<PAGE>

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

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

         For the fiscal year ended February 28, 2003

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         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 55th Place, Tulsa, Oklahoma   74146-6515     Registrant's telephone
                                                         number: (918) 622-4522

(Address of principal executive offices)      (Zip Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.20 par value
                                (Title of class)

                  Indicate by check mark whether the registrant (1) has filed
all reports required 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 [ ]

                  Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

                  Indicate by check mark whether the Registrant is an
accelerated filer (as defined in Rule 12b-2 of the Act)
                                Yes [ ]   No [X]

                  As of April 17, 2003, 3,878,677 shares of common stock were
outstanding. The aggregate market value of the voting shares held by
non-affiliates of the registrant, based on 2,720,485 shares (total outstanding
less shares held by all officers, directors and 401(k) Plan) extended at the
closing market price on April 17, 2003, of these shares traded on the Nasdaq
National Market, was approximately $26,933,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

                  The information required by Part III of this Annual Report, to
the extent not set forth herein, is incorporated herein by reference from the
registrant's definitive proxy statement relating to the annual meeting of
stockholders to be held on July 10, 2003.

                                        1

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>
FACTORS AFFECTING FORWARD LOOKING STATEMENTS..............................................................    3

PART I

Item 1.    Business.......................................................................................    3

Item 2.    Properties.....................................................................................    6

Item 3.    Legal Proceedings..............................................................................    6

Item 4.    Submission of Matters to a Vote of Security Holders............................................    6

PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters..........................    6

Item 6.    Selected Financial Data........................................................................    7

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations..........    7

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.....................................   12

Item 8.    Financial Statements and Supplementary Data....................................................   12

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........   12

PART III

Item 10.   Directors and Executive Officers of the Registrant.............................................   13

Item 11.   Executive Compensation.........................................................................   14

Item 12.   Security Ownership of Certain Beneficial Owners and Management.................................   14

Item 13.   Certain Relationships and Related Transactions.................................................   14

Item 14.   Controls and Procedures........................................................................   14

PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K...............................   15
</TABLE>

                                        2

<PAGE>

                       EDUCATIONAL DEVELOPMENT CORPORATION

                             FORM 10-K ANNUAL REPORT

                      FOR THE YEAR ENDED FEBRUARY 28, 2003

FACTORS AFFECTING FORWARD LOOKING STATEMENTS

         This annual Report on Form 10-K contains certain "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1993, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Certain statements contained in "Item 7 - 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 be materially different
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. Although Educational Development
Corporation believes that the expectations reflected by such forward looking
statements are reasonable based on information currently available to the
Company, no assurances can be given that such exceptions will prove to have been
correct.

                                     PART 1

Item 1.  BUSINESS

(a) General Development of Business

         Educational Development Corporation ("EDC" or the "Company"), a
Delaware corporation with its principal office in Tulsa, Oklahoma, is the
exclusive trade publisher of a line of children's books produced in the United
Kingdom by Usborne Publishing Limited.

         The Company was incorporated on August 23, 1965. The Company's original
corporate name was Tutor Tapes International Corporation of Delaware. Its name
was changed to International Teaching Tapes, Inc. on November 24, 1965, and
changed again to the present name on June 24, 1968.

         During Fiscal Year ("FY") 2003 the Company operated two divisions: Home
Business Division ("Usborne Books at Home" or "UBAH") and Publishing Division.
The Home Business Division distributes books through independent consultants who
hold book showings in individual homes, and through book fairs, direct sales and
Internet sales. The Home Business Division also distributes these titles to
school and public libraries. The Publishing Division markets books to
bookstores, toy stores, specialty stores and other retail outlets.

         The Company makes available free of charge through the Investor
Relations portion of its Internet website at www.edcpub.com its annual reports
on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form
8-K and amendments to those reports filed or furnished pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934, as amended, as soon as
reasonably practicable after it electronically files such material with, or
furnishes it to, the Securities and Exchange Commission.

         Significant Events During Fiscal Year 2003

         There were no significant events during fiscal year 2003.

                                        3

<PAGE>

(b) Financial Information about Industry Segments

         See part II, Item 8 - Financial Statements and Supplementary Data

(c) Narrative Description of Business

(i) General

       The principal product of both the Home Business Division ("Usborne Books
at Home" or "UBAH") and Publishing Division is a line of children's books
produced in the United Kingdom by Usborne Publishing Limited. The Company is the
sole United States trade publisher of these books. The Company currently offers
approximately 1,300 different titles. The Company also distributes a product
called "Usborne Kid Kits". These Kid Kits take an Usborne book and combine it
with specially selected items and/or toys which complement the information
contained in the book. The Kid Kits are packaged in a reusable vinyl bag.
Alternatively, 19 Kid Kits are also available in an attractive box package.
Currently 65 different Kid Kits are available.

         The Company considers the political risk of importing books from the
United Kingdom to be negligible as the two countries have maintained excellent
relations for many years. Likewise there is little direct economic risk to the
Company in importing books from the United Kingdom as the Company pays for the
books in U.S. dollars and is not directly subject to any currency fluctuations.
There is risk of physical loss of the books should an accident occur while the
books are in transit, which could cause the Company some economic loss due to
lost sales should the supply of some titles be depleted in the event of a lost
shipment. The Company considers this to be highly unlikely as this type of loss
has yet to occur.

There is some risk involved in having only one source for its products - Usborne
Publishing Limited. The Company has an excellent working relationship with its
foreign supplier Usborne Publishing Limited and can foresee no reason for this
to change. Management believes that the Usborne line of books are the best
available books of their type.

(ii)  Industry Segments

      (a) Home Business Division

         The Home Business Division markets the Usborne line of approximately
1,300 titles and 65 Kid Kits through a combination of direct sales, home
parties, book fairs and the Internet, sold through a network marketing system.
The division also sells to schools and public libraries.

     (b) Publishing Division

         The Publishing Division distributes the Usborne line to bookstores, toy
stores, specialty stores and other retail outlets utilizing an inside telephone
sales force as well as independent field sales representatives.

(iii) Research and Development

         The Company spent approximately $14,000 in fiscal year 2001 and
$120,000 in fiscal year 2000 in development of a new product, "Make Reading
Fun", a fully interactive reading and phonics program. The Company began sales
of this product during the last quarter of FY 2001.

                                        4

<PAGE>

(iv)   Marketing

     (a) Home Business Division

         The Home Business Division markets through commissioned consultants
using a combination of direct sales, home parties, book fairs and the Internet.
The division had approximately 7,000 consultants in 50 states at February 28,
2003.

     (b) Publishing Division

         The Publishing Division markets through commissioned trade
representatives who call on book, toy, specialty stores and other retail
outlets; and through marketing by telephone to the trade. This division markets
to approximately 6,000 book, toy and specialty stores. Significant orders
totaling 36% of the Publishing Division's sales have been received from major
book chains. During fiscal year 2003 the division continued to expand into mass
merchandising outlets such as drug, department and discount stores.

(v)  Competition

     (a) Home Business Division

         The Home Business Division faces significant competition from several
other direct selling companies which have more financial resources. In addition,
federal and state funding cuts will also impact the availability of funds to the
school libraries. The Company is unable to estimate the effect of these funding
cuts on the division's future sales to school libraries, because the magnitude
of funding cuts has yet to be determined by Congress. Management believes its
superior product line and consultant network will enable this division to be
highly competitive in its market area.

     (b) Publishing Division

         The Publishing Division faces strong competition from large U.S. and
international companies that have more financial resources. Industry sales of
juvenile paperbacks approach $876 million annually, down 1.3% from the previous
year. The Publishing Division's sales are approximately 0.9% of industry sales.
Competitive factors include product quality, price and deliverability.
Management believes its product line will enable this division to compete well
in its market area.

(vi)  Seasonality

     (a) Home Business Division

         The level of sales for Home Business Division is greatest during the
Fall as individuals prepare for the holiday season.

     (b) Publishing Division

         The level of sales for the Publishing Division is greatest in the Fall
while retailers are stocking up for the holiday season.

(vii) Government Funding

         Local, state and federal funds are important to the Home Business
Division but not to the Publishing Division. In many cities and states in which
the Company does business, school funds have been severely cut, which impacts
sales to school libraries.

                                        5

<PAGE>

(viii) Trademarks, Copyrights and Patents

         ( none )

(ix)   Employees

         As of April 1, 2003, the Company had 76 full-time employees and 1
part-time employee. The Company believes its relations with its employees to be
good.

Item 2.  PROPERTIES

         The Company is located at 10302 E. 55th Pl, Tulsa, Oklahoma. In January
2002, the Company purchased for $1.8 million the warehouse and office facilities
it formerly leased. These facilities contain approximately 80,400 square feet of
office and warehouse space.

         The Company's operating facility is well maintained, in good condition
and is adequately insured. Equipment items are well maintained and in good
operating condition consistent with the requirement of the Company's business.
The Company believes that its operating facility meets both its present and
future capacity needs.

Item 3.  LEGAL PROCEEDINGS

         The Company is not a party to any material pending legal proceedings.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders of the Company.

                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

         The common stock of EDC is traded on the Nasdaq National Market
(symbol--EDUC). The high and low closing quarterly common stock quotations for
fiscal years 2003 and 2002, as reported by the National Association of
Securities Dealers, Inc., were as follows:

<TABLE>
<CAPTION>
                      2003                 2002
                  ------------        -------------
  Period          High    Low         High     Low
  ------          ----    ----        ----     ----
<S>               <C>     <C>         <C>      <C>
1st Qtr...        7.40    6.65        3.688    2.92
2nd Qtr...        7.19    6.34         5.30    3.17
3rd Qtr...        7.98    6.00         5.75    4.55
4th Qtr...        9.75    7.60         7.39    5.28
</TABLE>

The number of shareholders of record of EDC's common stock at April 17, 2003 was
993.

The Company paid a $0.06 per share annual dividend during fiscal year 2003 and a
$0.04 per share annual dividend during fiscal year 2002. In January 2003, the
Company announced that the Board of Directors had approved a policy to pay 20%
of annual net earnings as a cash dividend. Accordingly, the Company announced
that it will pay a $0.10 per share dividend on June 11, 2003 to shareholders of
record as of May 28, 2003.

