10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended February 28, 2021

OR

☐TRANSITION REPORT PURSUANT TO 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 Avenue, 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)

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐          No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐          No ☒

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

Yes ☒          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 (§ 232.405 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, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 ☒

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

Yes ☐          No ☒

The aggregate market value of the outstanding shares of common stock held by non-affiliates of the registrant at the price at which the common stock was last sold on August 31, 2020 on the NASDAQ Stock Market, LLC was $90,190,900.

As of May 10, 2021, 8,350,972 shares of common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for fiscal year 2021 relating to our Annual Meeting of Shareholders to be held on July 7, 2021 are incorporated by reference into Part III of this Report on Form 10-K.

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		4
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	6
Item 2.	Properties	6
Item 3.	Legal Proceedings	6
Item 4.	Mine Safety Disclosures	6
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 6.	Selected Financial Data	7
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 8.	Financial Statements and Supplementary Data	16
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17
Item 9A.	Controls and Procedures	17
Item 9B.	Other Information	19
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	20
Item 11.	Executive Compensation	20
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	20
Item 13.	Certain Relationships and Related Transactions, and Director Independence	20
Item 14.	Principal Accounting Fees and Services	20
PART IV
Item 15.	Exhibits and Financial Statement Schedules	21
Item 16.	Form 10-K Summary	22

PART I

FORWARD-LOOKING STATEMENTS

CAUTIONARY REMARKS REGARDING FORWARD LOOKING STATEMENTS

The information discussed in this Annual Report on Form 10-K includes “forward-looking statements.” These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “continue,” “potential,” “should,” “could,” and similar terms and phrases.  Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties and we can give no assurance that such expectations or assumptions will be achieved.  Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, our success in recruiting and retaining new consultants, our ability to locate and procure desired books, our ability to ship timely, changes to our primary sales channels, our ability to obtain adequate financing for working capital and capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, the COVID-19 pandemic, as well as those factors discussed below and elsewhere in this Annual Report on Form 10-K, 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 Annual Report on Form 10-K and speak only as of the date of this Annual Report on Form 10-K.  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 Annual Report on Form 10-K, the terms “the Company,” “EDC,” “we,” “our” or “us” mean Educational Development Corporation, a Delaware corporation, unless the context indicates otherwise.

Item 1.  BUSINESS

(a)  General Description of Business

We are the exclusive United States (“U.S.”) trade co-publisher of educational children’s books produced in the United Kingdom by Usborne Publishing Limited (“Usborne”) and we also exclusively publish books through our ownership of Kane Miller Book Publisher (“Kane Miller”); both award-winning publishers of international children’s books.  We are a corporation incorporated under the laws of the State of Delaware on August 23, 1965. Our fiscal year ends on February 28 (29).

Our Company motto is “The future of our world depends on the education of our children.  EDC delivers educational excellence one book at a time.  We provide economic opportunity while fostering strong family values.  We touch the lives of children for a lifetime.”

(b)  Financial Information about Our Segments

While selling children’s books and related products (collectively referred to as “books”) is our only line of business, we sell through two business segments, which we sometimes refer to as “divisions”:

● Home Business Division (“Usborne Books & More” or “UBAM”) – This division sells our books through independent consultants directly to our customers.  Our consultants sell books by hosting home parties, through social media collaboration platforms on the internet, by hosting book fairs with school and public libraries and through other events.

● Publishing Division (“EDC Publishing” or “Publishing”) – This division sells our books to bookstores (including major national chains), toy stores, specialty stores, museums and other retail outlets throughout the country.

Percent Net Revenues by Division

	FY 2021			FY 2020
UBAM		96	%		91	%
Publishing		4	%		9	%
Total net revenues		100	%		100	%

4

(c)  Narrative Description of Business

Products

As the exclusive United States trade co-publisher of Usborne books and sole publisher of Kane Miller books, we offer over 2,000 different children’s books.  Many of our books are interactive in nature, including our touchy-feely board books, activity books and flashcards, adventure and search books, art books, sticker books and foreign language books.  Most of our books were originally published in other countries, in their native languages, and we translate them to common American English and have exclusive rights to publish the titles in the United States.

We also have a broad line of ‘internet-linked’ books which allow readers to expand their educational experience by referring them to relevant non-Company websites.  Our books include science and math titles, as well as chapter books and novels.  We continually introduce new titles across all lines of our products.

UBAM markets our books through commissioned consultants using a combination of direct sales, home parties, book fairs and internet based social media platforms (“online parties”).  This division had approximately 57,600 active consultants as of February 28, 2021.

Our Publishing division markets through commissioned trade representatives who call on retail book, toy, and specialty stores along with other retail outlets. Publishing also conducts in-house marketing by telephone to these customers and potential customers.  This division markets to approximately 4,000 book, toy and specialty stores. Approximately 5% of our Publishing division's net revenues are to national book chain stores.

Seasonality

Sales for both divisions are greatest during the fall due to the holiday season.

Competition

While we have the exclusive U.S. rights to sell Usborne and Kane Miller books, we face competition from the internet and other book publishers who are also selling directly to our customers.  Our UBAM division competes in recruiting and retaining sales consultants, which continuously receive opportunities to work for other direct selling companies, as well as new non-traditional employment opportunities in the gig-marketplace that provide part-time supplemental income. We also compete with Scholastic Corporation in the school and library book fair market.

Our Publishing division faces competition from large U.S. and international publishing companies that sell online and through the same retail publishing stores as well as for space in retail toy, gift and novelty stores that offer a variety of non-book products.

Employees

As of May 3, 2021, 214 full-time employees worked at our Tulsa office and distribution facility and at our San Diego office.  Of these employees, approximately 71% of our employees work in our distribution warehouse. 

Company Reports

Pursuant to Section 13 or 15 of the Exchange Act, as soon as reasonably practicable after filing electronically or otherwise furnishing it to the Securities and Exchange Commission (“SEC”), we make available, free of charge, on our website (www.edcpub.com) copies of our Annual Reports and Quarterly Reports. Our website also includes an internet link to the federal SEC website that contains additional public reports, including Current Reports on Form 8-K, amendments to those reports filed or furnished to the SEC and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act. These reports will be provided electronically, free of charge, upon request.

5

COVID-19 Update

In December 2019, a novel strain of coronavirus, known as COVID-19, was reported in Wuhan, China and has since extensively impacted the global health and economic environment. In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and President Trump declared the COVID-19 outbreak in the United States as a national emergency. The Company has taken numerous steps, and will continue to take further actions, in its approach to minimize the impact of the COVID-19 pandemic. To ensure the well-being of our employees, the Company offered employees in our office the ability to work from home on a temporary basis; we instructed employees in our warehouse and office to take their temperature at the start of every shift; we requested employees forgo any in-person meetings and instead opt to utilize virtual meeting spaces; and we published and continually updated our employees on the most recent developments related to COVID-19 and best practices for safety and health in the office, warehouse and at home. On April 16, 2020, the Company entered into a loan with MidFirst Bank as the lender in an aggregate principal amount of $1.4 million pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This loan program provided paycheck protection for our employees from the economic impact to our business due to COVID-19, which was seen most by the decline in our Publishing division’s sales due to the temporary closure of many retail outlets across the country, and in our UBAM division’s School and Library and Book Fair sales due to the temporary closure of many schools nation-wide.  The Company determined the PPP loan was no longer needed and therefore repaid the loan in full on May 12, 2020.  While the Company did not experience a decrease in net revenues during fiscal year 2021 compared with the prior fiscal year 2020, the severity and duration of the pandemic are uncertain and the extent to which our results are affected by COVID-19 cannot be accurately predicted. Effective May 1, 2021, we lessened our safety and health practices in the office and warehouse based on the recommendations from the Tulsa Health Department. We are closely monitoring the impact of the COVID-19 pandemic and continually assessing its potential effects on our business. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information on the impact COVID-19 had during the current fiscal year.

Item 1A.  RISK FACTORS

We are a smaller reporting company and are not required to provide this information.

Item 1B.  UNRESOLVED STAFF COMMENTS

None

Item 2.  PROPERTIES

Our headquarters office and distribution warehouse are located on a 40-acre complex at 5402 South 122nd East Ave, Tulsa, Oklahoma. We own the complex which includes multiple buildings that combine to approximately 400,000 square feet of office and warehouse space, of which 218,700 is utilized by us and 181,300 is occupied by a third-party tenant.  All customer orders are fulfilled from our 170,000 square foot warehouse using multiple flow-rack systems, known as “the lines,” to expedite order completion, packaging, and shipment. 

We also own a facility located at 10302 East 55th Place, Tulsa, Oklahoma that contains approximately 105,000 square feet of usable space including 8,000 square feet of office and 97,000 square feet of warehouse space. We use approximately 76,000 square feet of warehouse space for overflow inventory. The remaining 8,000 square feet of office space and 21,000 square feet of warehouse are leased to third-party tenants with multi-year lease agreements.

In addition to these owned properties, we also lease additional warehouse space in Tulsa OK as needed for overflow inventory and a small office in San Diego, California that is used by our Kane Miller employees.  We believe that our operating facilities meet both present and future capacity needs.

Item 3.  LEGAL PROCEEDINGS

We are not a party to any material pending legal proceedings.

Item 4.  MINE SAFETY DISCLOSURES

None

6

PART II

Item 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The common stock of EDC is traded on NASDAQ (symbol “EDUC”).  The number of shareholders of record of EDC's common stock as of May 10, 2021 was 467.

For information regarding our compensation plans see Note 10 of the notes to the financial statements and our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021, as outlined in Part III, Item 12 in this Annual Report.

Issuer Purchases of Equity Securities

Period	Total # of Shares Purchased		Average Price Paid Per Share		Total # of Shares Purchased as Part of Publicly Announced Plan (1)		Maximum # of Shares that may be Repurchased Under the Plan (1)
December 1-31, 2020		5,000	$	17.68		5,000		514,594
January 1-31, 2021		-		-		-		514,594
February 1-28, 2021		-		-		-		514,594
Total		5,000	$	17.68		5,000

(1) On February 4, 2019, the Board of Directors approved a new stock repurchase plan, replacing the former 2008 stock repurchase plan. The maximum number of shares which may be purchased under the new plan is 800,000. This plan has no expiration date.

Item 6.  SELECTED FINANCIAL DATA

We are a smaller reporting company and are not required to provide this information.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a discussion of our business, including a general overview of our segments, our results of operations, our liquidity and capital resources, and our quantitative and qualitative disclosures about market risk.

The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance.  The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control.  Our actual results could differ materially from those discussed in these forward-looking statements.  See “Cautionary Remarks Regarding Forward-Looking Statements” in the front of this Annual Report on Form 10-K.

Management Summary

We are the exclusive United States trade co-publisher of Usborne children’s books and the owner of Kane Miller.  We operate two separate segments; UBAM and Publishing, to sell our Usborne and Kane Miller children’s books.  These two segments each have their own customer base.  The Publishing segment markets its products on a wholesale basis to various retail accounts.  The UBAM segment markets its products through a network of independent sales consultants using a combination of home shows, social media platform events (called “online parties”) and book fairs.  All other supporting administrative activities are recognized as other expenses outside of our two segments.  Other expenses are primarily compensation of our office, warehouse and sales support staff as well as the cost of operating and maintaining our corporate office and distribution facility.

7

UBAM Division

Our UBAM division uses a multi-level direct selling platform to market books through independent sales representatives (“consultants”) located throughout the United States.  The customer base of UBAM consists of individual purchasers, as well as schools and public libraries.  Revenues are primarily generated through book showings in individual homes, on social media collaboration platforms, through book fairs with school and public libraries and other events.  This past fiscal year continued with a significant shift toward internet sales via social media platform events, such as Facebook parties.

An important factor in the continued growth of the UBAM division is the addition of new sales consultants and the retention of existing consultants.  Current active consultants (defined as those with sales during the past six months) often recruit new sales consultants.  UBAM makes it easy to recruit by providing sign-up kits for which new consultants can earn rewards including discounted books and cash based on exceeding certain sales criteria. In addition, our UBAM division provides our consultants with an extensive operational handbook, valuable training and an individual website they can customize and use to operate their business.

Consultants

	FY 2021		FY 2020
New Consultants Added During Fiscal Year		56,100		22,600
Active Consultants at End of Fiscal Year		57,600		29,600

Our UBAM division’s multi-level marketing platform presently has eight levels of sales representatives:

● Consultants

● Team Leaders

● Advanced Leaders

● Senior Leaders

● Executive Leaders

● Senior Executive Leaders

● Directors

● Senior Directors

Upon signing up, sales representatives begin as “Consultants”.  Consultants receive “weekly commissions” from each sale they make; the commission rate they receive on each sale is determined by the marketing program under which the sale is made.  In addition, Consultants receive a monthly sales bonus once their sales reach an established monthly goal and other awards (called “Home Office Challenges”) for meeting other individual sales and recruiting goals for the month.  Consultants who recruit a specified number of other consultants into their downline “central group” become “Team Leaders”. Upon reaching this Team Leader level, consultants become eligible to receive “monthly override payments” which are calculated on sales made from their downline central group of recruits. Team Leaders that recruit and promote other Team Leaders, and meet other established criteria, are eligible to become “Advanced Leaders”. 

Once Advanced Leaders promote a second level consultant, add additional recruits and meet other established criteria, they become “Senior Leaders”, “Executive Leaders”, “Senior Executive Leaders”, “Directors” or “Senior Directors”. One-time bonus payments are made to consultants at each promotion level.  Executive Leaders and higher receive an additional monthly override payment based upon the sales of their downline groups. Directors and higher receive an additional bonus payment if they promote an Advanced Leader to a Senior Leader from their central group. The maximum override payment a leader can receive is calculated on three levels below their downline central group.

8

During fiscal year 2021, internet sales continued to be the largest sales channel within our UBAM division.  The use of social media and party plan platforms, such as those available on Facebook, have become popular sales tools.  These platforms allow consultants to “present” and customers to “attend” online purchasing events from any geographical location.

Customer’s internet orders are primarily received via the consultant’s customized website, which is hosted by the Company.  Consultants contact hosts or hostesses (collectively “hostess”) who then provide a list of contacts to invite to an online party. During the online party, the consultant answers attendee’s questions and provides product recommendations. These attendees then select desired products and place orders via the consultant’s customized website. Internet orders are processed through a standard online “shopping cart checkout” and the consultant receives sales credit and commission on the transaction.  All internet orders are shipped directly to the end customer.  The hostess earns discounted books based on the total sales from the attendees at the online party.

Home parties occur when consultants contact hostesses to hold book shows in their homes.  The consultant assists the hostess in setting up the details for the show, makes a presentation at the show and takes orders for the books.  The hostess earns discounted books based on the total sales at the party, including internet orders for those customers who can only attend via online access.  Home party orders are typically shipped to the hostess who then distributes the books to the end customer.  Customer specials are also available when customers, or their party, order above a specified amount.  Additionally, home shows often provide an excellent opportunity for recruiting new consultants.

UBAM net revenues also includes sales to schools and libraries through educational consultants.  The school and library program includes book fairs which are held with an organization as the sponsor.  The consultant provides promotional materials to introduce our books to parents.  Parents turn in their orders at a designated time.  The book fair program generates discounted books for the sponsoring organization.  UBAM also has various fundraiser programs.  Reach for the Stars is a pledge-based reading incentive program that provides cash and books to the sponsoring organization and books for the participating children. An additional fundraising program, Cards for a Cause, offers our consultants the opportunity to help members of the community by sharing proceeds from the sale of specific items.  Organizations sell variety boxes of greeting-type cards and donate a portion of the proceeds to help support their related causes.

Publishing Division

Our Publishing division operates in a market that is highly competitive, with a large number of retail companies engaged in the selling of books.  The Publishing division’s customer base includes national book chains, regional and local bookstores, toy and gift stores, school supply stores and museums.  To reach these markets, the Publishing division utilizes a combination of commissioned sales representatives located throughout the country and a commissioned in-house sales group located at our headquarters.

The table below shows the percentage of net revenues from our Publishing division based on market type.

Publishing Division Net Revenues by Market Type

	FY 2021			FY 2020
National chain bookstores		5	%		9	%
All other		95	%		91	%
Total net revenues		100	%		100	%

Publishing uses a variety of methods to attract potential new customers and maintain current customers.  Our employees attend many of the national trade shows held by the book selling industry each year, allowing us to contact potential buyers who may be unfamiliar with our books.  We actively target the national book chains through joint promotional efforts and institutional advertising in trade publications.  Our products are then featured in promotions, such as catalogs offered by the vendor.  We may also seek to acquire, for a fee, an end cap position (our products are placed on the end of a shelf) in a bookstore, which we and the publishing industry consider an advantageous location in the bookstore.

Publishing’s in-house sales group targets the smaller independent book and gift store customers. This market has seen continued growth over the past several years as our sales to large bookstore chains have fluctuated based primarily on the number of promotions that we are able to run in the national chain stores.  Our semi-annual, full-color, 200-page catalogs, are mailed to over 4,000 customers and potential customers.  We also offer two display racks to assist stores in displaying our products.

Our Publishing division activities and sales were significantly impacted during the last fiscal year due to the COVID-19 pandemic. Many of the national trade shows were cancelled and a significant number of our retail customers temporarily closed to comply with their local health department recommendations. The Company has taken steps to limit the exposure to bad credit as well as offer flexible payment terms for those customers that requested additional time to pay their outstanding invoices.

9

Result of Operations

The following table shows our statements of earnings data:

	Twelve Months Ended February 28 (29),
	2021			2020
Net revenues	$	204,635,100		$	113,011,900
Cost of goods sold		60,037,000			36,863,300
Gross margin		144,598,100			76,148,600
Operating expenses
Operating and selling		36,123,700			18,606,000
Sales commissions		69,977,200			34,994,800
General and administrative		22,541,500			15,505,100
Total operating expenses		128,642,400			69,105,900
Other (income) expense
Interest expense		561,000			888,100
Other income		(1,836,100	)		(1,597,300	)
Earnings before income taxes		17,230,800			7,751,900
Income taxes		4,606,800			2,106,800
Net earnings	$	12,624,000		$	5,645,100

See the detailed discussion of net revenues, gross margin and operating expenses by reportable segment below.

The following is a discussion of significant changes in the non-segment related operating expenses, other income and expenses and income taxes during the respective periods.

Non-Segment Operating Results

Operating expenses not associated with a reporting segment were $19.4 million for fiscal year ended February 28, 2021 compared to $13.1 million for the same period a year ago.  Operating expenses increased $6.3 million due to a $3.8 million increase in payroll primarily related to an increase in warehouse labor and incentive plan expenses, an increase in freight handling costs of $1.9 million from an escalation in the number of shipments, a $0.2 million increase in depreciation expense, a $0.2 million increase in other services related to the increase in sales volumes, a $0.1 million increase in rent for the addition of warehouse space needed for the influx of inventory and other various increases totaling $0.1 million.

Interest expense decreased $0.3 million to $0.6 million for the fiscal year ended February 28, 2021, compared to $0.9 million reported for fiscal year ended February 29, 2020 due to the early extinguishment of two long-term debt agreements during the second quarter of fiscal year 2021.

Other income increased $0.2 million to $1.8 million for the fiscal year ended February 28, 2021, compared to $1.6 million for the fiscal year ended February 29, 2020 due primarily to increased royalties received from a national fast food restaurant chain that prints shortened versions of selected titles to include with their kids meals.

Income taxes increased $2.5 million to $4.6 million for the fiscal year ended February 28, 2021, from $2.1 million for the same period a year ago.  This increase was primarily related to an increase in taxable income for the current fiscal year compared to prior fiscal year. The effective tax rate decreased by 0.5% to 26.7% for the fiscal year ended February 28, 2021, as compared to 27.2% for the fiscal year ended February 29, 2020 due 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.

10

UBAM Operating Results

The following table summarizes the operating results of the UBAM segment for the twelve months ended February 28 (29):

	Twelve Months Ended February 28 (29),
	2021			2020
Gross sales	$	237,317,700		$	129,363,500
Less discounts and allowances		(65,099,100	)		(36,075,000	)
Transportation revenue		23,790,700			10,022,100
Net revenues		196,009,300			103,310,600
Cost of goods sold		55,603,000			31,759,200
Gross margin		140,406,300			71,551,400
Operating expenses
Operating and selling		31,182,700			15,551,000
Sales commissions		69,707,200			34,617,200
General and administrative		6,695,800			3,938,600
Total operating expenses		107,585,700			54,106,800
Operating income	$	32,820,600		$	17,444,600
Average number of active consultants		48,700			32,500

UBAM net revenues increased $92.7 million, or 89.7%, to $196.0 million for the fiscal year ended February 28, 2021, when compared with net revenues of $103.3 million reported for fiscal year ended February 29, 2020.  The average number of active consultants in fiscal year 2021 was 48,700, an increase of 16,200, or 49.8%, from 32,500 average active consultants selling in fiscal year 2020. The Company reports the average number of active consultants as a key indicator for this division. UBAM's increase in active consultants resulted from several factors, including: an increase in families looking for non-traditional income streams to supplement or replace income lost from the COVID-19 pandemic, a change in new consultant kits which offered lower introductory prices, the restructure of our UBAM consultant success program, which was introduced during the first quarter of fiscal 2021 and technology improvements that have enhanced the customer experience and streamlined the proprietary systems that our consultants use to run their business. Our increase in active consultants and our ability to receive orders online and deliver directly to our customers’ homes resulted in our increased revenues during the current fiscal year.

UBAM gross margin increased $68.8 million, or 96.1%, to $140.4 million for the fiscal year ended February 28, 2021, from $71.6 million reported for fiscal year ended February 29, 2020.  Gross margin as a percentage of net revenues increased 2.3% to 71.6% for fiscal year 2021 when compared to 69.3% for fiscal year 2020. The increase in gross margin as a percentage of net revenues was due to the change in mix of order types received. In the current fiscal year, our web sales, which have the lowest discounts and pay the highest commissions, increased significantly while book fairs, school and library sales and other in-person sale types declined year over year, due to the quarantining effects of the COVID-19 pandemic. The increase in web sales and decrease in in-person sales also resulted in overall higher sales commissions as a percentage of net revenues during the fiscal year. The overall net profit impact of the order type mix change after selling expenses, commissions and direct operating expenses was minimal.

Total UBAM operating expenses increased $53.5 million, or 98.9%, to $107.6 million during the fiscal year ended February 28, 2021, when compared with $54.1 million reported for fiscal year ended February 29, 2020.  Operating and selling expenses increased $15.6 million, to $31.2 million for fiscal year ended February 28, 2021 from $15.6 million reported for fiscal year 2020, primarily due to an increase in postage and freight costs of $15.0 million and an increase in expenses for trip accruals and other consultant rewards of $0.6 million, both associated with increased UBAM sales. Sales commissions increased $35.1 million, to $69.7 million, for fiscal year ended February 28, 2021 from $34.6 million reported for fiscal year 2020, due primarily to the increase in sales volumes and the increase in internet-based sales, which offer fewer discounts and higher sales commissions to consultants. General and administrative expenses increased $2.8 million to $6.7 million during the fiscal year ended February 28, 2021, when compared with $3.9 million reported for fiscal year ended February 29, 2020. This increase was primarily due to $2.1 million of increased credit card transaction fees associated with increased sales volumes and a $0.7 million increase in promotions and marketing expenses associated with increased consultant counts.

11

Operating income of our UBAM division increased $15.4 million, or 88.5%, to $32.8 million for fiscal year ended February 28, 2021, as compared to $17.4 million reported for fiscal year ended February 29, 2020. Operating income of the UBAM division as a percentage of net revenues for the year ended February 28, 2021 was 16.7%, compared to 16.9% for the year ended February 29, 2020, a change of 0.2%, or $0.3 million. Operating income as a percentage of net revenues changed from the prior year primarily due to increased postage and freight expenses as a percentage of net revenues totaling approximately $0.8 million, partially offset by the positive impact of the change to a “virtual” annual convention in our fiscal 2020 second quarter totaling approximately $0.5 million. 

Publishing Operating Results

The following table summarizes the operating results of the Publishing segment for the twelve months ended February 28 (29):

	Twelve Months Ended February 28 (29),
	2021			2020
Gross sales	$	18,271,900		$	20,573,300
Less discounts and allowances		(9,715,600	)		(10,909,700	)
Transportation revenue		69,500			37,700
Net revenues		8,625,800			9,701,300
Cost of goods sold		4,434,000			5,104,100
Gross margin		4,191,800			4,597,200
Total operating expenses		1,620,200			1,915,200
Operating income	$	2,571,600		$	2,682,000

Our Publishing division’s net revenues decreased $1.1 million, or 11.3%, to $8.6 million for the fiscal year ended February 28, 2021, when compared with net revenues of $9.7 million reported for fiscal year ended February 29, 2020.  The decrease in sales resulted from temporary store closures in areas impacted by the COVID-19 pandemic. Many Publishing customers temporarily closed during the first part of our fiscal year 2021, following the guidance from their local authorities to prevent the spread of the pandemic, and have begun reopening at varying times over the last six months of the fiscal year. In addition, many customers expanded their capacity to sell online, which had a positive impact on Publishing sales in the last six months.

Gross margin decreased $0.4 million to $4.2 million for the fiscal year ended February 28, 2021, from $4.6 million reported for fiscal year ended February 29, 2020.  The decrease in gross margin primarily resulted from the decrease in net revenues.  Gross margin as a percentage of net revenues increased 1.2% to 48.6% for the fiscal year 2021, compared to 47.4% reported the same period a year ago. The increase in gross margin percentage results primarily from a change in our customer mix. Customers receive varying discounts due to sales volumes and contract terms.

Operating income for the segment decreased $0.1 million, or 3.7%, to $2.6 million for fiscal year ended February 28, 2021, from $2.7 million reported during the same period last year.  The decrease in operating income resulted primarily from the $0.4 million decrease in gross margin, offset by $0.1 million of reduced freight from fewer sales orders, $0.1 million reduced sales commissions from fewer sales orders and $0.1 million of reduced expenses due to trade show cancellations resulting from the COVID-19 pandemic.

Liquidity and Capital Resources

EDC has a history of profitability and positive cash flows.  We typically fund our operations from the cash we generate.  We also use available cash primarily to purchase additional inventory, to pay down our outstanding bank loan balances, for capital expenditures, to pay dividends and to acquire treasury stock.  During fiscal year 2021, we dramatically increased our inventory purchases based on fiscal year 2021 sales.  At fiscal year-end 2021, our revolving bank credit facility loan balance was $5.2 million with $9.6 million in available capacity.

12

During fiscal year 2021, we generated positive cash flows from our operations of $7.8 million.  These cash flows resulted from:

●        net earnings of $12,624,000

Adjusted for: 

●        depreciation expense of $1,633,200

●        share-based compensation expense of $938,600

●        provision for inventory valuation allowance of $198,600

●        provision for doubtful accounts of $139,800

Offset by:

●        deferred income taxes of $903,400

Positively impacted by:

●        increase in accounts payable of $8,952,000

●        increase in accrued salaries, commissions, and other liabilities of $4,676,000

●        increase in deferred revenue of $1,528,800

●        increase in income taxes payable of $351,900

Negatively impacted by:

●        increase in inventories, net of $21,542,300

●        increase in accounts receivable of $519,400

●        increase in prepaid expenses and other assets of $260,100

Cash used in investing activities was $4.1 million for capital expenditures.  Our capital expenditures were primarily associated with equipment purchased to increase our daily shipping capacity and the software upgrades that our UBAM consultants use to monitor their business and place customer orders.

Our capital expenditures included:

●        Equipment purchased to increase our daily shipping capacity of $3,475,600

●        UBAM consultant and customer facing software upgrades of $502,100

●        Building and other improvements of $167,600

Cash used in financing activities was $4.9 million, which was comprised of net cash used to pay down term debt of $7.8 million, payments of $2.3 million for dividends and were offset by $5.2 million in net borrowings under the line of credit.

We continue to expect the cash generated from our operations and cash available through our line of credit with our Bank will provide us the liquidity we need to support ongoing operations. Cash generated from operations will be used to increase inventory by expanding our product lines, to liquidate existing debt, and any excess cash is expected to be distributed to our shareholders.

On February 15, 2021, the Company executed the Amended and Restated Loan Agreement with MidFirst Bank which replaced the prior loan agreement and includes multiple loans.  Term Loan #1 Tranche A, originally totaling $13.4 million, was part of the prior loan agreement. Term Loan #1 Tranche A has a fixed interest rate of 4.23% with principal and interest payable monthly and a stated maturity date of December 1, 2025.  Term Loan #1 is secured by the primary office, warehouse and land.  The outstanding borrowings on Term Loan #1 were $11.0 million and $11.5 million as of February 28, 2021 and February 29, 2020, respectively.

In addition, the Amended and Restated Loan Agreement provides a $6.0 million Advancing Term Loan to be used to finance planned equipment purchases. The Advancing Term Loan requires interest-only payments through July 15, 2021, at which time it will convert to a 60-month amortizing term loan maturing July 15, 2026. The Advancing Term Loan accrues interest at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% and matures on July 15, 2026. The Company had no borrowings under the Advancing Term Loan at February 28, 2021.

The Amended and Restated Loan Agreement also provides a $15.0 million revolving loan (“Line of credit”) through August 15, 2022 with interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%.  The Company had $5.2 million of borrowings outstanding on the line of credit as of February 28, 2021. Available credit under the revolving credit agreement was $9.6 million as of February 28, 2021.

13

During the second quarter of fiscal year 2021, we paid off Term Loan #1 Tranche B totaling $4.2 million from the previous loan agreement, which had a maturity date of December 1, 2025. In addition, we also paid off Term Loan #2 from the previous loan agreement totaling $2.9 million, which previously had a maturity date of June 28, 2021. The purpose of paying off these loans early was to utilize our existing cash flows from operations to increase future profits by reducing interest expense, as well as, free up future cash flows to be used to either pay dividends or purchase additional shares.

The Amended and Restated Loan Agreement also contains a provision for our use of the Bank’s letters of credit. The Bank agrees to issue or obtain issuance of commercial or stand-by letters of credit provided that the sum of the line of credit plus the letters of credit issued would not exceed the borrowing base in effect at the time. For the year ended February 28, 2021, we had no letters of credit outstanding.  The agreement contains provisions that require us to maintain specified financial ratios, place limitations on additional debt with other banks, limit the amounts of dividends declared and limits the amount of shares that can be repurchased using funding from the line of credit.

The following table reflects aggregate future maturities of long-term debt during the next five fiscal years as follows:

Years ending February 28 (29),
2022	$	533,500
2023		556,800
2024		581,200
2025		605,400
2026		8,707,800
	$	10,984,700

During the first quarter of fiscal 2021 we increased our quarterly dividend payments from $0.05 to $0.06. During the third quarter of fiscal 2021 we further increased our quarterly dividend from $0.06 to $0.10 per quarter. The Company has a long history of paying quarterly dividends and expects to continue its current practice of paying quarterly dividends to its shareholders.

In April 2008, our Board of Directors amended our 1998 stock repurchase plan, establishing that we may purchase up to an additional 1,000,000 shares as market conditions warrant.  In February 2019, our Board of Directors approved a new stock repurchase plan to replace the amended 2008 plan. Under the new 2019 plan, the Company is authorized to purchase up to 800,000 shares of common stock, which represented approximately 10% of the outstanding shares as of February 28, 2021, of which 514,594 remains available to purchase as of February 28, 2021. Management believes using excess liquidity to purchase outstanding shares enhances the value to the remaining shareholders and that these repurchases will have no adverse effect on our short-term and long-term liquidity.

Contractual Obligations

We are a smaller reporting company and are not required to provide this information.

Off Balance Sheet Arrangements

As of February 28, 2021, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Seasonality

The Company experiences increased sales in the Fall season.  We experience an increase in inventory during the Summer in anticipation for the Fall increase in sales.  In addition, new titles are released twice a year, in the Spring and Fall, which increases our inventory the months preceding these scheduled releases.  The Company uses available cash or working capital borrowings to fund these increases in inventory.

14

Critical Accounting Policies

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.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities.  On an on-going basis, we evaluate our estimates, including those related to our valuation of inventory, allowance for uncollectible accounts receivable, allowance for sales returns, long-lived assets and deferred income taxes.  We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may materially differ from these estimates under different assumptions or conditions.  Historically, however, actual results have not differed materially from those determined using required estimates. Our significant accounting policies are described in the notes accompanying the financial statements included elsewhere in this report.  However, we consider the following accounting policies to be more significantly dependent on the use of estimates and assumptions.

Share-Based Compensation

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 ratably from the service inception date to the vesting date for each tranche.  Forfeitures are recognized when they occur.

The restricted share awards granted under the 2019 Long-Term Incentive Plan (“2019 LTI Plan”) contain both service and performance conditions. The Company recognizes share compensation expense only for the portion of the restricted share awards that are considered probable of vesting.  Shares are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employees have been established.  The fair value of these awards are determined based on the closing price of the shares on the grant date. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment.

During fiscal years 2021 and 2020, the Company recognized $0.9 million and $0.7 million, respectively, of compensation expense associated with the shares granted.

Revenue Recognition

Sales associated with product orders are recognized and recorded when products are shipped.  Products are shipped FOB- Shipping Point. UBAM’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 product damaged in transit.  Damaged returns are primarily received from the retail customers of our Publishing division.  Those damages occur in the stores, not in shipping to the stores, and we typically do not offer credit for damaged returns.  It is 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 the fiscal years ended February 28, 2021 and February 29, 2020.

15

Allowance for Doubtful Accounts

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 (collectively “allowance for doubtful accounts”).  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. The COVID-19 pandemic caused several of our retail customers to temporarily close their stores during the past fiscal year. The impact of the temporary store closures on our customers is uncertain and many customers may be financially harmed and unable to continue operations. Management has evaluated customers with significant receivable balances to determine if additional bad debt reserves are needed. In addition, we have offered extended payment terms to customers that have requested assistance. Management has estimated an allowance for doubtful accounts of $0.3 million and $0.2 million as of February 28, 2021 and February 29, 2020, respectively. Included within this allowance is $0.1 million of reserve for vendor discounts to sell remaining inventory as of February 28, 2021 and February 29, 2020.

Inventory

Our inventory contains over 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 books 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 resulting in a four to six-month lead-time to have a title printed and delivered to us.

Certain inventory is maintained in a noncurrent classification.  Management continually estimates and calculates the amount of noncurrent 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.  Noncurrent inventory was estimated by management using the current year turnover ratio by title.  All inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory.  Noncurrent inventory balances prior to valuation allowances were $0.9 million and $1.2 million at February 28, 2021 and February 29, 2020, respectively.

Consultants that meet certain eligibility requirements may request and receive inventory on consignment.  We believe allowing our consultants to have consignment inventory greatly increases their ability to be successful in making effective presentations at home shows, book fairs and other events; and having consignment inventory leads to additional sales opportunities.  Approximately 4.0% of our active consultants maintained consignment inventory at the end of fiscal year 2021.  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 consultants was $1.1 million and $1.5 million at February 28, 2021 and February 29, 2020, respectively. 

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 $0.7 million and $0.5 million as of February 28, 2021 and February 29, 2020, respectively. The increase in our valuation allowance is primarily an increase in the reserve for consigned inventory. Management has increased this reserve due to declined consignment sales as in-person events, such as booths and fairs, have been cancelled due to the Covid-19 pandemic.

