----

----

----

----

| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES |
|---|-----------------------------------------------------------------|

|   | EXCHANGE ACT OF 1934 |
|--------|----------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                         | 73-0750007                           |
|---------------------------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization)   | (I.R.S. Employer Identification No.) |
|                                                                            |                                 |
| 10302 East 55th Place, Tulsa, Oklahoma                                | 74146-6515                           |
| (Address of principal executive offices)                                        | (Zip Code)                           |

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| Large accelerated filer o                                                        | Accelerated filer o               |
|---------------------------------------------------------------------------------------|-----------------------------------|
| Non-accelerated filer o  (Do not check if a smaller reporting company) | Smaller reporting company x  |

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Table of Contents 

TABLE OF 

| FACTORS AFFECTING FORWARD LOOKING STATEMENTS | 4                                                                                                                  |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                                         |                                                                                                               |
| PART I                                       |                                                                                                               |   |
|                                         |                                                                                                               |   |
| Item 1.                                      | Business                                                                                                           | 4 |
| Item 1A.                                     | Risk Factors                                                                                                       | 6 |
| Item 1B.                                     | Unresolved Staff Comments                                                                                          | 6 |
| Item 2.                                      | Properties                                                                                                         | 6 |
| Item 3.                                      | Legal Proceedings                                                                                                  | 6 |
| Item 4.                                      | Removed and Reserved                                                                                               | 6 |
|                                         |                                                                                                               |   |
| PART II                                      |                                                                                                               |   |
|                                         |                                                                                                               |   |
| Item 5.                                      | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 7 |
| Item 6.                                      | Selected Financial Data                                                                                            | 8 |
| Item 7.                                      | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 8 |
| Item 7A.                                     | Quantitative and Qualitative Disclosures About Market Risk                                                         | 16 |
| Item 8.                                      | Financial Statements and Supplementary Data                                                                        | 16 |
| Item 9.                                      | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               | 16 |
| Item 9A.                                     | Controls and Procedures                                                                                            | 16 |
| Item 9B.                                     | Other Information                                                                                                  | 16 |
|                                         |                                                                                                               |   |
| PART III                                     |                                                                                                               |   |
|                                         |                                                                                                               |   |
| Item 10.                                     | Directors, Executive Officers and Corporate Governance                                                             | 17 |
| Item 11.                                     | Executive Compensation                                                                                             | 17 |
| Item 12.                                     | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 17 |
| Item 13.                                     | Certain Relationships, Related Transactions and Director Independence                                              | 17 |
| Item 14.                                     | Principal Accounting Fees and Services                                                                             | 17 |
|                                         |                                                                                                               |   |
| PART IV                                      |                                                                                                               |   |
|                                         |                                                                                                               |   |
| Item 15.                                     | Exhibits and Financial Statement Schedules                                                                         | 18 |

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Table of Contents 

Item 1.  BUSINESS

| ·   | Home Business Division (“Usborne Books and More” or “UBAM”) - This division distributes books nationwide through independent consultants who hold book showings in individual homes, and through book fairs, direct sales and Internet sales.  The UBAM Consultants also distribute these titles to school and public libraries. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Publishing Division (“Publishing”) – This division markets books to bookstores (including major national chains), toy stores, specialty stores, museums and other retail outlets throughout the country. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|           |   | 2011   |   |   | 2010   |   |
|----------------|--------|--------|--------|--------|--------|--------|
| Publishing     |   |   | 36     | %      |   |   | 33 | % |
| UBAM           |   |   | 64     | %      |   |   | 67 | % |
| Total revenues |   |   | 100    | %      |   |   | 100 | % |

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Table of Contents 

Item 1A

Item 1B.  
UNRESOLVED 

Item 2.

Item 3.  
LEGAL 

Item 4.  
REMOVED 

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Table of Contents 

Item 5.  
MARKET 

|    |   | 2011 |   |   | 2010   |   |
|---------|--------|------|--------|--------|--------|--------|
| Period  |   | High |   |   | Low    |   |   | High |   |   | Low |   |
| 1st Qtr |   | $    | 7.00   |   |   | $      | 5.97 |   |   | $ | 6.05 |   |   | $ | 3.10 |   |
| 2nd Qtr |   | $    | 5.96   |   |   | $      | 5.15 |   |   | $ | 5.87 |   |   | $ | 4.40 |   |
| 3rd Qtr |   | $    | 7.00   |   |   | $      | 5.48 |   |   | $ | 5.66 |   |   | $ | 4.76 |   |
| 4th Qtr |   | $    | 7.00   |   |   | $      | 6.25 |   |   | $ | 6.19 |   |   | $ | 5.25 |   |

| Period                |   | Total # of SharesPurchased |   |   | Average PricePaid per Share |   |   | Total # of SharesPurchased asPart of Publicly Announced Plan (1) |   |   | Maximum # of Shares that Maybe Repurchased under the Plan |   |
|-----------------------|--------|----------------------------|--------|--------|-----------------------------|--------|--------|------------------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                  |   |                       |   |   |                        |   |   |                                                             |   |   |                                                      |   |   |
| December 1 - 31, 2010 |   |                       | -      |   |                        | $      | -      |                                                             |   |   | -                                                         |   |   |   | 397,042 |   |
| January 1 - 31, 2011  |   |                       | 202    |   |                        | $      | 6.85   |                                                             |   |   | 202                                                       |   |   |   | 396,840 |   |
| February 1 - 28, 2011 |   |                       | -      |   |                        | $      | 0.00   |                                                             |   |   | -                                                         |   |   |   | 396,840 |   |
| Total                 |   |                       | 202    |   |                        | $      | 6.85   |                                                             |   |   | 202                                                       |   |   |   |   |   |

| (1)   | In April 2008 the Board of Directors authorized us to purchase up to 500,000 additional shares of our common stock under a plan initiated in 1998.  This plan has no expiration date. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 6.  
SELECTED 

