Financial Data and Key Metrics Changes - For Q4 2025, net revenues decreased to $6.6 million from $9 million in the same period last year, reflecting a decline in sales [7] - Average active paper pie brand partners fell to 9,400 from 15,500 year-over-year [7] - Loss before income taxes improved to $1.5 million from a loss of $2.2 million in Q4 2024 [7] - For the fiscal year 2025, net revenues totaled $34.2 million compared to $51 million in the previous year [8] - Average active paper pie brand partners decreased to 12,300 from 18,300 year-over-year [8] - Loss before income taxes for the year was $6.9 million compared to income before taxes of $0.7 million in the prior year [8] Business Line Data and Key Metrics Changes - The decrease in sales was attributed to a reduced number of active brand partners and a lack of new titles over the past year [4][5] - Increased discounts offered to customers negatively impacted gross margin and bottom line, as part of a tactical decision to boost sales and convert excess inventory into cash [5] Market Data and Key Metrics Changes - The company noted fluctuations in consumer behavior due to inflation and shifting discretionary spending among families with young children, impacting customer purchasing habits [4] - The direct selling model's adaptability was highlighted as a strength in navigating the current economic environment [4] Company Strategy and Development Direction - The company is focused on reducing expenses and is committed to strategic and financially responsible purchases of new titles in the future [5] - The sale of the Hilti Complex is expected to fully pay back bank debt, leading to limited borrowing needs moving forward [14] - The company aims to redefine its identity and product offerings post-sale, with plans to purchase new titles conservatively [40][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the current environment but expressed confidence in the company's ability to emerge stronger [15] - The management emphasized the importance of completing the building sale to regain operational flexibility and return to business as usual [27][44] Other Important Information - The company launched a new shipping subscription program, The Pass, aimed at enhancing customer experience and encouraging repeat purchases [10] - The StoryMaker Summit was initiated to foster stronger community bonds and provide training for brand partners [12] Q&A Session Summary Question: Can you disclose who the buyer is for the Hilti Complex? - The company chose not to disclose the buyer's identity at this time, preferring to wait until the due diligence period is complete [16][18] Question: What price has been agreed upon for the sale? - The agreed price for the sale is $35.15 million [20] Question: Why was there a significant drop in average brand partners? - The drop was attributed to the seasonal nature of recruitment specials and the activity levels of brand partners [25][26] Question: What are the future plans for the undeveloped land? - The land will remain under the company's ownership for potential future use, including the possibility of building a warehouse if business grows [47]

