# EDGAR Filing Document

**Accession Number:** 0000031667
**File Stem:** 0001185185-23-000005
**Filing Date:** 2023-1
**Character Count:** 18838
**Document Hash:** 741189a05fd8862863c5e7c59f9675bc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001185185-23-000005.hdr.sgml**: 20230105

**ACCESSION NUMBER**: 0001185185-23-000005

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230105

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230105

**DATE AS OF CHANGE**: 20230105

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** EDUCATIONAL DEVELOPMENT CORP
- **CENTRAL INDEX KEY:** 0000031667
- **STANDARD INDUSTRIAL CLASSIFICATION:** WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190]
- **IRS NUMBER:** 730750007
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0228

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-04957
- **FILM NUMBER:** 23511176

**BUSINESS ADDRESS:**
- **STREET 1:** 5402 SOUTH 122ND EAST AVE
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74146
- **BUSINESS PHONE:** 918-622-4522

**MAIL ADDRESS:**
- **STREET 1:** 5402 SOUTH 122ND EAST AVE
- **CITY:** TULSA
- **STATE:** OK
- **ZIP:** 74146

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** TUTOR TAPES INTERNATIONAL CORP
- **DATE OF NAME CHANGE:** 19701030

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** INTERNATIONAL TEACHING TAPES INC
- **DATE OF NAME CHANGE:** 19701030

?xml version="1.0" encoding="ASCII"? edc20230104_8k.htm

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

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**FORM 8-K**

**CURRENT REPORT**

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**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): January 5, 2023 (January 5, 2023)

**<u>EDUCATIONAL DEVELOPMENT CORPORATION</u>**

(*Exact name of registrant as specified in its charter*)

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| | | |
|:---|:---|:---|
| **<u>Delaware</u>** | **<u>000-04957</u>** | **<u>73-0750007</u>** |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S Employer Identification No.) |

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**<u>5402 S 122nd E Avenue, Tulsa, Oklahoma 74146</u>**

(*Address of principal executive offices and Zip Code*)

**<u>(918) 622-4522</u>**

(*Registrant*'*s telephone number, including area code*)

*(Former name or former address, if changed since last report)*

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

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| | | |
|:---|:---|:---|
| **Common Stock, $.20 par value** | **EDUC** | **NASDAQ** |
| (Title of class) | (Trading symbol) | (Name of each exchange on which registered) |

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

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The information disclosed in these Items 2.02, 7.01 and 9.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.

**ITEM 2.02**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **RESULTS OF OPERATIONS AND FINANCIAL CONDITION**

On January 5, 2023, Educational Development Corporation announced, via press release, third quarter and year-to-date fiscal 2023 financial results. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

**ITEM 7.01**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **REGULATION FD DISCLOSURE**

On January 5, 2023, Educational Development Corporation announced, via press release, third quarter and year-to-date fiscal 2023 financial results. Educational Development Corporation's third quarter fiscal 2023 earnings call will be held on Thursday, January 5, 2023, at 3:30 PM CT (4:30 PM ET). A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

**ITEM 9.01**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **FINANCIAL STATEMENTS AND EXHIBITS**

(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EXHIBITS

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| | |
|:---|:---|
| **Exhibit**<br> **<u>Number</u>** | **<u>Description</u>** |
| 99.1 | [Press release dated as of January 5, 2023](ex_461146.htm) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |

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**SIGNATURE**

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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| | |
|:---|:---|
|  | **Educational Development Corporation** |
| By: | <u>/s/ Craig M. White&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> |
|  | Craig M. White |
|  | President and Chief Executive Officer |
| Date: | January 5, 2023 |

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## Exhibit 99.1

**EXHIBIT 99.1<u> </u>**

<u>PRESS RELEASE</u>

<u>EDUCATIONAL DEVELOPMENT CORPORATION</u>

<u>ANNOUNCES FISCAL THIRD QUARTER AND FISCAL 2023 YEAR-TO-DATE RESULTS</u>

TULSA, OK, January 5, 2023—Educational Development Corporation ("EDC", or the "Company") (NASDAQ: EDUC), a publishing company specializing in books and educational products for children, today reports financial results for the third quarter and year-to-date ended November 30, 2022.

**<u>Third Quarter Highlights Compared to the Prior Year Third Quarter</u>**

● Net revenues were $30.3 million, a decrease of $14.8 million, or 32.8%, compared to $45.1 million.

● Average active direct-sales consultants totaled 27,100 compared to 41,500.

● Earnings before income taxes were $0.0 million, a decrease of $3.6 million, compared to $3.6 million.

● Net earnings totaled $0.0 million, compared to $2.6 million, a decrease of $2.6 million.

