UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~November~~May 3031, ~~2025~~2026

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

For the transition period from to .

Commission file number: 000-04957

EDUCATIONAL DEVELOPMENT CORPORATION

(Exact name of registrant as specified in its charter)

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

5402 South 122nd East Ave, Tulsa, Oklahoma		74146
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (918) 622-4522

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

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

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	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. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of ~~January~~July 85, 2026, there were 8,~~511~~524,~~364 shares~~964 shares of Educational Development Corporation Common Stock, $0.20 par value outstanding.

TABLE OF CONTENTS

		Page	~~Page~~
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21	24
Item 4.	Controls and Procedures	21	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22	25
Item 1A.	Risk Factors	22	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22	25
Item 3.	Defaults Upon Senior Securities	22	25
Item 4.	Mine Safety Disclosures	22	25
Item 5.	Other Information	22	25
Item 6.	Exhibits	23	26
Signatures		24	28

Table of Contents

CAUTIONARY REMARKS REGARDING FORWARD-LOOKING STATEMENTS

The information discussed in this Quarterly Report on Form 10-Q 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, ● 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, ● cybersecurity threats and incidents, ● changes in macroeconomic conditions in international trade including ~~recently~~changes ~~announced~~in existing and ~~potential~~ future tariffs, ● legal matters, ● reliance on information technology infrastructure, ● potential restrictions imposed 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, as well as ● those factors discussed below and elsewhere in our Annual Report on Form 10-K for the year ended February 28, ~~2025~~2026 and in this Quarterly Report on Form ~~10-Q~~10Q, 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 this Quarterly Report on Form 10-Q and speak only as of the date of this Quarterly Report on Form 10-Q. 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. As used in this Quarterly Report on Form 10-Q, the terms “the Company,” “EDC,” “we,” “our” or “us” mean Educational Development Corporation, a Delaware corporation, unless the context indicates otherwise.

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

EDUCATIONAL DEVELOPMENT CORPORATION

CONDENSED BALANCE SHEETS (UNAUDITED)

	November 30,			February 28,
	May 31,			February 28,
	2025			2025
	2026			2026
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	31,~~108~~662,~~400~~500		$	~~428~~1,118,400
Restricted cash		~~322~~147,000			~~548~~222,~~100~~000
Accounts receivable, less allowance for credit losses of $99,000 (November 30) and $112,300 (February 28)		759,700			2,126,000
Accounts receivable, less allowance for credit losses of $73,000 (May 31) and $109,600 (February 28)		570,500			861,300
Inventories - net		2216,~~486~~059,~~700~~900			2917,~~099~~412,~~600~~200
Prepaid expenses and other assets		~~434~~496,~~100~~400			~~768~~374,~~100~~600
Assets held for sale		~~563~~450,~~600~~000			19563,~~277,000~~600
Total current assets		2719,~~674~~386,~~500~~300			5220,~~247~~552,~~200~~100
INVENTORIES - net		1620,~~652~~149,~~700~~200			1520,~~592~~251,~~500~~700
PROPERTY, PLANT AND EQUIPMENT - net		6,~~495~~120,~~600~~800			6,~~398~~291,~~700~~200
DEFERRED INCOME TAX ASSET		1,177,600			2,536,100
OPERATING LEASE RIGHT-OF-USE ASSETS		6,742,000			6,716,100
OPERATING LEASE RIGHT-OF-USE ASSETS		6,945,000			1,108,100
OTHER ASSETS		480,900,			500,500
OTHER ASSETS		510,200			431,700
TOTAL ASSETS	$	52,879,200		$	54,311,600
TOTAL ASSETS	$	59,455,600		$	78,314,300
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	21,~~048~~618,200		$	1,~~847~~686,400
Line of credit		-			4,198,100
Deferred revenues		417,000			320,500
Deferred revenues		696,000			491,800
Operating lease liabilities, current		1,315,900			1,371,700
Current maturities of long-term debt		-			26,685,500
Accrued salaries and commissions		311,700			218,600
Accrued salaries and commissions		629,300			313,700
Income taxes payable		1,153,600			1,146,800
Income taxes payable		1,313,500			460,900
Other current liabilities		1,241,600			1,427,500
Operating lease liabilities, current		1,532,800			697,000
Total current liabilities		6,058,000			6,171,500
Other current liabilities		1,918,800			2,528,300
OPERATING LEASE LIABILITIES, noncurrent		5,426,100			5,344,400
Total current liabilities		8,138,600			37,222,700
OTHER LONG-TERM LIABILITIES		200			5,200
OPERATING LEASE LIABILITIES, non-current		5,412,200			411,100
Total liabilities		11,484,300			11,521,100
OTHER LONG-TERM LIABILITIES		7,300			112,900
Total liabilities		13,558,100			37,746,700
SHAREHOLDERS’ EQUITY:
Common stock, $0.20 par value; Authorized 16,000,000 shares; Issued 12,702,080 shares; Outstanding 8,511,364 (November 30) and 8,583,201 (February 28) shares		2,540,400			2,540,400
Common stock, $0.20 par value; Authorized 16,000,000 shares; Issued 12,702,080 shares; Outstanding 8,511,364 (May 31 and February 28) shares		2,540,400			2,540,400
Capital in excess of par value		13,769,400			13,~~800~~769,~~000~~400
Retained earnings		4238,~~735~~232,~~200~~600			3739,~~303~~628,~~000~~200
Accumulated other comprehensive loss		-			(15,400	)
		54,542,400			55,938,000
		59,045,000			53,628,000
Less treasury stock, at cost		(13,147,500	)		(13,147,500	)
Less treasury stock, at cost		(13,147,500	)		(13,060,400	)
Total shareholders’ equity		41,394,900			42,790,500
Total shareholders’ equity		45,897,500			40,567,600
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	52,879,200		$	54,311,600
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	59,455,600		$	78,314,300

See notes to condensed financial statements (unaudited).

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EDUCATIONAL DEVELOPMENT CORPORATION

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended November 30,						Nine Months Ended November 30,
	Three Months Ended May 31,
	2025			2024			2025			2024
	2026			2025
PRODUCT REVENUES, net of discounts and allowances	$	64,~~668~~537,~~300~~400		$	106,~~556~~764,~~100~~800		$	~~17,829,400~~		$	~~26,266,600~~
Transportation revenue		~~339~~218,~~500~~400			~~496~~341,~~000~~600			~~905,900~~			~~1,288,100~~
NET REVENUES		74,~~007~~755,800			117,~~052~~106,~~100~~400			~~18,735,300~~			~~27,554,700~~
COST OF GOODS SOLD		21,~~698~~934,~~100~~500			42,~~148~~969,300			~~7,600,400~~			~~10,544,700~~
Gross margin		42,~~309~~821,~~700~~300			64,~~903~~137,~~800~~100			~~11,134,900~~			~~17,010,000~~
OPERATING EXPENSES
Operating and selling		1677,~~184,700~~000			1994,~~744,100~~600			~~2,918,800~~			~~5,010,000~~
Sales commissions		21,~~030~~348,~~500~~700			32,~~283~~012,~~600~~100			~~5,311,500~~			~~8,193,400~~
General and administrative		2,~~598~~070,~~300~~400			32,~~074~~694,~~700~~900			~~7,796,400~~			~~9,179,700~~
Total operating expenses		54,~~813~~096,~~500~~100			85,~~102~~701,~~400~~600			~~16,026,700~~			~~22,383,100~~
INTEREST EXPENSE		~~369,800~~600			~~575~~504,~~400~~300			~~1,477,300~~			~~1,697,800~~
OTHER INCOME
OTHER (INCOME) LOSS		103,700			(619,500	)
Gain from sale of assets		(12,243,700	)		-			(12,186,700	)		-
LOSS BEFORE INCOME TAXES		(1,379,100	)		(1,449,300	)
Other, net		(272,600	)		(662,100	)		(1,625,600	)		(1,745,900	)
INCOME TAX EXPENSE (BENEFIT)		16,500			(374,100	)
Total other income		(12,516,300	)		(662,100	)		(13,812,300	)		(1,745,900	)
NET LOSS	$	(1,395,600	)	$	(1,075,200	)
EARNINGS (LOSS) BEFORE INCOME TAXES		10,642,700			(1,111,900	)		7,443,200			(5,325,000	)
BASIC AND DILUTED LOSS PER SHARE
INCOME TAX EXPENSE (BENEFIT)		2,840,600			(276,200	)		2,011,000			(1,406,900	)
Basic	$	(0.16	)	$	(0.13	)
NET EARNINGS (LOSS)	$	7,802,100		$	(835,700	)	$	5,432,200		$	(3,918,100	)
Diluted	$	(0.16	)	$	(0.13	)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING:
Basic	$	~~0.91~~8,511,364		$	~~(0.10~~8,583,201	)	$	~~0.63~~		$	~~(0.47~~	)
Diluted	$	~~0.91~~8,511,364		$	~~(0.10~~8,583,201	)	$	~~0.63~~		$	~~(0.47~~	)
WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING
Dividends per share	$	-		$	-
Basic		8,576,197			8,273,402			8,580,866			8,270,797
Diluted		8,576,197			8,273,402			8,580,866			8,270,797
Dividends per share	$	-		$	-		$	-		$	-

See notes to condensed financial statements (unaudited).

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EDUCATIONAL DEVELOPMENT CORPORATION CONDENSED STATEMENTS OF ~~COMPREHENSIVEINCOME~~CHANGES ~~(LOSS)~~IN SHAREHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED MAY 31, 2026

	Three Months Ended November 30,					Nine Months Ended November 30,
	Common Stock (par value $0.20 per share)										Treasury Stock
	2025		2024			2025		2024
	Number of Shares Issued		Amount			Capital in Excess of Par Value		Retained Earnings			Number of Shares		Amount			Shareholders’ Equity
Net earnings (loss)	$	7,802,100	$	(835,700	)	$	5,432,200	$	(3,918,100	)
BALANCE - February 28, 2026		12,702,080	$	2,540,400		$	13,769,400	$	39,628,200			4,190,716	$	(13,147,500	)	$	42,790,500
Other comprehensive income:
Net loss		-		-			-		(1,395,600	)		-		-			(1,395,600	)
Unrealized loss on interest rate exchange agreement		-		(1,200	)		-		(46,000	)
BALANCE - May 31, 2026		12,702,080	$	2,540,400		$	13,769,400	$	38,232,600			4,190,716	$	(13,147,500	)	$	41,394,900
Comprehensive Income (loss)	$	7,802,100	$	(836,900	)	$	5,432,200	$	(3,964,100	)

~~See notes~~FOR toTHE ~~condensed~~THREE ~~financial~~MONTHS ~~statements~~ENDED ~~(unaudited).~~MAY 31, 2025

	Common Stock (par value $0.20 per share)									Accumulated			Treasury Stock
	Number of Shares Issued		Amount		Capital in Excess of Par Value		Retained Earnings			Other Comprehensive Loss			Number of Shares		Amount			Shareholders’ Equity
BALANCE – February 28, 2025		12,702,080	$	2,540,400	$	13,800,000	$	37,303,000		$	(15,400	)		4,118,879	$	(13,060,400	)	$	40,567,600
Change in fair value of interest rate exchange agreement		-		-		-		-			15,400			-		-			15,400
Net loss		-		-		-		(1,075,200	)		-			-		-			(1,075,200	)
BALANCE - May 31, 2025		12,702,080	$	2,540,400	$	13,800,000	$	36,227,800		$	-			4,118,879	$	(13,060,400	)	$	39,507,800

~~Table~~See ofnotes ~~Contents~~to condensed financial statements (unaudited).

~~EDUCATIONAL DEVELOPMENT CORPORATION CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED NOVEMBER 30, 2025~~3

	Common Stock (par value $0.20 per share)										Accumulated			Treasury Stock
	Number of Shares Issued		Amount		Capital in Excess of Par Value			Retained Earnings			Other Comprehensive Loss			Number of Shares			Amount			Shareholders’ Equity
BALANCE – February 28, 2025		12,702,080	$	2,540,400	$	13,800,000		$	37,303,000		$	(15,400	)		4,118,879		$	(13,060,400	)	$	40,567,600
Change in fair value of interest rate exchange agreement		-		-		-			-			15,400			-			-			15,400
Net loss		-		-		-			(1,075,200	)		-			-			-			(1,075,200	)
BALANCE - May 31, 2025		12,702,080		2,540,400		13,800,000		$	36,227,800			-			4,118,879			(13,060,400	)		39,507,800
Net Loss		-		-		-			(1,294,700	)		-			-			-			(1,294,700	)
BALANCE - August 31, 2025		12,702,080		2,540,400		13,800,000		$	34,933,100			-			4,118,879			(13,060,400	)		38,213,100
Purchases of treasury stock		-		-		-			-			-			87,837			(137,900	)		(137,900	)
Sale of treasury stock		-		-		(30,600	)		-			-			(16,000	)		50,800			20,200
Net earnings		-		-		-			7,802,100			-			-			-			7,802,100
BALANCE – November 30, 2025		12,702,080	$	2,540,400	$	13,769,400		$	42,735,200		$	-			4,190,716		$	(13,147,500	)	$	45,897,500

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~~FOR~~EDUCATIONAL ~~THE~~DEVELOPMENT ~~NINE~~CORPORATION ~~MONTHS~~CONDENSED ~~ENDED~~STATEMENTS ~~NOVEMBER~~OF ~~30,~~CASH ~~2024~~FLOWS (UNAUDITED)

	Common Stock (par value $0.20 per share)												Accumulated			Treasury Stock
	Three Months Ended May 31,
	Number of Shares Issued			Amount			Capital in Excess of Par Value			Retained Earnings			Other Comprehensive Income			Number of Shares			Amount			Shareholders’ Equity
	2026			2025
BALANCE – February 29, 2024		12,702,080		$	2,540,400		$	13,405,400		$	42,566,600		$	24,400			4,126,992		$	(13,086,100	)	$	45,450,700
CASH FLOWS FROM OPERATING ACTIVITIES
Sale of treasury stock		-			-			(4,100	)		-			-			(4,000	)		12,700			8,600
Net loss	$	(1,395,600	)	$	(1,075,200	)
Share-based compensation expense - net		-			-			100,800			-			-			-			-			100,800
Adjustments to reconcile net loss to net cash provided by operating activities:
Change in fair value of interest rate exchange agreement		-			-			-			-			22,900			-			-			22,900
Depreciation and amortization		273,100			366,100
Net loss		-			-			-			(1,279,000	)		-			-			-			(1,279,000	)
Deferred income taxes		-			(390,600	)
BALANCE - May 31, 2024		12,702,080			2,540,400			13,502,100			41,287,600			47,300			4,122,992			(13,073,400	)		44,304,000
Provision for credit losses		6,000			12,000
Sale of treasury stock		-			-			(3,000	)		-			-			(2,513	)		7,900			4,900
Provision for inventory valuation allowance		36,000			36,000
Share-based compensation expense - net		-			-			100,800			-			-			-			-			100,800
Net loss (gain) on sale of assets		(800	)		57,000
Change in fair value of interest rate exchange agreement		-			-			-			-			(67,700	)		-			-			(67,700	)
Impairment loss on assets		113,600			-
Net loss		-			-			-			(1,803,400	)		-			-			-			(1,803,400	)
Changes in assets and liabilities:
BALANCE - August 31, 2024		12,702,080			2,540,400			13,599,900			39,484,200			(20,400	)		4,120,479			(13,065,500	)	$	42,538,600
Accounts receivable		284,800			113,700
Sale of treasury stock		-			-			(2,200	)		-			-			(2,000	)		6,400			4,200
Inventories - net		1,418,800			2,611,900
Share-based compensation expense - net		-			-			100,800			-			-			-			-			100,800
Prepaid expenses and other assets		(108,900	)		(47,800	)
Change in fair value of interest rate exchange agreement		-			-			-			-			(1,200	)		-			-			(1,200	)
Accounts payable		(68,200	)		(329,000	)
Net loss		-			-			-			(835,700	)		-			-			-			(835,700	)
Accrued salaries and commissions and other liabilities		(97,800	)		(166,400	)
BALANCE - November 30, 2024		12,702,080		$	2,540,400		$	13,698,500		$	38,648,500		$	(21,600	)		4,118,479		$	(13,059,100	)	$	41,806,700
Deferred revenues		96,500			(26,300	)
Income taxes payable/receivable		6,800			235,100
Total adjustments		1,959,900			2,471,700
Net cash provided by operating activities		564,300			1,396,500
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(96,000	)		(207,400	)
Proceeds from sale of assets		800			45,000
Net cash used in investing activities		(95,200	)		(162,400	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on term debt		-			(450,000	)
Net cash used in financing activities		-			(450,000	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		469,100			784,100
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF PERIOD		1,340,400			976,500
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD	$	1,809,500		$	1,760,600
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid for interest	$	600		$	468,300
Cash (received)/paid for income taxes - net of refunds	$	9,700		$	(218,600	)
NONCASH TRANSACTIONS
Leased assets obtained in exchange for operating lease liabilities	$	305,100		$	26,200

See notes to condensed financial statements (unaudited).