Our principal supplier, based in England, generally requires a minimum re-order of 6,500 or more of a title in order to get a solo print run.  Smaller orders would require a shared print run with the supplier’s other customers, which can result in lengthy delays to receive the ordered title.  Anticipating customer preferences and purchasing habits requires historical analysis of similar titles in the same series. We then place the initial order or re-order based upon this analysis. These factors and historical analysis have led our management to determine that 2½ years represents a reasonable estimate of the normal operating cycle for our products.

New Accounting Pronouncements

See the New Accounting Pronouncements section of Note 1 to our financial statements, included in Part IV, Item 15 of this report, for further details of recent accounting pronouncements.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company and are not required to provide this information.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by Item 8 begins at page 24.

16

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

None

Item 9A.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) Rule 13a-15(a) as of February 28, 2021. This evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer (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 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 fourth quarter of the fiscal year covered by this report on Form 10-K, 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.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13(a) thru 15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our internal control over financial reporting based on the framework set forth in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our evaluation under the 2013 COSO Framework and applicable SEC rules, our management concluded that our internal control over financial reporting was effective as of February 28, 2021. Our internal control over financial reporting as of February 28, 2021 has been audited by HoganTaylor LLP, an independent registered public accounting firm, as stated in their report, which is included in this Form 10-K.

17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Internal Control Over Financial Reporting

We have audited Educational Development Corporation's (the Company) internal control over financial reporting as of February 28, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of February 28, 2021 and February 29, 2020, the related statements of earnings, shareholders' equity and cash flows for the years then ended, and the related notes to the financial statements and our report dated May 13, 2021 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ HOGANTAYLOR LLP

Tulsa, Oklahoma

May 13, 2021

18

Item 9B.  OTHER INFORMATION

None

19

PART III

Item 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

(a)  Identification of Directors

The information required by this Item 10 is furnished by incorporation by reference to the information under the caption "Election of Directors" in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

(b)  Identification of Executive Officers

The information required by this Item 10 is furnished by incorporation by reference to the information under the caption "Executive Officers of the Registrant" in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

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

The information required by this Item 10 is furnished by incorporation by reference to the information under the caption "Section 16 (a) Beneficial Ownership Reporting Compliance” in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

Item 11.  EXECUTIVE COMPENSATION

The information required by this Item 11 is furnished by incorporation by reference to the information under the caption "Executive Compensation" in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is furnished by incorporation by reference to the information under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Compensation Plans" in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None

Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 is furnished by incorporation by reference to the information under the caption "Independent Registered Public Accountants" in our definitive Proxy Statement to be filed in connection with the Annual Meeting of Shareholders to be held on July 7, 2021.

20

PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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

1.  Financial Statements          

	Page
Report of Independent Registered Public Accounting Firm	24
Balance Sheets as of February 28, 2021 and February 29, 2020	25
Statements of Earnings for the Years ended February 28, 2021 and February 29, 2020	26
Statements of Shareholders' Equity for the Years ended February 28, 2021 and February 29, 2020	27
Statements of Cash Flows for the Years ended February 28, 2021 and February 29, 2020	28
Notes to Financial Statements	29-41

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

2.  Exhibits

*3.1	Restated Certificate of Incorporation 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).
*4.1	Specimens of Common Stock Certificates are incorporated herein by reference to Exhibits 3.1 and 3.2 to Registration Statement on Form 10-K (File No. 0-04957) filed June 29, 1970.
*10.1	Usborne Agreement-Contractual agreement by and between the Company and Usborne Publishing Limited dated November 25, 1988 is incorporated herein by reference to Exhibit 10.12 to Form 10-K dated February 28, 1989 (File No. 0-04957).
*10.2	Party Plan-Contractual agreement by and between the Company and Usborne Publishing Limited dated March 14, 1989 is incorporated herein by reference to Exhibit 10.13 to Form 10-K dated February 28, 1989 (File No. 0-04957).
*10.3	Amendment dated January 1, 1992 to Usborne Agreement - Contractual agreement by and between the Company and Usborne Publishing Limited is incorporated herein by reference to Exhibit 10.13 to Form 10-K dated February 29, 1992 (File No. 0-04957).

21

10.4	Educational Development Corporation 2002 Incentive Stock Option Plan is incorporated herein by reference to Exhibit A to definitive proxy statement on Schedule 14A dated May 23, 2002 (File No. 0-04957).
10.5	Amendment dated November 12, 2002 to Usborne Agreement – Contractual agreement by and between us and Usborne Publishing Limited is incorporated herein by reference to Exhibit 10.32 to Form 10-K dated February 28, 2003 (File No. 0-04957).
10.6	Employment Agreement between Randall W. White and the Company dated February 28, 2004 incorporated herein by reference to Exhibit 10.8 to Form 10-K dated February 28, 2005 (File No. 0-04957).
10.7	Purchase and Sale Agreement dated December 1, 2015 by and between the Company and Hilti, Inc., Tulsa, OK incorporated herein by reference to Exhibit 10.8 to Form 10-K dated February 28, 2019 (File No. 0-04957).
10.8	Lease Agreement dated December 1, 2015 by and between the Company and Hilti, Inc., Tulsa, OK incorporated herein by reference to Exhibit 10.9 to Form 10-K dated February 28, 2019 (File No. 0-04957).
10.9	Lease Agreement dated December 1, 2015 by and between the Company and Hilti, Inc., Tulsa, OK incorporated herein by reference to Exhibit 10.9 to Form 10-K dated February 28, 2019 (File No. 0-04957).
**10.10	Amended and Restated Loan Agreement dated February 15, 2021 by and between the Company and MidFirst Bank, Tulsa, OK.
**10.11	First Amendment Amended and Restated Loan Agreement dated April 1, 2021 by and between the Company and MidFirst Bank, Tulsa, OK.
**23.1	Consent of Independent Registered Public Accounting Firm.

**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 the Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer) 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	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Paper Filed

**Filed Herewith

Item 16.  FORM 10-K SUMMARY

Not applicable

22

SIGNATURES

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

EDUCATIONAL DEVELOPMENT CORPORATION

Date:	May 13, 2021	By	/s/ Randall W. White
			Randall W. White
			Chairman of the Board, Director, President and Chief Executive Officer
			(Principal Executive Officer)

Date:	May 13, 2021	By	/s/ Dan E. O’Keefe
			Dan E. O’Keefe
			Chief Financial Officer and Corporate Secretary
			(Principal Financial and Accounting Officer)

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

Date:	May 13, 2021	/s/ Randall W. White
		Randall W. White
		Chairman of the Board, Director, President and Chief Executive Officer
		(Principal Executive Officer)
	May 13, 2021	/s/ John A. Clerico
		John A. Clerico, Director
	May 13, 2021	/s/ Ronald McDaniel
		Ronald McDaniel, Director
	May 13, 2021	/s/ Dr. Kara Gae Neal
		Dr. Kara Gae Neal, Director
	May 13, 2021	/s/ Joshua J. Peters
		Joshua J. Peters, Director
	May 13, 2021	/s/ Dan E. O’Keefe
		Dan E. O’Keefe
		Chief Financial Officer and Corporate Secretary
		(Principal Financial and Accounting Officer)

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Educational Development Corporation (the Company) as of February 28, 2021 and February 29, 2020, the related statements of earnings, shareholders' equity and cash flows for the years then ended, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2021 and February 29, 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 28, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated May 13, 2021, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

/s/ HOGANTAYLOR LLP

We have served as the Company's auditor since 2005.

Tulsa, Oklahoma

May 13, 2021

24

EDUCATIONAL DEVELOPMENT CORPORATION

BALANCE SHEETS

AS OF FEBRUARY 28 (29),

	2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,812,200		$	2,999,400
Accounts receivable, less allowance for doubtful accounts of $331,900 (2021) and $237,400 (2020)		3,346,700			2,967,200
Inventories - net		51,762,400			30,087,300
Income taxes receivable		-			221,700
Prepaid expenses and other assets		1,219,300			950,600
Total current assets		58,140,600			37,226,200
INVENTORIES - net		685,300			1,016,700
PROPERTY, PLANT AND EQUIPMENT - net		29,951,000			26,377,700
OTHER ASSETS		73,600			82,200
TOTAL ASSETS	$	88,850,500		$	64,702,800
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	19,674,300		$	9,661,100
Line of credit		5,245,300			-
Deferred revenues		1,914,100			385,300
Current maturities of long-term debt		533,500			1,027,400
Accrued salaries and commissions		3,488,000			1,657,200
Income taxes payable		130,200			-
Dividends payable		835,100			417,400
Other current liabilities		6,094,800			3,238,200
Total current liabilities		37,915,300			16,386,600
LONG-TERM DEBT - net of current maturities		10,451,200			17,784,300
DEFERRED INCOME TAXES - net		89,900			993,300
OTHER LONG-TERM LIABILITIES		134,300			145,800
Total liabilities		48,590,700			35,310,000
COMMITMENTS AND CONTINGENCIES – See Note 9
SHAREHOLDERS' EQUITY:
Common stock, $0.20 par value; Authorized 16,000,000 shares; Issued 12,410,080 shares; Outstanding 8,346,600 (2021) and 8,348,651 (2020) shares		2,482,000			2,482,000
Capital in excess of par value		10,863,900			9,843,900
Retained earnings		39,683,000			29,732,200
		53,028,900			42,058,100
Less treasury stock, at cost		(12,769,100	)		(12,665,300	)
Total shareholders' equity		40,259,800			29,392,800
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	88,850,500		$	64,702,800

See notes to financial statements.

25

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF EARNINGS

FOR THE YEARS ENDED FEBRUARY 28 (29),

	2021			2020
GROSS SALES	$	255,589,600		$	149,936,800
Less discounts and allowances		(74,814,700	)		(46,984,700	)
Transportation revenue		23,860,200			10,059,800
NET REVENUES		204,635,100			113,011,900
COST OF GOODS SOLD		60,037,000			36,863,300
Gross margin		144,598,100			76,148,600
OPERATING EXPENSES:
Operating and selling		36,123,700			18,606,000
Sales commissions		69,977,200			34,994,800
General and administrative		22,541,500			15,505,100
Total operating expenses		128,642,400			69,105,900
INTEREST EXPENSE		561,000			888,100
OTHER INCOME		(1,836,100	)		(1,597,300	)
EARNINGS BEFORE INCOME TAXES		17,230,800			7,751,900
INCOME TAXES		4,606,800			2,106,800
NET EARNINGS	$	12,624,000		$	5,645,100
BASIC AND DILUTED EARNINGS PER SHARE:
Basic	$	1.51		$	0.68
Diluted	$	1.50		$	0.68
WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING:
Basic		8,352,474			8,318,412
Diluted		8,426,724			8,323,128
Dividends per share	$	0.32		$	0.20

See notes to financial statements.

26

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF SHAREHOLDERS’ EQUITY

AS OF FEBRUARY 28 (29),

	Common Stock (par value $0.20 per share)										Treasury Stock
	Number of Shares Issued		Amount		Capital in Excess of Par Value			Retained Earnings			Number of Shares			Amount			Shareholders' Equity
BALANCE - February 28, 2019		12,092,080	$	2,418,400	$	8,975,100		$	25,754,900			3,896,998		$	(11,217,900	)	$	25,930,500
Purchases of treasury stock		-		-		-			-			254,475			(1,705,800	)		(1,705,800	)
Sales of treasury stock		-		-		241,000			-			(90,044	)		258,400			499,400
Exercise of stock options		10,000		2,000		24,300			-			-			-			26,300
Dividends declared ($0.20/share)		-		-		-			(1,667,800	)		-			-			(1,667,800	)
Share-based compensation expense (see Note 10)		-		-		665,100			-			-			-			665,100
Issuance of restricted share awards for vesting		308,000		61,600		(61,600	)		-			-			-			-
Net earnings		-		-		-			5,645,100			-			-			5,645,100
BALANCE - February 29, 2020		12,410,080	$	2,482,000	$	9,843,900		$	29,732,200			4,061,429		$	(12,665,300	)	$	29,392,800
Purchases of treasury stock		-		-		-			-			22,565			(163,800	)		(163,800	)
Sales of treasury stock		-		-		57,800			-			(26,828	)		83,600			141,400
Dividends declared ($0.32/share)		-		-		-			(2,673,200	)		-			-			(2,673,200	)
Forfeiture of restricted share awards		-		-		23,600			-			6,314			(23,600	)		-
Share-based compensation expense (see Note 10)		-		-		938,600			-			-			-			938,600
Net earnings		-		-		-			12,624,000			-			-			12,624,000
BALANCE - February 28, 2021		12,410,080	$	2,482,000	$	10,863,900		$	39,683,000			4,063,480		$	(12,769,100	)	$	40,259,800

See notes to financial statements.

27

EDUCATIONAL DEVELOPMENT CORPORATION

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED FEBRUARY 28 (29),

	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	12,624,000		$	5,645,100
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		1,633,200			1,425,700
Deferred income taxes		(903,400	)		120,700
Provision for doubtful accounts		139,800			63,900
Provision for inventory valuation allowance		198,600			318,400
Share-based compensation expense		938,600			665,100
Changes in assets and liabilities:
Accounts receivable		(519,400	)		227,700
Inventories, net		(21,542,300	)		2,598,200
Prepaid expenses and other assets		(260,100	)		590,200
Accounts payable		8,952,000			(4,567,500	)
Accrued salaries and commissions, and other liabilities		4,676,000			(1,284,700	)
Deferred revenues		1,528,800			(580,300	)
Income taxes receivable/payable		351,900			(978,100	)
Total adjustments		(4,806,300	)		(1,400,700	)
Net cash provided by operating activities		7,817,700			4,244,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(4,145,300	)		(638,800	)
Net cash used in investing activities		(4,145,300	)		(638,800	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term debt		(9,274,400	)		(964,900	)
Proceeds from term debt		1,447,400			-
Sales of treasury stock		141,400			499,400
Purchases of treasury stock		(163,800	)		(1,705,800	)
Cash proceeds from issuance of common stock upon exercise of stock options		-			26,300
Net borrowings under line of credit		5,245,300			-
Dividends paid		(2,255,500	)		(1,660,500	)
Net cash used in financing activities		(4,859,600	)		(3,805,500	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,187,200	)		(199,900	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		2,999,400			3,199,300
CASH AND CASH EQUIVALENTS - END OF YEAR	$	1,812,200		$	2,999,400
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest	$	582,000		$	899,100
Cash paid for income taxes	$	4,806,900		$	3,084,100
NON-CASH TRANSACTIONS:
Accrued capital expenditures	$	1,061,200		$	-

See notes to financial statements.

28

EDUCATIONAL DEVELOPMENT CORPORATION

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020

1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business—Educational Development Corporation (“we,” “our,” “us,” or “the Company”) distributes books and publications through our Usborne Books & More (“UBAM”) and EDC Publishing (“Publishing”) divisions to individual consumers, book, toy and gift stores, libraries and home educators located throughout the United States (“U.S.”).  We are the exclusive U.S. trade co-publisher of books and related items published by Usborne Publishing Limited (“Usborne”), an England-based publishing company, our largest supplier.  We also publish books and related items through our ownership of Kane Miller Book Publisher (“Kane Miller”).

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

Business Concentration—A significant portion of our inventory purchases are concentrated with Usborne.  Purchases from them were approximately $50.8 million and $21.4 million for the years ended February 28, 2021 and February 29, 2020, respectively.  Total inventory purchases for those same periods were approximately $72.4 million and $33.1 million, respectively.  As of February 28, 2021 and February 29, 2020, our outstanding accounts payable due to Usborne was $14.6 million and $5.5 million, respectively.

A significant portion of our UBAM division sales are facilitated through the use of social media collaboration platforms that allow our consultants to interact in real-time, or near real-time, with customers.  Consultants use these platforms to invite potential customers to “online parties,” provide book recommendations, answer questions and provide links to other supporting online materials. When a customer is ready to purchase books from the online party, they are redirected from the social media platform to the consultant’s e-commerce site where the order can be placed.

Cash and Cash Equivalents—Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000. We have never experienced any losses related to these balances.  The majority of payments due from banks for third party credit card transactions process within two business days.  These amounts due are classified as cash and cash equivalents.  Cash and cash equivalents also include demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired.

Accounts Receivable—Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within thirty days from the invoice date.  Extended payment terms are offered at certain times of the year for orders that meet minimum quantities or amounts.  During fiscal 2021, extended payment terms were granted to customers that were negatively impacted by the COVID-19 pandemic.  Delinquency fees are not assessed.  Payments of accounts receivable are allocated to the specific invoices identified on the customers’ remittance advice.  Accounts receivable are carried at original invoice amount less an estimated reserve made for returns and discounts based on quarterly review of historical rates of returns and expected discounts to be taken.  The carrying amount of accounts receivable is reduced, if needed, by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Management periodically reviews accounts receivable balances and, based on an assessment of historical bad debts, current customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends, estimates the portion of the balance that will not be collected.  Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation account based on its assessment of the current status of the individual accounts. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.  Recoveries of accounts receivable previously written off are recorded as income when received.

Management has estimated an allowance for doubtful accounts of $331,900 and $237,400 as of February 28, 2021 and February 29, 2020, respectively. Included within this allowance is $93,900 of reserve for vendor discounts to sell remaining inventory as of February 28, 2021 and February 29, 2020.

29

Inventories—Inventories are stated at the lower of cost or net realizable value.  Cost is determined using the average costing method.  We present a portion of our inventory as a noncurrent asset.  Occasionally we purchase book inventory in quantities in excess of what will be sold within the normal operating cycle due to the minimum order requirements of our primary supplier.  These excess quantities are included in noncurrent inventory.  We estimate noncurrent inventory using the current year turnover ratio by title.  For inventory that has at least twelve months of sales history, inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory.

The Company assumes title and responsibility for inventory purchased according to the contract language with our suppliers and the individual shipment terms for the order. The majority of Usborne orders pass title at FOB-Destination Port and most Kane Miller orders pass title at FOB-Shipping Point. The Company maintains insurance for the value of the inventory once the title has been passed until it is received at our warehouse (“inventory in transit”).

Consultants that meet certain eligibility requirements may request and receive inventory on consignment.  Consignment inventory is stated at the lower of cost or net realizable value, 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, excluding the estimated reserve, with consultants was $1,114,100 and $1,519,600 at February 28, 2021 and February 29, 2020, respectively.  The Company has reserved for consignment inventory not expected to be sold or returned of $478,600 and $239,800 as of February 28, 2021 and February 29, 2020, respectively.  

Inventories are presented net of a valuation allowance, which includes reserves for inventory obsolescence and consultant consignment inventory that is not expected to be sold or returned.  Management estimates the allowance for both current and noncurrent inventory.  The allowance is based on management’s identification of slow-moving inventory and estimated consignment inventory that will not be sold or returned.

Property, Plant and Equipment—Property, plant and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful life, as follows:

Building	30 years
Building improvements	5 – 15 years
Machinery and equipment	3 – 15 years
Capitalized software	4 years
Furniture and fixtures	3 years

Capitalized projects that are not placed in service are recorded as in progress and are not depreciated until the related assets are placed in service.

Impairment of Long-Lived Assets—We review the value of long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable based on estimated future cash flows.  Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, we recognize an impairment charge for the excess of carrying value of the asset over its estimated fair value. Determination as to whether and how much an asset is impaired involves management estimates and can be impacted by other uncertainties. No impairment was noted during fiscal years 2021 or 2020.

Income Taxes—We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using the current tax laws and rates. A valuation allowance is established when necessary to reduce net deferred tax assets to the amounts that are “more likely than not” to be realized.

Revenue Recognition—Revenue is derived from the sales of children’s books and related products which are generally capable of being distinct and accounted for as a single performance obligation to deliver tangible goods. Substantially all of our books are sold to end consumers through our UBAM division and retail outlets through our Publishing division.  Refer to Note 13 – Business Segments for revenue by segment.  Revenues of both divisions are recognized at shipping point, which is the point in time the customer obtains control of the products and risk of loss and rewards of ownership have been transferred.  Products are shipped FOB-Shipping Point. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for as a pass through liability, and therefore are excluded from net sales.

30

The majority of the UBAM's sales contracts have a single performance obligation and are short-term in nature.  UBAM’s sales are generally collected at the time the product is ordered.  Sales which have been paid for but not shipped are classified as deferred revenue on the balance sheets.  Sales associated with consignment inventory are recognized when reported by the consignee and payment associated with the sale has been collected.  Transportation revenue represents the amount billed to the customer for shipping the product and is recorded when the product is shipped.

Certain UBAM sales contracts associated with the hostess award programs include sales incentives, such as discounted products.  These incentives provide a separate performance obligation in the contract and material right to the customer.  The transaction price is allocated to the material right based on its relative standalone selling price and is recognized in revenue as the performance obligations are satisfied, which occurs at shipping point or at the expiration of the material right.  As the products included as sales incentives are shipped with the associated products ordered, there is no deferral required.  Revenues allocated to the material right are recognized in gross sales, discounts and allowances and cost of goods sold in our statement of earnings.

The majority of Publishing’s sales contracts have a single performance obligation and are short-term in nature. Publishing’s sales may be collected at the time the product is shipped or the customers may be given payment terms based primarily on their credit worthiness and payment history.

Estimated allowances for sales returns, which reduce net revenues and costs of goods sold, are recorded as sales are recognized. Management uses a moving average calculation to estimate the allowance for sales returns. We are not responsible for product damaged in transit. Damaged returns are primarily from retail stores. These returns result from damage that occurs in the stores, not in shipping to the stores. It is industry practice to accept non-damaged returns from retail customers. Management has estimated sales returns of approximately $201,500 as of both February 28, 2021 and February 29, 2020, which is included in other current liabilities on the Company’s balance sheets. In addition, Management has recorded an asset for the expected value of non-damaged inventories to be returned. The estimated value of returned products of $100,800 is included in other current assets on the Company’s balance sheets as of both February 28, 2021 and February 29, 2020.

The Company generally expenses sales commissions in the same period that the revenue is recognized. These costs are recorded within operating expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an unexpected length of one year or less.

Advertising Costs—Advertising costs are expensed as incurred.  Advertising expenses, included in general and administrative expenses in the statements of earnings, were $1,181,300 and $579,500 for the years ended February 28, 2021 and February 29, 2020, respectively.

Shipping and Handling Costs—We classify shipping and handling costs as operating and selling expenses in the statements of earnings.  Shipping and handling costs include postage, freight, handling costs, as well as shipping materials and supplies. These costs were $34,167,000 and $17,240,300 for the years ended February 28, 2021 and February 29, 2020, respectively.

Interest Expense—Interest related to our outstanding debt is recognized as incurred.  Interest expense, classified separately in the statements of earnings, was $561,000 and $888,100 for the years ended February 28, 2021 and February 29, 2020, respectively.

Earnings per Share—Basic earnings per share (“EPS”) is computed by dividing net earnings 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.

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

	Year Ended February 28 (29),
	2021		2020
Earnings per share:
Net earnings applicable to common shareholders	$	12,624,000	$	5,645,100
Shares:
Weighted average shares outstanding-basic		8,352,474		8,318,412
Assumed exercise of options and issuance of nonvested restricted shares		74,250		4,716
Weighted average shares outstanding-diluted		8,426,724		8,323,128
Diluted earnings per share:
Basic	$	1.51	$	0.68
Diluted	$	1.50	$	0.68

31

Share-Based Compensation—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 ratably from the service inception date to the vesting date for each tranche.  Forfeitures are recognized when they occur.

New Accounting Pronouncements—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 that the following recently issued accounting standard updates (“ASU”) apply to us:

In December 2019, the FASB published ASU 2019-12: Income Taxes (Topic 740), which simplifies the accounting for income taxes. Topic 740 addresses a number of topics including but not limited to the removal of certain exceptions currently included in the standard related to intra-period allocation when there are losses, in addition to calculation of income taxes when current year-to-date losses exceed anticipated loss for the year. The amendment also simplifies accounting for certain franchise taxes and disclosure of the effect of enacted change in tax laws or rates. Topic 740 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The impact of the adoption is not expected to have a material impact to our financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (LIBOR). This ASU includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This ASU is effective March 12, 2020 through December 31, 2022. The Company’s debt agreements include the use of alternate rates when LIBOR is not available. We do not expect the change from LIBOR to an alternate rate will have a material impact to our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.

2.       INVENTORIES

Inventories consist of the following:

	February 28 (29),
	2021			2020
Current:
Book inventory	$	52,276,200		$	30,346,900
Inventory valuation allowance		(513,800	)		(259,600	)
Inventories net - current	$	51,762,400		$	30,087,300
Noncurrent:
Book inventory	$	894,300		$	1,226,500
Inventory valuation allowance		(209,000	)		(209,800	)
Inventories net - noncurrent	$	685,300		$	1,016,700

Inventory in transit totaled $6,467,400 and $549,900 at February 28, 2021 and February 29, 2020, respectively.

Book inventory quantities in excess of what we expect will be sold within the normal operating cycle, based on 2 ½ years of anticipated sales, are included in non-current inventory.

32

3.        PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	February 28 (29),
	2021			2020
Land	$	4,107,200		$	4,107,200
Building		20,373,900			20,321,800
Building improvements		1,949,200			1,833,700
Machinery and equipment		8,289,400			8,025,000
Furniture and fixtures		110,800			110,800
Capitalized software		866,500			-
Property, plant and equipment - in progress		4,436,300			528,300
Total property, plant and equipment		40,133,300			34,926,800
Less accumulated depreciation		(10,182,300	)		(8,549,100	)
Property, plant and equipment-net	$	29,951,000		$	26,377,700

During fiscal year 2020, the Company began the process to upgrade the software platform that the UBAM division consultants use to monitor their business. During fiscal year 2021, the Company placed into service these UBAM platform upgrades and continued its development of a new platform for customers to place orders. In addition, during fiscal year 2021 the Company began construction on two new pick-pack-ship lines to increase the Company’s daily shipping capacity.

4.        OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

	February 28 (29),
	2021		2020
Accrued royalties	$	1,423,400	$	655,600
Accrued UBAM incentives		1,695,000		819,400
Accrued freight		265,700		150,600
Sales tax payable		986,400		499,300
Allowance for expected inventory returns		201,500		201,500
Other		1,522,800		911,800
Total other current liabilities	$	6,094,800	$	3,238,200

5.        INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The tax effects of significant items comprising our net deferred tax assets and liabilities are as follows:

	February 28 (29),
	2021			2020
Deferred tax assets:
Allowance for doubtful accounts	$	89,600		$	64,100
Inventory overhead capitalization		127,700			69,200
Inventory valuation allowance		138,700			70,100
Inventory valuation allowance – noncurrent		56,400			56,700
Allowance for sales returns		27,200			27,200
Accruals		754,200			363,900
Total deferred tax assets		1,193,800			651,200
Deferred tax liabilities:
Property, plant and equipment		(1,283,700	)		(1,644,500	)
Total deferred tax liabilities		(1,283,700	)		(1,644,500	)
Net deferred income tax liabilities	$	(89,900	)	$	(993,300	)

33

The components of income tax expense are as follows:

	February 28 (29),
	2021		2020
Current:
Federal	$	3,236,400	$	1,518,600
State		901,600		467,500
		4,138,000		1,986,100
Deferred:
Federal		382,100		109,300
State		86,700		11,400
		468,800		120,700
Total income tax expense	$	4,606,800	$	2,106,800

The following reconciles our expected income tax rate to the U.S. federal statutory income tax rate:

	February 28 (29),
	2021			2020
U.S. federal statutory income tax rate		21.0	%		21.0	%
U.S. state and local income taxes–net of federal benefit		5.5	%		5.9	%
Other		0.2	%		0.3	%
Total income tax expense		26.7	%		27.2	%

We file our tax returns in the U.S. and certain state jurisdictions in which we have nexus. We are no longer subject to income tax examinations by tax authorities for fiscal years before 2017.

Based upon a review of our income tax filing positions, we believe that our positions would be sustained upon an audit and do not anticipate any adjustments that would result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded. We classify interest and penalties associated with income taxes as a component of income tax expense on the statements of earnings.

6.        EMPLOYEE BENEFIT PLAN

The Company has created the Educational Development Corporation Employee 401(k) Plan (“EDC 401(k) Plan”) as a benefit plan for employees offering retirement investment options as well as profit sharing with its employees, in the form of matching contributions. This plan incorporates the provisions of Section 401(k) of the Internal Revenue Code that allow favorable tax treatments on investments.  The EDC 401(k) Plan is available to all employees that meet specific age and length of service requirements.  The Company’s matching contributions are discretionary and approved annually at a meeting of the EDC 401(k) Plan’s Trustees and Company’s management. Matching contributions made to the Plan by the Company totaled $126,800 and $146,600 during the fiscal years ended February 28, 2021 and February 29, 2020, respectively. 

The EDC 401(k) Plan includes, as an investment option, the ability to purchase shares of the Company’s stock. Employees that made contributions in this investment option historically purchased their shares directly from the Company. Sales of our treasury stock to the EDC 401(k) Plan totaled 40,559 shares in fiscal 2020. In fiscal year 2021, the EDC 401(k) Plan administrator began acquiring shares of the Company stock directly from the NASDAQ.

7.        LEASES

We have both lessee and lessor arrangements. Our leases are evaluated at inception or at any subsequent modification. Depending on the terms, leases are classified as either operating or finance leases if we are the lessee, or as operating, sales-type or direct financing leases if we are the lessor, as appropriate under Accounting Standards Codification (“ASC”) 842 - Leases.  Our lessee arrangement includes a rental agreement where we have the exclusive use of dedicated office space in San Diego, California, and qualifies as an operating lease. Our lessor arrangements include three rental agreements for warehouse and office space in Tulsa, Oklahoma, and each qualifies as an operating lease under ASC 842.

In accordance with ASC 842, we have made an accounting policy election to not apply the new standard to lessee arrangements with a term of one year or less and no purchase option that is reasonably certain of exercise. We will continue to account for these short-term arrangements by recognizing payments and expenses as incurred, without recording a lease liability and right-of-use asset.

34

We have also made an accounting policy election for both our lessee and lessor arrangements to combine lease and non-lease components. This election is applied to all of our lease arrangements as our non-lease components are not material and do not result in significant timing differences in the recognition of rental expenses or income.

Operating Leases – Lessee

We recognize a lease liability, reported in other liabilities 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. We also recognize a right-of-use asset, reported in other assets on the balance sheets, for each lease, valued at the lease liability, adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The lease liability and right-of-use asset are reduced over the term of the lease as payments are made and the assets are used.

	February 28 (29),
	2021			2020
Operating lease assets:
Right-of-use asset	$	34,100		$	45,200
Operating lease liabilities:
Current lease liability	$	13,700		$	13,500
Long-term lease liability	$	20,400		$	31,700
Remaining lease term (months)		31			43
Discount Rate		4.60	%		4.60	%

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 earnings. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

	February 28 (29),
	2021		2020
Fixed lease cost	$	13,200	$	12,700

Future minimum rental payments under operating leases with initial terms greater than one year as of February 28, 2021, are as follows:

Years ending February 28 (29),
2022	$	13,700
2023		14,200
2024		8,400
Total future minimum rental payments		36,300
Present value discount		(2,200	)
Total operating lease liability	$	34,100

The following table provides further information about our operating leases reported in our financial statements: 

	February 28 (29),
	2021		2020
Operating cash flows – operating lease	$	13,200	$	12,700

35

Operating Leases – Lessor

In connection with the 2015 purchase of our 400,000 square-foot facility on 40-acres, we entered into a 15-year lease with the seller, a non-related third party, who leases 181,300 square feet, or 45.3% of the facility. The lessee pays $116,800 per month, through the lease anniversary date of December 2021, with a 2.0% annual increase adjustment on each anniversary date thereafter.  The lease terms allow for one five-year extension, which is not a bargain renewal option, at the expiration of the 15-year term.  Revenues associated with the lease are being recorded on a straight-line basis over the initial lease term and are reported in other income in the statements of earnings. We recognize variable rental payments as revenue in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Future minimum payments receivable under operating leases with terms greater than one year are estimated as follows:

Years ending February 28 (29),
2022	$	1,542,100
2023		1,573,200
2024		1,577,900
2025		1,547,100
2026		1,524,300
Thereafter		8,091,000
Total	$	15,855,600

The cost of the leased space was approximately $10,826,400 and $10,789,500 as of February 28, 2021 and February 29, 2020, respectively.  The accumulated depreciation associated with the leased assets was $2,216,700 and $1,828,900 as of February 28, 2021 and February 29, 2020, respectively.  Both the leased assets and accumulated depreciation are included in property, plant and equipment-net on the balance sheets.

8.        DEBT

Debt consists of the following:

	February 28 (29),
	2021			2020
Line of credit	$	5,245,300		$	-
Long-term debt	$	10,984,700		$	18,811,700
Less current maturities		(533,500	)		(1,027,400	)
Long-term debt, net of current maturities	$	10,451,200		$	17,784,300

The Company executed an Amended and Restated Loan Agreement on February 15, 2021 (as amended the “Loan Agreement”) with MidFirst Bank (“the Bank”), which replaced the prior loan agreement and includes multiple loans.  Term Loan #1 Tranche A, originally totaling $13.4 million, was part of the prior loan agreement. Term Loan #1 Tranche A has a fixed interest rate of 4.23% with principal and interest payable monthly and a stated maturity date of December 1, 2025.  Term Loan #1 is secured by the primary office, warehouse and land.  The outstanding borrowings on Term Loan #1 were $10,984,700 and $11,497,100 as of February 28, 2021 and February 29, 2020, respectively. 

The Loan Agreement also provides a $15.0 million revolving loan (“Line of credit”) through August 15, 2022 with interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75% at February 28, 2021).  The Company had $5,245,300 of borrowings outstanding on the line of credit as of February 28, 2021. Available credit under the revolving credit agreement was $9,570,200 as of February 28, 2021.

In addition, the Loan Agreement provides a $6.0 million Advancing Term Loan to be used to finance planned equipment purchases. The Advancing Term Loan requires interest-only payments through July 15, 2021, at which time it will convert to a 60-month amortizing term loan maturing July 15, 2026. The Advancing Term Loan accrues interest at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75% at February 28, 2021). The Company had no borrowings under the Advancing Term Loan at February 28, 2021.

36

The Company had three separate loans under the prior loan agreement with the Bank: Term Loan #1 Tranche B, Term Loan #2 and a revolving loan that were fully paid prior to executing the current Loan Agreement. The Tranche B Loan had interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%. The outstanding borrowings on the Tranche B Loan was $4,293,500 as of February 29, 2020. Term Loan #2 had interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%.  Term Loan #2 was secured by our secondary warehouse and land. The outstanding borrowings on Term Loan #2 was $3,021,100 as of February 29, 2020. The prior loan agreement also provided a $10.0 million revolving loan with interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%.  We had no borrowings outstanding on the line of credit at February 29, 2020. 

The Advancing Term Loan and the line of credit accrue interest at a tiered rate based on our Adjusted Funded Debt to EBITDA ratio.  The current pricing tier is as follows:

Pricing Tier	Adjusted Funded Debt to EBITDA Ratio	LIBOR Margin (bps)
I	>2.00	300.00
II	>1.50 but <2.00	275.00
III	>1.00 but <1.50	250.00
IV	<1.00	225.00

Adjusted Funded Debt is defined as all long-term and short-term bank debt less the outstanding balance of Term Loan #1.  EBITDA is defined in the Loan Agreement as net income plus interest expense, income tax expense (benefit) and depreciation and amortization expenses.  The Adjusted Funded Debt to EBITDA ratio includes Adjusted Funded Debt to trailing twelve month EBITDA, reduced by specific rental income received from a non-related third party, see Note 7. The $15.0 million line of credit is limited to advance rates on eligible receivables and eligible inventory levels.

