Thank you for joining the Educational Development Corporation's first quarter earnings call. Before beginning the call, we would like to remind you that some of the statements made today will be forward-looking and are protected under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied due to a variety of factors. We refer you to Educational Development Corporation's recent filings with the SEC for a more detailed discussion of the company's financial condition. With that, I would like to turn the call over to Craig White, the company's President and Chief Executive Officer.

Thank you, Justin. Thank you, and welcome, everyone, to the call. With me today are Randall White, our Executive Chairman of the Board; Heather Cobb, Chief Sales and Marketing Officer; and Dan O'Keefe, our Chief Financial Officer. Some points I'd like to start off with. As much as we hate to keep pointing this out, our first quarter sequential comparisons remain difficult. Quarter 1 last year had tailwinds continuing from the pandemic, including retail stores reopening, record levels of active consultants and continued school disruptions. Quarter 1 this year was impacted additionally by headwinds, primarily tied to the overall economy such as the war in Ukraine, record inflation resulting in double-digit fuel and food price increases and employees returning to work back in the office. While we continue to manage through the impacts and changes created from the pandemic and these other global-related headwinds, I'm proud of our ability to remain profitable and to see the resiliency of our team, our employees to manage through these tumultuous times. We will expand on Q1 further in the call, and I will walk you through the recent announcement in regard to our Usborne publishing distribution agreement announced in May this year. With that, I will now turn the call over to Dan O'Keefe, our Chief Financial Officer, to provide a brief overview of the financials for our first quarter of fiscal 2023.

Thank you, Craig. Our first quarter highlights include net revenues for the first quarter totaled $23.2 million, a decrease of $17.6 million or 43.1% compared to $40.8 million reported in the first quarter of fiscal 2022. Earnings before net income taxes for the first quarter totaled $300,000, a decrease of $4.4 million or 93.6% compared to $4.7 million reported in the first quarter last year. Net earnings totaled $200,000 compared to $3.4 million, a decrease of $3.2 million or 94.1% from last year. Earnings per share on a fully diluted basis totaled $0.03 compared to $0.41, down 92.7% on a fully diluted basis from last year. Some balance sheet highlights. As we mentioned in the last earnings call, inventory levels peaked at the beginning of this fiscal year at approximately $17.6 million and reduced slightly to $71.6 million by the end of the first quarter. We continue to expect inventory to reduce in future quarters as we normalize our volumes to match current sales volumes. We expect to see the biggest change in inventory in the fiscal third quarter when our sales are the highest. Cash flow generated from inventory sales will be used to reduce our working capital line of credit. That concludes the financial report and now I'll turn the call over back to Craig.

Thanks, Dan. As I mentioned previously, our business is continually facing headwinds or tailwinds, depending on both the change in discretionary cash flow of our customers and the change in unemployment or inflation impacting our consultant network. Fortunately, we can capitalize on tailwinds and adjust our sales and costs in challenging periods like we are now when consumer discretionary spending is declining. We are not sitting idle watching the impact of the market. We are constantly changing our marketing and sales strategy to maximize our opportunity. And to further talk about sales opportunities, I'll pass the call over to our Chief Sales and Marketing Officer, Heather Cobb.

Thanks, Craig. I just want to talk a little bit about some recent sales and marketing specials that we have done and some of the things that we are currently doing. In May, we offered double points for our incentive trip contest, which we actually launched on May 1. That promotion itself resulted in an uptick in May sales. May and June, we offered a variety of different discount opportunities on various books to draw attention from consultants as well as customers. This July, we have been running promotions, including a free shipping promotion opportunity on our e-commerce site, which began on Monday and is running through the end of the week. A few weeks ago, we had our national convention here in Tulsa. It was our first live convention event in 3 years. We did a hybrid version of convention this year. The last 2 years, we've done a fully virtual event. And this year, we were able to host over 3,000 people attending both live and some from at home. We believe that this is the best event we've ever had. We've had great response back not only from those who attended but also with the various vendors that we worked with on the event. We announced during the convention that we were running a fabulous recruiting special to generate interest in joining the team. We've currently had over 3,000 new recruits to date with that special that started in mid-June. It is running through July 15, and we're excited to see how many more we will be adding. In addition, July and even in the coming months, we have more promotions that will be announced at a later date, both targeted towards customers and consultants. High inflationary periods usually precede growth in active consultants as more families are looking for supplemental income to offset an increase in living costs. And so we are working to try to capitalize on that opportunity because more recruits coming in the door helps increase those sales opportunities that come later, especially going into the fall. That concludes our sales and recruiting update, and I will turn the call back over to Craig once again.

Thank you, Heather. As Dan mentioned, we are continuing to improve our balance sheet. As our inventory converts to cash, we will initially use this cash to pay down our working capital line. After that, we plan to use additional cash flow to reinstate investor dividends. I've also mentioned in previous calls that I want to expand into educational toys, games, and puzzles. We have been in discussions with several vendors interested in creating exclusive content for us. It is still early in that process, and we have seen a few samples and second revisions of presentations. We are aiming for this expansion in fiscal 2024 or calendar 2023. We are actively exploring further projects and products. As Heather indicated, our sales and marketing team is implementing exciting changes with many new ideas to promote our products and energize our sales force during this inflationary period. We are also focused on increasing our active consultant count. We are pleased to observe a rebound in sales from channels that were negatively impacted by the pandemic, including school book fairs, booths, and school and library sales. These two channels are showing positive signs of returning to pre-pandemic levels. Lastly, I want to address our recent agreement with Usborne. This new agreement is long overdue and replaces several outdated agreements. It does not affect our 40-plus-year relationship, and we remain committed to Usborne Publishing, which produces some of the best children's books globally. They are also committed to our multilevel marketing division. There are still some changes we are navigating, but we continue to support each other during these leadership transitions in both of our companies. Now that I've summarized some recent activities, I will open the call to questions from our investors. Justin, please proceed.

At this time, there are no questions.

Justin, I have another comment to add. We are working on improving our schedule for our 8-K filings, press releases, and the announcement of this call. Over the past few quarters, we've been trying to make it more efficient so that the call occurs sooner after our press release and 8-K. I think we did not announce this call until about an hour ago, which is not ideal on our part, and we will aim to do better for next quarter.

There are no questions at this time, sir.

All right. I'll make some closing statements then. While the first quarter is not what we hoped it would be, it's still affected by factors beyond our control, such as the global economy, inflation, recession, and rising costs. However, there have been many positive developments over the last month or two that give us great hope for the future. Our convention was a huge success, and many of our promotions are performing very well, which we will continue to pursue. We need to increase our headcount, but most importantly, we're focused on boosting our sales to reduce our inventory. It will take us a couple more quarters to return to appropriate inventory levels, and after that, we should be in a good position moving forward. Thank you. I appreciate everyone being on the call.

Thank you. And that does conclude today's conference. We do thank you for your participation. Have an excellent day.