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~~EDUCATIONAL~~NOTES ~~DEVELOPMENT~~TO ~~CORPORATION~~ CONDENSED FINANCIAL STATEMENTS ~~OF CASH FLOWS~~ (UNAUDITED)

	Nine Months Ended November 30,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$	5,432,200		$	(3,918,100	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		1,085,700			1,355,300
Deferred income taxes		1,358,500			(1,257,100	)
Provision for credit losses		30,000			53,600
Provision for inventory valuation allowance		108,000			220,400
Share-based compensation expense - net		-			302,400
Net loss (gain) on sale of assets		(12,186,700	)		3,300
Impairment loss on assets		287,100			-
Changes in assets and liabilities:
Accounts receivable		1,336,300			(291,900	)
Inventories - net		5,444,700			8,582,700
Prepaid expenses and other assets		235,400			(241,900	)
Accounts payable		200,800			(1,577,500	)
Accrued salaries and commissions and other liabilities		(384,200	)		377,800
Deferred revenues		204,200			794,600
Income taxes payable/receivable		852,600			374,700
Total adjustments		(1,427,600	)		8,696,400
Net cash provided by operating activities		4,004,600			4,778,300
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(447,100	)		(308,300	)
Proceeds from sale of assets		29,927,600			9,800
Net cash provided by (used in) investing activities		29,480,500			(298,500	)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on term debt		(26,715,400	)		(1,350,000	)
Sales of treasury stock		20,200			17,700
Cash paid to acquire treasury stock		(137,900	)		-
Net payments under line of credit		(4,198,100	)		(1,200,000	)
Net cash used in financing activities		(31,031,200	)		(2,532,300	)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		2,453,900			1,947,500
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF PERIOD		976,500			1,277,400
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD	$	3,430,400		$	3,224,900
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid for interest	$	1,337,500		$	1,695,900
Cash (received)/paid for income taxes - net of refunds	$	(200,100	)	$	33,800
NONCASH TRANSACTIONS
Leased assets obtained in exchange for operating lease liabilities	$	6,338,900		$	282,800

Note 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~See notes~~Basis toof ~~condensed financial statements (unaudited).~~Presentation

5The accompanying Unaudited Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim condensed financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. The Unaudited Condensed Financial Statements include all adjustments considered necessary for a fair presentation of the financial position and results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed herein. Accordingly, the Unaudited Condensed Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. However, we believe that the disclosures made are adequate to make the information not misleading. These interim Unaudited Condensed Financial Statements should be read in conjunction with our audited financial statements as of and for the year ended February 28, 2026 included in our Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year due to the seasonality of our product sales.

~~Table~~Use of ~~Contents~~Estimates in the Preparation of Financial Statements

~~NOTES~~The preparation of the Unaudited TOCondensed ~~CONDENSED~~Financial ~~FINANCIAL~~Statements ~~STATEMENTS~~in ~~(UNAUDITED)~~conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

~~Note 1~~Significant –Accounting ~~BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Policies

~~Basis~~Our significant accounting policies, other than the adoption of ~~Presentation~~new accounting pronouncements separately documented herein and unless otherwise disclosed, are consistent with those disclosed in Note 1 to our audited financial statements as of and for the year ended February 28, 2026 included in our Form 10-K.

The accompanying Unaudited Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim condensed financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. The Unaudited Condensed Financial Statements include all adjustments considered necessary for a fair presentation of the financial position and results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed herein. Accordingly, the Unaudited Condensed Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. However, we believe that the disclosures made are adequate to make the information not misleading. These interim Unaudited Condensed Financial Statements should be read in conjunction with our audited financial statements as of and for the year ended February 28, 2025 included in our Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year due to the seasonality of our product sales.Reclassifications

~~Use~~Certain reclassifications have been made to the May 31, 2025 condensed offinancial ~~Estimates~~statements into conform to the ~~Preparation~~May of31, ~~Financial~~2026 ~~Statements~~condensed financial statements presentation. These reclassifications had no effect on net earnings.

The preparation of the Unaudited Condensed Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.5

~~Significant Accounting~~Table ~~Policies~~of Contents

~~Our significant~~New ~~accounting~~Accounting policies, other than the adoption of new accounting pronouncements separately documented herein and unless otherwise disclosed, are consistent with those disclosed in Note 1 to our audited financial statements as of and for the year ended February 28, 2025 included in our Form 10-K.Pronouncements

~~Liquidity~~The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. We have reviewed the recently issued pronouncements and concluded the following new accounting standard updates (“ASU”) apply to us:

~~In accordance~~New ~~with~~Accounting ~~ASC~~Standards ~~205-40,~~or ~~Going~~Updates ~~Concern,~~Not ~~the~~Yet Company has evaluated whether there are conditions and events considered in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.Adopted

~~Determining~~In ~~the~~December ~~extent~~2025, tothe FASB ~~which~~issued ~~conditions~~ASU or2025-12, ~~events~~Codification ~~raise~~Improvements ~~substantial~~(“ASU ~~doubt~~2025-12”). ~~about~~ASU ~~our~~2025-12 ~~ability~~addresses tosuggestions ~~continue~~received asfrom astakeholders regarding ~~going concern and~~ the ~~extent~~Accounting toStandards ~~which~~Codification ~~mitigating plans sufficiently alleviate any such substantial doubt requires significant judgment~~ and ~~estimation~~makes byother ~~us.~~incremental ~~Our~~improvements ~~significant estimates related~~ to ~~this~~U.S. ~~analysis~~GAAP. ~~may~~The ~~include~~update ~~identifying~~represents ~~business factors such as~~ changes into the ~~our~~Codification ~~Brand~~that ~~Partners~~clarify, ~~planned~~correct ~~reduction~~errors ofin ~~inventory levels,~~or ~~obtaining~~make ~~short~~other ~~term~~improvements ~~borrowings,~~to ifa ~~needed,~~variety ~~and~~of ~~sales~~topics ~~and~~that ~~profitability~~are ~~trends used~~intended into ~~the~~make ~~forecasted~~it ~~financial~~easier to ~~results~~understand and ~~liquidity~~apply. ~~Further,~~ASU we2025-12 ~~make~~is ~~assumptions~~effective ~~about~~for ~~the~~fiscal ~~probability~~years ~~that~~beginning ~~management’s~~after ~~plans will~~December be15, ~~effectively~~2026 ~~implemented~~ and ~~alleviate~~interim ~~substantial~~periods ~~doubt~~within ~~and~~those fiscal ~~our~~years. ~~ability~~Entities toare ~~continue~~required asto aapply ~~going concern. We believe that~~ the ~~estimated values~~amendments ~~used~~to inASC ~~our~~260 ~~going~~retrospectively. ~~concern~~All ~~analysis~~other ~~are~~amendments ~~based~~may onbe ~~reasonable~~applied ~~assumptions~~prospectively or retrospectively. ~~However,~~We ~~such~~have ~~assumptions~~adopted ~~are~~ASU ~~inherently~~2025-12 ~~uncertain,~~ and ~~actual~~ ~~results~~implemented ~~could~~its ~~differ materially from those estimates~~changes.

~~During~~In ~~the~~December ~~third quarter of fiscal 2026~~2025, the ~~Company completed the planned sale of the Hilti Complex and paid off the Line of Credit and Term Loans with the Company’s~~Financial ~~bank,~~Accounting ~~which~~Standards ~~was~~Board a(“FASB”) ~~key~~issued ~~step~~Accounting inStandards ~~management’s~~Update ~~plans~~(“ASU”) ~~for returning to profitability. Paying off the bank debts and eliminating the bank~~2025-~~imposed restrictions~~11, ~~allow~~Interim ~~the~~Reporting ~~Company to begin a conservative plan to re-order some key out of stock products along with introducing a limited~~(Topic ~~number~~270) ofImprovements ~~new titles which are expected~~ to ~~energize~~Interim ~~our~~Disclosure ~~Brand Partners and provide our retail customers with new offerings~~Requirements. ~~However,~~The ~~the Company’s~~standard ~~continued~~clarifies ~~recurring~~disclosure ~~operating~~requirements ~~losses~~for ~~raise~~interim ~~substantial~~financial ~~doubt over the Company’s ability to continue as a going concern.~~statements Toand ~~address~~is ~~these~~effective ~~ongoing~~for ~~concerns~~interim ~~management’s~~periods ~~future~~beginning ~~plans~~after ~~include~~December ~~implementing a conservative purchase plan while continuing to reduce overall inventory levels~~15, ~~which~~2027. ~~will~~Early ~~generate~~adoption ~~free~~is ~~cash flows and building the active PaperPie Brand Partner levels~~permitted. ~~Although~~We ~~there is~~are nocurrently ~~guarantee~~evaluating ~~these plans will be successful, management believes these plans, if achieved, will alleviate~~ the ~~substantial doubt about~~impact ~~continuing~~this asASU amay ~~going~~have ~~concern~~on ~~and generate sufficient liquidity to meet~~ our ~~obligations~~financial asstatement ~~they become due over the next twelve months~~disclosures.

6In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which requires software capitalization to begin when both of the following occur: (1) management has authorized and committed to funding the software project; and (2) it is probable that the project will be completed and the software will be used to perform the function intended. For public entities, the provisions within ASU 2025-06 are effective for the first annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The provisions within ASU 2025-06 allow for a prospective, modified, or retrospective transition approach. The Company is currently evaluating this ASU to determine its impact on the Company’s financial statements and disclosures.

~~Table of Contents~~6

~~New Accounting~~Table ~~Pronouncements~~of Contents

~~The~~In November 2024, the FASB ~~Financial~~issued ~~Accounting~~ASU ~~Standards~~2024-03, ~~Board~~Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (~~“FASB”~~Subtopic 220-40): Disaggregation ~~periodically~~of ~~issues~~Income ~~new~~Statement ~~accounting~~Expenses, ~~standards~~which inrequires adisclosure ~~continuing~~about ~~effort~~the totypes ~~improve~~of costs and expenses included in certain ~~standards~~expense ofcaptions ~~financial~~presented ~~accounting~~on ~~and~~the ~~reporting~~income statement. WeThe ~~have~~new ~~reviewed~~disclosure requirements are effective for the ~~recently~~Company’s ~~issued~~annual ~~pronouncements~~periods beginning March 1, 2027, and ~~concluded~~interim ~~the~~periods ~~following~~beginning ~~new~~March 1, 2028, with early adoption permitted, and may be applied either prospectively ~~accounting~~or ~~standard~~retrospectively. ~~updates~~The ~~(“ASU”)~~Company ~~apply~~is currently evaluating the ASU to ~~us:~~determine its impact on the Company’s financial statements and disclosures.

~~New Accounting~~Note ~~Standards~~2 or– ~~Updates Not Yet Adopted~~CASH

InThe ~~December~~table ~~2025,~~below ~~the FASB~~reconciles ~~issued ASU 2025-12~~cash, ~~Codification~~cash ~~Improvements~~equivalents ~~("ASU~~and ~~2025-12"). ASU~~restricted ~~2025-12 addresses~~cash ~~suggestions~~as ~~received~~reported ~~from stakeholders~~in ~~regarding~~ the ~~Accounting~~balance ~~Standards~~sheets ~~Codification and makes other incremental improvements~~ to ~~U.S. GAAP. The update represents changes to~~ the ~~Codification~~total ~~that clarify, correct errors in or make other improvements to a variety~~ of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the ~~amendments~~same toamounts ~~ASC~~shown ~~260~~in ~~retrospectively. All other amendments may be applied prospectively or retrospectively. Early adoption is permitted. We are currently evaluating~~ the ~~impact this ASU may have on our financial~~statements ~~statement~~of ~~disclosures.~~cash flows:

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270) Improvements to Interim Disclosure Requirements. The standard clarifies disclosure requirements for interim financial statements and is effective for interim periods beginning after December 15, 2026. Early adoption is permitted. We are currently evaluating the impact this ASU may have on our financial statement disclosures.

	May 31, 2026		May 31, 2025
Cash and cash equivalents	$	1,662,500	$	1,040,200
Restricted cash		147,000		720,400
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	1,809,500	$	1,760,600

InThe ~~September~~Company ~~2025,~~has ~~the FASB~~contracted ~~issued~~with ~~ASU~~Nexio ~~2025-06, Intangibles - Goodwill~~ and ~~Other~~PayPal, -Inc., ~~Internal~~third-~~Use~~party ~~Software~~merchant ~~(Subtopic~~service ~~350-40):~~processors, ~~Targeted Improvements~~ to ~~the~~capture ~~Accounting for~~Visa, ~~Internal-Use Software ("ASU 2025-06")~~Discover, ~~which~~Mastercard ~~requires~~and ~~software~~PayPal ~~capitalization~~payments tofrom ~~begin~~customers. Approximately ~~when~~90% ~~both~~ of ~~the~~all ~~following~~payments ~~occur: (1)~~received ~~management~~by ~~has~~the ~~authorized~~Company ~~and~~are ~~committed~~channeled tothrough ~~funding~~these ~~the~~processors. ~~software~~These ~~project;~~processors ~~and~~hold ~~(2)~~cash itpayments received isfrom ~~probable~~customers ~~that~~in ~~the~~reserve ~~project~~for ~~will~~a bespecified ~~completed and~~number ~~the~~of ~~software~~days ~~will be used~~ to ~~perform~~offset ~~the~~any ~~function~~potential ~~intended~~chargebacks. ~~For~~The ~~public~~Company ~~entities,~~also ~~the~~has ~~provisions~~a ~~within ASU 2025~~short-~~06 are effective for~~term ~~the~~certificate ~~first~~of ~~annual~~deposit ~~and interim reporting periods beginning after December 15, 2027,~~ with ~~early~~the ~~adoption~~Company’s ~~permitted.~~bank ~~The~~as ~~provisions~~collateral ~~within ASU 2025-06 allow~~ for abusiness ~~prospective,~~credit ~~modified,~~card ~~or retrospective transition approach~~use. The Company ishas ~~currently~~classified ~~evaluating~~the ~~this~~cash ~~ASU~~held in toreserves ~~determine its~~by ~~impact~~Nexio onand PayPal and the ~~Company’s~~restricted ~~financial~~certificate ~~statements~~of ~~and~~deposit ~~disclosures~~as restricted cash.

InNote ~~July~~3 ~~2025, the FASB issued Accounting Standards Update 2025-05~~ – ~~Financial~~ASSETS ~~Instruments~~HELD –FOR Credit Losses (Topic ASC 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this ASU provide entities with a practical expedient they may elect to use when developing an estimate of expected credit losses on current accounts receivable and current contract asset balances arising from transactions accounted for under Topic ASC 606 – Revenue from Contracts with Customers. Under this practical expedient, entities may elect to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in ASU 2025-05 become effective for fiscal years and for interim periods beginning after December 15, 2025, and early adoption is permitted. This ASU will be effective for our Form 10-K for fiscal 2026. The Company is currently evaluating this ASU to determine its impact on the Company’s financial statements and disclosures.SALE

InEquipment December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. This ASU will be effective for our Form 10-K for fiscal 2026. The Company is currently evaluating this ASU to determine its impact on the Company’s financial statements and disclosures.

InDuring the ~~November~~second ~~2024~~quarter of fiscal year 2025, the ~~FASB issued~~Company ~~ASU~~entered ~~2024~~into a triple-03net lease agreement for approximately 111,000 ~~Income~~square ~~Statement—Reporting~~feet ~~Comprehensive~~of available ~~Income—Expense~~office ~~Disaggregation~~and ~~Disclosures~~warehouse ~~(Subtopic~~space ~~220-40):~~in the Hilti Complex to a new tenant. To create space for this new tenant, the Company removed three ~~Disaggregation~~production oflines ~~Income~~from ~~Statement~~the ~~Expenses~~warehouse before July 31, ~~which~~2024. ~~requires~~As ~~disclosure~~a ~~about~~result, in the ~~types~~second quarter of ~~costs~~fiscal ~~and~~2025, ~~expenses~~the ~~included~~Company inmade ~~certain~~available ~~expense~~and ~~captions~~committed ~~presented~~to onsell the ~~income~~disassembled ~~statement~~equipment. The ~~new~~Company is actively marketing unused equipment using a national on-line auction house as of May 31, 2026. The Company is subject to the presentation and disclosure requirements ~~are~~since ~~effective~~the equipment meets all the criteria and is classified as an “Asset Held for Sale.” Once management determined that the ~~Company’s~~disassembled ~~annual~~equipment ~~periods~~met the criteria ~~beginning~~to ~~March~~be 1,classified ~~2027~~as held for sale, the Company ceased depreciation of the asset and ~~interim~~reported ~~periods~~it ~~beginning~~separately ~~March~~on 1the balance sheet, ~~2028~~beginning on August 31, ~~with~~2024. ~~early~~In ~~adoption~~the ~~permitted~~third quarter of fiscal 2026, ~~and~~the ~~may~~Company beevaluated ~~applied~~the ~~either~~carrying ~~prospectively or~~amount ~~retrospectively.~~of ~~The~~the ~~Company~~assets isand ~~currently~~the ~~evaluating~~estimated ~~this~~fair values ~~ASU~~less costs to ~~determine~~sell ~~its~~and ~~impact~~recorded an impairment loss on the assets of $287,100. In the first quarter of fiscal 2027 the Company’s ~~financial~~again evaluated ~~statements~~the carrying amount of the assets and the estimated fair values less costs to sell and recorded another impairment loss on the ~~disclosures~~assets of $113,600, further reducing the assets held for sale account.

~~Note~~The Company records assets 2held –for ~~CASH~~sale at the lower of their carrying value or fair value less costs to sell. The total carrying value of assets held for sale was $450,000 and $563,600 as of May 31, 2026, and February 28, 2026, respectively, and is separately recorded on the balance sheet.