                                        6

<PAGE>

Item 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                           YEARS ENDED FEBRUARY 28 (29)
                                      --------------------------------------------------------------------
                                          2003          2002          2001          2000          1999
                                      ------------   -----------   -----------   -----------   -----------
<S>                                   <C>            <C>           <C>           <C>           <C>
Net Sales                             $ 24,880,111   $20,554,451   $17,596,848   $16,851,261   $16,671,385
                                      ------------   ----------    -----------   -----------   -----------

Earnings From Continuing
   Operations                         $  2,038,085   $ 1,531,274   $ 1,090,262   $ 1,079,028   $ 1,297,493
                                      ------------   -----------   -----------   -----------   -----------
Earnings From Continuing Operations
   Per Common Share
     Basic                            $        .53   $       .40   $       .28   $       .25   $       .26
                                      ------------   -----------   -----------   -----------   -----------
     Diluted                          $        .49   $       .38   $       .27   $       .24   $       .26
                                      ------------   -----------   -----------   -----------   -----------

Total Assets                          $ 17,561,733   $14,156,798   $12,471,650   $12,340,022   $12,339,594
                                      ------------   -----------   -----------   -----------   -----------

Cash Dividends Declared
   Per Common Share                   $        .06   $       .04   $       .02   $       .02   $       .02
                                      ------------   -----------   -----------   -----------   -----------
</TABLE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         (a)  Results of Operations

FY 2003

         The Home Business Division's net sales increased 31.3% during FY 2003
when compared with FY 2002. Each quarter of FY 2003 recorded a sales increase
when compared with the same quarter of FY 2002. A quarterly comparison of FY
2003 versus FY 2002 shows the first quarter up 41.1%, the second quarter up
14.2%, the third quarter up 38.5% and the fourth quarter up 28.2%. The Company
attributes these increases to the fact that the number of active sales
consultants increased 14% during FY 2003. In addition, the Company continued to
offer leadership skills seminars throughout FY 2003. These seminars are designed
to help supervisors build their business and the seminars proved to be very
popular with these supervisors. The Home Business Division will hold its Seventh
National Convention in June 2003, in Tulsa, Oklahoma. Management is optimistic
that this division will continue in FY 2004 the growth trend experienced in FY
2003.

         The Publishing Division's net sales increased 2.7% in FY 2003 when
compared with FY 2002. Increased marketing efforts contributed to the sales
increase. The Company has an aggressive in-house sales force which maintains
contact with over 6,000 customers. During FY 2003, the telesales force opened
509 new accounts compared with 547 new accounts in FY 2002. The Company also
offers two display racks to assist stores in displaying the Company's products.
One is a six-foot rack with five adjustable shelves which can hold approximately
250 titles. The second rack is a four-sided rack with three levels which will
hold between 50 and 60 of the Company's Kid Kits. There were 3,690 of these
attractive racks in retail stores throughout the country at the end of FY 2003
compared with 3,545 at the end of FY 2002. In addition, the Company attends
major national trade shows throughout the country to further enhance product
visibility. The trend of prior years in which smaller independent book and gift
stores closed due to intense competition from larger chains continues. Our
in-house telesales force, which contacts smaller independent stores, estimated a
13.5% decrease in sales to the smaller independent book and gift stores during
FY 2003. Sales to the national chains continue to dominate the bookstore market.
The Company's sales to these national chains increased 13% during FY 2003. The
Company plans to continue to actively target the national chains through
cooperative advertising, joint promotional efforts and institutional advertising
in trade publications. Significant potential for growth exists with the national
chains and the Company is strongly committed to increasing these sales. For
these reasons, management is optimistic that the Publishing Division can
maintain its market share.

                                        7

<PAGE>

         Cost of sales increased 18.1% during FY 2003 when compared with FY
2002. Cost of sales as a percentage of gross sales was 26.6% for FY 2003 and
26.7% for FY 2002. Cost of sales as a percentage of gross sales will fluctuate
depending upon the product mix being sold. However, management expects the cost
of sales percentage for FY 2004 will remain consistent with FY 2003.

         Operating and selling expenses increased 13.1% during FY 2003 when
compared with FY 2002. As a percentage of gross sales, these costs were 11.7%
for FY 2003 and 12.2% for FY 2002. Contributing to the increase in operating and
selling expenses were increased payroll costs, higher freight costs, increased
credit card costs and increased marketing costs. Those increased costs are
attributed to the overall increase in sales in FY 2003 over sales in FY 2002.
Management expects operating and selling expenses to be approximately 11% to 13%
of gross sales in FY 2004.

         Sales commission increased 30.0% during FY 2003 when compared with FY
2002. As a percentage of gross sales, these costs were 17.6% in FY 2003 and
16.0% in FY 2002. Sales commissions as a percentage of gross sales are
determined by the product mix sold and the division that makes the sale.
Commission expense in the Publishing Division increased 3.0% during FY 2003 when
compared with FY 2002, the result of increased sales. Commission expense in the
Home Business Division increased 30.6%, the result of increased sales and the
higher commission structure in the Home Business Division.

         General and administrative expenses increased 7.3% in FY 2003 versus FY
2002. As a percentage of gross sales, these expenses were 4.4% in FY 2003 and
4.8% in FY 2002. An increase in payroll costs, attributed to adding employees
and general salaries increases, contributed to the increase in general and
administrative expenses.

         Interest expense declined 95.7% in FY 2003 when compared with FY 2002,
the result of lower borrowings during the year. As a percentage of gross sales,
interest expense was nominal in FY 2003 and 0.7% in FY 2002.

FY 2002

         The Home Business Division's net sales increased 28.8% during FY 2002
when compared with FY 2001. Each quarter of FY 2002 recorded a sales increase
when compared with the same quarter of FY 2001. A quarterly comparison of FY
2002 versus FY 2001 showed the first quarter up 28.7%, the second quarter up
42.4%, the third quarter up 22.5% and the fourth quarter up 26.6%. The Company
attributed these increases to the fact that the number of consultants selling
increased 28% during FY 2002. The Company continued offering its leadership
skills seminars throughout FY 2002. These seminars are designed to help
supervisors build their business and the seminars proved to be very popular with
these supervisors. The Home Business Division held its Sixth National Convention
in June, 2002, in Tulsa, Oklahoma.

                                        8

<PAGE>

         The Publishing Division's net sales increased slightly in FY 2002 when
compared with FY 2001. Increased marketing efforts contributed to the sales
increase. The Company has an aggressive in-house sales force which maintains
contact with over 9,000 customers. During FY 2002, the telesales force opened
547 new accounts compared with 679 new accounts in FY 2001. The Company offered
two display racks to assist stores in displaying the Company's products. One was
a six-foot rack with five adjustable shelves which can hold approximately 250
titles. The second rack was a four-sided rack with three levels which will hold
between 50 and 60 of the Company's Kid Kits. There were 3,545 of these
attractive racks in retail stores throughout the country at the end of FY 2002
compared with 3,428 at the end of FY 2001. The Company attended major national
trade shows throughout the country to further enhance product visibility. The
trend of prior years in which smaller independent book stores and gift stores
closed due to intense competition from larger chains continued. However, this
trend appeared to be slowing. Our in-house telesales force, which contacts
smaller independent stores, reported a slight sales increase during FY 2002. Our
field representatives had a slight sales decrease during FY 2002. Sales to the
national chains continued to dominate the bookstore market. The Company's sales
to these national chains increased 4.5% during FY 2002. The Company continued
its aggressive approach to the national chains in the areas of cooperative
advertising, joint promotional efforts and institutional advertising in trade
publications.

         Cost of sales increased 11.4% during FY 2002 when compared with FY
2001. Cost of sales as a percentage of gross sales was 26.7% for both FY 2002
and FY 2001. Cost of sales as a percentage of gross sales will fluctuate
depending upon the product mix being sold.

         Operating and selling expenses increased 12.8% during FY 2002 when
compared with FY 2001. As a percentage of gross sales, these costs were 12.2%
for FY 2002 and 12.1% for FY 2001. Contributing to the increase in operating and
selling expenses were increased payroll costs and higher freight costs.
Increased credit card costs and increased marketing costs in the Home Business
Division, the result of increased sales, also contributed to the increase

         Sales commission increased 30.0% during FY 2002 when compared with FY
2001. As a percentage of gross sales, these costs were 16.0% in FY 2002 and
13.7% in FY 2001. Sales commissions as a percentage of gross sales was
determined by the product mix sold and the division that makes the sale.
Commission expense in the Publishing Division remained unchanged between FY 2002
and FY 2001. Commission expense in the Home Business Division increased 30.9%,
the result of increased sales and the higher commission structure in the Home
Business Division.

         General and administrative expenses increased 2.2% in FY 2002 versus FY
2001. As a percentage of gross sales, these expenses were 4.8% in FY 2002 and
5.3% in FY 2001. An increase in materials and supplies contributed to the
increase in general and administrative expenses.

         Interest expense declined 80.6% in FY 2002 when compared with FY 2001.
As a percentage of gross sales, interest expense was 0.07% in FY 2002 and 0.4%
in FY 2001. The Company's note payable to the bank was paid off August 29, 2001.
This along with lower borrowings during the first six months of FY 2002 and
lower interest rates contributed to lower interest expense in FY 2002.

         (b)  Financial Position

         Working capital was $9.4 million for fiscal year end 2003 and $7.5
million at fiscal year end 2002. The net effect of an increase in accounts
receivable, an increase in inventory and an increase in accounts payable
resulted in the increase in working capital at fiscal year end 2003. Management
expects its financial position to remain strong and to increase working capital
during the next fiscal year.

                                        9

<PAGE>

         (c)  Liquidity and Capital Resources

         Management believes the Company's liquidity at February 28, 2003, is
adequate. There are no known demands, commitments, events or uncertainties that
would result in a material change in the Company's liquidity during fiscal year
2004. Capital expenditures are expected to be less than $750,000 during fiscal
year 2004. These expenditures would consist primarily of software and hardware
enhancements to the Company's existing data processing equipment, property
improvements and additions to equipment in the warehouse.

         Effective June 30, 2002, the Company signed a Third Amendment to the
Credit and Security Agreement with State Bank which provides a $3,500,000 line
of credit. The line of credit is evidenced by a promissory note in the amount of
$3,500,000 payable June 30, 2003. The note bears interest at the Wall Street
Journal prime floating rate minus 0.25% payable monthly (4.00% at February 28,
2003). The note is collateralized by substantially all of the assets of the
Company. At February 28, 2003 the Company had no borrowings outstanding.
Available credit under the revolving credit agreement was $3,500,000 at February
28, 2003.