Financial Performance - For fiscal year 2025, net revenues decreased to $34,191,000 from $51,030,300 in fiscal year 2024, representing a decline of approximately 33.1%[66] - Gross margin for fiscal year 2025 was $21,027,700, down from $32,984,900 in fiscal year 2024, indicating a decline of approximately 36%[66] - Net loss for fiscal year 2025 was $5,263,600, compared to a net earnings of $546,400 in fiscal year 2024, marking a significant downturn[66] - Other income fell to $2,109,000 in fiscal year 2025 from $9,394,300 in fiscal year 2024, a decrease of approximately 77.6%[69] - The effective tax rate decreased to 23.2% for fiscal year 2025 from 25.6% in fiscal year 2024, primarily due to fluctuations in sales mix and eligible credits[70] Brand Partner Activity - The PaperPie division added 7,800 new Brand Partners in fiscal year 2025, down from 10,800 in fiscal year 2024, resulting in a total of 7,800 active Brand Partners at the end of fiscal year 2025 compared to 15,000 in fiscal year 2024[53] - The average number of active Brand Partners decreased by 6,000, or 32.8%, to 12,300 in fiscal year 2025 from 18,300 in fiscal year 2024[71] - Active Brand Partners decreased from 15,000 in fiscal year 2024 to 7,800 in fiscal year 2025, with 7,800 new Brand Partners added during fiscal year 2025[53] - Approximately 17.3% of active Brand Partners maintained consignment inventory at the end of fiscal year 2025, with total consignment inventory costs of $1.3 million[118] Operating Expenses - Total operating expenses for fiscal year 2025 were $27,803,300, a decrease from $38,885,800 in fiscal year 2024, reflecting a reduction of approximately 28.5%[66] - Total operating expenses for PaperPie decreased by $9.3 million, or 36.0%, to $16.5 million for the fiscal year ended February 28, 2025[73] - Operating expenses decreased by $0.5 million, or 26.3%, to $1.4 million for the fiscal year ended February 28, 2025, compared to $1.9 million for the previous fiscal year[78] Inventory Management - Noncurrent inventory balances were $16.3 million as of February 28, 2025, compared to $12.3 million at February 29, 2024, with valuation allowances of $0.7 million and $0.6 million respectively[117] - Management has estimated a valuation allowance for inventory, including reserves for consigned inventory, of $1.2 million at February 28, 2025, compared to $1.0 million at February 29, 2024[119] - The total cost of inventory on consignment with Brand Partners was $1.3 million and $1.4 million at February 28, 2025 and February 29, 2024, respectively[118] Cash Flow and Financing - Cash flows from operations were positive at $3,211,700 during fiscal year 2025 despite a net loss of $5,263,600[82] - The Company executed multiple amendments to its credit agreement, with the latest extending the maturity date of the Revolving Loan to July 11, 2025, and adjusting the interest rate to SOFR + 6.00%[100] - As of the end of fiscal year 2025, the revolving bank credit facility loan balance was $4.2 million with $0.6 million of borrowing availability[81] - Cash used in financing activities totaled $3,083,000, consisting of net payments on the line of credit and term debt[87] Division Performance - PaperPie net revenues decreased by $15.7 million, or 34.4%, to $29.9 million for the fiscal year ended February 28, 2025, compared to $45.6 million for the fiscal year ended February 29, 2024[71] - Publishing division net revenues decreased by $1.1 million, or 20.4%, to $4.3 million for fiscal year ended February 28, 2025, due to the new distribution agreement with Usborne[76] - Gross margin for PaperPie decreased by $11.5 million, or 38.5%, to $18.4 million, with gross margin as a percentage of net revenues decreasing to 61.8% from 65.5%[72] - Gross margin for the Publishing division decreased by $0.5 million, or 16.1%, to $2.6 million, while gross margin as a percentage of net revenues increased to 59.5% from 57.5%[77] Debt Management - The Company plans to reduce debt by selling owned real estate, with proceeds expected to pay off Term Loans and the Revolving Loan[104] - The Company has taken steps to address concerns about its ability to continue as a going concern by planning to reduce debt through the sale of owned real estate[104]

Financial Transactions - Educational Development Corporation executed a Purchase and Sale Agreement for its headquarters and distribution warehouse for a total sale price of $35,150,000[6]. - The proceeds from the sale will be used to pay off outstanding Term Loans and Revolving Loan in the Credit Agreement with the Company's Bank[7]. - The sale agreement includes a 90-day due diligence period for the Buyer to secure financing and perform inspections[8]. - The Hilti Complex sale does not include approximately 17 acres of undeveloped land, which will remain under the ownership of Educational Development Corporation[7]. Lease Agreements - The new lease with the Buyer will have an initial term of 10 years at a rate of $8.62 per square foot, with 2.0% annual escalations starting in year two[9]. - The Company will assign existing tenant leases to the Buyer and enter into a new lease for its occupied space in the Hilti Complex[7]. - The initial lease will include typical triple-net terms, where the Seller is responsible for utilities, insurance, property taxes, and regular maintenance[9]. Corporate Governance - The Board of Directors approved the addition of Steven Hooser as a Class I Director, who will serve on the Audit, Compensation, and Governance Committees[13]. Financial Reporting - Educational Development Corporation announced its fiscal 2025 financial results on May 19, 2025, with a corresponding earnings call scheduled for the same day[14]. - Educational Development Corporation's fiscal 2025 earnings call will take place at 3:30 PM CT on May 19, 2025[14].