Item 7.  

|                              |   | FY 2011 |   |   | FY 2010 |   |
|-----------------------------------|--------|---------|--------|--------|---------|--------|
| National chain stores             |   |    | 38     | %      |    |   | 39 | % |
| All other                         |   |    | 62     | %      |    |   | 61 | % |
|    Total net sales |   |    | 100    | %      |    |   | 100 | % |

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Table of Contents 

| Net Revenues for Publishing Division  |   |
|--------------------------------------------|--------|
|                                       |   | FY 2011 |   |   | FY 2010 |   |
| Net Revenues                               |   | $ | 9,829,400 |   |   | $ | 9,502,700 |   |

|                                            |   | FY 2011 |   |   | FY 2010 |   |
|-------------------------------------------------|--------|---------|--------|--------|---------|--------|
| New Sales Representatives                       |   |    | 4,100  |   |    |   | 6,200 |   |
| Active Sales Representatives End of Fiscal Year |   |    | 6,200  |   |    |   | 8,000 |   |

| ·   | Consultants |
|--------------------|-------------|

| ·   | Supervisors |
|--------------------|-------------|

| ·   | Senior Supervisors |
|--------------------|--------------------|

| ·   | Executive Supervisors |
|--------------------|-----------------------|

| ·   | Senior Executive Supervisors |
|--------------------|------------------------------|

| ·   | Directors |
|--------------------|-----------|

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Table of Contents 

| Percent of Net Revenues by UBAM Marketing Program  |   |
|---------------------------------------------------------|--------|
|                                                    |   | FY 2011 |   |   | FY 2010 |   |
| Home Shows                                              |   |   | 33 | % |   |   | 37 | % |
| Direct Sales                                            |   |   | 2 | % |   |   | 2 | % |
| School & Library, including Book Fairs              |   |   | 42 | % |   |   | 38 | % |
| Internet                                                |   |   | 13 | % |   |   | 13 | % |
| Transportation Revenue                                  |   |   | 10 | % |   |   | 10 | % |
| Totals                                                  |   |   | 100 | % |   |   | 100 | % |

| Number of Orders by UBAM Marketing Program  |   |
|--------------------------------------------------|--------|
|                                             |   | FY 2011 |   |   | FY 2010 |   |
| Home Shows                                       |   |   | 24,100 |   |   |   | 29,000 |   |
| Direct Sales                                     |   |   | 4,200 |   |   |   | 5,100 |   |
| School & Library, including Book Fairs       |   |   | 12,500 |   |   |   | 12,400 |   |
| Internet                                         |   |   | 41,700 |   |   |   | 46,000 |   |
|                                             |   |   | 82,500 |   |   |   | 92,500 |   |

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| Earnings as a Percent of Net Revenues  |   |
|---------------------------------------------|--------|
|                                        |   | FY 2011 |   |   | FY 2010 |   |
| Net revenues                                |   |   | 100.0 | % |   |   | 100.0 | % |
| Cost of sales                               |   |   | 37.8 | % |   |   | 36.8 | % |
|   Gross margin                    |   |   | 62.2 | % |   |   | 63.2 | % |
| Operating expenses:                         |   |   |   |   |   |   |   |   |
|   Operating and selling           |   |   | 26.0 | % |   |   | 24.5 | % |
|   Sales commissions               |   |   | 20.4 | % |   |   | 21.4 | % |
|   General and administrative      |   |   | 8.7 | % |   |   | 7.1 | % |
|   Casualty Loss                   |   |   | 0.7 | % |   |   | - | % |
|   Total operating expenses        |   |   | 55.8 | % |   |   | 53.0 | % |
| Income from operations                      |   |   | 6.4 | % |   |   | 10.2 | % |
| Other income                                |   |   | 0.5 | % |   |   | 0.5 | % |
| Earnings before income taxes                |   |   | 6.9 | % |   |   | 10.7 | % |
| Income taxes                                |   |   | 2.6 | % |   |   | 4.0 | % |
| Net earnings                                |   |   | 4.3 | % |   |   | 6.7 | % |

|                            |   |    |        |   |    |   |        | $ Increase/ |   |
|---------------------------------|--------|---------|-------------|--------|---------|--------|-------------|-------------|--------|
|                            |   | FY 2011 |        |   | FY 2010 |   |        | (decrease)  |   |
| Gross sales                     |   | $       | 39,630,700  |   |    | $      | 40,451,300  |        |   | $ | (820,600 | ) |
| Less discounts & allowances |   |    | (13,657,600 | )      |    |   | (13,209,700 | )           |   |   | (447,900 | ) |
| Transportation revenue          |   |    | 1,270,100   |   |    |   | 1,429,200   |        |   |   | (159,100 | ) |
| Net revenues                    |   | $       | 27,243,200  |   |    | $      | 28,670,800  |        |   | $ | (1,427,600 | ) |

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|                       |   | FY 2011 |       |   | FY 2010 |   |       | $ Increase/(decrease) |   |
|----------------------------|--------|---------|------------|--------|---------|--------|------------|-----------------------|--------|
| Cost of sales              |   | $       | 10,284,700 |   |    | $      | 10,538,300 |                  |   | $ | (253,600 | ) |
| Operating and selling      |   |    | 7,077,200  |   |    |   | 7,032,400  |                  |   |   | 44,800 |   |
| Sales commissions          |   |    | 5,568,600  |   |    |   | 6,130,500  |                  |   |   | (561,900 | ) |
| General and administrative |   |    | 2,380,600  |   |    |   | 2,042,400  |                  |   |   | 338,200 |   |
| Casualty loss              |   |    | 188,500    |   |    |   | -          |                  |   |   | 188,500 |   |
| Total                      |   | $       | 25,499,600 |   |    | $      | 25,743,600 |                  |   | $ | (244,000 | ) |

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Item 7A.  
QUANTITATIVE 

Item 8.  
FINANCIAL 

Item 9.  
CHANGES 

Item 9A.

Item 9B

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Table of Contents 

Item 10.  

Item 11.  
EXECUTIVE 

Item 12.  
SECURITY 

Item 13. CERTAIN 

Item 14.  
PRINCIPAL 

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Table of Contents 

Item 15.  
EXHIBITS 

|                                                                       | Page   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   |
| Report of Independent Registered Public Accounting Firm                    | 21     |
|                                                                       |   |
| Balance Sheets - February 28, 2011 and 2010                                | 22     |
|                                                                       |   |
| Statements of Earnings - Years ended February 28, 2011 and 2010            | 23     |
|                                                                       |   |
| Statements of Shareholders' Equity -Years ended February 28, 2011 and 2010 | 24     |
|                                                                       |   |
| Statements of Cash Flows - Years ended February 28, 2011 and 2010          | 25     |
|                                                                       |   |
| Notes to Financial Statements                                              | 26-35  |

| 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. 0-4957).        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                   |
| 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. 0-4957).                    |
|   |                                                                                                                                                                                                                                   |
| 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. 0-4957).                                                                                        |
|   |                                                                                                                                                                                                                                   |
| 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. 0-4957).                   |
|   |                                                                                                                                                                                                                                   |
| 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. 0-4957).                      |
|   |                                                                                                                                                                                                                                   |
| 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. 0-4957).                                     |
|   |                                                                                                                                                                                                                                   |
| 4.1    | Specimens of Common Stock Certificates are incorporated herein by reference to Exhibits 3.1 and 3.2 to Registration Statement on Form 10-K (File No. 0-4957) filed June 29, 1970.                                                      |
|   |                                                                                                                                                                                                                                   |
| 10.1   | Usborne Agreement-Contractual agreement by and between the Company and Usborne Publishing Limited dated November 25, 1988 is incorporated herein by reference to Exhibit 10.12 to Form 10-K dated February 28, 1989 (File No. 0-4957). |

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| 10.2   | Party Plan-Contractual agreement by and between the Company and Usborne Publishing Limited dated March 14, 1989 is incorporated herein by reference to Exhibit 10.13 to Form 10-K dated February 28, 1989 (File No. 0-4957).                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                |
| 10.3   | Amendment dated January 1, 1992 to Usborne Agreement - Contractual agreement by and between the Company and Usborne Publishing Limited is incorporated herein by reference to Exhibit 10.13 to Form 10-K dated February 29, 1992 (File No. 0-4957). |
|   |                                                                                                                                                                                                                                                |
| 10.4   | Educational Development Corporation 1992 Incentive Stock Option Plan is incorporated herein by reference to Exhibit 4(c) to Registration Statement on Form S-8 (File No. 33-60188).                                                                 |
|   |                                                                                                                                                                                                                                                |
| 10.5   | Restated Loan Agreement dated June 30, 1999 between the Company and State Bank & Trust, N.A., Tulsa, OK, is incorporated herein by reference to Exhibit 10.24 to Form 10-K dated February 29, 2000 (File No. 0-4957).                           |
|   |                                                                                                                                                                                                                                                |
| 10.6   | Educational Development Corporation 2002 Incentive Stock Option Plan is incorporated herein by reference to Exhibit A to definitive proxy statement on Schedule 14A dated May 23, 2002 (File No. 0-4957).                                           |
|   |                                                                                                                                                                                                                                                |
| 10.7   | Amendment dated November 12, 2002 to Usborne Agreement – Contractual agreement by and between we and Usborne Publishing Limited is incorporated herein by reference to Exhibit 10.24 to Form 10-K dated February 28, 2003 (File No. 0-4957).  |
|   |                                                                                                                                                                                                                                                |
| 10.8   | Employment Agreement between Randall W. White and the Company dated February 28, 2004.                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                |
| 10.9   | Fifth Amendment dated June 30, 2004 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                      |
|   |                                                                                                                                                                                                                                                |
| 10.10  | Sixth Amendment dated June 30, 2005 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK                                                                                                                                       |
|   |                                                                                                                                                                                                                                                |
| 10.11  | Seventh Amendment dated September 2, 2005 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                |
|   |                                                                                                                                                                                                                                                |
| 10.12  | Eighth Amendment dated June 30, 2006 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK                                                                                                                                      |
|   |                                                                                                                                                                                                                                                |
| 10.13  | Ninth Amendment dated June 30, 2007 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                      |
|   |                                                                                                                                                                                                                                                |
| 10.14  | Tenth Amendment dated June 30, 2008 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                      |
|   |                                                                                                                                                                                                                                                |
| 10.15  | Eleventh Amendment dated June 30, 2009 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                   |
|   |                                                                                                                                                                                                                                                |
| 10.16  | Twelfth Amendment dated June 30, 2010 to Restated Loan Agreement between the Company and Arvest Bank, Tulsa, OK.                                                                                                                                    |
|   |                                                                                                                                                                                                                                                |
| *23.1  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                |
| *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 the Controller and Corporate Secretary (Principal Financial and Accounting Officer) 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.                                                                                                                              |

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SIGN

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REPORT OF 

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| EDUCATIONAL DEVELOPMENT CORPORATION                                                                                                                                                                                       |   |   |        |   |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| BALANCE SHEETS                                                                                                                                                                                                            |   |   |        |   |   |   |
| AS OF FEBRUARY 28,                                                                                                                                                                                                        |   |   |        |   |   |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |
| ASSETS                                                                                                                                                                                                                    |   | 2011   |        |   | 2010   |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |
| CURRENT ASSETS:                                                                                                                                                                                                           |   |   |        |   |   |   |
|   Cash and cash equivalents                                                                                                                                                                                     |   | $      | 1,988,200   |   |   | $      | 1,196,900 |   |
|   Accounts receivable, less allowance for doubtful accounts and    sales returns $562,800 (2011) and  $231,300 (2010)                                                                  |   |   | 3,076,300   |   |   |   | 3,305,500 |   |
|   Inventories—Net                                                                                                                                                                                         |   |   | 10,010,100  |   |   |   | 11,285,300 |   |
|   Prepaid expenses and other assets                                                                                                                                                                             |   |   | 315,500     |   |   |   | 268,400 |   |
|   Income tax receivable                                                                                                                                                                                         |   |   | -           |   |   |   | 8,000 |   |
|   Deferred income taxes                                                                                                                                                                                         |   |   | 367,700     |   |   |   | 256,900 |   |
|              Total current assets                                                                                                                        |   |   | 15,757,800  |   |   |   | 16,321,000 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| INVENTORIES—Net                                                                                                                                                                                                     |   |   | 593,000     |   |   |   | 659,000 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| PROPERTY, PLANT AND EQUIPMENT—Net                                                                                                                                                                                   |   |   | 2,042,400   |   |   |   | 2,147,500 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| OTHER ASSETS                                                                                                                                                                                                              |   |   | 256,500     |   |   |   | 172,500 |   |
| DEFERRED INCOME TAXES                                                                                                                                                                                                     |   |   | 55,300      |   |   |   | 60,400 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| TOTAL                                                                                                                                                                                                                     |   | $      | 18,705,000  |   |   | $      | 19,360,400 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                |   |   |        |   |   |   |   |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
|   Accounts payable                                                                                                                                                                                              |   | $      | 2,407,900   |   |   | $      | 2,259,100 |   |
|   Accrued salaries and commissions                                                                                                                                                                              |   |   | 398,700     |   |   |   | 531,600 |   |
|   Current maturities of long-term debt                                                                                                                                                                          |   |   | 75,000      |   |   |   | 75,000 |   |
|   Income tax payable                                                                                                                                                                                            |   |   | 23,800      |   |   |   | - |   |
|   Dividends payable                                                                                                                                                                                             |   |   | 468,700     |   |   |   | 466,400 |   |
|   Other current liabilities                                                                                                                                                                                     |   |   | 672,400     |   |   |   | 531,200 |   |
|              Total current liabilities                                                                                                                   |   |   | 4,046,500   |   |   |   | 3,863,300 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| LONG-TERM NOTES PAYABLE, net of current maturities                                                                                                                                                                        |   |   | -           |   |   |   | 75,000 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| COMMITMENTS (Note 7)                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| SHAREHOLDERS’ EQUITY:                                                                                                                                                                                               |   |   |        |   |   |   |   |   |
|   Common stock, $0.20 par value; Authorized 8,000,000 shares;    Issued 6,041,040 (2011) and 6,039,040 (2010) shares;    Outstanding 3,905,898 (2011) and 3,887,030 (2010) shares |   |   | 1,208,200   |   |   |   | 1,207,800 |   |
|   Capital in excess of par value                                                                                                                                                                                |   |   | 8,548,000   |   |   |   | 8,544,000 |   |
|   Retained earnings                                                                                                                                                                                             |   |   | 16,575,100  |   |   |   | 17,391,700 |   |
|                                                                                                                                                                                                                      |   |   | 26,331,300  |   |   |   | 27,143,500 |   |
|   Less treasury stock, at cost                                                                                                                                                                                  |   |   | (11,672,800 | )      |   |   | (11,721,400 | ) |
|                                                                                                                                                                                                                      |   |   | 14,658,500  |   |   |   | 15,422,100 |   |
| TOTAL                                                                                                                                                                                                                     |   | $      | 18,705,000  |   |   | $      | 19,360,400 |   |
|                                                                                                                                                                                                                      |   |   |        |   |   |   |   |   |
| See notes to financial statements.                                                                                                                                                                                        |   |   |        |   |   |   |   |   |

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| EDUCATIONAL DEVELOPMENT CORPORATION                                            |   |   |        |   |
|--------------------------------------------------------------------------------|--------|--------|-------------|--------|
| STATEMENTS OF EARNINGS                                                         |   |   |        |   |   |   |
| FOR THE YEARS ENDED FEBRUARY 28,                                               |   |   |        |   |
|                                                                           |   |   |        |   |
|                                                                           |   | 2011   |        |   | 2010 |   |
|                                                                           |   |   |        |   |   |   |
| GROSS SALES                                                                    |   | $      | 39,630,700  |   |   | $ | 40,451,300 |   |
|   Less discounts and allowances                                      |   |   | (13,657,600 | )      |   |   | (13,209,700 | ) |
|   Transportation revenue                                             |   |   | 1,270,100   |   |   |   | 1,429,200 |   |
| NET REVENUES                                                                   |   |   | 27,243,200  |   |   |   | 28,670,800 |   |
| COST OF SALES                                                                  |   |   | 10,284,700  |   |   |   | 10,538,300 |   |
|            Gross margin |   |   | 16,958,500  |   |   |   | 18,132,500 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| OPERATING EXPENSES:                                                            |   |   |        |   |   |   |   |   |
|   Operating and selling                                              |   |   | 7,077,200   |   |   |   | 7,032,400 |   |
|   Sales commissions                                                  |   |   | 5,568,600   |   |   |   | 6,130,500 |   |
|   General and administrative                                         |   |   | 2,380,600   |   |   |   | 2,042,400 |   |
|   Casualty loss                                                      |   |   | 188,500     |   |   |   | - |   |
|                                                                           |   |   | 15,214,900  |   |   |   | 15,205,300 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| OTHER INCOME                                                                   |   |   | 126,600     |   |   |   | 125,200 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| EARNINGS BEFORE INCOME TAXES                                                   |   |   | 1,870,200   |   |   |   | 3,052,400 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| INCOME TAXES                                                                   |   |   | 702,000     |   |   |   | 1,138,800 |   |
| NET EARNINGS                                                                   |   | $      | 1,168,200   |   |   | $ | 1,913,600 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| BASIC AND DILUTED EARNINGS PER SHARE:                                          |   |   |        |   |   |   |   |   |
|   Basic                                                              |   | $      | 0.30        |   |   | $ | 0.49 |   |
|   Diluted                                                            |   | $      | 0.30        |   |   | $ | 0.49 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING:           |   |   |        |   |   |   |   |   |
|   Basic                                                              |   |   | 3,887,895   |   |   |   | 3,866,510 |   |
|   Diluted                                                            |   |   | 3,890,384   |   |   |   | 3,868,082 |   |
|                                                                           |   |   |        |   |   |   |   |   |
| See notes to financial statements.                                             |   |   |        |   |   |   |   |   |