The Loan Agreement contains a provision for our use of the Bank’s letters of credit. The Bank agrees to issue or obtain issuance of commercial or stand-by letters of credit provided that no letters of credit will have an expiry date later than August 15, 2022, and that the sum of the line of credit plus the letters of credit would not exceed the borrowing base in effect at the time. We had no letters of credit outstanding as of February 28, 2021.

The Loan Agreement also contains provisions that require the Company to maintain specified financial ratios and limits any additional debt with other lenders. Additionally, the Loan Agreement places limitations on the amount of dividends that may be distributed and the total value of stock that can be repurchased using advances from the line of credit.

On April 16, 2020, the Company entered into a loan with the Bank of approximately $1.4 million pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The PPP Loan had a fixed interest rate of 1.00%, with principal and interest payments starting December 1, 2020 and a scheduled maturity date of May 1, 2022. The Company determined the PPP loan was no longer needed and repaid the loan in full, including interest accrued to date, on May 12, 2020.

The following table reflects aggregate future maturities of long-term debt during the next five fiscal years as follows:

Years ending February 28 (29),
2022	$	533,500
2023		556,800
2024		581,200
2025		605,400
2026		8,707,800
Total	$	10,984,700

9.        COMMITMENTS AND CONTINGENCIES

As of February 28, 2021, the Company had outstanding purchase commitments for inventory totaling $37,577,300, which will be received and payments due during fiscal year 2022.  Of these inventory commitments, $26,141,100 were with Usborne, $11,231,500 with various Kane Miller publishers and the remaining $204,700 with other suppliers.

37

The Company also had outstanding purchase commitments for equipment associated with the addition of two new pick-pack-ship lines totaling $1,693,600 at February 28, 2021, of which $1,061,200 was included in accounts payable.

10.        SHARE-BASED COMPENSATION

The Board of Directors adopted the 2002 Incentive Stock Option Plan (the “2002 Plan”) in June of 2002.  The 2002 Plan also authorized us to grant up to 2,000,000 stock options. Options granted under the 2002 Plan vest at date of grant and are exercisable up to ten years from the date of grant.  The exercise price on options granted is equal to the market price at the date of grant.  There were no options outstanding during fiscal year 2021. The options outstanding at the beginning of fiscal year 2020 were exercised in December 2019.

A summary of the status of our 2002 Plan as of February 28, 2021 and February 29, 2020, and changes during the years then ended is presented below:

	February 28 (29),
	2021				2020
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		-		-		10,000	$	2.63
Exercised		-		-		10,000	$	2.63
Expired		-		-		-		-
Outstanding at end of year		-		-		-		-

In July 2018, our shareholders 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 to be granted to certain members of management based on exceeding specified net revenues and pre-tax performance metrics during fiscal years 2019, 2020 and 2021. Restricted shares granted under the 2019 LTI Plan “cliff vest” after five years.

The restricted share awards granted under the 2019 LTI Plan contain both service and performance conditions. The Company recognizes share compensation expense only for the portion of the restricted share awards that are considered probable of vesting.  Shares are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employee have been established.  The fair value of these awards is determined based on the closing price of the shares on the grant date. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment.  

During fiscal year 2019, the Company granted approximately 308,000 restricted shares under the 2019 LTI Plan with an average grant-date fair value of $9.94 per share.  5,000 restricted shares from fiscal year 2019 were forfeited during fiscal year 2021. The remaining compensation expense for fiscal year 2019 awards, totaling approximately $1,307,000, will be recognized ratably over the remaining vesting period of approximately 24 months.  No shares were granted during fiscal year 2020.

During fiscal year 2021, the Company initially granted 151,000 restricted shares under the 2019 LTI Plan with an average grant-date fair value of $6.30 per share. 8,000 of these shares were granted, forfeited and re-granted to remaining participants in fiscal year 2021. In the third quarter of fiscal year 2021, the Company increased the number of shares granted for fiscal year 2021 from 151,000 to 305,000 due to revised performance expectations for the year. The remaining compensation expense for these awards, totaling approximately $1,571,200, will be recognized ratably over the remaining vesting period of approximately 48 months. As of February 28, 2021, there are no restricted shares available for issuance as future awards under the 2019 LTI Plan.

A summary of compensation expense recognized in connection with restricted share awards as follows:

	Year Ended February 28 (29),
	2021		2020
Share-based compensation expense	$	938,600	$	665,100

38

The following table summarizes stock award activity during fiscal year 2021 under the 2019 LTI Plan:

	Shares			Weighted Average Fair Value (per share)
Outstanding at February 29, 2020		308,000		$	9.94
Granted		305,000			6.30
Vested		-			-
Forfeited		(13,000	)		(7.70	)
Outstanding at February 28, 2021		600,000		$	8.14

As of February 28, 2021, total unrecognized share-based compensation expense related to unvested restricted shares was $2,878,200, which we expect to recognize over a weighted-average period of 37.1 months.

11.        STOCK REPURCHASE PLAN

In April 2008, the Board of Directors authorized us to repurchase up to an additional 1,000,000 shares of our common stock under the plan initiated in 1998 (“amended 2008 plan”).  On February 4, 2019, the Board of Directors replaced the amended 2008 plan with a new plan which authorized us to repurchase up to 800,000 shares of outstanding common stock in the open market or in privately negotiated transactions, and to utilize any derivative or similar instrument to effect share repurchase transactions (including without limitation, accelerated share repurchase contracts, equity forward transactions, equity swap transactions, floor transactions or other similar transactions or any combination of the foregoing transactions). This plan has no expiration date.

During fiscal year 2021, we purchased 22,565 shares at an average price of $7.27 per share totaling approximately $163,800 under the 2019 stock repurchase plan. During fiscal year 2020, we purchased 254,475 shares at an average price of $6.70 per share totaling approximately $1,705,800 under the 2019 stock repurchase plan. The maximum number of shares that may be repurchased in the future is 514,594.

12.        QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the years ended February 28, 2021 and February 29, 2020:

	Net  Revenues		Gross Margin		Net Earnings		Basic Earnings  Per Share		Diluted Earnings  Per Share
2021
First quarter	$	38,291,700	$	26,896,200	$	1,931,100	$	0.23	$	0.23
Second quarter		59,250,100		41,940,600		4,255,000		0.51		0.51
Third quarter		66,750,300		47,152,500		4,269,600		0.51		0.51
Fourth quarter		40,343,000		28,608,800		2,168,300		0.26		0.25
Total year	$	204,635,100	$	144,598,100	$	12,624,000	$	1.51	$	1.50
2020
First quarter	$	27,587,400	$	18,531,200	$	1,363,600	$	0.17	$	0.17
Second quarter		24,438,000		16,391,600		1,007,600		0.12		0.12
Third quarter		40,824,600		27,544,700		2,735,800		0.33		0.33
Fourth quarter		20,161,900		13,681,100		538,100		0.06		0.06
Total year	$	113,011,900	$	76,148,600	$	5,645,100	$	0.68	$	0.68

39

13.        BUSINESS SEGMENTS

We have two reportable segments: Publishing and UBAM. These reportable segments offer different methods of distribution to different types of customers. They are managed separately based on the fundamental differences in their operations. Our Publishing segment markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers and our internal tele-sales group. Our UBAM segment markets its products through a network of independent sales consultants using a combination of internet sales, direct sales, home shows and book fairs.

The accounting policies of the segments are the same as those of the rest of the Company. We evaluate segment performance based on earnings before income taxes of the segments, which is defined as segment net revenues reduced by cost of sales and direct expenses. Corporate expenses, depreciation, interest expense 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. 

Information by industry segment for the years ended February 28, 2021 and February 29, 2020 is set forth below:

NET REVENUES

	2021		2020
Publishing	$	8,625,800	$	9,701,300
UBAM		196,009,300		103,310,600
Total	$	204,635,100	$	113,011,900

EARNINGS (LOSS) BEFORE INCOME TAXES

	2021			2020
Publishing	$	2,571,600		$	2,682,000
UBAM		32,820,600			17,444,600
Other		(18,161,400	)		(12,374,700	)
Total	$	17,230,800		$	7,751,900

14.        FAIR VALUE MEASUREMENTS

The valuation hierarchy included in U.S. GAAP considers the transparency of inputs used to value assets and liabilities as of the measurement date.  A financial instrument's classification within the valuation hierarchy is based on the lowest level of input that is significant to its fair value measurement. The three levels of the valuation hierarchy and the classification of our financial assets and liabilities within the hierarchy are as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 - Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly. If an asset or liability has a specified term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs for the asset or liability.

We do not report any assets or liabilities at fair value in the financial statements. However, the estimated fair value of our term notes payable is estimated by management to approximate $11,078,800 and $19,155,500 as of February 28, 2021 and February 29, 2020, respectively. Management's estimates are based on the obligations' characteristics, including floating interest rate, maturity, and collateral. Such valuation inputs are considered a Level 2 measurement in the fair value valuation hierarchy.

40

15.        DEFERRED REVENUES

The Company’s UBAM division receives payments on orders in advance of shipment. Any payments received prior to our fiscal year end that were not shipped as of February 28, 2021 and February 29, 2020 are recorded as deferred revenues on the balance sheets. We received approximately $1,914,100 and $385,300 as of February 28, 2021 and February 29, 2020, respectively, in payments for sales orders which were, or will be, shipped out subsequent to the fiscal year end. Orders that were included in deferred revenues predominantly shipped within the first few days of the next fiscal year.

16.     SUBSEQUENT EVENTS

On April 1, 2021, the Company executed the First Amendment to the Loan Agreement which reduced the fixed interest rate on Term Loan #1 to 3.12% and removed the prepayment premium from the Loan Agreement.

On May 11, 2021, the Board of Directors of EDC approved a $0.10 dividend that will be paid to shareholders of record on Wednesday, June 2, 2021. 

41

EX-10.10

Exhibit 10.10

AMENDED AND RESTATED LOAN AGREEMENT

By and Between

EDUCATIONAL DEVELOPMENT CORPORATION

and

MIDFIRST BANK

February 15, 2021

TABLE OF CONTENTS

				Page
ARTICLE I. DEFINITIONS				1
	1.1.	Defined Terms		1
	1.2.	Terms Generally; References and Titles; Accounting Terms		1
ARTICLE II. THE LOANS				1
	2.1.	The Term Loan		1
		(a)	Interest	1
		(b)	Payment	2
		(c)	Prepayment	2
	2.2.	The Revolving Loan		2
		(a)	Advances	3
		(b)	Payment	3
		(c)	Interest	3
		(d)	Prepayment	3
		(e)	Letters of Credit	4
	2.3.	Advancing Term Loan		4
		(a)	Advances	4
		(b)	Interest	5
		(c)	Payment	5
		(d)	Prepayment	5
	2.4.	General Terms		5
		(a)	Interest	5
		(b)	Default Rate; Late Charge	5
		(c)	Payment	6
		(d)	Additional Expenditures	6
		(e)	Additional Costs	6
		(f)	Lenders Determinations	6
	2.5.	Security for the Loans		6
ARTICLE III. REPRESENTATIONS				6
	3.1.	Representations		6
		(a)	Status; Operational Authority	6
		(b)	Power; Transactional Authority; Enforceability	6
		(c)	No Violation; No Consent	6
		(d)	Financial Matters	7
		(e)	No Default	7
		(f)	Trade Name	7
		(g)	Litigation	7
		(h)	Title and Authority; Permitted Encumbrances	7
		(i)	Taxes	7
		(j)	Foreign Person	7
		(k)	ERISA	7
		(l)	Executive Order 13224; OFAC	8
		(m)	Purpose	8
		(n)	Investment Company Act	8
		(o)	No Financing Statement	8
		(p)	Location of Collateral	8
		(q)	Compliance with Applicable Law	8
		(r)	Brokerage Commissions	8
		(s)	Leases	8
		(t)	Collateral	9
		(u)	Condition of Property	9
		(v)	Operating Account	9

i

		(w)	Environmental	9
		(x)	No Reliance	9
		(y)	Beneficial Ownership and Responsibility	10
ARTICLE IV. COVENANTS AND AGREEMENTS OF BORROWER				10
	4.1.	Covenants and Agreements		10
		(a)	Change of Name, Identity or Structure	10
		(b)	Indemnity	10
		(c)	Fees and Expenses	11
		(d)	Waivers	11
		(e)	Books and Records	11
		(f)	Financial Statements and other Reports	11
		(g)	Compliance Certificate	11
		(h)	Borrowing Base Certificate	12
		(i)	Estoppel Certificate	12
		(j)	Further Assurances	12
		(k)	Location and Use of Collateral	12
		(l)	Insurance Requirements	12
		(m)	Escrow	13
		(n)	Operation of Property	14
		(o)	Repair and Maintenance	14
		(p)	Appraisal	14
		(q)	Casualty and Condemnation	14
		(r)	Collateral	15
		(s)	Litigation	16
		(t)	Indebtedness	16
		(u)	Limitation on Dividends and Stock Buybacks	16
		(v)	Hilti Lease	16
		(w)	Field Audit	16
		(x)	Accounts	16
		(y)	Accounts and Lockbox	16
		(z)	Appraisals	16
		(aa)	Information Technology	17
		(bb)	Stock Buybacks; Reporting	17
ARTICLE V. DEFAULTS AND REMEDIES				17
	5.1.	Event of Default		17
		(a)	Monetary Obligations	17
		(b)	Representations	17
		(c)	Bankruptcy Event	17
		(d)	Third Party Matters	17
		(e)	Transfers; Liens; Debt	17
		(f)	Death; Dissolution; Change in Ownership or Control	18
		(g)	Financial Reporting	18
		(h)	DCR Test Default	18
		(i)	Hilti Lease	18
		(j)	Loan to Value Default	18
		(k)	Non-Monetary Obligations	18
	5.2.	Remedies		18
		(a)	Pre-Event of Default	18
		(b)	Post-Event of Default	18
		(c)	Costs	19
ARTICLE VI. GENERAL CONDITIONS				19
	6.1.	Waiver		19
	6.2.	Lender's Action or Inaction		19
	6.3.	Lender's Rights		19

ii

6.4.	Third Party Rights	20
6.5.	Satisfaction of Condition; Time	20
6.6.	Assignment; Loan Participations	20
6.7.	Heirs, Successors and Assigns	20
6.8.	Exercise of Rights and Remedies	20
6.9.	Headings	20
6.10.	Inconsistency	20
6.11.	Applicable Law	20
6.12.	Forum; Service	21
6.13.	Usury	21
6.14.	Severability	21
6.15.	Counterparts	21
6.16.	Joint Liability	21
6.17.	Modification or Termination	21
6.18.	Notice	21
6.19.	Signatures	22
6.20.	No Partnership	22
6.21.	Waiver of Jury Trial	22
6.22.	Consent of Lender; Approvals	22
6.23.	Imaging	22
6.24.	Entire Agreement	22
6.25.	Damage Waiver	22
6.26.	Amendment and Restatement	22

iii

AMENDED AND RESTATED LOAN AGREEMENT

Borrower and Lender, for the mutual promises in the Loan Documents and other good and valuable consideration, enter into this Amended and Restated Loan Agreement on the Effective Date.

Background Recitals

A.    Borrower and Lender are parties to that certain Loan Agreement dated as of December 1, 2015 (as amended, the "Existing Loan Agreement").

B.    Borrower has requested that the Maximum Revolving Principal Amount be increased and certain other changes, and Lender has agreed to such request on the terms and conditions set forth in this Agreement.

C.    For convenience, Borrower and Lender desire to amend and restate the Existing Loan Agreement in its entirety in accordance with the terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and the mutual covenants and agreements herein contained, the parties hereby amend and restate the Existing Loan Agreement in its entirety and covenant and agree as follows:

ARTICLE I.
DEFINITIONS

1.1.    Defined Terms. Each capitalized term used in the Loan Documents has the meaning set forth in Exhibit A of this Agreement.

1.2.    Terms Generally; References and Titles; Accounting Terms. References in this Agreement to "Articles," "Sections," "Exhibits" or "Schedules" will be to the Articles, Sections, Exhibits or Schedules of this Agreement unless otherwise specifically provided. All Exhibits and Schedules attached to this Agreement are incorporated in, and are a part of, this Agreement for the purposes set forth in this Agreement. Any term defined in this Agreement may be used in the singular or plural. Words of any gender include all other genders. The terms "include," "includes," and "including" are followed by "without limitation". Except as otherwise specified or limited in this Agreement, a reference to any Person includes the successors and assigns of the Person. Unless otherwise specified all references "from" or "through" any date mean "from and including" or "through and including" the date. References to any statute or act include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any statute or act, without additional reference, refer to federal statutes and acts of the United States. References to any agreement, instrument or document includes all schedules, exhibits, annexes and other attachments to the agreement, instrument or document. Except as otherwise specifically provided herein, all accounting terms not specifically or completely defined herein shall be construed in conformity with GAAP, applied in a manner consistent with that used in preparing the financial statements delivered pursuant to this Agreement.

ARTICLE II.
THE LOANS

2.1.    The Term Loan. Subject to the terms of this Agreement and in reliance on Borrower's representations and warranties in the Loan Documents, Borrower acknowledges and agrees that it has borrowed the Term Loan. THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender the Principal Term Amount with fees, costs and interest as set forth in, and payable (in Dollars at Lender's Offices) pursuant to, this Agreement. The funding of the Term Loan was made under the Existing Loan Agreement at the Lender's Offices. Borrower and Lender acknowledge that as of the Effective Date, only Tranche A (as defined in the Existing Loan Agreement) of the Loan Agreement remains outstanding.

(a)    Interest. Subject to Subsection 2.4(b) below, the Principal Term Amount bears interest at the Contract Rate.

(b)    Payment. Borrower shall pay to Lender on each Principal Payment Date the Installment Amount. On the Maturity Date, Borrower shall pay in full to Lender the Principal Term Amount along with all unpaid, accrued interest.

(c)    Prepayment. Borrower may not prepay the Term Loan in whole or in part, except during the Prepayment Period, except as set forth below. Lender may refuse to accept any Term Loan prepayment which does not comply with this Section 2.1(c). During the Prepayment Period, Borrower may prepay the Term Loan, in whole or in part, without premium. However, if Borrower prepays the Term Loan at any time other than during the Prepayment Period, then concurrent with the prepayment, Borrower shall remit to Lender the Prepayment Premium; provided, however, the Prepayment Premium shall not be required to the extent the source of such prepayment is from Borrower's operational cash flow (and only to such extent), and not a refinancing, sale of the Property or any other source. Upon request, Borrower shall provide Lender with evidence reasonably satisfactory to Lender that any such exception to the Prepayment Premium is from Borrower's operational cash flow.

(i)    Lender and Borrower agree that:

(A)    the Prepayment Premium is not a penalty;

(B)    the Prepayment Premium will compensate Lender for Lender's losses resulting from Borrower's prepayment of the Term Loan;

(C)    Lender is likely to sustain losses if Borrower prepays the Term Loan;

(D)    the calculation method used to determine the Prepayment Premium is a reasonable determination of Lender's loss resulting from Borrower's prepayment of the Term Loan;

(E)    Lender has no obligation to mitigate its loss arising from any prepayment of the Term Loan; and

(F)    the compensation Lender will receive from the Term Loan, if the Term Loan is not prepaid, is greater than or equal to the Prepayment Premium.

(ii)    Borrower waives any right to claim that the Prepayment Premium is unenforceable or a penalty.

(iii)    Borrower acknowledges that Lender:

(A)    made the Term Loan to Borrower expecting that Borrower will not repay the Term Loan early but will repay the Term Loan as set forth in Section 2.1(b) above; and

(B)    was not willing to make the Term Loan for a shorter period.

(iv)    If during an Event of Default Period, Lender accelerates the maturity and repayment of the Term Loan, then the Prepayment Premium for will also be due and added to the Indebtedness.

Borrower has read and understands the terms of this Prepayment Subsection.

EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation

By:                                                            

Name: Randall W. White

Title:   Chairman, President and CEO

2.2.    The Revolving Loan. Subject to the terms of this Agreement and in reliance on Borrower's representations and warranties in the Loan Documents, Lender agrees to continue the Revolving Loan in favor of Borrower. Prior to the Termination Date, Lender agrees to make advances to Borrower from time to time under the Revolving Loan and issue Letters of Credit upon request, provided that the Total Revolving

2

Outstandings may not exceed the lesser of (i) the Maximum Revolving Principal Amount, (ii) the Borrowing Base then in effect, and (iii) the total amount of accounts payable of Borrower plus $5,000,000. Within the foregoing limits, funds may be advanced, repaid and re-advanced under the Revolving Loan. THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender the Principal Revolving Amount with fees, costs and interest as set forth in, and payable (in Dollars at Lender's Offices) pursuant to, this Agreement. The closing of the Revolving Loan will take place in Lender's Offices or at such other place as Lender may designate. The Revolving Loan will be subject to the following terms and conditions:

(a)    Advances. Except during an Event of Default Period, and provided all of the conditions to lending set forth below have been satisfied, advances under the Revolving Loan will be made by Lender from time to time on the request of Borrower subject to the following limitations:

(i)    The proceeds of all advances made under the Revolving Loan will be used solely for (A) working capital purposes and (B) stock buybacks in an aggregate amount not to exceed $4,000,000. Except for stock buybacks in an aggregate amount not to exceed $4,000,000 and Borrower's strict compliance with Section 4.1(bb), no advance to be made under the Revolving Loan shall be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(ii)    To request any advance, an officer of Borrower must notify Lender in writing or by telephone of the total amount of the requested advance and provide Lender such documents and information with respect to the advance as Lender may reasonably request. Lender is entitled to assume that any party purporting to be an officer in connection with a telephonic request for an advance has the authority to act on behalf of Borrower so long as Lender follows agreed upon procedures to confirm the identity of the individual claiming to be the officer, and Borrower hereby releases, indemnifies and holds Lender harmless from any loss, liability or expense which Lender might incur as a result of acting on the directions of any such party.

(iii)    Notwithstanding the foregoing, during any period of time during which Borrower is utilizing any cash management service offered from time to time by Lender, advances will be made automatically in accordance with the terms of such service, without the necessity of Borrower notifying Lender as provided above.

(iv)    Upon Borrower's satisfaction of the requirements and conditions contained in this Agreement, Lender will disburse the amount of any requested advance to Borrower's primary operating account maintained with Lender.

(v)    Lender will have no obligation to make any requested advance during an Event of Default Period or if the making of the request advance would cause the Total Revolving Outstandings to exceed the lesser of (i) the Maximum Revolving Principal Amount or (ii) the Borrowing Base then in effect.

(vi)    Each advance made against the Revolving Note and each principal payment thereon will be recorded by the Lender in its books and records, and the unpaid principal balance so recorded will be deemed presumptive evidence of the principal amount owing.

(b)    Payment. Borrower shall pay to Lender on each Principal Payment Date interest on the Principal Revolving Amount, in arrears, on each Interest Payment Date. On the Termination Date, Borrower shall pay in full to Lender the Principal Revolving Amount along with all unpaid, accrued interest. If at any time the Total Revolving Outstandings are greater than the lesser of (i) the Maximum Revolving Principal Amount and (ii) the Borrowing Base then in effect, Borrower shall immediately repay the Revolving Loan such that the Total Revolving Outstandings do not exceed such amount.

(c)    Interest. Subject to Subsection 2.4(a)(ii) and Subsection 2.4(b) below, the Principal Revolving Amount bears interest at the LIBO Rate.

(d)    Prepayment. Borrower may prepay the Revolving Loan, in whole or in part, without premium or penalty.

3

(e)    Letters of Credit. Lender agrees from time to time prior to the Termination Date to issue (or cause an affiliate of Lender to issue) commercial and standby letters of credit (each, a "Letter of Credit") for the account of Borrower. The Outstanding Amount of all Letters of Credit will be reserved under the Revolving Loan and will reduce the amount available for advances thereunder. The issuance (including any increase or extension) of each Letter of Credit will be subject to the following terms and conditions:

(i)    The form, terms and purpose of each Letter of Credit shall be acceptable to the Lender. Each Letter of Credit shall be issued for a term not to exceed 365 days, provided, however, that no Letter of Credit shall have an expiration date that is subsequent to the Termination Date, unless other arrangements have been made satisfactory to Lender in its sole discretion. Each Letter of Credit shall be subject to the additional terms and conditions of the letter of credit application, reimbursement agreement and/or other related documents required by the Lender.

(ii)    The Lender will have no obligation to issue (or increase or extend) any requested Letter of Credit during any Event of Default Period or if the issuance (or increase or extension) of the request Letter of Credit would cause the Total Revolving Outstandings to exceed the lesser of (i) the Revolving Commitment or (ii) the Borrowing Base then in effect.

(iii)    Each drawing paid under a Letter of Credit will be deemed an advance under the Revolving Loan; provided, however, that if advances under the Revolving Loan are not available for any reason at the time any drawing is paid, Borrower shall immediately pay to the Lender the full amount drawn, together with interest thereon from the date such drawing is paid to the date such amount is fully repaid by Borrower, at the rate of interest then applicable to advances under the Revolving Loan. Borrower authorizes Lender to debit any account maintained by Borrower with Lender for the amount of any such drawing.

2.3.    Advancing Term Loan. Subject to the terms of this Agreement and in reliance on Borrower's representations and warranties in the Loan Documents, Lender agrees to establish the Advancing Term Loan. THEREFORE, FOR VALUE RECEIVED, Borrower promises to pay to the order of Lender the Advancing Term Loan Maximum Principal Amount with fees, costs and interest as set forth in, and payable (in Dollars at Lender's Offices) pursuant to, this Agreement. The funding and closing of the Advancing Term Loan will take place in Lender's Offices or at such other place as Lender may designate.

(a)    Advances. Except during an Event of Default Period, and provided all of the conditions to lending set forth below have been satisfied, advances under the Advancing Term Loan will be made by Lender from time to time on the request of Borrower subject to the following limitations:

(i)    The proceeds of all advances made under the Advancing Term Loan will be used solely to finance 90% of the cost of new equipment purchased not earlier than six months prior to the Effective Date. No advance to be made under the Advancing Term Loan shall be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System.

(ii)    To request any advance, an officer of Borrower must notify Lender in writing or by telephone of the total amount of the requested advance and provide Lender such documents and information with respect to the advance as Lender may reasonably request. Lender is entitled to assume that any party purporting to be an officer in connection with a telephonic request for an advance has the authority to act on behalf of Borrower so long as Lender follows agreed upon procedures to confirm the identity of the individual claiming to be the officer, and Borrower hereby releases, indemnifies and holds Lender harmless from any loss, liability or expense which Lender might incur as a result of acting on the directions of any such party.

(iii)    Upon Borrower's satisfaction of the requirements and conditions contained in this Agreement, Lender will disburse the amount of any requested advance to Borrower's primary operating account maintained with Lender.

4

(iv)    Lender will have no obligation to make any requested advance during an Event of Default Period or if the making of the request advance would cause the Advancing Term Loan Principal Amount to exceed the Advancing Term Loan.

(v)    Each advance made against the Advancing Term Loan and each principal payment thereon will be recorded by Lender in its books and records, and the unpaid principal balance so recorded will be deemed presumptive evidence of the principal amount owing.

(b)    Interest. Subject to Subsection 2.3(a)(ii) above, the Advancing Term Loan Principal Amount of the Advancing Term Loan bears interest at the LIBO Rate.

(c)    Payment. Prior to the expiration of the Advancing Term Loan Advance Period, Borrower shall pay to Lender on each Principal Payment Date interest on the Advancing Term Loan Principal Amount, in arrears, on each Interest Payment Date. From and after expiration of the Advancing Term Loan Advance Period, Borrower shall pay to Lender on each Principal Payment Date the Advancing Term Loan Installment Amount. On the Advancing Term Loan Maturity Date, Borrower shall pay in full to Lender the Advancing Term Loan Principal Amount along with all unpaid, accrued interest.

(d)    Prepayment. Borrower may prepay the Advancing Term Loan, in whole or in part, without premium or penalty. Amounts repaid may not be reborrowed.

2.4.    General Terms.

(a)    Interest.

(i)    All interest accruing under the Loan Documents will be calculated on the basis of a 360-day year applied to the actual number of days in each month. Borrower shall make each payment which it owes under the Loan Documents on or before the Payment Deadline in immediately available Dollars without setoff, counterclaim or other deduction. If Lender receives any payment after the Payment Deadline, then the payment will be credited on the next following Business Day.

(ii)    Immediately after Lender gives a Suspension Notice to Borrower, Lender's obligation to make or maintain the Advancing Term Loan, the Revolving Loan and Additional Costs at the LIBO Rate will be suspended and all interest and Additional Costs payable at the LIBO Rate will automatically convert to the Prime Rate. If circumstances further change and nullify the basis on which the Suspension Notice was given, then Lender will advise Borrower of the change and thereafter the Advancing Term Loan, the Revolving Loan and the Additional Costs will automatically bear interest at the LIBO Rate.

(b)    Default Rate; Late Charge.

(i)    Any time during an Event of Default Period (and including any period prior to and after any judgment against any Borrower Party concerning the Loans, the Principal Amount or Additional Costs), the Principal Amount, any Additional Costs and all past due installments of interest will, at Lender's option, bear interest at the Default Rate.

(ii)    In addition to all other sums due under the Loan Documents, Borrower shall pay to Lender on demand the Late Charge upon all Past Due Indebtedness. The Late Charge is not a penalty, but is intended to compensate Lender for the losses Lender incurs because of the delinquent payment. Borrower agrees that, considering all of the circumstances existing on the date this Agreement is executed, the Late Charge represents a reasonable estimate of the losses Lender will incur because of any late payment, and that proof of Lender's actual losses will be costly, inconvenient, impracticable and extremely difficult to fix. Lender does not waive the Event of Default resulting from a past due payment because Lender accepts a Late Charge.

5

(c)    Payment.

(i)    Except during an Event of Default Period, Lender will apply all Loan payments: (A) first, to any unpaid Claims; (B) second, to any unpaid Additional Costs; (C) third, to accrued but unpaid interest due under the Loan Documents; (D) fourth, to all other unpaid sums due under the Loan Documents, except for the Principal Amount; and (E) last, to the unpaid Principal Amount (first to the Revolving Loan, then to the Term Loan). During an Event of Default Period, Lender may apply all Loan payments in any order Lender elects in its sole discretion.

(ii)    Borrower may not send any payments to Lender with a Paid in Full Mark. If Borrower tenders a payment to Lender with a Paid in Full Mark, then Lender may accept the payment without losing any of Lender's rights under the Loan Documents, and Borrower will remain obligated to pay any further amounts owed to Lender under the Loan Documents.

(d)    Additional Expenditures. All sums Lender pays or expends pursuant to the Loan Documents in excess of the Maximum Principal Amount will be (i) an additional loan to Borrower, (ii) Indebtedness, and (iii) immediately due and payable, upon Lender's written demand to Borrower, together with interest at the Default Rate from the date of Lender's expenditure until Borrower repays the expenditure and interest to Lender. Notwithstanding anything to the contrary in the Loan Documents, Lender is not obligated to make any expenditures.

(e)    Additional Costs. Notwithstanding anything to the contrary in any of the Loan Documents, Borrower shall pay to Lender all Additional Costs immediately after Lender's demand.

(f)    Lenders Determinations. All of Lender's reasonable determinations are conclusive, absent manifest error.

2.5.    Security for the Loans. The Loans are secured by, among other things, the Security Instruments.

ARTICLE III.
REPRESENTATIONS

3.1.    Representations. On the Effective Date and on each Compliance Certificate Delivery Date, Borrower represents to Lender that:

(a)    Status; Operational Authority. Each Borrower Party: (i) is duly organized, validly existing, and in good standing, under the laws of the jurisdiction in which it is formed; (ii) is duly qualified, authorized to do business, and in good standing, in every jurisdiction (other than the jurisdiction of its formation) in which it must be qualified; and (iii) has the power and authority to own the Property and its other assets, and to transact its present and proposed business.

(b)    Power; Transactional Authority; Enforceability. Each Borrower Party has the requisite power and authority to execute, deliver and carry out the terms and provisions of the Loan Documents to which it is a party, and has taken all necessary actions to authorize its execution, delivery and performance of the Loan Documents. Each Borrower Party has duly executed and delivered the Loan Documents. The Loan Documents each Borrower Party executes or under which it is obligated constitute the Borrower Party's legal, valid and binding obligations, enforceable in accordance with the terms of the Loan Documents, subject to (i) the effect of any Applicable Bankruptcy Law, or (ii) general principles of equity.

(c)    No Violation; No Consent. Each Borrower Party's execution, delivery and performance of the Loan Documents, and compliance with the terms and provisions of the Loan Documents, will not (i) contravene any Applicable Law, (ii) conflict or be inconsistent with or result in any breach of any term, covenant, condition or provision of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the Property or the Borrower Party's other assets pursuant to the terms of any indenture, mortgage, deed of trust,

6

agreement or other instrument to which the Borrower Party is a party or by which the Borrower Party or any of the Property or the Borrower Party's other assets is bound or may be subject, or (iii) violate any term of any Borrower Party's certificate of incorporation or other documents and agreements governing the Borrower Party's existence, management or operation. No Borrower Party is required to obtain the consent of any other party, including any Governmental Authority, in connection with the execution, delivery, performance, validity or enforceability of the Loan Documents.

(d)    Financial Matters. Each Borrower Party financial statement previously delivered to Lender was prepared in accordance with GAAP and completely, correctly and fairly present the financial condition and the results of operations of each Borrower Party on the date and for the period covered by the financial statements. All other reports, statements and other data that any Borrower Party furnished to Lender in connection with the Loan are true and correct in all material respects and do not omit any fact or circumstance necessary to ensure that the statements are not misleading. Each Borrower Party (i) is solvent, (ii) is not bankrupt, and (iii) has no outstanding liens, suits, garnishments, bankruptcies or court actions which may render the Borrower Party insolvent or bankrupt. Since the date of the last financial statements each Borrower Party delivered to Lender, no event, act, condition or liability has occurred or exists, which has had, or may reasonably be expected to have, a material adverse effect upon (A) such Borrower Party's business, condition (financial or otherwise) or operations, or (B) such Borrower Party's ability to perform or satisfy, or Lender's ability to enforce, any of the Indebtedness.

(e)    No Default. No Event of Default exists.

(f)    Trade Name. Borrower does not do business under any trade name or other name with respect to the Property or otherwise.

(g)    Litigation. There are no suits or proceedings (including condemnation) pending or (to Borrower's knowledge, after reasonable inquiry) threatened against or affecting any Borrower Party or the Property or involving the validity, enforceability or priority of any of the Loan Documents. Borrower has not received notice from any Governmental Authority alleging that any Borrower Party or the Property is violating any Applicable Law.

(h)    Title and Authority; Permitted Encumbrances. Borrower is the lawful owner of good and marketable title to the Property free and clear from all liens, security interests and encumbrances, except the lien and security interest evidenced by the Security Instruments and the Permitted Encumbrances. Borrower has good right and authority to transfer and encumber the Property and to grant a security interest in the Collateral. There are no mechanics' or materialmen's liens, or other claims that may constitute a lien on the Property other than claims for Real Estate Taxes which are not yet due or payable. There are no defaults under any of the Permitted Encumbrances. No Permitted Encumbrance has been modified unless approved by Lender in writing.