Core Viewpoint - Educational Development Corporation (EDC) has focused on cash flow management over profitability in fiscal 2025, leading to significant debt reduction and inventory management strategies [2][5]. Fiscal Year Summary Compared to the Prior Year - EDC reduced bank debts and vendor payables by a total of $16.9 million over fiscal years 2024 and 2025, with a reduction of $3.1 million in bank debts and $2.0 million in vendor payables during fiscal 2025 [2]. - Inventory levels decreased from $55.6 million to $44.7 million, generating $10.9 million in cash flow, with an excess inventory of approximately $30 million remaining [2]. - The company experienced a net loss of $(5.3) million for the fiscal year, compared to a net gain of $0.5 million in the previous year [4][6]. Fourth Quarter Summary Compared to the Prior Year Fourth Quarter - Net revenues for the fourth quarter were $6.6 million, down from $9.0 million in the previous year, while the average active PaperPie Brand Partners decreased from 15,500 to 9,400 [4][6]. - The loss before income taxes improved to $(1.5) million from $(2.2) million in the prior year’s fourth quarter, indicating a focus on cost reductions [4][6]. - Loss per share for the fourth quarter was $(0.16), an improvement from $(0.19) in the previous year [4][6]. Strategic Direction - EDC plans to strengthen its financial position through the sale and leaseback of its headquarters, which is expected to eliminate remaining bank debts and associated interest expenses [5]. - A Purchase Sale Agreement has been executed with TG OTC, LLC, with the transaction expected to close by early September 2025, allowing EDC to retain ownership of excess land [5].

Core Points - Educational Development Corporation (EDC) has announced a revised date and time for its Fiscal Year 2025 earnings call [1][2] - The earnings call will take place on May 19, 2025, at 3:30 PM CT (4:30 PM ET) and will include a live Q&A session [2] - Key executives, including the CEO, Chief Sales and Marketing Officer, and Chief Financial Officer, will present the year-end results and answer questions [2] Company Overview - EDC specializes in publishing children's books and is the owner of Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys [3] - The company is also the exclusive U.S. distributor of Usborne Publishing Limited's children's books [3] - EDC products are sold through 4,000 retail outlets and via independent brand partners through various sales channels, including social media and book fairs [3]

Group 1 - Educational Development Corporation has executed the Eighth Amendment to its Existing Credit Agreement with BOKF, NA, extending the maturity date on the Revolving Loan to July 11, 2025, and requiring step downs to $4.5 million by May 31, 2025 [1] - The maturity dates of two term loans have also been extended to September 19, 2025, providing additional time for the company to manage its financial obligations [1] - The company has paid down over $3.0 million in bank debt and reduced payables by $2.0 million, strengthening its balance sheet during the marketing process of the Hilti Complex [2] Group 2 - The engagement of Keen-Summit as the new real estate broker for the Hilti Complex has been announced, with marketing materials completed and the property re-listed for sale [2] - The funds from the sale of the Hilti Complex are expected to completely pay off the borrowings under the Revolver and Term Loans, allowing the company to operate with limited borrowings post-sale [2] - Eliminating debt and interest payments from the sale of the Hilti Complex is anticipated to positively impact the company's profitability and cash flow [2] Group 3 - Educational Development Corporation specializes in publishing children's books and owns brands such as Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys [3] - The company is the exclusive U.S. MLM distributor of Usborne Publishing Limited children's books, with products sold through 4,000 retail outlets and independent brand partners [3]

Group 1: Company Overview - Educational Development Corporation (EDC) is a publishing company specializing in children's books and owns brands such as Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys [3] - EDC is the exclusive U.S. distributor of Usborne Publishing Limited children's books, with products sold through 4,000 retail outlets and independent brand partners [3] Group 2: Recent Developments - EDC has executed a new brokerage agreement with Keen-Summit Capital Partners for marketing the sale of the Hilti Complex, which includes headquarters and distribution warehouse in Tulsa, Oklahoma [1] - The Hilti Complex consists of 402,000 square feet of rentable office and warehouse space on 35 acres, currently occupied by EDC and two tenants, Hilti and Crusoe [2] - The company aims to maximize the value of the Hilti Complex by engaging Keen-Summit, which has a broader network and a successful track record in real estate [2] Group 3: Future Plans - EDC expects to complete the listing and sale of the Hilti Complex within the calendar year while continuing to work with local broker McGraw Davisson Stewart [2] - The company plans to execute a new multi-year lease agreement for the space it occupies after the sale of the Hilti Complex [2] Group 4: Keen-Summit Capital Partners - Keen-Summit is a nationally recognized real estate broker with over 40 years of experience in maximizing real estate value across North America [4] - The firm offers additional services in lease restructuring and investment banking [4]

