
PART I. FINANCIAL INFORMATION Financial Statements Unaudited Q1 FY2025 financial statements show a $1.28 million net loss and decreased total assets Key Financial Performance Metrics | Financial Metric | May 31, 2024 ($) | May 31, 2023 ($) | | :--- | :--- | :--- | | Net Revenues | $9,993,400 | $14,524,000 | | Gross Margin | $6,459,500 | $9,373,600 | | Net Loss | $(1,279,000) | $(872,800) | | Basic & Diluted Loss Per Share | $(0.15) | $(0.11) | Key Balance Sheet Items | Balance Sheet Item | May 31, 2024 ($) | February 29, 2024 ($) | | :--- | :--- | :--- | | Total Assets | $88,010,800 | $90,105,000 | | Total Liabilities | $43,706,800 | $44,654,300 | | Total Shareholders' Equity | $44,304,000 | $45,450,700 | - The company identified conditions raising substantial doubt about its ability to continue as a going concern, planning to sell real estate to mitigate this5654 - Subsequent to quarter-end, the company executed a contract to sell its Hilti Complex for $35.5 million, intending to use proceeds to pay off outstanding debt128155 Notes to Condensed Financial Statements Notes detail accounting policies, liquidity, debt, and segment performance, highlighting a going concern warning - The company listed its Hilti Complex for sale in Q3 FY2024, with a carrying value of $18.3 million as of May 31, 20243435 Debt Structure as of May 31, 2024 | Debt Component | May 31, 2024 Balance ($) | | :--- | :--- | | Line of credit | $5,598,100 | | Floating rate term loan | $17,037,500 | | Fixed rate term loan | $11,113,400 | | Total term debt | $28,150,900 | - The company did not meet the minimum purchase requirements under its distribution agreement with Usborne Publishing Limited, giving Usborne the right to terminate the agreement95 Segment Performance Q1 FY25 | Segment | Net Revenues (Q1 FY25, $) | Loss Before Income Taxes (Q1 FY25, $) | | :--- | :--- | :--- | | PaperPie | $8,900,300 | $771,100 | | Publishing | $1,093,100 | $231,600 | | Other (Corp. Expenses) | N/A | $(2,749,700) | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a 31.2% decline in net revenues from PaperPie and Publishing segments, facing liquidity challenges Q1 FY2025 vs Q1 FY2024 Financial Performance | Metric | Q1 FY2025 ($) | Q1 FY2024 ($) | % Change | | :--- | :--- | :--- | :--- | | Net Revenues | $9.99M | $14.52M | -31.2% | | Gross Margin | $6.46M | $9.37M | -31.1% | | Net Loss | $(1.28M) | $(0.87M) | +46.7% | - PaperPie division's revenue declined due to a significant drop in the average number of active brand partners, from 23,200 in Q1 FY24 to 13,400 in Q1 FY25, following a rebranding from 'Usborne Books & More' and economic factors161 - Publishing division's net revenues decreased by 42.1% primarily due to discontinued sales of Usborne products to retail customers, with Usborne sales accounting for $1.3 million in the prior-year quarter167 - The company generated $1.2 million in cash from operating activities, largely due to a $2.8 million decrease in inventory, used for debt payments and operations144169146 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not applicable as the company qualifies as a smaller reporting company182 Controls and Procedures Management concluded disclosure controls were effective with no material changes in internal financial reporting controls - Disclosure controls and procedures were concluded to be effective based on an evaluation at the end of the period17183 - No material changes occurred in internal control over financial reporting during the first quarter184 PART II. OTHER INFORMATION Legal Proceedings The company is not a party to any material legal proceedings - The company reports no material legal proceedings207 Risk Factors This section is not applicable for this quarterly report - This section is noted as not applicable in the report185 Unregistered Sales of Equity Securities and Use of Proceeds No shares repurchased in Q1 FY2025; 376,393 shares remain under the 2019 repurchase plan Shares Repurchased During Q1 FY2025 | Period | Total of Shares Purchased | | :--- | :--- | | March 1 - 31, 2024 | 0 | | April 1 - 30, 2024 | 0 | | May 1 - 31, 2024 | 0 | - The 2019 stock repurchase plan has 376,393 shares remaining available for repurchase with no expiration date20185 Defaults Upon Senior Securities The company reports no defaults upon senior securities - There were no defaults upon senior securities during the period208 Mine Safety Disclosures The company reports no mine safety disclosures - There are no mine safety disclosures to report21 Other Information No other information is reported under this item Exhibits Exhibits filed with Form 10-Q include credit agreement amendments and CEO/CFO certifications - Exhibits include various amendments to the Credit Agreement, with the Fifth Amendment effective May 31, 2024, incorporated by reference22 - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits22