Prepared by MERRILL CORPORATION www.edgaradvantage.com

2130 GOLD STREET, P.O. BOX 649061
SAN JOSE, CALIFORNIA 95164-9061
(Address of principal executive offices)

NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common shares outstanding, as of August 31, 2000—5,120,147.

The Company's unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) considered necessary to fairly state the Company's financial position, results of operations, and cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Form 10-K for the fiscal year ended May 31, 2000. The results of operations for the three-month period ended August 31, 2000 are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire fiscal year ending May 31, 2001. The May 31, 2000 balance sheet was derived from audited consolidated financial statements, but does not include all disclosures required by generally accepted accounting principles.

Dividends declared for the three month periods ended August 31, 2000 and 1999 were as follows:

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or chief decision making group, in deciding how to allocate resources and in assessing performance. The Chief Executive Officer is the Company's chief decision maker. The Company operates and is managed internally by four geographic operating segments. The operating segments include United States, Canada, the Netherlands and Australia. Each operating segment has a general manager that reports to the Chief Executive Officer.

		Three Months Ended August 31,
		2000			1999
Revenues:
	United States	$	23,277		$	25,760
	Canada		4,961			4,144
	Netherlands		972			977
	Australia		1,020			1,113

	Consolidated Total	$	30,230		$	31,994

Income (Loss) before income taxes:
	United States	$	(4,670	)	$	12,722
	Canada		188			(216	)
	Netherlands		92			55
	Australia		17			(10	)

	Consolidated Total	$	(4,373	)	$	12,551

Depreciation and amortization:
	United States	$	987		$	980
	Canada		72			109
	Netherlands		15			17
	Australia		12			12

	Consolidated Total	$	1,086		$	1,118

Geographic revenues are based on the country from which customers are invoiced. Income before tax is net sales less operating expenses, interest or other expenses, but prior to income taxes.

Basic (loss) earnings per share is computed by dividing net (loss) earnings by the weighted average common shares outstanding for the period while diluted earnings per share also includes the dilutive

impact of stock options. Basic and diluted (loss) earnings per share for the quarters ended August 31, 2000 and 1999, respectively, are calculated as follows (in thousands, except share data):

		Three Months Ended August 31,
		2000			1999
Net (Loss) Earnings before cumulative effect of a change in accounting principle		$	(2,791	)	$	7,280
Cumulative effect of a change in accounting principle			(330	)		—

Net (Loss) Earnings		$	(3,121	)	$	7,280

BASIC:
	Weighted average common shares outstanding used in computing basic net earnings per share		5,206,313			5,026,473

Basic Net (Loss) Earnings Per Share before cumulative effect of a change in accounting principle		$	(.54	)	$	1.45
Cumulative effect of a change in accounting principle			(.06	)		—

Basic Net (Loss) Earnings Per Share		$	(.60	)	$	1.45

DILUTED:
	Weighted average common shares Outstanding		5,206,313			5,026,473
	Dilutive options outstanding		—			22,573

	Shares used in computing diluted net earnings per share		5,206,313			5,049,046

Diluted Net (Loss) Earnings Per Share before cumulative effect of a change in accounting principle		$	(.54	)	$	1.44
Cumulative effect of a change in accounting principle			(.06	)		—

Diluted Net (Loss) Earnings Per Share		$	(.60	)	$	1.44

The components of comprehensive (loss) income, net of tax, are as follows (in thousands):

	Three Months Ended August 31,
	2000		1999
Net (loss) earnings	$	(3,121	)	$	7,280
Foreign currency translation		(87	)		27

Comprehensive (loss) income	$	(3,208	)	$	7,307

Accumulated other comprehensive loss, net of tax, presented on the accompanying consolidated condensed balance sheets consists of the following (in thousands):

		August 31, 2000		May 31, 2000
Foreign currency translation		$	(804	)	$	(717	)

In July 1999, the Company authorized the repurchase of up to 300,000 shares of Common Stock from time to time at prevailing market prices. The authorization was effective until July 2000. During fiscal 2000 the Company repurchased 33,100 shares of Common Stock under the repurchase program at a cost of $218,000. The Company has not extended the authorization of the stock repurchase program.

The Company has entered into a non-binding letter of intent to sell unutilized property and a building for $2.9 million subject to due diligence and finalization of a definitive agreement.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The Company anticipates that the adoption of SFAS No. 133 will not have a material impact on its financial position, results of operations or cash flows. The Company will adopt SFAS No. 133 in its first fiscal quarter of 2002.