Financial Data and Key Metrics Changes - For Q3 2025, net revenues decreased to $11.1 million from $16.9 million in Q3 2024, representing a decline of approximately 34.4% [10] - Loss before income taxes was $1.1 million compared to a profit of $2.7 million in the same quarter last year [11] - Net loss for the quarter was $800,000, down from a net income of $2 million in Q3 2024, resulting in a loss per share of $0.10 compared to earnings per share of $0.24 [11] - Year-to-date net revenues totaled $27.6 million, down from $42.1 million in the prior year [12] Business Line Data and Key Metrics Changes - Average active brand partners decreased to 12,400 from 16,400 year-over-year [10] - Year-to-date average active brand partners were 19,200, down from the previous year [12] Market Data and Key Metrics Changes - The company reported a significant decrease in net inventories, which fell by $8.8 million from $55.6 million to $46.8 million [13] Company Strategy and Development Direction - The company is focusing on operational improvements and cost efficiencies while intentionally offering discounts to boost sales and convert excess inventory into cash [8] - A sale-leaseback of the headquarters is in progress, with expectations to complete the transaction by early March 2025, which will help pay down bank debt and improve cash flow [21][23] - The company plans to return to historical promotions and pricing after the sale, which is expected to positively impact cash flow and margins [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced, including inflation and the relationship with Usborne, but expressed confidence in the company's ability to emerge stronger post-sale of the building [25][59] - The management believes that the sale of the building will serve as a catalyst for a turnaround in business operations and sales performance [60] Other Important Information - The company introduced a shipping subscription program aimed at enhancing customer relationships and driving revenue [16] - The Black Friday promotion was expanded, generating positive sales performance [17] - The company is preparing for five StoryMaker Summits in 2025 to engage brand partners in a more intimate setting [18] Q&A Session Summary Question: Are there any new markets being considered? - Management indicated they are always looking for new markets but highlighted the success of SmartLab Toys as a new market initiative [32] Question: Update on IT implementation and digital extensions? - Management discussed successful IT projects, including e-commerce enhancements and a new shipping subscription program [34] Question: Clarification on the building sale timeline? - Management explained the timeline for the building sale and the reasons for delays, confirming the sale price remains at $38.3 million [46][51] Question: Consideration of strategic alternatives beyond selling the building? - Management stated that exploring other options would be premature until the building sale is finalized, emphasizing the importance of resolving current debt issues first [57] Question: Insights on the decrease in brand partners? - Management noted that the decrease is influenced by economic headwinds and a wait-and-see attitude among brand partners, but expressed optimism for future recovery [66][68]

