscal 1999  revenues  increased  20% from $15.6 million in fiscal 1998 to $18.7
million in fiscal 1999. Increased sales resulted from major increases in special
sales to direct sales organizations,  book clubs, book fairs and catalogs,  plus
an increase in direct sales to school and public libraries through telemarketing
programs, direct sales force and direct mail campaigns.

Gross  profits  for the year  ended  July 31,  1999  were  $8,604,000,  prior to
adjustments,  as compared to $7,813,000  for the previous year. Due to less than
expected  sales on certain titles during the fourth quarter of 1999, the Company
is writing  off  related  royalty  advances.  In  addition,  the Company is also
increasing  its  inventory  reserve  for  related  product.  The result of these
write-offs  and  reserves  caused  the  Company  to take  $914,000  of  non-cash
operating  charges.  Gross  profits  after  adjustments  for  fiscal  1999  were
$7,805,000.

Selling and  marketing  expenses  for fiscal 1999  decreased to 32% of net sales
from 33% of net sales for fiscal 1998.  Selling and marketing expenses increased
$739,000 over 1998 as a result of the  Company's  efforts to expand its internal
marketing  operations  and  higher  warehousing  and  distribution  costs due to
increased sales.  However,  as a percentage of net sales,  selling and marketing
expenses have decreased.

Net  operating  profit  for the year  ended July 31,  1999 was  $639,000  before
adjustments, compared to $866,000 for the previous year. Taking adjustments into
account, the result was a net operating loss of $275,000 for the year ended July
31, 1999.


                                       16
<PAGE>

Net  interest  expense  increased  from  $218,000  in fiscal 1998 to $399,000 in
fiscal  1999.  The  increase in  interest  expense is due to  borrowing  for the
acquisition of  Twenty-First  Century Books (December  1997),  and borrowing for
working capital requirements, due to higher sales levels.

Net income for the year ended July 31,  1999 was  $240,000  before  adjustments,
compared to $648,000 in the previous year. Taking adjustments into account,  the
result was a net loss of $674,000 for the year ended July 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

As of July 31,  1999,  the Company had cash and working  capital of $133,000 and
$4.7 million,  respectively,  as compared to cash and working capital of $34,000
and $5.4 million, respectively as of July 31, 1998.

The Company has  available a $7,500,000  revolving  line of credit with People's
Bank. The line of credit  restricts the ability of the Company to obtain working
capital in the form of indebtedness, to grant security interest in the assets of
the Company or to pay  dividends  on the  Company's  securities.  As of July 31,
1999,  the Company has $5,458,000  outstanding  under this line, all of which is
classified as current  liabilities since it is due on demand. The reason for the
increase in the debt is the  acquisition  of  Twenty-First  Century Books and to
meet working  capital needs. At July 31, 1999, the Company was not in compliance
with certain covenants  contained in its credit agreement with People's Bank, as
amended on June 10, 1998.  The Company has obtained a waiver from  People's Bank
for its non-compliance status.

Inventory  of finished  goods  totaled $7.1 million and $6.7 million at July 31,
1999  and  1998,  respectively.  The  higher  level of  inventory  is due to the
introduction  of the beginning  reader  program and the  increasing  size of our
trade and school and library  backlist.  The increase in accounts  receivable of
$1,159,000 from the prior year is due to increased sales.

Based on its current  operating  plan,  the Company  believes  that its existing
resources  together  with cash  generated  from  operations  and cash  available
through its credit line will be sufficient to satisfy the Company's contemplated
working capital requirements through approximately July 31, 2000. However, there
can be no assurance that the Company's  working  capital  requirements  will not
exceed its  available  resources or that these funds will be  sufficient to meet
the Company's longer-term cash requirements for operations.  Accordingly, either
before or after  July 31,  2000,  the  Company  may seek  additional  funds from
borrowings or through debt or equity financing.

FORWARD-LOOKING STATEMENTS

This Form 10KSB contains certain  forward-looking  statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the  safe  harbors   created   hereby.   Investors   are   cautioned   that  all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation, the Company's future cash resources and liquidity and the ability of
the Company to fully exploit a book's sales  potential in the school and library
and  consumer

                                       17


<PAGE>

markets.  Although the Company  believes  that the  assumptions  underlying  the
forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions could be inaccurate,  and therefore,  there can be no assurance that
the  forward-looking  statements  included  in this Form 10-KSB will prove to be
accurate.   In  light  of  the   significant   uncertainties   inherent  in  the
forward-looking  statements  included herein,  the inclusion of such information
should not be regarded as a  representation  by the Company or any other  person
that the objectives and plans of the Company will be achieved.