In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements, which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC and was effective the first fiscal quarter of fiscal years beginning after December 15, 1999 and requires companies to report any changes in revenue recognition as a cumulative change in accounting principal at the time of implementation in accordance with Accounting Principles Board Opinion 20, Accounting Changes. Subsequently, SAB No. 101A and 101B were issued to delay the implementation of SAB No. 101.

After evaluation of the Company's revenue recognition policies compared to the guidance in the Securities and Exchange Commission's Staff Accounting Bulletin No. 101B ("SAB No. 101") the Company has changed its accounting policy for revenue from mobile file storage equipment. Adoption of the change in accounting, in the third quarter of fiscal year 2001, resulted in revenue being recorded only after installation of the equipment on customer premises rather than upon shipment, thus postponing revenue recognition by an average of two months. The change in accounting necessitated the restatement of the first and second quarter 10Q filings to properly reflect the beginning of the year recording of the cumulative effect of a change in accounting principle.

Details of the impact on the financial statements for FY2001 first quarter are as follows:

	As Reported		Restated
Accounts Receivable	$	24,323	$	23,585
Inventories		6,824		7,210
Compensation Payable		1,699		1,646
Deferred taxes and other non-current liabilities		1,501		1,391
Retained Earnings		67,381		67,191

	As Reported			Restated
Revenues	$	29,725		$	30,230
Cost of revenues		19,273			19,466
Selling, general and administrative		14,993			15,053
(Loss) earnings before income taxes		(4,625	)		(4,373	)
(Benefit) provision for income taxes		(1,694	)		(1,582	)
Net (Loss) Earnings before cumulative effect of a change in accounting principle		(2,931	)		(2,791	)
Cumulative effect of a change in accounting principle		—			(330	)
Net (Loss) Earnings		(2,931	)		(3,121	)
Basic net (loss) earnings per share before cumulative effect of a change in accounting principle		—		$	(0.54	)
Cumulative effect on prior years of a change in accounting principle		—		$	(0.06	)
Basic net (loss) earnings per share	$	(0.56	)	$	(0.60	)
Diluted net (loss) earnings per share before cumulative effect of a change in accounting principle		—		$	(0.54	)
Cumulative effect on prior years of a change in accounting principle		—		$	(0.06	)
Diluted net (loss) earnings per share	$	(0.56	)	$	(0.60	)

	As Reported			Restated
Net (Loss) Earnings	$	(2,931	)	$	(3,121	)
Cumulative effect of a change in accounting principle		—			330
Deferred income taxes and other		242			354
Accounts receivable		5,379			4,874
Inventories		21			214
Compensation payable		(1,160	)		(1,100	)

The effect on the Net Loss before cumulative effect of a change in accounting principle for the three months ended August 31, 2000 was a decrease in the loss of $140,000. The Cumulative effect of the change in accounting principle was a charge of $330,000. The effect on the Net Loss for the three months was an increase in the Net Loss of $190,000.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Restated)

This report, including without limitation the following section regarding Management's Discussion and Analysis of Financial Condition and Results of Operations, contains 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, regarding the Company and its business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "foreseeable," "estimates," and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as the development of new products, enhancements or technologies, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.

Although forward-looking statements in this report reflect the good faith judgment of the Company's management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed in "Business Environment and Risk Factors" as well as those discussed elsewhere in this report. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers are urged to carefully review and consider the various disclosures made by the Company in this report, which attempt to advise interested parties of the risks and factors that may affect the Company's business, financial condition, results of operations and prospects.

The following discussion of the Company's financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements of the Company.

At August 31, 2000 the Company had cash and short-term investments of $8.3 million, a decrease of $2.6 million from the $10.9 million at May 31, 2000. The Company's working capital position at August 31, 2000 was $29.8 million as compared with $32.2 million at May 31, 2000. The current ratio of 2.8 at August 31, 2000 was higher than the current ratio of 2.7 reported for May 31, 2000. The decrease in cash and working capital are the result of the payment of liabilities assumed as a result of the Docucon acquisition, which closed on May 25, 2000, and the payment of compensation accrued in the prior year. Offsetting the decrease in cash was an accounts receivable decrease of $6.1 million from $29.7 million on May 31, 2000 to $23.6 million on August 31, 2000. Inventories at August 31, 2000 were $0.4 million higher than the $6.8 million at May 31, 2000.