(i)    Taxes. Each Borrower Party has filed all required Tax returns. Each Borrower Party has paid all Taxes for which it is obligated, other than those Taxes which (A) are not yet delinquent or (B) the appropriate Borrower Party is diligently, and in good faith, contesting and for which the Borrower Party has made adequate reserves acceptable to Lender.

(j)    Foreign Person. Borrower is not a "foreign person" within the meaning of the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701 (i.e., Borrower is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder). Borrower's Taxpayer Identification Number is true and correct.

(k)    ERISA. (i) Borrower is not an "employee benefit plan" or a "governmental plan" within the meaning of ERISA; (ii) Borrower is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; (iii) Borrower's assets do not constitute "plan assets" under ERISA; and (iv) one or more of the following circumstances is true: (1) Equity interests in Borrower are publicly offered securities under ERISA or are securities issued by an investment

7

company registered under the Investment Company Act of 1940; (2) Less than 25% of the value of any class of equity interests in Borrower is held by "benefit plan investors" within the meaning of ERISA; or (3) Borrower qualifies as an "operating company," a "venture capital operating company," or a "real estate operating company" within the meaning of ERISA. Borrower will deliver to Lender such certifications and other evidence periodically requested by Lender, in its sole discretion, to verify the representations in this Subsection.

(l)    Executive Order 13224; OFAC. No Borrower Party or any Person with which a Borrower Party is associated or affiliated is (i) referred to or described in Executive Order 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, as amended) or (ii) subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. Borrower will not use any Loan proceeds in violation of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

(m)    Purpose. The Loan is solely for the purpose of carrying on or acquiring Borrower's business, and is not for personal, family, household or agricultural purposes. Borrower does not use any portion of the Property as Borrower's residence or business homestead and, therefore, no portion of the Property is exempt from forced sale under Applicable Bankruptcy Law or any other Applicable Law. Except as expressly permitted by Section 2.4(a)(i) and Section 4.1(bb), Borrower will not use any Loan proceeds to purchase or carry "margin stock" within the meaning of Federal Reserve Regulation U (12 C.F.R. §§ 221 et seq., as amended).

(n)    Investment Company Act. No Borrower Party is (i) an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of a "holding company" or (iii) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.

(o)    No Financing Statement. There are no effective financing statements covering any of the Collateral, except for those financing statements filed in connection with the Loan.

(p)    Location of Collateral. All tangible Collateral is located on the Land.

(q)    Compliance with Applicable Law. Borrower and the Property comply with all Applicable Laws. Borrower has not received notice that it or the Property is violating Applicable Law. Borrower has obtained all requisite approvals, permits and other authorizations from all Governmental Authorities with jurisdiction over the Property, Borrower and Borrower's businesses.

(r)    Brokerage Commissions. Any brokerage commission due in connection with any Lease has been paid in full.

(s)    Leases.

(i)    Borrower is the sole owner of the entire lessor's interest in the Leases and has good title to, and the full right to assign, the Leases and Rent and no other Person has any right, title or interest in the Leases or the Rent. Borrower has not assigned the Leases or the Rent to any Person, other than Lender.

(ii)    Borrower has delivered to Lender a true and complete copy of each Lease and a rent roll.

(iii)    Each of the Leases is (A) in writing, (B) valid and subsisting, (C) in full force and effect, and (D) except as disclosed to Lender in writing, unmodified.

(iv)    After the Effective Date, Borrower has not collected Rent under any Lease more than one month in advance of its due date.

(v)    No Tenant has: (A) an option to purchase any of the Property; (B) a right to terminate its Lease without Lender's prior consent; or (C) any defense, counterclaim or set-off to payment of the Rent.

8

(vi)    There are no existing defaults under the Leases; and no event has occurred, which with the passage of time or the giving of notice (or both) would constitute a default under the Leases. Borrower has taken all steps necessary to continue each Lease in force and effect until at least 12 months after the Maturity Date. Borrower has not, without Lender's prior written consent, (A) waived any default under, (B) released any obligated Person under, or (C) agreed to terminate, any Lease.

(t)    Collateral. Borrower is the sole owner of, has good title to, and the right to assign, the Collateral. No Person (other than Borrower or Lender) has any right, title or interest in the Collateral. The Leases, Licenses and Contracts are (or will be when issued or entered into) in full force and effect and there are no defaults (or any events which with the passage of time or the giving of notice, would be a default) under the Leases, Licenses or Contracts. Borrower has not assigned, transferred, encumbered, created or permitted any lien upon or charge against the Collateral (except in favor of Lender). Borrower has not done anything which might prevent Lender from enjoying and exercising any of its rights and privileges under the Loan Documents. Borrower has delivered to Lender a complete list, and certified copies, of all Contracts and Licenses. Borrower has furnished to Lender the Plans and Specifications. The Plans and Specifications comply with all Applicable Laws. There are no pending, or (to Borrower's knowledge) threatened or contemplated, special or other assessments against the Property.

(u)    Condition of Property. The Property has all necessary utility services and legally sufficient parking required for Borrower's use of the Property. The Property has legal access to all streets, alleys and easements necessary to serve the Property, and all of the streets, alleys and easements use have been completed, dedicated and accepted by the appropriate Governmental Authority. The Property is in good condition and repair with no deferred maintenance. Borrower is not aware of any latent or patent defects in the Property.

(v)    Operating Account. Borrower maintains all operating accounts for the Property (including security deposit accounts) with Lender.

(w)    Environmental.

(i)    Compliance. Borrower (A) is in compliance with all applicable Environmental Laws, (B) has obtained all Environmental Approvals required to operate its business as presently conducted or as reasonably anticipated to be conducted, (C) has not received any written communication, whether from a Governmental Authority, citizens group, employee or otherwise, that alleges that Borrower has failed to comply with any Environmental Law, and (D) no circumstance exists that may prevent or interfere with Borrower's full compliance in the future with all applicable Environmental Laws.

(ii)    No Claim. There is no Environmental Claim pending or threatened against Borrower or the Property.

(iii)    No Violation. There are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge or disposal of any Material of Environmental Concern that could form the basis of any Environmental Claims against Borrower or the Property.

(iv)    No Materials of Environmental Concern. There are no on-site or off-site locations in which Borrower has stored, disposed or arranged for the disposal of Materials of Environmental Concern. There are no underground storage tanks located on Property. There is no asbestos in the Improvements. No polychlorinated biphenyls (PCBs) are used or stored at the Property.

(x)    No Reliance. Borrower has made the decision to enter into the Purchase Agreement and the Hilti Lease based on its own investment decisions and due diligence investigation, and that in connection therewith has not in any manner relied on Lender and agrees that each of such actions is its free and voluntary act.

9

(y)    Beneficial Ownership and Responsibility. As of the Effective Date, the following individuals directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, own 25% or more of the equity interests of Borrower: None. As of the Effective Date, the following individual has significant responsibility to control, manage, or direct Borrower: Randall W. White.

ARTICLE IV.
COVENANTS AND AGREEMENTS OF BORROWER

4.1.    Covenants and Agreements. Borrower covenants to Lender as follows:

(a)    Change of Name, Identity or Structure. Borrower shall not (i) change its name, its jurisdiction of organization, its principal place of business, its identity (including trade name) or its entity structure or governance without notifying Lender of any change in writing at least 30 days prior to the effective date of the change or (ii) sell all or substantially all of its assets or merge or consolidate with any corporation, partnership, limited liability company or other legal entity.

(b)    Indemnity. Borrower's obligations under this Section 4.1(b) survive (1) payment in full of all Indebtedness, (2) maturity of the Loan and (3) termination of this Agreement and the other Loan Documents.

(i)    Borrower shall protect, defend, indemnify, reimburse and hold each Indemnified Party harmless for, from and against all Claims of every kind, known or unknown, foreseeable or unforeseeable, which may be imposed upon, asserted against or incurred or paid by an Indemnified Party at any time, arising out of or in any way connected with (A) the Loan, (B) the Property, (C) any Loan Document, (D) bodily injury, death, or property damage occurring in, upon or adjacent to the Property, through any cause whatsoever, (E) Indemnified Party's exercise of remedies under the Loan Documents, (F) any act performed or omitted to be performed by any Indemnified Party under any Loan Document, (G) any Borrower failure to perform its obligations under any Contract or License, (H) any Event of Default, (I) any Environmental Claim, (J) any claim by a Governmental Authority for any Taxes, or (K) any Borrower Party violation of Applicable Law, INCLUDING ANY CLAIMS ACTUALLY OR ALLEGEDLY ARISING FROM THE ORDINARY, CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE, OR STRICT LIABILITY, OF ANY INDEMNIFIED PARTY, except to the extent a court of competent jurisdiction determines in a final, non-appealable judgment that the Claims actually arose from the Indemnified Party's gross negligence or intentional misconduct.

(ii)    If an Indemnified Party notifies Borrower of any Claims for which Borrower's indemnity in Subsection (i) above applies, Borrower shall, on behalf of the Indemnified Party, assume and conduct, with due diligence and in good faith, the investigation and defense of the Claims with counsel selected by the Indemnified Party. If both Borrower and an Indemnified Party are defendants to the Claims and the Indemnified Party has been advised in writing by counsel that there may be legal defenses available to it which are inconsistent with those available to Borrower, then the Indemnified Party may select separate counsel to participate in the investigation and defense of the Claims on its own behalf, and Borrower will pay or reimburse the Indemnified Party for all Attorneys' Fees incurred with respect to separate counsel.

(iii)    If an Indemnified Party notifies Borrower of any Claims for which Borrower's indemnity in Subsection (i) above applies and Borrower fails, within 15 days after being notified of the Claims, to take the actions required under Subsection (ii) above, then (A) notwithstanding to the contrary in any of the Loan Documents, an Event of Default will immediately occur, and (B) the Indemnified Party may contest (or settle) the Claims at Borrower's expense using counsel selected by the Indemnified Party.

10

(c)    Fees and Expenses. Borrower shall pay, immediately upon Lender's demand, all fees (including appraisal fees, filing and recording fees, inspection fees, survey fees, taxes, brokerage fees and commissions, abstract fees, title policy fees, lien or security interest search fees, escrow fees, and Attorneys' Fees) and all other costs Lender or Borrower incurs in connection with (A) the Loan and the Loan Documents, (B) any Event of Default, (C) Lender's (1) exercise of remedies under the Loan Document or (2) protection of the Property, or (D) any modification to the Loan Document.

(d)    Waivers.

(i)    Borrower, with respect to the Indebtedness, waives, to the extent permitted by the Governing Law: (A) PRESENTMENT FOR PAYMENT; (B) DEMAND; (C) NOTICE OF DEMAND, DISHONOR AND NONPAYMENT; (D) NOTICE OF INTENTION TO ACCELERATE; (E) NOTICE OF ACCELERATION; (F) NOTICE OF DISPOSITION OF COLLATERAL; (G) THE DEFENSE OF IMPAIRMENT OF COLLATERAL; (H) THE RIGHT TO A COMMERCIALLY REASONABLE SALE OF COLLATERAL; (I) PROTEST AND NOTICE OF PROTEST; and (J) DILIGENCE IN COLLECTING, AND BRINGING SUIT AGAINST ANY OTHER PERSON.

(ii)    Borrower further waives and releases, to the extent permitted by the Governing Law, the rights (A) of redemption, valuation, and appraisement of the Property or other Collateral, (B) to (1) marshaling of Borrower's assets (including the Property), (2) the sale in inverse order of alienation, (3) a homestead exemption concerning any of the Collateral, and (C) to any matter to defeat, reduce or affect the Lender's rights under the terms of the Loan Documents to sell the Collateral or collect the full Indebtedness.

(e)    Books and Records. Borrower shall keep accurate books and records in accordance with GAAP. Lender and its representatives may, at any time during reasonable business hours, inspect and copy all of Borrower's books and records (including all contracts, statements, invoices, bills and claims for labor, materials and services supplied for the construction and operation of the Improvements).

(f)    Financial Statements and other Reports. Borrower shall deliver to Lender the below statements and reports on or before the below delivery deadline. Borrower shall also deliver to Lender any other information, reports or certificates as and when Lender requests.

Statement or Report	Frequency	Delivery Deadline
Borrower's audited annual financial statements	Annually	Within 90 days after each fiscal year ends
Borrower's quarterly financial statements	Quarterly	Within 45 days after each quarter ends
Audited annual financial statements of Hilti	Annually	Within 90 days after each fiscal year of Hilti
Confirmation of payment of rent by Hilti and CAM payments under Hilti Lease	Annually	Within 90 days after each anniversary of the Effective Date

All statements and reports must be in scope and detail reasonably satisfactory to Lender. During any Event of Default Period, Lender may require that all statements and reports be prepared, audited and certified (at Borrower's cost and expense) by an independent certified public accountant, acceptable to Lender. Borrower shall provide Lender with such additional financial, management, or other information regarding any Borrower Party or the Property, as Lender may request. Upon Lender's request, Borrower shall deliver all items required by this Subsection in an electronic format or by electronic transmission reasonably acceptable to Lender.

(g)    Compliance Certificate. Borrower shall deliver a Compliance Certificate to Lender on or before the Compliance Certificate Due Date.

11

(h)    Borrowing Base Certificate. Borrower shall deliver a Borrowing Base Certificate to Lender on or before the Borrowing Base Certificate Due Date.

(i)    Estoppel Certificate. Borrower shall:

(i) within 10 Business Days after receiving Lender's request, deliver a certificate stating (or explaining why the statement is false) (A) that the Loan Documents are valid and binding obligations of Borrower, (B) that the Loan Documents are enforceable against Borrower in accordance with their terms, (C) the Principal Amount, (D) that the Loan Documents have not been released, subordinated or modified, (E) the date of the last Loan payment, and (F) that Borrower is entitled to no offsets or defenses against enforcement of the Loan Documents; and

(ii) within 10 Business Days after receiving Lender's request, deliver a certificate from each requested Tenant, in form and substance acceptable to Lender, confirming the terms of the Tenant's Leases.

(j)    Further Assurances. Borrower shall, on Lender's request and at Borrower's cost promptly: (i) correct any defect concerning the Loan Documents, the Leases or the Collateral; (ii) execute, deliver and file any instrument, and do anything Lender determines to be necessary or desirable to carry out the purposes of the Loan Documents; (iii) take all necessary action to promptly protect the liens or the security interests under the Loan Documents against any Person other than Lender; (iv) take all actions necessary or desirable in Lender's determination to comply with the requirements or requests of any Governmental Authority; and (v) submit to Lender such additional information concerning the Collateral or the Contractors as Lender may reasonably request.

(k)    Location and Use of Collateral. All tangible Collateral will be used in the business of Borrower and shall remain in Borrower's control at all times at Borrower's risk of loss.

(l)    Insurance Requirements.

(i)    Casualty; Business Interruption. Borrower must, at all times, keep the Collateral insured, to the extent available, against damage or loss from all hazards for the full insurable replacement cost of the Collateral (without reduction for depreciation or co-insurance and without any exclusions or reduction of policy limits for acts of domestic and foreign terrorism and other specified action or inaction). The limit of insurance for all Collateral insurance policies must, all times, be equal to or greater than the Principal Amount, or such other amount determined by Lender in its sole discretion. Borrower must, at all times, also keep boiler and machinery insurance, domestic and foreign terrorism coverage and such other insurance for the Collateral as Lender reasonably requires. Borrower must keep the Collateral insured against loss by flood if the Property is, now or in the future, located in an area in which flood insurance is available under Applicable Law. Borrower shall maintain business interruption insurance, including use and occupancy, rental income loss and extra expense, for all periods covered by Borrower's property insurance for a limit equal to twelve (12) calendar months' exposure, all without any exclusions or reduction of policy limits for acts of domestic and foreign terrorism or other specified action or inaction.

(ii)    Liability and Other Insurance. Borrower shall maintain: (A) commercial general liability insurance with respect to the Property providing for limits of liability in the amount approved by Lender for both injury to or death of a person and for property damage per occurrence; (B) umbrella liability coverage in the amount and to the extent required by Lender; and (C) other liability insurance Lender reasonably requires from time to time. In addition, Borrower shall maintain (1) worker's compensation insurance and employer's liability insurance covering employees at the Property employed by Borrower (in the amounts required by Applicable Laws), (2) professional liability insurance, and (3) business interruption insurance.

12

(iii)    Form of Policies. All insurance policies must be fully paid and non-assessable when issued. All insurance policies must contain the provisions, endorsements, and expiration dates that Lender reasonably requires. All insurance policies must (A) be issued by insurance companies (1) authorized to do business in the State, and (2) approved by Lender, (B) if available, include a standard mortgagee clause, without contribution, in the name of Lender, (C) name Lender as an additional insured or loss payee, (D) not be cancellable, amendable or alterable without 30 days' prior written notice to Lender, and (E) include a waiver of subrogation for all liability and workers compensation coverage issued in favor of Lender.

(iv)    General. Borrower shall not carry separate or additional insurance concurrent in form or contributing to any loss for which coverage is required under this Subsection (l) unless approved by Lender in all respects. If Lender (or a third-party purchaser at or after a foreclosure) acquires title to the Collateral, then all of Borrower's interest in all insurance policies then in force concerning the Collateral will immediately vest in Lender (or the purchaser of the Collateral). Lender's approval of any insurance policy or insurer is not a representation or warranty of (A) the insurer's solvency or (B) the sufficiency of any insurance policy. Borrower shall comply with all insurance policy requirements and restrictions. Borrower will also provide all additional insurance which Lender reasonably requires and approves. If Lender requires, Borrower shall assign to Lender (on forms acceptable to Lender in its discretion) all insurance policies required under the Loan Documents. Any insurance proceeds Lender receives, because of (X) an assignment required under the Loan Documents or (Y) Lender being named loss payee, are Collateral and are not trust funds. The cost of any insurance Lender obtains for the account of Borrower will be Additional Costs.

(v)    Right to Purchase. If Borrower fails to provide Lender with evidence of the insurance coverage required by this Agreement within five (5) days after Lender's written demand for such evidence, the Lender may purchase any or all required insurance at Borrower's expense. Such insurance may, but need not, protect Borrower's interests. The insurance Lender purchases may not pay any claim Borrower might make or any claim made against Borrower. Borrower may later cancel any insurance Lender purchases, but only after providing Lender with evidence that Borrower has obtained all required insurance. If Lender purchases Property insurance, then, to the fullest extent allowed under Applicable Law, Borrower will be responsible for the costs of the insurance, including interest and other charges Lender imposes in connection with obtaining the insurance. Lender may add the costs of the insurance to the Indebtedness. The costs of the insurance may be more than the cost of insurance Borrower is able to obtain on its own.

(m)    Escrow. As additional security for the Indebtedness and Borrower's obligations under the Loan Documents, Borrower shall, upon Lender's written request, and until the Maturity Date, establish and maintain the Tax and Insurance Escrow Account. Upon such request, Borrower will deposit into the Tax and Insurance Escrow Account a sum equal to all Real Estate Taxes and Insurance Premiums for the then current year, as Lender estimates. Thereafter, on each Interest Payment Date, Borrower shall pay to Lender, which Lender will deposit into the Tax and Insurance Escrow Account, sufficient funds (as Lender estimates) to permit Lender to pay, at least 30 days prior to the due date, the next installments for Real Estate Taxes and Insurance Premiums. Borrower shall ensure that Lender receives, at least 30 days prior to the due date, all invoices for Real Estate Taxes and Insurance Premiums. So long as no Event of Default has occurred and Lender has received all invoices for Real Estate Taxes and Insurance Premiums, Lender shall pay (or will permit Borrower to make withdrawals from the Tax and Insurance Escrow Account to pay) all invoices for Real Estate Taxes and Insurance Premiums. Any excess amounts in the Tax and Insurance Escrow Account may, at Lender's option and subject to Applicable Law, be retained in the account for future use, applied to the Indebtedness or refunded to Borrower. Borrower shall immediately remit to Lender funds (as Lender determines and demands) sufficient to satisfy any deficiency in the Tax and Insurance Escrow Account. The Tax and Insurance Escrow Account is not, unless otherwise explicitly required by Applicable Law, an escrow or trust fund. The Tax and Insurance Escrow Account will not bear interest. The Tax and Insurance Escrow Account may be commingled with the general funds of Lender. During an Event of Default Period, Lender may apply the Tax and Insurance Escrow Account funds to the Indebtedness as Lender determines.

13

(n)    Operation of Property. Borrower shall operate the Property in accordance with all Applicable Laws and in the same manner as is customary and usual in the operation of comparable properties in the same metropolitan area as the Property. Borrower shall not use or allow the use of the Property in any manner which constitutes a public or private nuisance. Without obtaining Lender's prior written consent, Borrower shall: (i) use all commercially reasonable efforts to oppose any zoning reclassification of the Property, (ii) not seek, or acquiesce to, any zoning reclassification or variance for the Property; (iii) not impose any restrictive covenants or encumbrances upon the Property; (iv) not execute or file any subdivision plat affecting the Property; (v) not consent to any municipality's annexation of the Property; (vi) not permit the Property to be operated as a cooperative or condominium; (vii) not permit any drilling or exploration for, or extraction, removal or production of, minerals from the surface or subsurface of the Property; (viii) not permit any action or inaction which may reasonably be expected to diminish the value of the Property; (ix) not engage another Person to operate or manage the Property; or (x) not permit the Property to be included in any special taxing district.

(o)    Repair and Maintenance. Borrower shall keep the Property in good order, repair, condition and appearance. Borrower shall promptly make all necessary repairs and replacements, to the Property. Borrower shall insure that the Property is not deteriorated, misused, abused or wasted. All replacements to the Property must be equal or better than the replaced Property was when it was new. Borrower may not, without Lender's prior written consent: (i) erect any new buildings, structures or other improvements on the Property; (ii) except for the foregoing repairs, remove any Property from the Land; or (iii) make any structural alteration or any other alteration to the Property involving an estimated expenditure of $50,000 or more. Lender (or its designee) may, at Borrower's expense, inspect or examine the Property during normal business hours and without unnecessarily interrupting the Tenants or the operations of the Property. Except during any Event of Default Period, Lender (or its designee) shall give Borrower at least 24 hours advance notice (by any means and not subject to the terms of Section 6.18 below). Borrower shall assist Lender (and its designees) in completing any inspection. Borrower (or its designee) may accompany Lender (and its designee) during any inspection of the Property. If Lender's inspection reveals that repairs to the Property are necessary, then Borrower shall complete all repairs or other work to Lender's reasonable satisfaction within 60 days after Lender delivers written notice of the necessary repairs to Borrower.

(p)    Appraisal. At Borrower's expense, Lender may obtain from time to time an Appraisal. The cost for any Appraisal are Additional Costs. Borrower shall cooperate (including providing access to the Collateral) with anyone preparing an Appraisal.

(q)    Casualty and Condemnation.

(i)    Borrower's Obligation. If any Damage or a Taking occurs, then Borrower shall promptly (A) notify Lender of the Damage and take all necessary steps to preserve the Collateral, (B) at Borrower's expense (1) diligently prosecute any Taking proceedings, (2) consult and cooperate with Lender in handling the Taking proceedings, and (C) subject to Sections 4.1(q)(ii) – (iv) below and regardless of whether the Net Proceeds are, or Award is, sufficient, commence and diligently (but, unless Lender approves otherwise in writing, no later than 90 days after the Damage occurs) complete the Restoration. Borrower shall comply with Lender's reasonable requirements to preserve the Collateral. Borrower may not settle any Taking proceedings without Lender's prior written consent. Lender may (but is not obligated to) participate in all Taking proceedings. Borrower shall sign and deliver all instruments Lender requests in connection with Lender's participation in any Taking proceeding. All of Lender's reasonable costs in any Taking proceeding are Additional Costs.

(ii)    Lender's Rights. Borrower will remain liable for the Indebtedness outstanding after Lender applies any Net Proceeds or Award. Lender will not pay interest on any Net Proceeds or Award Lender holds. If Borrower receives any insurance proceeds for the Damage or an Award, then Borrower shall promptly deliver all of the proceeds or Award to Lender, without deduction. Notwithstanding anything in the Loan Documents, at law or in equity to

14

the contrary, the Net Proceeds and Award will not be trust funds and Lender may dispose of the Net Proceeds or Award as permitted in the Loan Documents. Borrower assumes all risk of loss from any Damage or Taking.

a.    If any Damage occurs which is, at least partially, covered by insurance, then: (A) if Borrower does not promptly make an insurance claim for the Damage, then Lender may, but is not obligated to, make the insurance claim; (B) if Lender makes an insurance claim, then Borrower authorizes and empowers Lender to settle, adjust, or compromise the claim; (C) Borrower authorizes and directs the insurer to make any Damage payment directly to Lender; and (D) unless otherwise expressly set forth in Subsection (iii) below, Lender may apply the Net Proceeds to the Indebtedness in any order it determines.

b.    Borrower assigns all Awards to Lender. All Awards must be paid to Lender. Lender may (A) collect, receive, and give receipt for, any Award, (B) accept any Award in any amount without question, and (C) appeal any judgment, decree, or Award. Borrower shall sign and deliver all instruments Lender requests to evidence Borrower's assignments and authorizations in this Subsection.

(iii)    Application of Net Proceeds or Award. Except during an Event of Default Period, Lender shall make the Net Proceeds or the Award available to Borrower for Restoration if: (A) prior to beginning the Restoration, in Lender's determination, the Restoration is practical and will be completed (1) within a reasonable time and (2) at least 90 days prior to the Stated Maturity Date; (B) prior to beginning the Restoration, in Lender's determination, Borrower has sufficient business interruption insurance; (C) prior to beginning the Restoration, Borrower enters into Contracts acceptable to Lender for Restoration; (D) prior to beginning the Restoration, if applicable, all Tenants have waived any termination rights arising from the Damage or Taking; (E) prior to the beginning and until completion of the Restoration, Borrower has deposited and continuously maintains all Additional Funds with Lender; and (F) prior to the beginning and until completion of the Restoration, in Lender's determination, once the Restoration is complete, the Debt Coverage Ratio will exceed 1.25:1.00. Lender may (as Lender determines in its sole discretion) apply against the Indebtedness any Net Proceeds or Award in excess of the Restoration costs.

(iv)    Disbursement of Net Proceeds or Award. If Net Proceeds or an Award are available for Restoration, then Lender shall, in its sole discretion, establish a disbursement procedure (including lien releases and title insurance) and periodically make the Award or Net Proceeds (and the Additional Funds, if any) available to Borrower (in installments).

(v)    Effect on Indebtedness. Prior to, during and after any Damage or Taking, Borrower must continue to pay the Indebtedness and perform its obligations under the Loan Documents. Lender's receipt of Net Proceeds, Rent Loss Proceeds, Additional Funds or an Award does not reduce the Indebtedness until Lender actually applies Net Proceeds, Rent Loss Proceeds, Additional Funds or the Award to the Indebtedness.

(r)    Collateral. Until the Maturity Date, Borrower:

(i)    shall faithfully perform each of its affirmative and negative obligations under the Additional Collateral and the Leases;

(ii)    shall promptly enforce against all Persons (other than Lender) the terms of the Additional Collateral and the Leases;

(iii)    may not, without Lender's prior written approval, (A) waive, modify or amend any terms of the Additional Collateral or the Leases, (B) release or discharge any Person from its obligations under any of the Additional Collateral or the Leases, or (C) terminate any of the Licenses, Contracts or Leases;

(iv)    may not enter into any new Contracts without Lender's prior written approval;

(v)    subject to the terms of the Security Instruments, may not enter into any new Leases without Lender's prior written approval;

15

(vi)    shall, unless Lender otherwise agrees in writing, assign to Lender any letter of credit securing any Tenant Lease obligations; and

(vii)    shall give Lender prompt notice of any actual or alleged default under the Additional Collateral or the Leases along with a copy of any written notice Borrower receives concerning the actual or alleged default.

(s)    Litigation. Borrower will promptly furnish to the Lender written notice of any litigation in which any Borrower Party is involved and any litigation affecting the Property or relating to the Improvements, all only to the extent that such litigation would materially adversely affect any Borrower Party's ability to perform under the Loan Documents to which such Borrower Party is a party or materially adversely impair the ability of Borrower to carry on its business substantially as now conducted or contemplated.

(t)    Indebtedness. Borrower shall not incur any indebtedness (including any contingent indebtedness) other than with Lender in excess of $500,000 in the aggregate.

(u)    Limitation on Dividends and Stock Buybacks. Borrower shall not declare, make or pay any dividend or distribution, or set apart any sum or any of its assets for the payment of any dividend of distribution, if (i) a Default or Event of Default exists, (ii) such action would be reasonably expected to result in a Default or Event of Default, or (iii) such dividend or distribution would exceed (1) 50% of Borrower's net profit (if positive) beginning with the fiscal year ending February 28, 2018, and each subsequent fiscal year, or (2) Borrower's quarterly net income for the fiscal quarter for which it is declared.

(v)    Hilti Lease. Borrower shall not modify the Hilti Lease, terminate the Hilti Lease or waive any default by Hilti under the Hilti Lease without the prior written consent of Lender.

(w)    Field Audit. Borrower will permit Lender, through its authorized agents and representatives (who need not be employees of Lender), to conduct periodic field audits of Borrower and to review its operations, books and records, credit policies, charge-off policies, collection procedures, methodology for eligibility calculations, and other matters relating to the value and maintenance of the Eligible Accounts and Eligible Inventory and Borrower's financial reporting. Except during any Event of Default Period, field audits will be conducted no more than once per calendar year at the sole discretion of Lender. Borrower will pay all costs and expenses incurred by Lender in connection with each field audit.

(x)    Accounts. Maintain its primary operating accounts with Lender and utilize Lender for its cash and treasury management services needs.

(y)    Accounts and Lockbox. Continue to maintain (i) its primary operating accounts with Lender and utilize Lender for its cash and treasury management services needs, and (ii) a lockbox (the "Lockbox") with Lender for the receipt of payments on all Accounts. Borrower agrees that (a) all invoices sent to Borrower's account debtors will include the Lockbox address as the point of remittance for payments on Borrower's Accounts, (b) it will not, without the prior written consent of Lender, revoke or alter the instructions to its customers to direct all payments on Accounts to the Lockbox, and (c) without limiting the requirement that all account debtors make payment only to the Lockbox, any payments received directly by Borrower will be deposited within five Business Days into the Lockbox. The Lockbox Services Agreement between Borrower and Lender will continue in full force and effect until all of the Indebtedness has been paid in full and any commitments have been terminated. Payments received in the Lockbox will be processed in accordance with the terms and conditions of the Lockbox Services Agreement. Provided that no Event of Default has occurred, on each Business Day the Lender will apply collected funds from the Lockbox against the outstanding principal balance of the Revolving Loan.

(z)    Appraisals. Permit Lender, through its authorized agents and representatives (who need not be employees of Lender), to conduct periodic appraisals or reappraisals of Borrower's properties (including, without limitation, the Property). Except during any Event of Default Period,

16

such appraisals or reappraisals will be conducted no more than once per calendar year. Borrower will pay all costs and expenses incurred by Lender in connection with each appraisal or reappraisal.

(aa)    Information Technology. Maintain an adequately trained and staffed information technology (IT) department capable of maintaining and updating Borrower's e-commerce website and accounting systems, including in the event Lender exercises any of its remedies under any Loan Document, including any the sale of any Collateral, and Borrower agrees that any online sale where Lender or its agent uses Borrower's domain name, e-commerce website and accounting systems for a period of eight weeks is commercially reasonable. Borrower further covenants and agrees that upon request by Lender, Borrower shall promptly (but in any event not later than 10 days) provide Lender with access to its information technology systems (including domain names, website hosting, e-commerce systems, accounting software and access to applicable staff and contractors), including without limitation administrator credentials and other relevant information, and not make any change thereto without first notifying Lender in writing.

(bb)    Stock Buybacks; Reporting. Borrower shall not use the proceeds of advances made under the Revolving Loan for stock buybacks in an aggregate amount in excess of $4,000,000. If requested by Lender, Borrower will promptly (and in any event not later than five Business Days) furnish to Lender a Form FR U-1 or Form FR G-3, as applicable (or an amendment to a Form FR U-1 or Form FR G-3 previously furnished), and any other necessary forms or statements, properly completed and confirming compliance with Regulations U, T and X of the Board of Governors of the Federal Reserve System.

ARTICLE V.
DEFAULTS AND REMEDIES

5.1.    Event of Default. The term "Event of Default" means that:

(a)    Monetary Obligations. Borrower fails to pay, with respect to any Loan: (i) prior to the applicable maturity date (whether the Maturity Date, the Termination Date, or otherwise, as applicable), any Indebtedness within 5 days after it is due and payable; or (ii) all of the Indebtedness on the applicable maturity date; or

(b)    Representations. Any Borrower Party representation to Lender in the Loan Documents is false or misleading in any material respect; or

(c)    Bankruptcy Event. A Bankruptcy Event occurs; or

(d)    Third Party Matters. Any Borrower Party (i) is in default under any agreement (other than the Loan Documents), (ii) fails to pay any final money judgment, (iii) becomes party to any proceeding, or (iv) fails to comply with any Applicable Laws, which may (in Lender's determination) materially and adversely impair (A) the Borrower Party's ability to perform its obligations under the Loan Documents, or (B) the value of, or Lender's rights in, the Collateral; or

(e)    Transfers; Liens; Debt. Without Lender's prior written consent (which Lender may withhold for any reason or condition upon any event or consideration, as Lender determines in its sole discretion), Borrower:

(i)    sells, leases (except as expressly permitted in the Loan Documents), exchanges, assigns, transfers, conveys or otherwise disposes of any part of, or any interest in, the Property, or legal or equitable title to any part of, or any interest in, the Property is vested in any Person other than Borrower or Lender, by operation of law or otherwise, whether voluntary or involuntary; or

(ii)    creates or permits any (voluntary or involuntary) lien, whether statutory, constitutional or contractual (except for any lien for Real Estate Taxes on the Collateral which are not delinquent), security interest or other encumbrance, conditional sale or other title retention document, against or covering any portion of the Collateral; or

17

(f)    Death; Dissolution; Change in Ownership or Control. Any Borrower Party dies or becomes legally incapacitated, dissolves, liquidates, merges or consolidates; or any interest in any Borrower Party is, voluntarily or involuntarily, assigned, encumbered, or otherwise transferred; or, any time after the Effective Date, the Person Controlling or owning Borrower changes; or

(g)    Financial Reporting. Lender does not receive any item on the date it is due under Section 4.1(f); or

(h)    DCR Test Default. A DCR Test Default occurs; or

(i)     AFD Test Default. A AFD Test Default occurs; or

(i)    Hilti Lease. Hilti is 30 or more days past due on rent or any other payment to Borrower, as landlord, under the Hilti Lease; or

(j)    Loan to Value Default. A Loan to Value Default occurs; or

(k)    Non-Monetary Obligations. Any Borrower Party fails, on or before the expiration of the Grace Period, to timely perform any of its obligations in any Loan Document, other than those failures specifically governed by any other (i) Subsection of this Section 5.1, or (ii) Section of this Agreement or the Loan Documents.

5.2.    Remedies.

(a)    Pre-Event of Default. Lender may file, appear in, or defend any Loan Matter. Lender may employ counsel (including in-house counsel) and incur any expenses, including Attorneys' Fees, in connection with any Loan Matter. If Lender incurs any expense in connection with any Loan Matter, then the expenditure will bear interest at the Default Rate from the date incurred until the date on which Borrower fully repays the expenditure along with all accrued interest. The expenditure and all accrued interest are Indebtedness. Borrower shall immediately pay to Lender all amounts due under this Subsection upon Lender's demand.