YEAR 2000 DISCLOSURE

Many currently  installed  computer  systems and software  products are coded to
accept only  two-digit  entries in the date code  field.  These date code fields
will need to accept four digit  entries to  distinguish  21st century dates from
20th century  dates.  As a result,  computer  systems and software  used by many
companies,  including customers and potential customers of the Company, may need
to be  upgraded to comply  with such "Year  2000"  requirements.  The Company is
closely  monitoring  the  progress  the  developers  of the software the Company
utilizes in many of its  customer  projects,  as well as the  developers  of the
software  utilized in  internal  systems are making  towards  ensuring  that the
products the Company utilizes are Year 2000 compliant. The Company believes that
its internal systems and third party software incorporated into client solutions
will be Year 2000  compliant.  Failure to provide Year 2000  compliant  business
solutions and software to its customers could have a material  adverse effect on
the Company's  business,  results of operations  and  financial  condition.  The
Company's  costs to ensure that  internal  systems  and  software  acquired  for
integration into client business  solutions are Year 2000 compliant has not been
and is not expected to become significant.

Further,  the Company  believes  that the  purchasing  patterns of customers and
potential  customers  may be affected by Year 2000  issues as  companies  expend
significant  resources to correct or patch their  current  software  systems for
Year 2000 compliance.  These  expenditures may result in reduced funds available
to purchase products and services such as those offered by the Company.



                                       18
<PAGE>
ITEM 7.          FINANCIAL STATEMENTS


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



The Shareholders and The Board of Directors
The Millbrook Press Inc.:


We have audited the  accompanying  balance sheets of The Millbrook Press Inc. as
of  July  31,  1999  and  1998,  and  the  related   statements  of  operations,
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of The Millbrook Press Inc. as of
July 31, 1999 and 1998 and the results of its  operations and its cash flows for
the  years  then  ended,  in  conformity  with  generally  accepted   accounting
principles.


Arthur Andersen LLP


Stamford, Connecticut
October 22, 1999

                                       19
<PAGE>
                            THE MILLBROOK PRESS INC.


                                 BALANCE SHEETS

                             JULY 31, 1999 AND 1998



<TABLE>
<CAPTION>

                                                                                      1999        1998
                                                                                      ----        ----
                   ASSETS

  Current assets:
<S>                                                                             <C>          <C>
       Cash                                                                     $   133,000  $    34,000
       Accounts receivable (less allowance for returns and bad
        debts of $803,000 in 1999 and $630,000 in 1998)                           6,104,000    4,945,000
       Inventories                                                                7,079,000    6,709,000
       Royalty advances, net                                                        699,000      857,000
       Prepaid expenses                                                             341,000      423,000
                                                                                -----------  -----------
                                  Total current assets                           14,356,000   12,968,000
                                                                                -----------  -----------
       Plant costs, net                                                           4,360,000    4,248,000
       Fixed assets, net                                                            237,000      236,000
       Goodwill, net                                                              3,126,000    3,336,000
       Royalty advances, net                                                        852,000      673,000
       Other assets                                                                    --         15,000
                                                                                -----------  -----------
                                  Total assets                                  $22,931,000  $21,476,000
                                                                                ===========  ===========
</TABLE>

                 The accompanying notes to financial statements
                  are an integral part of these balance sheets.


                                       20
<PAGE>
                            THE MILLBROOK PRESS INC.


                                 BALANCE SHEETS

                             JULY 31, 1999 AND 1998

                                   (Continued)

<TABLE>
<CAPTION>

                                                                 1999            1998
                                                                 ----            ----

       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
<S>                                                         <C>            <C>
     Notes payable to banks                                 $  5,458,000   $  3,875,000
     Accounts payable and accrued expenses                     3,892,000      3,406,000
     Royalties payable                                           308,000        248,000
                                                            ------------   ------------
                Total current liabilities                      9,658,000      7,529,000
                                                            ------------   ------------
Commitments

Stockholders' equity:
     Common stock, par value $.01 per share, authorized
      12,000,000 shares; issued and outstanding 3,455,000
      shares in 1999 and 1998

                                                                  35,000         35,000
     Additional paid-in capital                               17,556,000     17,556,000
     Accumulated deficit                                      (4,318,000)    (3,644,000)
                                                            ------------   ------------
                Total stockholders' equity                    13,273,000     13,947,000
                                                            ------------   ------------
                Total liabilities and stockholders' equity  $ 22,931,000   $ 21,476,000
                                                            ============   ============
</TABLE>


                 The accompanying notes to financial statements
                  are an integral part of these balance sheets.


                                       21
<PAGE>
                            THE MILLBROOK PRESS INC.