Pursuant to the Agreement for Purchase and Sale of Assets (the "Agreement"), by and between the Company and Bell & Howell Document Management Products Company, a wholly-owned subsidiary of Bell & Howell Company ("Bell & Howell"), the Company sold its Field Service Group to Bell & Howell. The Company's Field Service Group consisted of assets that include existing service contracts and certain related tangible and intangible assets and certain liabilities. The price of the Purchased Assets, as defined in the Agreement, consisted of an initial cash payment from Bell & Howell to the Company of $11,200,000, the assumption of liabilities and obligations of the Company valued at an estimated $4,300,000 and up to an additional $3,500,000 payable to the Company subject to certain adjustments for changes in certain accounts attributable to the Field Service Group. The sale was effective as of June 1, 1999. In connection with the sale the Company recorded a pre-tax gain on sale of $13.8 million in the first quarter of fiscal year 2000.

On June 22, 1999, the Company announced the consolidation of its paper manufacturing operations to its main plant located in Mayville, Wisconsin. The Company closed its paper manufacturing facility located in Turlock, California and transferred the inventory and equipment to Mayville. As a result of the consolidation, the Company recorded a pre-tax charge of approximately $435,000 in the first quarter of fiscal year 2000.

Other current assets increased $3.3 million from $3.8 million at May 31, 2000 to $7.1 million at August 31, 2000 and other non-current assets increased $0.1 million from $2.4 million at May 31, 2000 to $2.5 million at August 31, 2000 primarily due to an increased tax receivable which will be realized on the carryback of current operating losses to prior years. Current liabilities decreased $2.5 million from $19.0 million at May 31, 2000 to $16.5 million at August 31, 2000. Significant transactions which affected current liabilities included the payment of accrued liabilities assumed as a result of the Docucon acquisition of assets and assumption of liabilities and by the payment of compensation accrued in the prior year.

Investments in property, plant and equipment, which were primarily focused on enterprise management information systems and associated infrastructure investments, were $0.1 million for the three months ended August 31, 2000. Capital expenditures to support operations for fiscal 2001 are expected to total approximately $0.6 million.

In July 1999, the Company authorized the repurchase of up to 300,000 shares of Common Stock from time to time at prevailing market prices. The authorization was effective until July 2000. During fiscal 2000 the Company repurchased 33,100 shares of Common Stock under the Company's authorized repurchase program at a cost of $218,000. The Company has not extended the authorization of the stock repurchase program.

For the three month period ended August 31, 2000, the Company paid cash dividends of $256,000, and for the three month period ended August 31, 1999, the Company paid cash dividends of $251,000.

The Company currently has no outstanding debt. The Company's unsecured $5 million revolving line of credit was terminated as of June 22, 2000. The Company has received and signed a commitment letter from a bank for a $5 million secured line of credit. The agreement will be finalized upon completion of customary bank due diligence. The Company believes that its cash and borrowing capacity will provide sufficient working capital for the next twelve months.

Revenues for the first quarter of fiscal 2001 amounted to $30.2 million, down $1.8 million or 5.6% from $32.0 million revenue for the first quarter of fiscal 2000. The decline is primarily related to a decrease in the sales of filing supplies and file storage equipment only partially offset by higher U.S. revenue from services and higher revenues from TAB's Canadian operation.

Backlog The Company's order booking to invoicing ratio ("book-to-bill ratio") was 1.1:1.0 for the first three quarters of fiscal 2000, resulting in a substantial increase in backlog. The ratio dropped to .94:1.0 in the fourth quarter of fiscal 2000, causing a reduction of backlog. There was a further small

reduction of backlog in the first quarter of fiscal 2001 although the ratio improved to .98:1.0. There can be no assurance that the Company's book-to-bill ratio will continue to improve.

Cost of Revenues, as a percentage of revenues, was 64.4% for the first quarter of fiscal 2001 as compared to the 60.1% cost of revenues reported in the first quarter of fiscal 2000 on comparable revenues. Cost of revenues for the first quarter was $19.5 million as compared to the $19.2 million amount reported in the comparable quarter of fiscal 2000. The increase in cost of revenues, as a percentage of revenues, was the result of higher costs of professional services and higher fixed costs related to imaging services.