(b)    Post-Event of Default. Subject to any limitations under the Governing Law and the applicable Laws of the State, during any Event of Default Period:

(i)    Lender may declare all Indebtedness in its entirety to be immediately due and payable or exercise any right at law or in equity, or any remedy expressly provided in any of the Loan Documents, including foreclosing any liens or security interests;

(ii)    Lender may: (1) enforce all Additional Collateral terms and exercise all rights under the Additional Collateral; (2) enter into, terminate, renew or modify Contracts or Licenses, and make concessions to Governmental Authorities; and (3) exercise all proprietary rights in, and fully utilize, the Plans and Specifications.

(iii)    Contractors and Governmental Authorities may: (1) continue work under the Additional Collateral under the sole direction of Lender; and (2) permit Lender to retain and use the Additional Collateral for any purpose Lender deems appropriate. In furtherance of the foregoing, any Person may rely on an affidavit from any officer, agent or attorney of Lender confirming that an Event of Default Period exists.

Lender is not obligated to undertake any remedies under the Loan Documents. However, by exercising any rights under the Loan Documents, Lender does not (unless Lender expressly agrees in writing) become (i) a party to any of the Additional Collateral, or (ii) liable to any Person (including Borrower and any guarantor), EVEN IF THE LIABILITY ACTUALLY OR ALLEGEDLY AROSE FROM THE ORDINARY, CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE, OR STRICT LIABILITY OF LENDER. Lender will only be liable for liabilities if a court of competent jurisdiction determines in a final, non-appealable judgment that the liability arose from Lender's gross negligence or intentional misconduct.

18

Lender's rights under this Section are in addition to any other rights and remedies Lender may have under the Loan Documents, at law, in equity or otherwise. Lender may (but will not be obligated to) also:

(i)    at Borrower's sole cost and expense, take whatever action Lender deems necessary or appropriate, including the use of legal proceedings, to (A) cause Borrower to vacate the Property, and (B) take possession of the Property;

(ii)    at Borrower's sole cost and expense, employ security watchmen to protect the Property; or

(iii)    at Borrower's sole cost and expense, perform or cause to be performed any covenant or agreement of Borrower under any of the Loan Documents.

Notwithstanding the foregoing, Lender may not exercise its rights against the Land and Improvements if there exists only a non-monetary default with respect to the Revolving Loan.

(c)    Costs. All sums Lender incurs in connection with exercising its rights under the Loan Documents will be (1) additional Indebtedness and will bear interest from the date on which Lender incurs the sum until the date on which the sum is repaid in full at the Default Rate, and (2) secured by the Loan Documents. In addition to Lender's rights under the Loan Documents, Lender will be automatically subrogated to all rights of any Person receiving any sum from Lender.

ARTICLE VI.
GENERAL CONDITIONS

6.1.    Waiver. Lender may, without impairing its rights under the Loan Documents (a) waive or not enforce any term of the Loan Documents (b) release any part of the Collateral from the lien or security interest of the Loan Documents or (c) release any Person, directly or indirectly, liable for the Indebtedness or any covenant in the Loan Documents, without releasing the liability of any other Person.

6.2.    Lender's Action or Inaction. The liens, security interests or other rights of Lender in any Loan Document will not be impaired by any indulgence, moratorium or release that Lender may grant, including (a) any renewal, extension, increase or modification which Lender may grant with respect to any Indebtedness, (b) any surrender, compromise, release, renewal, extension, exchange or substitution which Lender may grant in respect of the Property, or any part thereof or any interest therein, or (c) any release or indulgence granted to any endorser, guarantor or surety of any Indebtedness. If Lender takes additional security, then Lender will not be deemed to have released or impaired Lender's liens, assignments, security interests or other rights in and to the Property or under the Loan Documents and Borrower's and any other endorser's, guarantor's or other surety's liability will not be affected, and the rights of any permitted junior lienholder will not be improved, thereby. Lender may resort to any Collateral (or to any other security now existing or hereafter given to secure payment of the Indebtedness) in such order as Lender deems best (in its sole discretion) without waiving any of the rights, benefits, liens or security interests evidenced by the Security Instruments.

6.3.    Lender's Rights. Lender may waive any Event of Default without waiving any other prior or subsequent Event of Default. Lender may remedy any Event of Default without waiving the Event of Default remedied. Lender's failure to exercise (in any period of time) any right, power or remedy after any Event of Default will not be a waiver of (i) any Event of Default or (ii) Lender's right to exercise any power or remedy at a later date. Lender's (a) delay in accelerating or failure to accelerate the Indebtedness during any Event of Default Period, (b) acceptance of a partial or past due payment, or (c) indulgence, from time to time, of any Borrower Party, is not a (1) novation of any Note, (2) reinstatement of the Indebtedness, or (3) waiver of Lender's right to accelerate or thereafter to insist on strict compliance with the terms of this Agreement and the other Loan Documents. Lender's single or partial exercise of any right, power or remedy under the Loan Documents will not exhaust the same or preclude any other or further exercise thereof, and every such right, power or remedy under any of the Loan Documents may be exercised at any time and from time to time. (x) The Loan Documents will not be modified, (y) no waiver under the Loan Documents will be granted, and (z) Lender will not have consented to Borrower's departure from any term of the Loan Documents, unless Lender has executed such a written (a) modification, (b) waiver, or (c) consent, and any such modification, waiver or consent is effective only in the specific instance and purpose for which it was given and to the extent specified in writing. Borrower

19

will not be entitled to any additional notice or demand under the Loan Documents, unless specified therein, regardless of whether Lender has given Borrower any notice or made any demand on Borrower which was not expressly required under the terms of the Loan Documents. Lender may accept, on account only, any payment in an amount less than the amount then due on the Indebtedness without in any way affecting the existence of an Event of Default.

6.4.    Third Party Rights. No Person, other than Lender, the Indemnified Parties and Borrower is a beneficiary of the Loan Documents. Lender makes no representations and assumes no duties or obligations to any Person concerning the Improvements.

6.5.    Satisfaction of Condition; Time. Lender may freely establish to its satisfaction (in its absolute discretion) the existence (or nonexistence) of any fact actually or implicitly required to satisfy any condition of this Agreement. Time is of the essence for the Loan Documents.

6.6.    Assignment; Loan Participations.

(a)    Notwithstanding anything to the contrary in the Loan Documents, Borrower may not assign its rights under any of the Loan Documents without the prior written consent of Lender. Any Borrower assignment without Lender's written consent will (i) be an immediate Event of Default, (ii) relieve Lender from all further obligations under the Loan Documents, and (iii) at Lender's option, be null and void.

(b)    Lender may assign, sell or offer to assign or sell interests in the Loan or any portion of the Loan Documents and disseminate to any purchaser, assignee or prospective purchaser or assignee any information Lender has pertaining to the Loan, including credit information on Borrower Parties and any of their respective principals. If Lender makes any assignment or sells any interest in the Loan, then Borrower shall make all modifications, at Lender's or its purchaser's or assignee's expense, to this Agreement as will facilitate Lender's sale or assignment, provided that no modification will materially add to Borrower's obligations under the Loan Documents.

6.7.    Heirs, Successors and Assigns. The Loan Documents (i) are binding upon Borrower, and its heirs, devisees, representatives, successors and permitted assigns, including all of Borrower's successors-in-interest in and to all or any part of the Property, (ii) inure to the benefit of Lender and the Indemnified Parties, and their respective successors, substitutes and assigns, and (iii) will constitute covenants running with the Land. All references in this Agreement to Borrower, Lender or Indemnified Parties will include all of their respective heirs, devisees, representatives, successors, substitutes and permitted assigns.

6.8.    Exercise of Rights and Remedies. Lender may exercise each right and remedy under the Loan Documents, at law or in equity at any time and from time to time. All of Lender's rights and remedies under the Loan Documents, at law or in equity are separate, distinct and cumulative. Lender's exercise of any right or remedy under the Loan Documents, at law or in equity will not preclude Lender from later exercising the same right or remedy, or from exercising any other right or remedy under the Loan Documents, at law or in equity.

6.9.    Headings. The headings of the sections and subsections of this Agreement are for convenience of reference only and will not affect the scope or meaning of the sections of this Agreement.

6.10.    Inconsistency. If there are any inconsistencies between this Agreement and the other Loan Documents, then this Agreement will control all inconsistencies, except those inconsistencies necessary to create or preserve a valid lien upon or security interest in the Collateral. The Security Instruments will control all inconsistencies among the Loan Documents concerning the creation, preservation, perfection and foreclosure of all liens upon or security interests in the Collateral.

6.11.    Applicable Law. The Loan Documents and the rights and obligations of Borrower and Lender are in all respects governed by, and construed and enforced in accordance with the Governing Law (without giving effect to its principles of conflicts of law), except for those terms of the Security Instruments pertaining to the creation, perfections, validity, priority or foreclosure of the liens or security interests on the Property located within the State, which terms will be governed by, and construed and enforced in accordance with the laws of the State (without giving effect to its principles of conflicts of law).

20

6.12.    Forum; Service. BORROWER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN TULSA, OKLAHOMA, OVER ANY PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS. BORROWER AGREES THAT, IN ADDITION TO ANY METHOD OF SERVICE UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING RELATING TO THE LOAN DOCUMENTS AND FILED IN ANY STATE OR FEDERAL COURT SITTING IN TULSA, OKLAHOMA, MAY BE SENT AND GIVEN AS SET FORTH IN SECTION 6.18.

6.13.    Usury. Lender and Borrower intend that the Loan Documents strictly comply with applicable usury law. Therefore, Lender and Borrower agree that: (i) none of the terms of the Loan Documents create a contract to pay for the use, forbearance or detention of money, or interest at a rate in excess of the Maximum Rate; (ii) no Borrower Party will ever be obligated or required to pay interest on the Indebtedness or any other sums due under the Loan Documents at a rate in excess of the Maximum Rate; and (iii) this Section controls over all other provisions of the Loan Documents which may be in conflict with this Section. Lender expressly disavows any intention to charge or collect excessive unearned interest or finance charges on any portion of the Indebtedness. If at any time the interest received for the Indebtedness exceeds the Maximum Rate, then Lender will, at its option, either refund to Borrower the amount of the excess or credit the amount of the excess against the Principal Amount. Borrower agrees that the Loan is not usurious and agrees that if, at any time, Borrower believes that the Loan is usurious, it shall give Lender (a) notice of the condition and (b) 60 days in which to make an appropriate refund or other adjustment, if necessary, to correct the condition.

6.14.    Severability. If any term of the Loan Documents is unenforceable or invalid, then those terms will either be (i) removed from the Loan Documents, or (ii) if possible (and acceptable to Lender), reformed by the court finding the term unenforceable or invalid to be a valid and enforceable term which is as similar as legally possible to the invalid or unenforceable term. All remaining portions of the Loan Documents will remain enforceable and valid.

6.15.    Counterparts. The Loan Documents may be executed in any number of counterparts with the same effect as if all signers executed the same instrument. All counterparts of each Loan Document must be construed together and will constitute one instrument.

6.16.    Joint Liability. If more than one Person is included in the definition of "Borrower", then each Person included in the definition of "Borrower" will be jointly and severally liable for Borrower's obligations under this Agreement.

6.17.    Modification or Termination. The Loan Documents may only be amended, modified or terminated by a written instrument executed by Lender and each Borrower Party (who is a party to the Loan Document being amended, modified or terminated). Notwithstanding the foregoing, Borrower agrees that it will be bound by any written amendment or modification of the Loan Documents between Lender and any subsequent owner of the Collateral, with or without notice to Borrower, and Borrower's obligations under the Loan Documents will not be impaired because of any such amendment or modification. This Section does not permit Borrower to transfer any of the Collateral.

6.18.    Notice. Except for notices which are required to be given differently by Applicable Law, any notice or communication required or permitted under the Loan Documents must be made in writing and sent by (a) personal delivery, (b) expedited delivery service with proof of delivery, or (c) United States Mail, postage prepaid, registered or certified mail, addressed as follows:

To Lender:                     MidFirst Bank

2201 S. Utica Place, Suite 200

Tulsa, OK 74114

Attn: Marc Short, Senior Vice President

With a copy to:        MidFirst Bank

Legal Department

501 NW Grand Blvd.

Oklahoma City, OK 73118

21

To Borrower:                  5404 South 122nd East Avenue

Tulsa, OK 74146

Attn: Randall W. White, Chairman, President and CEO

or to such other address(es) as Lender or Borrower may designate in writing and deliver in accordance with this Section. Any change of address will be effective on the 5th Business Day after notice is given pursuant to the terms of this Section. Any notice or communication sent in accordance with this Section will be deemed to be given (i) at the time of personal delivery, or (ii) if sent by delivery service or mail, as of the date of the first attempted delivery at the address and in the manner provided in this Section. Borrower consents to Lender recording any telephone communications between Lender and Borrower.

6.19.    Signatures. The Loan Documents may be executed by Facsimile Signature and delivered by electronic means, including a PDF (or other format) attachment to an email or fax. Subject to Applicable Law, any Loan Documents executed by Facsimile Signature will have the same force and effect as a Loan Document containing an original signature and will be binding on all parties to the Loan Documents. Lender may require that any Loan Document with a Facsimile Signature be confirmed by an original signature. However, Lender's failure to request or Borrower's failure to deliver any original signature confirmation will not limit the effectiveness of any Loan Document executed by Facsimile Signature. In this Section, "original signature" means a manually signed document by a natural person, as opposed to an electronic signature, and "Facsimile Signature" means the signature of a natural person produced by mechanical means, printer or stamp.

6.20.    No Partnership. Borrower and Lender are not partners or joint venturers with respect to the Property. Nothing in the Loan Documents is intended to create any partnership, joint venture or association between Borrower and Lender.

6.21.    Waiver of Jury Trial. BORROWER AND LENDER WAIVE ANY RIGHT TO A JURY TRIAL CONCERNING ANY DISPUTE ARISING FROM OR IN CONNECTION WITH ANY OF THE LOAN DOCUMENTS. BORROWER AND LENDER HAVE BOTH BEEN ADVISED BY COMPETENT COUNSEL IN CONNECTION WITH THIS WAIVER.

6.22.    Consent of Lender; Approvals. Except as otherwise expressly provided in the Loan Documents, if Lender's approval, consent or judgment is required under any Loan Document, then Lender may, in its sole discretion, exercise its judgment in granting or denying its approval or consent regardless of the reasonableness of the request or Lender's judgment.

6.23.    Imaging. Lender may image and destroy the executed, original Loan Documents. Borrower waives any right it has, or may have in the future, to claim that the imaged copies of the Loan Documents are not originals or the best evidence of the Loan Documents.

6.24.    Entire Agreement. The Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Loan. The Loan Documents supersede all prior written or oral understandings and agreements between Borrower and Lender with respect to the Loan.

6.25.    Damage Waiver. Borrower (and any other Borrower Party, who now or hereafter executes a Loan Document) and Lender agree that neither party will be liable to the other party or any other Person for any punitive, exemplary, consequential or other special damages which may actually or allegedly arise from the Loan, the Loan Documents or the Collateral, INCLUDING ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES ACTUALLY OR ALLEGEDLY ARISING FROM THE ORDINARY, CONTRIBUTORY, COMPARATIVE OR SOLE NEGLIGENCE, GROSS NEGLIGENCE OR STRICT LIABILITY, OF ANY BORROWER PARTY OR LENDER. The foregoing waiver does not limit or otherwise impair the terms of Section 2.1(b) or Section 4.1(b) above.

6.26.    Amendment and Restatement. On and as of the Effective Date, the Existing Loan Agreement shall be amended, restated and superseded in its entirety by this Agreement. The parties hereto acknowledge and agree that (i) this Agreement and the other Loan Documents, whether executed and delivered in connection herewith or otherwise, do not constitute a novation, payment or reborrowing, or termination of the

22

"Indebtedness" (as defined in the Existing Loan Agreement) as in effect prior to the Effective Date and (ii) such "Indebtedness" is in all respects continuing (as amended and restated hereby) with only the terms thereof being modified as provided in this Agreement. Each reference to the "Loan Agreement" or "Loan Agreement" in any Loan Document shall be deemed to be a reference to the Existing Loan Agreement as amended and restated hereby.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

23

Borrower and Lender have executed this Agreement to be effective on the Effective Date.

EDUCATIONAL DEVELOPMENT CORPORATION,

a Delaware corporation

By:                                                                                     

Name: Randall W. White

Title:   Chairman, President and CEO

Borrower's Signature Page

to

Amended and Restated Loan Agreement

24

MIDFIRST BANK, a federally chartered savings association

By:                                                                                        

Name: Marc Short

Title:   Senior Vice President

Lender's Signature Page

to

Amended and Restated Loan Agreement

25

EXHIBIT A

DEFINITION OF TERMS

"Accounts" means accounts, accounts receivable, contracts, contract rights, and other forms of obligations and receivables owing to Borrower including, without limitation, such as may arise out of the sale, lease or other disposition of Inventory arising out of or in connection with Borrower's ordinary course of business.

"Additional Collateral" means, collectively, any (a) Licenses, (b) Contracts, (c) Plans and Specifications, (d) Net Proceeds, (e) Rent Loss Proceeds, and (f) Additional Funds.

"Additional Costs" means (1) all costs, losses and expenses Lender (in its reasonable determination) incurs (at any time) from (i) making or maintaining the Loans, (ii) protecting the Collateral, or (iii) enforcing its remedies under the Loan Documents during an Event of Default Period, and (2) any reduction in any amount (including lost profits) to which Lender is entitled under the Loan Documents. Additional Costs includes costs which (a) subject Lender to any tax, duty or other charge with respect to the Loan, or changes the basis of taxation of any amounts payable to Lender under the Loans (other than taxes imposed on the overall net income of Lender or of its applicable lending office by the jurisdiction in which Lender's principal office or such applicable lending office is located) or (b) impose or modify any reserve, special deposit or similar requirements relating to Lender. For purposes of this definition, the term "Lender," at Lender's option, includes Lender's present and future participants in the Loans.

"Additional Funds" means the difference, in Lender's determination from time to time, between (i) the cost to complete the Restoration and (ii) the Net Proceeds or Award, as the case may be.

"Adjusted Funded Debt to EBITDA Ratio" means, as of any date of determination, the ratio that Lender reasonably determines of (i) Borrower's Funded Debt minus the Principal Term Amount (Lender's Note #1108135-100) to (ii) Borrower's EBITDA on trailing 12-month basis, minus lease payments received by Borrower under the Hilti Lease during the same period.

"Advancing Term Loan" means the advancing term loan Lender establishes in favor of Borrower pursuant to Section 2.3 of this Agreement up to the Advancing Term Loan Maximum Principal Amount.

"Advancing Term Loan Advance Period" means the period from the Effective Date until six months thereafter.

"Advancing Term Loan Installment Amount" means an amount which would fully amortize the stated principal amount of the Advancing Term Loan, together with interest thereon at the interest rate determined in accordance with Section 2.3(a), over an assumed 60-month amortization period commencing six months after the Effective Date. Beginning July 1, 2022, and on each July 1 thereafter, the required monthly installment amount shall be re-determined, effective with the installment payment due on the following August 1, with the re-determined installment amount being an amount which would fully amortize the then-unpaid principal balance of the Advancing Term Loan, together with interest thereon at the fluctuating interest rate determined in accordance with Section 2.3(b) as of such re-determination date, over the remainder of such assumed 60-month amortization period.

"Advancing Term Loan Maturity Date" means the earlier to occur of (i) the Advancing Term Loan Stated Maturity Date and (ii) the date on which the entire Advancing Term Loan must be paid in full after acceleration pursuant to the terms of the Loan Documents.

"Advancing Term Loan Maximum Principal Amount" means $6,000,000.00.

"Advancing Term Loan Principal Amount" means, at any point in time, that portion of the principal balance of the Advancing Term Loan which is unpaid.

"Advancing Term Loan Stated Maturity Date" means July 15, 2026.

Exhibit A

to

Amended and Restated Loan Agreement

"AFD Test Default" means that, as of the last day of any calendar month, the Adjusted Funded Debt to EBITDA Ratio is greater than 2.00:1.00.

"Agreement" means this Amended and Restated Loan Agreement as, from time to time, amended, modified or restated.

"Applicable Bankruptcy Law" means Title 11 of the United States Code, any regulation or rule promulgated thereunder or any other present or future insolvency, bankruptcy or similar law, including laws concerning assignments for the benefit of creditors, appointment of a receiver, trustee, custodian or liquidator, under the laws of the United States or the State of Oklahoma.

"Applicable Law" means all Laws, covenants, conditions and restrictions (including private restrictive covenants) and other requirements relating to or affecting Borrower, Lender or the Property.

"Appraisal" means collectively (a) an MAI appraisal of the Property ordered by Lender, dated within 90 days of its use, and prepared by a licensed appraiser satisfactory to Lender, (b) any appraisal of the Property acceptable to Lender in its sole discretion, (c) an environmental site assessment of the Property acceptable to Lender in its sole discretion, and (d) any condition report of the Property of the Property acceptable to Lender in its sole discretion.

"Attorneys' Fees" means all reasonable fees, costs and expenses of attorneys (including allocated costs of in-house counsel), other professional consultants and experts.

"Award" means all condemnation awards, judgments, decrees, or proceeds of any sale in lieu of condemnation.

"Bankruptcy Event" means any of the following events: (i) any Borrower Party files a petition for relief under Applicable Bankruptcy Law; (ii) any party (other than Lender) files an involuntary petition for relief under Applicable Bankruptcy Law against any Borrower Party and such petition is not dismissed within 60 days after being filed; (iii) a court of competent jurisdiction enters an order for relief under any Applicable Bankruptcy Law which is related in any way to a petition filed under (i) or (ii) above; (iv) any Borrower Party, at any time, requests or consents to any composition, rearrangement, extension, reorganization or other relief of any debtor; (v) any Borrower Party (A) is generally not paying its debts as they become due, (B) is insolvent, (C) fraudulently transfers any of its assets to the detriment of any of its creditors, (D) makes an assignment for the benefit of creditors, or (E) admits in writing that it is unable to pay its debts as they become due; or (vi) a receiver, trustee or custodian is appointed for, or takes possession of, all or substantially all of a Borrower Party's assets or any of the Property, either in a proceeding a Borrower Party brings, or any other Person (except for Lender) brings against a Borrower Party, and any such appointment is not discharged or such possession is not terminated within 60 days after commencing, or the Borrower Party consents to or acquiesces in such appointment or possession (unless such consent or acquiescence is in connection with any Lender initiated proceeding). A Bankruptcy Event may exist even if an Event of Default cannot be declared because of Applicable Bankruptcy Law.

"Borrower" means Educational Development Corporation, a Delaware corporation, and its successors and permitted assigns.

"Borrower Party" means, collectively, Borrower, any general partner or managing member of Borrower, and any general partner or managing member in any partnership or limited liability company that is a general partner or managing member of Borrower.

"Borrowing Base" means, as of any calculation date, the sum of (i) 80% of Eligible Accounts and (ii) 40% of Eligible Inventory; provided, however, Eligible Inventory shall not be more than 90% of the Borrowing Base.

"Borrowing Base Certificate" means a certificate in the form set forth in Exhibit D of this Agreement and executed by the Controller (or equivalent position) on behalf of Borrower in favor of Lender.

Exhibit A

to

Amended and Restated Loan Agreement

"Borrowing Base Certificate Due Date" means the 30th calendar day following the end of each calendar month. If the Borrowing Base Certificate Due Date is on a day which is not a Business Day, then the Borrowing Base Certificate Due Date will be the next Business Day.

"Business Day" means each day of the week which is not a Saturday, Sunday or a holiday recognized and observed by the Board of Governors of the Federal Reserve System.

"Claims" means any claim (including any Environmental Claim or any other claims arising under Environmental Laws), demands, liabilities, losses, damages, causes of action, judgments, penalties, fines, costs and expenses (including Attorneys' Fees, and of the investigation and defense of any claim, whether or not such claim is ultimately defeated, and the settlement of any claim or judgment including all value paid or given in settlement).

"Collateral" means the Property and all of Borrower's other assets which are ever situated on, derived from or used in connection with the Property, whether now owned or hereafter acquired, including the Leases and all proceeds from such assets of Borrower.

"Compliance Certificate" means a certificate in the form set forth in Exhibit C of this Agreement and executed by the Controller (or equivalent position) on behalf of Borrower in favor of Lender.

"Compliance Certificate Delivery Date" means the 30th calendar day following the end of each calendar month. If the Compliance Certificate Due Date is on a day which is not a Business Day, then the Compliance Certificate Due Date will be the next Business Day.

"Compliance Certificate Due Date" means the 45th calendar day following the end of each fiscal quarter. If the Compliance Certificate Due Date is on a day which is not a Business Day, then the Compliance Certificate Due Date will be the next Business Day.

"Contract Rate" means a per annum rate of interest equal to the lesser of (i) 4.23%, and (ii) the Maximum Rate.

"Contractors" means, collectively, all parties with whom or to whom the Contracts have been made or are given.

"Contracts" means all contracts, subcontracts, agreements, site development agreements, service agreements, management agreements, warranties and purchase orders, together with any and all renewals, extensions and modifications thereof and all amendments, exhibits and addenda thereto, which have been or will be executed by or on behalf of Borrower, or which have been assigned to Borrower, in connection with the acquisition, use, operation or maintenance of the Property or the construction of improvements on the Property.

"Control" or "controls" means, with respect to Borrower, the power to direct the management and policies of Borrower, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise; and the terms "Controlling" and "Controlled" have meanings correlating to the foregoing.

"Damage" means any damage to, or loss or destruction of, the Property.

"DCR Test Default" means that, as of the last day of any calendar month, the Debt Coverage Ratio is less than 1.40:1.00.

"Debt Coverage Ratio" means, as of any date of determination, the ratio that Lender reasonably determines on a trailing 12-month basis of (i) Borrower's net income, plus interest expense, plus depreciation and amortization expense, less dividends, to (ii) Debt Service. Upon request by Lender, an officer of Borrower shall certify, in detail satisfactory to Lender, documentation of such amounts, and such amounts shall not be effective until approved by Lender.

"Debt Service" means Borrower's current maturities of long term indebtedness and capital leases plus interest expense for such period.

Exhibit A

to

Amended and Restated Loan Agreement

"Default Rate" means a per annum rate of interest equal to the lesser of (i) the rate determined in accordance with Section 2.1(a) plus 5.0%, and (ii) the Maximum Rate.

"Dollars" and "$" means lawful money of the United States of America, which at the time of payment is legal tender for the payment of all public and private debts.

"EBITDA" means Borrower's net income, plus interest expense, plus depreciation and amortization expense, plus income tax expense.

"Effective Date" means the date on which each condition set forth on Exhibit E of this Agreement is satisfied.

"Eligible Accounts" means all Accounts of Borrower, except for any Account:

(i)    Any Account which does not arise in the ordinary course of Borrower's business;

(ii)    Any Account which is in dispute or which is subject to (or as to which Borrower has received notice that the account debtor claims) right of rejection, return, recoupment, setoff, counterclaim, deduction, allowance, adjustment or defense to payment;

(iii)    Any Account which is a contra account from a supplier of Borrower;

(iv)    Any Account which is subject to any attachment, levy, garnishment or other judicial process or any assignment, adverse claim, lien or security interest of any character (other than in favor of Lender);

(v)    Any Account which is evidenced by, or as to which Borrower has received, a note, chattel paper, draft, check, trade acceptance or other instrument in payment thereof or obtained a judgment with respect thereto;

(vi)    Any Account with respect to which Borrower does not have possession of receipts evidencing shipment of the goods or, if representing services, the services have not been fully performed;

(vii)    Any Account which is a credit card receivable;

(viii)    Any Account arising from a sale of Inventory held on consignment or other arrangement where Borrower does not hold title to the Inventory;

(ix)    Any Account as to which the account debtor is an officer, employee, director or agent of Borrower or any affiliate, or as to which the account debtor has shareholders, officers or directors in common with Borrower;

(x)    Any Account as to which the account debtor is a Governmental Authority, unless in the case of any Account with respect to which the account debtor is the United States of America or any department, agency or instrumentality thereof, such Account has been assigned to the Lender in accordance with the terms and conditions of the Federal Assignment of Claims Act, but only to the extent that a notice of assignment with respect to such Account has been executed by each government officer and other Person required under the Federal Assignment of Claims Act and a copy of such notice of assignment has been delivered to Lender;

(xi)    Any Account as to which the account debtor has died or is the subject of dissolution, liquidation, termination of existence, insolvency, business failure, receivership, bankruptcy, readjustment of debt, assignment for the benefit of creditors or similar proceedings, or as to which Borrower or Lender has received notice of a material adverse change in the financial condition of the account debtor;

(xii)    Any Account which is payable in a currency other than United States dollars;

(xiii)    Any Account which is due from an account debtor located outside the United States or Canada or incorporated/organized under the laws of a jurisdiction other than a state of the United States or Canada, unless the payment of the Account is secured by an irrevocable commercial letter of credit issued or confirmed by a United States financial institution approved by and assigned to the Lender or unless Lender shall otherwise consent to the inclusion of such Account as an Eligible Account;

Exhibit A

to

Amended and Restated Loan Agreement

(xiv)    Any Account which is aged over 90 days from the date of invoice or is more than two contractual payments past due;

(xv)    The amount of any retainage held by any account debtor;

(xvi)    Any Account where the account debtor has returned any of the goods from the sale of which the Account arose, or has made any partial payment thereon;

(xvii)    Any other Account as to which the Lender has made a determination, in the reasonable exercise of its discretion, that the prospects for collection are doubtful; and

Any Account which is due and owing from an account debtor which has an outstanding balance under accounts which have been billed and invoiced, if 10% or more of such balance has been outstanding more than 90 days beyond the original invoice date.

"Eligible Inventory" means all inventory of Borrower, except for any Inventory:

(i)    Inventory classified as "long term" or "noncurrent" on Borrower's balance sheet;

(ii)    Inventory classified as Supplies, Displayers, Racks or Kits;

(iii)    Inventory older than one year;

(iv)    Inventory classified as obsolete goods, damaged goods and/or goods not readily marketable;

(v)    Inventory in transit;

(vi)    Inventory held by Borrower on consignment;

(vii)    Inventory subject to any floor planning arrangement;

(viii)    Inventory in which any Person other than Lender has a purchase money security interest or any other security interest, lien or claim;

(ix)    Inventory produced in violation of the Fair Labor Standards Act and subject to the "hot goods" provisions contained in Title 29 U.S.C. § 215;

(x)    Inventory that is subject to any agreement which would restrict Lender's ability to sell or otherwise dispose of the same;

(xi)    Inventory located outside the United States of America;

(xii)    To the extent Inventory is in the custody of third party venders; and

(xiii)    Inventory consisting of returned or repossessed goods.

"Environmental Approvals" means any permit, license, approval, ruling, variance, exemption or other authorization required under applicable Environmental Laws.

"Environmental Claim" means, with respect to any Person, any notice, claim, demand or similar written communication by any other Person alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, fines or penalties arising out of, based on or resulting from (a) the presence, or release into the environment, of any Material of Environmental Concern at any location, whether or not owned by such Person or (b) circumstances forming the basis of any violation (or alleged violation) of any Environmental Law.

"Environmental Laws" means all federal, state and foreign laws and regulations relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including laws and regulations relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. The term "Environmental Laws" includes the following statutes, as amended, any successor thereto, and any

Exhibit A

to

Amended and Restated Loan Agreement

regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations, guidelines and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right‑to‑Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including Subtitle I relating to underground Storage Tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term "Environmental Law" also includes any present and future federal, state and local laws, statutes, ordinances, rules, regulations, guidelines and the like, as well as common law, conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the Property; requiring notification or disclosure of any releases of any Material of Environmental Concern or other environmental condition of the Property to any Governmental Authority or other Person, whether or not in connection with transfer of title to or interest in the Property; or imposing conditions or requirements in connection with permits or other authorization for lawful activity.

"ERISA" means, as amended, the Employee Retirement Income Security Act of 1974, as amended, and all rules, regulations and guidance promulgated thereunder.

"Event of Default" has the meaning set forth in Section 5.1.

"Event of Default Period" means the period beginning on the occurrence of an Event of Default and ending on the cure of such Event of Default and any other Events of Default outstanding.

"Funded Debt" means, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (iii) all purchase money debt (including debt in respect of conditional sale or title retention arrangements and obligations in respect of the deferred purchase price of property or services) of such Person, including the principal portion of all obligations of such Person under capital leases, (iv) all Funded Debt of another Person secured by a lien on any property of such Person, whether or not such Funded Debt has been assumed, and (v) the Funded Debt or any partnership or joint venture in which such Person is a general partner or joint venture, but only to the extent to which there is recourse to such Person for the payment of such Funded Debt.

"GAAP" means those generally accepted accounting principles and practices recognized from time-to-time by the Financial Accounting Standards Board (or any generally recognized successor). Borrower and all parties who must deliver any financial information to Lender under this Agreement or any other Loan Document must consistently apply GAAP to all statements and information delivered or provided, or otherwise made available, to Lender.

"Governing Law" means all United States (applicable to transactions in the State of Oklahoma) and Oklahoma laws, statutes, regulations, ordinances, rules, judgments, orders, decrees, and other governmental restrictions (include any amendment or modification thereto) relating to or affecting the Loan, the Indebtedness or the Loan Documents.

"Governmental Authority" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank, or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supranational bodies such as the European Union or the European Central Bank).

"Grace Period" means a period of either: (i) 30 days after Lender delivers written notice to Borrower (the "Initial Grace Period") and demand for the performance of any default of any covenant, agreement, warranty or condition set forth in this Agreement; or (ii) 60 days if (A) Borrower immediately commences and diligently pursues the cure of such default and delivers (prior to the end of the Initial Grace Period) to Lender a written request for more time, and (B) Lender reasonably determines that the default cannot be cured within the Initial Grace Period but can be cured within 90 days after the default.

Exhibit A

to

Amended and Restated Loan Agreement

"H.15 Report" means the Federal Reserve Board's Statistical Release H.15, "Selected Interest Rates." The H.15 Report is generally available at the Federal Reserve Board's website: www.federalreserve.gov.  If the H.15 Report is replaced or otherwise unavailable, Lender will (in its discretion) designate the replacement report or another report reasonably comparable to the H.15 Report. Lender's designated replacement report will replace the H.15 Report.

"Hilti" means Hilti, Inc., an Oklahoma corporation.

"Hilti Lease" means that certain Lease Agreement dated as of the Effective Date, between Borrower, as landlord, and Hilti, as tenant.

"IBA" means the ICE Benchmark Administration or its successor as the administrator for LIBOR.

"ICE" means the Intercontinental Exchange.

"Improvements" means all improvements now or hereafter located upon the Land.

"Indebtedness" means all obligations, liabilities and indebtedness of Borrower arising under the Loan Documents (including all Additional Costs).

"Indemnified Party" means Lender and its directors, officers, employees and agents (and their predecessors and successors) and any Person owned or controlled by, owning or controlling, or under common control or affiliated with Lender or Trustee and their respective successors and assigns.

"Installment Amount" means $82,834.54.

"Insurance Premiums" means all costs for the insurance policies required under Section 4.1(l) above.

"Interest Payment Date" means the first Business Day of each calendar month beginning on March 1, 2021, and ending on the earlier of (i) the date such Loan is repaid in full and any commitment therefor is terminated, and (ii) with respect to the Term Loan, the Maturity Date, with respect to the Advancing Term Loan, the Advancing Term Loan Maturity Date, or with respect to the Revolving Loan, the Termination Date.