                            STATEMENTS OF OPERATIONS

                   FOR THE YEARS ENDED JULY 31, 1999 AND 1998



                                                    1999          1998
                                                    ----          ----

Net sales                                      $ 18,763,000   $ 15,615,000

Cost of sales                                    10,958,000      7,802,000
                                               ------------   ------------
              Gross profit                        7,805,000      7,813,000
                                               ------------   ------------
Operating expenses:
     Selling and marketing                        5,915,000      5,176,000
     General and administrative                   2,165,000      1,771,000
                                               ------------   ------------
              Total operating expenses            8,080,000      6,947,000
                                               ------------   ------------
Operating income (loss)                            (275,000)       866,000

Interest expense                                    399,000        218,000
                                               ------------   ------------
Net income (loss)                              $   (674,000)  $    648,000
                                               ============   ============


Earnings (loss) per share (basic and diluted)  $       (.20)  $        .19
                                               ============   ============
Weighted average shares outstanding
                                                  3,455,000      3,455,000
                                               ============   ============


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

                                       22
<PAGE>
                            THE MILLBROOK PRESS INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE YEARS ENDED JULY 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                         Additional
                                  Common Stock            Paid-In       Accumulated
                               Shares       Amount        Capital           Deficit        Total
                               ------       ------        -------           -------        -----

<S>                           <C>           <C>         <C>             <C>              <C>
Balance at July 31, 1997      3,455,000     $35,000     $17,556,000     $(4,292,000)     $13,299,000

Net income                        -           -               -             648,000          648,000
                              ---------     -------     -----------     -----------      -----------

Balance at July 31, 1998      3,455,000     $35,000     $17,556,000     $(3,644,000)     $13,947,000

Net income                        -           -               -            (674,000)        (674,000)
                              ---------     -------     -----------     -----------      -----------
Balance at July 31, 1999      3,455,000     $35,000     $17,556,000     $(4,318,000)     $13,283,000
                              =========     =======     ===========     ===========      ===========
</TABLE>


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




                                       23

<PAGE>
                           THE MILLBROOK PRESS INC.

                           STATEMENTS OF CASH FLOWS

                      YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>

                                                                          1999          1998
                                                                          ----          ----

Cash flows from operating activities:
<S>                                                                   <C>           <C>
     Net (loss) income                                                $  (674,000)  $   648,000
     Depreciation and amortization                                      1,912,000     1,548,000
     Changes in assets and liabilities, excluding effects
      from acquisition of Twenty-First Century Books:
            Increase in accounts receivable                            (1,159,000)   (2,121,000)
            Increase in inventories                                      (370,000)   (1,261,000)
            Increase in royalty advances                                  (21,000)     (610,000)
            Decrease in prepaid expenses                                   82,000       159,000
            Decrease in other assets                                       15,000        19,000
            Increase in accounts payable and accrued expenses             486,000     1,135,000
            Increase in royalties payable                                  60,000        49,000
                                                                      -----------   -----------
              Net cash provided by (used in) by operating activities      331,000      (434,000)
                                                                      -----------   -----------
Cash flows from investing activities:
     Capital expenditures                                                 (81,000)      (65,000)
     Plant costs, excluding effect from acquisition of
      Twenty-First Century Books
                                                                       (1,734,000)   (1,652,000)
     Payment for acquisition of Twenty-First Century Books                   --      (2,013,000)
                                                                      -----------   -----------
             Net cash used in investing activities                     (1,815,000)   (3,730,000)

Cash flows from financing activities:
     Proceeds from borrowings under notes payable                       1,583,000     3,875,000
                                                                      -----------   -----------

            Net cash provided by financing activities                   1,583,000     3,875,000

            Net increase (decrease) in cash                                99,000      (289,000)
                                                                      -----------   -----------
Cash at beginning of year                                                  34,000       323,000
                                                                      -----------   -----------

Cash at end of year                                                   $   133,000   $    34,000
                                                                      ===========   ===========
Supplemental disclosures:
     Interest paid                                                    $   399,000   $   218,000
                                                                      ===========   ===========
     Income taxes paid                                                $   145,000   $    12,000
                                                                      ===========   ===========
</TABLE>

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

                                       24
<PAGE>
                            THE MILLBROOK PRESS INC.

                          NOTES TO FINANCIAL STATEMENTS

                             JULY 31, 1999 AND 1998

(1)      Description of the Business:

         The Millbrook  Press Inc.  ("Company") was  incorporated  and commenced
         operations as an independent  company on February 23, 1994. The Company
         is a publisher of children's  nonfiction  books,  in both hardcover and
         paperbacks,  for preschoolers through young adults. The Company's books
         are  distributed  to  the  school  and  public  library  market,  trade
         bookstores and other specialty  retail and direct sales markets through
         wholesalers,  its own  telemarketing  efforts  and  commissioned  sales
         representatives.  The Company was formed to acquire the net assets of a
         wholly owned subsidiary of Antia Publishing Company,  which is a wholly
         owned  subsidiary  of  Groupe  de  la  Cite  International,   a  French
         corporation.