~~The table below reconciles cash, cash equivalents and restricted cash as reported in the balance sheets to the total of the same amounts shown in the statements of cash flows:~~7

	November 30, 2025		November30, 2024
Cash and cash equivalents	$	3,108,400	$	2,289,300
Restricted cash		322,000		935,600
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	3,430,400	$	3,224,900

Table of Contents

~~The Company~~Note ~~has~~4 ~~contracted~~– with Nexio and PayPal, Inc., third-party merchant service processors, to capture Visa, Discover, Mastercard and PayPal payments from customers. Approximately 90% of all payments received by the Company are channelled through these processors. These processors hold cash payments received from customers in reserve for a specified number of days to offset any potential chargebacks. The Company also has a short-term certificate of deposit with the Company’s bank as collateral for business credit card use. The Company has classified the cash held in reserves by Nexio and PayPal and the restricted certificate of deposit as restricted cash.INVENTORIES

7Inventories consist of the following:

Table of Contents

	May 31, 2026			February 28, 2026
Current:
Product inventory	$	16,431,000		$	17,771,000
Inventory valuation allowance		(371,100	)		(358,800	)
Inventories net – current	$	16,059,900		$	17,412,200

Noncurrent:
Product inventory	$	21,010,200		$	21,056,700
Inventory valuation allowance		(861,000	)		(805,000	)
Inventories net – noncurrent	$	20,149,200		$	20,251,700

~~Note~~Inventory in transit totalled 3$47,600 –and ~~ASSETS~~$147,900 ~~HELD~~at ~~FOR~~May ~~SALE~~31, 2026 and February 28, 2026, respectively.

~~The~~Product ~~assets~~inventory ~~held for sale on~~quantities ~~the~~in ~~balance~~excess ~~sheet~~of atwhat ~~February~~we ~~28,~~expect ~~2025,~~will ~~totalling~~be ~~$19,277,000~~sold ~~consisted~~within ofthe ~~disassembled~~normal ~~equipment~~operating cycle, ~~the~~based ~~Hilti~~on ~~Complex~~2½ ~~and~~years ~~approximately 17 acres~~ of ~~excess~~anticipated ~~land. The assets held for sale at November 30~~sales, ~~2025,~~are ~~consists of disassembled equipment. The Company records assets~~included ~~held~~in ~~for~~noncurrent ~~sale at the lower of their carrying value or fair value less costs to sell~~inventory.

~~Hilti~~Note ~~Complex~~5 – LEASES

~~During~~Our ~~the~~lessee ~~third~~arrangements ~~quarter of~~include ~~fiscal~~six ~~2024,~~rental ~~the~~agreements ~~Company~~where ~~listed~~we ~~its~~have ~~real~~the ~~estate~~exclusive ~~property~~use ~~located~~of atdedicated ~~5402~~office S.space ~~122nd~~in E.San ~~Ave~~Diego, ~~Tulsa~~California, ~~Oklahoma~~Ogden, ~~74146~~Utah, ~~for~~a ~~sale.~~warehouse ~~The property~~space ~~consisted~~in ofJoplin, ~~approximately~~Missouri ~~402,000~~and ~~square~~three ~~feet~~leases offor office and warehouse space onlocally ~~35-acres~~in ~~(the~~Tulsa, ~~“Hilti Complex”)~~Oklahoma, ~~along~~all ~~with 17-acres~~ of ~~adjacent~~which ~~undeveloped~~qualify ~~land.~~as ~~The~~operating ~~Company ceased recording depreciation on the assets upon meeting the held for sale criteria~~leases atunder ~~the~~ASC ~~end of the third quarter of fiscal 2024~~842.

OnIn ~~October~~connection ~~27,~~with ~~2025,~~ the ~~Company~~ ~~completed the~~ sale of the Hilti Complex ~~to 10Mark 10K Industrial~~, ~~LLC.~~the ~~The~~Company ~~agreed~~leased ~~upon~~back ~~sale~~a ~~price~~portion of the ~~Hilti~~ Complex ~~per~~for ~~the executed~~office ~~Contract~~and ~~totalled~~warehouse ~~$32,200,000~~space. The ~~net~~term ~~proceeds less the carrying value~~ of the ~~assets~~lease ~~held~~is ~~for~~10 ~~sale resulted in a gain on sale~~years, ofand ~~$12,243,700 during~~ the ~~three~~initial ~~months~~lease ~~ended~~rate ~~November~~is ~~30, 2025~~$8.00 ~~Following~~per ~~the~~square ~~sale of the Hilti Complex~~foot, ~~the 17 acres of excess land,~~ with a2.5% ~~cost~~annual ~~basis of $850,000, was reclassified from Assets held for Sale to land as it no longer listed for sale~~escalations. The ~~proceeds~~Company ~~from the~~also ~~sale~~has ~~were~~two ~~utilized~~five-year torenewal ~~pay~~and ~~off~~extension options ~~the~~with ~~Term~~2.5% ~~Loans~~increases ~~and~~annually ~~Revolving Loan outstanding~~ in the ~~Credit~~base ~~Agreement~~rental ~~with~~rate of the ~~Company’s~~preceding ~~Bank~~year. At ~~closing,~~The ~~EDC~~Lease ~~assigned~~also ~~the~~includes ~~existing third~~triple-~~party~~net ~~tenant~~terms, ~~leases~~where to the Company ~~Buyer~~ and ~~executed~~other atenants ~~separate~~will ~~Triple-Net~~be ~~Lease~~responsible ~~(the “Lease”)~~ for ~~its~~utilities, ~~occupied~~insurance, ~~space~~property intaxes, ~~the~~and ~~Hilti~~regular ~~Complex~~maintenance.

~~Equipment~~We recognize an operating lease liability on the balance sheets for each lease based on the present value of remaining minimum fixed rental payments (which includes payments under any renewal option that we are reasonably certain to exercise), using a discount rate that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term. Expected payments in the next twelve months are classified as current operating lease liabilities. Payments in excess of twelve months are classified as long-term operating lease liabilities. We also recognize an operating lease right-of-use asset on the balance sheets, valued at the lease liability and adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The operating lease liability and right-of-use assets are reduced over the term of the lease as payments are made and the assets are used.

During the second quarter of fiscal year 2025, the Company entered into a triple-net lease agreement for approximately 111,000 square feet of available office and warehouse space in the Hilti Complex to a new tenant. To create space for this new tenant, the Company removed three production lines from the warehouse before July 31, 2024. As a result, in the second quarter of fiscal 2025, the Company made available and committed to sell the disassembled equipment. The Company is actively marketing the unused equipment using a national on-line auction house as of November 30, 2025. The Company is subject to the presentation and disclosure requirements since the equipment meets all the criteria and is classified as an “Asset Held for Sale.” Once management determined that the disassembled equipment met the criteria to be classified as held for sale, the Company ceased depreciation of the asset and reported it separately on the balance sheet, beginning on August 31, 2024. The Company evaluated the carrying amount of the assets and the estimated fair values less costs to sell and recorded an impairment loss on the assets of $287,100 during the three months ended November 30, 2025.8

~~Note 4~~Table –of ~~INVENTORIES~~Contents

Inventories consist of the following:

	May 31, 2026			February 28, 2026
Operating lease assets:
Right-of-use assets	$	6,742,000		$	6,716,100

Operating lease liabilities:
Current lease liabilities	$	1,315,900		$	1,371,700
Long-term lease liabilities	$	5,426,100		$	5,344,400

Weighted-average remaining lease term (months)		105.4			108.9
Weighted-average discount rate		6.35	%		6.36	%

	November 30, 2025			February 28, 2025
Current:
Product inventory	$	22,962,000		$	29,530,100
Inventory valuation allowance		(475,300	)		(430,500	)
Inventories net – current	$	22,486,700		$	29,099,600
Noncurrent:
Product inventory	$	17,467,200		$	16,326,500
Inventory valuation allowance		(814,500	)		(734,000	)
Inventories net – noncurrent	$	16,652,700		$	15,592,500

Minimum fixed rental payments are recognized on a straight-line basis over the life of the lease as costs and expenses in our statements of operations. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

Inventory in transit totalled $132,400 and $25,500 at November 30, 2025 and February 28, 2025, respectively.

		May 31, 2026				May 31, 2025
Fixed lease costs		$	388,300			$	170,700

~~Product inventory~~Future ~~quantities~~minimum inrental ~~excess~~payments under ofoperating ~~what~~leases wewith ~~expect~~initial ~~will~~terms begreater ~~sold~~than ~~within~~one ~~the~~year ~~normal~~as ~~operating~~of ~~cycle~~May 31, ~~based on 2½ years of anticipated sales~~2026, are ~~included~~as ~~in noncurrent inventory.~~follows:

Years ending February 28,
2027	$	998,300
2028		1,037,700
2029		958,200
2030		929,200
2031		952,500
Thereafter		4,766,500
Total future minimum rental payments		9,642,400
Less: imputed interest		(2,900,400	)
Total operating lease liabilities	$	6,742,000

~~Table~~The offollowing ~~Contents~~table provides further information about our operating leases reported in our condensed financial statements:

Note 5 – LEASES

		May 31, 2026				May 31, 2025
Operating cash outflows – operating leases		$	388,300			$	170,700

We have both lessee and lessor arrangements. Our lessee arrangements include seven rental agreements where we have the exclusive use of dedicated office space in San Diego, California, Ogden, Utah, Seattle, Washington, a warehouse space in Joplin, Missouri and three leases for office and warehouse space locally in Tulsa, Oklahoma, all of which qualify as operating leases under ASC 842. Our lessor arrangements include one rental agreement for warehouse and office space in Tulsa, Oklahoma, and qualify as operating leases under ASC 842.

	2026		2025
NONCASH TRANSACTIONS
Lease assets obtained in exchange for new lease liabilities	$	305,100	$	26,200

InThe ~~connection~~Company ~~with~~assesses ~~the~~its ~~sale~~leases to determine whether it is reasonably certain that these renewal options will be exercised. In general, most of the ~~Hilti~~office ~~Complex~~space outside of Tulsa, ~~the~~Oklahoma ~~Company~~is ~~leased~~associated ~~back~~with aremote ~~portion~~employees. ofTheir ~~the~~continued ~~Complex~~employment ~~for~~determines ~~office~~the ~~and~~need ~~warehouse~~for this space. ~~The~~Much ~~term~~of the warehouse space outside of the ~~lease~~Hilti Complex is 10used ~~years, and~~to store non-current inventory. As the ~~initial~~Company ~~lease~~sells ~~rate~~down isexcess ~~$8.00~~inventory, ~~per~~less ~~square~~outside ~~foot~~space will be needed, ~~with~~and ~~2.5%~~any ~~annual~~renewals ~~escalations~~will be for less space. The Company also ~~has~~considered ~~two~~the ~~five-year~~ renewal ~~and extension~~ options ~~with~~for ~~2.5%~~the ~~increases~~operating ~~annually~~lease inat the Hilti ~~base~~Complex ~~rental~~and ~~rate~~is ofnot reasonably certain to exercise the ~~preceding~~renewal ~~year~~options. ~~The~~Accordingly, ~~Lease~~the ~~also~~renewal ~~includes~~options ~~triple~~are not included in the calculation of its right-~~net~~of-use ~~terms~~assets and lease liabilities, ~~where~~as the Company ~~and~~does ~~other~~not ~~tenants~~believe ~~will~~that beit ~~responsible~~is ~~for~~reasonably ~~utilities,~~certain ~~insurance,~~that ~~property~~these renewal ~~taxes,~~options ~~and~~will ~~regular~~be ~~maintenance~~exercised.

~~Operating Leases – Lessee~~9

WeTable ~~recognize an operating lease liability on the balance sheets for each lease based on the present value~~ of remaining minimum fixed rental payments (which includes payments under any renewal option that we are reasonably certain to exercise), using a discount rate that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term. Expected payments in the next twelve months are classified as current operating lease liabilities. Payments in excess of twelve months are classified as long-term operating lease liabilities. We also recognize an operating lease right-of-use asset on the balance sheets, valued at the lease liability and adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The operating lease liability and right-of-use assets are reduced over the term of the lease as payments are made and the assets are used.Contents

	November 30, 2025			February 28, 2025
Operating lease assets:
Right-of-use assets	$	6,945,000		$	1,108,100
Operating lease liabilities:
Current lease liabilities	$	1,532,800		$	697,000
Long-term lease liabilities	$	5,412,200		$	411,100
Weighted-average remaining lease term (months)		109.6			18.4
Weighted-average discount rate		6.34	%		4.89	%

Note 6 – DEBT

~~Minimum~~In March 2026, the Company ~~fixed~~executed ~~rental~~a ~~payments~~new ~~are~~credit ~~recognized~~agreement onwith Regent Bank (the Lender). The loan agreement establishes a ~~straight-line~~revolving ~~basis~~promissory ~~over~~note in the ~~life~~principal amount ofup ~~the~~to ~~lease~~$2,000,000. asInterest ~~costs~~shall ~~and~~be ~~expenses~~calculated ineach ~~our~~month ~~statements~~on ofthe ~~operations~~outstanding borrowings. The credit agreement was secured by the ~~Variable~~assets of the Company including accounts receivable, inventory, equipment and ~~short-term~~excess ~~rental~~land. ~~payments~~The ~~are~~Lender ~~recognized~~also asrequired ~~costs~~the personal guarantee of Craig White, President, Chief Executive Officer, and ~~expenses~~Chairman asof ~~they~~the ~~are~~Board ~~incurred~~of the Company.

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Fixed lease costs	$	288,800	$	224,600	$	630,200	$	604,100

Available credit under the current revolving line of credit with the Company’s Lender was $2,000,000 as of May 31, 2026.

~~Future minimum~~Features ~~rental payments under operating leases with initial terms greater than one year as~~ of ~~November~~the ~~30,~~loan ~~2025, are as follows~~agreement include:

Years ending February 28,
	(i)	$2.0 million revolving loan with maturity date of March 6, 2027.
2026		$	388,200
	(i)(a)	The revolving loan bears variable interest at a rate per annum equal to the U.S. Prime Rate + 2.00%.
2027			1,311,500
	(i)(b)	The U.S. Prime Rate was 6.75% as of May 31, 2026, making the total interest rate equal to 8.75%.
2028			884,500
2029			906,600
2030			929,200
Thereafter			5,718,900
Total future minimum rental payments			10,138,900
Less: imputed interest			(3,193,900	)
Total operating lease liabilities		$	6,945,000

~~The following~~Note ~~table~~7 ~~provides~~– ~~further~~BUSINESS ~~information about our operating leases reported in our condensed financial statements:~~CONCENTRATION

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Operating cash outflows – operating leases	$	288,800	$	224,600	$	630,200	$	604,100

Significant portions of our inventory purchases are concentrated with an England-based publishing company, Usborne Publishing Limited (“Usborne”). During fiscal 2023, we entered into a new distribution agreement (“Agreement”) with Usborne. The Agreement includes annual minimum purchase volumes along with specific payment terms and letter of credit requirements, which if not met offer Usborne the right to terminate the Agreement on less than 30 days’ written notice. Should termination of the Agreement occur, the Company will be allowed to sell its remaining Usborne inventory for an agreed upon period, but not less than twelve months following the termination date. As of May 31, 2026, the Company did not meet the minimum purchase requirements and did not supply the letter of credit required under the Agreement, which offers Usborne the right to exercise their option to terminate the Agreement. Usborne has not notified the Company of termination of the Agreement. In addition, Usborne has refused to pay the $1.0 million volume rebate owed to the Company from purchases made during fiscal 2022. The Company is disputing the cancellation of the rebate but has not recognized any rebate due to its uncertainty. Additionally, under the terms in the Agreement, the Company no longer has the rights to distribute Usborne’s products to retail customers through our Publishing division. As a result, the Company discontinued selling Usborne products to retail customers in the first quarter of fiscal 2024.

	November 30, 2025		November 30, 2024
NONCASH TRANSACTIONS
Lease assets obtained in exchange for new lease liabilities	$	6,338,900	$	282,800

The following table summarizes Usborne product revenues, net of discounts, by division and inventory purchases by product type:

The Company assesses its leases to determine whether it is reasonably certain that these renewal options will be exercised. In general, most of the office space outside of Tulsa, Oklahoma is associated with remote employees. Their continued employment determines the need for this space. Much of the warehouse space outside of the Hilti Complex is used to store non-current inventory. As the Company sells down excess inventory, less outside space will be needed, and any renewals will be for less space. The Company also considered the renewal options for the operating lease at the Hilti Complex and is not reasonably certain to exercise the renewal options. Accordingly, the renewal options are not included in the calculation of its right-of-use assets and lease liabilities, as the Company does not believe that it is reasonably certain that these renewal options will be exercised.

	Three Months Ended May 31,
	2026			2025
Product revenues, net of discounts of Usborne products by division:
PaperPie division	$	1,309,200		$	2,539,100
% of total PaperPie Product revenues, net of discounts		33.1	%		44.4	%
Publishing division		-			-
% of total Publishing Product revenues, net of discounts		0.0	%		0.0	%
Total Product revenues, net of discounts of Usborne products	$	1,309,200		$	2,539,100

Purchases received by product type:
Usborne	$	-		$	43,100
% of total purchases received		0.00	%		26.1	%
All other product types		435,300			122,100
% of total purchases received		100.0	%		73.9	%
Total purchases received	$	435,300		$	165,200

9Total Usborne inventory owned by the Company and included in our balance sheets was $19,568,500 and $20,158,500 as of May 31, 2026 and February 28, 2026, respectively.

