Educational Development Corp. Files 2024 Annual Report

TL;DR

EDC filed its 2024 10-K. All systems go.

AI Summary

Educational Development Corp. filed its annual 10-K report for the fiscal year ended February 29, 2024. The company, incorporated in Delaware and headquartered in Tulsa, Oklahoma, operates in the wholesale-miscellaneous nondurable goods sector. This filing provides a comprehensive overview of the company's financial performance and business operations for the reported period.

Why It Matters

This 10-K filing provides investors and stakeholders with crucial financial and operational details for Educational Development Corp., enabling informed decision-making regarding the company's performance and future prospects.

Risk Assessment

Risk Level: low — The filing is a standard annual report and does not indicate any immediate or unusual risks.

Key Numbers

• 000-04957 — Commission File Number (Identifies the company's filing with the SEC.)
• 73-0750007 — IRS Number (Company's Employer Identification Number.)
• 0228 — Fiscal Year End (Indicates the end date of the company's reporting fiscal year.)

Key Players & Entities

• EDUCATIONAL DEVELOPMENT CORP (company) — Registrant
• 000-04957 (dollar_amount) — Commission file number
• Delaware (company) — State of incorporation
• 73-0750007 (dollar_amount) — IRS number
• TULSA (company) — Business address city
• February 29, 2024 (date) — Fiscal year end

FAQ

Filing Documents

• edc20240229_10k.htm (10-K) — 1288KB
• ex_676448.htm (EX-23.1) — 3KB
• ex_676449.htm (EX-31.1) — 13KB
• ex_676450.htm (EX-31.2) — 13KB
• ex_676451.htm (EX-32.1) — 7KB
• ex_677097.htm (EX-97.1) — 25KB
• 0001185185-24-000577.txt ( ) — 7110KB
• educ-20240229.xsd (EX-101.SCH) — 64KB
• educ-20240229_cal.xml (EX-101.CAL) — 62KB
• educ-20240229_def.xml (EX-101.DEF) — 297KB
• educ-20240229_lab.xml (EX-101.LAB) — 506KB
• educ-20240229_pre.xml (EX-101.PRE) — 292KB
• edc20240229_10k_htm.xml (XML) — 1010KB

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS 4 PART I Item 1.

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 6 Item 1B. Unresolved Staff Comments 6 Item 1C. Cybersecurity 6 Item 2.

Properties

Properties 7 Item 3.

Legal Proceedings

Legal Proceedings 7 Item 4. Mine Safety Disclosures 7 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 8 Item 6. [Reserved] 8 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 19 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 19 Item 9A.

Controls and Procedures

Controls and Procedures 19 Item 9B. Other Information 20 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 20 PART III Item 10. Directors, Executive Officers and Corporate Governance 21 Item 11.

Executive Compensation

Executive Compensation 21 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 21 Item 13. Certain Relationships and Related Transactions, and Director Independence 21 Item 14. Principal Accounting Fees and Services 21 PART IV Item 15. Exhibits and Financial Statement Schedules 22 Item 16. Form 10-K Summary 24 PART I

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS CAUTIONARY REMARKS REGARDING FORWARD LOOKING STATEMENTS The information discussed in this Annual Report on Form 10-K 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 Brand Partners (formerly consultants), our ability to locate and procure desired books, product and supplier concentrations, our relationship with our primary supplier and the related distribution requirements and contractual limitations, adverse publicity associated with our Company or the industry, our ability to ship timely, changes to our primary sales channels, including social media and party plan platforms, changing consumer preferences and demands, legal matters, reliance on information technology infrastructure, restrictions imposed by covenants in the agreements governing our indebtedness, our ability to obtain adequate financing for working capital and capital expenditures, economic and competitive conditions, regulatory changes, and other uncertainties, outstanding impacts from the COVID-19 pandemic, as well as those factors discussed

BUSINESS

Item 1. BUSINESS ( a) General Description of Business We are the owner and exclusive publisher of Kane Miller children's books; Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. We are also the exclusive United States Multi-Level Marketing ("MLM") distributor of Usborne Publishing Limited ("Usborne") children's books. We are a corporation incorporated under the laws of the State of Delaware on August 23, 1965. Our fiscal year ends on February 28 (29). Our Company vision statement reflects "We believe that education is the catalyst for wonderment, kindness, and connection. Our vision is to empower the world by sparking a child's natural curiosity and lifelong love of learning through products and experiences that meet at the intersection of education and play." Our Company mission statement reflects "We are creating the story of tomorrow through people, products, and purpose." 4 Table of Contents (b) Financial Information about Our Segments We sell children's books, educational toys and games and other related products (collectively referred to as "products" or "books") through two business segments, which we refer to as "divisions" or "sales channels": Direct Sales Division ("PaperPie") – This division sells our books and products through independent sales representatives ("Brand Partners") direct to the customer. Our Brand Partners sell our products in various ways, including hosting home parties, through social media collaboration platforms on the internet, hosting book fairs with school and public libraries and through other events. This division had approximately 15,000 active Brand Partners as of February 29, 2024. Publishing Division ("EDC Publishing" or "Publishing") – This is our trade division which markets through commissioned trade representatives who call on retail book, toy and specialty stores along with other retail outlets. This division also has in-house representatives marke