(2)      Summary of Significant Accounting Policies:

         Cash and Cash Equivalents-

         Cash and cash  equivalents  consist of cash in banks and highly liquid,
         short-term investments with original maturities of three months or less
         at the date acquired.

         Revenue Recognition-

         Revenue  from  the  sale of  books  to  wholesalers  is  recognized  at
         shipment.  The Company  provides a reserve for product  returns.  Sales
         from telemarketing  activities are recognized when the customer accepts
         all or part of a sample shipment.

         Inventories-

         Inventories of sheets and bound books, which are primarily located in a
         public warehouse or at customers as inventory on preview, are stated at
         the lower of cost or market,  with cost  determined by the average cost
         method. Allowances are established to reduce recorded costs of obsolete
         and slow moving inventory to its net realizable value.

         Royalty Advances-

         Licensing  agreements for rights to future publications usually require
         a  non-refundable  partial  payment  of the  royalty  in advance of the
         publication.  The Company  charges  royalty  advances to expense in the
         period during which the related sales are recorded.  If it appears that
         an advance  will  exceed  total  royalties  to be  incurred  based upon
         estimated sales, such excess is immediately



                                       25
<PAGE>

         expensed.  Royalty  advances for publications to be published in excess
         of one year from the balance sheet date are  classified as  non-current
         assets.

         Plant Costs-

         Plant costs  consisting of plates,  photo  engravings,  separations and
         other text costs of  unpublished  books are  amortized  over five years
         from  publication  date or the  estimated  remaining  life, if shorter.
         Plant costs at July 31, 1999 and 1998 are presented net of  accumulated
         amortization of $7,716,000 and $6,115,000 respectively.

         Advertising Costs-

         Advertising  costs are  expensed  in the periods in which the costs are
         incurred.  Catalog  costs  consisting  of the  costs of  producing  and
         distributing  catalogs are expensed  ratably over the year in which the
         costs are  incurred in relation to sales.  Advertising  expense for the
         years  ended  July  31,  1999  and  1998  was  $479,000  and  $538,000,
         respectively.

         Fixed Assets-

         Fixed assets are recorded at cost.  Depreciation  and  amortization  of
         fixed assets are computed on the  straight-line  method based on useful
         lives ranging from 7-10 years for office  furniture and equipment and 5
         years for  computers.  Leasehold  improvements  are amortized  over the
         lesser of the lease term or the life of the asset.

         Goodwill and Other Long Lived Assets-

         Goodwill  represents  the excess of the cost over the fair value of the
         net assets acquired.  For financial reporting  purposes,  the excess of
         cost over the fair value of net assets  acquired is  amortized  over 20
         years using the straight-line method.  Accumulated amortization at July
         31, 1999 and 1998 is $1,051,000 and $842,000, respectively. Pursuant to
         Internal Revenue Code Section 197, for Federal income tax purposes such
         goodwill is deductible over 15 years.

         The Company systematically reviews the recoverability of its long-lived
         assets  by  comparing  their   unamortized   carrying  value  to  their
         anticipated  undiscounted  future cash flows. Any impairment is charged
         to expense when such determination is made.

         Income Taxes-

         Deferred tax assets and  liabilities  are recognized for the future tax
         consequences   attributable   to  differences   between  the  financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases and operating  loss and tax credit  carryforwards.
         Deferred  tax assets and  liabilities  are measured  using  enacted tax
         rates  expected to apply to taxable  income in the years in which those
         temporary  differences  are  expected to be  realized  or settled.  The
         effect on deferred tax assets and  liabilities of a change in tax rates
         is recognized in income in the period that includes the enactment date.


                                       26
<PAGE>

         Earnings (Loss) Per Share-

         Basic EPS is computed as net earnings  divided by the  weighted-average
         number  of  common  shares  outstanding  for the  period.  Diluted  EPS
         reflects the  potential  dilution  that could occur from common  shares
         issuable  through   stock-based   compensation  plans  including  stock
         options,  restricted  stock  awards,  warrants  and  other  convertible
         securities using the treasury stock method.

         Earnings  (loss) per share are net  earnings  (loss) less the  dividend
         requirements on preferred stock, divided by the weighted average number
         of common stock  outstanding  for the periods.  Per share data for 1999
         and 1998 does not assume the  exercise of common  stock  options as the
         option exercise price is above the average market price of common stock
         for the year.

         Stock Options-

         The  Company   adopted  SFAS  No.  123,   "Accounting  for  Stock-Based
         Compensation",   which  allows   entities  to  continue  to  apply  the
         provisions  of APB  Opinion No. 25 and provide pro forma net income and
         pro forma  earnings per share  disclosures  for  employee  stock option
         grants made in fiscal 1996 and future years as if the  fair-value-based
         method  defined  in SFAS No.  123 had been  applied.  The  Company  has
         elected to continue to apply the  provisions of  Accounting  Principles
         Board  ("APB')  Opinion  No. 25 and  provide  the pro forma  disclosure
         provisions of SFAS No. 123.

