<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

         For the quarterly period ended May 31, 2000.

[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

         For the transition period from ___________ to ____________.

                        Commission file number: 0-4957

                      EDUCATIONAL DEVELOPMENT CORPORATION
            (Exact name of registrant as specified in its charter)

               Delaware                                         73-0750007
      (State or other jurisdiction of                        (I.R.S. Employer
      incorporation or organization)                         Identification No.)

10302 East 55/th/ Place, Tulsa Oklahoma 74146-6515
(Address of principal executive offices)

Registrant's telephone number: (918) 622-4522

     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   X              No _____
                                -----

     As of May 31, 2000 there were 3,987,822 shares of Educational Development
Corporation Common Stock, $0.20 par value outstanding.
<PAGE>

PART I. FINANCIAL INFORMATION
-----------------------------

ITEM 1

BALANCE SHEETS

<TABLE>
<CAPTION>
                                                    May 31, 2000  February 29, 2000
                                                    (unaudited)   -----------------
                                                    -----------
<S>                                                 <C>           <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                        $   189,100   $   214,300
   Accounts receivable - (less
     allowances for doubtful accounts
     and sales returns: 5/31/00 - $215,100
     2/29/00 - $209,500)                              2,458,500     2,020,400
   Inventories - Net                                  8,103,300     8,364,100
   Prepaid expenses and other assets                    255,500       220,400
   Deferred income taxes                                180,300       137,700
                                                    -----------   -----------
         Total current assets                        11,186,700    10,956,900

INVENTORIES                                           1,280,000     1,280,000

PROPERTY AND EQUIPMENT
     at cost (less accumulated depreciation:
     05/31/00 - $1,416,300; 2/29/00 - $1,330,500)          --          85,300

DEFERRED INCOME TAXES                                    21,900        17,800
                                                    -----------   -----------

                                                    $12,488,600   $12,340,000
                                                    ===========   ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Note payable to bank                             $ 1,534,000   $ 1,278,000
   Accounts payable                                   1,570,500     1,681,600
   Accrued salaries and commissions                     316,800       258,100
   Income taxes                                         220,000        46,900
   Dividend payable                                      79,000          --
   Other current liabilities                            159,300       103,000
                                                    -----------   -----------
         Total current liabilities                    3,879,600     3,367,600

COMMITMENTS

SHAREHOLDERS' EQUITY:
   Common Stock, $.20 par value (Authorized
     6,000,000 shares; Issued 5,429,240
     shares; Outstanding 3,987,822 and
     4,167,389 shares)                                1,085,800     1,085,800
   Capital in excess of par value                     4,410,100     4,410,100
   Retained earnings                                  7,456,200     7,259,100
                                                    -----------   -----------
                                                     12,952,100    12,755,000
   Less treasury shares, at cost                     (4,343,100)   (3,782,600)
                                                    -----------   -----------
                                                      8,609,000     8,972,400
                                                    -----------   -----------

                                                    $12,488,600   $12,340,000
                                                    ===========   ===========
</TABLE>

See notes to financial statements

                                       2
<PAGE>

STATEMENTS OF EARNINGS (UNAUDITED)

<TABLE>
<CAPTION>
                                             Three Months Ended May 31
                                             --------------------------
                                                2000            1999
                                             -----------    -----------
<S>                                          <C>            <C>
GROSS SALES                                  $ 6,742,000    $ 6,556,600
   Less discounts & allowances                (2,491,600)    (2,434,500)
                                             -----------    -----------

     Net sales                                 4,250,400      4,122,100
COST OF SALES                                  1,797,400      1,726,500
                                             -----------    -----------
     Gross margin                              2,453,000      2,395,600
OPERATING EXPENSES:
   Operating & selling                           760,300        785,300
   Sales commissions                             805,600        741,800
   General & administrative                      420,200        401,400
   Interest                                       34,000         13,000
                                             -----------    -----------
                                                 432,900        454,100
OTHER INCOME                                      14,600         15,800
                                             -----------    -----------