RISK FACTORS

Item 1A. RISK FACTORS We are a smaller reporting company and are not required to provide this information.

UNRESOLVED STAFF COMMENTS

Item 1B. UNRESOLVED STAFF COMMENTS None

CYBERSECURITY

Item 1C. CYBERSECURITY The Company has developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. We designed and assessed our cybersecurity risk based on the Payment Card Industry Data Security Standard (PCI DSS). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use these frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas. Our cybersecurity risk management program includes: Risk assessments are designed to help identify material cybersecurity risks to our critical systems and information. A security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents. The use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls. Cybersecurity awareness training of our employees, including our incident response personnel. A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected the Company, including our operations, business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of ope

PROPERTIES

Item 2. PROPERTIES Our headquarters office and distribution warehouse are located on a 50-acre complex at 5402 South 122nd East Ave, Tulsa, Oklahoma. The Company headquarters includes multiple buildings that combine to approximately 400,000 square feet of office and warehouse space, of which 218,700 is utilized by us and 181,300 is occupied by a third-party tenant. Substantially all customer orders are fulfilled from our 170,000 square foot warehouse, in Tulsa, Oklahoma, using multiple flow-rack systems, referred to as "lines," to expedite order completion, packaging, and shipment. During the third quarter of fiscal 2024, the Company listed for sale/leaseback our headquarters office and warehouse property. The listing of the property for sale resulted in a reclassification of the owned property as "Assets held for sale" in the Company's financial statements. In addition to this owned property, we also lease additional warehouse space in Tulsa, Oklahoma as needed for overflow inventory, a small office in San Diego, California that is used by our Kane Miller employees, and a warehouse and office space in Layton, Utah. We believe that our operating facilities meet both present and future capacity needs.

LEGAL PROCEEDINGS

Item 3. LEGAL PROCEEDINGS We are not a party to any material pending legal proceedings.

MINE SAFETY DISCLOSURES

Item 4. MINE SAFETY DISCLOSURES None 7 Table of Contents PART II

MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of EDC is traded on NASDAQ (symbol "EDUC"). The number of shareholders of record of EDC's common stock as of May 13, 2024, was 446. For information regarding our compensation plans see Note 14 of the notes to the financial statements and our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 10, 2024, as outlined in Part III, Item 12 in this Annual Report. Issuer Purchases of Equity Securities Period Total # of Shares Purchased Average Price Paid per Share Total # of Shares Purchased as Part of Publicly Announced Plan (1) Maximum # of Shares that may be Repurchased under the Plan (1) December 1 - 31, 2023 - $ - - 376,393 January 1 - 31, 2024 - - - 376,393 February 1 - 29, 2024 - - - 376,393 Total - $ - - (1) On February 4, 2019, the Board of Directors approved a new stock repurchase plan, replacing the former 2008 stock repurchase plan. The maximum number of shares which may be purchased under the new plan is 800,000. This plan has no expiration date.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management ' s Discussion and Analysis of Financial Condition and Results of Operations contains a discussion of our business, including a general overview of our segments, our results of operations, our liquidity and capital resources, and our quantitative and qualitative disclosures about market risk. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. See " Cautionary Remarks Regarding Forward Looking Statements " in the front of this Annual Report on Form 10-K. Management Summary We are the owner and exclusive publisher of Kane Miller children's books; Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. We are also the exclusive United States Multi-Level Marketing ("MLM") distributor of Usborne Publishing Limited ("Usborne") children's books. Significant portions of our product offering, and inventory are concentrated with Usborne. Our distribution agreement with Usborne includes annual minimum purchase volumes along with specific payment terms, which, if not met or if payments are not received in a timely manner, offer Usborne the right to terminate the agreement. During fiscal 2023 and fiscal 2024, the Company did not meet the minimum purchase volumes and certain payments were not received timely. No notification of non-compliance or termination has been received from Usborne. Should termination of the agreement occur, the Company will be allowed, at a minimum, to sell through their remaining Usborne inventory over the twelve months following the termination date. We sell our products through two s

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