Operating Expenses were $15.3 million or 50.4% of total revenues for the first quarter of fiscal 2001 as compared to $13.9 million or 43.3% of total revenues for the first quarter of fiscal 2000. The increase in operating expenses as a percentage of revenues was primarily due to lower revenues and a one-time charge of $1.4 million due to the retirement of the Company's Chief Executive Officer.

Interest (Expense) Income, net, and other was a gain of $0.1 million in the first quarter of fiscal 2001 as compared to a gain of $13.7 million in the first quarter of fiscal 2000. The decrease for the three months ended August 31, 2000 was primarily due to the gain on sale of the Field Service Group in the first quarter of the prior year.

Income Tax Benefit Net losses for the period ended August 31, 2000 have been reduced by the amount of tax refunds available from the carryback of net operating losses to prior years. The effective rate of 36.6% for the period ended August 31, 2000 is lower than the effective rate of 42.0% for the prior year due to limitation on carrybacks by certain states.

Earnings (Loss) Per Share for the three months ended August 31, 2000 was a loss of $.54 per share for both basic and diluted shares, respectively, compared to a gain of $1.45 per share for basic and a gain of $1.44 per share for diluted shares for the three months ended August 31, 1999.

Cumulative Effect of a Change in Accounting Principle Adoption of a change in accounting for the recognition of revenue related to mobile filing systems necessitated a cumulative effect adjustment of $.3 million as of the beginning of the first quarter of fiscal year 2001.

The Company has entered into a non-binding letter of intent to sell unutilized property and a building for $2.9 million subject to due diligence and finalization of a definitive agreement.

implementation in accordance with Accounting Principles Board Opinion 20, Accounting Changes. Subsequently, SAB No. 101A and 101B were issued to delay the implementation of SAB No. 101.

The Company's future operating results may be affected by various trends and factors, which the Company must successfully manage in order to achieve favorable operating results. In addition, there are trends and factors beyond the Company's control, which affect its operations. Such trends and factors include, but are not limited to, adverse changes in general economic conditions or conditions in the specific markets for the Company's products, governmental regulation, fluctuations in foreign exchange rates, and other factors, including those listed below.

The Company reaches its North American customers through a broad distribution system, which currently includes 24 sales branches in the U.S. and Canada employing approximately 140 account managers who primarily call on large companies and government agencies. The Company currently also has approximately 100 U.S. and Canadian independent Channel Partners who primarily serve medium and smaller size firms. Additional Channel Partners may be appointed in the future. The Company also maintains a call center to receive orders by telephone and intends to expand the call center operation to include outbound solicitation of orders. There can be no assurance that the Company's distribution system will obtain sufficient orders to return the Company to profitability.

The Company's future performance may depend in significant part upon attracting and retaining key senior management, sales, manufacturing, marketing and technical support personnel. Competition for such personnel is intense and the inability to retain its current key personnel or to attract, assimilate or retain other highly qualified personnel in the future on a timely basis could have a material adverse effect on the Company's business, results of operations and financial condition.

Factors affecting the Company's operating results and gross margins include the volume of product sales, competitive pricing pressures, the ability of the Company to match supply with demand, changes in product and customer mix, market acceptance of new or enhanced versions of the Company's products and services, changes in the channels through which the Company's products and services are distributed, timing of new product announcements and introductions by the Company and its competitors, fluctuations in product costs, variations in manufacturing cycle times, fluctuations in manufacturing utilization, the ability of the Company to achieve manufacturing volumes with its new and existing products, increased research and development expenses, exchange rate fluctuations, a change in the Company's effective tax rate and changes in general economic conditions. All of these

factors are difficult to forecast and these or other factors can materially affect the Company's quarterly or annual operating results.

The Company expects competition to increase in the future from existing competitors and from other companies that may enter the Company's existing or future markets with similar or alternative document management solutions that may be less costly or provide additional features. Such competition could result in lost sales and in lower operating results, if the Company's average selling prices decrease faster than its costs.

The Company's Professional Services business requires submitting bids to customers based on estimates of the time and expense needed to meet various project specifications and deadlines. Failure to estimate accurately and execute within proper estimates has had a negative impact on our gross margins and may continue to do so. Management is developing improved systems, cost controls and management oversight to produce better estimates and project execution. There can be no assurance that these improvements will be successful.