● Earnings per share totaled $0.00, compared to $0.31, on a fully diluted basis.

**<u>Year-to-Date Highlights Compared to the Prior Year</u>**

● Net revenues of $72.8 million, a decrease of $46.1 million, or 38.8%, compared to $118.9 million.

● Average active UBAM sales consultants totaled 28,700 compared to 47,300.

● Earnings (loss) before income taxes were $(0.8) million, a decrease of $11.7 million, or 107.3%, compared to $10.9 million.

● Net earnings (loss) totaled $(0.6) million, compared to $8.0 million, a decrease of $8.6 million, or 107.5%.

● Earnings (loss) per share totaled $(0.07), compared to $0.94, down 107.4% on a fully diluted basis.

"While sales continued to be impacted by high inflation and soaring food and fuel costs, our sales volumes grew over 50% on a sequential basis as our third quarter is seasonally our strongest quarter. During the quarter, we offered additional discounts and increased sales incentives to further energize our salesforce and recruiting efforts. While these market decisions did impact our bottom line during the quarter, they were designed to accelerate sales, converting excess inventory into cash faster to pay down our creditors and reduce our working capital line of credit. During the third quarter we also made strategic changes to improve future profitability, including increasing the amount we charge for freight on outbound shipments, along with several other cost reductions," stated Craig White, President and CEO of Educational Development Corporation. "Our business has a long history of profitability and our core pricing, product costs and sales compensation fundamentals remain unchanged. While we are challenged by recent macro-economic pressures, we continue to face these pressures 'head on' and are working diligently to restore profitability to historical levels."

"We remain highly enthusiastic as several recently announced developments within our direct sales division will create additional momentum, not just in our fourth quarter, but as we move into fiscal 2024 and beyond. During the third quarter we saw stabilization in our average number of active consultants. We have seen our active consultant levels begin to rebound while our leader level consultants remain at historically high numbers. Like most direct sales companies, our leaders drive the majority of our sales and new recruits. Maintaining our high levels of leadership during these difficult inflationary times gives us confidence for the future of our salesforce. Additionally, we have historically experienced increased active consultants during inflationary periods as families look for non-traditional income to offset the rising costs within their households."

"Another milestone we recently accomplished was the strategic rebranding of our direct sales division. Rebranding our direct sales division was a significant project and accomplishment from our sales and marketing teams. I was proud to share the stage with Heather Cobb, our Chief Sales and Marketing Officer, as we announced the new divisional name, PaperPie, at the December 28th Nasdaq closing bell. On January 3, 2023, we completed the rebranding of our e-commerce and Back-Office online platforms to PaperPie. This new name allows us to better showcase our full product offering and allows us to build a recognizable name unique to our Company. Our entire organization and our sales consultants are rejuvenated by this rebranding and we look forward to the associated sales and recruiting."

"Along with our rebrand, we are rolling out our new product line SmartLab Toys. We are excited to introduce this S.T.E.A.M. based new product line, to not only our PaperPie customers but also our retail accounts. Many of our retail customers have historically carried SmartLab Toys and are excited about our new ownership and planned product rollout in January 2023."

"We have made a lot of positive changes over the past year and we are excited to 'Turn the Page' into 2023," concluded Mr. White.

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**<u>Pre-COVID, COVID Impacted and Current Year Comparison</u>**

Due to the significant positive impact of the COVID-19 pandemic on our business in previous years, we are providing the additional tables below to show pre-COVID, COVID impacted and current financial results for the fiscal year-to-date and fiscal third quarter:

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| | | | | |
|:---|:---|:---|:---|:---|
| **QUARTERLY RESULTS (THIRD FISCAL QUARTER)** | **QUARTERLY RESULTS (THIRD FISCAL QUARTER)** | **QUARTERLY RESULTS (THIRD FISCAL QUARTER)** | **QUARTERLY RESULTS (THIRD FISCAL QUARTER)** | **QUARTERLY RESULTS (THIRD FISCAL QUARTER)** |
|  | **Pre-COVID** | **COVID Impacted** | **COVID Impacted** | **Current Year** |
| **Period** | **Q3 FY 2020** | **Q3 FY 2021** | **Q3 FY 2022** | **Q3 FY 2023** |
| **Average # of Consultants** | 33600 | 57200 | 41500 | 27100 |
| **Net Revenues** | 40824600 | 66750300 | 45112300 | 30269400 |
| **Net Earnings** | 2735800 | 4269600 | 2646600 | 900 |
| **After tax profit %** | 6.7% | 6.4% | 5.9% | 0.0% |