"Interest Period" means a 1-month period commencing on the first day, and ending on the last day, of each calendar month.

"Inventory" means all raw materials, work in process, finished products and all other goods of whatever nature now owned or hereafter acquired by Borrower which are held for sale or lease or are furnished or to be furnished under contracts of sale or service.

"Land" means the land described in Exhibit B of this Agreement.

"Late Charge" means a product equal to 5.0% times the amount of any Past Due Indebtedness.

"Law" or "Laws" means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction, or binding judicial (or tribunal) decisions of any Governmental Authority. All references to Law include any amendment or modification to the Law, and all regulations, rulings, and other Laws promulgated under such Law.

"Leases" means all rights, title, interests, estates, powers, privileges, options and other benefits of Borrower in, to and under the lease, sublease, license, rental and other use or occupancy agreements which now or hereafter cover or affect any portion of the Property, together with all renewals, extensions, modifications, amendments, subleases and assignments of such lease agreements.

"Lender" means MIDFIRST BANK, a federally chartered savings association, and its successors and assigns.

"Lender's Offices" means 501 Northwest Grand Boulevard, Oklahoma City, OK 73118 or any other place Lender designates from time to time.

"LIBO Rate" means the lesser of (i) the Maximum Rate, and (ii) the rate per annum equal to the sum of (a) the quotient of the LIBOR Index for Interest Period in question divided by (1 minus the Reserve Requirement), and (b) 2.75%. Notwithstanding the foregoing, the LIBO Rate shall never be less than 2.75%.

Exhibit A

to

Amended and Restated Loan Agreement

"LIBOR" means the London Interbank Offered Rate.

"LIBOR Business Day" means each day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London, England.

"LIBOR Index" means the rate equal to the offered rate (and not the bid rate) for deposits in U.S. Dollars for a period equivalent to the Interest Period, as published by the IBA two LIBOR Business Days before the beginning of the applicable Interest Period.

"LIBOR Margin" means, for any day, a percentage per annum (expressed as basis points) as set forth below, based upon the Adjusted Funded Debt to EBITDA Ratio for the most recent fiscal quarter of Borrower:

Pricing Tier	Adjusted Funded Debt to EBITDA Ratio	LIBOR Margin (bps)
I	> 2.00	300.00
II	> 1.50 but ≤ 2.00	275.00
III	> 1.00 but ≤ 1.50	250.00
IV	≤ 1.00	225.00

Any increase or decrease in the LIBOR Margin resulting from a change in the Adjusted Funded Debt to EBITDA Ratio for the most recent fiscal quarter of Borrower shall become effective not later than 30 days following the date a Compliance Certificate is delivered and confirmed by Lender; provided, however, that if Borrower fails to deliver a Compliance Certificate on or before the applicable Compliance Certificate Due Date, then Pricing Tier I shall apply as of the first Business Day after such Compliance Certificate Due Date and shall continue to apply until not later than 30 days following the date a Compliance Certificate is delivered and confirmed by Lender, whereupon the LIBOR Margin shall be adjusted based upon the Adjusted Funded Debt to EBITDA Ratio contained in such Compliance Certificate.

"Licenses" means, collectively, all licenses, permits, approvals, certificates and agreements with or from all boards, agencies, departments, governmental or otherwise, relating directly or indirectly to the ownership, use, operation and maintenance of the Property, or the construction of the Improvements, whether heretofore or hereafter issued or executed.

"Loans" means, collectively, the Term Loan, the Advancing Term Loan and the Revolving Loan.

"Loan Documents" means this Agreement, and all other instruments evidencing, guarantying, securing, governing or relating to any Loan, and all amendments, modifications, renewals, substitutions and replacements of any of the foregoing Loan Documents.

"Loan Matter" means any action or proceeding which may affect the rights or duties of any Person under the Loan Documents.

"Loan Title Policy" means the title insurance policy accepted by the Lender after the closing of the Existing Loan Agreement (i) naming Lender as the insured, (ii) in the amount required by Lender, (iii) in form (including endorsements), date and substance, and written by a title insurance underwriter, satisfactory to Lender, (iv) insuring a valid first lien upon the Land and Improvements by virtue of the Security Instruments, and (v) containing no exceptions other than the preprinted exceptions and the Permitted Encumbrances.

"Loan to Value Default" means any point in time that the Loan to Value Ratio exceeds 80%.

"Loan to Value Ratio" means the percentage resulting from a fraction having (i) a numerator equal to the Principal Term Amount plus any unfunded amounts under the Term Loan, and (ii) a denominator equal to the value of the Land and Improvements, as determined by the most recent Appraisal, established as of the date on which the fraction is determined.

Exhibit A

to

Amended and Restated Loan Agreement

"Loan Year" means a consecutive 365-day period. The first Loan Year will begin on the Effective Date and end at 11:59 PM Central Time (Daylight or Standard Time, as applicable) on the 364th day thereafter.

"Material of Environmental Concern" means all chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products, and all other substances regulated by Environmental Laws.

"Maturity Date" means the earlier to occur of (i) the Stated Maturity Date and (ii) the date on which the entire Term Loan must be paid in full after acceleration pursuant to the terms of the Loan Documents.

"Maturity Months" means the number of months between the Prepayment Date and the Stated Maturity Date.

"Maximum Principal Amount" means, collectively, the Maximum Term Principal Amount, the Advancing Term Loan Maximum Principal Amount and the Maximum Revolving Principal Amount.

"Maximum Revolving Principal Amount" means $15,000,000.00, or if the Termination Date has occurred (and has not been extended by Lender in writing in its sole discretion), $0.

"Maximum Term Principal Amount" means the lesser of (i) $18,400,000.00 and (ii) 80% of the Loan to Value Ratio.

"Maximum Rate" means the maximum interest rate permitted under the Governing Law.

"Net Proceeds" means the amount of all insurance proceeds Lender receives less all reasonable costs and expenses Lender incurs in connection with the collection and disbursement of the proceeds.

"Outstanding Amount" means, (i) with respect to any advances under the Revolving Loan on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of advances occurring on such date, and (ii) with respect to Letters of Credit issued and outstanding under the Revolving Loan on any date, the aggregate face amount of all such Letters of Credit plus any unpaid reimbursement obligations due in respect of such Letters of Credit.

"Paid in Full Mark" means any payment Borrower tenders to Lender marked "paid in full," "without recourse," or any similar language.

"Past Due Indebtedness" means the sum of any Indebtedness which Borrower fails to pay to Lender within the earlier to occur of (i) 10 days after the date on which the Indebtedness is due, and (ii) the Maturity Date.

"Payment Deadline" means no later than 11:00 a.m. Central Time (Daylight or Standard Time, as applicable) on the date any payment is due and payable under this Agreement or the date any voluntary prepayment is made.

"Permitted Encumbrances" means the encumbrances, approved by Lender, set forth in Schedule B of the Loan Title Policy, except for the preprinted exceptions to title coverage.

"Person" means a natural person, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

"Plans and Specifications" means, collectively, all plans, specifications, notes, drawings, approvals, certifications and similar work product (and all modifications thereof) relating to the Property, including all engineering plans, complete architectural plans, specifications and work drawings, projected costs and related information, site plans, proposed plat dedications and proposed development restrictions and conditions and all requisite building permits authorizing construction of the Improvements (and repairs, modifications and additions thereto).

"Prepayment Date" means the day on which Borrower (or any other Person) tenders any Indebtedness which is not then due and payable.

Exhibit A

to

Amended and Restated Loan Agreement

"Prepayment Period" means the period of time beginning on the 60th day before the Stated Maturity Date and ending on the Stated Maturity Date.

"Prepayment Premium" means an amount equal to product of (i) the Principal Term Amount being prepaid, and (ii) (a) in the first Loan Year, 5.0%, (b) in the second Loan Year, 4.0%, (c) in the third Loan Year, 3.0%, (d) in the fourth Loan Year, 2.0%, (e) in the fifth Loan Year, 1.0%, (f) in the sixth Loan Year, 1.0%, (g) in the seventh Loan Year, 1.0%, and (h) in each Loan Year thereafter, 0.0%. For purposes of this definition, "Loan Year" shall be calculated from and after December 1, 2015.

"Prime Rate" means, for any day, the lesser of (i) the prime rate as published in The Wall Street Journal's "Money Rates" table for that day plus 2.15%, and (ii) the Maximum Rate. If multiple prime rates are quoted in the "Money Rates" table, then the highest quoted prime rate will be the Prime Rate. If the Prime Rate is no longer published in The Wall Street Journal, then Lender will choose a substitute index rate for calculating the Prime Rate and promptly notify Borrower of the new index rate. The Prime Rate may not be the lowest rate of interest that Lender charges. The Prime Rate will fluctuate with each change reported by The Wall Street Journal (or as determined by Lender if no longer published by The Wall Street Journal) as of the day of any reported change. Notwithstanding the foregoing, the Prime Rate shall never be less than 2.75%.

"Principal Amount" means, collectively, the Principal Term Amount, the Advancing Term Loan Principal Amount and the Principal Revolving Amount.

"Principal Payment Date" means the first Business Day of each calendar month and ending on the earlier of (i) for each Loan, the date such Loan is repaid in full, and (ii) with respect to the Term Loan, the Maturity Date, with respect to the Advancing Term Loan, the Advancing Term Loan Maturity Date, or with respect to the Revolving Loan, the Termination Date.

"Principal Revolving Amount" means, at any point in time, that portion of the principal balance of the Revolving Loan which is unpaid.

"Principal Term Amount" means, at any point in time, that portion of the principal balance of the Term Loan which is unpaid.

"Property" means, collectively, the Term Loan Property.

"Purchase Agreement" means that certain Purchase and Sale Agreement dated as of October 1, 2015, as amended by that certain Addendum No. 1 dated October 1, 2015, executed November 6, 2015, between Hilti, as seller, and Borrower, as purchaser, whereby Borrower will acquire the Land and the Improvements.

"Real Estate Taxes" means all ad valorem taxes, assessments and charges (including ground rents, water and sewer rents, and all other recurring charge) which may create a lien against the Property.

"Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as amended or supplemented from time to time.

"Rent" means all of the rents, income, receipts, revenues, issues, profits and other sums of money that are now or at any time hereafter become due and payable to Borrower under the terms of any Lease or arising or issuing from or out of any Lease or from or out of the Property or any part thereof, including minimum rents, additional rents, percentage rents, deficiency rents and liquidated damages following default, payments in consideration for cancellation of a Lease, security deposits (whether cash, one or more letters of credit, bonds or other form of security), advance rents, all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Property and all of Borrower's rights to recover monetary amounts from any lessee in bankruptcy, including (i) rights of recovery for use and occupancy and damage claims arising out of lease defaults, (ii) rejection, disaffirmance, repudiation, and similar actions, under Applicable Bankruptcy Law and other statutes governing the rights of creditors, and (iii) the immediate and continuing right to collect and receive all of the foregoing.

"Rent Loss Proceeds" means the aggregate of any loss or business interruption insurance proceeds which the carrier acknowledges is payable to Lender.

Exhibit A

to

Amended and Restated Loan Agreement

"Reserve Requirement" means the rate at which Lender must maintain reserves (including any marginal, supplemental or emergency reserves), if any, under Regulation D of the Federal Reserve System (a) against "Eurocurrency Liabilities" (as such term is used in Regulation D), or (b) pursuant to Applicable Law against (i) any category of liabilities which includes deposits by reference to which the LIBO Rate is to be determined as provided in this Agreement, or (ii) any category of extensions of credit or other assets which includes loans the interest rate on which is determined on the basis of rates referred to in the definition of "LIBO Rate".

"Restoration" means the restoration, replacement, and rebuilding of the Property as nearly as possible to its value and condition immediately prior to any Damage or Taking in accordance with Plans and Specifications Lender approves.

"Revolving Loan" means the revolving loan Lender makes to Borrower pursuant to this Agreement (or the other Loan Documents) up to the Maximum Revolving Principal Amount.

"Security Instruments" means, collectively, each mortgage, assignment of leases and rents, security agreement, fixture filing and/or financing statement (and all amendments thereto and modifications thereof) executed by Borrower or any other Person, in favor of Lender concerning the Property.

"State" means the state in which the Land is situated.

"Stated Maturity Date" means December 1, 2025.

"Suspension Notice" means the notice from Lender to Borrower setting forth Lender's good faith determination that (A) the LIBOR Index is not reported, or (B) (as a result of changes to Applicable Law) it has become unlawful or discouraged for Lender to make or maintain any Loan at the LIBO Rate, or (C) the LIBOR Index (1) is unreliable or impractical to use for loans tied to any LIBOR Index or for Lender's risk management or hedging related to any such loans, or (2) is no longer the predominant index for variable rate loans made by Lender or its competitors, or (3) no longer permits Lender to achieve (in all material respects) the return on any Loan as Lender modeled at the time Lender approved such Loan.

"Taking" means any threatened or instituted proceedings for the condemnation or taking by eminent domain, or offer to purchase in lieu of a taking, of all or any portion of the Property including any change in any street (whether as to grade, access, or otherwise).

"Tax" or "Taxes" means all (1) income, franchise, margin and other taxes, which now or in the future, may be assessed against a Borrower Party, (2) stamp or other taxes due with respect to the Loan Documents, (3) taxes and assessments, which now or in the future, are levied or assessed against the Collateral, (4) taxes (except for ordinary income taxes) and assessments, which now or in the future, are levied or assessed against Lender in any way related to the Indebtedness or the Loan Documents, and (5) all Real Estate Taxes.

"Tax and Insurance Escrow Account" means the impound account Borrower establishes with Lender for the payment of Real Estate Taxes and Insurance Premiums.

"Taxpayer Identification Number" means 73-0750007.

"Tenant" means each occupant of any portion of the Land or Improvements under a Lease.

"Term Loan" means the term loan Lender made to Borrower pursuant to Section 2.1 of this Agreement (or the other Loan Documents) up to the Maximum Term Principal Amount.

"Term Loan Principal Amount" means, at any point in time, that portion of the principal balance of the Term Loan which is unpaid.

"Term Loan Property" means, collectively, the Land, the Improvements and the Additional Collateral with respect thereto.

"Termination Date" means August 15, 2022, or as may be extended by Lender in writing from time to time in Lender's sole discretion.

Exhibit A

to

Amended and Restated Loan Agreement

"Total Revolving Outstandings" means the aggregate Outstanding Amount of all advances under the Revolving Loan plus the aggregate Outstanding Amount of all Letters of Credit.

"Transfer Event" means the conveyance of any Collateral to Lender or another Person through a foreclosure (or deed in lieu), receivership, bankruptcy or other voluntary or involuntary Borrower action.

"Treasury Note Rate" means the latest Treasury Constant Maturity Series yields reported, for the last day for which such yields shall have been so reported as of the applicable LIBOR Business Day, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to 10 years. If necessary, the yield will be determined by (i) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice, and (ii) interpolating linearly between reported yields.

Exhibit A

to

Amended and Restated Loan Agreement

EXHIBIT B

DESCRIPTION OF LAND

Street Address: 5400 S. 122nd East Avenue, Tulsa, Tulsa County, Oklahoma 74146

Legal Description:

Exhibit B

to

Loan Agreement

37

EXHIBIT C

COMPLIANCE CERTIFICATE

On February 15, 2021, EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation ("Borrower"), and MIDFIRST BANK ("Lender") entered into an Amended and Restated Loan Agreement (as, from time to time, amended, modified or restated, the "Agreement"). Borrower delivers this certificate (this "Certificate") to Lender in order to comply with the terms of the Agreement. Capitalized terms used, but not defined, in this Certificate have the meanings specified in the Agreement.

Borrower certifies to Lender that as of the Effective Date (as defined below):

(1)    No Event of Default exists;

(2)    No event exists which after the passage of time or the delivery of notice will become an Event of Default;

(3)    The natural person executing this Certificate on Borrower's behalf (a) holds the title or position with Borrower required under the Agreement to execute this Certificate, (b) has been duly authorized to execute this Certificate on Borrower's behalf, and (c) has the capacity to duly execute, and make the certifications in, this Certificate; and

(4)    Borrower's calculations of the Debt Coverage Ratio as of the Monthly Calculation Date (as defined below) are set forth on Schedule 1 to this Certificate.

(5)    Borrower's calculations of the Adjusted Funded Debt to EBITDA Ratio as of the Monthly Calculation Date are set forth on Schedule 2 to this Certificate.

BORROWER:

EDUCATIONAL DEVELOPMENT CORPORATION

By:                                                                                               

Name:                                                                                          

Title:                                                                                            

Date Borrower executed this Certificate

(the "Effective Date")

Last day of most recently completed

calendar month for monthly calculations

(the "Monthly Calculation Date")

Last day of most recently completed fiscal

quarter for quarterly calculations

(the "Quarterly Calculation Date")

Exhibit C

to

Amended and Restated Loan Agreement

Schedule 1

to

Compliance Certificate

This Schedule 1 to Compliance Certificate is delivered as of the date reflected on the accompanying Compliance Certificate and is executed and delivered by Educational Development Corporation, a Delaware corporation ("Borrower"), to MidFirst Bank ("Lender") pursuant to and in accordance with the provisions of that certain Amended and Restated Loan Agreement dated as of February 15, 2021 (as amended and in effect from time to time, the "Agreement") between Borrower and Lender.

Compliance with Debt Coverage Ratio

A. Numerator:

Net Income                                                            $                                          

plus Interest Expense                                               +         $                                          

plus Depreciation and Amortization Expense          +         $                                          

less Dividends                                                           -         $                                          

                                                                               $                                          

B. Denominator:

Current maturities of long term indebtedness       $                                          

plus Interest Expense                                               +          $                                          

plus capital leases                                                    +          $                                          

Debt Coverage Ratio (A ÷ B)                                 ____________:1

Schedule 1

to

Exhibit C

to

to Amended and Restated Loan Agreement

Schedule 2

to

Compliance Certificate

This Schedule 2 to Compliance Certificate is delivered as of the date reflected on the accompanying Compliance Certificate and is executed and delivered by Educational Development Corporation, a Delaware corporation ("Borrower"), to MidFirst Bank ("Lender") pursuant to and in accordance with the provisions of that certain Amended and Restated Loan Agreement dated as of February 15, 2021 (as amended and in effect from time to time, the "Agreement") between Borrower and Lender.

Adjusted Funded Debt to EBITDA Ratio

A. Numerator:

Funded Debt                                                          $                                          

minus Principal Term Amount

(Lender's Note #1108135-100 and

Note #1108135-102)                                                -         $                                          

Subtotal of A:                                                         $                                          

B. Denominator:

Net Income                                                             $                                          

plus Interest Expense                                               +         $                                          

plus Depreciation and Amortization Expense          +         $                                          

plus Income Tax Expense                                         +         $                                          

EBITDA                                                                 $                                          

minus lease payments under Hilti Lease                   -         $                                          

Subtotal of B:                                                         $                                          

Adjusted Funded Debt to EBITDA Ratio (A ÷ B)           ____________:1

Schedule 2

to

Exhibit C

to

to Amended and Restated Loan Agreement

EXHIBIT D

BORROWING BASE CERTIFICATE

On February 15, 2021, EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation ("Borrower"), and MIDFIRST BANK ("Lender") entered into an Amended and Restated Loan Agreement (as, from time to time, amended, modified or restated, the "Agreement"). Borrower delivers this certificate (this "Certificate") to Lender in order to comply with the terms of the Agreement. Capitalized terms used, but not defined, in this Certificate have the meanings specified in the Agreement.

Borrower certifies to Lender that as of the Effective Date (as defined below):

(1)    As of the end of the calendar month ending ______________, the Borrowing Base was $_________, as demonstrated by the calculations set forth on Schedule 1 to this Certificate.

BORROWER:

EDUCATIONAL DEVELOPMENT CORPORATION

By:                                                                                               

Name:                                                                                          

Title:                                                                                            

Date Borrower Executed this Certificate

(the "Effective Date")

Exhibit D

to

Amended and Restated Loan Agreement

Schedule 1

to

Borrowing Base Certificate

Schedule 1

to

Exhibit D

to

Amended and Restated Loan Agreement

Schedule 2

to

Borrowing Base Certificate

(Accounts Receivable Aging Report)

Schedule 2

to

Exhibit D

to

Amended and Restated Loan Agreement

EXHIBIT E

CONDITIONS PRECEDENT

Each of the following conditions must be satisfied, at Borrower's cost and to Lender's satisfaction (in Lender's sole discretion), before this Agreement is effective.

1. Documents. Lender has received:

a. fully executed originals of each Loan Document;

b. immediately available funds from Borrower sufficient to reimburse Lender for all costs (including attorneys' fees) Lender incurred to underwrite, document and close the Loan;

c. evidence that all Borrower Parties have all insurance policies required under the Loan Documents;

d. all reports, including environmental assessments, Lender desires;

e. satisfactory results from all due diligence, including financial statement and background checks, Lender desires;

2. No Default. On the day on which Lender receives the last satisfactory document under paragraph 1 above:

a. no Event of Default exists; and

b. no event exists that after delivery of notice or passage of time will become an Event of Default.

Exhibit E

to

Amended and Restated Loan Agreement

EX-10.11

Exhibit 10.11

FIRST AMENDMENT AMENDED AND RESTATED LOAN AGREEMENT

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (this "Amendment") is made and entered into as of April 1, 2021 (the "Effective Date"), by and between EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation ("Borrower"), and MIDFIRST BANK, a federally charted savings association ("Lender").

Background Recitals

A.    Borrower and Lender are parties to that certain Amended and Restated Loan Agreement dated as of February 15, 2021 (the "Loan Agreement"). Unless the context otherwise requires, capitalized terms used in this Amendment and not otherwise defined herein have the respective meanings assigned to them in the Loan Agreement.

B.    Borrower has requested that Lender agree to reduce the pricing and remove the prepayment premium for the Term Loan, and Lender has agreed to such requests, but only upon the terms and conditions set forth in this Amendment.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

1.     PRICING AND PREPAYMENT OF TERM LOAN.

1.1.    Contract Rate. The definition of "Contract Rate" appearing in Exhibit A of the Loan Agreement is hereby amended in its entirety to read as follows:

"Contract Rate" means a per annum rate of interest equal to the lesser of (i) 3.12%, and (ii) the Maximum Rate.

1.2.    Prepayment of Term Loan. Section 2.1(c) of the Loan Agreement is amended in its entirety to read as follows:

(c)         Prepayment. Borrower may prepay the Term Loan, in whole or in part, without premium or penalty.

2.     CONDITIONS TO EFFECTIVENESS. This Amendment will be effective as of the Effective Date, but subject to satisfaction of each of the following conditions precedent:

2.1.    Execution of Amendment. This Amendment shall have been executed by the applicable parties and delivered to Lender.

2.2.    Legal Matters. All legal matters incident to this Amendment shall be satisfactory to Lender and its counsel.

3.     REPRESENTATIONS AND WARRANTIES.

3.1.    Reaffirmation. Borrower confirms that all representations and warranties made by it in the Loan Agreement and the other Loan Documents are, and as of the Effective Date will be, true and correct in all material respects, and all of such representations and warranties are hereby remade and restated as of the Effective Date and shall survive the execution and delivery of this Amendment.

3.2.    Additional Representations and Warranties.

3.2.1.    Power; Transactional Authority; Enforceability. Borrower has the requisite power and authority to execute, deliver and carry out the terms and provisions of this Amendment, and has taken all necessary action to authorize its execution, delivery and performance of this Amendment. Borrower

has duly executed and delivered this Amendment. This Amendment constitutes Borrower's legal, valid and binding obligations, enforceable in accordance with the terms of the Loan Documents, as amended by this Amendment, subject to (i) the effect of any Applicable Bankruptcy Law, or (ii) general principles of equity.

3.2.2.    No Violation; No Consent. Borrower's execution, delivery and performance of this Amendment, and compliance with the terms and provisions of the Loan Documents, as amended by this Amendment, will not (i) contravene any Applicable Law, (ii) conflict or be inconsistent with or result in any breach of any term, covenant, condition or provision of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any lien upon any of the Property or Borrower's other assets pursuant to the terms of any indenture, mortgage, deed of trust, agreement or other instrument to which Borrower is a party or by which Borrower or any of the Property or Borrower's other assets is bound or may be subject, or (iii) violate any term of Borrower's certificate of incorporation or other documents and agreements governing Borrower's existence, management or operation. Borrower is not required to obtain the consent of any other party, including any Governmental Authority, in connection with the execution, delivery, performance, validity or enforceability of the Loan Documents, as amended by this Amendment.

3.2.3.    Financial Matters. Each Borrower Party financial statement previously delivered to Lender was prepared in accordance with GAAP and completely, correctly and fairly present the financial condition and the results of operations of each Borrower Party on the date and for the period covered by the financial statements. All other reports, statements and other data that any Borrower Party furnished to Lender in connection with the Loan are true and correct in all material respects and do not omit any fact or circumstance necessary to ensure that the statements are not misleading. Each Borrower Party (i) is solvent, (ii) is not bankrupt, and (iii) has no outstanding liens, suits, garnishments, bankruptcies or court actions which may render such Borrower Party insolvent or bankrupt. Since the date of the last financial statements each Borrower Party delivered to Lender, no event, act, condition or liability has occurred or exists, which has had, or may reasonably be expected to have, a material adverse effect upon (A) such Borrower Party's business, condition (financial or otherwise) or operations, or (B) such Borrower Party's ability to perform or satisfy, or Lender's ability to enforce, any of the Indebtedness.

3.2.4.    Litigation. There are no suits or proceedings (including condemnation) pending or (to Borrower's knowledge, after reasonable inquiry) threatened against or affecting any Borrower Party or the Property or involving the validity, enforceability or priority of any of the Loan Documents. Borrower has not received notice from any Governmental Authority alleging that any Borrower Party or the Property is violating any Applicable Law.

3.2.5.    No Default. No Event of Default currently exists or would exist after giving effect to the transactions contemplated by this Amendment.

4.     MISCELLANEOUS.

4.1.    Effect of Amendment. The terms of this Amendment shall be incorporated into and form a part of the Loan Agreement. Except as expressly amended, modified and supplemented by this Amendment, the Loan Agreement shall continue in full force and effect in accordance with its original stated terms, all of which are hereby reaffirmed in every respect as of the Effective Date. In the event of any irreconcilable inconsistency between the terms of this Amendment and the terms of the Loan Agreement, the terms of this Amendment shall control and govern, and the agreements shall be interpreted so as to carry out and give full effect to the intent of this Amendment. All references to the Loan Agreement appearing in any of the Loan Documents shall hereafter be deemed references to the Loan Agreement as amended, modified and supplemented by this Amendment.

4.2.    No Course of Dealing; Past Acceptance. This Amendment shall not establish a course of dealing or be construed or relied upon as evidence of any willingness on Lender's part to grant any future consent or amendment, should any be requested. Lender acknowledges that Lender and its agents in the past may have

2

accepted, without exercising the remedies to which Lender was entitled, payments and performance by Borrower that constituted Events of Default under the Loan Documents. Borrower acknowledges that no such acceptance or grace granted by Lender or its agents in the past, or Lender's agreement to the modifications evidenced hereby, has in any manner diminished Lender's right in the future to insist that Borrower Parties strictly comply with the terms of the Loan Documents, as modified by the terms of this Amendment. Furthermore, Borrower specifically acknowledges that any future grace or forgiveness of any Events of Default shall not constitute a waiver or diminishment of any right of Lender with respect to any future Event of Default, whether or not similar to any Event of Default with respect to which Lender has in the past chosen, or may in the future choose, not to exercise all of the rights and remedies granted to it under the Loan Documents.

4.3.    Release. Borrower hereby releases, remises, acquits and forever discharges Lender and any co-lender or loan participant, together with their respective employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, successors and assigns, subsidiary corporations, parent corporations, and related corporate divisions (all of the foregoing the "Released Parties"), from any and all actions and causes of action, judgments, executions, suits, liens, debts, claims, counterclaims, defenses, demands, liabilities, obligations, damages and expenses of any and every character (collectively, "Claims"), known or unknown, direct or indirect, at law or in equity, of whatsoever kind or nature, whether heretofore or hereafter accruing, for or because of any matter or things done, omitted or suffered to be done by any of the Released Parties prior to and including the Effective Date, and in any way directly or indirectly arising out of or in any way connected to this Amendment or the other Loan Documents, or any of the transactions associated therewith, or the Property, including specifically but not limited to claims of usury, lack of consideration, fraudulent transfer and lender liability, that it now has or may hereafter have against any Released Party, and hereby agrees to indemnify and hold harmless Lender and each other Released Party for all Claims that any Person may bring against any such Released Party that arise under or in connection with the Loan Agreement based on facts existing on or before the Effective Date. THE FOREGOING RELEASE INCLUDES ACTIONS AND CAUSES OF ACTION, JUDGMENTS, EXECUTIONS, SUITS, DEBTS, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, DAMAGES AND EXPENSES ARISING AS A RESULT OF THE NEGLIGENCE OR STRICT LIABILITY OF ONE OR MORE OF THE RELEASED PARTIES.

4.4.    Ratification and Affirmation. Borrower hereby acknowledges the terms of this Amendment and ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect.

4.5.    No Modification. This Amendment along with the Loan Documents supersedes and merges all prior and contemporaneous promises and agreements. No modification of this Amendment or any other Loan Document, or any waiver of rights under any of the foregoing, shall be effective unless made by supplemental agreement, in writing, executed by the Parties. The Parties further agree that the Loan Agreement, as amended by this Amendment, may not in any way be explained or supplemented by a prior, existing or future course of dealings between the Parties or by any prior, existing, or future performance between the Parties pursuant to this Amendment, the Loan Agreement or otherwise.

4.6.    Headings. The headings of the sections and subsections of this Amendment are for convenience of reference only and will not affect the scope or meaning of the sections of this Amendment.

4.7.    Applicable Law. This Amendment and the rights and obligations of Borrower and Lender are in all respects governed by, and construed and enforced in accordance with the Governing Law (without giving effect to its principles of conflicts of law), except for those terms of the Security Instruments pertaining to the creation, perfections, validity, priority or foreclosure of the liens or security interests on the Property located within the State, which terms will be governed by, and construed and enforced in accordance with the laws of the State (without giving effect to its principles of conflicts of law).

4.8.    Counterparts; Miscellaneous. This Amendment may be executed in any number of counterparts with the same effect as if all signers executed the same instrument. All counterparts of this Amendment must

3

be construed together and will constitute one instrument. This Amendment is a Loan Document. Time is of the essence with respect to this Amendment. The Parties acknowledge and confirm that each of their respective attorneys has participated or has had the opportunity to participate jointly in the review and revision of this Amendment and that it has not been written solely by counsel for one party. The Parties therefore stipulate and agree that the rule of construction to the effect that any ambiguities are to or may be resolved against the drafting Party will not favor either Party against the other. The terms and provisions of this Amendment are binding upon and inure to the benefit of the Parties and their successors and assigns.

4.9.    Reimbursement of Expenses. Borrower agrees to pay or reimburse Lender for all reasonable out-of-pocket expenses, including Attorneys' Fees, incurred by Lender in connection with the negotiation, preparation, execution and delivery of this Amendment and the consummation of the transactions contemplated hereby.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

4

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed effective as of the Effective Date.

Borrower:   EDUCATIONAL DEVELOPMENT CORPORATION, a Delaware corporation     By:                                                          Name: Randall W. White Title:   Chairman, President and CEO

Borrower's Signature Page

to

First Amendment to Amended and Restated Loan Agreement

Lender:      MIDFIRST BANK, a federally chartered savings association     By:                                                           Name: Marc Short Title:   Senior Vice President

Lender's Signature Page

to

First Amendment to Amended and Restated Loan Agreement

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 33-60188, 333-100659 and 333-231817) on Form S-8 of Educational Development Corporation of our reports dated May 13, 2021, relating to the financial statements and the effectiveness of internal control over financial reporting of Educational Development Corporation, appearing in this Annual Report on Form 10-K of Educational Development Corporation for the year ended February 28, 2021.