~~Table of Contents~~10

~~Operating Leases~~Table –of ~~Lessor~~Contents

~~The~~Note ~~Company~~8 ~~subleases~~– ~~some office~~INCOME ~~and warehouse space in one of its leased facilities.~~TAXES

~~Future~~Deferred income taxes reflect ~~minimum~~the ~~payments~~net ~~receivable~~tax ~~under~~effects ~~operating~~of ~~leases~~temporary ~~with~~differences ~~terms~~between ~~greater~~the ~~than~~carrying ~~one~~amounts ~~year~~of ~~are~~assets ~~estimated~~and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant items comprising our net deferred tax assets and liabilities are as follows:

Years ending February 28 (29),
	May 31,			February 28
~~2026~~	$2026	~~26,300~~		2026
2027		52,700
Deferred tax assets:
Total	$	79,000
Allowance for credit losses	$	19,700		$	29,600
Inventory overhead capitalization		208,700			182,700
Inventory valuation allowance		100,200			96,900
Inventory valuation allowance – noncurrent		232,500			217,300
Allowance for sales returns		27,200			27,200
Net operating loss carry forward (1)		399,600			109,300
Disallowed interest (2)		2,001,300			2,001,300
Accruals		20,100			12,100
Total deferred tax assets		3,009,300			2,676,400
Deferred tax liabilities:
Property, plant, and equipment		(1,082,400	)		(1,121,600	)
Total deferred tax liabilities		(1,082,400	)		(1,121,600	)
Valuation allowance (3)		(1,926,900	)		(1,554,800	)
Net deferred tax assets	$	-		$	-

The cost of the leased space was approximately $0 and $16,333,900 as of November 30, 2025, and February 28, 2025, respectively. The accumulated depreciation associated with the leased assets was $0 and $3,906,700 as of November 30, 2025, and February 28, 2025, respectively. During the third quarter of fiscal 2024, the Company announced its plans to sell the Hilti Complex and reclassified the land and buildings from property, plant and equipment to assets held for sale and discontinued depreciating the property. The leased space was included in this reclassification. During the third quarter of fiscal 2026, the Company completed the sale and leaseback of the Hilti Complex.

(1)	The Company’s net operating loss (“NOL”) carry forward was generated from losses incurred in fiscal 2025 and first quarter of fiscal 2027. The Company’s NOL can be carried forward indefinitely but are limited to an 80% maximum offset of taxable income.
(2)	The Company’s disallowed interest was generated from interest expense that was not deductible for tax purposes due to a maximum allowable deduction of 30% of taxable income. The disallowed interest is carried forward to be deducted against future income, subject to the 30% limitation.
(3)	In evaluating the need for a valuation allowance and the realizability of deferred tax assets, the Company utilized the framework contained in ASC 740, “Income Taxes,” pursuant to which management analysed all positive and negative evidence available at the balance sheet date to determine whether all or some portion of the deferred tax assets will not be realized. Under this guidance, a valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. In conclusion, management placed significant emphasis on guidance in ASC 740, which includes that a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome. Based upon available evidence, it was concluded on a more-likely-than-not basis that certain deferred tax assets were not realizable as of May 31, 2026 and February 28, 2026. Accordingly, a valuation allowance has been recorded to offset these deferred tax assets.

~~Note~~The reconciliation of taxes at the federal statutory 6rate –to ~~DEBT~~our provision for income taxes for the three months ended May 31, 2026 was as follows:

Debt consists of the following:

	May 31, 2026
	Amount			Percentage
U.S. federal statutory income tax rate	$	(289,600	)		21.0	%
Tax credits
U.S. state and local income taxes, net of federal benefit		(85,000	)		6.2	%
Changes in valuation allowance		372,100			(27.0	)%
Other		19,000			(1.4	)%
Effective tax rate	$	16,500			(1.2	)%

	November 30, 2025		February 28, 2025
Line of credit	$	-	$	4,198,100
Floating rate Term Loan	$	-	$	16,250,000
Fixed rate Term Loan		-		10,550,900
Total term debt		-		26,800,900
Less current maturities		-		(26,685,500	)
Less debt issue cost		-		(115,400	)
Long-term debt, net	$	-	$	-

~~On August~~Table ~~9, 2022, the Company executed a Credit Agreement (“Loan Agreement”) with BOKF, NA (“Bank~~ of Oklahoma” or the “Lender”). The Loan Agreement established a fixed rate Term Loan in the principal amount of $15,000,000 (the “Fixed Rate Term Loan”), a floating rate Term Loan in the principal amount of $21,000,000 (the “Floating Rate Term Loan”; together with the Fixed Rate Term Loan, collectively, the “Term Loans”), and a revolving promissory note in the principal amount up to $15,000,000 (the “Revolving Loan” or “Line of Credit”).Contents

10The components of income tax expense (benefit) are as follows:

Table of Contents

	May 31,			May 31,
	2026			2025
Current:
Federal	$	19,600		$	18,300
State and local		16,500			16,500
		36,100			34,800
Deferred:
Federal		76,900			(307,600	)
State and local		(96,500	)		(101,300	)
		(19,600	)		(408,900	)
Total income tax expense (benefit)	$	16,500		$	(374,100	)

~~On April 16, 2025, the Company executed the Eighth Amendment to the Credit Agreement with the Lender.~~ The ~~amendment,~~following ~~effective~~reconciles ~~April 4,~~our ~~2025,~~expected ~~increased~~income ~~the~~tax ~~Revolving Loan interest~~ rate ~~on the effective date~~ to ~~SOFR + 6.00%, extended~~ the ~~maturity date of the Revolving Loan to July 11, 2025, and includes a required step down on the Revolving Loan to $4,500,000 million on June 1, 2025~~U.S. ~~The~~federal ~~amendment~~statutory ~~also~~income ~~changed the~~tax ~~maturity dates of the two Term Loans to September 19, 2025.~~rate:

On August 12, 2025, Educational Development Corporation executed the Ninth Amendment to the Existing Credit Agreement with the Lender. The Amendment, effective July 11, 2025, extends the maturity date of the Revolving Loan to September 19, 2025, increased the Revolving Loan interest rate on the effective date to SOFR + 8.00% and added a 2% deferred interest rate to the Term loans and Revolving Loan.

	May 31,			May 31,
	2026			2025
U.S. federal statutory income tax rate		21.0	%		21.0	%
U.S. state and local income taxes–net of federal benefit		6.2	%		6.1	%
Valuation allowance		(27.0	)%		-	%
Other		(1.4	)%		(1.3	)%
Total income tax (expense) benefit		(1.2	)%		25.8	%

~~The~~Note ~~Company’s~~9 ~~credit agreement~~– ~~with~~SHIPPING ~~its~~AND ~~lender~~HANDLING ~~expired on September 19, 2025, with the balances of our Term Loans and the Revolving Loan unpaid.~~COSTS

~~On September~~We ~~30,~~classify ~~2025,~~shipping ~~the~~and ~~Company~~handling costs ~~received~~as aoperating ~~Reservation of Rights notice from its lender outlining that events of default have occurred~~ and ~~are~~selling ~~continuing~~expenses ~~due to our failure to pay~~ in ~~full in cash~~ the ~~unpaid~~condensed ~~balance~~statements of ~~the Term Loans and Revolving Loan before the maturity date~~operations. ~~The~~Shipping ~~Lender did not waive the specified defaults~~ and ~~reserved~~handling ~~all~~costs ofinclude ~~its~~postage, ~~rights~~freight, handling ~~powers~~costs, ~~privileges~~as ~~and~~well ~~remedies~~as ~~under~~shipping ~~the~~materials ~~credit agreement, the UCC,~~ and ~~applicable law~~supplies. ~~Under~~These ~~the~~costs ~~credit~~were ~~agreement~~$571,000 ~~the~~and ~~lender~~$805,200 ~~had~~for the ~~right,~~three ~~among~~months ~~other~~ended ~~remedies~~May ~~listed~~31, ~~to demand~~ ~~payment~~2026 ~~or repossess~~ and ~~liquidate the Company’s assets used as collateral for the loans. Under the terms of the credit agreement~~2025, an ~~additional default interest rate of 2% is added to the existing interest rates defined in the credit agreement~~respectively.

OnNote ~~October~~10 ~~27,~~– ~~2025,~~BUSINESS the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under its Credit Agreement dated August 9, 2022, between the Company and its Lender. The Company’s payment, including interest, was approximately $30.0 million, which satisfied all of the Company’s debt obligations with the Lender. The Company did not incur any early termination penalties because of the repayment of indebtedness or termination of the Amended and Restated Credit Agreement. Further, the Lender waived the additional 2% default interest charge associated with the Ninth Amendment. In connection with the repayment of outstanding indebtedness, the Company was released from all security interests, mortgages, liens and encumbrances under the Amended and Restated Credit Agreement with the Lender.SEGMENTS

~~Note~~We have two reportable segments: PaperPie and Publishing. 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. Our PaperPie segment markets its products through a network of independent Brand Partners using a combination of internet sales, direct sales, home shows, and book fairs. Our Publishing segment markets its products to retail accounts, which include book, school supply, toy and gift stores, museums, trade and specialty wholesalers, through commissioned sales representatives, and our internal tele-sales group. See Note 7 –for ~~OTHER~~the ~~INCOME~~impact of our updated Usborne distribution agreement on the Publishing segment.

AThe accounting policies for ~~summary~~the segments are the same as those for the rest of ~~other~~the Company. We evaluate segment performance based on earnings before income taxes of the segments, which is ~~shown~~defined as segment net revenues reduced by cost of sales and direct expenses. Direct expenses are composed of payroll, commissions, general and administrative, and operating and selling expenses. Corporate expenses, depreciation, interest expense, other income, and income taxes are not allocated to the segments but are listed in the “Other” row below:. Corporate expenses include the executive department, accounting department, information services department, general office management, warehouse operations and building facilities management. Our assets and liabilities are not allocated on a segment basis. Separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. For the Company, the Chief Executive Officer is the CODM.

	Three Months Ended November 30,					Nine Months Ended November 30,
	2025			2024		2025			2024
Other income (expense)
Gain from sale of assets	$	12,243,700		$	-	$	12,186,700		$	-
Rental income		559,700			655,100		1,912,700			1,605,500
Impairment on assets held for sale		(287,100	)		-		(287,100	)		-
Other, net		-			7,000					140,400
Total other income	$	12,516,300		$	662,100	$	13,812,300		$	1,745,900

Information by reporting segment for the three-month periods ended May 31, 2026 and 2025, are as follows:

11NET REVENUES

Table of Contents

	Three Months Ended May 31,
	2026		2025
PaperPie	$	4,174,900	$	6,060,300
Publishing		580,900		1,046,100
Total	$	4,755,800	$	7,106,400

~~Note 8 – BUSINESS CONCENTRATION~~12

~~Significant portions~~Table of our inventory purchases are concentrated with an England-based publishing company, Usborne Publishing Limited (“Usborne”). During fiscal 2023, we entered into a new distribution agreement (“Agreement”) with Usborne. The Agreement includes annual minimum purchase volumes along with specific payment terms and letter of credit requirements, which if not met offer Usborne the right to terminate the Agreement on less than 30 days’ written notice. Should termination of the Agreement occur, the Company will be allowed to sell its remaining Usborne inventory for an agreed upon period, but not less than twelve months following the termination date. As of November 30, 2025, the Company did not meet the minimum purchase requirements and did not supply the letter of credit required under the Agreement, which offers Usborne the right to exercise their option to terminate the Agreement. Usborne has not notified the Company of termination of the Agreement. In addition, Usborne has refused to pay the $1.0 million volume rebate owed to the Company from purchases made during fiscal 2022. The Company is disputing the cancellation of the rebate but has not recognized any rebate due to its uncertainty. Additionally, under the terms in the Agreement, the Company no longer has the rights to distribute Usborne’s products to retail customers through our Publishing division. As a result, the Company discontinued selling Usborne products to retail customers in the first quarter of fiscal 2024.Contents

~~The following~~LOSS ~~table~~BEFORE ~~summarizes~~INCOME ~~Usborne product revenues, net of discounts, by division and inventory purchases by product type:~~TAXES

	Three Months Ended November 30,						Nine Months Ended November 30,
	Three Months Ended May 31,
	2025			2024			2025			2024
	2026			2025
Product revenues, net of discounts of Usborne products by division:
PaperPie	$	378,600		$	461,700
PaperPie division	$	3,342,200		$	4,446,500		$	7,573,500		$	9,889,200
Publishing		91,000			207,800
% of total PaperPie Product revenues, net of discounts		56.7	%		47.9	%		50.1	%		43.3	%
Other		(1,848,700	)		(2,118,800	)
Publishing division		-			-			-			-
Total	$	(1,379,100	)	$	(1,449,300	)
% of total Publishing Product revenues, net of discounts		0.0	%		0.0	%		0.0	%		0.0	%
Total Product revenues, net of discounts of Usborne products	$	3,342,200		$	4,446,500		$	7,573,500		$	9,889,200
Purchases received by product type:
Usborne	$	497,800		$	70,600		$	567,900		$	171,300
% of total purchases received		51.9	%		15.2	%		35.8	%		8.8	%
All other product types		462,200			394,100			1,020,300			1,774,200
% of total purchases received		48.1	%		84.8	%		64.2	%		91.2	%
Total purchases received	$	960,000		$	464,700		$	1,588,200		$	1,945,500

~~Total Usborne~~PUBLISHING ~~inventory~~OPERATING ~~owned by the Company and included in our balance sheets was $20,866,600 and $23,696,800 as of November 30, 2025, and February 28, 2025, respectively.~~RESULTS

~~Note~~The following table summarizes 9the –operating ~~EARNINGS~~results ~~(LOSS)~~of ~~PER~~the ~~SHARE~~Publishing segment for the three months ended May 31, 2026 and 2025:

Basic earnings (loss) per share (“EPS”) is computed by dividing net earnings (loss) 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 and the assumed vesting of granted restricted share awards. In computing Diluted EPS, we have utilized the treasury stock method.

	Three Months Ended May 31,
	2026		2025
Net revenues	$	580,900	$	1,046,100

Cost of goods sold		251,800		500,000
Gross margin		329,100		546,100

Operating expenses:
Operating and selling		58,800		82,300
Sales commissions		11,900		30,500
General and administrative		167,400		225,500
Total operating expenses		238,100		338,300

Operating income	$	91,000	$	207,800

~~The computation~~PAPERPIE ofOPERATING ~~weighted average common and common equivalent shares used in the calculation of basic and diluted EPS is shown below:~~RESULTS

	Three Months Ended November 30,					Nine Months Ended November 30,
	2025		2024			2025		2024
Net earnings (loss) per share:
Net earnings (loss) applicable to common shareholders	$	7,802,100	$	(835,700	)	$	5,432,200	$	(3,918,100	)
Weighted average shares outstanding:
Basic		8,576,197		8,273,402			8,580,866		8,270,797
Diluted		8,576,197		8,273,402			8,580,866		8,270,797
Earnings (loss) per share:
Basic	$	0.91	$	(0.10	)	$	0.63	$	(0.47	)
Diluted	$	0.91	$	(0.10	)	$	0.63	$	(0.47	)

The following table summarizes the operating results of the PaperPie segment for the three months ended May 31, 2026 and 2025:

	Three Months Ended May 31,
	2026		2025
Net revenues	$	4,174,900	$	6,060,300

Cost of goods sold		1,682,700		2,469,300
Gross margin		2,492,200		3,591,000

Operating expenses
Operating and selling		502,900		739,600
Sales commissions		1,336,800		1,981,500
General and administrative		273,900		408,200
Total operating expenses		2,113,600		3,129,300

Operating income	$	378,600	$	461,700

~~Table of Contents~~13

~~As shown~~Table ~~in the table below, the following shares have not been included in the calculation~~ of ~~diluted loss per share as they would be anti-dilutive to the calculation above.~~Contents

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Weighted average shares:
Issued unvested restricted stock and assumed shares issuable under granted unvested restricted stock awards		-		235,214		-		185,665

Information for the Other segment above for the three months ended May 31, 2026 and 2025 is set forth below:

~~Note 10~~OTHER ~~– SHARE~~NON-~~BASED~~SEGMENT ~~COMPENSATION~~LOSS BEFORE INCOME TAXES

We account for share-based compensation whereby share-based payment transactions with employees, such as stock options and restricted stock, are measured at estimated fair value at the date of grant. For awards subject to service conditions, compensation expense is recognized over the vesting period on a straight-line basis. Awards subject to performance conditions are attributed separately for each vesting tranche of the award and are recognized rateably from the service inception date to the vesting date for each tranche. Forfeitures are recognized when they occur. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and share awards are updated and compensation expense is adjusted based on updated information.