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| EDUCATIONAL DEVELOPMENT CORPORATION          |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |
|----------------------------------------------|--------|-----------------------------|-----------|--------|--------|---------|-----------|------------|--------|---------|-----------|--------|--------|----------------|------------|--------|
| STATEMENTS OF SHAREHOLDERS’ EQUITY     |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |
| FOR THE YEARS ENDED FEBRUARY 28,             |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |
|                                         |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |
|                                         |   | Common Stock                |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |
|                                         |   | (par value $0.20 per share) |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |
|                                         |   | Number of                   |      |   |   |    |      | Capital in |   |    |      |   |   | Treasury Stock |       |   |   |   |
|                                         |   | Shares                      |      |   |   |    |      | Excess of  |   |    | Retained  |   |   | Number of      |       |   |   |   |   | Shareholders’ |   |
|                                         |   | Issued                      |      |   | Amount |    |      | Par Value  |   |    | Earnings  |   |   | Shares         |       |   | Amount |   |   | Equity |   |
|                                         |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |
|                                         |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |
| BALANCE—March 1, 2009                  |   |                        | 6,039,040 |   |   | $  | 1,207,800 |       |   | $  | 8,508,400 |   |   | $         | 18,062,800 |   |   |   | 2,200,579 |   |   | $  | (11,883,700 | ) |   | $  | 15,895,300 |   |
|                                         |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Purchases of treasury stock      |   |                        | -         |   |   |    | -         |       |   |    | -         |   |   |           | -          |   |   |   | 7,919 |   |   |   | (46,400 | ) |   |   | (46,400 | ) |
|   Sales of treasury stock          |   |                        | -         |   |   |    |  -   |       |   |    |  -   |   |   |           |  -    |   |   |   | (56,488 | ) |   |   | 208,700 |   |   |   | 208,700 |   |
|   Dividends declared ($0.12/share) |   |                        |  -   |   |   |    | -         |       |   |    |  -   |   |   |           | (466,400   | )      |   |   | - |   |   |   | - |   |   |   | (466,400 | ) |
|   Dividends paid ($0.55/share)     |   |                        |  -   |   |   |    |  -   |       |   |    |  -   |   |   |           | (2,118,300 | )      |   |   |  - |   |   |   |  - |   |   |   | (2,118,300 | ) |
|   Stock-based compensation         |   |                        | -         |   |   |    |  -   |       |   |    | 35,600    |   |   |           |  -    |   |   |   |  - |   |   |   |  - |   |   |   | 35,600 |   |
|   Net earnings                     |   |                        |  -   |   |   |    |  -   |       |   |    |  -   |   |   |           | 1,913,600  |   |   |   |  - |   |   |   |  - |   |   |   | 1,913,600 |   |
| BALANCE—February 28, 2010              |   |                        | 6,039,040 |   |   |    | 1,207,800 |       |   |    | 8,544,000 |   |   |           | 17,391,700 |   |   |   | 2,152,010 |   |   |   | (11,721,400 | ) |   |   | 15,422,100 |   |
|   Purchases of treasury stock      |   |                        | -         |   |   |    |  -   |       |   |    |  -   |   |   |           |  -    |   |   |   | 29,393 |   |   |   | (191,000 | ) |   |   | (191,000 | ) |
|   Sales of treasury stock          |   |                        |  -   |   |   |    |  -   |       |   |    |  -   |   |   |           |  -    |   |   |   | (46,262 | ) |   |   | 239,600 |   |   |   | 239,600 |   |
|   Dividends declared ($0.12/share) |   |                        |  -   |   |   |    |  -   |       |   |    |  -   |   |   |           | (468,700   | )      |   |   |  - |   |   |   | - |   |   |   | (468,700 | ) |
|   Dividends paid ($0.39/share)     |   |                        |  -   |   |   |    |  -   |       |   |    |  -   |   |   |           | (1,516,100 | )      |   |   | - |   |   |   |  - |   |   |   | (1,516,100 | ) |
|   Exercise of options at $2.1875   |   |                        | 2,000     |   |   |    | 400       |       |   |    | 4,000     |   |   |           |  -    |   |   |   |  - |   |   |   |  - |   |   |   | 4,400 |   |
|   Net earnings                     |   |                        |  -   |   |   |    | -         |       |   |    |  -   |   |   |           | 1,168,200  |   |   |   |  - |   |   |   |  - |   |   |   | 1,168,200 |   |
| BALANCE—February 28, 2011              |   |                        | 6,041,040 |   |   | $  | 1,208,200 |       |   | $  | 8,548,000 |   |   | $         | 16,575,100 |   |   |   | 2,135,141 |   |   | $  | (11,672,800 | ) |   | $  | 14,658,500 |   |
|                                         |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See notes to financial statements.           |   |                        |      |   |   |    |      |       |   |    |      |   |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| EDUCATIONAL DEVELOPMENT CORPORATION                                                                                                                             |   |   |       |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| STATEMENTS OF CASH FLOWS                                                                                                                                        |   |   |       |   |   |   |
| FOR THE YEARS ENDED FEBRUARY 28,                                                                                                                                |   |   |       |   |   |   |
|                                                                                                                                                            |   |   |       |   |   |   |
|                                                                                                                                                            |   | 2011   |       |   | 2010   |   |
|                                                                                                                                                            |   |   |       |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                                                           |   |   |       |   |   |   |
|   Net earnings                                                                                                                                        |   | $      | 1,168,200  |   |   | $      | 1,913,600 |   |
|   Adjustments to reconcile net earnings to net cash     provided by operating activities:                                              |   |   |       |   |   |   |   |   |
|     Depreciation                                                                                                                            |   |   | 124,700    |   |   |   | 136,500 |   |
|     Deferred income taxes                                                                                                                   |   |   | (105,700   | )      |   |   | (41,300 | ) |
|     Stock-based compensation                                                                                                                |   |   | -          |   |   |   | 35,600 |   |
|     Provision for doubtful accounts and sales returns                                                                                       |   |   | 1,619,600  |   |   |   | 1,207,400 |   |
|     Changes in assets and liabilities:                                                                                                      |   |   |       |   |   |   |   |   |
|       Accounts receivable                                                                                                         |   |   | (1,390,400 | )      |   |   | (1,259,900 | ) |
|       Inventories, net                                                                                                            |   |   | 1,341,200  |   |   |   | (1,073,700 | ) |
|       Prepaid expenses and other assets                                                                                           |   |   | (131,100   | )      |   |   | (73,700 | ) |
|       Accounts payable, accrued salaries and commissions,        and other current liabilities |   |   | 157,100    |   |   |   | (322,000 | ) |
|       Income tax payable/receivable, net                                                                                          |   |   | 31,800     |   |   |   | (110,200 | ) |
|              Total adjustments                                                                 |   |   | 1,647,200  |   |   |   | (1,501,300 | ) |
|              Net cash  provided by operating activities                              |   |   | 2,815,400  |   |   |   | 412,300 |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                                                           |   |   |       |   |   |   |   |   |
|   Purchases of property and equipment                                                                                                                 |   |   | (19,600    | )      |   |   | (5,600 | ) |
|              Net cash used in investing activities                                             |   |   | (19,600    | )      |   |   | (5,600 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                                                           |   |   |       |   |   |   |   |   |
|   Payments on notes payable                                                                                                                           |   |   | (75,000    | )      |   |   | (150,000 | ) |
|   Cash received from exercise of stock options                                                                                                        |   |   | 4,400      |   |   |   | - |   |
|   Cash received from sale of treasury stock                                                                                                           |   |   | 239,600    |   |   |   | 208,700 |   |
|   Cash paid to acquire treasury stock                                                                                                                 |   |   | (191,000   | )      |   |   | (46,400 | ) |
|   Borrowings under revolving credit agreement                                                                                                         |   |   | -          |   |   |   | 2,200,000 |   |
|   Payments under revolving credit agreement                                                                                                           |   |   | -          |   |   |   | (2,200,000 | ) |
|   Dividends paid                                                                                                                                      |   |   | (1,982,500 | )      |   |   | (2,118,300 | ) |
|              Net cash used in financing activities                                             |   |   | (2,004,500 | )      |   |   | (2,106,000 | ) |
| NET  (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                                                                 |   |   | 791,300    |   |   |   | (1,699,300 | ) |
| CASH AND CASH EQUIVALENTS—BEGINNING OF YEAR                                                                                                               |   |   | 1,196,900  |   |   |   | 2,896,200 |   |
| CASH AND CASH EQUIVALENTS—END OF YEAR                                                                                                                     |   | $      | 1,988,200  |   |   | $      | 1,196,900 |   |
| SUPPLEMENTAL DISCLOSURE OF CASH  FLOW INFORMATION:                                                                                                    |   |   |       |   |   |   |   |   |
|   Cash paid for income taxes                                                                                                                          |   | $      | 742,700    |   |   | $      | 1,290,400 |   |
|                                                                                                                                                            |   |   |       |   |   |   |   |   |
| See notes to financial statements.                                                                                                                              |   |   |       |   |   |   |   |   |