/s/ HOGANTAYLOR LLP

Tulsa, Oklahoma

May 13, 2021

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Randall W. White, certify that:

1. I have reviewed this Annual Report on Form 10-K of Educational Development Corporation;

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

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

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 13, 2021

/s/ Randall W. White                             

Chairman of the Board, Director, President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dan E. O’Keefe, certify that:

1. I have reviewed this Annual Report on Form 10-K of Educational Development Corporation;

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

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

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 13, 2021

/s/ Dan E. O’Keefe                                  

Chief Financial Officer and Corporate Secretary

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the Annual Report of Educational Development Corporation (the “Company”) on Form 10-K for the year ending February 28, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:    May 13, 2021	By      /s/ Randall W. White
	Randall W. White President and Chief Executive Officer (Principal Executive Officer)
Date:    May 13, 2021	By      /s/ Dan E. O’Keefe
	Dan E. O’Keefe Chief Financial Officer and Corporate Secretary (Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - USD ($)	12 Months Ended
	Feb. 28, 2021	May 10, 2021	Aug. 31, 2020
Document Information Line Items
Entity Registrant Name	EDUCATIONAL DEVELOPMENT CORPORATION
Trading Symbol	EDUC
Document Type	10-K
Current Fiscal Year End Date	--02-28
Entity Common Stock, Shares Outstanding		8,350,972
Entity Public Float			$ 90,190,900
Amendment Flag	false
Entity Central Index Key	0000031667
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Feb. 28, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	FY
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Annual Report	true
Document Transition Report	false
Entity File Number	000-04957
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	73-0750007
Entity Address, Address Line One	5402 South 122nd East Avenue
Entity Address, City or Town	Tulsa
Entity Address, State or Province	OK
Entity Address, Postal Zip Code	74146
City Area Code	918
Local Phone Number	622-4522
Title of 12(b) Security	Common Stock, $.20 par value
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes

XML

BALANCE SHEETS - USD ($)	Feb. 28, 2021	Feb. 29, 2020
CURRENT ASSETS:
Cash and cash equivalents	$ 1,812,200	$ 2,999,400
Accounts receivable, less allowance for doubtful accounts of $331,900 (2021) and $237,400 (2020)	3,346,700	2,967,200
Inventories - net	51,762,400	30,087,300
Income taxes receivable	0	221,700
Prepaid expenses and other assets	1,219,300	950,600
Total current assets	58,140,600	37,226,200
INVENTORIES - net	685,300	1,016,700
PROPERTY, PLANT AND EQUIPMENT - net	29,951,000	26,377,700
OTHER ASSETS	73,600	82,200
TOTAL ASSETS	88,850,500	64,702,800
CURRENT LIABILITIES:
Accounts payable	19,674,300	9,661,100
Line of credit	5,245,300	0
Deferred revenues	1,914,100	385,300
Current maturities of long-term debt	533,500	1,027,400
Accrued salaries and commissions	3,488,000	1,657,200
Income taxes payable	130,200	0
Dividends payable	835,100	417,400
Other current liabilities	6,094,800	3,238,200
Total current liabilities	37,915,300	16,386,600
LONG-TERM DEBT - net of current maturities	10,451,200	17,784,300
DEFERRED INCOME TAXES - net	89,900	993,300
OTHER LONG-TERM LIABILITIES	134,300	145,800
Total liabilities	48,590,700	35,310,000
COMMITMENTS AND CONTINGENCIES – See Note 9
SHAREHOLDERS' EQUITY:
Common stock, $0.20 par value; Authorized 16,000,000 shares; Issued 12,410,080 shares; Outstanding 8,346,600 (2021) and 8,348,651 (2020) shares	2,482,000	2,482,000
Capital in excess of par value	10,863,900	9,843,900
Retained earnings	39,683,000	29,732,200
	53,028,900	42,058,100
Less treasury stock, at cost	(12,769,100)	(12,665,300)
Total shareholders' equity	40,259,800	29,392,800
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 88,850,500	$ 64,702,800

XML

BALANCE SHEETS (Parentheticals) - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts (in Dollars)	$ 331,900	$ 237,400
Common stock, shares outstanding	8,346,600	8,348,651
Common stock, shares issued	12,410,080	12,410,080
Common stock, authorized shares	16,000,000	16,000,000
Common stock, par value (in Dollars per share)	$ 0.20	$ 0.20

XML

STATEMENTS OF EARNINGS - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
NET REVENUES	$ 204,635,100	$ 113,011,900
COST OF GOODS SOLD	60,037,000	36,863,300
Gross margin	144,598,100	76,148,600
OPERATING EXPENSES:
Operating and selling	36,123,700	18,606,000
Sales commissions	69,977,200	34,994,800
General and administrative	22,541,500	15,505,100
Total operating expenses	128,642,400	69,105,900
INTEREST EXPENSE	561,000	888,100
OTHER INCOME	(1,836,100)	(1,597,300)
EARNINGS BEFORE INCOME TAXES	17,230,800	7,751,900
INCOME TAXES	4,606,800	2,106,800
NET EARNINGS	$ 12,624,000	$ 5,645,100
BASIC AND DILUTED EARNINGS PER SHARE:
Basic (in Dollars per share)	$ 1.51	$ 0.68
Diluted (in Dollars per share)	$ 1.50	$ 0.68
WEIGHTED AVERAGE NUMBER OF COMMON AND EQUIVALENT SHARES OUTSTANDING:
Basic (in Shares)	8,352,474	8,318,412
Diluted (in Shares)	8,426,724	8,323,128
Dividends per share (in Dollars per share)	$ 0.32	$ 0.20
Gross Sales [Member]
REVENUES	$ 255,589,600	$ 149,936,800
Discounts and Allowances [Member]
Less discounts and allowances	(74,814,700)	(46,984,700)
Transportation Revenue [Member]
REVENUES	$ 23,860,200	$ 10,059,800

XML

STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balance at Feb. 28, 2019	$ 2,418,400	$ 8,975,100	$ 25,754,900	$ (11,217,900)	$ 25,930,500
Balance (in Shares) at Feb. 28, 2019	12,092,080			3,896,998
Purchases of treasury stock				$ (1,705,800)	$ (1,705,800)
Purchases of treasury stock (in Shares)				254,475	254,475
Sales of treasury stock		241,000		$ 258,400	$ 499,400
Sales of treasury stock (in Shares)				(90,044)
Exercise of stock options	$ 2,000	24,300			$ 26,300
Exercise of stock options (in Shares)	10,000				10,000
Dividends declared			(1,667,800)		$ (1,667,800)
Share-based compensation expense (see Note 10)		665,100			665,100
Issuance of restricted share awards for vesting	$ 61,600	(61,600)
Issuance of restricted share awards for vesting (in Shares)	308,000
Net earnings			5,645,100		5,645,100
Balance at Feb. 29, 2020	$ 2,482,000	9,843,900	29,732,200	$ (12,665,300)	29,392,800
Balance (in Shares) at Feb. 29, 2020	12,410,080			4,061,429
Purchases of treasury stock				$ (163,800)	$ (163,800)
Purchases of treasury stock (in Shares)				22,565	22,565
Sales of treasury stock		57,800		$ 83,600	$ 141,400
Sales of treasury stock (in Shares)				(26,828)
Exercise of stock options (in Shares)					0
Dividends declared			(2,673,200)		$ (2,673,200)
Forfeiture of restricted share awards		23,600		$ (23,600)
Forfeiture of restricted share awards (in Shares)				6,314
Share-based compensation expense (see Note 10)		938,600			938,600
Net earnings			12,624,000		12,624,000
Balance at Feb. 28, 2021	$ 2,482,000	$ 10,863,900	$ 39,683,000	$ (12,769,100)	$ 40,259,800
Balance (in Shares) at Feb. 28, 2021	12,410,080			4,063,480

XML

STATEMENTS OF SHAREHOLDERS' EQUITY (Parentheticals) - $ / shares	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Retained Earnings [Member]
Dividends declared	$ 0.32	$ 0.20

XML

STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 12,624,000	$ 5,645,100
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	1,633,200	1,425,700
Deferred income taxes	(903,400)	120,700
Provision for doubtful accounts	139,800	63,900
Provision for inventory valuation allowance	198,600	318,400
Share-based compensation expense	938,600	665,100
Changes in assets and liabilities:
Accounts receivable	(519,400)	227,700
Inventories, net	(21,542,300)	2,598,200
Prepaid expenses and other assets	(260,100)	590,200
Accounts payable	8,952,000	(4,567,500)
Accrued salaries and commissions, and other liabilities	4,676,000	(1,284,700)
Deferred revenues	1,528,800	(580,300)
Income taxes receivable/payable	351,900	(978,100)
Total adjustments	(4,806,300)	(1,400,700)
Net cash provided by operating activities	7,817,700	4,244,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(4,145,300)	(638,800)
Net cash used in investing activities	(4,145,300)	(638,800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term debt	(9,274,400)	(964,900)
Proceeds from term debt	1,447,400	0
Sales of treasury stock	141,400	499,400
Purchases of treasury stock	(163,800)	(1,705,800)
Cash proceeds from issuance of common stock upon exercise of stock options	0	26,300
Net borrowings under line of credit	5,245,300	0
Dividends paid	(2,255,500)	(1,660,500)
Net cash used in financing activities	(4,859,600)	(3,805,500)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,187,200)	(199,900)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	2,999,400	3,199,300
CASH AND CASH EQUIVALENTS - END OF YEAR	1,812,200	2,999,400
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for interest	582,000	899,100
Cash paid for income taxes	4,806,900	3,084,100
NON-CASH TRANSACTIONS:
Accrued capital expenditures	$ 1,061,200	$ 0

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Feb. 28, 2021

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business—Educational Development Corporation (“we,” “our,” “us,” or “the Company”) distributes books and publications through our Usborne Books & More (“UBAM”) and EDC Publishing (“Publishing”) divisions to individual consumers, book, toy and gift stores, libraries and home educators located throughout the United States (“U.S.”).  We are the exclusive U.S. trade co-publisher of books and related items published by Usborne Publishing Limited (“Usborne”), an England-based publishing company, our largest supplier.  We also publish books and related items through our ownership of Kane Miller Book Publisher (“Kane Miller”).

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

Business Concentration—A significant portion of our inventory purchases are concentrated with Usborne.  Purchases from them were approximately $50.8 million and $21.4 million for the years ended February 28, 2021 and February 29, 2020, respectively.  Total inventory purchases for those same periods were approximately $72.4 million and $33.1 million, respectively.  As of February 28, 2021 and February 29, 2020, our outstanding accounts payable due to Usborne was $14.6 million and $5.5 million, respectively.

A significant portion of our UBAM division sales are facilitated through the use of social media collaboration platforms that allow our consultants to interact in real-time, or near real-time, with customers.  Consultants use these platforms to invite potential customers to “online parties,” provide book recommendations, answer questions and provide links to other supporting online materials. When a customer is ready to purchase books from the online party, they are redirected from the social media platform to the consultant’s e-commerce site where the order can be placed.

Cash and Cash Equivalents—Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000. We have never experienced any losses related to these balances.  The majority of payments due from banks for third party credit card transactions process within two business days.  These amounts due are classified as cash and cash equivalents.  Cash and cash equivalents also include demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired.

Accounts Receivable—Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within thirty days from the invoice date.  Extended payment terms are offered at certain times of the year for orders that meet minimum quantities or amounts.  During fiscal 2021, extended payment terms were granted to customers that were negatively impacted by the COVID-19 pandemic.  Delinquency fees are not assessed.  Payments of accounts receivable are allocated to the specific invoices identified on the customers’ remittance advice.  Accounts receivable are carried at original invoice amount less an estimated reserve made for returns and discounts based on quarterly review of historical rates of returns and expected discounts to be taken.  The carrying amount of accounts receivable is reduced, if needed, by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Management periodically reviews accounts receivable balances and, based on an assessment of historical bad debts, current customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends, estimates the portion of the balance that will not be collected.  Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation account based on its assessment of the current status of the individual accounts. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.  Recoveries of accounts receivable previously written off are recorded as income when received.

Management has estimated an allowance for doubtful accounts of $331,900 and $237,400 as of February 28, 2021 and February 29, 2020, respectively. Included within this allowance is $93,900 of reserve for vendor discounts to sell remaining inventory as of February 28, 2021 and February 29, 2020.

Inventories—Inventories are stated at the lower of cost or net realizable value.  Cost is determined using the average costing method.  We present a portion of our inventory as a noncurrent asset.  Occasionally we purchase book inventory in quantities in excess of what will be sold within the normal operating cycle due to the minimum order requirements of our primary supplier.  These excess quantities are included in noncurrent inventory.  We estimate noncurrent inventory using the current year turnover ratio by title.  For inventory that has at least twelve months of sales history, inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory.

The Company assumes title and responsibility for inventory purchased according to the contract language with our suppliers and the individual shipment terms for the order. The majority of Usborne orders pass title at FOB-Destination Port and most Kane Miller orders pass title at FOB-Shipping Point. The Company maintains insurance for the value of the inventory once the title has been passed until it is received at our warehouse (“inventory in transit”).

Consultants that meet certain eligibility requirements may request and receive inventory on consignment.  Consignment inventory is stated at the lower of cost or net realizable value, 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, excluding the estimated reserve, with consultants was $1,114,100 and $1,519,600 at February 28, 2021 and February 29, 2020, respectively.  The Company has reserved for consignment inventory not expected to be sold or returned of $478,600 and $239,800 as of February 28, 2021 and February 29, 2020, respectively.  

Inventories are presented net of a valuation allowance, which includes reserves for inventory obsolescence and consultant consignment inventory that is not expected to be sold or returned.  Management estimates the allowance for both current and noncurrent inventory.  The allowance is based on management’s identification of slow-moving inventory and estimated consignment inventory that will not be sold or returned.

Property, Plant and Equipment—Property, plant and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful life, as follows:

Building	30 years
Building improvements	5 – 15 years
Machinery and equipment	3 – 15 years
Capitalized software	4 years
Furniture and fixtures	3 years

Capitalized projects that are not placed in service are recorded as in progress and are not depreciated until the related assets are placed in service.

Impairment of Long-Lived Assets—We review the value of long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable based on estimated future cash flows.  Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, we recognize an impairment charge for the excess of carrying value of the asset over its estimated fair value. Determination as to whether and how much an asset is impaired involves management estimates and can be impacted by other uncertainties. No impairment was noted during fiscal years 2021 or 2020.

Income Taxes—We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using the current tax laws and rates. A valuation allowance is established when necessary to reduce net deferred tax assets to the amounts that are “more likely than not” to be realized.

Revenue Recognition—Revenue is derived from the sales of children’s books and related products which are generally capable of being distinct and accounted for as a single performance obligation to deliver tangible goods. Substantially all of our books are sold to end consumers through our UBAM division and retail outlets through our Publishing division.  Refer to Note 13 – Business Segments for revenue by segment.  Revenues of both divisions are recognized at shipping point, which is the point in time the customer obtains control of the products and risk of loss and rewards of ownership have been transferred.  Products are shipped FOB-Shipping Point. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for as a pass through liability, and therefore are excluded from net sales.

The majority of the UBAM's sales contracts have a single performance obligation and are short-term in nature.  UBAM’s sales are generally collected at the time the product is ordered.  Sales which have been paid for but not shipped are classified as deferred revenue on the balance sheets.  Sales associated with consignment inventory are recognized when reported by the consignee and payment associated with the sale has been collected.  Transportation revenue represents the amount billed to the customer for shipping the product and is recorded when the product is shipped.

Certain UBAM sales contracts associated with the hostess award programs include sales incentives, such as discounted products.  These incentives provide a separate performance obligation in the contract and material right to the customer.  The transaction price is allocated to the material right based on its relative standalone selling price and is recognized in revenue as the performance obligations are satisfied, which occurs at shipping point or at the expiration of the material right.  As the products included as sales incentives are shipped with the associated products ordered, there is no deferral required.  Revenues allocated to the material right are recognized in gross sales, discounts and allowances and cost of goods sold in our statement of earnings.

The majority of Publishing’s sales contracts have a single performance obligation and are short-term in nature. Publishing’s sales may be collected at the time the product is shipped or the customers may be given payment terms based primarily on their credit worthiness and payment history.

Estimated allowances for sales returns, which reduce net revenues and costs of goods sold, are recorded as sales are recognized. Management uses a moving average calculation to estimate the allowance for sales returns. We are not responsible for product damaged in transit. Damaged returns are primarily from retail stores. These returns result from damage that occurs in the stores, not in shipping to the stores. It is industry practice to accept non-damaged returns from retail customers. Management has estimated sales returns of approximately $201,500 as of both February 28, 2021 and February 29, 2020, which is included in other current liabilities on the Company’s balance sheets. In addition, Management has recorded an asset for the expected value of non-damaged inventories to be returned. The estimated value of returned products of $100,800 is included in other current assets on the Company’s balance sheets as of both February 28, 2021 and February 29, 2020.

The Company generally expenses sales commissions in the same period that the revenue is recognized. These costs are recorded within operating expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an unexpected length of one year or less.

Advertising Costs—Advertising costs are expensed as incurred.  Advertising expenses, included in general and administrative expenses in the statements of earnings, were $1,181,300 and $579,500 for the years ended February 28, 2021 and February 29, 2020, respectively.

Shipping and Handling Costs—We classify shipping and handling costs as operating and selling expenses in the statements of earnings.  Shipping and handling costs include postage, freight, handling costs, as well as shipping materials and supplies. These costs were $34,167,000 and $17,240,300 for the years ended February 28, 2021 and February 29, 2020, respectively.

Interest Expense—Interest related to our outstanding debt is recognized as incurred.  Interest expense, classified separately in the statements of earnings, was $561,000 and $888,100 for the years ended February 28, 2021 and February 29, 2020, respectively.

Earnings per Share—Basic earnings per share (“EPS”) is computed by dividing net earnings 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.

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

	Year Ended February 28 (29),
	2021		2020
Earnings per share:
Net earnings applicable to common shareholders	$	12,624,000	$	5,645,100
Shares:
Weighted average shares outstanding-basic		8,352,474		8,318,412
Assumed exercise of options and issuance of nonvested restricted shares		74,250		4,716
Weighted average shares outstanding-diluted		8,426,724		8,323,128
Diluted earnings per share:
Basic	$	1.51	$	0.68
Diluted	$	1.50	$	0.68

Share-Based Compensation—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 ratably from the service inception date to the vesting date for each tranche.  Forfeitures are recognized when they occur.

New Accounting Pronouncements—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 that the following recently issued accounting standard updates (“ASU”) apply to us:

In December 2019, the FASB published ASU 2019-12: Income Taxes (Topic 740), which simplifies the accounting for income taxes. Topic 740 addresses a number of topics including but not limited to the removal of certain exceptions currently included in the standard related to intra-period allocation when there are losses, in addition to calculation of income taxes when current year-to-date losses exceed anticipated loss for the year. The amendment also simplifies accounting for certain franchise taxes and disclosure of the effect of enacted change in tax laws or rates. Topic 740 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The impact of the adoption is not expected to have a material impact to our financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (LIBOR). This ASU includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This ASU is effective March 12, 2020 through December 31, 2022. The Company’s debt agreements include the use of alternate rates when LIBOR is not available. We do not expect the change from LIBOR to an alternate rate will have a material impact to our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.

XML

INVENTORIES

12 Months Ended

Feb. 28, 2021

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

2.       INVENTORIES

Inventories consist of the following:

	February 28 (29),
	2021			2020
Current:
Book inventory	$	52,276,200		$	30,346,900
Inventory valuation allowance		(513,800	)		(259,600	)
Inventories net - current	$	51,762,400		$	30,087,300
Noncurrent:
Book inventory	$	894,300		$	1,226,500
Inventory valuation allowance		(209,000	)		(209,800	)
Inventories net - noncurrent	$	685,300		$	1,016,700

Inventory in transit totaled $6,467,400 and $549,900 at February 28, 2021 and February 29, 2020, respectively.

Book inventory quantities in excess of what we expect will be sold within the normal operating cycle, based on 2 ½ years of anticipated sales, are included in non-current inventory.

XML

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Feb. 28, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

3.        PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	February 28 (29),
	2021			2020
Land	$	4,107,200		$	4,107,200
Building		20,373,900			20,321,800
Building improvements		1,949,200			1,833,700
Machinery and equipment		8,289,400			8,025,000
Furniture and fixtures		110,800			110,800
Capitalized software		866,500			-
Property, plant and equipment - in progress		4,436,300			528,300
Total property, plant and equipment		40,133,300			34,926,800
Less accumulated depreciation		(10,182,300	)		(8,549,100	)
Property, plant and equipment-net	$	29,951,000		$	26,377,700

During fiscal year 2020, the Company began the process to upgrade the software platform that the UBAM division consultants use to monitor their business. During fiscal year 2021, the Company placed into service these UBAM platform upgrades and continued its development of a new platform for customers to place orders. In addition, during fiscal year 2021 the Company began construction on two new pick-pack-ship lines to increase the Company’s daily shipping capacity.

XML

OTHER CURRENT LIABILITIES

12 Months Ended

Feb. 28, 2021

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Liabilities Disclosure [Text Block]

4.        OTHER CURRENT LIABILITIES

Other current liabilities consist of the following:

	February 28 (29),
	2021		2020
Accrued royalties	$	1,423,400	$	655,600
Accrued UBAM incentives		1,695,000		819,400
Accrued freight		265,700		150,600
Sales tax payable		986,400		499,300
Allowance for expected inventory returns		201,500		201,500
Other		1,522,800		911,800
Total other current liabilities	$	6,094,800	$	3,238,200

XML

INCOME TAXES

12 Months Ended

Feb. 28, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

5.        INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The tax effects of significant items comprising our net deferred tax assets and liabilities are as follows:

	February 28 (29),
	2021			2020
Deferred tax assets:
Allowance for doubtful accounts	$	89,600		$	64,100
Inventory overhead capitalization		127,700			69,200
Inventory valuation allowance		138,700			70,100
Inventory valuation allowance – noncurrent		56,400			56,700
Allowance for sales returns		27,200			27,200
Accruals		754,200			363,900
Total deferred tax assets		1,193,800			651,200
Deferred tax liabilities:
Property, plant and equipment		(1,283,700	)		(1,644,500	)
Total deferred tax liabilities		(1,283,700	)		(1,644,500	)
Net deferred income tax liabilities	$	(89,900	)	$	(993,300	)

The components of income tax expense are as follows:

	February 28 (29),
	2021		2020
Current:
Federal	$	3,236,400	$	1,518,600
State		901,600		467,500
		4,138,000		1,986,100
Deferred:
Federal		382,100		109,300
State		86,700		11,400
		468,800		120,700
Total income tax expense	$	4,606,800	$	2,106,800

The following reconciles our expected income tax rate to the U.S. federal statutory income tax rate:

	February 28 (29),
	2021			2020
U.S. federal statutory income tax rate		21.0	%		21.0	%
U.S. state and local income taxes–net of federal benefit		5.5	%		5.9	%
Other		0.2	%		0.3	%
Total income tax expense		26.7	%		27.2	%

We file our tax returns in the U.S. and certain state jurisdictions in which we have nexus. We are no longer subject to income tax examinations by tax authorities for fiscal years before 2017.

Based upon a review of our income tax filing positions, we believe that our positions would be sustained upon an audit and do not anticipate any adjustments that would result in a material change to our financial position. Therefore, no reserves for uncertain income tax positions have been recorded. We classify interest and penalties associated with income taxes as a component of income tax expense on the statements of earnings.

XML

EMPLOYEE BENEFIT PLAN

12 Months Ended

Feb. 28, 2021

Retirement Benefits [Abstract]

Retirement Benefits [Text Block]

6.        EMPLOYEE BENEFIT PLAN

The Company has created the Educational Development Corporation Employee 401(k) Plan (“EDC 401(k) Plan”) as a benefit plan for employees offering retirement investment options as well as profit sharing with its employees, in the form of matching contributions. This plan incorporates the provisions of Section 401(k) of the Internal Revenue Code that allow favorable tax treatments on investments.  The EDC 401(k) Plan is available to all employees that meet specific age and length of service requirements.  The Company’s matching contributions are discretionary and approved annually at a meeting of the EDC 401(k) Plan’s Trustees and Company’s management. Matching contributions made to the Plan by the Company totaled $126,800 and $146,600 during the fiscal years ended February 28, 2021 and February 29, 2020, respectively. 

The EDC 401(k) Plan includes, as an investment option, the ability to purchase shares of the Company’s stock. Employees that made contributions in this investment option historically purchased their shares directly from the Company. Sales of our treasury stock to the EDC 401(k) Plan totaled 40,559 shares in fiscal 2020. In fiscal year 2021, the EDC 401(k) Plan administrator began acquiring shares of the Company stock directly from the NASDAQ.

XML

LEASES

12 Months Ended

Feb. 28, 2021

Disclosure Text Block [Abstract]

Lessor, Operating Leases [Text Block]

7.        LEASES

We have both lessee and lessor arrangements. Our leases are evaluated at inception or at any subsequent modification. Depending on the terms, leases are classified as either operating or finance leases if we are the lessee, or as operating, sales-type or direct financing leases if we are the lessor, as appropriate under Accounting Standards Codification (“ASC”) 842 - Leases.  Our lessee arrangement includes a rental agreement where we have the exclusive use of dedicated office space in San Diego, California, and qualifies as an operating lease. Our lessor arrangements include three rental agreements for warehouse and office space in Tulsa, Oklahoma, and each qualifies as an operating lease under ASC 842.

In accordance with ASC 842, we have made an accounting policy election to not apply the new standard to lessee arrangements with a term of one year or less and no purchase option that is reasonably certain of exercise. We will continue to account for these short-term arrangements by recognizing payments and expenses as incurred, without recording a lease liability and right-of-use asset.

We have also made an accounting policy election for both our lessee and lessor arrangements to combine lease and non-lease components. This election is applied to all of our lease arrangements as our non-lease components are not material and do not result in significant timing differences in the recognition of rental expenses or income.

Operating Leases – Lessee

We recognize a lease liability, reported in other liabilities 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. We also recognize a right-of-use asset, reported in other assets on the balance sheets, for each lease, valued at the lease liability, adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The lease liability and right-of-use asset are reduced over the term of the lease as payments are made and the assets are used.

	February 28 (29),
	2021			2020
Operating lease assets:
Right-of-use asset	$	34,100		$	45,200
Operating lease liabilities:
Current lease liability	$	13,700		$	13,500
Long-term lease liability	$	20,400		$	31,700
Remaining lease term (months)		31			43
Discount Rate		4.60	%		4.60	%

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 earnings. Variable and short-term rental payments are recognized as costs and expenses as they are incurred.

	February 28 (29),
	2021		2020
Fixed lease cost	$	13,200	$	12,700

Future minimum rental payments under operating leases with initial terms greater than one year as of February 28, 2021, are as follows:

Years ending February 28 (29),
2022	$	13,700
2023		14,200
2024		8,400
Total future minimum rental payments		36,300
Present value discount		(2,200	)
Total operating lease liability	$	34,100

The following table provides further information about our operating leases reported in our financial statements: 

	February 28 (29),
	2021		2020
Operating cash flows – operating lease	$	13,200	$	12,700

Operating Leases – Lessor

In connection with the 2015 purchase of our 400,000 square-foot facility on 40-acres, we entered into a 15-year lease with the seller, a non-related third party, who leases 181,300 square feet, or 45.3% of the facility. The lessee pays $116,800 per month, through the lease anniversary date of December 2021, with a 2.0% annual increase adjustment on each anniversary date thereafter.  The lease terms allow for one five-year extension, which is not a bargain renewal option, at the expiration of the 15-year term.  Revenues associated with the lease are being recorded on a straight-line basis over the initial lease term and are reported in other income in the statements of earnings. We recognize variable rental payments as revenue in the period in which the changes in facts and circumstances on which the variable lease payments are based occur.

Future minimum payments receivable under operating leases with terms greater than one year are estimated as follows:

Years ending February 28 (29),
2022	$	1,542,100
2023		1,573,200
2024		1,577,900
2025		1,547,100
2026		1,524,300
Thereafter		8,091,000
Total	$	15,855,600

The cost of the leased space was approximately $10,826,400 and $10,789,500 as of February 28, 2021 and February 29, 2020, respectively.  The accumulated depreciation associated with the leased assets was $2,216,700 and $1,828,900 as of February 28, 2021 and February 29, 2020, respectively.  Both the leased assets and accumulated depreciation are included in property, plant and equipment-net on the balance sheets.

XML

DEBT

12 Months Ended

Feb. 28, 2021

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

8.        DEBT

Debt consists of the following:

	February 28 (29),
	2021			2020
Line of credit	$	5,245,300		$	-
Long-term debt	$	10,984,700		$	18,811,700
Less current maturities		(533,500	)		(1,027,400	)
Long-term debt, net of current maturities	$	10,451,200		$	17,784,300

The Company executed an Amended and Restated Loan Agreement on February 15, 2021 (as amended the “Loan Agreement”) with MidFirst Bank (“the Bank”), which replaced the prior loan agreement and includes multiple loans.  Term Loan #1 Tranche A, originally totaling $13.4 million, was part of the prior loan agreement. Term Loan #1 Tranche A has a fixed interest rate of 4.23% with principal and interest payable monthly and a stated maturity date of December 1, 2025.  Term Loan #1 is secured by the primary office, warehouse and land.  The outstanding borrowings on Term Loan #1 were $10,984,700 and $11,497,100 as of February 28, 2021 and February 29, 2020, respectively. 

The Loan Agreement also provides a $15.0 million revolving loan (“Line of credit”) through August 15, 2022 with interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75% at February 28, 2021).  The Company had $5,245,300 of borrowings outstanding on the line of credit as of February 28, 2021. Available credit under the revolving credit agreement was $9,570,200 as of February 28, 2021.

In addition, the Loan Agreement provides a $6.0 million Advancing Term Loan to be used to finance planned equipment purchases. The Advancing Term Loan requires interest-only payments through July 15, 2021, at which time it will convert to a 60-month amortizing term loan maturing July 15, 2026. The Advancing Term Loan accrues interest at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75% at February 28, 2021). The Company had no borrowings under the Advancing Term Loan at February 28, 2021.

The Company had three separate loans under the prior loan agreement with the Bank: Term Loan #1 Tranche B, Term Loan #2 and a revolving loan that were fully paid prior to executing the current Loan Agreement. The Tranche B Loan had interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%. The outstanding borrowings on the Tranche B Loan was $4,293,500 as of February 29, 2020. Term Loan #2 had interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%.  Term Loan #2 was secured by our secondary warehouse and land. The outstanding borrowings on Term Loan #2 was $3,021,100 as of February 29, 2020. The prior loan agreement also provided a $10.0 million revolving loan with interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%.  We had no borrowings outstanding on the line of credit at February 29, 2020. 

The Advancing Term Loan and the line of credit accrue interest at a tiered rate based on our Adjusted Funded Debt to EBITDA ratio.  The current pricing tier is as follows:

Pricing Tier	Adjusted Funded Debt to EBITDA Ratio	LIBOR Margin (bps)
I	>2.00	300.00
II	>1.50 but <2.00	275.00
III	>1.00 but <1.50	250.00
IV	<1.00	225.00

Adjusted Funded Debt is defined as all long-term and short-term bank debt less the outstanding balance of Term Loan #1.  EBITDA is defined in the Loan Agreement as net income plus interest expense, income tax expense (benefit) and depreciation and amortization expenses.  The Adjusted Funded Debt to EBITDA ratio includes Adjusted Funded Debt to trailing twelve month EBITDA, reduced by specific rental income received from a non-related third party, see Note 7. The $15.0 million line of credit is limited to advance rates on eligible receivables and eligible inventory levels.

The Loan Agreement contains a provision for our use of the Bank’s letters of credit. The Bank agrees to issue or obtain issuance of commercial or stand-by letters of credit provided that no letters of credit will have an expiry date later than August 15, 2022, and that the sum of the line of credit plus the letters of credit would not exceed the borrowing base in effect at the time. We had no letters of credit outstanding as of February 28, 2021.

The Loan Agreement also contains provisions that require the Company to maintain specified financial ratios and limits any additional debt with other lenders. Additionally, the Loan Agreement places limitations on the amount of dividends that may be distributed and the total value of stock that can be repurchased using advances from the line of credit.

On April 16, 2020, the Company entered into a loan with the Bank of approximately $1.4 million pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The PPP Loan had a fixed interest rate of 1.00%, with principal and interest payments starting December 1, 2020 and a scheduled maturity date of May 1, 2022. The Company determined the PPP loan was no longer needed and repaid the loan in full, including interest accrued to date, on May 12, 2020.

The following table reflects aggregate future maturities of long-term debt during the next five fiscal years as follows:

Years ending February 28 (29),
2022	$	533,500
2023		556,800
2024		581,200
2025		605,400
2026		8,707,800
Total	$	10,984,700

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Feb. 28, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

9.        COMMITMENTS AND CONTINGENCIES

As of February 28, 2021, the Company had outstanding purchase commitments for inventory totaling $37,577,300, which will be received and payments due during fiscal year 2022.  Of these inventory commitments, $26,141,100 were with Usborne, $11,231,500 with various Kane Miller publishers and the remaining $204,700 with other suppliers.

The Company also had outstanding purchase commitments for equipment associated with the addition of two new pick-pack-ship lines totaling $1,693,600 at February 28, 2021, of which $1,061,200 was included in accounts payable.

XML

STOCK-BASED COMPENSATION

12 Months Ended

Feb. 28, 2021

Share-based Payment Arrangement, Disclosure [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

10.        SHARE-BASED COMPENSATION

The Board of Directors adopted the 2002 Incentive Stock Option Plan (the “2002 Plan”) in June of 2002.  The 2002 Plan also authorized us to grant up to 2,000,000 stock options. Options granted under the 2002 Plan vest at date of grant and are exercisable up to ten years from the date of grant.  The exercise price on options granted is equal to the market price at the date of grant.  There were no options outstanding during fiscal year 2021. The options outstanding at the beginning of fiscal year 2020 were exercised in December 2019.

A summary of the status of our 2002 Plan as of February 28, 2021 and February 29, 2020, and changes during the years then ended is presented below:

	February 28 (29),
	2021				2020
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		-		-		10,000	$	2.63
Exercised		-		-		10,000	$	2.63
Expired		-		-		-		-
Outstanding at end of year		-		-		-		-

In July 2018, our shareholders 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 to be granted to certain members of management based on exceeding specified net revenues and pre-tax performance metrics during fiscal years 2019, 2020 and 2021. Restricted shares granted under the 2019 LTI Plan “cliff vest” after five years.

The restricted share awards granted under the 2019 LTI Plan contain both service and performance conditions. The Company recognizes share compensation expense only for the portion of the restricted share awards that are considered probable of vesting.  Shares are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employee have been established.  The fair value of these awards is determined based on the closing price of the shares on the grant date. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment.  

During fiscal year 2019, the Company granted approximately 308,000 restricted shares under the 2019 LTI Plan with an average grant-date fair value of $9.94 per share.  5,000 restricted shares from fiscal year 2019 were forfeited during fiscal year 2021. The remaining compensation expense for fiscal year 2019 awards, totaling approximately $1,307,000, will be recognized ratably over the remaining vesting period of approximately 24 months.  No shares were granted during fiscal year 2020.

During fiscal year 2021, the Company initially granted 151,000 restricted shares under the 2019 LTI Plan with an average grant-date fair value of $6.30 per share. 8,000 of these shares were granted, forfeited and re-granted to remaining participants in fiscal year 2021. In the third quarter of fiscal year 2021, the Company increased the number of shares granted for fiscal year 2021 from 151,000 to 305,000 due to revised performance expectations for the year. The remaining compensation expense for these awards, totaling approximately $1,571,200, will be recognized ratably over the remaining vesting period of approximately 48 months. As of February 28, 2021, there are no restricted shares available for issuance as future awards under the 2019 LTI Plan.

A summary of compensation expense recognized in connection with restricted share awards as follows:

	Year Ended February 28 (29),
	2021		2020
Share-based compensation expense	$	938,600	$	665,100

The following table summarizes stock award activity during fiscal year 2021 under the 2019 LTI Plan:

	Shares			Weighted Average Fair Value (per share)
Outstanding at February 29, 2020		308,000		$	9.94
Granted		305,000			6.30
Vested		-			-
Forfeited		(13,000	)		(7.70	)
Outstanding at February 28, 2021		600,000		$	8.14

As of February 28, 2021, total unrecognized share-based compensation expense related to unvested restricted shares was $2,878,200, which we expect to recognize over a weighted-average period of 37.1 months.

XML

STOCK REPURCHASE PLAN

12 Months Ended

Feb. 28, 2021

Share-based Payment Arrangement [Abstract]

Share-based Payment Arrangement [Text Block]

11.        STOCK REPURCHASE PLAN

In April 2008, the Board of Directors authorized us to repurchase up to an additional 1,000,000 shares of our common stock under the plan initiated in 1998 (“amended 2008 plan”).  On February 4, 2019, the Board of Directors replaced the amended 2008 plan with a new plan which authorized us to repurchase up to 800,000 shares of outstanding common stock in the open market or in privately negotiated transactions, and to utilize any derivative or similar instrument to effect share repurchase transactions (including without limitation, accelerated share repurchase contracts, equity forward transactions, equity swap transactions, floor transactions or other similar transactions or any combination of the foregoing transactions). This plan has no expiration date.

During fiscal year 2021, we purchased 22,565 shares at an average price of $7.27 per share totaling approximately $163,800 under the 2019 stock repurchase plan. During fiscal year 2020, we purchased 254,475 shares at an average price of $6.70 per share totaling approximately $1,705,800 under the 2019 stock repurchase plan. The maximum number of shares that may be repurchased in the future is 514,594.

XML

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

12 Months Ended

Feb. 28, 2021

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

12.        QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for the years ended February 28, 2021 and February 29, 2020:

	Net  Revenues		Gross Margin		Net Earnings		Basic Earnings  Per Share		Diluted Earnings  Per Share
2021
First quarter	$	38,291,700	$	26,896,200	$	1,931,100	$	0.23	$	0.23
Second quarter		59,250,100		41,940,600		4,255,000		0.51		0.51
Third quarter		66,750,300		47,152,500		4,269,600		0.51		0.51
Fourth quarter		40,343,000		28,608,800		2,168,300		0.26		0.25
Total year	$	204,635,100	$	144,598,100	$	12,624,000	$	1.51	$	1.50
2020
First quarter	$	27,587,400	$	18,531,200	$	1,363,600	$	0.17	$	0.17
Second quarter		24,438,000		16,391,600		1,007,600		0.12		0.12
Third quarter		40,824,600		27,544,700		2,735,800		0.33		0.33
Fourth quarter		20,161,900		13,681,100		538,100		0.06		0.06
Total year	$	113,011,900	$	76,148,600	$	5,645,100	$	0.68	$	0.68

XML

BUSINESS SEGMENTS

12 Months Ended

Feb. 28, 2021

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

13.        BUSINESS SEGMENTS

We have two reportable segments: Publishing and UBAM. These reportable segments offer different methods of distribution to different types of customers. They are managed separately based on the fundamental differences in their operations. Our Publishing segment markets its products to retail accounts, which include book, school supply, toy and gift stores and museums, through commissioned sales representatives, trade and specialty wholesalers and our internal tele-sales group. Our UBAM segment markets its products through a network of independent sales consultants using a combination of internet sales, direct sales, home shows and book fairs.

