EDUCATIONAL DEVELOPMENT CORP SEC 10-Q Report

Educational Development Corp, a prominent player in the educational publishing industry, has released its Form 10-Q report for the third quarter. The report outlines significant financial and operational challenges faced by the company, including a notable decline in net revenues and operational hurdles in its PaperPie and Publishing divisions. Despite these challenges, the company is implementing strategic measures to improve its financial health and operational efficiency.

Financial Highlights

• Net Revenues: $7.1 million, reflecting a decrease from $10.0 million in the same period last year due to reduced sales in both PaperPie and Publishing segments.
• Gross Margin: $4.1 million, down from $6.5 million, primarily due to increased discounts and shipping promotions.
• Operating Income: $(1.6) million, compared to $(1.7) million in the prior year, indicating a slight improvement despite lower revenues.
• Net Loss: $(1.1) million, compared to $(1.3) million, with the decrease in loss attributed to cost reductions and efficiency improvements.
• Basic and Diluted Loss Per Share: $(0.13), compared to $(0.15) in the previous year, reflecting the reduced net loss.

Business Highlights

• Revenue Segments: The PaperPie division experienced a significant decrease in net revenues, dropping by 31.5% to $6.1 million, primarily due to a reduction in the average number of active Brand Partners and economic challenges impacting disposable income.
• Revenue Segments: The Publishing division's net revenues decreased by 9.1% to $1.0 million, attributed to additional discounts offered to retail customers to spur sales.
• Sales Units: The average number of active Brand Partners in the PaperPie division decreased by 42.5% to 7,700, impacting sales performance significantly.
• Operational Challenges: The PaperPie division faced challenges due to economic factors such as inflation, high fuel costs, and food price increases, which affected customer disposable income and Brand Partner recruitment.
• Operational Challenges: The rebranding from Usborne Books & More to PaperPie and unmet terms of the new Usborne distribution agreement contributed to increased Brand Partner turnover and recruitment challenges.
• Future Outlook: Management plans to address operational challenges by reducing inventory levels to generate cash flow and meet obligations, while also aiming to rebuild the number of active PaperPie Brand Partners to pre-pandemic levels.
• Future Outlook: The company is focused on selling owned real estate, including the Hilti Complex, to pay off existing debts and improve liquidity, which is expected to support ongoing operations.

SEC Filing: EDUCATIONAL DEVELOPMENT CORP [ EDUC ] - 10-Q - Jul. 07, 2025