         Use of Estimates-

         The  preparation of financial  statements in accordance  with generally
         accepted  accounting  principles  requires management to make estimates
         and  assumptions  that  affect  the  reported  amounts  of  assets  and
         liabilities and the reported amounts of revenue and expenses during the
         reported  periods.  Actual  results  could vary from the  estimates and
         assumptions  used  in the  preparation  of the  accompanying  financial
         statements.

(3)      Fixed Assets:

         Fixed assets at July 31, 1999 and 1998 consist of the following:

                                                    1999             1998
                                                    ----             ----

         Office furniture and equipment          $184,000        $ 184,000
         Computers                                487,000          407,000
         Telecommunication equipment               61,000           60,000
         Leasehold improvements                    75,000           75,000
                                                 --------        ---------
                                                  807,000          726,000
         Accumulated depreciation                (570,000)        (490,000)
                                                 --------        ---------
                                                $ 237,000        $ 236,000
                                                 ========        =========
                                       27

<PAGE>

         Depreciation  expense  for the years  ended July 31,  1999 and 1998 was
         $80,000 and $86,000, respectively.

(4)      Notes Payable to Banks:

         On December 14,  1995,  the Company  entered  into a revolving  line of
         credit  agreement  with a  bank  that  provided  for  borrowings  up to
         $2,700,000.  The  bank  increased  the  available  line  of  credit  to
         $4,000,000 on June 17, 1997 and to $7,500,00 on June 10, 1998. The line
         of credit  provides  for an interest  rate at the bank's base rate plus
         .5% (8% and 9% at July 31, 1999 and 1998, respectively). In addition, a
         certain portion of the line of credit may be priced at the 90 day Libor
         rate plus 2.0% (5.03%) at July 31, 1999.  At July 31, 1999,  the amount
         outstanding  under this credit agreement was $5,458,000  ($3,000,000 of
         which was priced at the Libor rate). Advances under this line of credit
         are  collateralized  by substantially all of the assets of the Company.
         The revolving line of credit, which is payable upon demand by the bank,
         contains various covenants which include, among other things, a minimum
         tangible net worth requirement.  The revolving line of credit prohibits
         the Company  from the  declaration  or payment of  dividends  on common
         stock.

         At July 31,  1999,  the  Company  was not in  compliance  with  certain
         covenants  contained in its credit  agreement  with  People's  Bank, as
         amended on June 10,  1998.  The  Company  has  obtained  a waiver  from
         People's Bank for its non-compliance status.


(5)      Income Taxes:

         No Federal income taxes were provided for the years ended July 31, 1999
         and 1998, due to the Company's net operating losses.  The actual income
         tax expense differs from the "expected"  income tax benefit computed by
         applying  the U.S.  Federal  corporate  income tax rate to loss  before
         income taxes for the years ended July 31, 1999 and 1998 as follows:


                                                            1999         1998
                                                            ----         ----

         Computed "expected" income tax benefit          $ (229,000)   $220,000
         State and local income taxes, net of
           Federal benefit                                  (37,000)     39,000
         Increase (decrease) in valuation allowance         263,000    (265,000)
         Nondeductible expenses                              13,000       6,000
         Other                                              (10,000)         -
                                                         ----------    ---------
                      Provision for income taxes         $      -      $     -
                                                         ==========    =========


                                       28

<PAGE>
         The  tax  effects  of  temporary   differences  between  the  financial
         statement carrying amounts and tax bases of assets and liabilities that
         give rise to the deferred tax assets and  deferred tax  liabilities  at
         July 31, 1999 and 1998 are the following:

                                                      1999               1998
                                                      ----               ----
         Deferred tax assets:
          Accounts receivable allowances         $    320,000        $   72,000
          Inventory reserves                          326,000           336,000
          Unicap                                      373,000            51,000
          Plate and revision costs                     80,000            93,000
          Fixed assets                                 61,000               -
          Pre-publication costs                       665,000               -
          AMT credit                                   25,000               -
          Net operating loss carryforwards            103,000           297,000
          Other                                         2,000               -
                                                -------------        ----------
                    Net deferred tax asset         1,955,000            849,000
        Less:  Valuation allowance                  (960,000)          (697,000)
                                               -------------        ----------
                    Net deferred tax asset           995,000            152,000
                                               -------------        ----------
        Deferred tax liabilities:
        Fixed asset depreciation                           -            (13,000)
        Goodwill amortization                       (240,000)          (139,000)
        Plate and revision costs                           -                 -
        Adjustment for change in tax accounting
         method                                      (755,000)               -
                                               --------------       ----------
                    Net deferred tax liability       (995,000)         (152,000)
                                               --------------       -----------
                    Net deferred income taxes     $       -        $       -
                                               ==============       ===========