The Company purchases several critical components from single or sole source vendors for which alternative sources are not currently developed. Development of alternative suppliers would require a significant amount of time to qualify in the case of certain of the Company's components. The Company does not maintain long-term supply agreements with any of these vendors. The inability to develop alternative sources for these single or sole source components or to obtain sufficient quantities of these components could result in delays or reductions in product shipments, which could adversely affect the Company's business, financial condition and results of operations.

There can be no assurance that the Company's manufacturing facilities will achieve or maintain acceptable manufacturing volumes in the future. The inability of the Company to achieve planned volumes from its manufacturing facilities could have an adverse effect on the Company's business, financial condition and results of operations. Any problems experienced by the Company in its current or future transitions to new processes and products or the consolidation of its manufacturing operations could have a material adverse effect on the Company's business, financial condition and results of operations.

Recent market research indicates there may be an accelerated move to digital technologies, such as imaging, by large paper intensive organizations. This trend could result in a weakening of demand for the Company's paper-based records management supplies and records storage products. Failure of the Company to match the changing market with new document management products and services in the digital arena could materially adversely affect the Company's business, results of operations, financial condition and prospects.

The backlog of orders has historically not been a significant factor in understanding the business of the Company because the order-to-revenue cycle was typically completed within 30 to 60 days from receipt of an order. In recent periods, however, the orders obtained by the Company have included a higher percentage of larger projects with a longer order-to-revenue cycle. Revenue from product sales is generally recognized upon product shipment. Professional service projects, some of which include

product sales, tend to have a longer order-to-revenue cycle. The Company's working capital needs have increased to support the consequently longer order-to-collection cycle. The Company is currently attempting to achieve a more favorable mix of orders of varying sizes and types. There can be no assurance that these efforts will be successful.

The Company's order booking to invoicing ratio ("book-to-bill ratio") was 1.1:1.0 for the first three quarters of fiscal 2000, resulting in a substantial increase in backlog. The ratio dropped to .94:1.0 in the fourth quarter of fiscal 2000, causing a reduction of backlog. There was a further small reduction in backlog in the first quarter of fiscal 2001 although the ratio improved to .98:1.0. There can be no assurance that the Company's book-to-bill ratio will continue to improve.

Government revenues primarily expose the Company to risks from reductions in budget allocations to support regulation and administrative offices. The current reinventing government initiative opens opportunities to help the government streamline workflow processes, reduce paperwork and increase customer service, which may provide short-term opportunities for the Company. However, the long-term effect of a government initiative to streamline processes could have a negative impact on the Company's business, financial condition and results of operations.

The Company relies on a combination of patents, trademarks, copyright and trade secret laws, confidentiality procedures and licensing arrangements to protect its intellectual property rights. The Company has been notified in the past and the Company may be notified in the future of claims that they may be infringing upon patents or other intellectual property rights owned by third parties. There can be no assurance that in the future any patents held by the Company will not be invalidated, that patents will be issued for any of the Company's pending applications or that any claims allowed from existing or pending patents will be of sufficient scope or strength or be issued in the primary countries where the Company's products can be sold to provide meaningful protection or any commercial advantage to the Company. Additionally, competitors of the Company may be able to design around the Company's patents.

In January 1999, certain member countries of the European Union established permanent, fixed conversion rates between their existing currencies and the European Union's common currency (the Euro). The transition period for the introduction of the Euro is scheduled to phase in over a period ending January 1, 2002, with the existing currency being completely removed from circulation on July 1, 2002. The timing of phasing out all uses of the existing currencies will comply with the legal requirements and also be scheduled to facilitate optimal coordination with the plans of our vendors, distributors and customers. Work related to the introduction of the Euro and the phasing out of the other currencies includes converting information technology systems; recalculating currency risk; and taking action, if needed, regarding continuity of contracts; and modifying our processes for preparing tax, accounting, payroll and customer records. Management believes the introduction of the Euro and the phasing out of the other currencies will not have a material impact on the Company's Consolidated Financial Statements.