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NOTES 

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| Building                  | 30 years     |
|---------------------------|--------------|
| Machinery & equipment | 3 - 10 years |
| Furniture & fixtures  | 3 years      |

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|                                                         |   | Year Ended February 28, |      |
|--------------------------------------------------------------|--------|-------------------------|-----------|
|                                                         |   | 2011                    |      |   | 2010 |   |
| Diluted Earnings Per Share:                                  |   |                    |      |   |   |   |
|   Net earnings applicable tocommon shareholders    |   | $                       | 1,168,200 |   |   | $ | 1,913,600 |   |
|                                                         |   |                    |      |   |   |   |   |   |
| Shares:                                                      |   |                    |      |   |   |   |   |   |
|   Weighted average sharesoutstanding–basic   |   |                    | 3,887,895 |   |   |   | 3,866,510 |   |
|   Assumed exercise of options                      |   |                    | 2,489     |   |   |   | 1,572 |   |
|                                                         |   |                    |      |   |   |   |   |   |
|   Weighted average sharesoutstanding–diluted |   |                    | 3,890,384 |   |   |   | 3,868,082 |   |
|                                                         |   |                    |      |   |   |   |   |   |
| Diluted Earnings Per Share                                   |   | $                       | 0.30      |   |   | $ | 0.49 |   |