         In  assessing  the  realizability  of deferred  tax assets,  management
         considers  whether it is more likely than not that some  portion or all
         of the deferred tax asset will be realized. The ultimate realization of
         the  deferred  tax asset is  dependent  upon the  generation  of future
         taxable income during the periods in which temporary differences or net
         operating loss carryforwards become deductible.  Based on the Company's
         net operating  losses to date, the Company has  established a valuation
         allowance of $960,000 at July 31, 1999. The Company's tax net operating
         loss carryforward of approximately $103,000 at July 31, 1999 expires in
         the years 2009 to 2012.  The Tax Reform  Act of 1986  included  certain
         provisions relating to changes in stock ownership,  which if triggered,
         could result in future annual limitations on the utilization of the net
         operating loss carryforwards.

(6)      Stock Option Plan:

         The  Company  has  reserved  675,000  shares of common  stock under its
         non-qualified  1994 Stock Option Plan  ("Option  Plan") which  provides
         that a committee,  appointed by the Board of Directors, may grant stock
         options to eligible employees, officers and directors of the Company or
         its affiliates.  The number of shares reserved for issuance is adjusted
         in  accordance  with the  provisions  of the Plan.  All  stock  options
         granted by the Company  expire seven years after the grant date.  Stock
         options  vest over a period from 2-5 years as  determined  by the stock
         option committee.
                                       29

<PAGE>

         In October  1996,  the Company  amended the Option Plan to decrease the
         exercise  price on  outstanding  options  from  $8.00  per share to the
         initial public  offering price of $4.50 per share.  Non-vested  options
         outstanding  on the effective  date  (December 23, 1996) of the initial
         public offering, representing options for 283,500 shares, will vest 50%
         one year from that date and additional 50% two years from that date. As
         of July 31, 1999 and 1998,  there were options  outstanding for 517,500
         shares and 527,000 shares, respectively, under the Option Plan.

         The per share  weighted-average  fair  value of stock  options  granted
         during 1998,  calculated in accordance  with SFAS No. 123, was $1.88 on
         the date of grant using the Black Scholes option-pricing model with the
         following weighted-average assumptions: 1998 - expected volatility 37%,
         risk-free interest rate of 5.7% and an expected life of 5 years.

         The Company  applies APB  Opinion No. 25 in  accounting  for its Option
         Plan. Had the Company  determined  compensation  cost based on the fair
         value at the grant date for its stock  options  under SFAS No. 123, the
         Company's net income (loss) would have changed to the pro forma amounts
         indicated below:
<TABLE>
<CAPTION>

                                                                1999          1998
                                                                ----          ----
         Net income (loss)
<S>                                                         <C>            <C>
         As reported                                        $(674,000)     $   648,000
         Pro forma                                           (764,000)         587,000
         Earnings (loss) per share (basic and diluted)
         As reported                                             (.20)             .19
         Pro forma                                               (.22)             .17
</TABLE>

         Pro forma net income (loss)  reflects only options  granted in 1999 and
         1998. Therefore,  the full impact of calculating  compensation cost for
         stock  options under SFAS No. 123 is not reflected in the pro forma net
         loss amounts  presented  above because  compensation  cost is reflected
         over the options'  vesting periods of 2-5 years and  compensation  cost
         for options granted prior to August 1, 1995 is not considered.


                                       30

<PAGE>

         Stock Option Plan activity during the periods indicated is as follows:

                                                                     Weighted-
                                                   Number of           Average
                                                    Shares        Exercise Price
                                                   ----------     --------------


         Balance at July 31, 1996                   285,500            8.00
            Granted                                 463,500            4.78
            Cancelled                              (310,500)           8.00
                                                  ---------
         Balance at July 31, 1997                   438,500            4.60 (a)
            Granted                                 126,000            4.50
            Forfeited                               (37,500)           4.50
                                                  ---------
         Balance at July 31, 1998                   527,000            4.50

            Granted                                       -               -
            Forfeited                                (9,500)           4.54
                                                  ---------
         Balance at July 31, 1999                   517,500            4.50
                                                  =========

         (a) As discussed above, in October 1996, the Company amended the Option
         Plan to decrease the exercise price on  outstanding  options from $8.00
         per share to $4.50 per share.

         At July 31,  1999 and 1998,  the range of  exercise  prices was $4.50 -
         $6.075. The weighted-average  remaining contractual life of outstanding
         options at July 31, 1999 and 1998 was 4.2 and 4.9 years, respectively.

         At July 31,  1999 and 1998,  the  number of  options  exercisable  were
         353,000 and 219,000,  respectively,  and the weighted-average  exercise
         price of those options was $4.50.