International sales accounted for approximately 23% and 19%, respectively of the Company's total revenues in the first quarter of fiscal 2001 and 2000. Fluctuations in currencies could adversely affect the Company's business, financial condition and results of operations. In addition, gains and losses on

the conversion to United States dollars of accounts receivable, accounts payable and other monetary assets and liabilities arising from international operations may contribute to fluctuations in the Company's results of operations. Because sales of the Company's products have been denominated to date primarily in United States dollars, increases in the value of the United States dollar could increase the price of the Company's products so that they become relatively more expensive to customers in the local currency of a particular country, leading to a reduction in sales and profitability in that country. The Company is subject to the risks of conducting business internationally, including foreign government regulation and general geopolitical risks such as political and economic instability, potential hostilities and changes in diplomatic and trade relationships. Manufacturing and sales of the Company's products may also be materially adversely affected by factors such as unexpected changes in, or imposition of, regulatory requirements, tariffs, import and export restrictions and other barriers and restrictions, longer payment cycles, greater difficulty in accounts receivable collection, potentially adverse tax consequences, the burdens of complying with a variety of foreign laws and other factors beyond the Company's control. In addition, the laws of certain foreign countries in which the Company's products are or may be developed, manufactured or sold, may not protect the Company's intellectual property rights to the same extent as do the laws of the United States and thus make piracy of the Company's products a more likely possibility. There can be no assurance that these factors will not have a material adverse effect on the Company's business, financial condition or results of operations.

The Company increased its expense levels to support its planned growth over the last two years. The Company will be focusing on reducing costs since growth has not materialized as planned. If the cost reduction measures do not align with the current revenue levels, the Company's business, financial condition and results of operations will be materially adversely affected.

The Company is exposed to market risk related to fluctuations in interest rates and in foreign currency exchange rates.

The Company's exposure to market risk due to fluctuations in interest rates relates primarily to its short-term investment portfolio, which consists of corporate debt securities, which are classified as available-for-sale and were reported at an aggregate fair value of $4.1 million as of August 31, 2000. These available-for-sale securities are subject to interest rate risk in as much as their fair value will fall, if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10% from the levels prevailing at August 31, 2000, the fair value of the portfolio would not decline by a material amount. The Company does not use derivative financial instruments to mitigate the risks inherent in these securities. However, the Company does attempt to reduce such risks by typically limiting the maturity date of such securities to no more than nine months, placing its investments with high credit quality issuers and limiting the amount of credit exposure with any one issuer. In addition, the Company believes that it currently has the ability to hold these investments until maturity, and therefore, believes that reductions in the value of such securities attributable to short-term fluctuations in interest rates would not materially affect the financial position, results of operations or cash flows of the Company.

The Company's exposure to market risk due to fluctuations in foreign currency exchange rates relates primarily to the intercompany balance with its Australian subsidiary. Although the Company transacts business with various foreign countries, settlement amounts are usually based on local currency. Transaction gains or losses have not been significant in the past and there is no hedging activity on Australian dollars or other currencies. Based on the intercompany balance of $0.8 million at August 31, 2000, a hypothetical 10% adverse change in Australian dollars against U.S. dollars would

not result in a material foreign exchange loss. Consequently, the Company does not expect that reductions in the value of such intercompany balances or of other accounts denominated in foreign currencies, resulting from even a sudden or significant fluctuation in foreign exchange rates, would have a direct material impact on the Company's financial position, results of operations or cash flows.

Notwithstanding the foregoing analysis of the direct effects of interest rate and foreign currency exchange rate fluctuations on the value of certain of the Company's investments and accounts, the indirect effects of such fluctuations could have a material adverse effect on the Company's business, financial condition and results of operations. For example, international demand for the Company's products could be affected by foreign currency exchange rates. In addition, interest rate fluctuations may affect the buying patterns of the Company's customers. Furthermore, interest rate and currency exchange rate fluctuations have broad influence on the general condition of the U.S., foreign and global economies, which could materially and adversely affect the Company.

Pursuant to the requirements 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.

DELAWARE		94-1190862
(State of Incorporation)		(IRS Employer Identification No.)

		Page No.
	PART I. FINANCIAL INFORMATION
ITEM 1	Financial Statements:
	Consolidated Condensed Balance Sheets August 31, 2000 (Restated) and May 31, 2000	3
	Consolidated Condensed Statements of Earnings Three months ended August 31, 2000 (Restated) and 1999	4
	Consolidated Condensed Statements of Cash Flows Three months ended August 31, 2000 (Restated) and 1999	5
	Supplemental Financial Data—Notes (Restated)	6
ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations (Restated)	11
ITEM 3	Quantitative and Qualitative Disclosure About Market Risks	17
	PART II. OTHER INFORMATION
ITEM 6	Exhibits	19
	Signatures	20

