Educational Development Corp 10-Q for FY2025 Q3

Educational Development Corp (EDUC)

10-Q 2025-01-13 For: 2024-11-30

Added on April 11, 2026

About this 10-Q

Educational Development Corp filed this 10-Q on January 13, 2025, covering the quarter ended November 30, 2024 (FY2025 Q3).

Headline figures

Quarter ended November 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.05M; down 34.8% from $16.94M a year earlier
Net loss: $835.7K; compared with net income of $1.97M a year earlier
Diluted EPS: -$0.10; compared with $0.24 a year earlier

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5402 South 122nd East Ave, Tulsa, Oklahoma	74146
(Address of principal executive offices)	(Zip Code)

Common Stock, $.20 par value	EDUC	NASDAQ
(Title of class)	(Trading symbol)	(Name of each exchange on which registered)

	Large accelerated filer ☐	Accelerated filer ☐

	Non-accelerated filer ☒	Smaller reporting company ☒

		Emerging Growth Company ☐

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

	●	our success in recruiting and retaining new brand partners,
	●	our ability to locate and procure desired books,
	●	product and supplier concentrations,
	●	our relationship with our primary supplier and the related distribution requirements and contractual limitations,
	●	adverse publicity associated with our Company or the industry,
	●	our ability to ship timely,
	●	changes to our primary sales channels, including social media and party plan platforms,
	●	changing consumer preferences and demands,
	●	cybersecurity threats and incidents,
	●	legal matters,
	●	reliance on information technology infrastructure,
	●	restrictions imposed by covenants in the agreements governing our indebtedness,
	●	our ability to obtain adequate financing for working capital and capital expenditures,
	●	economic and competitive conditions, regulatory changes and other uncertainties, as well as
	●	those factors discussed below and elsewhere in our Annual Report on Form 10-K for the year ended February 29, 2024 and in this Quarterly Report on Form 10-Q, all of which are difficult to predict.

Indicate by check mark whether the registrant (1) has filed all reports 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 ☒ No ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
	Yes ☐ No ☒

	November 30,			February 29,
ASSETS	2024			2024
CURRENT ASSETS:
Cash and cash equivalents	$	2,289,300		$	844,500
Restricted cash		935,600			432,900
Accounts receivable, less allowance for credit losses of $124,700 (November 30) and $129,000 (February 29)		2,175,200			1,936,900
Inventories - net		32,058,600			43,913,200
Prepaid expenses and other assets		842,900			630,800
Assets held for sale		19,250,000			18,281,100
Total current assets		57,551,600			66,039,400

INVENTORIES - net		14,728,500			11,677,000
PROPERTY, PLANT AND EQUIPMENT - net		6,964,300			8,939,600
DEFERRED INCOME TAX ASSET		2,663,600			1,406,500
OPERATING LEASE RIGHT-OF-USE ASSETS		1,256,500			1,614,900
OTHER ASSETS		437,300			427,600
TOTAL ASSETS	$	83,601,800		$	90,105,000

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2,332,700		$	3,910,200
Line of credit		4,298,100			5,498,100
Deferred revenues		1,378,100			583,500
Operating lease liabilities, current		705,800			726,900
Current maturities of long-term debt		1,800,000			1,800,000
Accrued salaries and commissions		913,900			384,400
Income taxes payable		1,148,100			773,400
Other current liabilities		3,232,400			3,338,100
Total current liabilities		15,809,100			17,014,600

LONG-TERM DEBT - net		25,324,300			26,640,700
OPERATING LEASE LIABILITIES, non-current		550,700			888,000
OTHER LONG-TERM LIABILITIES		111,000			111,000
Total liabilities		41,795,100			44,654,300


SHAREHOLDERS' EQUITY:
Common stock, $0.20 par value; Authorized 16,000,000 shares; Issued 12,702,080 shares; Outstanding 8,583,601 (November 30) and 8,575,088 (February 29) shares		2,540,400			2,540,400
Capital in excess of par value		13,698,500			13,405,400
Retained earnings		38,648,500			42,566,600
Accumulated other comprehensive income (loss)		(21,600	)		24,400
		54,865,800			58,536,800
Less treasury stock, at cost		(13,059,100	)		(13,086,100	)
Total shareholders' equity		41,806,700			45,450,700
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	83,601,800		$	90,105,000

	Three Months Ended November 30,						Nine Months Ended November 30,
	2024			2023			2024			2023
PRODUCT REVENUES, net of discounts and allowances	$	10,556,100		$	16,597,200		$	26,266,600		$	39,964,000
Transportation revenue		496,000			347,600			1,288,100			2,097,800
NET REVENUES		11,052,100			16,944,800			27,554,700			42,061,800
COST OF GOODS SOLD		4,148,300			5,802,400			10,544,700			14,637,100
Gross margin		6,903,800			11,142,400			17,010,000			27,424,700