         The Company uses the credit facility to fund routine operations. The
Company plans to renew this facility when it matures on June 30, 2003. The
Company believes its borrowing capacity under this line to be adequate for
anticipated operating levels.

         The Company generated cash of $1.1 million from operating activities
during fiscal year 2003 and $4.2 million during FY 2002. Net income for FY 2003
of $2,038,085 contributed to a significant portion of cash flows from operating
activities. It was offset by the changes in accounts receivable and inventory.
The change in accounts payable and accrued expenses also contributed to cash
flows from operating activities.

         Accounts receivable increased slightly during the year as several large
orders in the Publishing Division were received in February. In addition, the
Publishing Division offered special dating terms during the fourth quarter with
payment due during the first quarter of fiscal year 2004. The Company plans to
continue to maximize its collection efforts in order to maintain cash flows
during fiscal year 2004.

         Inventory levels increased 30.8% from fiscal year end 2002 to fiscal
year end 2003, the result of the timing of deliveries from the Company's
principal supplier. The Company continues to monitor inventory levels to ensure
that adequate inventory is on hand to support sales as well as to meet the six
to eight month resupply requirements of its principal supplier. The Company
expects inventory levels to increase moderately over the next year.

         Approximately $4.5 million of total accounts payable is payable to the
Company's principal supplier. Increases and decreases in inventory levels
directly affect the level of accounts payable. Also the timing of the purchases
and the payment terms offered by the suppliers affect the year-end levels of
accounts payable. The Company expects accounts payable to increase moderately
next year. Management anticipates cash flows from operating activities to
increase in the foreseeable future.

         Cash used in investing activities during fiscal year 2003 was primarily
for building improvements.

         During the year the Company continued the stock buyback program by
purchasing 107,498 shares of its common stock at a cost of $765,227. The Company
paid a dividend of $0.06 per share or $230,146.

                                       10

<PAGE>

         (d)  Critical Accounting Policies

         Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosures of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates, including those
related to our valuation of inventory, allowance for uncollectable accounts
receivable, allowance for sales returns, long-lived assets and deferred income
taxes. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may materially differ from these estimates under different
assumptions or conditions. Historically, however, actual results have not
differed materially from those determined using required estimates. The
Company's significant accounting policies are described in the notes
accompanying the financial statements included elsewhere in this report.
However, the Company considers the following accounting policies to be more
dependent on the use of estimates and assumptions

Revenue Recognition

         Revenue from merchandise sales is net of returns and allowances. The
provisions of the SEC Staff Accounting Bulletin No.101, "Revenue Recognition in
Financial Statements," have been applied, and as a result, a reserve is provided
for estimated future sales returns. The Company's sales return policy allows the
customer to return all purchases for an exchange or refund for up to 30 days
after the customer receives the item. Management has estimated and included a
reserve for sales returns of $101,000 as of February 28, 2003 and 2002. The
reserve for sales returns is estimated by management using historical sales
returns data.

Allowance for Doubtful Accounts

The Company maintains an allowance for estimated losses resulting from the
inability of its customers to make required payments. An estimate of
uncollectable amounts is made by management based upon historical bad debts,
current customer receivable balances, age of customer receivable balances, the
customer's financial condition and current economic trends. If the actual
uncollected amounts significantly exceed the estimated allowance, then the
Company's operating results would be significantly adversely affected.
Management has estimated allowance for doubtful accounts of $88,962 and $83,076
as of February 28, 2003 and 2002, respectively

Inventory

         Management continually estimates and calculates the amount of
non-current inventory. The inventory arises due to the Company occasionally
purchasing 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. Noncurrent inventory was estimated by management using the
current year turnover ratio by title. All inventory in excess of 2 1/2 years of
anticipated sales was classified as noncurrent inventory. Noncurrent inventory
balances were $511,500 and $817,500 at February 28, 2003 and 2002, respectively.

         Inventories are presented net of a reserve for obsolete inventory.
Management has estimated and included a reserve for obsolescence for both
current and noncurrent inventory. This reserve is based on management's
identification of obsolete inventory on hand at February 28, 2003 and 2002.
Management has estimated reserves for both current and noncurrent inventory of
$215,990 and $179,990 as of February 28, 2003 and 2002, respectively.

                                       11

<PAGE>

Deferred Tax Assets

         As discussed in Note 4 of the consolidated financial statements, the
Company does not currently have a valuation allowance recorded against its
deferred tax assets. If management determines it is more likely than not that
its deferred tax assets would not be realizable in the future, a valuation
allowance would be recorded to reduce the deferred tax asset to its net
realizable value.

Long-lived Assets

         In evaluating the fair value and future benefits of long-lived assets,
we perform an analysis of the anticipated undiscounted future net cash flows of
the related long-lived assets and reduce their carrying value by the excess, if
any, of the result of such calculation. We believe at this time that the
long-lived assets' carrying values and useful lives continues to be appropriate.

         (e)  New Accounting Standards

         In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB
Statement No. 123, which is effective for fiscal years ending after December 15,
2002. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation,
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. SFAS No.
148 also amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. SFAS No. 148 was adopted as of February 28, 2003.

         In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This interpretation elaborates on the
disclosures to be made by a guarantor in its financial statements about its
obligations under certain guarantees that it has issued. It also requires a
guarantor to recognize, at the inception of a guarantee, a liability for the
fair value of the obligations it has undertaken in issuing the guarantee. The
initial recognition and initial measurement provisions of the interpretation are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements are effective for financial
statements of interim or annual periods ending after December 15, 2002. The
adoption of this interpretation did not impact the Company's financial
statements.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The Company does not have any material market risk.

Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The information required by this Item 8 begins at page F-1,
          following page 23 hereof.

Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

              There have been no disagreements on any matter of accounting
principles or practices or financial statement disclosure within the twenty-four
months prior to February 28, 2003.

                                       12

<PAGE>

                                    PART III

Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

              (a)  Identification of Directors

              The information required by this Item 10 is furnished by
incorporation by reference to all information under the caption "Election of
Directors" in the Company's definitive Proxy Statement to be filed in connection
with the annual Meeting of Shareholders to be held on July 10, 2003.

              (b)  Identification of Executive Officers

              The following information is furnished with respect to each of the
executive officers of the Company, each of whom is elected by and serves at the
pleasure of the Board of Directors.

<TABLE>
<CAPTION>
                                                                      Office
       Name                              Office                     Held Since   Age
       ----                              ------                     ----------   ---
<S>                       <C>                                       <C>          <C>
Randall W. White          Chairman of the Board,                       1986      61
                          President and Treasurer

W. Curtis Fossett         Controller and                               1989      57
                          Corporate Secretary

Michael L. Puhl           Vice President - Operations                  1998      47

Craig M. White*           Vice President - Information Systems         2001      34

Ronald T. McDaniel*       Vice President - Publishing Division         2002      65

Kathy A. Slemp            Vice President - Usborne Books at            2002      44
                          Home Division
</TABLE>

               *The prior business experience for these executive officers who
have been employed by the Company for less than five years is as follows:

         In April 2001, Craig M. White, son of Randall W. White, Chairman of the
Board, President and Chief Executive Officer, was elected Vice President of
Information Systems. Craig White graduated from Oklahoma State University in
December 1994 with a BS degree in Electrical and Computer Engineering. He joined
EDC in December 1994 as an Inventory Analyst. In July 1995 he was named Manager
- Information Systems.

         In July 2002, Ronald T. McDaniel was elected Vice President of the
Publishing Division. Ronald McDaniel joined EDC on September 25, 2000 as
National Sales Manager of the Publishing Division. Prior to that he was
affiliated with Prudential Detrick Realty, serving as a Residential and Light
Commercial Sales Associate. In addition, he was President of The McDaniel
Company, a residential management and rehabilitation company.

              (c)  Compliance With Section 16 (a) of the Exchange Act

              The information required by this Item 10 is furnished by
incorporation by reference to all information under the caption "Compliance With
Section 16 (a)" in the Company's definitive Proxy Statement to be filed in
connection with the Annual Meeting of Shareholders to be held on July 10, 2003.

                                       13

<PAGE>

Item 11.      EXECUTIVE COMPENSATION

              The information required by this Item 11 is furnished by
incorporation by reference to all information under the caption "Executive
Compensation" in the Company's definitive Proxy Statement to be filed in
connection with the Annual Meeting of Shareholders to be held on July 10, 2003.

Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT

              The information required by this Item 12 is furnished by
incorporation by reference to all information under the caption "Voting
Securities and Principal Holders Thereof" in the Company's definitive Proxy
Statement to be filed in connection with the Annual Meeting of Shareholders to
be held on July 10, 2003.

Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

              The Company sells to the EDC Employee 401(k) Plan treasury shares
at a cost equal to or greater than the Company's cost of those shares. During
fiscal year 2003 the EDC Employee 401(k) Plan acquired 48,298 shares priced from
$3.13 - $5.00 per share, for a total cost of approximately $183,800.

Item 14.      CONTROLS AND PROCEDURES

              An evaluation was performed of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14(c) and 15d-14(c) within 90 days of the filing date of
this Annual Report on Form 10-K. This evaluation was conducted under the
supervision and with the participation of the Company's management, including
its Chief Executive Officer and its Chief Financial Officer. Based on that
evaluation, the Company's Chief Executive Officer and its Chief Financial
Officer concluded that he Company's disclosure controls were effective to ensure
that information required to be disclosed in reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported in accordance with the rules and forms of the SEC. It should be noted
that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls since the date controls were evaluated.

                                       14

<PAGE>

                                     PART IV

Item 15.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

              (a)  The following documents are filed as part of this
                     report:

<TABLE>
<CAPTION>
1. Financial Statements                                           Page
   --------------------                                         --------
<S>                                                             <C>
Independent Auditors' Report                                       F-1

Balance Sheets - February 28, 2003
  and February 28, 2002                                            F-2

Statements of Earnings - Years ended
  February 28, 2003, February 28, 2002
  and February 28, 2001                                            F-3

Statements of Shareholders' Equity -
  Years ended February 28, 2003,
  February 28, 2002 and February 28, 2001                          F-4

Statements of Cash Flows -
  Years ended February 28, 2003,
  February 28, 2002 and February 28, 2001                          F-5

Notes to Financial Statements                                      F-6-F-15
</TABLE>

              Schedules have been omitted as such information is either not
              required or is included in the financial statements.