			August 31, 2000			May 31, 2000
ASSETS
Current assets:
	Cash and cash equivalents		$	4,212		$	5,724
	Short-term investments			4,104			5,170
	Accounts receivable, less allowances of $1,184 and $1,095 for doubtful accounts			23,585			29,685
	Inventories			7,210			6,842
	Prepaid income taxes and other expenses			7,120			3,837

		Total Current Assets		46,231			51,258
Property, plant and equipment, net of accumulated depreciation of $29,548 and $28,845				11,266			12,253
Goodwill, net				7,094			7,387
Other assets				2,491			2,395

Total Assets			$	67,082		$	73,293

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	8,817		$	10,024
	Compensation payable			1,646			2,911
	Other accrued liabilities			5,955			6,099

		Total Current Liabilities		16,418			19,034

Deferred taxes and other non-current liabilities				1,391			1,579

STOCKHOLDERS' EQUITY:
	Preferred stock: $.01 par value, authorized 500,000 shares, issued—none			—			—
	Common stock: $.01 par value, authorized 25,000,000 shares, issued—August 2000 and May 2000—7,611,116 shares			76			76
	Additional paid-in capital			14,541			15,286
	Stock subscriptions—notes receivable			(695	)		(1,374	)
	Retained earnings			67,191			70,573
	Treasury stock: August 2000—2,490,969 shares and May 2000—2,404,027 shares			(31,036	)		(31,164	)
	Accumulated other comprehensive loss			(804	)		(717	)

		Total Stockholders' Equity		49,273			52,680

Total Liabilities and Stockholder's Equity			$	67,082		$	73,293

			Three Months Ended August 31,
			2000			1999
OPERATING ACTIVITIES:
	Net (loss) earnings		$	(3,121	)	$	7,280
	Cumulative effect of a change in accounting principle			330			—
Adjustments to Reconcile Net (Loss) Earnings to Net Cash Required by Operating Activities:
	Depreciation and amortization			1,086			1,118
	Deferred income taxes and other			354			—
	Gain on sale of Field Service Group			—			(8,001	)
	Changes in operating assets and liabilities:
		Accounts receivable, net		4,874			1,137
		Inventories		214			(522	)
		Prepaid income taxes and other expenses		(3,529	)		(1,497	)
		Other assets		(94	)		663
		Accounts payable		(1,218	)		(163	)
		Compensation payable		(1,100	)		(584	)
		Other accrued liabilities		(224	)		(493	)

Net Cash Required by Operating Activities				(2,428	)		(1,062	)

INVESTING ACTIVITIES:
	Sale of Field Service Group			—			13,405
	Purchase of property, plant and equipment, net			(134	)		(486	)
	Purchases of short-term investments			(1,487	)		(1,820	)
	Sales of short-term investments			2,553			991

Net Cash Provided By Investing Activities				932			12,090

FINANCING ACTIVITIES:
	Repayment of long-term debt			—			(81	)
	Cash restricted to collateralize loan			—			(6,625	)
	Proceeds from issuance of common stock			62			—
	Repurchase of Treasury Stock			—			(22	)
	Dividends paid			(256	)		(251	)

Net Cash Required by Financing Activities				(194	)		(6,979	)

Effect of exchange rate changes on cash				178			17

Increase (decrease) in cash and cash equivalents				(1,512	)		4,066
Cash and cash equivalents at beginning of period				5,724			6,972

Cash and Cash Equivalents at End of Period			$	4,212		$	11,038

	August 31, 2000		May 31, 2000
Finished goods	$	2,597	$	2,164
Work in process		297		273
Raw materials		4,316		4,405

	$	7,210	$	6,842

Record Date		Shares Outstanding	Dividend Per Share
Fiscal 2001:
	August 25, 2000	5,120,147	$	0.05
Fiscal 2000:
	August 25, 1999	5,024,589	$	0.05

		August 31, 2000		May 31, 2000
Long-lived assets:
	United States	$	12,830	$	13,585
	Canada		583		733
	Netherlands		121		151
	Australia		223		179

	Consolidated Total	$	13,757	$	14,648

		TAB PRODUCTS CO. (Registrant)
Date: April 16, 2001		/s/ DAVID J. DAVIS David J. Davis, Senior Vice President and Chief Financial Officer
Date: April 16, 2001		/s/ ROBERT J. CRECCA Robert J. Crecca, Corporate Controller and Chief Accounting Officer