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|                                      |   | February 28, |       |
|-------------------------------------------|--------|--------------|------------|
|                                      |   | 2011         |       |   | 2010 |   |
| Current:                                  |   |         |       |   |   |   |
|   Book inventory                |   | $            | 10,030,800 |   |   | $ | 11,310,300 |   |
|   Inventory valuation allowance |   |         | (20,700    | ) |   |   | (25,000 | ) |
| Inventories net–current             |   | $            | 10,010,100 |   |   | $ | 11,285,300 |   |
|                                      |   |         |       |   |   |   |   |   |
| Noncurrent:                               |   |         |       |   |   |   |   |   |
|   Book inventory                |   | $            | 903,000    |   |   | $ | 989,000 |   |
|   Inventory valuation allowance |   |         | (310,000   | ) |   |   | (330,000 | ) |
| Inventories net–noncurrent          |   | $            | 593,000    |   |   | $ | 659,000 |   |

|                          |   | February 28, |       |
|-------------------------------|--------|--------------|------------|
|                          |   | 2011         |       |   | 2010 |   |
| Land                          |   | $            | 250,000    |   |   | $ | 250,000 |   |
| Building                      |   |         | 2,124,700  |   |   |   | 2,124,700 |   |
| Machinery and equipment       |   |         | 2,182,500  |   |   |   | 2,162,900 |   |
| Furniture and fixtures        |   |         | 74,100     |   |   |   | 74,100 |   |
|                          |   |         | 4,631,300  |   |   |   | 4,611,700 |   |
| Less accumulated depreciation |   |         | (2,588,900 | ) |   |   | (2,464,200 | ) |
|                          |   | $            | 2,042,400  |   |   | $ | 2,147,500 |   |

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|                                                                                                |   | 2011   |    |   | 2010   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Current:                                                                                            |   |   |    |   |   |   |
|   Deferred tax assets:                                                                    |   |   |    |   |   |   |
|     Allowance for doubtful accounts                                             |   | $      | 176,000 |   |   | $      | 50,500 |   |
|     Inventory overhead capitalization                                           |   |   | 77,300  |   |   |   | 87,100 |   |
|     Allowance for slow moving inventory                                         |   |   | 7,600   |   |   |   | 9,500 |   |
|     Allowance for sales returns                                                 |   |   | 38,000  |   |   |   | 38,000 |   |
|     Accruals                                                                    |   |   | 68,800  |   |   |   | 71,800 |   |
|                                                                                                |   |   |    |   |   |   |   |   |
|            Deferred tax assets–Current |   | $      | 367,700 |   |   | $      | 256,900 |   |
|                                                                                                |   |   |    |   |   |   |   |   |
| Noncurrent:                                                                                         |   |   |    |   |   |   |   |   |
|   Deferred tax assets:                                                                    |   |   |    |   |   |   |   |   |
|     Allowance for slow moving inventory                                         |   | $      | 117,800 |   |   | $      | 125,400 |   |
|                                                                                                |   |   |    |   |   |   |   |   |
|            Deferred tax assets               |   |   | 117,800 |   |   |   | 125,400 |   |
|                                                                                                |   |   |    |   |   |   |   |   |
|   Deferred tax liabilities:                                                               |   |   |    |   |   |   |   |   |
|     Property and equipment                                                      |   |   | (62,500 | )      |   |   | (65,000 | ) |
|                                                                                                |   |   |    |   |   |   |   |   |
|            Deferred tax liabilities          |   |   | (62,500 | )      |   |   | (65,000 | ) |
|                                                                                                |   |   |    |   |   |   |   |   |
| Deferred tax asset–Net                                                                        |   | $      | 55,300  |   |   | $      | 60,400 |   |

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|                     |   | February 28, |     |
|--------------------------|--------|--------------|----------|
|                     |   | 2011         |     |   | 2010 |   |
| Current:                 |   |         |     |   |   |   |
|   Federal      |   | $            | 676,900  |   |   | $ | 990,700 |   |
|   State        |   |         | 130,800  |   |   |   | 189,400 |   |
|                     |   |         | 807,700  |   |   |   | 1,180,100 |   |
| Deferred:                |   |         |     |   |   |   |   |   |
|   Federal      |   |         | (88,900  | ) |   |   | (36,800 | ) |
|   State        |   |         | (16,800  | ) |   |   | (4,500 | ) |
|                     |   |         | (105,700 | ) |   |   | (41,300 | ) |
| Total income tax expense |   | $            | 702,000  |   |   | $ | 1,138,800 |   |

|                                              |   | February 28, |    |
|---------------------------------------------------|--------|--------------|---------|
|                                              |   | 2011         |    |   | 2010 |   |
| Tax expense at federal statutory rate             |   | $            | 635,900 |   |   | $ | 1,037,800 |   |
| State income tax–net of federal tax benefit |   |         | 73,700  |   |   |   | 120,500 |   |
| Other                                             |   |         | (7,600  | ) |   |   | (19,500 | ) |
| Total income tax expense                          |   | $            | 702,000 |   |   | $ | 1,138,800 |   |

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|                                                                                  |   | 2011   |    |   | 2010   |   |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Notes payable to former Kane/Miller shareholders,payments due annually, maturing 2011 |   | $      | 75,000  |   |   | $      | 150,000 |   |
| Less current maturities                                                               |   |   | (75,000 | )      |   |   | (75,000 | ) |
| Long-term notes payable, less current maturities                                      |   | $      | -       |   |   | $      | 75,000 |   |

|                     |   | Total |   |   | 2012   |   |   | 2013   |   |   | 2014  |   |   | 2015 |   |
|--------------------------|--------|-------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|------|--------|
| Total lease payments due |   | $     | 76,000 |   |   | $      | 57,300 |   |   | $      | 8,500 |   |   | $    | 5,100  |   |   | $ | 5,100 |   |