         2. Exhibits

                3.1    Restated Certificate of Incorporation of the Company
                       dated April 26, 1968, Certificate of Amendment there to
                       dated June 21, 1968 and By-Laws of the Company are
                       incorporated herein by reference to Exhibit 1 to
                       Registration Statement on Form 10 (File No. 0-4957).

                3.2    Certificate of Amendment of Restated Certificate of
                       Incorporation of the Company dated August 27, 1977 and
                       By-Laws of the Company as amended are incorporated herein
                       by reference to Exhibits 20.1 and 20.2 to Form 10-K for
                       fiscal year ended February 28, 1981 (File No. 0-4957).

                3.3    Certificate of Amendment of Restated Certificate of
                       Incorporation of the Company 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).

                3.4    Certificate of Amendment of Restated Certificate of
                       Incorporation of the Company dated March 22, 1996.

                                       15

<PAGE>

                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).

               10.1    Educational Development Corporation Incentive Stock
                       Option Plan of 1981, is incorporated herein by reference
                       to Exhibit 10.9 to Form 10-K for fiscal year ended
                       February 28, 1982 (File No. 0-4957).

               10.2    Agreement by and among the Company, Usborne Publishing
                       Ltd., and Hayes Books, Inc., dated May 17, 1983, is
                       incorporated herein by reference to Exhibit 10.16 to Form
                       10-K for fiscal year ended February 29, 1984 (File No.
                       0-4957).

               10.3    Settlement Agreement dated August 7, 1986, by and between
                       the Company and Hayes Publishing Ltd., Cyril Hayes Books,
                       Inc. (formerly named Hayes Books, Inc.), and Cyril Hayes
                       is incorporated herein by reference to Exhibit 10.1 to
                       Form 8-K dated August 7, 1986 (File No. 0-4957).

               10.4    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).

               10.5    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).

               10.6    Loan Agreement dated January 18, 1990, by and between the
                       Company and State Bank & Trust, N.A., Tulsa, OK (formerly
                       WestStar Bank, N.A., Bartlesville, OK), is incorporated
                       herein by reference to Exhibit 10.11 to Form 10-K dated
                       February 28, 1990 (File No. 0-4957).

               10.7    Lease Agreement by and between the Company and James D.
                       Dunn dated March 1, 1991, is incorporated herein by
                       reference to Exhibit 10.12 to Form 10-K dated February
                       28, 1991 (File No. 0-4957).

               10.8    Agreement for Exchange of Contract Rights and Securities
                       by and between the Company and Robert D. Berryhill dated
                       October 1, 1990, is incorporated herein by reference to
                       Exhibit 10.1 to Form 10-K dated February 28, 1991 (File
                       No. 0-4957).

               10.9    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).

                                       16

<PAGE>

              10.10    First Amendment dated January 31, 1992 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, (formally WestStar Bank, N.A., Bartlesville, OK,) is
                       incorporated herein by reference to Exhibit 10.14 to Form
                       10-K dated February 29, 1992 (File No. 0-4957).

              10.11    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)

              10.12    Second Amendment dated June 30, 1992 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, (formally WestStar Bank, N.A., Bartlesville, OK,) is
                       incorporated herein by reference to Exhibit 10.12 to Form
                       10-KSB dated February 28, 1994 (File No. 0-4957).

              10.13    Third Amendment dated June 30, 1993 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, (formally WestStar Bank, N.A., Bartlesville, OK,) is
                       incorporated herein by reference to Exhibit 10.13 to Form
                       10-KSB dated February 28, 1995 (File No. 0-4957).

              10.14    Fourth Amendment dated June 30, 1994 to Loan Agreement
                       between the Company and State Bank & Trust, N.A, Tulsa,
                       OK, is incorporated herein by reference to Exhibit 10.14
                       to Form 10-KSB dated February 28, 1995 (File No. 0-4957).

              10.15    Fifth Amendment dated March 13, 1995 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, is incorporated herein by reference to Exhibit 10.15
                       to Form 10-KSB dated February 28, 1995 (File No. 0-4957).

              10.16    Sixth Amendment dated March 27, 1995 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, is incorporated herein by reference to Exhibit 10.16
                       to Form 10-KSB dated February 28, 1995 (File No. 0-4957).

              10.17    Seventh Amendment dated April 27, 1995 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, is incorporated herein by reference to Exhibit 10.17
                       to Form 10-KSB dated February 28, 1995 (File No. 0-4957).

              10.18    Amendment dated February 28, 1995 to the Lease Agreement
                       by and between the Company and James D. Dunn, is
                       incorporated herein by reference to Exhibit 10.18 to Form
                       10-KSB dated February 28, 1995 (File No. 0-4957).

              10.19    Eighth Amendment Dated July 27, 1995 to Loan Agreement
                       between the Company and State Bank & Trust, N.A., Tulsa,
                       OK, is incorporated herein by reference to Exhibit 10.19
                       to Form 10-KSB dated February 29, 1996 (File No. 0-4957).

                                       17

<PAGE>

              10.20    Restated Loan Agreement dated September 25, 1995 between
                       the Company and State Bank & Trust, N.A., Tulsa, OK, is
                       incorporated herein by reference to Exhibit 10.20 to Form
                       10-KSB dated February 29, 1996 (File No. 0-4957).

              10.21    Restated Loan Agreement dated June 10, 1996 between the
                       Company and State Bank & Trust, N.A., Tulsa, OK, is
                       incorporated herein by reference to Exhibit 10.21 to Form
                       10-K dated February 28, 1997 (File No. 0-4957).

              10.22    First Amendment dated June 30, 1997 to Restated Loan
                       Agreement between the Company and State Bank & Trust,
                       N.A., Tulsa, OK, is incorporated herein by reference to
                       Exhibit 10.22 to Form 10-K dated February 28, 1998 (File
                       No. 0-4957).

              10.23    Second Amendment dated June 30, 1998 to Restated Loan
                       Agreement between the Company and State Bank & Trust,
                       N.A., Tulsa, OK, is incorporated herein by reference to
                       Exhibit 10.23 to Form 10-K dated February 28, 1999 (File
                       No. 0-4957).

              10.24    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).

              10.25    Lease agreement by and between the Company and James D.
                       Dunn dated July 1, 1999, is incorporated herein by
                       reference to Exhibit 10.25 to Form 10-K dated February
                       29, 2000 (File No. 0-4957).

              10.26    First Amendment dated June 30, 2000 to Restated Loan
                       Agreement between the Company and State Bank & Trust,
                       N.A., Tulsa, OK, is incorporated herein by reference to
                       Exhibit 10.25 to Form 10-K dated February 28, 2001 (File
                       No. 0-4957).

              10.27    Second Amendment dated June 30, 2001 to Restated Loan
                       Agreement between the Company and State Bank & Trust,
                       N.A., Tulsa, OK, is incorporated herein by reference to
                       Exhibit 10.25 to Form 10-K dated February 28, 2002 (File
                       No. 0-4957).

              10.28    Educational Development Corporation 2002 Incentive Stock
                       Option Plan is incorporated herein by reference to
                       Exhibit A to DEF 14A dated May 23, 2002 (File No. 0-4957)

             *10.29    Third Amendment dated June 30, 2002 to Restated Loan
                       Agreement between the Company and State Bank & Trust,
                       N.A., Tulsa, OK.

             *10.30    Certificate of Amendment of Restated Certificate of
                       Incorporation of the Company dated July 15, 2002.

              10.31    Registration of 1,500,000 shares of Common Stock is
                       incorporated herein by reference to Form S-8 dated
                       October 22, 2002 (File No. 333-100659)

                                       18

<PAGE>

             *10.32    Amendment dated November 12, 2002 to Usborne Agreement -
                       Contractual agreement by and between the Company and
                       Usborne Publishing Limited

                *23.    Independent Auditors' Consent

-------------------

              *Filed Herewith

                       (b)    No reports on Form 8-K were filed during the last
                              quarter of the period covered by this report.

                                       19

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(b) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                       EDUCATIONAL DEVELOPMENT CORPORATION

Date:  May 12, 2003             By  /s/ W. Curtis Fossett
                                   -------------------------
                                     W. Curtis Fossett
                                     Principal Financial
                                     and Accounting Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

Date:  May 12, 2003           /s/ Randall W. White
                              -----------------------------
                              Randall W. White
                              Chairman of the Board
                              President, Treasurer and
                              Director

       May 12, 2003           /s/ Robert D. Berryhill
                              -----------------------------
                              Robert D. Berryhill, Director

       May 12, 2003           /s/ Dean Cosgrove
                              -----------------------------
                              G. Dean Cosgrove, Director

       May 12, 2003           /s/ James F. Lewis
                              -----------------------------
                              James F. Lewis, Director

       May 12, 2003           /s/ W. Curtis Fossett
                              -----------------------------
                              W. Curtis Fossett
                              Principal Financial
                              and Accounting Officer

                                       20

<PAGE>

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

In connection with the Annual Report of Educational Development Corporation (the
"Company") on Form 10-K for the period ending February 28, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Randall W. White, President and Chief Executive Officer of the Company, certify
pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the
requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934;
and (2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

Date:  May 12, 2003                  By    /s/ Randall W. White
                                        --------------------------------
                                           Randall W. White
                                           President and Chief Executive Officer

In connection with the Annual Report of Educational Development Corporation (the
"Company") on Form 10-K for the period ending February 28, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I, W.
Curtis Fossett, Chief Financial Officer of the Company, certify pursuant to 18
U.S.C. ss.1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that: (1) The Report fully complies with the requirements of Section 13
(a) or 15 (d) of the Securities Exchange Act of 1934; and (2) The information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Date: May 12, 2003                   By   /s/ W. Curtis Fossett
                                        -------------------------
                                          W. Curtis Fossett
                                          Chief Financial Officer

                                       21

<PAGE>

                                  CERTIFICATION

I, Randall W. White, President and CEO of Educational Development Corporation
certify that:

1.   I have reviewed this annual report on Form 10-K of Educational Development
     Corporation.

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of
     the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:   May 12, 2003                 By   /s/ Randall W. White
                                        --------------------------------
                                          Randall W. White
                                          President and Chief Executive Officer

                                       22

<PAGE>

I, W. Curtis Fossett, CFO of Educational Development Corporation certify that:

1.   I have reviewed this annual report on Form 10-K of Educational Development
     Corporation.

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of
     the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  May 12, 2003                  By    /s/ W. Curtis Fossett
                                         ---------------------------------
                                           W. Curtis Fossett
                                           Chief Financial Officer

                                       23

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
   Educational Development Corporation:

We have audited the accompanying balance sheets of Educational Development
Corporation (the "Company") as of February 28, 2003 and 2002, and the related
statements of earnings, shareholders' equity, and cash flows for each of the
three years in the period ended February 28, 2003. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at February 28, 2003 and 2002,
and the results of its operations and its cash flows for each of the three years
in the period ended February 28, 2003, in conformity with accounting principles
generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
---------------------------

Tulsa, Oklahoma
April 4, 2003

                                      -F-1-

<PAGE>

EDUCATIONAL DEVELOPMENT CORPORATION

BALANCE SHEETS
FEBRUARY 28, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                       2003            2002
<S>                                                                <C>             <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                                       $  1,432,982    $    906,889
   Accounts receivable, less allowance for doubtful accounts and
      sales returns $189,962 (2003) and $184,076 (2002)               2,137,412       2,040,423
   Inventories - Net                                                 11,413,715       8,291,950
   Prepaid expenses and other assets                                    162,674         218,341
   Deferred income taxes                                                 72,100          59,200
                                                                   ------------    ------------
             Total current assets                                    15,218,883      11,516,803

INVENTORIES - Net                                                       341,880         683,880

PROPERTY, PLANT AND EQUIPMENT - Net                                   1,941,270       1,907,615

DEFERRED INCOME TAXES                                                    59,700          48,500
                                                                   ------------    ------------

                                                                   $ 17,561,733    $ 14,156,798
                                                                   ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                $  4,997,273    $  3,380,102
   Accrued salaries and commissions                                     435,728         352,756
   Other current liabilities                                            251,824         244,846
   Income taxes payable                                                 160,303          63,753
                                                                   ------------    ------------
             Total current liabilities                                5,845,128       4,041,457

COMMITMENTS

SHAREHOLDERS' EQUITY:
   Common stock, $0.20 par value; Authorized 8,000,000 (2003)
      and 6,000,000 (2002) shares;
      Issued 5,441,640 (2003) and 5,429,240 (2002) shares;
      Outstanding 3,827,620 (2003) and 3,822,117 (2002) shares        1,088,328       1,085,848
   Capital in excess of par value                                     4,619,406       4,417,507
   Retained earnings                                                 11,455,662       9,647,723
                                                                   ------------    ------------
                                                                     17,163,396      15,151,078
   Less treasury stock, at cost                                      (5,446,791)     (5,035,737)
                                                                   ------------    ------------
                                                                     11,716,605      10,115,341
                                                                   ------------    ------------

                                                                   $ 17,561,733    $ 14,156,798
                                                                   ============    ============
</TABLE>

See notes to financial statements.

                                      -F-2-

<PAGE>

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF EARNINGS
YEARS ENDED FEBRUARY 28, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                                2003               2002               2001
<S>                                         <C>                <C>                <C>
GROSS SALES                                 $ 36,036,786       $ 30,457,695       $ 27,260,879
   Less discounts and allowances             (11,156,675)        (9,903,244)        (9,664,031)
                                            ------------       ------------       ------------
           Net sales                          24,880,111         20,554,451         17,596,848
COST OF SALES                                  9,591,425          8,121,522          7,287,920
                                            ------------       ------------       ------------
           Gross margin                       15,288,686         12,432,929         10,308,928
                                            ------------       ------------       ------------

OPERATING EXPENSES:
   Operating and selling                       4,203,340          3,717,465          3,295,164
   Sales commissions                           6,327,058          4,867,970          3,743,954
   General and administrative                  1,569,826          1,463,631          1,432,030
   Interest                                          884             20,343            104,925
                                            ------------       ------------       ------------
                                              12,101,108         10,069,409          8,576,073
                                            ------------       ------------       ------------

OTHER INCOME                                      77,207             76,554             37,507
                                            ------------       ------------       ------------

EARNINGS BEFORE INCOME TAXES                   3,264,785          2,440,074          1,770,362

INCOME TAXES                                   1,226,700            908,800            680,100
                                            ------------       ------------       ------------

NET EARNINGS                                $  2,038,085       $  1,531,274       $  1,090,262
                                            ============       ============       ============

BASIC AND DILUTED EARNINGS PER SHARE:
   Basic                                    $       0.53       $       0.40       $       0.28
                                            ============       ============       ============
   Diluted                                  $       0.49       $       0.38       $       0.27
                                            ============       ============       ============

WEIGHTED AVERAGE NUMBER OF
   COMMON AND EQUIVALENT SHARES
   OUTSTANDING:

   Basic                                       3,835,411          3,867,221          3,955,527
                                            ============       ============       ============
   Diluted                                     4,158,781          4,061,956          4,042,642
                                            ============       ============       ============
</TABLE>

See notes to financial statements.

                                      -F-3-

<PAGE>

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED FEBRUARY 28, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                              COMMON STOCK
                                       (PAR VALUE $0.20 PER SHARE)
                                  -------------------------------------                        TREASURY STOCK
                                  NUMBER OF                 CAPITAL IN                    ------------------------
                                   SHARES                   EXCESS OF       RETAINED      NUMBER OF                  SHAREHOLDERS'
                                   ISSUED       AMOUNT      PAR VALUE       EARNINGS       SHARES        AMOUNT         EQUITY
<S>                               <C>         <C>          <C>            <C>             <C>         <C>            <C>
BALANCE, MARCH 1, 2000            5,429,240   $ 1,085,848  $  4,410,066   $  7,259,141    1,261,851   $ (3,782,646)  $  8,972,409

   Issuance of treasury stock             -             -             -              -         (583)         1,700          1,700
   Purchases of treasury stock            -             -             -              -      289,252       (856,215)      (856,215)
   Sales of treasury stock                -             -         3,561              -      (32,680)        82,889         86,450
   Dividends paid ($0.02/share)           -             -             -        (78,779)           -              -        (78,779)
   Net earnings                           -             -             -      1,090,262            -              -      1,090,262
                                  ---------   -----------  ------------   ------------    ---------   ------------   ------------

BALANCE, FEBRUARY 28, 2001        5,429,240     1,085,848     4,413,627      8,270,624    1,517,840     (4,554,272)     9,215,827

   Issuance of treasury stock             -             -         1,327              -       (1,000)         3,023          4,350
   Purchases of treasury stock            -             -             -              -      139,603       (634,752)      (634,752)
   Sales of treasury stock                -             -        18,480              -      (31,520)        95,812        114,292
   Exercise of options ($1.50 -
     $3.00/share)                         -             -       (15,927)             -      (17,800)        54,452         38,525
   Dividends paid ($0.04/share)           -             -             -       (154,175)           -              -       (154,175)
   Net earnings                           -             -             -      1,531,274            -              -      1,531,274
                                  ---------   -----------  ------------   ------------    ---------   ------------   ------------

BALANCE, FEBRUARY 28, 2002        5,429,240     1,085,848     4,417,507      9,647,723    1,607,123     (5,035,737)    10,115,341

   Purchases of treasury stock            -             -             -              -      107,498       (765,227)      (765,227)
   Sales of treasury stock                -             -       138,286              -      (90,201)       321,566        459,852
   Exercise of options ($1.50 -
     $5.50/share)                    12,400         2,480        63,613              -      (10,400)        32,607         98,700
   Dividends paid ($0.06/share)           -             -             -       (230,146)           -              -       (230,146)
   Net earnings                           -             -             -      2,038,085            -              -      2,038,085
                                  ---------   -----------  ------------   ------------    ---------   ------------   ------------

BALANCE, FEBRUARY 28, 2003        5,441,640   $ 1,088,328  $  4,619,406   $ 11,455,662    1,614,020   $ (5,446,791)  $ 11,716,605
                                  =========   ===========  ============   ============    =========   ============   ============
</TABLE>

See notes to financial statements.

                                      -F-4-

<PAGE>

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 28, 2003, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                    2003           2002             2001
<S>                                                             <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings                                                 $ 2,038,085     $ 1,531,274     $ 1,090,262
   Adjustments to reconcile net earnings to net cash
      provided by operating activities:
      Depreciation and amortization                                 165,910         120,738          59,662
      Deferred income taxes                                         (24,100)        (27,900)         75,700
      Provision for doubtful accounts and sales returns           1,057,803         991,813       1,381,704
      Stock issued for awards                                             -           4,350           1,700
      Changes in assets and liabilities:
         Accounts and income tax receivable                      (1,154,792)     (1,481,184)       (912,302)
         Inventories                                             (2,779,765)      1,241,092        (572,826)
         Prepaid expenses and other assets                           11,846         (26,456)        (26,745)
         Accounts payable, accrued salaries and commissions,
            and other current liabilities                         1,707,121       1,830,181         104,833
         Income tax payable                                          96,550          63,753         (46,923)
                                                                -----------     -----------     -----------
            Total adjustments                                      (919,427)      2,716,387          64,803
                                                                -----------     -----------     -----------

            Net cash provided by operating activities             1,118,658       4,247,661       1,155,065
                                                                -----------     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES -
   Purchases of property and equipment                             (155,744)     (1,888,933)        (58,571)
                                                                -----------     -----------     -----------

             Net cash used in investing activities                 (155,744)     (1,888,933)        (58,571)
                                                                -----------     -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings on revolving credit agreement                       1,317,000       2,347,000       7,703,000
   Payments on revolving credit agreement                        (1,317,000)     (3,431,000)     (7,897,000)
   Cash received from exercise of stock options                      98,700          38,525               -
   Cash received from sale of treasury stock                        459,852         114,292          86,450
   Cash paid to acquire treasury stock                             (765,227)       (634,752)       (856,215)
   Dividends paid                                                  (230,146)       (154,175)        (78,779)
                                                                -----------     -----------     -----------

             Net cash used in financing activities                 (436,821)     (1,720,110)     (1,042,544)
                                                                -----------     -----------     -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                           526,093         638,618          53,950

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                        906,889         268,271         214,321
                                                                -----------     -----------     -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                          $ 1,432,982     $   906,889     $   268,271
                                                                ===========     ===========     ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for interest                                       $       884     $    26,392     $   105,348
                                                                ===========     ===========     ===========
   Cash paid for income taxes                                   $ 1,154,250     $   800,250     $   724,020
                                                                ===========     ===========     ===========
</TABLE>

See notes to financial statements.