OPERATING EXPENSES
Operating and selling		1,744,100			2,978,200			5,010,000			7,292,100
Sales commissions		3,283,600			5,585,000			8,193,400			13,305,100
General and administrative		3,074,700			3,520,300			9,179,700			10,683,900
Total operating expenses		8,102,400			12,083,500			22,383,100			31,281,100


INTEREST EXPENSE		575,400			726,200			1,697,800			2,202,900
OTHER INCOME		(662,100	)		(4,363,300	)		(1,745,900	)		(9,007,500	)

EARNINGS (LOSS) BEFORE INCOME TAXES		(1,111,900	)		2,696,000			(5,325,000	)		2,948,200

INCOME TAX EXPENSE (BENEFIT)		(276,200	)		723,900			(1,406,900	)		787,200
NET EARNINGS (LOSS)	$	(835,700	)	$	1,972,100		$	(3,918,100	)	$	2,161,000

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Basic	$	(0.10	)	$	0.24		$	(0.47	)	$	0.26
Diluted	$	(0.10	)	$	0.24		$	(0.47	)	$	0.26

WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING
Basic		8,273,402			8,266,032			8,270,797			8,271,284
Diluted		8,273,402			8,266,032			8,270,797			8,277,491
Dividends per share	$	-		$	-		$	-		$	-

	Common Stock (par value $0.20 per share)													Treasury Stock
	Number of Shares Issued		Amount		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Income			Number of Shares			Amount			Shareholders' Equity

BALANCE – February 29, 2024		12,702,080	$	2,540,400	$	13,405,400		$	42,566,600		$	24,400			4,126,992		$	(13,086,100	)	$	45,450,700
Sale of treasury stock		-		-		(4,100	)		-			-			(4,000	)		12,700			8,600
Share-based compensation expense - net		-		-		100,800			-			-			-			-			100,800
Change in fair value of interest rate exchange agreement		-		-		-			-			22,900			-			-			22,900
Net loss		-		-		-			(1,279,000	)		-			-			-			(1,279,000	)
BALANCE - May 31, 2024		12,702,080	$	2,540,400	$	13,502,100		$	41,287,600		$	47,300			4,122,992		$	(13,073,400	)	$	44,304,000
Sale of treasury stock		-		-		(3,000	)		-			-			(2,513	)		7,900			4,900
Share-based compensation expense - net		-		-		100,800			-			-			-			-			100,800
Change in fair value of interest rate exchange agreement		-		-		-			-			(67,700	)		-			-			(67,700	)
Net loss		-		-		-			(1,803,400	)		-			-			-			(1,803,400	)
BALANCE - August 31, 2024		12,702,080	$	2,540,400	$	13,599,900		$	39,484,200		$	(20,400	)		4,120,479		$	(13,065,500	)	$	42,538,600
Sale of treasury stock		-		-		(2,200	)		-			-			(2,000	)		6,400			4,200
Share-based compensation expense - net		-		-		100,800			-			-			-			-			100,800
Change in fair value of interest rate exchange agreement		-		-		-			-			(1,200	)		-			-			(1,200	)
Net loss		-		-		-			(835,700	)		-			-			-			(835,700	)
BALANCE - November 30, 2024		12,702,080	$	2,540,400	$	13,698,500		$	38,648,500		$	(21,600	)		4,118,479		$	(13,059,100	)	$	41,806,700

	Nine Months Ended November 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$	(3,918,100	)	$	2,161,000
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		1,355,300			1,995,500
Deferred income taxes		(1,257,100	)		(199,500	)
Provision for credit losses		53,600			19,800
Provision for inventory valuation allowance		220,400			9,300
Share-based compensation expense - net		302,400			270,700
Net loss (gain) on sale of assets		3,300			(4,017,100	)
Changes in assets and liabilities:
Accounts receivable		(291,900	)		1,041,900
Inventories - net		8,582,700			5,867,700
Prepaid expenses and other assets		(241,900	)		107,300
Accounts payable		(1,577,500	)		1,271,200
Accrued salaries and commissions and other liabilities		377,800			637,700
Deferred revenues		794,600			1,491,600
Income taxes payable/receivable		374,700			961,700
Total adjustments		8,696,400			9,457,800
Net cash provided by operating activities		4,778,300			11,618,800
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(308,300	)		(675,200	)
Proceeds from sale of assets		9,800			4,858,200
Net cash provided by (used in) investing activities		(298,500	)		4,183,000
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on term debt		(1,350,000	)		(6,049,100	)
Cash paid to acquire treasury stock		-			(563,900	)
Sales of treasury stock		17,700			-
Net payments under line of credit		(1,200,000	)		(5,636,400	)
Net cash used in financing activities		(2,532,300	)		(12,249,400	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		1,947,500			3,552,400
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF PERIOD		1,277,400			689,100
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD	$	3,224,900		$	4,241,500

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid for interest	$	1,695,900		$	2,216,400
Cash paid for income taxes - net of refunds	$	33,800		$	25,000

	November 30, 2024		November 30, 2023
Cash and cash equivalents	$	2,289,300	$	3,141,000
Restricted cash		935,600		1,100,500
Total cash, cash equivalents and restricted cash shown in the condensed statements of cash flows	$	3,224,900	$	4,241,500

	November 30, 2024			February 29, 2024
Current:
Product inventory	$	32,486,300		$	44,303,000
Inventory valuation allowance		(427,700	)		(389,800	)
Inventories net – current	$	32,058,600		$	43,913,200

Noncurrent:
Product inventory	$	15,480,300		$	12,269,200
Inventory valuation allowance		(751,800	)		(592,200	)
Inventories net – noncurrent	$	14,728,500		$	11,677,000

	November 30, 2024			February 29, 2024
Operating lease assets:
Right-of-use assets	$	1,256,500		$	1,614,900

Operating lease liabilities:
Current lease liabilities	$	705,800		$	726,900
Long-term lease liabilities	$	550,700		$	888,000

Weighted-average remaining lease term (months)		16.2			25.8
Weighted-average discount rate		4.87	%		4.34	%

Years ending February 28 (29),
2025	$	190,400
2026		701,000
2027		435,300
Total future minimum rental payments		1,326,700
Less: imputed interest		(70,200	)
Total operating lease liabilities	$	1,256,500

Years ending February 28 (29),
2025	$	657,500
2026		2,657,700
2027		2,666,300
2028		2,676,600
2029		2,741,400
Thereafter		3,711,200
Total	$	15,110,700

	(i)	Two Term Loans on 20-year amortization with 5-year maturity date of August 9, 2027
	(ii)	$15 Million Fixed Rate Term Loan bears interest at a fixed rate per annum equal to 4.26%
	(iii)	$21 Million Floating Rate Term Loan bears interest at a rate per annum equal to Term SOFR Rate + 1.75%
	(iv)	$5.5 Million Revolving Loan with maturity date of January 4, 2025. The Revolving Loan bears interest at a rate per annum equal to Term SOFR Rate + 5.50% (effective rate was 10.17% at November 30, 2024)
	(v)	Revolving Loan allows for Letters of Credit upon bank approval (none were outstanding at November 30, 2024)

	Three Months Ended November 30,						Nine Months Ended November 30,
	2024			2023			2024			2023
Product revenues, net of discounts of Usborne products by division:
PaperPie division	$	4,446,500		$	7,578,200		$	9,889,200		$	17,521,500
% of total PaperPie Product revenues, net of discounts		47.9	%		49.4	%		43.3	%		49.3	%
Publishing division		-			-			-			1,304,000
% of total Publishing Product revenues, net of discounts		0.0	%		0.0	%		0.0	%		29.5	%
Total Product revenues, net of discounts of Usborne products	$	4,446,500		$	7,578,200		$	9,889,200		$	18,838,200

Purchases received by product type:
Usborne	$	70,600		$	-		$	171,300		$	1,560,700
% of total purchases received		15.2	%		0.0	%		8.8	%		20.1	%
All other product types		394,100			1,713,700			1,774,200			6,191,700
% of total purchases received		84.8	%		100.0	%		91.2	%		79.9	%
Total purchases received	$	464,700		$	1,713,700		$	1,945,500		$	7,752,400

	Shares		Weighted Average Fair Value (per share)

Outstanding at February 29, 2024		297,000	$	5.53
Granted		-		-
Vested		-		-
Forfeited		-		-
Outstanding at November 30, 2024		297,000	$	5.53

Years ending February 28 (29),
2025	$	450,000
2026		1,800,000
2027		1,800,000
2028		23,200,900
Total	$	27,250,900

NET REVENUES
	Three Months Ended November 30,				Nine Months Ended November 30,
	2024		2023		2024		2023
PaperPie	$	9,776,700	$	15,698,300	$	24,117,300	$	37,615,500
Publishing		1,275,400		1,246,500		3,437,400		4,446,300
Total	$	11,052,100	$	16,944,800	$	27,554,700	$	42,061,800

EARNINGS (LOSS) BEFORE INCOME TAXES
	Three Months Ended November 30,					Nine Months Ended November 30,
	2024			2023		2024			2023
PaperPie	$	1,017,000		$	1,610,700	$	1,317,400		$	3,633,600
Publishing		422,500			341,200		909,300			1,237,800
Other		(2,551,400	)		744,100		(7,551,700	)		(1,923,200	)
Total	$	(1,111,900	)	$	2,696,000	$	(5,325,000	)	$	2,948,200