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|                            |   | February 28, 2011 |   |   | February 28, 2010 |   |
|---------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                            |   |              |   |   | Weighted          |   |   |   |   |   | Weighted |   |
|                            |   |              |   |   | Average           |   |   |   |   |   | Average |   |
|                            |   |              |   |   | Exercise          |   |   |   |   |   | Exercise |   |
|                            |   | Shares            |   |   | Price             |   |   | Shares |   |   | Price |   |
|                            |   |              |   |   |              |   |   |   |   |   |   |   |
| Outstanding atBeginning of Year |   |              | 18,000 |   |              | $      | 5.17 |   |   |   | 3,000 |   |   | $ | - |   |
|                            |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Granted                         |   |              | -      |   |              |   | - |   |   |   | 15,000 |   |   |   | 5.25 |   |
|                            |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Exercised/canceled              |   |              | (2,000 | )      |              |   | (2.19 | ) |   |   | - |   |   |   | - |   |
|                            |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at End of Year      |   |              | 16,000 |   |              | $      | 5.55 |   |   |   | 18,000 |   |   | $ | 5.17 |   |

|             |   |            | Number      |        |   | Weighted Average |   |
|------------------|--------|-----------------|-------------|-------------|--------|------------------|--------|
|             |   |            | Outstanding |        |   | Remaining        |   |
| Weighted Average |   | at February 28, |        | Contractual |   |
| Exercise Price   |   |            | 2011        |        |   | Life (Years)     |   |
|             |   |            |        |        |   |             |   |
| $                | 5.25   |            |        |        | 15,000 |             |   |   | 8.8 |   |
| $                | 10.00  |            |        |        | 1,000  |             |   |   | 3.0 |   |
|             |   |            |        |        | 16,000 |             |   |   |   |   |

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|                       |   |     |       |   |         |   |       |         |   |   | Basic     |   |   | Diluted   |   |
|----------------------------|--------|----------|------------|--------|--------------|--------|------------|--------------|--------|--------|-----------|--------|--------|-----------|--------|
|                       |   | Net      |       |   |         |   |       |         |   |   | Earnings  |   |   | Earnings  |   |
|                       |   | Revenues |       |   | Gross Margin |   |       | Net Earnings |   |   | Per Share |   |   | Per Share |   |
| 2011                       |   |     |       |   |         |   |       |         |   |   |      |   |   |      |   |
|   First quarter  |   | $        | 6,295,400  |   |         | $      | 3,974,200  |         |   | $      | 188,200   |   |   | $         | 0.05   |   |   | $ | 0.05 |   |
|   Second quarter |   |     | 5,750,400  |   |         |   | 3,387,200  |         |   |   | 190,200   |   |   |      | 0.05   |   |   |   | 0.05 |   |
|   Third quarter  |   |     | 9,484,600  |   |         |   | 6,006,000  |         |   |   | 776,900   |   |   |      | 0.20   |   |   |   | 0.20 |   |
|   Fourth quarter |   |     | 5,712,800  |   |         |   | 3,591,100  |         |   |   | 12,900    |   |   |      | 0.00   |   |   |   | 0.00 |   |
| Total year                 |   | $        | 27,243,200 |   |         | $      | 16,958,500 |         |   | $      | 1,168,200 |   |   | $         | 0.30   |   |   | $ | 0.30 |   |
|                       |   |     |       |   |         |   |       |         |   |   |      |   |   |      |   |   |   |   |   |   |
| 2010                       |   |     |       |   |         |   |       |         |   |   |      |   |   |      |   |   |   |   |   |   |
|   First quarter  |   | $        | 6,390,600  |   |         | $      | 4,090,400  |         |   | $      | 415,400   |   |   | $         | 0.11   |   |   | $ | 0.11 |   |
|   Second quarter |   |     | 6,005,900  |   |         |   | 3,553,300  |         |   |   | 225,400   |   |   |      | 0.06   |   |   |   | 0.06 |   |
|   Third quarter  |   |     | 10,016,400 |   |         |   | 6,481,600  |         |   |   | 925,100   |   |   |      | 0.24   |   |   |   | 0.24 |   |
|   Fourth quarter |   |     | 6,257,900  |   |         |   | 4,007,200  |         |   |   | 347,700   |   |   |      | 0.08   |   |   |   | 0.08 |   |
| Total year                 |   | $        | 28,670,800 |   |         | $      | 18,132,500 |         |   | $      | 1,913,600 |   |   | $         | 0.49   |   |   | $ | 0.49 |   |

| ·   | The Publishing Division markets its products to retail accounts, which include book, toy and gift stores, school supply stores and museums, through commissioned sales representatives, trade and specialty wholesalers and an internal telesales group. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | UBAM markets its product line through a nationwide network of independent sales consultants using a combination of direct sales, home shows and book fairs.  The UBAM Division also distributes to school and public libraries. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| NET REVENUES                        |   |
|-------------------------------------|--------|
|                                |   |   |   |   |   |   |
|                                |   | 2011 |   |   | 2010 |   |
| Publishing                          |   | $ | 9,829,400 |   |   | $ | 9,502,700 |   |
| UBAM                                |   |   | 17,413,800 |   |   |   | 19,168,100 |   |
| Other                               |   |   | - |   |   |   | - |   |
| Total                               |   | $ | 27,243,200 |   |   | $ | 28,670,800 |   |
|                                |   |   |   |   |   |   |   |   |
| EARNINGS (LOSS) BEFORE INCOME TAXES |   |
|                                |   |   |   |   |   |   |   |   |
|                                |   |   | 2011 |   |   |   | 2010 |   |
| Publishing                          |   | $ | 3,204,400 |   |   | $ | 3,263,100 |   |
| UBAM                                |   |   | 3,262,700 |   |   |   | 3,842,200 |   |
| Other                               |   |   | (4,596,900 | ) |   |   | (4,052,900 | ) |
| Total                               |   | $ | 1,870,200 |   |   | $ | 3,052,400 |   |

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