                                      -F-5-

<PAGE>

EDUCATIONAL DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 2003, 2002 AND 2001

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF BUSINESS - Educational Development Corporation (the
         "Company") distributes books and publications through its Publishing
         and Usborne Books at Home Divisions to book, toy and gift stores,
         libraries and home educators located throughout the United States
         ("U.S."). The Company is the sole U.S. distributor of books and related
         items, which are published by an England based publishing company. The
         England based publishing company is the Company's primary supplier.

         ESTIMATES - The Company's financial statements were prepared in
         conformity with accounting principles generally accepted in the United
         States of America, which requires management to make estimates and
         assumptions that affect the amounts and disclosures in the financial
         statements. Actual results could differ from these estimates.

         BUSINESS CONCENTRATION - A significant portion of inventory purchases
         by the Company are concentrated with an England based publishing
         company. Purchases from this England based publishing company were
         approximately $11.1 million, $6.1 million and $6.8 million for fiscal
         2003, 2002 and 2001, respectively. Total inventory purchases were
         approximately $13.9 million, $8.1 million and $8.7 million for fiscal
         2003, 2002 and 2001, respectively.

         CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on
         hand and cash on deposit in banks.

         INVENTORIES - Inventories are stated at the lower of cost or market.
         Cost is determined using the first-in, first-out ("FIFO") method. The
         Company presents a portion of its inventory as a noncurrent asset.
         Occasionally the Company 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
         excess quantities were included in noncurrent inventory. Noncurrent
         inventory was estimated by management using the current year turnover
         ratio by title. All inventory in excess of 2-1/2 years of anticipated
         sales was classified as noncurrent inventory.

         Inventories are presented net of a reserve for obsolete inventory.
         Management has estimated and included a reserve for obsolescence for
         both current and noncurrent inventory. This reserve is based on
         management's identification of obsolete inventory on hand at February
         28, 2003 and 2002.

         PREPAID EXPENSES AND OTHER ASSETS - Prepaid expenses and other assets
         at February 28, 2003 and 2002, include notes receivable of
         approximately $14,000 and $26,000, respectively, due from directors and
         related parties of the Company.

         PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
         stated at cost and depreciated on a straight-line basis over the
         estimated useful lives, which range from 2 to 30 years.

                                      -F-6-

<PAGE>

         INCOME TAXES - The Company records deferred tax assets and liabilities
         for the future tax consequences attributable to differences between the
         financial statement carrying amounts of existing assets and liabilities
         and their respective tax bases, using the regular tax rate expected to
         be in effect when the taxes are actually paid or recovered. The Company
         records net deferred tax assets related to the recognition of future
         tax benefits, to the extent that realization of such benefits is
         considered more likely than not to occur.

         INCOME RECOGNITION - Sales are recognized and recorded when products
         are shipped. The estimated allowance for sales returns is recorded as
         sales are recognized and recorded. Management uses prior experience to
         estimate the allowance for sales returns.

         ADVERTISING COSTS - The Company expenses advertising costs as incurred.

         EARNINGS PER SHARE - Basic earnings per share ("EPS") is computed by
         dividing net income by the weighted average number of common shares
         outstanding during the period. Diluted EPS is based on the combined
         weighted average number of common shares outstanding and dilutive
         potential common shares issuable which include, where appropriate, the
         assumed exercise of options. In computing diluted EPS the Company has
         utilized the treasury stock method.

         The following reconciles the diluted earnings per share:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED FEBRUARY 28,
                                                       -------------------------------------------
                                                          2003           2002              2001
<S>                                                    <C>            <C>               <C>
DILUTED EARNINGS PER SHARE:
   Net earnings applicable to common shareholders      $2,038,085     $1,531,274        $1,090,262
                                                       ==========     ==========        ==========

SHARES:
   Weighted average shares outstanding - basic         3,835,411      3,867,221         3,955,527
   Assumed exercise of options                           323,370        194,735            87,115
                                                       ----------     ----------        ----------

   Weighted average shares outstanding- diluted        4,158,781      4,061,956         4,042,642
                                                       ==========     ==========        ==========

DILUTED EARNINGS PER SHARE                             $     0.49     $     0.38        $     0.27
                                                       ==========     ==========        ==========
</TABLE>

         Stock options representing 249,600 of common shares for the year ended
         2001 were not included in calculation of diluted earnings per share
         since the effect was antidilutive. There were no stock options for the
         years ended 2003 and 2002 excluded from the diluted earnings per share
         calculation.

         FAIR VALUE OF FINANCIAL INSTRUMENTS - For cash and cash equivalents,
         accounts receivable and accounts payable, the carrying amount
         approximates fair value because of the short maturity of those
         instruments.

         LONG-LIVED ASSET IMPAIRMENT - The Company reviews the value of
         long-lived assets for impairment whenever events or changes in
         circumstances indicate that the carrying amount of an asset may not be
         recoverable based on estimated future cash flows. No impairment was
         noted as a result of such review during the years ended February 28,
         2003, 2002 or 2001.

         STOCK-BASED COMPENSATION - The Company accounts for stock-based
         compensation using the intrinsic value method prescribed in Accounting
         Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to
         Employees. Compensation cost for stock options, if any, is measured as
         the excess of the quoted market price of the Company's stock at the
         date of grant over the amount an employee must pay

                                      -F-7-

<PAGE>

         to acquire the stock. The Company has adopted the disclosure
         requirements of Statement of Financial Accounting Standards ("SFAS")
         No. 123, Accounting for Stock-Based Compensation, as amended by SFAS
         No. 148, Accounting for Stock-Based Compensation - Transition and
         Disclosure, an Amendment of FASB Statement No. 123.

         NEW ACCOUNTING STANDARDS - In December 2002, the FASB issued SFAS No.
         148, Accounting for Stock-Based Compensation - Transition and
         Disclosure, an Amendment of FASB Statement No. 123, which is effective
         for fiscal years ending after December 15, 2002. SFAS No. 148 amends
         SFAS No. 123, Accounting for Stock-Based Compensation, to provide
         alternative methods of transition for a voluntary change to the fair
         value based method of accounting for stock-based employee compensation.
         SFAS No. 148 also amends the disclosure requirements of SFAS No. 123 to
         require prominent disclosures in both annual and interim financial
         statements about the method of accounting for stock-based employee
         compensation and the effect of the method used on reported results. See
         Note 7 for the required disclosures as prescribed by SFAS No. 148.

         In November 2002, the FASB issued Interpretation No. 45, Guarantor's
         Accounting and Disclosure Requirements for Guarantees, Including
         Indirect Guarantees of Indebtedness of Others. This interpretation
         elaborates on the disclosures to be made by a guarantor in its
         financial statements about its obligations under certain guarantees
         that it has issued. It also requires a guarantor to recognize, at the
         inception of a guarantee, a liability for the fair value of the
         obligations it has undertaken in issuing the guarantee. The initial
         recognition and initial measurement provisions of the interpretation
         are applicable on a prospective basis to guarantees issued or modified
         after December 31, 2002. The disclosure requirements are effective for
         financial statements of interim or annual periods ending after December
         15, 2002. The adoption of this interpretation did not impact the
         Company's financial statements.

         RECLASSIFICATIONS - Certain prior year amounts have been reclassified
         to conform with the 2003 presentation.

2.       INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                   FEBRUARY 28,
                                      ------------------------------------
                                          2003                   2002
<S>                                   <C>                    <C>
Current:
   Book inventory                     $ 11,460,085           $  8,338,320
   Reserve for obsolescence                (46,370)               (46,370)
                                      ------------           ------------\

Inventories net - current             $ 11,413,715           $  8,291,950
                                      ============           ============

Noncurrent:
   Book inventory                     $    511,500           $    817,500
   Reserve for obsolescence               (169,620)              (133,620)
                                      ------------           ------------

Inventories net - noncurrent          $    341,880           $    683,880
                                      ============           ============
</TABLE>

                                      -F-8-

<PAGE>

3.       PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
                                                                  FEBRUARY 28,
                                                       ---------------------------------
                                                           2003                 2002
<S>                                                    <C>                  <C>
Land                                                   $   250,000          $   250,000
Building                                                 1,540,000            1,540,000
Machinery and equipment                                  1,473,054            1,439,057
Furniture and fixtures                                     237,753              124,592
                                                       -----------          -----------
                                                         3,500,807            3,353,649
Less accumulated depreciation and amortization          (1,559,537)          (1,446,034)
                                                       -----------          -----------

                                                       $ 1,941,270          $ 1,907,615
                                                       ===========          ===========
</TABLE>

4.       INCOME TAXES

         Deferred income taxes reflect the net tax effects of temporary
         differences between the carrying amounts of assets and liabilities for
         financial reporting purposes and the amounts used for income tax
         purposes. The tax effects of significant items comprising the Company's
         net deferred tax assets and liabilities as of February 28, 2003 and
         2002 are as follows:

<TABLE>
<CAPTION>
                                                                       FEBRUARY 28,
                                                                --------------------------
                                                                  2003             2002
<S>                                                             <C>              <C>
Current:
   Deferred tax assets:
      Allowance for doubtful accounts                           $ 33,800         $ 31,600
      Allowance for obsolescence                                  17,600           17,600
      Expenses deducted on the cash basis for income
         tax purposes                                             30,800           22,800
      Other                                                        3,800            3,800
                                                                --------         --------

           Deferred tax assets                                    86,000           75,800
                                                                --------         --------

           Deferred tax liability - Software development         (13,900)         (16,600)
                                                                --------         --------

Deferred tax asset - Net                                        $ 72,100         $ 59,200
                                                                ========         ========

Noncurrent:
   Deferred tax assets:
      Allowance for obsolescence                                $ 75,200         $ 61,500
      Deferred tax asset - other                                   1,900            3,800
                                                                --------         --------

           Deferred tax assets                                    77,100           65,300
                                                                --------         --------
   Deferred tax liabilities:
      Software development                                             -          (13,900)
      Property and equipment                                     (17,400)          (2,900)
                                                                --------         --------

           Deferred tax liabilities                              (17,400)         (16,800)
                                                                --------         --------

Deferred tax asset - Net                                        $ 59,700         $ 48,500
                                                                ========         ========
</TABLE>

                                      -F-9-

<PAGE>

         Management has determined that no valuation allowance is necessary to
         reduce the deferred tax assets as it is more likely than not that such
         assets are realizable.