Financial Performance - Net revenues for the three months ended November 30, 2024, decreased by $5.9 million, or 37.6%, to $9.8 million compared to $15.7 million in the same period last year [97]. - Gross margin for the three months ended November 30, 2024, decreased by $4.2 million, or 40.4%, to $6.2 million, with gross margin as a percentage of net revenues dropping to 62.9% from 66.3% [99]. - Net earnings for the three months ended November 30, 2024, resulted in a loss of $835,700 compared to a profit of $1,972,100 in the same period last year [87]. - Operating income for the PaperPie segment decreased by $0.6 million, or 37.5%, to $1.0 million during the three months ended November 30, 2024 [102]. - Operating income of the PaperPie segment decreased by $2.3 million, or 63.9%, to $1.3 million during the nine months ended November 30, 2024, with operating income as a percentage of net revenues dropping to 5.5% from 9.7% [106]. - Publishing division's net revenues decreased by $1.0 million, or 22.7%, to $3.4 million during the nine-month period ended November 30, 2024, primarily due to the stoppage of Usborne product distribution [111]. Operating Expenses - Total operating expenses for the three months ended November 30, 2024, decreased by $3.7 million, or 42.0%, to $5.1 million compared to $8.8 million in the same quarter last year [101]. - Total operating expenses decreased by $7.7 million, or 36.2%, to $13.6 million for the nine-month period ended November 30, 2024, compared to $21.3 million for the same period last year [105]. - Total operating expenses not associated with a reporting segment decreased by $0.3 million, or 10.3%, to $2.6 million for the three months ended November 30, 2024 [88]. - Total operating expenses of the Publishing segment decreased by $0.2 million, or 15.4%, to $1.1 million during the nine-month period ended November 30, 2024 [113]. Income and Tax - Other income decreased by $3.7 million, or 84.1%, to $0.7 million for the three months ended November 30, 2024, primarily due to the absence of the previous year's sale of the old headquarters building [90]. - Income tax benefit for the three months ended November 30, 2024, was $276,200, compared to a tax expense of $723,900 in the same period last year [91]. Cash Flow and Financing - Cash inflows from operations during the first nine months of fiscal year 2025 were $4,778,300, despite a net loss of $3,918,100 [116]. - Cash used in financing activities was $2,532,300, including net payments on the line of credit of $1,200,000 and payments on term debt of $1,350,000 [117]. - Available credit under the current $5,500,000 revolving line of credit was approximately $1,201,900 at November 30, 2024 [128]. - The Company executed multiple amendments to its Loan Agreement, including a reduction in the revolving commitment from $15,000,000 to $4,000,000 by January 31, 2024 [123]. - Total current maturities of term debt for the fiscal year ending February 28, 2025, amount to $450,000, with a total of $27,250,900 due by 2028 [129]. Inventory and Reserves - The company has estimated a reserve for sales returns of $0.2 million as of November 30, 2024, and February 29, 2024 [138]. - Noncurrent inventory balances were $15.5 million and $12.3 million as of November 30, 2024, and February 29, 2024, respectively, with valuation allowances of $0.8 million and $0.6 million [141]. - Management has estimated a valuation allowance for inventory, including reserves for consigned inventory, of $1.2 million as of November 30, 2024 [143]. - Approximately 11.7% of active Brand Partners maintained consignment inventory at the end of the third quarter of fiscal year 2025, with total consignment inventory costs of $1.5 million [142]. - An allowance for credit losses of $0.1 million was estimated for both November 30, 2024, and February 29, 2024 [139]. Management Plans and Strategies - The Company expects to reduce excess inventory levels and use cash proceeds to offset future operating losses and pay down debt [118]. - Management plans to reduce debt by selling owned real estate, with proceeds expected to pay off Term Loans and the Revolving Loan [131]. - The company aims to build the active PaperPie Brand Partners to pre-pandemic levels to alleviate concerns about continuing as a going concern [131]. - The effective interest rate for the Revolving Loan was 10.17% as of November 30, 2024 [131].

Financial Performance - Net revenues for the third quarter were $11.1 million, down 34.3% from $16.9 million in the prior year[4] - Loss before income taxes was $(1.1) million compared to a gain of $2.7 million in the same quarter last year[4] - Net loss totaled $(0.8) million, a decline from a net gain of $2.0 million in the prior year[4] - Year-to-date net revenues were $27.6 million, down 34.5% from $42.1 million[4] - Loss before income taxes for the year-to-date period was $(5.3) million compared to a gain of $2.9 million last year[4] Operational Metrics - Average active PaperPie Brand Partners decreased to 12,400 from 16,400 year-over-year[4] - Average active PaperPie Brand Partners for the year-to-date period decreased to 13,300 from 19,200[4] Strategic Actions - The company executed a Purchase Sale Agreement for the Hilti Complex, expected to eliminate bank borrowings and achieve full debt repayment by March 31, 2025[3] - The company has reduced outbound freight costs by approximately 20% through a new carrier[3] Tax Credits - An Employee Retention Tax Credit of $3.8 million was received in the previous year, impacting financial results positively[3]