         In December 1996 in connection  with the initial public  offering,  the
         Company sold to the  Underwriter for $100, the  Underwriter's  Purchase
         Option ("Purchase  Option"),  consisting of the right to purchase up to
         an aggregate of 170,000 shares of common stock.  The Purchase Option is
         exercisable  at $6.075 per share for a period of four years  commencing
         one year from December 17, 1996.

(7)      401(k) Profit Sharing Plan:

         The Company  maintains a  Non-standardized  Prototype  Cash or Deferred
         Profit Sharing 401(k) Plan (the "Plan").  Participation  in the Plan by
         employees  requires  that they  complete  six months of service for the
         Company and attain 21 years of age.  Employees on the Plan's  effective
         date did not have to satisfy the  six-month  service  requirement.  The
         Company  determines  each year a discretionary  matching  contribution.
         Such additional  contribution,  if any, shall be allocated to employees
         in proportion to each participant's  contribution.  The Company did not
         contribute to the Plan during the years ended July 31, 1999 and 1998.


                                       31
<PAGE>
xx

(8)      Commitments

         The Company  leases  office  facilities  under  operating  leases which
         expire at  various  dates  through  2004.  The  leases  are  subject to
         escalation  clauses as they  relate to certain  expenses of the lessor,
         i.e., utilities and real estate taxes.

         Minimum future rental payments under  non-cancelable  operating  leases
         having initial or remaining terms in excess of one year are as follows:

                     Year ending July 31         Amount
                     -------------------         ------

                          2000                  $146,000

                          2001                   150,000

                          2002                   154,000

                          2003                    93,000

                          2004                    39,000

                          Thereafter                  --
                                                --------

                                                $582,000
                                                ========


         Rent  expense for the years ended July 31, 1999 and 1998 were  $158,000
         and $167,000, respectively.

         In May 1994, the Company  entered into an agreement with Aladdin Books,
         a British publishing company, whereby Aladdin agreed to produce no less
         than 50 titles per year for  Millbrook  through  January  1, 2002.  The
         titles are to be wholly owned by Millbrook.  Aladdin is responsible for
         production,  printing  and  binding.  Production  costs  are  shared by
         Aladdin and Millbrook. Aladdin retains sales rights for these titles to
         countries  other than the United  States,  Canada and the  Philippines.
         Royalties  are paid to Aladdin  based on Millbrook  sales.  Development
         recovery  amounts  are paid to  Millbrook  based on sales by Aladdin to
         other parts of the world.  Net payables to Aladdin at July 31, 1999 and
         1998 are $858,000 and $681,000, respectively.

(9)      Fair Value of Financial Instruments:

         Cash, Accounts Receivable, Accounts Payable and Accrued Expenses-

         The carrying amount  approximates  fair value because of the short term
         maturity of these instruments.

         Notes Payable-

         The carrying amount of these financial  instruments  approximates  fair
         values based on the fact that the related interest rates fluctuate with
         market rates.

                                       32
<PAGE>

(10)     Concentration of Credit Risk:

         The company extends credit to various  companies in the retail and mass
         merchandising  industry  for  the  purchase  of its  merchandise  which
         results in a concentration of credit risk. This concentration of credit
         risk  may  be  affected  by  changes  in  economic  or  other  industry
         conditions and may,  accordingly,  impact the Company's  overall credit
         risk. Although the Company generally does not require  collateral,  the
         Company  performs  ongoing  credit  evaluations  of its  customers  and
         reserves for potential  losses are maintained.  One customer  accounted
         for 10% and 7% of the  Company's net sales for the years ended July 31,
         1999 and 1998, respectively.

(11)     Acquisition of Twenty-First Century Books:

         On December  5, 1997,  certain  assets of  Twenty-First  Century  Books
         ("Twenty-First   Century"),   were   acquired   by  the   Company   for
         approximately  $2,013,000 in cash.  The  acquisition  has been recorded
         using the purchase method of accounting.  Accordingly, the accompanying
         financial  statements include the results of operations of Twenty-First
         Century from December 5, 1997. Goodwill resulting from this acquisition
         is being amortized on a straight line basis over 20 years.


Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosures

                         None


Part III

Item 9.  Directors,   Executive   Officers,   Promoters  and  Control   Persons;
         Compliance with Section 16 (a) of the Exchange Act.

         The information  required by Item 9 regarding directors is incorporated
by  reference  to the  information  appearing  under the  caption  "Election  of
Directors"  in the Company's  definitive  Proxy  Statement  relating to its 1999
Annual  Meeting of  Stockholders  to be filed with the  Securities  and Exchange
Commission  within 120 days after the close of its fiscal year. The  information
required  by Item 9  regarding  executive  officers  appears  under the  caption
"Executive Officers of the Registrant" in Part I.

Item 10. Executive Compensation.

         The information required by Item 10 is incorporated by reference to the
information  appearing  under  the  caption  "Executive   Compensation"  in  the
Company's  definitive  Proxy  Statement  relating to its 1999 Annual  Meeting of
Stockholders to be filed with the Securities and Exchange  Commission within 120
days after the close of its fiscal year.