         The components of income tax expense are as follows:

<TABLE>
<CAPTION>
                                                    FEBRUARY 28,
                                ---------------------------------------------------
                                    2003                2002                2001
<S>                             <C>                 <C>                 <C>
Current:
   Federal                      $ 1,063,200         $   796,200         $   513,800
   State                            187,600             140,500              90,600
                                -----------         -----------         -----------
                                  1,250,800             936,700             604,400

Deferred:
   Federal                          (20,500)            (23,700)             64,300
   State                             (3,600)             (4,200)             11,400
                                -----------         -----------         -----------
                                    (24,100)            (27,900)             75,700
                                -----------         -----------         -----------

Total income tax expense        $ 1,226,700         $   908,800         $   680,100
                                ===========         ===========         ===========
</TABLE>

         The following reconciles the Company's expected income tax expense
         utilizing statutory tax rates to the actual tax expense:

<TABLE>
<CAPTION>
                                                               YEAR ENDED FEBRUARY 28,
                                                     --------------------------------------------
                                                         2003            2002             2001
<S>                                                  <C>              <C>              <C>
Tax expense at federal statutory rate                $ 1,110,000      $  830,000       $  602,000
State income tax, net of federal tax benefit             130,000          96,000           72,000
Other                                                    (13,300)        (17,200)           6,100
                                                     -----------      ----------       ----------

                                                     $ 1,226,700      $  908,800       $  680,100
                                                     ===========      ==========       ==========
</TABLE>

5.       EMPLOYEE BENEFIT PLAN

         The Company has a profit sharing plan which incorporates the provisions
         of Section 401(k) of the Internal Revenue Code. The 401(k) plan covers
         substantially all employees meeting specific age and length of service
         requirements. Matching contributions from the Company are discretionary
         and amounted to $60,412, $52,258 and $40,557 in fiscal years 2003, 2002
         and 2001, respectively.

6.       COMMITMENTS

         The Company has a $3,500,000 revolving credit agreement, with interest
         payable monthly at prime minus .25%, collateralized by substantially
         all assets of the Company and maturing on June 30, 2003. Available
         credit under the revolving credit agreement was $3,500,000 at February
         28, 2003 and 2002. The agreement contains provisions that require the
         Company to maintain specified financial ratios, restrict transactions
         with related parties, prohibit mergers or consolidation, disallow
         additional debt, and limit the amount of compensation, salaries,
         investments, capital expenditures and leasing transactions. The Company
         is in compliance with all restrictive covenants at February 28, 2003.
         The Company intends to renew the bank agreement or obtain other
         financing upon maturity.

         The Company had no borrowings outstanding on the above revolving credit
         agreement at February 28, 2003 or 2002.

                                      -F-10-

<PAGE>

         At February 28, 2003, the Company had outstanding commitments to
         purchase inventory from its primary vendor totaling approximately
         $4,978,000.

         The Company leased its office and warehouse facilities under a
         noncancelable operating lease until January 2002. On January 7, 2002,
         the Company purchased its leased office and warehouse facilities for
         $1,790,000 and simultaneously terminated its lease. Total rent expense
         related to these facilities was $204,000 in fiscal 2002, and $240,000
         in fiscal 2001.

7.       CAPITAL STOCK, STOCK OPTIONS AND WARRANTS

         The Board of Directors adopted the 1992 Incentive Stock Option Plan
         (the "1992 Plan") in June of 1992, which authorized the Company to
         grant up to 1,000,000 stock options. The 1992 Plan expired in June of
         2002 upon which the Board of Directors adopted the 2002 Stock Option
         Plan (the "2002 Plan"). The 2002 Plan also authorized the Company to
         grant up to 1,000,000 stock options.

         Options granted under the 1992 Plan and 2002 Plan (collectively the
         "Incentive Plans") vest at date of grant and are exercisable up to ten
         years from the date of grant. The exercise price on options granted is
         equal to the market price at the date of grant. Options outstanding at
         February 28, 2003 expire beginning in April 2003 through October 2012.

         A summary of the status of the Company's Incentive Plans as of February
         28, 2003, 2002 and 2001, and changes during the years then ended is
         presented below:

<TABLE>
<CAPTION>
                                           2003                    2002                   2001
                                  ----------------------  ----------------------  --------------------
                                              WEIGHTED                WEIGHTED                WEIGHTED
                                               AVERAGE                AVERAGE                  AVERAGE
                                              EXERCISE                EXERCISE                EXERCISE
                                   SHARES      PRICE       SHARES      PRICE       SHARES       PRICE
<S>                               <C>         <C>         <C>          <C>        <C>         <C>
Outstanding at
   Beginning of Year              590,600     $  3.24     599,600      $ 3.17     507,400     $  3.42

Granted                            15,000        6.00      10,000        5.50     136,000        2.28

Exercised/canceled                (26,200)      (4.29)    (19,000)      (2.28)    (43,800)      (3.30)
                                  -------     -------     -------      ------     -------     -------

Outstanding at End of Year        579,400     $  3.26     590,600      $ 3.24     599,600     $  3.17
                                  =======     =======     =======      ======     =======     =======
</TABLE>

         The following table summarizes information about stock options
         outstanding at February 28, 2003:

<TABLE>
<CAPTION>
                          NUMBER
   RANGE OF             OUTSTANDING                 WEIGHTED
   EXERCISE           AT FEBRUARY 28,           AVERAGE REMAINING            WEIGHTED AVERAGE
    PRICES                 2003              CONTRACTUAL LIFE (YEARS)         EXERCISE PRICE
<S>                   <C>                    <C>                             <C>
$1.375 - $1.50            71,500                         1                        $1.40
$ 1.51 - $2.50           146,000                         7                         2.26
$ 2.51 - $3.13           111,700                         2                         3.11
    $ 3.81                15,000                         5                         3.81
    $ 4.00                85,000                         5                         4.00
    $ 4.63               135,200                         5                         4.63
    $ 6.00                15,000                        10                         6.00
                         -------

                         579,400
                         =======
</TABLE>

         All options outstanding are exercisable at February 28, 2003.

                                     -F-11-

<PAGE>


         The Company applies APB Opinion No. 25 and related interpretations in
         accounting for its Incentive Plan. Accordingly, no stock-based employee
         compensation cost is reflected in net earnings, as all options granted
         had an exercise price equal to the market value of the underlying
         common stock on the date of grant. The following table illustrates the
         effect on net earnings and earnings per share if the Company had
         applied the fair value recognition provisions of SFAS No. 123 to
         stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED FEBRUARY 28
                                                       -----------------------------------------------------------
                                                          2003                    2002                     2001
<S>                                                    <C>                     <C>                      <C>
Net earnings - as reported                             $2,038,085              $1,531,274               $1,090,262
Deduct:  Total stock-based compensation
   expense determined under fair value based
   method for all awards, net of related
   tax effects                                            (31,422)                 (5,110)                (166,457)
                                                       ----------              ----------               ----------

Net earnings - pro forma                               $2,006,663              $1,526,164               $  923,805
                                                       ==========              ==========               ==========

Earnings per share - as reported:
   Basic                                               $     0.53              $     0.40               $     0.28
                                                       ==========              ==========               ==========
   Diluted                                             $     0.49              $     0.38               $     0.27
                                                       ==========              ==========               ==========

Earnings per share - pro forma:
   Basic                                               $     0.52              $     0.39               $     0.23
                                                       ==========              ==========               ==========
   Diluted                                             $     0.48              $     0.38               $     0.23
                                                       ==========              ==========               ==========
</TABLE>

         The fair value per option granted in 2003, 2002 and 2001, was $2.09,
         $0.51 and $1.22, respectively. The fair value of options granted under
         the Incentive Plan was estimated on the date of grant using the
         Black-Scholes option-pricing model. The following assumptions were used
         for options granted in 2003: no dividend yield, expected volatility of
         27.64%, risk free interest rate of 3.68%, and expected life of ten
         years; the following assumptions were used for options granted in 2002:
         no dividend yield, expected volatility of 35.60%, risk free interest
         rate of 1.98%, and expected life of one year; the following assumptions
         were used for options granted in 2001: no dividend yield, expected
         volatility of 84%, risk free interest rates between 5.13% and 6.16%,
         and expected life of ten years.

                                     -F-12-

<PAGE>

8.       QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         The following is a summary of the quarterly results of operations for
         the years ended February 28, 2003, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                                        BASIC            DILUTED
                                                                                                      EARNINGS           EARNINGS
                              NET SALES             GROSS MARGIN             NET EARNINGS             PER SHARE         PER SHARE
<S>                          <C>                    <C>                      <C>                      <C>               <C>
2003
   First quarter             $ 6,132,300             $ 3,687,200              $  547,700               $ 0.14             $ 0.13
   Second quarter              5,602,100               3,304,200                 454,000                 0.12               0.11
   Third quarter               7,827,400               5,025,200                 764,900                 0.20               0.19
   Fourth quarter              5,318,311               3,272,086                 271,485                 0.07               0.06
                             -----------             -----------              ----------               ------             ------

Total year                   $24,880,111             $15,288,686              $2,038,085               $ 0.53             $ 0.49
                             ===========             ===========              ==========               ======             ======

2002
   First quarter             $ 4,800,600             $ 2,827,800              $  369,500               $ 0.09             $ 0.09
   Second quarter              5,108,400               3,000,300                 423,800                 0.11               0.11
   Third quarter               6,007,900               3,772,700                 485,000                 0.13               0.12
   Fourth quarter              4,637,551               2,832,129                 252,974                 0.07               0.06
                             -----------             -----------              ----------               ------             ------

Total year                   $20,554,451             $12,432,929              $1,531,274               $ 0.40             $ 0.38
                             ===========             ===========              ==========               ======             ======

2001
   First quarter             $ 4,250,400             $ 2,453,000              $  276,100               $ 0.07             $ 0.07
   Second quarter              4,414,600               2,464,300                 352,700                 0.09               0.09
   Third quarter               5,245,600               3,180,300                 381,900                 0.10               0.10
   Fourth quarter              3,686,248               2,211,328                  79,562                 0.02               0.01
                             -----------             -----------              ----------               ------             ------

Total year                   $17,596,848             $10,308,928              $1,090,262               $ 0.28             $ 0.27
                             ===========             ===========              ==========               ======             ======
</TABLE>

         During the fourth quarter of fiscal year 2001, the Company corrected
         the depreciation calculated on certain property and equipment, which
         resulted in a decrease in depreciation expense of approximately
         $30,000.