EARNINGS BEFORE INCOME TAXES                     447,500        469,900

INCOME TAXES                                     171,400        179,600
                                             -----------    -----------

NET EARNINGS                                 $   276,100    $   290,300
                                             ===========    ===========

BASIC AND DILUTED EARNINGS
   PER SHARE                                 $       .07    $       .06
                                             ===========    ===========

WEIGHTED AVERAGE NUMBER OF
   COMMON AND COMMON EQUIVALENT
   SHARES OUTSTANDING:
     Basic                                     4,069,128      4,624,517
                                             ===========    ===========
     Diluted                                   4,121,164      4,659,489
                                             ===========    ===========

DIVIDENDS DECLARED PER
   COMMON SHARE                              $       .02    $       .02
                                             ===========    ===========
</TABLE>

See notes to financial statements.

                                       3
<PAGE>

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>
                                  Common Stock
                           (par value $.20 per share)                                        Treasury Stock
                           -------------------------                                         --------------
                                  Number of                   Capital in                   Number
                                    Shares                    Excess of      Retained        of                     Shareholders'
                                    Issued        Amount      Par Value      Earnings      Shares       Amount         Equity
                                  ----------    ----------   -----------    ----------   ---------    -----------   -------------
<S>                        <C>                  <C>          <C>            <C>          <C>          <C>           <C>
BALANCE, MAR. 1, 2000              5,429,240    $1,085,800   $ 4,410,100    $7,259,100   1,261,851    $(3,782,600)   $ 8,972,400

Issuance of treasury stock              --            --            --            --          (333)         1,000          1,000
Purchases of treasury
   stock                                --            --            --            --       179,900       (561,500)      (561,500)

Dividend declared                       --            --            --         (79,000)       --             --          (79,000)

Net earnings                            --            --            --         276,100        --             --          276,100
                                   ---------    ----------   -----------    ----------   ---------    -----------    ------------
BALANCE, MAY 31, 2000              5,429,240    $1,085,800   $ 4,410,100    $7,456,200   1,441,418    $(4,343,100)   $ 8,609,000
                                   =========    ==========   ===========    ==========   =========    ===========    ============
</TABLE>

See notes to financial statements.

                                       4
<PAGE>

STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                             Three Months Ended May 31
                                                            ---------------------------
                                                                2000           1999
                                                            ------------    -----------
<S>                                                          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES                         $   280,900    $ 1,017,900

CASH FLOWS FROM INVESTING ACTIVITIES -
   Purchases of property and equipment                              (600)       (11,300)
                                                             -----------    -----------
     Net cash used in investing activities                          (600)       (11,300)
                                                             -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings under revolving credit agreement                 1,865,000      1,569,000
   Payments under revolving credit agreement                  (1,609,000)    (1,624,000)
   Cash paid to acquire treasury stock                          (561,500)    (1,088,200)
                                                             -----------    -----------

     Net cash used in financing activities                      (305,500)    (1,143,200)
                                                             -----------    -----------

Net Decrease in Cash and Cash Equivalents                        (25,200)      (136,600)
Cash and Cash Equivalents, Beginning of Period                   214,300        210,900
                                                             -----------    -----------
Cash and Cash Equivalents, End of Period                     $   189,100    $    74,300
                                                             ===========    ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for interest                                    $    27,900    $    10,900
                                                             ===========    ===========
   Cash paid for income taxes                                $    45,000    $      --
                                                             ===========    ===========

Supplemental Disclosure of Non Cash Operating Activities -
   Dividend declared                                         $    79,000    $    86,000
                                                             ===========    ===========
</TABLE>

See notes to financial statements.

