Educational Development Corp 8-K, filed Nov 15, 2023
Educational Development Corp (EDUC)
About this 8-K
Educational Development Corp filed this 8-K on November 15, 2023, reporting on events of November 10, 2023.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 2023 (
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The information disclosed in these Items 5.02, 8.01 and 9.01 including Exhibit 99.1 and Exhibit 99.2 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 10, 2023, Mr. John A. Clerico provided notice of his resignation from the Board of Directors effective November 10, 2023. John A. Clerico was a Class III Director elected to serve through the 2025 annual meeting of shareholders and served as the Company’s Audit Committee Chair, Compensation Committee Chair and Governance Committee Chair. Mr. Clerico failed to confirm any circumstances surrounding his resignation. A copy of the notice from Mr. Clerico is furnished herewith as Exhibit 99.2 and is incorporated herein by reference. A copy of this filing will be sent to Mr. Clerico today and any future response from him will be subsequently disclosed and furnished in an 8-K filing. His service as a member of the Board of Directors since 2004 has been appreciated by the Company and it's management team.
The Board made no decision to replace Mr. Clerico as of the date of this filing. Brad Stoots, an existing Board member and financial expert, has agreed, effective November 10, 2023, to perform the duties of the Audit Committee Chair, Compensation Committee Chair and Governance Chair. A copy of the notice from Mr. Clerico is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.
Following the resignation of Mr. Clerico, the Company’s Board of Directors consists of two independent and two non-independent directors, which fails to meet the NASDAQ listing requirements of a majority of independent directors. Under NASDAQ guidelines, the Company has until the earlier of its next annual shareholders meeting or 180 days following the resignation to cure this deficiency. The Board expects to add another independent board member within the cure period.
ITEM 8.01 Other Events
On November 15, 2023, Educational Development Corporation announced, via press release, Board of Director approval to list for sale the Company’s headquarters and distribution warehouse located at 5400-5402 South 122nd East Avenue, Tulsa, Oklahoma 74146 (the “Hilti Complex”) with a licensed commercial real estate broker by November 30, 2023. The Hilti Complex consists of multiple buildings totaling 402,255 square feet of rentable office and warehouse space on 34-acres. Approximately 185,400 square feet of the Hilti Complex is occupied by a third-party tenant under a 15-year lease, with the Company occupying the remaining 216,855 square feet. The Board approved the Hilti Complex sale, with or without the adjacent 17 acres of excess land located behind the Hilti Complex. The Hilti Complex, without the adjacent excess land, was appraised for $40,510,000 in July 2023. The 17 acres of adjacent excess land appraised for $1,460,000.
The Company expects to enter into a sale leaseback arrangement with the building sale including a lease term of seven to fifteen years to maximize the sale price. Proceeds from the sale are expected to pay the Company’s borrowings with it’s bank and provide liquidity for ongoing operations.
A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01 Financial Statements and Exhibits
(d) EXHIBITS
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Exhibit |
Description |
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99.1 |
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99.2 |
Copy of Resignation Letter from John A. Clerico, dated November 10, 2023 |
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104 |
Cover Page Interactive Data File (formatted as Inline XBRL) |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Educational Development Corporation
By: /s/ Craig M. White
Craig M. White
President and Chief Executive Officer
Date: November 15, 2023
Exhibit 99.1
PRESS RELEASE
EDUCATIONAL DEVELOPMENT CORPORATION ANNOUNCES
BOARD APPROVAL TO LIST COMPANY HEADQUARTERS FOR SALE
On November 15, 2023, Educational Development Corporation announced, via press release, Board of Director approval to list for sale the Company’s headquarters and distribution warehouse located at 5400-5402 South 122nd East Avenue, Tulsa, Oklahoma 74146 (the “Hilti Complex”) with a licensed commercial real estate broker by November 30, 2023. The Hilti Complex consists of multiple buildings totaling 402,255 square feet of rentable office and warehouse space on 34-acres. Approximately 185,400 square feet of the Hilti Complex is occupied by a third-party tenant under a 15-year lease, with the Company occupying the remaining 216,855 square feet. The Board approved the Hilti Complex sale, with or without the adjacent 17 acres of excess land located behind the Hilti Complex. The Hilti Complex, without the adjacent excess land, was appraised for $40,510,000 in July 2023. The 17 acres of adjacent excess land appraised for $1,460,000.
The Company expects to enter into a sale leaseback arrangement with the building sale including a lease term of seven to fifteen years to maximize the sale price. Proceeds from the sale are expected to pay the Company’s borrowings with it’s bank and provide liquidity for ongoing operations.
Per Craig White, President and Chief Executive Officer, “It has been management’s number one priority to reduce our debt and related interest expense. In line with our prior announcement, we closed on the sale/leaseback arrangement of our warehouse facility which allowed us to strategically reduce our term debt with the Bank by $4.7 million. The proceeds from that transaction, combined with our forthcoming sale of the Company’s headquarters and distribution facility, will play a pivotal role in removing interest expense and restoring profitability. Following the sale of the Hilti Complex, we expect to operate with minimal borrowings thus improving our bottom-line profitability. Although the Company continues to maintain high levels of inventory, without debt this excess inventory turns to cash, allowing us to strategically deploy the proceeds to maximize shareholder value.”
About Educational Development Corporation (EDC)
EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books (“Kane Miller”); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited (“Usborne”) children’s books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.
Contact:
Educational Development Corporation
Craig White, (918) 622-4522
Investor Relations:
Three Part Advisors, LLC
Steven Hooser or Jean Marie Young, (214) 872-2710
EXHIBIT 99.2
November 10, 2023
Communication received via e-mail.
To: Randall White
Cc: Craig White
Please accept this communication as my resignation from the EDC Board of Directors effective immediately.
Sincerely,
s/ John A. Clerico