	Three Months Ended May 31,
	2026			2025
Operating and selling:
Freight	$	85,900		$	149,700
Computer support		29,400			23,000
Total operating and selling expenses		115,300			172,700

General and administrative:
Payroll		750,200			963,200
Depreciation		256,200			276,700
Building and warehouse rents		390,600			237,700
Outside services		49,300			151,600
Property insurance		57,900			74,800
Professional service fees		56,400			59,700
Dues and subscriptions		73,600			53,500
Other		(5,100	)		244,100
Total general and administrative expenses		1,629,100			2,061,300

Interest expense		600			504,300
Other (income) loss		103,700			(619,500	)
Total other non-segment loss before income taxes	$	1,848,700		$	2,118,800

~~In July~~Note ~~2018,~~11 ~~our~~– ~~shareholders~~FINANCIAL approved the Company’s 2019 Long-Term Incentive Plan (“2019 LTI Plan”). The 2019 LTI Plan established up to 600,000 shares of restricted stock available to be granted to certain members of management based on exceeding specified net revenues and pre-tax performance metrics during fiscal years 2019, 2020 or 2021. The Company exceeded all defined metrics during these fiscal years and 600,000 shares were granted to members of management according to the Plan. The granted shares under the 2019 LTI Plan “cliff vest” after five years from the fiscal year that the defined metrics were exceeded. All remaining shares under the 2019 Long-Term Incentive Plan vested on February 28, 2025.INSTRUMENTS

~~A summary~~The offollowing ~~compensation~~methods ~~expense~~and ~~recognized~~assumptions are used in ~~connection~~estimating ~~with~~the ~~restricted~~fair-value ~~share~~disclosures ~~awards~~for ~~follows~~financial instruments:

		Three Months Ended November 30,				Nine Months Ended November 30,
	-	The carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments.
		2025		2024		2025		2024
	-	The estimated fair value of our assets held for sale was $450,000 as of May 31, 2026 and $563,600 February 28, 2026, respectively.
Share-based compensation expense - net of forfeitures		$	-	$	100,800	$	-	$	302,400

Note 11 12 – ~~SHIPPING~~DEFERRED ~~AND HANDLING COSTS~~REVENUES

WeThe Company’s PaperPie ~~classify~~division ~~shipping~~receives ~~and~~payments ~~handling~~on ~~costs~~orders asin ~~operating~~advance ~~and~~of ~~selling~~shipment. ~~expenses~~Any inpayments ~~the~~received ~~condensed~~prior ~~statements~~to the end of ~~operations.~~the ~~Shipping~~period ~~and~~that ~~handling~~were not shipped ~~costs~~as ~~include~~of ~~postage,~~May ~~freight~~31, ~~handling~~2026 ~~costs~~or February 28, as2026 ~~well~~are recorded as ~~shipping~~deferred ~~materials~~revenues ~~and~~on ~~supplies~~the balance sheets. ~~These~~We ~~costs~~received ~~were~~approximately $~~919~~417,000 and $1320,~~350,400 for~~500 ~~the~~as ~~three~~of ~~months~~May ~~ended November 30~~31, ~~2025~~2026 and ~~2024~~February 28, 2026, respectively., ~~These~~in ~~costs~~payments ~~were~~for ~~$2,296,000~~sales ~~and~~orders $3which were,~~865,500~~ ~~for~~or ~~the~~will ~~nine~~be, ~~months~~shipped ~~ended~~out subsequent ~~November~~to ~~30,~~the ~~2025~~end ~~and~~of ~~2024,~~the ~~respectively~~period.

~~Note 12 – BUSINESS SEGMENTS~~14

WeTable ~~have two reportable segments: PaperPie and Publishing. 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. Our PaperPie segment markets its products through a network of independent Brand Partners using a combination of internet sales, direct sales, home shows, and book fairs. Our Publishing segment markets its products to retail accounts, which include book, school supply, toy and gift stores, museums, trade and specialty wholesalers, through commissioned sales representatives, and our internal tele-sales group. See Note 8 for the impact of our updated Usborne distribution agreement on the Publishing segment.Contents

~~The accounting~~Item ~~policies for the segments are the same as those for the rest of the Company~~2. WeMANAGEMENT’S ~~evaluate~~DISCUSSION ~~segment~~AND ~~performance~~ANALYSIS ~~based~~OF onFINANCIAL ~~earnings before~~CONDITION ~~income~~AND ~~taxes~~RESULTS ofOF the segments, which is defined as segment net revenues reduced by cost of sales and direct expenses. Direct expenses are composed of payroll, commissions, general and administrative, and operating and selling expenses. Corporate expenses, depreciation, interest expense, other income, and income taxes are not allocated to the segments but are listed in the “Other” row below. Corporate expenses include the executive department, accounting department, information services department, general office management, warehouse operations and building facilities management. Our assets and liabilities are not allocated on a segment basis. Separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. For the Company, the Chief Executive Officer is the CODM.OPERATIONS

13Factors Affecting Forward-Looking Statements

~~Table~~See “Cautionary Remarks Regarding Forward-Looking Statements” in the front of ~~Contents~~this Quarterly Report on Form 10-Q.

~~Information by reporting segment for the three and nine month periods ended November 30, 2025 and 2024, are as follows:~~Overview

~~NET~~We ~~REVENUES~~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 2025 and fiscal 2026, 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 our remaining Usborne inventory over a period of twelve months following the termination date.

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
PaperPie	$	6,236,100	$	9,776,700	$	16,027,600	$	24,117,300
Publishing		771,700		1,275,400		2,707,700		3,437,400
Total	$	7,007,800	$	11,052,100	$	18,735,300	$	27,554,700

We sell our products through two separate divisions, PaperPie and Publishing. These two divisions each have their own customer base. The PaperPie division markets our complete line of products through a network of independent Brand Partners using a combination of home shows, internet party events, and book fairs. The Publishing division markets Kane Miller, Learning Wrap-Ups, and SmartLab Toys on a wholesale basis to various retail accounts. All other supporting administrative activities are recognized as other expenses outside of our two divisions. Other expenses consist primarily of compensation for our office, warehouse, and sales support staff as well as the cost of operating and maintaining our corporate offices, warehouses and distribution facility.

~~EARNINGS~~The ~~(LOSS)~~following ~~BEFORE~~table ~~INCOME~~shows our ~~TAXES~~condensed statements of operations data:

	Three Months Ended November 30,						Nine Months Ended November 30,
	Three Months Ended May 31,
	2025			2024			2025		2024
	2026			2025
PaperPie	$	521,800		$	1,017,000		$	968,800	$	1,317,400
Product revenues, net of discounts and allowances	$	4,537,400		$	6,764,800
Publishing		133,000			422,500			546,500		909,300
Transportation revenue		218,400			341,600
Other		9,987,900			(2,551,400	)		5,927,900		(7,551,700	)
Net revenues		4,755,800			7,106,400
Total	$	10,642,700		$	(1,111,900	)	$	7,443,200	$	(5,325,000	)
Cost of goods sold		1,934,500			2,969,300
Gross margin		2,821,300			4,137,100
Operating expenses
Operating and selling		677,000			994,600
Sales commissions		1,348,700			2,012,100
General and administrative		2,070,400			2,694,900
Total operating expenses		4,096,100			5,701,600
Interest expense		600			504,300
Other (income) expense		103,700			(619,500	)
Loss before income taxes		(1,379,100	)		(1,449,300	)
Income tax expense (benefit)		16,500			(374,100	)
Net loss	$	(1,395,600	)	$	(1,075,200	)

~~PAPERPIE~~See the detailed discussion ~~OPERATING~~of ~~RESULTS~~revenues, gross margin and general and administrative expenses by reportable segment below. The following is a discussion of significant changes in the non-segment related general and administrative expenses, other income and expenses and income taxes during the respective periods.

~~The following table summarizes the operating results of the PaperPie segment for the three and nine months ended November 30, 2025 and 2024:~~15

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Net revenues	$	6,236,100	$	9,776,700	$	16,027,600	$	24,117,300
Cost of goods sold		2,361,900		3,623,800		6,400,600		9,150,300
Gross margin		3,874,200		6,152,900		9,627,000		14,967,000
Operating expenses
Operating and selling		963,500		1,334,800		2,257,600		4,007,700
Sales commissions		2,008,700		3,260,300		5,235,500		8,121,200
General and administrative		380,200		540,800		1,165,100		1,520,700
Total operating expenses		3,352,400		5,135,900		8,658,200		13,649,600
Operating income	$	521,800	$	1,017,000	$	968,800	$	1,317,400

Table of Contents

14Non-Segment Operating Results for the Three Months Ended May 31, 2026

~~Table~~Total operating expenses not associated with a reporting segment decreased $0.5 million, or 22.7%, to $1.7 million for the three-month period ended May 31, 2026, when compared to $2.2 million for the same quarterly period a year ago. Operating expenses decreased primarily as a result of ~~Contents~~a $0.2 million decrease in labor expenses and a $0.1 million decrease in freight expense, due primarily to a lower number of outbound shipments, and a $0.1 million decrease in outside services expense as well as a $0.1 million decrease in various other general and administrative expenses.

~~PUBLISHING~~Interest expense decreased ~~OPERATING~~$0.5 ~~RESULTS~~million, or 100.0%, to $0.0 million for the three months ended May 31, 2026, when compared to $0.5 million for the same quarterly period a year ago, due to reduced borrowings of debt, period over period.

~~The~~Income taxes increased ~~following~~$0.4 ~~table~~million, ~~summarizes~~or 100.0%, to $0.0 million expense for the ~~operating~~three ~~results~~months ended May 31, 2026, from a tax benefit of $0.4 million for the same ~~Publishing~~quarterly ~~segment~~period a year ago, resulting primarily from a decrease in gross sales along with tax valuation allowance offsetting our net operating loss benefit due to the uncertainty that our deferred tax asset will be realizable. Our effective tax rate decreased to (1.2)% for the ~~three~~quarter ~~and~~ended ~~nine~~May ~~months~~31, 2026, from 25.8% for the quarter ended ~~November~~May 3031, 2025 due primarily to sales mix fluctuations between states and the tax valuation allowance booked during the quarter. Our tax rates are lower than the federal statutory rate of 21% due ~~2024:~~to the inclusion of state income and franchise taxes offset by the tax valuation allowance.

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Net revenues	$	771,700	$	1,275,400	$	2,707,700	$	3,437,400
Cost of goods sold		336,200		524,400		1,199,800		1,394,400
Gross margin		435,500		751,000		1,507,900		2,043,000
Operating expenses:
Operating and selling		68,100		88,300		220,300		358,300
Sales commissions		21,800		23,300		76,000		72,200
General and administrative		212,600		216,900		665,100		703,200
Total operating expenses		302,500		328,500		961,400		1,133,700
Operating income	$	133,000	$	422,500	$	546,500	$	909,300

PaperPie Operating Results for the Three Months Ended May 31, 2026

~~Information~~The following table summarizes ~~for~~the operating results of the ~~Other~~PaperPie segment ~~above~~ for the three ~~and nine~~ months ended ~~November~~May 3031, ~~2025~~2026 and ~~2024 is set forth below~~2025:

OTHER NON-SEGMENT LOSS (EARNINGS) BEFORE INCOME TAXES

	Three Months Ended May 31,
	2026		2025
Net revenues	$	4,174,900	$	6,060,300

Cost of goods sold		1,682,700		2,469,300
Gross margin		2,492,200		3,591,000

Operating expenses
Operating and selling		502,900		739,600
Sales commissions		1,336,800		1,981,500
General and administrative		273,900		408,200
Total operating expenses		2,113,600		3,129,300

Operating income	$	378,600	$	461,700

Average number of active Brand Partners		5,300		7,700

	Three Months Ended November 30,						Nine Months Ended November 30,
	2025			2024			2025			2024
Operating and selling:	$			$			$			$
Freight		123,400			297,400			347,200			583,500
Computer support		29,700			23,500			93,700			60,400
Total operating and selling expenses		153,100			320,900			440,900			643,900
General and administrative:
Payroll		956,500			1,186,900			2,869,600			3,568,500
Depreciation		271,700			292,700			823,100			1,078,700
Building and warehouse rents		289,700			249,400			743,600			592,000
Outside services		82,400			115,200			334,200			336,700
Property taxes		25,400			92,700			180,700			278,100
Property insurance		75,500			57,000			184,900			177,500
Professional service fees		60,300			59,700			176,700			178,300
Dues and subscriptions		79,000			77,900			187,100			207,300
Other		165,000			185,700			466,300			538,800
Total general and administrative expenses		2,005,500			2,317,200			5,966,200			6,955,900
Interest expense		369,800			575,400			1,477,300			1,697,800
Other income:
Gain from sale of assets		(12,243,700	)		-			(12,186,700	)		-
Other, net		(272,600	)		(662,100	)		-			(1,745,900	)
Total other income		(12,516,300	)		(662,100	)		(13,812,300	)		(1,745,900	)
Total other non-segment loss (earnings) before income taxes	$	(9,987,900	)	$	2,551,400		$	(5,927,900	)	$	7,551,700

PaperPie Operating Results for the Three Months Ended May 31, 2026

15PaperPie net revenues decreased $1.9 million, or 31.1%, to $4.2 million during the three months ended May 31, 2026, when compared to $6.1 million during the same period a year ago. The average number of active brand partners in the first quarter of fiscal 2027 was 5,300, a decrease of 2,400, or 31.2%, from 7,700 average active brand partners selling in the first quarter of fiscal 2026. The Company reports the average number of active Brand Partners as a key indicator for this division. Recruiting and maintaining Brand Partners has been negatively impacted by several factors including inflation and our distribution agreement with Usborne whereby Usborne actively sells their products through discounted retailers in the U.S. market. Inflation was most evident in the increase of food and fuel prices, both impacting the disposable income of our target customer base, which is families with small children. Sales during fiscal 2026 continued to be negatively impacted by continuing inflationary pressures and we expect this to continue into the next fiscal year, as these pressures persist. Historically, when we have experienced these difficult inflationary times, our active brand partner numbers have been positively impacted as more families look for non-traditional income streams to offset rising costs of living.

~~Table of Contents~~16

~~Note 13~~Table –of ~~FINANCIAL INSTRUMENTS~~Contents

~~The~~Recent sales levels have also ~~following~~been ~~methods~~impacted by the lack of new titles being introduced and ~~assumptions~~certain ~~are~~out-of-stock ~~used~~items due to purchasing restrictions placed on us from our lender in ~~estimating~~the first three quarters of fiscal year 2026. Following the ~~fair~~sale of the Hilti Complex in fiscal 2026 and corresponding payoff of the revolver and term loans with our bank which removed our purchasing restrictions, we have begun a conservative plan to place reorders and purchase new titles. The Company is returning to our past practice of introducing new titles, along with additional enhancements to our PaperPie e-~~value~~commerce ~~disclosures~~and ~~for~~“Backoffice” ~~financial~~systems ~~instruments:~~that are expected to create existing Brand Partner excitement and should increase our number of new recruits in this division.

-PaperPie ~~The~~gross ~~carrying~~margin ~~amounts~~decreased $1.1 ~~reported~~million, onor ~~the~~30.6%, ~~balance~~to ~~sheets~~$2.5 ~~for~~million ~~cash~~during ~~and~~the ~~cash~~three ~~equivalents,~~months ~~accounts~~ended ~~receivable~~May ~~and~~31, ~~accounts~~2026, ~~payable~~when ~~approximate~~compared ~~fair~~to ~~value~~$3.6 ~~due~~million toduring the ~~short-term~~same ~~maturity~~period a ofyear ~~these instruments~~ago. -Gross ~~The~~margin ~~estimated~~as ~~fair~~a ~~value~~percentage of ~~our~~net ~~assets~~revenues ~~held~~ for ~~sale~~the ~~was~~three ~~$563,600~~months asended ofMay ~~November 30~~31, ~~2025,~~2026 ~~and~~increased ~~$37,000,000~~to ~~February 28~~59.7%, ~~2025,~~compared ~~respectively~~to 59.3% the -same ~~The~~period ~~estimated~~a ~~fair~~year ~~value~~ago. ofThe ~~our~~increase ~~term~~in ~~notes~~gross ~~payable~~margin isas ~~estimated~~a bypercentage ~~management to approximate $0 and $26,507,100 as~~ of ~~November~~net ~~30,~~revenues ~~2025~~was ~~and~~primarily ~~February~~attributed ~~28,~~to ~~2025,~~product ~~respectively~~mix. ~~Management’s estimates are based on the obligations’ characteristics, including floating interest rate, maturity, and collateral.~~

~~Note~~Total PaperPie operating expenses 14decreased –$1.0 ~~DEFERRED~~million, ~~REVENUES~~or 32.3%, to $2.1 million during the three-month period ended May 31, 2026, when compared to $3.1 million reported in the same quarter a year ago. Operating and selling expenses decreased $0.2 million, or 28.6%, to $0.5 million during the three-month period ended May 31, 2026, when compared to $0.7 million reported in the same quarter a year ago. These decreased expenses were due to a $0.1 million decrease in shipping costs associated with the decrease in volume of orders shipped and a decrease of $0.1 million in accruals for Brand Partner incentive trip expenses. Sales commissions decreased $0.7 million, or 35.0%, to $1.3 million during the three-month period ended May 31, 2026, when compared to $2.0 million reported in the same quarter a year ago, due primarily to the decrease in net revenues. General and administrative expenses decreased $0.1 million, or 25.0%, to $0.3 million during the three months ended May 31, 2026, when compared to $0.4 million during the same period a year ago. This decrease was due to a $0.1 million decrease in depreciation expense associated with the discontinued operation of line equipment currently in assets held for sale.

~~The Company’s~~Operating ~~PaperPie~~income ~~division~~for ~~receives~~the ~~payments~~PaperPie segment ondecreased ~~orders~~$0.1 inmillion, ~~advance~~or of20.0% ~~shipment~~to $0.4 ~~Any~~million ~~payments~~during ~~received~~the ~~prior~~three tomonths ~~the~~ended ~~end~~May of31, ~~the~~2026, ~~period that~~when ~~were~~compared ~~not~~to ~~shipped~~$0.5 asmillion ofreported in ~~November~~the ~~30,~~same ~~2025~~quarter ora ~~February~~year ~~28,~~ago. ~~2025~~Operating ~~are~~income ~~recorded~~for the PaperPie division as ~~deferred~~a percentage of net revenues onfor the ~~balance~~year ~~sheets.~~ended WeMay ~~received~~31, ~~approximately~~2026 ~~$696,000~~was ~~and $491~~9.1%,~~800~~ ascompared ofto ~~November~~7.6% ~~30,~~for ~~2025~~the ~~and~~year ~~February~~ended 28May 31, 2025, ~~respectively,~~an inincrease ~~payments~~of ~~for~~1.5%. ~~sales~~Operating ~~orders~~income ~~which~~as ~~were,~~a percentage of net revenues orchanged ~~will~~from ~~be,~~the ~~shipped~~prior ~~out~~year ~~subsequent~~primarily due to both the ~~end~~decrease ofin ~~the~~operating ~~period~~and selling expenses and general and administrative expenses compared to last fiscal year.

16Publishing Operating Results for the Three Months Ended May 31, 2026

~~Table~~The following table summarizes the operating results of ~~Contents~~the Publishing segment for the three months ended May 31, 2026 and 2025:

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Three Months Ended May 31,
	2026		2025
Net revenues		580,900		1,046,100

Cost of goods sold		251,800		500,000
Gross margin		329,100		546,100

Total operating expenses		238,100		338,300

Operating income	$	91,000	$	207,800

~~Factors Affecting Forward-Looking Statements~~17

~~See “Cautionary~~Table ~~Remarks Regarding Forward-Looking Statements” in the front~~ of ~~this Quarterly Report on Form 10-Q.~~Contents

~~Overview~~Publishing Operating Results for the Three Months Ended May 31, 2026

~~We are~~Our 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~~division’s ~~books. Significant portions of our product offering~~ ~~and~~net ~~inventory~~revenues ~~are~~decreased ~~concentrated with Usborne~~$0.4 ~~Our distribution agreement with Usborne includes annual minimum purchase volumes along with specific payment terms~~million, ~~which, if not met~~ or ~~if payments are not received in a timely manner~~40.0%, ~~offer~~to ~~Usborne~~$0.6 ~~the~~million ~~right~~during ~~to terminate~~ the ~~agreement.~~ ~~During~~three-month ~~fiscal~~period ~~2024~~ended ~~and~~May ~~fiscal~~31, ~~2025~~2026, ~~the~~from ~~Company~~$1.0 ~~did~~million ~~not~~reported in ~~meet~~ the ~~minimum~~same ~~purchase~~period ~~volumes~~a ~~and~~year ~~certain payments were not received timely~~ago. NoThe ~~notification~~change ofin ~~non-compliance~~net orrevenues ~~termination~~was ~~has~~primarily ~~been~~from ~~received~~an ~~from~~overall ~~Usborne.~~sales ~~Should~~volume ~~termination~~decrease ofthat ~~the~~was ~~agreement~~driven ~~occur,~~by the decrease ~~Company~~in ~~will~~new betitles ~~allowed,~~available atto apresent ~~minimum,~~ to ~~sell~~our ~~through~~retail ~~our~~customers ~~remaining~~due ~~Usborne~~to ~~inventory~~the ~~over~~purchasing arestrictions ~~period~~in offiscal ~~twelve~~2026 ~~months~~imposed ~~following~~by ~~the~~our ~~termination date~~lender.

~~We sell~~Gross ~~our~~margin ~~products~~decreased ~~through~~$0.2 million, ~~two~~or ~~separate divisions~~40.0%, ~~PaperPie~~to ~~and Publishing~~$0.3 ~~These~~million ~~two~~during ~~divisions~~the ~~each~~three-month ~~have~~period ~~their~~ended ~~own~~May ~~customer~~31, ~~base~~2026, from $0.5 ~~The PaperPie~~million ~~division~~reported ~~markets~~in ~~our~~the ~~complete~~same ~~line~~quarter ofa year ~~products~~ago, ~~through~~primarily adue ~~network~~to ofthe ~~independent~~decrease ~~Brand~~in ~~Partners~~net ~~using~~revenues. aGross ~~combination~~margin ofas ~~home~~a ~~shows, internet~~percentage ~~party~~of ~~events,~~net ~~and~~revenues ~~book~~increased ~~fairs~~to 56.7% ~~The~~during ~~Publishing~~the ~~division~~three-month period ~~markets~~ended ~~Kane~~May ~~Miller~~31, ~~Learning Wrap-Ups~~2026, ~~and~~from ~~SmartLab~~52.2% ~~Toys~~reported onin athe ~~wholesale basis~~same toquarter ~~various~~a ~~retail~~year ~~accounts~~ago. ~~All~~Gross ~~other~~margin ~~supporting administrative activities are recognized~~ as ~~other~~a ~~expenses~~percentage ~~outside~~ of ~~our~~net ~~two divisions.~~revenues ~~Other~~changed ~~expenses consist~~ primarily from ofadditional ~~compensation~~discounts ~~for~~offered ~~our~~to ~~office,~~retail ~~warehouse,~~customers ~~and~~in ~~sales support staff as well as~~ the ~~cost~~first quarter of ~~operating~~ ~~and~~last ~~maintaining~~year ~~our~~to ~~corporate~~spur ~~offices, warehouses and distribution facility~~sales.

~~The~~Total operating expenses of ~~following~~the ~~table~~Publishing ~~shows~~segment ~~our~~decreased ~~condensed~~$0.1 ~~statements~~million, or 33.4%, to $0.2 million, from $0.3 million, during the three-month periods ended May 31, 2026 and 2025, respectively. This change was primarily due to a $0.1 million decrease in different general and administrative expenses associated with the decrease in volume of ~~operations~~orders ~~data:~~shipped.

	Three Months Ended November 30,						Nine Months Ended November 30,
	2025			2024			2025			2024
Product revenues, net of discounts and allowances	$	6,668,300		$	10,556,100		$	17,829,400		$	26,266,600
Transportation revenue		339,500			496,000			905,900			1,288,100
Net revenues		7,007,800			11,052,100			18,735,300			27,554,700
Cost of goods sold		2,698,100			4,148,300			7,600,400			10,544,700
Gross margin		4,309,700			6,903,800			11,134,900			17,010,000
Operating expenses
Operating and selling		1,184,700			1,744,100			2,918,800			5,010,000
Sales commissions		2,030,500			3,283,600			5,311,500			8,193,400
General and administrative		2,598,300			3,074,700			7,796,400			9,179,700
Total operating expenses		5,813,500			8,102,400			16,026,700			22,383,100
Interest expense		369,800			575,400			1,477,300			1,697,800
Other income
Gain from sale of assets		(12,243,700	)		-			(12,186,700	)		-
Other, net		(272,600	)		(662,100	)		-			(1,745,900	)
Total other income		(12,516,300	)		(662,100	)		(13,812,300	)		(1,745,900	)
Earnings (loss) before income taxes		10,642,700			(1,111,900	)		7,443,200			(5,325,000	)
Income tax expense (benefit)		2,840,600			(276,200	)		2,011,000			(1,406,900	)
Net earnings (loss)	$	7,802,100		$	(835,700	)	$	5,432,200		$	(3,918,100	)

Operating income of the Publishing division decreased $0.1 million, or 50.0%, to $0.1 from $0.2 million for the three-month periods ending May 31, 2026 and 2025, respectively. Operating income for the Publishing division as a percentage of net revenues for the year ended May 31, 2026 was 15.7%, compared to 20.0% for the year ended May 31, 2025, a decrease of 4.3%. Operating income as a percentage of net revenues changed from the prior year primarily due to the decrease in operating and selling expenses compared to last fiscal year.

~~See the~~Liquidity ~~detailed discussion of revenues, gross margin~~ and ~~general~~Capital and administrative expenses by reportable segment below. The following is a discussion of significant changes in the non-segment related general and administrative expenses, other income and expenses and income taxes during the respective periods.Resources

17Prior to the last two fiscal years, which have been challenged with higher product discounting to spur sales and increased interest rates on borrowings, EDC has a history of profitability and positive cash flow. We typically fund our operations from the cash we generate. During periods of operating losses, EDC will reduce purchases and sell through excess inventory to generate cash flow. The Company expects to reduce current excess inventory levels and use the cash proceeds to offset any future operating losses until it returns to profitability. In addition, the Company sold its owned real estate and paid off the revolving line of credit and term debts with our bank. Available cash has historically been used to pay down the outstanding bank loan balances, for capital expenditures, to pay dividends, and to acquire treasury stock.

~~Table~~During the first three months of ~~Contents~~fiscal year 2027, we experienced positive cash inflows from operations of $564,300. These cash inflows resulted from:

~~Non-Segment Operating~~● ~~Results~~net ~~for~~loss ~~the~~of ~~Three Months Ended November 30~~$1, ~~2025~~395,600

~~Total operating~~Adjusted ~~expenses not associated with a reporting segment decreased $0.4 million, or 15.4%, to $2.2 million~~ for the three-month period ended November 30, 2025, when compared to $2.6 million for the same quarterly period a year ago. Operating expenses decreased primarily because of a $0.2 million decrease in labor expense within our warehouse operations due to lower number of orders, as well as a $0.2 million decrease in freight handling expenses due to less orders being shipped compared to prior year.:

~~Interest expense~~● ~~decreased~~depreciation ~~$0.2~~and ~~million,~~amortization orexpense ~~33.3%,~~of to $~~0.4~~273,100 ~~million~~● ~~for~~impairment ~~the~~on ~~three~~assets ~~months~~held ~~ended~~for ~~November~~sale ~~30,~~of ~~2025~~$113,600 ~~when~~● ~~compared~~provision ~~to $0.6 million~~ for ~~the~~inventory ~~same~~allowance ~~quarterly~~of ~~period a year ago~~$36,000 ~~due~~● toprovision ~~the~~for ~~Company~~credit ~~selling~~losses ~~the Hilti Complex at the end~~ of ~~October 2025 and paying in full all outstanding indebtedness and terminating all commitments and obligations under its Credit Agreement dated August 9~~$6, ~~2022 between the Company and its Lender.~~000

~~Other income~~Offset increased $11.8 million to $12.5 million for the three months ended November 30, 2025, when compared to $0.7 million for the same quarterly period a year ago resulting from the gain of $12.2 million from the sale of the Hilti Complex, offset by ~~a $0.1 million decrease in rental income from the sale of the Hilti Complex and a $0.3 million loss due to the impairment of the line equipment in assets held for sale.~~:

~~Income taxes~~● ~~increased~~net ~~$3.1~~gain ~~million~~on to an income tax expense of $2.8 million for the three months ended November 30, 2025, from a tax benefit of $0.3 million for the same quarterly period a year ago, resulting primarily from an increase in other income as result of the sale of the Hilti Complex. Our effective tax rate increased to 26.7% for the quarter ended November 30, 2025, from 24.8% for the quarter ended November 30, 2024, due primarily to sales mix fluctuations between states. Our tax rates are higher than the federal statutory rate of ~~21%~~ ~~due~~assets ~~to the inclusion~~ of ~~state income and franchise taxes.~~$800

~~Non-Segment Operating Results for the Nine Months Ended November 30, 2025~~18

~~Total~~Table operating expenses not associated with a reporting segment decreased $1.2 million, or 15.8%, to $6.4 million for the nine month period ended November 30, 2025, when compared to $7.6 million for the same period a year ago. Labor expenses decreased $0.7 million from staff reductions across all departments, a decrease in freight handling of $0.2 million due to less overall sales orders and shipments compared to the prior year, and a $0.3 million decrease in depreciation expense related to the reclassification of the disassembled equipment to assets held for sale and resulting in the discontinuation of depreciation.Contents

~~Interest expense~~Positively ~~decreased~~impacted $0.2 million, or 11.8%, to $1.5 million for the nine months ended November 30, 2025, when compared to $1.7 million for the same quarterly period a year ago, due to the sale of the Hilti Complex on October 27, 2025 and resulting debt payoff.by:

~~Other~~● ~~income~~decrease ~~increased $12.1~~in ~~million to $13.8 million for the nine months ended November 30~~inventories, ~~2025,~~net ~~when~~of ~~compared to~~ $1~~.7 million for the same quarterly period a year ago~~, ~~primarily from the sale of the Hilti Complex~~418,800 ~~which~~● ~~resulted~~increase in ~~an increase of other~~ income ~~due~~taxes topayable ~~the gain~~ of $~~12.2~~6,800 ~~million and~~● andecrease ~~increase~~ in ~~rental~~accounts ~~income~~receivable of $~~0.3 million~~284,800 ~~offset~~● byincrease ~~$0.3~~in ~~million~~deferred ~~from~~revenues ~~the impairment~~ of ~~the line equipment in assets held for sale and a~~ $~~0.1 million decrease in other income related to a Chick-fil-A promotion held last year.~~96,500

~~Income taxes~~Negatively ~~increased~~impacted $3.4 million to a tax expense of $2.0 million for the nine months ended November 30, 2025, from a tax benefit of $1.4 million for the same period a year ago, primarily related to the increase in other income associated with the sale of the Hilti Complex. Our effective tax rate increased to 27.0% for the nine months ended November 30, 2025, from 26.4% for the nine months ended November 30, 2024, due primarily to sales mix fluctuations between states. Our tax rates are higher than the federal statutory rate of 21% due to the inclusion of state income and franchise taxes.by:

18● decrease in accounts payable of $68,200 ● decrease in accrued salaries and commissions, and other liabilities of $97,800 ● increase in prepaid expenses and other assets of $108,900

~~Table~~Cash used in investing activities was $95,200 for capital expenditures, consisting of ~~Contents~~$96,000 in upgrades to our proprietary systems that our PaperPie Brand Partners use to monitor their business and place customer orders offset by $800 from the sale of machinery and equipment.

~~PaperPie~~The Company continues to expect ~~Operating~~the ~~Results~~cash ~~for~~generated from operations, specifically from the ~~Three~~reduction ~~and~~of ~~Nine~~excess ~~Months~~inventory, ~~Ended~~will ~~November~~provide 30us with the liquidity we need to support ongoing operations. Additionally, ~~2025~~we have obtained a $2 million short-term loan to fund any short-term cash flow needs. Cash generated from operations will be used to acquire new inventory and pay down any short-term borrowings we expect to obtain.

~~The following~~Critical ~~table~~Accounting ~~summarizes the operating results of the PaperPie segment:~~Policies

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Net revenues	$	6,236,100	$	9,776,700	$	16,027,600	$	24,117,300
Cost of goods sold		2,361,900		3,623,800		6,400,600		9,150,300
Gross margin		3,874,200		6,152,900		9,627,000		14,967,000
Operating expenses
Operating and selling		963,500		1,334,800		2,257,600		4,007,700
Sales commissions		2,008,700		3,260,300		5,235,500		8,121,200
General and administrative		380,200		540,800		1,165,100		1,520,700
Total operating expenses		3,352,400		5,135,900		8,658,200		13,649,600
Operating income	$	521,800	$	1,017,000	$	968,800	$	1,317,400
Average number of active brand partners		5,100		12,400		6,200		13,300

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States(“GAAP”). 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, provision for credit losses, 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.

~~PaperPie~~Actual results may materially ~~Operating~~differ ~~Results~~from these estimates under different assumptions or conditions. Historically, however, actual results have not differed materially from those determined using required estimates. Our significant accounting policies are described in the notes accompanying the financial statements included elsewhere in this report and in our audited financial statements as of and for the ~~Three~~year ~~Months~~ended ~~Ended~~February ~~November~~28, 302026 included in our Form 10-K. However, ~~2025~~we consider the following accounting policies to be more significantly dependent on the use of estimates and assumptions.

PaperPie net revenues decreased $3.6 million, or 36.7%, to $6.2 million during the three months ended November 30, 2025, when compared to $9.8 million during the same period a year ago. The average number of active brand partners in the third quarter of fiscal 2026 was 5,100, a decrease of 7,300, or 58.9%, from 12,400 average active brand partners selling in the third quarter of fiscal 2025. The Company reports the average number of active Brand Partners as a key indicator for this division. The Company saw new Brand Partner recruiting negatively impacted due to several factors including economic challenges that include inflation, resulting in high fuel costs and food price increases that continue to impact the disposable income of our customers. Additionally, the Company executed a distribution agreement with Usborne Publishing Limited in fiscal 2023. This agreement required the rebranding of the direct sales division from Usborne Books & More (“UBAM”) to PaperPie along with providing a letter of credit and minimal level of annual purchases. This rebranding was completed in the fourth quarter of fiscal 2023. The letter of credit was not provided by the Company and the Company did not meet the minimum purchase requirements in fiscal 2024 or 2025, creating uncertainty with the relationship on a go-forward basis. The reduced sales and uncertainty resulting from the revised Usborne distribution agreement increased Brand Partner turnover and has negatively impacted new Brand Partner recruits over the past two years. 19

~~Recent~~Table ~~sales levels have also been impacted by the lack~~ of new titles being introduced and certain out of stock items, due to purchasing restrictions placed on us from our lender. The Company has started to place reorders and purchase new titles following the sale of the Hilti Complex and the payoff of the loans with our bank at the end of the third quarter fiscal 2026. The Company plans to return to our past practice of introducing new titles, along with additional enhancements to our PaperPie e-commerce and “Backoffice” systems that are expected to create existing Brand Partner excitement which should increase our number of new recruits in this division.Contents

PaperPie gross margin decreased $2.3 million, or 37.1%, to $3.9 million during the three months ended November 30, 2025, when compared to $6.2 million during the same period a year ago. Gross margin as a percentage of net revenues for the three months ended November 30, 2025 decreased to 62.1%, compared to 62.9% for the same period a year ago. The decrease in gross margin as a percentage of net revenues was primarily attributed to increased discounts offered in the current quarter to spur sales along with additional shipping promotions.Leases

~~Total~~Our ~~PaperPie~~lessee ~~operating~~arrangements ~~expenses~~include ~~decreased~~six ~~$1.7~~rental ~~million,~~agreements orwhere ~~33.3%,~~we tohave ~~$3.4 million during~~ the ~~three-month~~exclusive ~~period~~use ~~ended~~of ~~November~~dedicated ~~30,~~office ~~2025,~~space ~~when compared to $5.1 million reported~~ in ~~the~~San ~~same quarter a year ago. Operating and selling expenses decreased $0.3 million~~Diego, ~~or 23.1% to $1.0 million during the three-month period ended November 30~~California, ~~2025~~Ogden, when compared to $1.3 million reported in the same quarter a year ago. These decreased expenses were due to a $0.2 million decrease in shipping costs associated with the decrease in sales and volume of orders shippedUtah, ~~and~~ a ~~decrease~~warehouse ~~of $0.1~~space ~~million~~ in ~~accruals for Brand Partner incentive trip expenses as the division expects less trip earners this year. Sales commissions decreased $1.3 million~~Joplin, orMissouri ~~39.4%,~~and ~~to $2.0 million during the~~ three~~-month~~ ~~period~~leases ~~ended~~for ~~November~~office ~~30,~~and ~~2025,~~warehouse ~~when~~space ~~compared~~locally ~~to $3.3 million reported~~ in ~~the same quarter a year ago~~Tulsa, ~~due primarily to the decrease in net revenues~~Oklahoma, ~~which~~all ~~resulted in a decrease~~ of ~~weekly~~which ~~commissions~~qualify ~~of $0.7 million, a $0.5 million decrease in commission overrides,~~ as ~~well~~operating ~~as a $0.1 million decrease in commissions related to sales bonus. General~~leases ~~and~~under ~~administrative~~ASC ~~expenses decreased $0~~842.1 million, or 20.0%, to $0.4 million during the three months ended November 30, 2025, when compared to $0.5 million during the same period a year ago due to a decrease in credit card transaction fees associated with decreased sales volumes.