                                       5
<PAGE>

NOTES TO FINANCIAL STATEMENTS

Note 1 - The information shown with respect to the three months ended May 31,
------
2000 and 1999, which is unaudited, includes all adjustments which in the opinion
of Management are considered to be necessary for a fair presentation of earnings
for such periods. There were no adjustments, other than normal recurring
accruals, entering into the determination of the results shown except as noted
in this report. The results of operations for the three months ended May 31,
2000 and 1999, respectively, are not necessarily indicative of the results to be
expected at year end due to seasonality of the product sales.

These financial statements and notes are prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for interim reporting and
should be read in conjunction with the Financial Statements and accompanying
notes contained in the Company's Annual Report to Shareholders for the Fiscal
Year ended February 29, 2000.

Reclassifications were made to the 1999 balances to conform with 2000
presentation.

Note 2 - Effective June 30, 1999 the Company signed a Restated Credit and
------
Security Agreement with State Bank which provided a $3,500,000 line of credit.
The line of credit was evidenced by a promissory note in the amount of
$3,500,000 payable June 30, 2000. The note bore interest at the Wall Street
Journal prime floating rate minus 0.25% payable monthly (9.25% at May 31, 2000).
The note was collateralized by substantially all of the assets of the Company.
At May 31, 2000, the Company had $1,534,000 in borrowings. Available credit
under the revolving credit agreement was $1,966,000 at May 31, 2000.

Effective June 30, 2000 the Company signed a First Amendment to the Credit and
Security Agreement with State Bank which provides a $3,500,000 line of credit.
This line of credit is evidenced by a promissory note in the amount of
$3,500,000 payable June 30, 2001. This note bears interest at the Wall Street
Journal prime floating rate minus 0.25% payable monthly. The note is
collateralized by substantially all the assets of the Company.

Note 3 - Inventories consist of the following:
------

<TABLE>
<CAPTION>
                                              May 31, 2000     February 29, 2000
                                              ------------     -----------------
          <S>                                 <C>              <C>
          Current:
            Book Inventory                    $ 8,227,000         $ 8,487,800
            Reserve for Obsolescence             (123,700)           (123,700)
                                              ------------       ------------

          Inventories net - current           $ 8,103,300         $ 8,364,100
                                              ===========         ===========

          Inventories - non-current           $ 1,280,000         $ 1,280,000
                                              ===========         ===========
</TABLE>

          The Company occasionally purchases book inventory in quantities in
          excess of what will be sold within the normal operating cycle due to
          minimum order requirements of the Company's primary supplier. These
          amounts are included in non-current inventory.

Note 4- Basic earnings per share is computed by dividing net earnings by the
------
weighted average number of common shares outstanding during the period. Diluted
earnings per share is based on the combined weighted average number of common
shares outstanding increased, when appropriate, for the number of common shares
issuable upon exercise of stock options, computed using the treasury stock
method.

                                       6
<PAGE>

The computation of weighted average common and common equivalent shares used in
the calculation of basic and diluted earnings per share ("EPS") is shown below.

<TABLE>
<CAPTION>
                                                   Three Months Ended May 31,
                                                   --------------------------
                                                      2000            1999
                                                   ----------      ----------
         <S>                                       <C>             <C>
         Net Earnings                              $  276,100      $  290,300
                                                   ==========      ==========

         Basic EPS:
             Weighted Average Shares Outstanding    4,069,128       4,624,517
                                                   ==========      ==========
         Basic EPS                                 $      .07      $      .06
                                                   ==========      ==========

         Diluted EPS:
             Weighted Average Shares Outstanding    4,069,128       4,624,517
             Assumed Exercise of Options               52,036          34,972
                                                   ----------      ----------
         Shares Applicable to Diluted Earnings      4,121,164       4,659,489
                                                   ==========      ==========
         Diluted EPS                               $      .07      $      .06
                                                   ==========      ==========
</TABLE>

Since March 1, 1998, when the Company began its stock repurchase program,
1,430,819 shares of the Company's common stock at a total cost of $4,354,900
have been acquired. The Board of Directors has authorized purchasing up to
2,000,000 shares as market conditions warrant.

ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS
-------------

Certain statements contained in this Management Discussion and Analysis are not
based on historical facts, but are forward-looking statements that are based
upon numerous assumptions about future conditions that may ultimately prove to
be inaccurate. Actual events and results may materially differ from anticipated
results described in such statements. The Company's ability to achieve such
results is subject to certain risks and uncertainties. Such risks and
uncertainties include but are not limited to, product prices, continued
availability of capital and financing, and other factors affecting the Company's
business that may be beyond its control.

FINANCIAL CONDITION
-------------------

The financial condition of the Company remains strong. Working capital at May
31, 2000 was $7,307,100 compared to working capital of $7,589,300 at the end of
fiscal year 2000. Accounts receivable increased 19.9% during the first quarter
of fiscal year 2001. Several sizable orders were received during the first
quarter of fiscal year 2001 with payment due during the second quarter,
resulting in the increase in accounts receivable. Inventory levels declined 2.7%
during the first quarter of fiscal year 2001. The level of inventory will
fluctuate depending upon sales and the timing of shipments from the Company's
principal supplier. The Company continuously monitors inventory to assure it has
adequate supplies on hand to meet sales requirements. The note payable to the
bank increased 20.0% during the first quarter of fiscal year 2001 as the Company
paid its principal supplier and continued to repurchase stock. Accounts payable
declined 6.6% during the first three months of fiscal year 2001. A major
component of accounts payable is the amount due to the Company's principal
supplier. Increases and decreases in inventory levels as well as the timing of
the purchases and the payment terms offered by various suppliers affect the
levels of accounts payable.

In April 2000 the Company declared a cash dividend of $0.02 per share to
shareholders of record August 1, 2000, to be paid August 10, 2000.

Pre-tax margins were 10.5% for the first quarter ended May 31, 2000 compared
with 11.4% for the three months ended May 31, 1999. Contributing to the lower
pre-tax margins was an increase in sales discounts given during the first
quarter of fiscal year 2001 as special promotions were offered to increase
sales.

                                       7
<PAGE>

RESULTS OF OPERATIONS
---------------------

Revenues - Net sales from the Home Business Division were $2,178,700 for the
--------
three months ended May 31, 2000 compared with net sales of $2,024,500 for the
three months ended May 31, 1999, an increase of 7.6%. The Company believes this
increase resulted from the addition of new recruits and the retention of
existing consultants. The Company continues to offer new and exciting incentive
programs, travel contests and regional seminars to help stimulate sales and
recruiting. The Company has been holding leadership skills programs for the
supervisors. This program is designed to help supervisors build their business.
Management is encouraged by this increase in net sales and is hopeful that it
will continue.

Net sales from the Publishing Division were $2,071,700 for the three months
ended May 31, 2000 compared with net sales of $2,097,600 for the three months
ended May 31, 1999, a decrease of 1.2%. The juvenile paperback market is very
competitive with sales over $660 million annually. The Publishing Division's
annual sales are approximately 1.2% of industry sales. National chains
increasingly dominate the bookstore market, resulting in fewer independent
bookstores. The closing of these independent bookstores, an important market to
the Company, contributed to the decline in net sales. The Company continues to
explore the gift market and believes it offers considerable potential. Each year
the Company attends several national trade shows throughout the country to
promote its products. For these reasons Management believes the Company can
maintain its market share in the highly competitive publishing market.

Operating Expenses - The Company's cost of sales for the three months ended May
------------------
31, 2000 was $1,797,400 compared with $1,726,500 for the same three months last
year, an increase of 4.1%. Cost of sales expressed as a percentage of gross
sales was 26.7% and 26.3% respectively, for the three month periods ended May
31, 2000 and May 31, 1999. Cost of sales as a percentage of gross sales will
fluctuate depending upon the product mix sold.

Operating and selling expenses decreased 3.2% to $760,300 for the three months
ended May 31, 2000 versus $785,300 for the three months ended May 31, 1999.
These expenses expressed as a percentage of gross sales were 11.3% and 12.0% for
the three month periods ended May 31, 2000 and May 31, 1999 respectively. A
decline in shipping costs in the Publishing Division contributed to the decrease
in selling and operating expenses.

Sales commissions increased 8.6% to $805,600 during the first quarter ended May
31, 2000 when compared with $741,800 for the first quarter ended May 31, 1999.
These expenses expressed as a percentage of gross sales were 11.9% for the
quarter ended May 31, 2000 versus 11.3% for the quarter ended May 31, 1999.
Sales commissions will fluctuate depending upon the product being sold and the
Division making the sale. The Home Business Division and the Publishing Division
have separate and different commission programs and rates. Commission expense
increased in both the Publishing Division and the Home Business Division.

General and administrative expenses increased 4.7% to $420,200 for the three
months ended May 31, 2000 when compared with $401,400 for the three months ended
May 31, 1999. Expressed as a percentage of gross sales, general and
administrative expenses for the period ended May 31, 2000 were 6.2% compared
with 6.1% for the period ended May 31, 1999. Increases in salaries and benefits,
primarily to existing employees, contributed to the increase in general and
administrative expenses.

Interest expense increased 161.5% to $34,000 for the three months ended May 31,
2000 when compared with interest expense of $13,000 for the three months ended
May 31, 1999. The average amount borrowed during the first quarter ended May 31,
2000 increased to $1,513,000 compared with an average amount borrowed of
$657,600 for the first quarter ended May 31, 1999. The interest rate charged the
Company on its borrowing ranged between 8.25% and 9.25% during the first quarter
of fiscal year 2001 compared with 7.75% during the first quarter of fiscal year
2000. The increased borrowing levels and increased interest rates resulted in
higher interest costs to the Company during the quarter ended May 31, 2000 when
compared with the same quarter last year.

BUSINESS SEGMENTS
-----------------

The Company has two reportable segments: Publishing and Usborne Books at Home
("UBAH"). These reportable segments are business units that offer different
methods of distribution to different types of customers. They are managed
separately based on the fundamental differences in their operations. The
Publishing Division markets its products to retail accounts, which include book,
school supply, toy and gift stores and museums, through commissioned sales
representatives, trade and specialty wholesalers and an internal telesales
group. The UBAH Division markets its product line through a network of
independent sales consultants through a combination of direct sales, home shows
and book fairs.

                                       8
<PAGE>

The accounting policies of the segments are the same as those of the Company.
The Company evaluates segment performance based on operating profits of the
segments which is defined as segment net sales reduced by direct cost of sales
and direct expenses. Corporate expenses, including interest and depreciation,
and income taxes are not allocated to the segments. The Company's assets are not
allocated on a segment basis.

Information by industry segment for the three months ended May 31, 2000 and 1999
is set forth below:

<TABLE>
<CAPTION>
                                         Publishing      UBAH        Other         Total
                                         ----------      ----        -----         -----
<S>                                      <C>          <C>          <C>           <C>
Three months Ended May 31, 2000

  Net sales from external customers      $2,071,700   $2,178,700   $      --     $4,250,400
  Earnings before income taxes              783,200      478,400    (814,100)       447,500

Three Months Ended May 31, 1999

  Net sales from external customers      $2,097,600   $2,024,500   $      --     $4,122,100
  Earnings before income taxes              770,500      500,900    (801,500)       469,900
</TABLE>

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------  ----------------------------------------------------------

          The Company does not have any material market risk.

PART II OTHER INFORMATION
-------------------------

          None

                                       9
<PAGE>

                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                      EDUCATIONAL DEVELOPMENT CORPORATION
                                 (Registrant)



                              By /s/ Randall W. White
                                 --------------------
                                 Randall W. White
                                 President

Date:  July 6, 2000
       ------------

                                       10