	-	The carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments
	-	The estimated fair value of our assets held for sale for the Hilti complex was $37,000,000 as of November 30, 2024 and February 29, 2024, respectively. Management's estimates are based on the recent sale agreement for the price of the Hilti Complex less the estimated costs to sell plus an estimated value of the excess land of approximately 17 acres for $2,500,000 along with the estimated fair value of equipment held for sale of approximately $1,000,000.
	-	The estimated fair value of our term notes payable is estimated by management to approximate $26,936,300 and $28,152,800 as of November 30, 2024 and February 29, 2024, respectively. Management's estimates are based on the obligations' characteristics, including floating interest rate, maturity, and collateral.
	-	The fair value of the Company’s interest rate swap of $(21,600) is based on Level 2 inputs, including the present value of estimated future cash flows based on market expectations of the yield curve on variable interest rates.

Period	Total # of Shares Purchased		Average Price Paid per Share		Total # of Shares Purchased as Part of Publicly Announced Plan (1)		Maximum # of Shares that may be Repurchased under the Plan (1)

September 1 - 30, 2024		-	$	-		-		376,393
October 1 - 31, 2024		-		-		-		376,393
November 1 - 30, 2024		-		-		-		376,393
Total		-	$	-		-

3.1*		Restated Certificate of Incorporation dated April 26, 1968 and Certificate of Amendment thereto dated June 21, 1968 are incorporated herein by reference to Exhibit 1 to Registration Statement on Form 10-K (File No. 0-04957).

3.2*		Certificate of Amendment of Restated Certificate of Incorporation dated August 27, 1977 is incorporated herein by reference to Exhibit 20.1 to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).

3.3*		By-Laws, as amended, are incorporated herein by reference to Exhibit 20.2. to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).

3.4*		Certificate of Amendment of Restated Certificate of Incorporation dated November 17, 1986 is incorporated herein by reference to Exhibit 3.3 to Form 10-K for fiscal year ended February 28, 1987 (File No. 0-04957).

3.5		Certificate of Amendment of Restated Certificate of Incorporation dated March 22, 1996 is incorporated herein by reference to Exhibit 3.4 to Form 10-K for fiscal year ended February 28, 1997 (File No. 0-04957).

3.6		Certificate of Amendment of Restated Certificate of Incorporation dated July 15, 2002 is incorporated herein by reference to Exhibit 10.30 to Form 10-K dated February 28, 2003 (File No. 0-04957).

3.7		Certificate of Amendment of Restated Certificate of Incorporation dated August 15, 2018 is incorporated herein by reference to Exhibit 3.1 to Form 8-K dated August 21, 2018 (File No. 0-04957).

10.1		Usborne Distribution Agreement dated May 16, 2022 by and between the Company and Usborne Publishing Limited, London, England is incorporated herein by reference to Exhibit 10.2 to form 10-Q dated May 31, 2022 (File No. 0-04957).

10.2		Credit Agreement dated August 9, 2002 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to form 8-K dated August 11, 2022 (File No. 0-04957).

10.3		First Amendment to Credit Agreement, dated December 22, 2022 by and between the Company and BOKF, NA, Tulsa, OK. Is incorporated herein by reference to Exhibit 10.4 to Form 10-Q dated November 30, 2022 (File No. 0-04957).

10.4		Second Amendment to Credit Agreement, dated May 10, 2023 by and between the Company and BOKF, NA, Tulsa, OK. Is incorporated herein by reference to Exhibit 10.18 to Form 10-K dated February 28, 2023 (File No. 0-04957).

10.5		Third Amendment to Credit Agreement, dated August 9, 2023 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated August 17, 2023 (File No. 0-04957).

10.6		Fourth Amendment to Credit Agreement, effective December 1, 2023 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated December 28, 2023 (File No. 0-04957)..

10.7		Fifth Amendment to Credit Agreement, effective May 31, 2024 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated June 17, 2024 (File No. 0-04957).

10.8		Sixth Amendment to Credit Agreement, effective October 3, 2024 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated October 7, 2024 (File No. 0-04957).

10.9**		Seventh Amendment to Credit Agreement, effective January 4, 2025 by and between the Company and BOKF, NA, Tulsa, OK.

31.1**		Certification of the Chief Executive Officer of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification of Chief Financial Officer and Corporate Secretary of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document
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101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
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104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	EDUCATIONAL DEVELOPMENT CORPORATION (Registrant)


Date: January 13, 2025	By	/s/ Craig M. White
		Craig M. White President and Chief Executive Officer (Principal Executive Officer)


Date: January 13, 2025	By	/s/ Dan E. O’Keefe
		Dan E. O’Keefe Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer)

1.	I have reviewed this quarterly report on Form 10-Q of Educational Development Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.