~~Operating~~We recognize an operating ~~income~~lease liability on the balance sheets for each lease based on the ~~PaperPie~~present ~~segment~~value ~~decreased~~of ~~$0.5~~remaining ~~million~~minimum orfixed ~~50%,~~rental topayments ~~$0.5~~(which ~~million~~includes payments ~~during~~under ~~the~~any ~~three~~renewal ~~months~~option ~~ended~~that ~~November~~we ~~30,~~are ~~2025,~~reasonably ~~when compared~~certain to ~~the~~exercise), ~~loss~~using ofa ~~$1.0~~discount ~~million~~rate ~~reported~~that inapproximates the ~~same~~rate ~~quarter~~of ainterest we ~~year~~would ~~ago.~~have ~~Operating~~to ~~income~~pay ~~for~~to ~~the~~borrow ~~PaperPie~~on ~~division~~a ascollateralized basis over a ~~percentage of~~similar ~~net~~term. ~~revenues~~Expected ~~for~~payments in the ~~year~~next ~~ended~~twelve ~~November~~months ~~30,~~are ~~2025~~classified as ~~decreased~~current tooperating 8lease liabilities.~~4%,~~ ~~when~~Payments ~~compared~~in toexcess ~~10.4%~~of ~~for~~twelve ~~the~~months ~~year~~are ~~ended~~classified ~~November~~as ~~30,~~long-term ~~2024, a~~operating ~~decrease~~lease ~~of 2~~liabilities.~~0%.~~ ~~Operating~~We also ~~income~~recognize asan aoperating ~~percentage~~lease right-of-use ~~net~~asset ~~revenues~~on ~~changed~~the ~~from~~balance ~~the~~sheets, ~~prior~~valued ~~year~~at ~~primarily~~the ~~due~~lease toliability ~~the~~and ~~decrease~~adjusted infor ~~net~~prepaid or ~~revenues~~accrued ~~from~~rent ~~the~~balances ~~reduced~~existing ~~number~~at the time of ~~active~~initial ~~brand~~recognition. ~~partners~~The inoperating ~~addition~~lease toliability ~~higher~~and ~~discounts~~right-of-use ~~offered~~assets toare ~~spur~~reduced ~~sales,~~over the ~~which~~term ~~are~~of ~~both~~the ~~offset by~~lease aas ~~decrease~~payments inare ~~operating~~made ~~expenses~~and asthe ~~shown~~assets ~~above~~are used.

19The Company assesses its leases to determine whether it is reasonably certain that these renewal options will be exercised. In general, most of the office space outside of Tulsa, Oklahoma is associated with remote employees. Their continued employment determines the need for this space. Much of the warehouse space outside of the Hilti Complex is used to store non-current inventory. As the Company sells down excess inventory, less outside space will be needed, and any renewals will be for less space. The Company also considered the renewal options for the operating lease at the Hilti Complex and is not reasonably certain to exercise the renewal options. Accordingly, the renewal options are not included in the calculation of its right-of-use assets and lease liabilities, as the Company does not believe that it is reasonably certain that these renewal options will be exercised.

~~Table~~ Revenue ~~of Contents~~Recognition

Sales associated with product orders are recognized and recorded when products are shipped. Products are shipped FOB-Shipping Point. PaperPie’s sales are generally ~~Operating~~paid ~~Results~~at the time the product is ordered. Sales which have been paid for but not shipped are classified as deferred revenue on the ~~Nine~~balance sheet. ~~Months~~Sales ~~Ended~~associated ~~November~~with ~~30,~~consignment ~~2025~~inventory are recognized when reported and payment associated with the sale has been remitted. Transportation revenue represents the amount billed to the customer for shipping the product and is recorded when the product is shipped.

~~PaperPie~~Estimated ~~net~~allowances ~~revenues~~for ~~decreased~~sales ~~$8.1~~returns ~~million,~~are orrecorded ~~33.6%,~~as tosales ~~$16.0~~are ~~million during the nine-month period ended November 30, 2025, compared to $24~~recognized.1 ~~million~~Management ~~from~~uses ~~the same period~~ a ~~year~~moving ~~ago. The~~ average ~~number~~calculation ofto ~~active~~estimate ~~brand partners in~~ the ~~nine-month~~allowance ~~period~~for ~~ended~~sales ~~November~~returns. We ~~30,~~are ~~2025,~~not ~~was~~responsible ~~6,200,~~for a ~~decrease of~~product ~~7,100,~~damaged ~~or 53.4%, from 13,300 selling~~ in ~~same period a year ago~~transit. ~~Recruiting~~Damaged ~~and~~returns ~~maintaining~~are ~~brand~~primarily ~~partners~~received ~~has~~from ~~been negatively impacted by several factors including continued inflation, our distribution agreement with Usborne, and~~ the ~~rebranding~~retail ofcustomers ~~the division in the fourth quarter~~ of ~~fiscal~~our ~~year 2023~~Publishing division. ~~Inflation~~This ~~was~~damage ~~most~~occurs ~~evident~~ in the ~~increase~~stores, ofnot ~~food~~in ~~and~~shipping ~~fuel~~to ~~prices, both impacting~~ the ~~disposable income~~stores, ofand ~~our~~we ~~target~~typically ~~customer~~do ~~base,~~not ~~which~~offer iscredit ~~families~~for ~~with~~damaged ~~small children~~returns. ~~Sales during the first nine months of fiscal 2026 continued~~It tois bean ~~negatively~~industry ~~impacted~~practice ~~by continuing inflationary pressures and we expect this~~ to ~~continue~~accept ~~through~~non-damaged ~~the~~returns ~~rest~~from ofretail ~~fiscal year 2026, as these pressures persist~~customers. ~~Historically,~~Management ~~when~~has weestimated ~~have~~and ~~experienced~~included ~~these~~a ~~difficult~~reserve ~~inflationary~~for ~~times, our active brand partner numbers~~sales ~~have~~returns ~~been~~of ~~positively~~$0.2 ~~impacted~~million ~~as more families look~~ for ~~non-traditional~~May ~~income~~31, ~~streams~~2026 toand ~~offset~~February ~~rising~~28, ~~costs~~2026, ~~of living~~respectively.

Recent sales levels have also been impacted by the lack of new titles being introduced and certain out of stock items due to purchasing restrictions placed on us from our lender. We have begun a conservative plan to place reorders and purchase new titles since the sale of the Hilti Complex and the payoff of the loans with our bank. The Company is now returning to our past practice of introducing new titles, along with additional enhancements to our PaperPie e-commerce and “Backoffice” systems that are expected to create existing Brand Partner excitement and should increase our number of new recruits in this division.Inventory

~~Gross margin~~Our ~~decreased~~inventory ~~$5.4~~contains ~~million~~approximately 2,000 ~~or 36.0%~~titles, toeach ~~$9.6~~with ~~million~~different ~~during~~rates ~~the~~of ~~nine-month~~sale ~~period~~depending ~~ended~~upon ~~November~~the ~~30,~~nature ~~2025,~~and ~~when~~popularity ~~compared~~of tothe ~~$15~~title.~~0 million~~ ~~during~~Almost ~~the~~all ~~same~~of ~~period~~our aproduct ~~year~~line is ~~ago,~~saleable ~~due~~as ~~primarily~~the toproducts aare ~~decrease~~not topical in ~~net~~nature ~~revenues.~~and ~~Gross~~remain ~~margin~~current asin acontent ~~percentage~~today ofas ~~net~~well ~~revenues decreased~~as toin 60the future.1% ~~for~~Most ~~the~~of ~~nine-month~~our ~~period~~products are ~~ended~~printed ~~November~~in 30China, ~~2025~~Europe, ~~when~~Singapore, ~~compared~~India, toMalaysia, ~~62.1%~~and ~~for~~Dubai ~~the~~typically ~~same~~resulting ~~period a year ago. The decrease~~ in ~~gross margin as~~ a ~~percentage~~four- ~~of net revenues was primarily attributed~~ to ~~increased~~eight-month ~~recruiting~~lead-time ~~promotions offered~~ to ~~increase~~have ~~brand~~a ~~partner~~title ~~levels~~printed and ~~additional~~delivered ~~discounts offered~~ to ~~customers between the periods to spur sales, as well as increased cost of goods from the tariffs implemented by the current administration on our SmartLab Toys product line~~us.

Total operating expenses decreased $4.9 million, or 36.0%, to $8.7 million during the nine-month period ended November 30, 2025, from $13.6 million for the same period a year ago. Operating and selling expenses decreased $1.7 million, or 42.5%, to $2.3 million during the nine-month period ended November 30, 2025, when compared to $4.0 million reported in the same period a year ago. This decrease relates primarily to a decrease in shipping costs associated with the decrease in volume of orders shipped, totalling approximately $1.2 million, as well as a $0.5 million decrease in brand partner incentive trip expenses as fewer brand partners are expected to earn the trip this year. Sales commissions decreased $2.9 million, or 35.8%, to $5.2 million during the nine-month period ended November 30, 2025, when compared to $8.1 million reported in the same period a year ago primarily due to the decrease in net revenues, which resulted in a decrease of weekly commissions of $1.6, a $1.2 million decrease in monthly commission overrides, as well as a decrease in sales bonus’ of $0.1 million. General and administrative expenses decreased $0.3 million, or 20.0%, to $1.2 million, from $1.5 million recognized during the same period last year, due primarily to $0.2 million of decreased credit card transaction fees associated with decreased sales volumes and a $0.1 million decrease in other various general and administrative expenses.

~~Operating income~~Table of the PaperPie segment decreased $0.3 million, or 23.1%, to $1.0 million during the nine months ended November 30, 2025, when compared to $1.3 million reported in the same period last year. Operating income of the PaperPie division as a percentage of net revenues for the nine months ended November 30, 2025 was 6.0%, compared to 5.5% for the nine months ended November 30, 2024. Operating income as a percentage of net revenues changed from the prior year primarily due to the decrease in net revenues from the reduced number of active brand partners in addition to higher discounts offered to spur sales, which are both offset by the decrease in operating expenses as shown above.Contents

~~Publishing~~Certain inventory is maintained ~~Operating~~in ~~Results~~a ~~for~~non-current classification. Management continually estimates and calculates the ~~Three~~amount of non-current inventory. Noncurrent inventory arises due to occasional purchases of titles in quantities in excess of what will be sold within the normal operating cycle, due to the minimum order requirements of our suppliers, as well as reduced sales volumes. Noncurrent inventory is estimated by management using an anticipated turnover ratio by title, based primarily on historical trends. Inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory. These inventory quantities have additional exposure for storage damages, aging of topical related content, and ~~Nine~~associated ~~Months~~issues, ~~Ended~~and ~~November~~therefore 30have higher obsolescence reserves. Noncurrent inventory balances prior to valuation allowances were $21.0 million and $21.1 million at May 31, ~~2025~~2026 and February 28, 2026, respectively. Noncurrent inventory valuation allowances were $0.9 million at May 31, 2026 and $0.8 million at February 28, 2026.

~~The~~Brand Partners that meet certain ~~following~~eligibility ~~table~~requirements ~~summarizes~~may request and receive inventory on consignment. We believe allowing Brand Partners to have consignment inventory greatly increases their ability to be successful in making effective presentations at home shows, book fairs, and other events; in summary, having consignment inventory leads to additional sales opportunities. Approximately 19.5% of our active Brand Partners maintained consignment inventory at the ~~operating~~end ~~results~~of the first quarter of fiscal year 2027. Consignment inventory is stated at cost, less an estimated reserve for consignment inventory that is not expected to be sold or returned to the ~~Publishing~~Company. ~~segment:~~The total cost of inventory on consignment with Brand Partners was $1.0 million and $1.1 million at May 31, 2026 and February 28, 2026, respectively.

	Three Months Ended November 30,				Nine Months Ended November 30,
	2025		2024		2025		2024
Net revenues	$	771,700	$	1,275,400	$	2,707,700	$	3,437,400
Cost of goods sold		336,200		524,400		1,199,800		1,394,400
Gross margin		435,500		751,000		1,507,900		2,043,000
Total operating expenses		302,500		328,500		961,400		1,133,700
Operating income	$	133,000	$	422,500	$	546,500	$	909,300

Inventories are presented net of a valuation allowance, which includes reserves for inventory obsolescence and reserves for consigned inventory that is not expected to be sold or returned to the Company. Management estimates the inventory obsolescence allowance for both current and noncurrent inventory, which is based on management’s identification of slow-moving inventory. Management has estimated a valuation allowance for both current and noncurrent inventory, including the reserve for consigned inventory, of $1.2 million at May 31, 2026 and February 28, 2026.

20Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Table~~Not ~~of Contents~~applicable.

~~Publishing Operating~~Item ~~Results~~4. ~~for~~CONTROLS ~~the~~AND ~~Three Months Ended November 30, 2025~~PROCEDURES

~~Our~~Evaluation ~~Publishing division’s~~of ~~net~~Disclosure ~~revenues~~Controls ~~decreased~~and $0.5 million, or 38.5%, to $0.8 million during the three-month period ended November 30, 2025, from $1.3 million reported in the same period a year ago. The change in net revenues was directly associated with the decrease in overall sales volume offset by a slight decrease in discounts.Procedures

~~Gross margin~~We ~~decreased~~performed ~~$0.4~~an ~~million,~~evaluation of orthe ~~50.0%,~~effectiveness toof ~~$0.4~~the ~~million~~design ~~during~~and ~~the~~operation ~~three-month~~of ~~period~~our ~~ended~~“disclosure ~~November~~controls ~~30,~~and ~~2025,~~procedures” ~~from~~(as ~~$0.8~~defined ~~million~~in ~~reported~~Rule 13a-15(e) inand 15d-15(e) under the ~~same~~Securities ~~quarter~~Exchange aAct ~~year~~of ~~ago~~1934, ~~primarily~~as ~~due~~amended to (the ~~decrease~~“Exchange inAct”)) ~~net revenues. Gross margin~~ as ~~a percentage~~ of ~~net~~the ~~revenues~~end ~~decreased to~~of ~~56.4% during~~ the ~~three-month~~ period ~~ended~~covered by ~~November~~this ~~30,~~report. ~~2025,~~This ~~from~~evaluation ~~58.9%~~was ~~reported~~conducted inunder the ~~same~~supervision ~~quarter~~and awith ~~year~~the ~~ago.~~participation ~~Gross~~of ~~margin~~our asmanagement, ~~a percentage~~including ofour ~~net~~Chief Executive ~~revenues~~Officer ~~changed~~and ~~primarily~~Chairman ~~from~~of the ~~increase~~Board in(Principal ~~cost~~Executive ofOfficer) ~~goods~~and ~~due~~our toChief ~~the~~Financial ~~additional~~Officer ~~tariffs~~and ~~implemented~~Corporate bySecretary ~~the current~~(Principal ~~administration~~Financial onand ~~our~~Accounting ~~SmartLab Toys product line~~Officer).

~~Total~~Based on that evaluation, ~~operating~~these ~~expenses~~officers ofconcluded ~~the~~that ~~Publishing~~our ~~segment~~disclosure ~~stayed~~controls ~~consistent~~and atprocedures ~~$0.3~~were ~~million,~~designed ~~during~~and were effective to ensure that information required to be disclosed in reports that we file or submit under the ~~three-month~~Exchange ~~periods~~Act ~~ended~~is ~~November~~accumulated 30and communicated to them, ~~2025~~as appropriate, to allow timely decisions regarding required disclosure and ~~2024~~is recorded, ~~respectively~~processed, summarized, and reported in accordance with the time periods specified in SEC rules and forms. 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.

~~Operating income~~Changes ~~decreased $0.3 million, or 75.0%, to $0.1 million during the three-month period ended November 30, 2025, from $0.4 million reported~~ in ~~the~~Internal ~~same~~Control ~~quarter~~over ~~a year ago, respectively. Operating income for the Publishing division as a percentage of net revenues for the year~~Financial ended November 30, 2025 was 17.2%, compared to 33.1% for the year ended November 30, 2024, a decrease of 15.9%. The decrease in operating income was primarily associated with the decline in net revenues associated with the decrease in gross sales in addition to the increase in cost of goods due to the additional tariffs implemented by the current administration on our SmartLab Toys product line.Reporting

~~Publishing Operating~~During ~~Results~~the ~~for~~first quarter of the ~~Nine~~fiscal ~~Months~~year ~~Ended~~covered ~~November~~by 30this report on Form 10-Q, ~~2025~~there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Our Publishing division’s net revenues decreased by $0.7 million, or 20.6%, to $2.7 million during the nine-month period ended November 30, 2025, from $3.4 million reported in the same period a year ago primarily due to the increased discounts offered to spur sales and the decrease in gross sales volume compared to the prior year.21

~~Gross margin~~Table ~~decreased $0.5 million, or 25.0%, to $1.5 million during the nine-month period ended November 30, 2025, from $2.0 million reported in the same period a year ago. Gross margin as a percentage~~ of net revenues decreased to 55.7%, during the nine-month period ended November 30, 2025, from 59.4% reported in the same period a year ago. Gross margin as a percentage of net revenues changed primarily from changes in the mix of products sold between EDC-owned brands: Kane Miller, SmartLab Toys and Learning Wrap-Ups products, as well as the increase in cost of goods due to the additional tariffs implemented by the current administration on our SmartLab Toys product line.Contents

~~Total operating~~PART ~~expenses of the Publishing segment decreased $0~~II.1 ~~million,~~OTHER or 9.1%, to $1.0 million during the nine-month period ended November 30, 2025, from $1.1 million reported in the same period a year ago. This change was due to a $0.1 million decrease in shipping costs associated with the decrease in volume of orders shipped from decreased sales.INFORMATION

~~Operating income~~Item ~~of the Publishing segment decreased $0~~1.4 ~~million,~~LEGAL or 44.4%, to $0.5 million during the nine-month period ended November 30, 2025 when compared to $0.9 million reported in the same period a year ago, due primarily to the decrease in sales and increase in cost of goods and operating and selling expenses compared to the prior year.PROCEEDINGS

~~Liquidity~~We are not a party to any ~~and~~material ~~Capital~~legal ~~Resources~~proceedings.

~~Prior to~~Item the last two fiscal years, which have been challenged with higher product discounting to spur sales and increased interest rates on borrowings, EDC has a history of profitability and positive cash flow1A. WeRISK typically fund our operations from the cash we generate. During periods of operating losses, EDC will reduce purchases and sell through excess inventory to generate cash flow. The Company expects to reduce current excess inventory levels and use the cash proceeds to offset any future operating losses until it returns to profitability. In addition, the Company sold its owned real estate and paid off the revolving line of credit and term debts with our bank. Available cash has historically been used to pay down the outstanding bank loan balances, for capital expenditures, to pay dividends, and to acquire treasury stock.FACTORS

~~During the~~Not ~~first~~required ~~nine~~by ~~months~~smaller ~~of fiscal year 2026, we experienced positive cash inflows from operations of $4,004,600. These cash inflows resulted~~reporting ~~from:~~company.

●Item ~~Net~~2. ~~earnings~~UNREGISTERED ofSALES ~~$5,432,200~~OF EQUITY SECURITIES AND USE OF PROCEEDS

Adjusted for:

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)
March 1 - 31, 2026		-	$	-		-		288,156
April 1 - 30, 2026		-		-		-		288,156
May 1 - 31, 2026		-		-		-		288,156
Total		-	$	-		-

●(1) ~~deferred~~On ~~income~~February ~~taxes~~4, of2019 ~~$1,358,500~~the ●Board ~~depreciation~~of ~~and~~Directors ~~amortization~~approved ~~expense~~a ofnew $1stock repurchase plan,~~085,700~~ ●replacing ~~impairment~~the onformer ~~assets~~2008 ~~held~~stock ~~for~~repurchase ~~sale~~plan. The maximum number of ~~$287,100~~shares ●which ~~provision~~can ~~for~~be ~~inventory~~purchased ~~allowance~~under ofthe ~~$108~~new plan is 800,000. ●This ~~provision~~plan ~~for~~has ~~credit~~no ~~losses~~expiration ~~of $30,000~~date.

~~Offset by:~~Item 3. DEFAULTS UPON SENIOR SECURITIES

●Not ~~net gain on sale of assets of $12,186,700~~applicable.

21Item 4. MINE SAFETY DISCLOSURES

~~Table of Contents~~None.

~~Positively impacted~~Item ~~by:~~5. OTHER INFORMATION

● decrease in inventories, net of $5,444,700 ● decrease in accounts receivable of $1,336,300 ● increase in income taxes payable of $852,600 ● decrease in prepaid expenses and other assets of $235,400 ● increase in deferred revenues of $204,200 ● increase in accounts payable of $200,800None.

~~Negatively impacted by:~~22

●Table ~~decrease in accrued salaries and commissions, and other liabilities~~ of ~~$384,200~~Contents

~~Cash provided~~Item by investing activities totalled $29,480,500, consisting of $29,927,600 in proceeds from the sale of the Hilti Complex offset by $282,500 in software upgrades to our proprietary systems that our PaperPie Brand Partners use to monitor their business and place customer orders and $164,600 in building improvements in Assets Held for Sale6. EXHIBITS

Cash used in financing activities was $31,031,200, consisting of $26,715,400 to pay down existing term debt, $4,198,100 to pay down existing line of credit, $137,900 paid to acquire treasury stock, offset by cash received of $20,200 from the sale of treasury stock.

3.1*		Restated Certificate of Incorporation dated April 26, 1968 and Certificate of Amendment thereto dated June 21, 1968 are incorporated herein by reference to Exhibit 1 to Registration Statement on Form 10-K (File No. 0-04957).

3.2*		Certificate of Amendment of Restated Certificate of Incorporation dated August 27, 1977 is incorporated herein by reference to Exhibit 20.1 to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).

3.3*		By-Laws, as amended, are incorporated herein by reference to Exhibit 20.2. to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).

3.4*		Certificate of Amendment of Restated Certificate of Incorporation dated November 17, 1986 is incorporated herein by reference to Exhibit 3.3 to Form 10-K for fiscal year ended February 28, 1987 (File No. 0-04957).

3.5		Certificate of Amendment of Restated Certificate of Incorporation dated March 22, 1996 is incorporated herein by reference to Exhibit 3.4 to Form 10-K for fiscal year ended February 28, 1997 (File No. 0-04957).

3.6		Certificate of Amendment of Restated Certificate of Incorporation dated July 15, 2002 is incorporated herein by reference to Exhibit 10.30 to Form 10-K dated February 28, 2003 (File No. 0-04957).

3.7		Certificate of Amendment of Restated Certificate of Incorporation dated August 15, 2018 is incorporated herein by reference to Exhibit 3.1 to Form 8-K dated August 21, 2018 (File No. 0-04957).

10.1		Usborne Distribution Agreement dated May 16, 2022 by and between the Company and Usborne Publishing Limited, London, England is incorporated herein by reference to Exhibit 10.2 to form 10-Q dated May 31, 2022 (File No. 0-04957).

10.2		Credit Agreement dated March 6, 2026 by and between the Company and Regent Bank Broken Arrow, OK is incorporated herein by reference to Exhibit 10.01 to form 8-K dated March 11, 2026 (File No. 0-04957).

31.1**		Certification of the Chief Executive Officer of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certification of Chief Financial Officer and Corporate Secretary of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~The~~* ~~Company~~Paper ~~continues~~Filed ~~to expect~~** ~~the~~Filed cash generated from operations, specifically from the reduction of excess inventory, will provide us with the liquidity we need to support ongoing operations. Additionally, we expect to obtain short-term financing from traditional or non-traditional lenders to fund any short-term cash flow needs. Cash generated from operations will be used to acquire new inventory and pay down any short-term borrowings we expect to obtain.Herewith

~~Risks and Uncertainties~~23

~~In accordance~~Table ~~with~~of ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events considered in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.Contents

The Company’s continued recurring operating losses raise substantial doubt over the Company’s ability to continue as a going concern. To address these concerns management’s plans include reducing inventory, to generate free cash flows and building the active PaperPie Brand Partners to pre-pandemic levels. Although there is no guarantee these plans will be successful, management believes these plans, if achieved, will alleviate the substantial doubt about continuing as a going concern and generate sufficient liquidity to meet our obligations as they become due over the next twelve months.SIGNATURES

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

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). 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, provision for credit losses, 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.

	EDUCATIONAL DEVELOPMENT CORPORATION (Registrant)

Date: July 9, 2026	By	/s/ Craig M. White
		President, Chief Executive Officer, and Chairman of the Board (Principal Executive Officer)

Date: July 9, 2026	By	/s/ Dan E. O’Keefe
		Dan E. O’Keefe Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer)

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. Our significant accounting policies are described in the notes accompanying the financial statements included elsewhere in this report and in our audited financial statements as of and for the year ended February 28, 2025 included in our Form 10-K. However, we consider the following accounting policies to be more significantly dependent on the use of estimates and assumptions.24

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Table of Contents

Leases

We recognize an operating lease liability on the balance sheets for each lease based on the present value of remaining minimum fixed rental payments (which includes payments under any renewal option that we are reasonably certain to exercise), using a discount rate that approximates the rate of interest we would have to pay to borrow on a collateralized basis over a similar term. Expected payments in the next twelve months are classified as current operating lease liabilities. Payments in excess of twelve months are classified as long-term operating lease liabilities. We also recognize an operating lease right-of-use asset on the balance sheets, valued at the lease liability and adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The operating lease liability and right-of-use assets are reduced over the term of the lease as payments are made and the assets are used.

Revenue Recognition

Sales associated with product orders are recognized and recorded when products are shipped. Products are shipped FOB-Shipping Point. PaperPie’s sales are generally paid at the time the product is ordered. Sales which have been paid for but not shipped are classified as deferred revenue on the balance sheet. Sales associated with consignment inventory are recognized when reported and payment associated with the sale has been remitted. Transportation revenue represents the amount billed to the customer for shipping the product and is recorded when the product is shipped.

Estimated allowances for sales returns are recorded as sales are recognized. Management uses a moving average calculation to estimate the allowance for sales returns. We are not responsible for a product damaged in transit. Damaged returns are primarily received from the retail customers of our Publishing division. This damage occurs in the stores, not in shipping to the stores, and we typically do not offer credit for damaged returns. It is an industry practice to accept non-damaged returns from retail customers. Management has estimated and included a reserve for sales returns of $0.2 million for November 30, 2025 and February 28, 2025, respectively.

Allowance for Credit Losses

We maintain an allowance for estimated losses resulting from the inability of our customers to make required payments and a reserve for vendor share markdowns, when applicable (collectively “credit losses”). An estimate of uncollectible amounts is made by management based upon historical bad debts, current customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends. Management has estimated and included an allowance for credit losses of $0.1 million for November 30, 2025 and February 28, 2025, respectively.

Inventory

Our inventory contains approximately 2,000 titles, each with different rates of sale depending upon the nature and popularity of the title. Almost all of our product line is saleable as the products are not topical in nature and remain current in content today as well as in the future. Most of our products are printed in China, Europe, Singapore, India, Malaysia, and Dubai typically resulting in a four- to eight-month lead-time to have a title printed and delivered to us.

Certain inventory is maintained in a non-current classification. Management continually estimates and calculates the amount of non-current inventory. Noncurrent inventory arises due to occasional purchases of titles in quantities in excess of what will be sold within the normal operating cycle, due to the minimum order requirements of our suppliers, as well as reduced sales volumes. Noncurrent inventory is estimated by management using an anticipated turnover ratio by title, based primarily on historical trends. Inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory. These inventory quantities have additional exposure for storage damages, aging of topical related content, and associated issues, and therefore have higher obsolescence reserves. Noncurrent inventory balances prior to valuation allowances were $17.5 million and $16.3 million at November 30, 2025 and February 28, 2025, respectively. Noncurrent inventory valuation allowances were $0.8 million at November 30, 2025 and $0.7 million at February 28, 2025.

Brand Partners that meet certain eligibility requirements may request and receive inventory on consignment. We believe allowing Brand Partners to have consignment inventory greatly increases their ability to be successful in making effective presentations at home shows, book fairs, and other events; in summary, having consignment inventory leads to additional sales opportunities. Approximately 20.0% of our active Brand Partners maintained consignment inventory at the end of the third quarter of fiscal year 2026. Consignment inventory is stated at cost, less an estimated reserve for consignment inventory that is not expected to be sold or returned to the Company. The total cost of inventory on consignment with Brand Partners was $1.3 million at November 30, 2025 and February 28, 2025, respectively.

Table of Contents

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We performed an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chairman of the Board (Principal Executive Officer) and our Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer).

Based on that evaluation, these officers concluded that our disclosure controls and procedures were designed and were effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to them, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported in accordance with the time periods specified in SEC rules and forms. 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.

Changes in Internal Control over Financial Reporting

During the third quarter of the fiscal year covered by this report on Form 10-Q, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

Item 1A. RISK FACTORS

Not required by smaller reporting company.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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)
September 1 - 30, 2025		-	$	-		-		375,993
October 1 - 31, 2025		-		-		-		375,993
November 1 - 30, 2025		-		-		-		375,993
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 can be purchased under the new plan is 800,000. This plan has no expiration date.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

None.

Item 5. OTHER INFORMATION

None.

Table of Contents

Item 6. EXHIBITS

3.1*		Restated Certificate of Incorporation dated April 26, 1968 and Certificate of Amendment thereto dated June 21, 1968 are incorporated herein by reference to Exhibit 1 to Registration Statement on Form 10-K (File No. 0-04957).
3.2*		Certificate of Amendment of Restated Certificate of Incorporation dated August 27, 1977 is incorporated herein by reference to Exhibit 20.1 to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).
3.3*		By-Laws, as amended, are incorporated herein by reference to Exhibit 20.2. to Form 10-K for fiscal year ended February 28, 1981 (File No. 0-04957).
3.4*		Certificate of Amendment of Restated Certificate of Incorporation dated November 17, 1986 is incorporated herein by reference to Exhibit 3.3 to Form 10-K for fiscal year ended February 28, 1987 (File No. 0-04957).
3.5		Certificate of Amendment of Restated Certificate of Incorporation dated March 22, 1996 is incorporated herein by reference to Exhibit 3.4 to Form 10-K for fiscal year ended February 28, 1997 (File No. 0-04957).
3.6		Certificate of Amendment of Restated Certificate of Incorporation dated July 15, 2002 is incorporated herein by reference to Exhibit 10.30 to Form 10-K dated February 28, 2003 (File No. 0-04957).
3.7		Certificate of Amendment of Restated Certificate of Incorporation dated August 15, 2018 is incorporated herein by reference to Exhibit 3.1 to Form 8-K dated August 21, 2018 (File No. 0-04957).
10.1		Usborne Distribution Agreement dated May 16, 2022 by and between the Company and Usborne Publishing Limited, London, England is incorporated herein by reference to Exhibit 10.2 to form 10-Q dated May 31, 2022 (File No. 0-04957).
10.2		Credit Agreement dated August 9, 2002 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to form 8-K dated August 11, 2022 (File No. 0-04957).
10.3		First Amendment to Credit Agreement, dated December 22, 2022 by and between the Company and BOKF, NA, Tulsa, OK. is incorporated herein by reference to Exhibit 10.4 to Form 10-Q dated November 30, 2022 (File No. 0-04957).
10.4		Second Amendment to Credit Agreement, dated May 10, 2023 by and between the Company and BOKF, NA, Tulsa, OK. is incorporated herein by reference to Exhibit 10.18 to Form 10-K dated February 28, 2023 (File No. 0-04957).
10.5		Third Amendment to Credit Agreement, dated August 9, 2023 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated August 17, 2023 (File No. 0-04957).
10.6		Fourth Amendment to Credit Agreement, effective December 1, 2023 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated December 28, 2023 (File No. 0-04957).
10.7		Fifth Amendment to Credit Agreement, effective May 31, 2024 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated June 17, 2024 (File No. 0-04957).
10.8		Sixth Amendment to Credit Agreement, effective October 3, 2024 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated October 7, 2024 (File No. 0-04957).

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10.9		Seventh Amendment to Credit Agreement, effective January 4, 2025 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.09 to Form 10-Q dated November 30, 2024 (File No. 0-04957).
10.18		Eighth Amendment to Credit Agreement, effective April 4, 2025 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated April 17, 2025 (File No. 0-04957).
10.19		Ninth Amendment to Credit Agreement, effective July 11, 2025 by and between the Company and BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.01 to Form 8-K dated August 12, 2025 (File No. 0-04957).
10.20		Notice of Default and Reservation of Rights, dated September 30, 2025, from BOKF, NA, Tulsa, OK is incorporated herein by reference to Exhibit 10.20 to Form 10-Q dated August 31, 2025 (File No. 0-04957).
31.1**		Certification of the Chief Executive Officer of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2**		Certification of Chief Financial Officer and Corporate Secretary of Educational Development Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Paper Filed ** Filed Herewith

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SIGNATURES

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

	EDUCATIONAL DEVELOPMENT CORPORATION (Registrant)
Date: January 13, 2026	By	/s/ Craig M. White
		President, Chief Executive Officer, and Chairman of the Board (Principal Executive Officer)
Date: January 13, 2026	By	/s/ Dan E. O’Keefe
		Dan E. O’Keefe Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer)

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