9.       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, toy and gift stores,
         school supply 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. The UBAH Division also distributes to school and public
         libraries.

                                     -F-13-

<PAGE>

         The accounting policies of the segments are the same as those described
         in the summary of significant accounting policies. 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 years ended February 28, 2003,
         2002 and 2001 is set forth below:

<TABLE>
<CAPTION>
                                              PUBLISHING                 UBAH                   OTHER                   TOTAL
<S>                                          <C>                     <C>                     <C>                    <C>
2003

Net sales                                    $ 7,560,258             $ 17,319,853            $         -            $ 24,880,111
Earnings (loss) before income taxes            2,570,156                3,887,858             (3,193,229)              3,264,785

2002

Net sales                                    $ 7,362,332             $ 13,192,119            $         -            $ 20,554,451
Earnings (loss) before income taxes            2,579,082                2,845,712             (2,984,720)              2,440,074

2001

Net sales                                    $ 7,353,750             $ 10,243,098            $         -            $ 17,596,848
Earnings (loss) before income taxes            2,577,593                2,234,031             (3,041,262)              1,770,362
</TABLE>

10.      SUBSEQUENT EVENT

         On April 2, 2003, the Company announced that it will pay a $0.10 per
         share dividend on June 11, 2003 to shareholders of record as of May 28,
         2003.

                                   * * * * * *

                                     -F-14-

<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
  NO.                                     DESCRIPTION
<S>               <C>
  3.1             Restated Certificate of Incorporation of the Company dated
                  April 26, 1968, Certificate of Amendment there to dated June
                  21, 1968 and By-Laws of the Company are incorporated herein by
                  reference to Exhibit 1 to Registration Statement on Form 10
                  (File No. 0-4957).

  3.2             Certificate of Amendment of Restated Certificate of
                  Incorporation of the Company dated August 27, 1977 and By-Laws
                  of the Company as amended are incorporated herein by reference
                  to Exhibits 20.1 and 20.2 to Form 10-K for fiscal year ended
                  February 28, 1981 (File No. 0-4957).

  3.3             Certificate of Amendment of Restated Certificate of
                  Incorporation of the Company 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).

  3.4             Certificate of Amendment of Restated Certificate of
                  Incorporation of the Company dated March 22, 1996.
</TABLE>

<PAGE>

<TABLE>
<S>               <C>
  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).

  10.1            Educational Development Corporation Incentive Stock Option
                  Plan of 1981, is incorporated herein by reference to Exhibit
                  10.9 to Form 10-K for fiscal year ended February 28, 1982
                  (File No. 0-4957).

  10.2            Agreement by and among the Company, Usborne Publishing Ltd.,
                  and Hayes Books, Inc., dated May 17, 1983, is incorporated
                  herein by reference to Exhibit 10.16 to Form 10-K for fiscal
                  year ended February 29, 1984 (File No. 0-4957).

  10.3            Settlement Agreement dated August 7, 1986, by and between the
                  Company and Hayes Publishing Ltd., Cyril Hayes Books, Inc.
                  (formerly named Hayes Books, Inc.), and Cyril Hayes is
                  incorporated herein by reference to Exhibit 10.1 to Form 8-K
                  dated August 7, 1986 (File No. 0-4957).

  10.4            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).

  10.5            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).

  10.6            Loan Agreement dated January 18, 1990, by and between the
                  Company and State Bank & Trust, N.A., Tulsa, OK (formerly
                  WestStar Bank, N.A., Bartlesville, OK), is incorporated herein
                  by reference to Exhibit 10.11 to Form 10-K dated February 28,
                  1990 (File No. 0-4957).

  10.7            Lease Agreement by and between the Company and James D. Dunn
                  dated March 1, 1991, is incorporated herein by reference to
                  Exhibit 10.12 to Form 10-K dated February 28, 1991 (File No.
                  0-4957).

  10.8            Agreement for Exchange of Contract Rights and Securities by
                  and between the Company and Robert D. Berryhill dated October
                  1, 1990, is incorporated herein by reference to Exhibit 10.1
                  to Form 10-K dated February 28, 1991 (File No. 0-4957).

  10.9            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).
</TABLE>

<PAGE>

<TABLE>
<S>               <C>
  10.10           First Amendment dated January 31, 1992 to Loan Agreement
                  between the Company and State Bank & Trust, N.A., Tulsa, OK,
                  (formally WestStar Bank, N.A., Bartlesville, OK,) is
                  incorporated herein by reference to Exhibit 10.14 to Form 10-K
                  dated February 29, 1992 (File No. 0-4957).

  10.11           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)

  10.12           Second Amendment dated June 30, 1992 to Loan Agreement between
                  the Company and State Bank & Trust, N.A., Tulsa, OK, (formally
                  WestStar Bank, N.A., Bartlesville, OK,) is incorporated herein
                  by reference to Exhibit 10.12 to Form 10-KSB dated February
                  28, 1994 (File No. 0-4957).

  10.13           Third Amendment dated June 30, 1993 to Loan Agreement between
                  the Company and State Bank & Trust, N.A., Tulsa, OK, (formally
                  WestStar Bank, N.A., Bartlesville, OK,) is incorporated herein
                  by reference to Exhibit 10.13 to Form 10-KSB dated February
                  28, 1995 (File No. 0-4957).

  10.14           Fourth Amendment dated June 30, 1994 to Loan Agreement between
                  the Company and State Bank & Trust, N.A, Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.14 to Form
                  10-KSB dated February 28, 1995 (File No. 0-4957).

  10.15           Fifth Amendment dated March 13, 1995 to Loan Agreement between
                  the Company and State Bank & Trust, N.A., Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.15 to Form
                  10-KSB dated February 28, 1995 (File No. 0-4957).

  10.16           Sixth Amendment dated March 27, 1995 to Loan Agreement between
                  the Company and State Bank & Trust, N.A., Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.16 to Form
                  10-KSB dated February 28, 1995 (File No. 0-4957).

  10.17           Seventh Amendment dated April 27, 1995 to Loan Agreement
                  between the Company and State Bank & Trust, N.A., Tulsa, OK,
                  is incorporated herein by reference to Exhibit 10.17 to Form
                  10-KSB dated February 28, 1995 (File No. 0-4957).

  10.18           Amendment dated February 28, 1995 to the Lease Agreement by
                  and between the Company and James D. Dunn, is incorporated
                  herein by reference to Exhibit 10.18 to Form 10-KSB dated
                  February 28, 1995 (File No. 0-4957).

  10.19           Eighth Amendment Dated July 27, 1995 to Loan Agreement between
                  the Company and State Bank & Trust, N.A., Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.19 to Form
                  10-KSB dated February 29, 1996 (File No. 0-4957).
</TABLE>

<PAGE>

<TABLE>
<S>               <C>
  10.20           Restated Loan Agreement dated September 25, 1995 between the
                  Company and State Bank & Trust, N.A., Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.20 to Form
                  10-KSB dated February 29, 1996 (File No. 0-4957).

  10.21           Restated Loan Agreement dated June 10, 1996 between the
                  Company and State Bank & Trust, N.A., Tulsa, OK, is
                  incorporated herein by reference to Exhibit 10.21 to Form 10-K
                  dated February 28, 1997 (File No. 0-4957).

  10.22           First Amendment dated June 30, 1997 to Restated Loan Agreement
                  between the Company and State Bank & Trust, N.A., Tulsa, OK,
                  is incorporated herein by reference to Exhibit 10.22 to Form
                  10-K dated February 28, 1998 (File No. 0-4957).

  10.23           Second Amendment dated June 30, 1998 to Restated Loan
                  Agreement between the Company and State Bank & Trust, N.A.,
                  Tulsa, OK, is incorporated herein by reference to Exhibit
                  10.23 to Form 10-K dated February 28, 1999 (File No. 0-4957).

  10.24           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).

  10.25           Lease agreement by and between the Company and James D. Dunn
                  dated July 1, 1999, is incorporated herein by reference to
                  Exhibit 10.25 to Form 10-K dated February 29, 2000 (File No.
                  0-4957).

  10.26           First Amendment dated June 30, 2000 to Restated Loan Agreement
                  between the Company and State Bank & Trust, N.A., Tulsa, OK,
                  is incorporated herein by reference to Exhibit 10.25 to Form
                  10-K dated February 28, 2001 (File No. 0-4957).

  10.27           Second Amendment dated June 30, 2001 to Restated Loan
                  Agreement between the Company and State Bank & Trust, N.A.,
                  Tulsa, OK, is incorporated herein by reference to Exhibit
                  10.25 to Form 10-K dated February 28, 2002 (File No. 0-4957).

  10.28           Educational Development Corporation 2002 Incentive Stock
                  Option Plan is incorporated herein by reference to Exhibit A
                  to DEF 14A dated May 23, 2002 (File No. 0-4957)

  *10.29          Third Amendment dated June 30, 2002 to Restated Loan Agreement
                  between the Company and State Bank & Trust, N.A., Tulsa, OK.

  *10.30          Certificate of Amendment of Restated Certificate of
                  Incorporation of the Company dated July 15, 2002.

  10.31           Registration of 1,500,000 shares of Common Stock is
                  incorporated herein by reference to Form S-8 dated October 22,
                  2002 (File No. 333-100659)
</TABLE>

<PAGE>

<TABLE>
<S>               <C>
  *10.32          Amendment dated November 12, 2002 to Usborne Agreement -
                  Contractual agreement by and between the Company and Usborne
                  Publishing Limited

     *23.         Independent Auditors' Consent
</TABLE>

-------------------------
*  Filed Herewith