                                       33
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The information required by Item 11 is incorporated by reference to the
information  appearing under the caption  "Security  Ownership" in the Company's
definitive  Proxy Statement  relating to its 1999 Annual Meeting of Stockholders
to be filed with the  Securities and Exchange  Commission  within 120 days after
the close of the fiscal year.


Item 12. Certain Relationships and Related Transactions

         The information required by Item 12 is incorporated by reference to the
information  appearing  under the  caption  "Certain  Relationships  and Related
Transactions" in the Company's  definitive Proxy Statement  relating to its 1999
Annual  Meeting of  Stockholders  to be filed with the  Securities  and Exchange
Commission within 120 days after the close of the fiscal year.




                                       34
<PAGE>

Item 13. Exhibits, List and Reports on Form 8-K

               (a)    Exhibits


Exhibit
Number                              Description of Exhibit
-------         ----------------------------------------------------------------

**3.1           Restated Certificate of Incorporation of the Company.

**3.2           By-laws of the Company, as amended.

**4.1           Form of Common Stock Certificate.

**4.2           Form of Underwriter's Purchase Option granted to GKN Securities.

**4.3           Form of bridge Warrant.

 *10.1          Employment Agreement, dated as of August 1, 1998, by and between
                the Company and Jeffrey Conrad.

**10.2          Employment  Agreement,  dated as of December  12,  1996,  by and
                between the Company and Jean E. Reynolds.

**10.3          Consulting  Agreement,  dated as of December  13,  1996,  by and
                between the Company and Farrell Associates, Inc.

**10.4          Consulting  Agreement,  dated as of December  13,  1996,  by and
                between  the  Company and Graham  International  Publishing  and
                Research, Inc.

**10.5          Form of  Indemnification  Agreement between each of the Officers
                and Directors of the Company and the Company.

**10.6          Agreement of Lease, dated September 27, 1994, by and between the
                Company and Arnold S. Paster.

**10.7          Agreement  of Lease,  dated March 26,  1996,  by and between the
                Company and Land First II Group.

**10.8          Agreement of Lease and rider  attached  thereto,  dated February
                15,  1996,  by and between the Company and  Ninety-Five  Madison
                Company.

**10.9          1994 Stock Option Plan, as amended.

**10.10         Loan and  Security  Agreement,  dated as of December  14,  1995,
                between People's Bank and the Company.


                                       35
<PAGE>

*10.11          Amendment to Loan and Security  Agreement,  dated June 10, 1998,
                between People's Bank and the Company.

**10.12         Agreement  made  effective  as of August 1, 1996 by and  between
                Aladdin Books Limited and the Company.

***10.13        Employment  Agreement,  dated as of  January  20,  1997,  by and
                between the Company and Satish Dua.

****10.14       Employment  Agreement, dated as of February 1999, by and between
                the Company and David Allen.


****27          Financial Data Schedule

--------------------------------------------------------------------------------


*               Filed as an  Exhibit  to the  Company's  Annual  Report  on Form
                10-KSB for the year  ended July 31,  1998
**              Filed as an Exhibit to the Company's  Registration  Statement on
                Form SB-2 (No. 33-14631)
***             Filed as an  Exhibit  to the  Company's  Annual  Report  on Form
                10-KSB for the year ended July 31, 1997
****            Filed herewith

                (b)  Reports on Form 8-K

                The Company filed a Form 8-K under Item 4 (Form 8-K).





                                       36
<PAGE>

                                   SIGNATURES

         In accordance with 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 MILLBROOK PRESS INC.

Dated:  October 27, 1999              By: /s/ Jeffrey Conrad
                                              Jeffrey Conrad, President and
                                              Chief Executive Officer


         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following  persons on behalf of the  registrant  and in
the capacities and on the dated indicated.

Signatures                        Title                            Date

/s/ Jeffrey Conrad                President and                October 27, 1999
-------------------------
Jeffrey Conrad                    Chief Executive Officer
                                  (Principal Executive
                                  Officer)

/s/ David Allen                   Chief Financial Officer      October 27, 1999
-------------------------
David Allen                       (Principal Financial
                                  Officer and Principal
                                  Accounting Officer)

/s/ Howard Graham                 Chairman of the Board        October 27, 1999
-------------------------
Howard Graham

/s/ Frank J. Farrell              Director                     October 27, 1999
-------------------------
Frank Farrell

/s/ Barry Fingerhut               Director                     October 27, 1999
-------------------------
Barry Fingerhut

/s/ Barry Rubenstein              Director                     October 27, 1999
-------------------------
Barry Rubenstein

/s/ Hannah Stone                  Director                     October 27,1999
-------------------------
Hannah Stone


                                       37