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| | | | | |
|:---|:---|:---|:---|:---|
| **YEAR-TO-DATE RESULTS (THROUGH THIRD FISCAL QUARTER)** | **YEAR-TO-DATE RESULTS (THROUGH THIRD FISCAL QUARTER)** | **YEAR-TO-DATE RESULTS (THROUGH THIRD FISCAL QUARTER)** | **YEAR-TO-DATE RESULTS (THROUGH THIRD FISCAL QUARTER)** | **YEAR-TO-DATE RESULTS (THROUGH THIRD FISCAL QUARTER)** |
|  | **Pre-COVID** | **COVID Impacted** | **COVID Impacted** | **Current Year** |
| **Period** | **FY 2020** | **FY 2021** | **FY 2022** | **FY 2023** |
| **Average # of Consultants** | 32900 | 45200 | 47300 | 28700 |
| **Net Revenues** | 92850000 | 164292100 | 118914600 | 72848700 |
| **Net Earnings (loss)** | 5107000 | 10455700 | 7982900 | (585200) |
| **After tax profit %** | 5.5% | 6.4% | 6.7% | (0.8%) |

---

PaperPie's net revenues decreased $15.9 million, or 38.4%, to $25.5 million during the three months ended November 30, 2022, when compared to $41.4 million during the same period a year ago. The average number of active consultants in the third quarter of fiscal 2023 was 27,100, a decrease of 14,400, or 34.7%, from 41,500 average active consultants selling in the third quarter of fiscal 2022.

Net revenues from our Publishing division increased $1.1 million, or 29.7%, to $4.8 million during the three months ended November 30, 2022, when compared to $3.7 million during the same period a year ago. During fiscal 2023, we entered into a new distribution agreement ("Agreement") with Usborne. Under the terms in our new Agreement, the Company no longer has the rights to distribute Usborne's products to retail customers after November 15, 2022, at which time Usborne will use a different distributor to supply retail accounts with their products. The November 15th transition date, at Usborne's request, was extended until January 31, 2023. The transition between distributors brought disruption concerns to many of our retail customers and resulted in additional sales orders before the November 15th transition date.

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| | | | | |
|:---|:---|:---|:---|:---|
| **EDUCATIONAL DEVELOPMENT CORPORATION** | **EDUCATIONAL DEVELOPMENT CORPORATION** | **EDUCATIONAL DEVELOPMENT CORPORATION** | **EDUCATIONAL DEVELOPMENT CORPORATION** | **EDUCATIONAL DEVELOPMENT CORPORATION** |
| **CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)** | **CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)** | **CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)** | **CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)** | **CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)** |
|  | **Three Months Ended** <br> **November 30,** | **Three Months Ended** <br> **November 30,** | **Nine Months Ended**<br> **November 30,**  | **Nine Months Ended**<br> **November 30,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| NET REVENUES | $30269400 | $45112300 | $72848700 | $118914600 |
| EARNINGS (LOSS) BEFORE INCOME TAXES | 1200 | 3602600 | (819200) | 10921300 |
| INCOME TAXES | 300 | 956000 | (234000) | 2938400 |
| NET EARNINGS (LOSS) | $900 | $2646600 | $(585200) | $7982900 |
| DIVIDENDS PER SHARE | $- | $0.10 | $- | $0.30 |
| WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING |  |  |  |  |
| Basic | 8058349 | 8029060 | 8075528 | 8028973 |
| Diluted | 8249069 | 8430221 | 8075528 | 8449183 |

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**<u>Third Quarter Fiscal 2023 Earnings Call</u>**

Date: Thursday, January 5, 2023

Time: 3:30 PM CT (4:30 PM ET)

Dial-in number: (888) 396-8049

Conference ID: 88833788

The conference call will be broadcast live and audio replays will be available following the event at www.edcpub.com/investors.

**<u>About Educational Development Corporation (EDC)</u>**

EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books ("Kane Miller"); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited ("Usborne") children's books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.

Contact:

Educational Development Corporation

Craig White, (918) 622-4522

Investor Relations:

Three Part Advisors, LLC

Steven Hooser or Jean Marie Young, (214) 872-2710

**<u>Cautionary Statement for the Purpose of the</u>** <u>"</u>**<u>Safe Harbor</u>**<u>"</u> **<u>Provision of the Private Securities Litigation Reform Act of 1995.</u>**

The information discussed in this Press Release includes "forward-looking statements." These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties and we can give no assurance that such expectations or assumptions will be achieved. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our success in recruiting and retaining new consultants, our ability to locate and procure desired books, our ability to ship the volume of orders that are received without creating backlogs, our ability to obtain adequate financing for working capital and capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, the COVID-19 pandemic, as well as those factors discussed in our Annual Report on Form 10-K for the year ended February 28, 2022, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in our Annual Report on Form 10-K for the year ended February 28, 2022 and speak only as of the date of this Press Release. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.