The accounting policies of the segments are the same as those of the rest of the Company. We evaluate segment performance based on earnings before income taxes of the segments, which is defined as segment net revenues reduced by cost of sales and direct expenses. Corporate expenses, depreciation, interest expense 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. 

Information by industry segment for the years ended February 28, 2021 and February 29, 2020 is set forth below:

NET REVENUES

	2021		2020
Publishing	$	8,625,800	$	9,701,300
UBAM		196,009,300		103,310,600
Total	$	204,635,100	$	113,011,900

EARNINGS (LOSS) BEFORE INCOME TAXES

	2021			2020
Publishing	$	2,571,600		$	2,682,000
UBAM		32,820,600			17,444,600
Other		(18,161,400	)		(12,374,700	)
Total	$	17,230,800		$	7,751,900

XML

FAIR VALUE MEASUREMENTS

12 Months Ended

Feb. 28, 2021

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

14.        FAIR VALUE MEASUREMENTS

The valuation hierarchy included in U.S. GAAP considers the transparency of inputs used to value assets and liabilities as of the measurement date.  A financial instrument's classification within the valuation hierarchy is based on the lowest level of input that is significant to its fair value measurement. The three levels of the valuation hierarchy and the classification of our financial assets and liabilities within the hierarchy are as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 - Observable inputs other than quoted prices included within Level 1 for the asset or liability, either directly or indirectly. If an asset or liability has a specified term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs for the asset or liability.

We do not report any assets or liabilities at fair value in the financial statements. However, the estimated fair value of our term notes payable is estimated by management to approximate $11,078,800 and $19,155,500 as of February 28, 2021 and February 29, 2020, respectively. Management's estimates are based on the obligations' characteristics, including floating interest rate, maturity, and collateral. Such valuation inputs are considered a Level 2 measurement in the fair value valuation hierarchy.

XML

DEFERRED REVENUES

12 Months Ended

Feb. 28, 2021

Disclosure Text Block [Abstract]

Deferred Revenue Disclosure [Text Block]

15.        DEFERRED REVENUES

The Company’s UBAM division receives payments on orders in advance of shipment. Any payments received prior to our fiscal year end that were not shipped as of February 28, 2021 and February 29, 2020 are recorded as deferred revenues on the balance sheets. We received approximately $1,914,100 and $385,300 as of February 28, 2021 and February 29, 2020, respectively, in payments for sales orders which were, or will be, shipped out subsequent to the fiscal year end. Orders that were included in deferred revenues predominantly shipped within the first few days of the next fiscal year.

XML

SUBSEQUENT EVENT

12 Months Ended

Feb. 28, 2021

Subsequent Events [Abstract]

Subsequent Events [Text Block]

16.     SUBSEQUENT EVENTS

On April 1, 2021, the Company executed the First Amendment to the Loan Agreement which reduced the fixed interest rate on Term Loan #1 to 3.12% and removed the prepayment premium from the Loan Agreement.

On May 11, 2021, the Board of Directors of EDC approved a $0.10 dividend that will be paid to shareholders of record on Wednesday, June 2, 2021. 

XML

Accounting Policies, by Policy (Policies)

12 Months Ended

Feb. 28, 2021

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Nature of Business—Educational Development Corporation (“we,” “our,” “us,” or “the Company”) distributes books and publications through our Usborne Books & More (“UBAM”) and EDC Publishing (“Publishing”) divisions to individual consumers, book, toy and gift stores, libraries and home educators located throughout the United States (“U.S.”).  We are the exclusive U.S. trade co-publisher of books and related items published by Usborne Publishing Limited (“Usborne”), an England-based publishing company, our largest supplier.  We also publish books and related items through our ownership of Kane Miller Book Publisher (“Kane Miller”).

Use of Estimates, Policy [Policy Text Block]

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

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Business Concentration—A significant portion of our inventory purchases are concentrated with Usborne.  Purchases from them were approximately $50.8 million and $21.4 million for the years ended February 28, 2021 and February 29, 2020, respectively.  Total inventory purchases for those same periods were approximately $72.4 million and $33.1 million, respectively.  As of February 28, 2021 and February 29, 2020, our outstanding accounts payable due to Usborne was $14.6 million and $5.5 million, respectively.

A significant portion of our UBAM division sales are facilitated through the use of social media collaboration platforms that allow our consultants to interact in real-time, or near real-time, with customers.  Consultants use these platforms to invite potential customers to “online parties,” provide book recommendations, answer questions and provide links to other supporting online materials. When a customer is ready to purchase books from the online party, they are redirected from the social media platform to the consultant’s e-commerce site where the order can be placed.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents—Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000. We have never experienced any losses related to these balances.  The majority of payments due from banks for third party credit card transactions process within two business days.  These amounts due are classified as cash and cash equivalents.  Cash and cash equivalents also include demand and time deposits, money market funds and other marketable securities with maturities of three months or less when acquired.

Receivable [Policy Text Block]

Accounts Receivable—Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within thirty days from the invoice date.  Extended payment terms are offered at certain times of the year for orders that meet minimum quantities or amounts.  During fiscal 2021, extended payment terms were granted to customers that were negatively impacted by the COVID-19 pandemic.  Delinquency fees are not assessed.  Payments of accounts receivable are allocated to the specific invoices identified on the customers’ remittance advice.  Accounts receivable are carried at original invoice amount less an estimated reserve made for returns and discounts based on quarterly review of historical rates of returns and expected discounts to be taken.  The carrying amount of accounts receivable is reduced, if needed, by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.

Management periodically reviews accounts receivable balances and, based on an assessment of historical bad debts, current customer receivable balances, age of customer receivable balances, customers’ financial conditions and current economic trends, estimates the portion of the balance that will not be collected.  Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation account based on its assessment of the current status of the individual accounts. Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.  Recoveries of accounts receivable previously written off are recorded as income when received.

Management has estimated an allowance for doubtful accounts of $331,900 and $237,400 as of February 28, 2021 and February 29, 2020, respectively. Included within this allowance is $93,900 of reserve for vendor discounts to sell remaining inventory as of February 28, 2021 and February 29, 2020.

Inventory, Policy [Policy Text Block]

Inventories—Inventories are stated at the lower of cost or net realizable value.  Cost is determined using the average costing method.  We present a portion of our inventory as a noncurrent asset.  Occasionally we purchase book inventory in quantities in excess of what will be sold within the normal operating cycle due to the minimum order requirements of our primary supplier.  These excess quantities are included in noncurrent inventory.  We estimate noncurrent inventory using the current year turnover ratio by title.  For inventory that has at least twelve months of sales history, inventory in excess of 2½ years of anticipated sales is classified as noncurrent inventory.

The Company assumes title and responsibility for inventory purchased according to the contract language with our suppliers and the individual shipment terms for the order. The majority of Usborne orders pass title at FOB-Destination Port and most Kane Miller orders pass title at FOB-Shipping Point. The Company maintains insurance for the value of the inventory once the title has been passed until it is received at our warehouse (“inventory in transit”).

Consultants that meet certain eligibility requirements may request and receive inventory on consignment.  Consignment inventory is stated at the lower of cost or net realizable value, 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, excluding the estimated reserve, with consultants was $1,114,100 and $1,519,600 at February 28, 2021 and February 29, 2020, respectively.  The Company has reserved for consignment inventory not expected to be sold or returned of $478,600 and $239,800 as of February 28, 2021 and February 29, 2020, respectively.  

Inventories are presented net of a valuation allowance, which includes reserves for inventory obsolescence and consultant consignment inventory that is not expected to be sold or returned.  Management estimates the allowance for both current and noncurrent inventory.  The allowance is based on management’s identification of slow-moving inventory and estimated consignment inventory that will not be sold or returned.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment—Property, plant and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful life, as follows:

Building	30 years
Building improvements	5 – 15 years
Machinery and equipment	3 – 15 years
Capitalized software	4 years
Furniture and fixtures	3 years

Capitalized projects that are not placed in service are recorded as in progress and are not depreciated until the related assets are placed in service.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets—We review the value of long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable based on estimated future cash flows.  Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, historical and future cash flows and profitability measurements. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, we recognize an impairment charge for the excess of carrying value of the asset over its estimated fair value. Determination as to whether and how much an asset is impaired involves management estimates and can be impacted by other uncertainties. No impairment was noted during fiscal years 2021 or 2020.

Income Tax, Policy [Policy Text Block]

Income Taxes—We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and the tax basis of assets and liabilities using the current tax laws and rates. A valuation allowance is established when necessary to reduce net deferred tax assets to the amounts that are “more likely than not” to be realized.

Revenue [Policy Text Block]

Revenue Recognition—Revenue is derived from the sales of children’s books and related products which are generally capable of being distinct and accounted for as a single performance obligation to deliver tangible goods. Substantially all of our books are sold to end consumers through our UBAM division and retail outlets through our Publishing division.  Refer to Note 13 – Business Segments for revenue by segment.  Revenues of both divisions are recognized at shipping point, which is the point in time the customer obtains control of the products and risk of loss and rewards of ownership have been transferred.  Products are shipped FOB-Shipping Point. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for as a pass through liability, and therefore are excluded from net sales.

The majority of the UBAM's sales contracts have a single performance obligation and are short-term in nature.  UBAM’s sales are generally collected at the time the product is ordered.  Sales which have been paid for but not shipped are classified as deferred revenue on the balance sheets.  Sales associated with consignment inventory are recognized when reported by the consignee and payment associated with the sale has been collected.  Transportation revenue represents the amount billed to the customer for shipping the product and is recorded when the product is shipped.

Certain UBAM sales contracts associated with the hostess award programs include sales incentives, such as discounted products.  These incentives provide a separate performance obligation in the contract and material right to the customer.  The transaction price is allocated to the material right based on its relative standalone selling price and is recognized in revenue as the performance obligations are satisfied, which occurs at shipping point or at the expiration of the material right.  As the products included as sales incentives are shipped with the associated products ordered, there is no deferral required.  Revenues allocated to the material right are recognized in gross sales, discounts and allowances and cost of goods sold in our statement of earnings.

The majority of Publishing’s sales contracts have a single performance obligation and are short-term in nature. Publishing’s sales may be collected at the time the product is shipped or the customers may be given payment terms based primarily on their credit worthiness and payment history.

Estimated allowances for sales returns, which reduce net revenues and costs of goods sold, are recorded as sales are recognized. Management uses a moving average calculation to estimate the allowance for sales returns. We are not responsible for product damaged in transit. Damaged returns are primarily from retail stores. These returns result from damage that occurs in the stores, not in shipping to the stores. It is industry practice to accept non-damaged returns from retail customers. Management has estimated sales returns of approximately $201,500 as of both February 28, 2021 and February 29, 2020, which is included in other current liabilities on the Company’s balance sheets. In addition, Management has recorded an asset for the expected value of non-damaged inventories to be returned. The estimated value of returned products of $100,800 is included in other current assets on the Company’s balance sheets as of both February 28, 2021 and February 29, 2020.

The Company generally expenses sales commissions in the same period that the revenue is recognized. These costs are recorded within operating expenses. The Company does not disclose the value of unsatisfied performance obligations for contracts with an unexpected length of one year or less.

Advertising Cost [Policy Text Block]

Advertising Costs—Advertising costs are expensed as incurred.  Advertising expenses, included in general and administrative expenses in the statements of earnings, were $1,181,300 and $579,500 for the years ended February 28, 2021 and February 29, 2020, respectively.

Cost of Goods and Service [Policy Text Block]

Shipping and Handling Costs—We classify shipping and handling costs as operating and selling expenses in the statements of earnings.  Shipping and handling costs include postage, freight, handling costs, as well as shipping materials and supplies. These costs were $34,167,000 and $17,240,300 for the years ended February 28, 2021 and February 29, 2020, respectively.

Interest Expense, Policy [Policy Text Block]

Interest Expense—Interest related to our outstanding debt is recognized as incurred.  Interest expense, classified separately in the statements of earnings, was $561,000 and $888,100 for the years ended February 28, 2021 and February 29, 2020, respectively.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share—Basic earnings per share (“EPS”) is computed by dividing net earnings 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.

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

	Year Ended February 28 (29),
	2021		2020
Earnings per share:
Net earnings applicable to common shareholders	$	12,624,000	$	5,645,100
Shares:
Weighted average shares outstanding-basic		8,352,474		8,318,412
Assumed exercise of options and issuance of nonvested restricted shares		74,250		4,716
Weighted average shares outstanding-diluted		8,426,724		8,323,128
Diluted earnings per share:
Basic	$	1.51	$	0.68
Diluted	$	1.50	$	0.68

Share-based Payment Arrangement [Policy Text Block]

Share-Based Compensation—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 ratably from the service inception date to the vesting date for each tranche.  Forfeitures are recognized when they occur.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements—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 that the following recently issued accounting standard updates (“ASU”) apply to us:

In December 2019, the FASB published ASU 2019-12: Income Taxes (Topic 740), which simplifies the accounting for income taxes. Topic 740 addresses a number of topics including but not limited to the removal of certain exceptions currently included in the standard related to intra-period allocation when there are losses, in addition to calculation of income taxes when current year-to-date losses exceed anticipated loss for the year. The amendment also simplifies accounting for certain franchise taxes and disclosure of the effect of enacted change in tax laws or rates. Topic 740 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The impact of the adoption is not expected to have a material impact to our financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04: Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as London Interbank Offered Rate (LIBOR). This ASU includes practical expedients for contract modifications due to reference rate reform. Generally, contract modifications related to reference rate reform may be considered an event that does not require remeasurement or reassessment of a previous accounting determination at the modification date. This ASU is effective March 12, 2020 through December 31, 2022. The Company’s debt agreements include the use of alternate rates when LIBOR is not available. We do not expect the change from LIBOR to an alternate rate will have a material impact to our financial statements and, to the extent we enter into modifications of agreements that are impacted by the LIBOR phase-out, we will apply such guidance to those contract modifications.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Feb. 28, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) [Line Items]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

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

	Year Ended February 28 (29),
	2021		2020
Earnings per share:
Net earnings applicable to common shareholders	$	12,624,000	$	5,645,100
Shares:
Weighted average shares outstanding-basic		8,352,474		8,318,412
Assumed exercise of options and issuance of nonvested restricted shares		74,250		4,716
Weighted average shares outstanding-diluted		8,426,724		8,323,128
Diluted earnings per share:
Basic	$	1.51	$	0.68
Diluted	$	1.50	$	0.68

Property, Plant and Equipment, Estimated Useful Life [Member]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) [Line Items]

Property, Plant and Equipment [Table Text Block]

Property, plant and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful life, as follows:

Building	30 years
Building improvements	5 – 15 years
Machinery and equipment	3 – 15 years
Capitalized software	4 years
Furniture and fixtures	3 years

XML

INVENTORIES (Tables)

12 Months Ended

Feb. 28, 2021

Inventory Disclosure [Abstract]

Schedule of Inventory [Table Text Block]

Inventories consist of the following:

	February 28 (29),
	2021			2020
Current:
Book inventory	$	52,276,200		$	30,346,900
Inventory valuation allowance		(513,800	)		(259,600	)
Inventories net - current	$	51,762,400		$	30,087,300
Noncurrent:
Book inventory	$	894,300		$	1,226,500
Inventory valuation allowance		(209,000	)		(209,800	)
Inventories net - noncurrent	$	685,300		$	1,016,700

XML

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Feb. 28, 2021

Property, Plant and Equipment [Member]

PROPERTY, PLANT AND EQUIPMENT (Tables) [Line Items]

Property, Plant and Equipment [Table Text Block]

Property, plant and equipment consist of the following:

	February 28 (29),
	2021			2020
Land	$	4,107,200		$	4,107,200
Building		20,373,900			20,321,800
Building improvements		1,949,200			1,833,700
Machinery and equipment		8,289,400			8,025,000
Furniture and fixtures		110,800			110,800
Capitalized software		866,500			-
Property, plant and equipment - in progress		4,436,300			528,300
Total property, plant and equipment		40,133,300			34,926,800
Less accumulated depreciation		(10,182,300	)		(8,549,100	)
Property, plant and equipment-net	$	29,951,000		$	26,377,700

XML

OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Feb. 28, 2021

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Current Liabilities [Table Text Block]

Other current liabilities consist of the following:

	February 28 (29),
	2021		2020
Accrued royalties	$	1,423,400	$	655,600
Accrued UBAM incentives		1,695,000		819,400
Accrued freight		265,700		150,600
Sales tax payable		986,400		499,300
Allowance for expected inventory returns		201,500		201,500
Other		1,522,800		911,800
Total other current liabilities	$	6,094,800	$	3,238,200

XML

INCOME TAXES (Tables)

12 Months Ended

Feb. 28, 2021

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  The tax effects of significant items comprising our net deferred tax assets and liabilities are as follows:

	February 28 (29),
	2021			2020
Deferred tax assets:
Allowance for doubtful accounts	$	89,600		$	64,100
Inventory overhead capitalization		127,700			69,200
Inventory valuation allowance		138,700			70,100
Inventory valuation allowance – noncurrent		56,400			56,700
Allowance for sales returns		27,200			27,200
Accruals		754,200			363,900
Total deferred tax assets		1,193,800			651,200
Deferred tax liabilities:
Property, plant and equipment		(1,283,700	)		(1,644,500	)
Total deferred tax liabilities		(1,283,700	)		(1,644,500	)
Net deferred income tax liabilities	$	(89,900	)	$	(993,300	)

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The components of income tax expense are as follows:

	February 28 (29),
	2021		2020
Current:
Federal	$	3,236,400	$	1,518,600
State		901,600		467,500
		4,138,000		1,986,100
Deferred:
Federal		382,100		109,300
State		86,700		11,400
		468,800		120,700
Total income tax expense	$	4,606,800	$	2,106,800

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The following reconciles our expected income tax rate to the U.S. federal statutory income tax rate:

	February 28 (29),
	2021			2020
U.S. federal statutory income tax rate		21.0	%		21.0	%
U.S. state and local income taxes–net of federal benefit		5.5	%		5.9	%
Other		0.2	%		0.3	%
Total income tax expense		26.7	%		27.2	%

XML

LEASES (Tables)

12 Months Ended

Feb. 28, 2021

Disclosure Text Block [Abstract]

Lease, Cost [Table Text Block]

We recognize a lease liability, reported in other liabilities 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. We also recognize a right-of-use asset, reported in other assets on the balance sheets, for each lease, valued at the lease liability, adjusted for prepaid or accrued rent balances existing at the time of initial recognition. The lease liability and right-of-use asset are reduced over the term of the lease as payments are made and the assets are used.

	February 28 (29),
	2021			2020
Operating lease assets:
Right-of-use asset	$	34,100		$	45,200
Operating lease liabilities:
Current lease liability	$	13,700		$	13,500
Long-term lease liability	$	20,400		$	31,700
Remaining lease term (months)		31			43
Discount Rate		4.60	%		4.60	%

	February 28 (29),
	2021		2020
Fixed lease cost	$	13,200	$	12,700

	February 28 (29),
	2021		2020
Operating cash flows – operating lease	$	13,200	$	12,700

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum rental payments under operating leases with initial terms greater than one year as of February 28, 2021, are as follows:

Years ending February 28 (29),
2022	$	13,700
2023		14,200
2024		8,400
Total future minimum rental payments		36,300
Present value discount		(2,200	)
Total operating lease liability	$	34,100

Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity [Table Text Block]

Future minimum payments receivable under operating leases with terms greater than one year are estimated as follows:

Years ending February 28 (29),
2022	$	1,542,100
2023		1,573,200
2024		1,577,900
2025		1,547,100
2026		1,524,300
Thereafter		8,091,000
Total	$	15,855,600

XML

DEBT (Tables)

12 Months Ended

Feb. 28, 2021

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

Debt consists of the following:

	February 28 (29),
	2021			2020
Line of credit	$	5,245,300		$	-
Long-term debt	$	10,984,700		$	18,811,700
Less current maturities		(533,500	)		(1,027,400	)
Long-term debt, net of current maturities	$	10,451,200		$	17,784,300

Schedule of Long-term Debt Instruments [Table Text Block]

The Advancing Term Loan and the line of credit accrue interest at a tiered rate based on our Adjusted Funded Debt to EBITDA ratio.  The current pricing tier is as follows:

Pricing Tier	Adjusted Funded Debt to EBITDA Ratio	LIBOR Margin (bps)
I	>2.00	300.00
II	>1.50 but <2.00	275.00
III	>1.00 but <1.50	250.00
IV	<1.00	225.00

Schedule of Maturities of Long-term Debt [Table Text Block]

The following table reflects aggregate future maturities of long-term debt during the next five fiscal years as follows:

Years ending February 28 (29),
2022	$	533,500
2023		556,800
2024		581,200
2025		605,400
2026		8,707,800
Total	$	10,984,700

XML

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Feb. 28, 2021

Share-based Payment Arrangement, Disclosure [Abstract]

Share-based Payment Arrangement, Option, Activity [Table Text Block]

A summary of the status of our 2002 Plan as of February 28, 2021 and February 29, 2020, and changes during the years then ended is presented below:

	February 28 (29),
	2021				2020
			Weighted				Weighted
			Average				Average
			Exercise				Exercise
	Shares		Price		Shares		Price
Outstanding at beginning of year		-		-		10,000	$	2.63
Exercised		-		-		10,000	$	2.63
Expired		-		-		-		-
Outstanding at end of year		-		-		-		-

Share-based Payment Arrangement, Cost by Plan [Table Text Block]

A summary of compensation expense recognized in connection with restricted share awards as follows:

	Year Ended February 28 (29),
	2021		2020
Share-based compensation expense	$	938,600	$	665,100

Nonvested Restricted Stock Shares Activity [Table Text Block]

The following table summarizes stock award activity during fiscal year 2021 under the 2019 LTI Plan:

	Shares			Weighted Average Fair Value (per share)
Outstanding at February 29, 2020		308,000		$	9.94
Granted		305,000			6.30
Vested		-			-
Forfeited		(13,000	)		(7.70	)
Outstanding at February 28, 2021		600,000		$	8.14

XML

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Tables)

12 Months Ended

Feb. 28, 2021

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Table Text Block]

The following is a summary of the quarterly results of operations for the years ended February 28, 2021 and February 29, 2020:

	Net  Revenues		Gross Margin		Net Earnings		Basic Earnings  Per Share		Diluted Earnings  Per Share
2021
First quarter	$	38,291,700	$	26,896,200	$	1,931,100	$	0.23	$	0.23
Second quarter		59,250,100		41,940,600		4,255,000		0.51		0.51
Third quarter		66,750,300		47,152,500		4,269,600		0.51		0.51
Fourth quarter		40,343,000		28,608,800		2,168,300		0.26		0.25
Total year	$	204,635,100	$	144,598,100	$	12,624,000	$	1.51	$	1.50
2020
First quarter	$	27,587,400	$	18,531,200	$	1,363,600	$	0.17	$	0.17
Second quarter		24,438,000		16,391,600		1,007,600		0.12		0.12
Third quarter		40,824,600		27,544,700		2,735,800		0.33		0.33
Fourth quarter		20,161,900		13,681,100		538,100		0.06		0.06
Total year	$	113,011,900	$	76,148,600	$	5,645,100	$	0.68	$	0.68

XML

BUSINESS SEGMENTS (Tables)

12 Months Ended

Feb. 28, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Information by industry segment for the years ended February 28, 2021 and February 29, 2020 is set forth below:

	2021		2020
Publishing	$	8,625,800	$	9,701,300
UBAM		196,009,300		103,310,600
Total	$	204,635,100	$	113,011,900

	2021			2020
Publishing	$	2,571,600		$	2,682,000
UBAM		32,820,600			17,444,600
Other		(18,161,400	)		(12,374,700	)
Total	$	17,230,800		$	7,751,900

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Payments for (Proceeds from) Other Investing Activities	$ 72,400,000	$ 33,100,000
Cash, FDIC Insured Amount	250,000
Accounts Receivable, Allowance for Credit Loss	331,900	237,400
Other Inventory, Materials, Supplies and Merchandise under Consignment, Gross	1,114,100	1,519,600
Inventory Valuation Reserves	478,600	239,800
Asset Impairment Charges	0	0
Other Liabilities, Current	6,094,800	3,238,200
Advertising Expense	1,181,300	579,500
Cost of Goods and Services Sold	60,037,000	36,863,300
Interest Expense	561,000	888,100
Sales Returns and Allowances [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Other Liabilities, Current	201,500
Inventory Vendor Discounts [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Accounts Receivable, Allowance for Credit Loss	93,900	93,900
Usborne Books and More [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Payments for (Proceeds from) Other Investing Activities	50,800,000	21,400,000
Accounts Payable, Other, Current	14,600,000	5,500,000
Returned Products [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Other Assets, Current	100,800
Shipping and Handling [Member]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) [Line Items]
Cost of Goods and Services Sold	$ 34,167,000	$ 17,240,300

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Property, Plant and Equipment	12 Months Ended
	Feb. 28, 2021
Building [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	30 years
Building Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	5 years
Building Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	15 years
Machinery and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	3 years
Machinery and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	15 years
Software Development [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	4 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	3 years

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Diluted Earnings Per Share - USD ($)	3 Months Ended								12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020	Aug. 31, 2020	May 31, 2020	Feb. 29, 2020	Nov. 30, 2019	Aug. 31, 2019	May 31, 2019	Feb. 28, 2021	Feb. 29, 2020
Earnings per share:
Net earnings applicable to common shareholders (in Dollars)									$ 12,624,000	$ 5,645,100
Shares:
Weighted average shares outstanding-basic									8,352,474	8,318,412
Assumed exercise of options and issuance of nonvested restricted shares									74,250	4,716
Weighted average shares outstanding-diluted									8,426,724	8,323,128
Diluted earnings per share:
Basic (in Dollars per share)	$ 0.26	$ 0.51	$ 0.51	$ 0.23	$ 0.06	$ 0.33	$ 0.12	$ 0.17	$ 1.51	$ 0.68
Diluted (in Dollars per share)	$ 0.25	$ 0.51	$ 0.51	$ 0.23	$ 0.06	$ 0.33	$ 0.12	$ 0.17	$ 1.50	$ 0.68

XML

INVENTORIES (Details) - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Inventory Disclosure [Abstract]
Other Inventory, in Transit, Gross	$ 6,467,400	$ 549,900

XML

INVENTORIES (Details) - Schedule of Inventory, Noncurrent - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Inventory Current [Member]
Current:
Book inventory	$ 52,276,200	$ 30,346,900
Inventory valuation allowance	(513,800)	(259,600)
Inventories net	51,762,400	30,087,300
Inventory, Noncurrent [Member]
Current:
Book inventory	894,300	1,226,500
Inventory valuation allowance	(209,000)	(209,800)
Inventories net	$ 685,300	$ 1,016,700

XML

PROPERTY, PLANT AND EQUIPMENT (Details) - Schedule of Property, Plant and Equipment - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 40,133,300	$ 34,926,800
Less accumulated depreciation	(10,182,300)	(8,549,100)
Property, Plant and Equipment, Net	29,951,000	26,377,700
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	4,107,200	4,107,200
Building [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	20,373,900	20,321,800
Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,949,200	1,833,700
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	8,289,400	8,025,000
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	110,800	110,800
Software Development [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	866,500	0
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 4,436,300	$ 528,300

XML

OTHER CURRENT LIABILITIES (Details) - Schedule of Other Current Liabilities - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Schedule of Other Current Liabilities [Abstract]
Accrued royalties	$ 1,423,400	$ 655,600
Accrued UBAM incentives	1,695,000	819,400
Accrued freight	265,700	150,600
Sales tax payable	986,400	499,300
Allowance for expected inventory returns	201,500	201,500
Other	1,522,800	911,800
Total other current liabilities	$ 6,094,800	$ 3,238,200

XML

INCOME TAXES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Deferred tax assets:
Allowance for doubtful accounts	$ 89,600	$ 64,100
Inventory overhead capitalization	127,700	69,200
Inventory valuation allowance	138,700	70,100
Inventory valuation allowance – noncurrent	56,400	56,700
Allowance for sales returns	27,200	27,200
Accruals	754,200	363,900
Total deferred tax assets	1,193,800	651,200
Deferred tax liabilities:
Property, plant and equipment	(1,283,700)	(1,644,500)
Total deferred tax liabilities	(1,283,700)	(1,644,500)
Net deferred income tax liabilities	$ (89,900)	$ (993,300)

XML

INCOME TAXES (Details) - Schedule of Components of Income Tax Expense (Benefit) - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Current:
Federal	$ 3,236,400	$ 1,518,600
State	901,600	467,500
	4,138,000	1,986,100
Deferred:
Federal	382,100	109,300
State	86,700	11,400
	468,800	120,700
Total income tax expense	$ 4,606,800	$ 2,106,800

XML

INCOME TAXES (Details) - Schedule of Effective Income Tax Rate Reconciliation	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Schedule of Effective Income Tax Rate Reconciliation [Abstract]
U.S. federal statutory income tax rate	21.00%	21.00%
U.S. state and local income taxes–net of federal benefit	5.50%	5.90%
Other	0.20%	0.30%
Total income tax expense	26.70%	27.20%

XML

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
401(k) Plan [Member]
EMPLOYEE BENEFIT PLAN (Details) [Line Items]
Defined Benefit Plan, Plan Assets, Contributions by Employer	$ 126,800	$ 146,600

XML

LEASES (Details)	12 Months Ended
	Feb. 28, 2021 USD ($) ft² a	Feb. 29, 2020 USD ($)
LEASES (Details) [Line Items]
Number of Rental Agreements	3
Area of Real Estate Property (in Square Feet) | ft²	400,000
Area of Land (in Acres) | a	40
Property Subject to or Available for Operating Lease, Net	$ 10,826,400	$ 10,789,500
Property Subject to or Available for Operating Lease, Accumulated Depreciation	$ 2,216,700	$ 1,828,900
Building [Member]
LEASES (Details) [Line Items]
Area of Real Estate Property (in Square Feet) | ft²	181,300
Lessee, Operating Lease, Term of Contract	15 years
Area of Real Estate, Percentage Leased	45.30%
Description of Lessee Leasing Arrangements, Operating Leases	The lessee pays $116,800 per month, through the lease anniversary date of December 2021, with a 2.0% annual increase adjustment on each anniversary date thereafter.
Operating Leases, Rent Expense, Minimum Rentals	$ 116,800
Lessee, Operating Lease, Renewal Term	5 years

XML

LEASES (Details) - Lease, Cost - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Operating lease assets:
Right-of-use asset	$ 34,100	$ 45,200
Operating lease liabilities:
Current lease liability	13,700	13,500
Long-term lease liability	$ 20,400	$ 31,700
Remaining lease term (months)	31 months	43 months
Discount Rate	4.60%	4.60%
Fixed lease cost	$ 13,200	$ 12,700
Operating cash flows – operating lease	$ 13,200	$ 12,700

XML

LEASES (Details) - Schedule of Future Minimum Rental Payments for Operating Leases	Feb. 28, 2021 USD ($)
Schedule of Future Minimum Rental Payments for Operating Leases [Abstract]
2022	$ 13,700
2023	14,200
2024	8,400
Total future minimum rental payments	36,300
Present value discount	(2,200)
Total operating lease liability	$ 34,100

XML

LEASES (Details) - Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity	Feb. 28, 2021 USD ($)
Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity [Abstract]
2022	$ 1,542,100
2023	1,573,200
2024	1,577,900
2025	1,547,100
2026	1,524,300
Thereafter	8,091,000
Total	$ 15,855,600

XML

DEBT (Details) - USD ($)		12 Months Ended
	Dec. 01, 2015	Feb. 28, 2021	Apr. 16, 2020	Feb. 29, 2020	Feb. 28, 2019
DEBT (Details) [Line Items]
Long-term Debt		$ 10,984,700		$ 18,811,700
Long-term Line of Credit		$ 5,245,300		0
Number of Loans		3
Notes Payable to Banks [Member]
DEBT (Details) [Line Items]
Debt Instrument, Face Amount			$ 1,400,000
Debt Instrument, Interest Rate, Stated Percentage			1.00%
Tranche A [Member] | Notes Payable to Banks [Member]
DEBT (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 13,400,000
Debt Instrument, Interest Rate During Period	4.23%
Long-term Debt		$ 10,984,700		11,497,100
Tranche B [Member] | Notes Payable to Banks [Member]
DEBT (Details) [Line Items]
Line of Credit Facility, Expiration Date	Dec. 01, 2025
Long-term Debt				4,293,500
Debt Instrument, Interest Rate, Basis for Effective Rate		interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75%
Term Loan # 2 [Member]
DEBT (Details) [Line Items]
Long-term Debt				3,021,100
Advancing Term Loan [Member]
DEBT (Details) [Line Items]
Debt Instrument, Interest Rate During Period		2.75%
Debt Instrument, Face Amount		$ 6,000,000.0
Debt Instrument, Interest Rate Terms		The Advancing Term Loan requires interest-only payments through July 15, 2021, at which time it will convert to a 60-month amortizing term loan maturing July 15, 2026. The Advancing Term Loan accrues interest at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75%
Line of Credit [Member]
DEBT (Details) [Line Items]
Line of Credit Facility, Expiration Date		Aug. 15, 2022
Debt Instrument, Interest Rate, Basis for Effective Rate		interest payable monthly at the Bank-adjusted LIBOR Index plus a tiered pricing rate based on the Company’s Adjusted Funded Debt to EBITDA Ratio, with a minimum rate of 2.75% (the effective rate was 2.75%
Line of Credit Facility, Interest Rate at Period End		2.75%
Long-term Line of Credit		$ 5,245,300
Line of Credit Facility, Remaining Borrowing Capacity		9,570,200			$ 9,570,200
Line of Credit [Member] | Term Loan # 2 [Member]
DEBT (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 15,000,000.0		$ 10,000,000.0
London Interbank Offered Rate (LIBOR) [Member] | Line of Credit [Member] | Term Loan # 2 [Member]
DEBT (Details) [Line Items]
Line of Credit Facility, Interest Rate at Period End				2.75%

XML

DEBT (Details) - Schedule of Debt - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Schedule of Debt [Abstract]
Line of credit	$ 5,245,300	$ 0
Long-term debt	10,984,700	18,811,700
Less current maturities	(533,500)	(1,027,400)
Long-term debt, net of current maturities	$ 10,451,200	$ 17,784,300

XML

DEBT (Details) - Schedule of Long-term Debt Instruments	12 Months Ended
	Feb. 29, 2020
Pricing Tier I [Member]
Debt Instrument [Line Items]
Adjusted Funded Debt to EBITDA Ratio	>2.00
Pricing Tier II [Member]
Debt Instrument [Line Items]
Adjusted Funded Debt to EBITDA Ratio	>1.50 but <2.00
Pricing Tier III [Member]
Debt Instrument [Line Items]
Adjusted Funded Debt to EBITDA Ratio	>1.00 but <1.50
Pricing Tier IV [Member]
Debt Instrument [Line Items]
Adjusted Funded Debt to EBITDA Ratio	<1.00
London Interbank Offered Rate (LIBOR) [Member] | Pricing Tier I [Member]
Debt Instrument [Line Items]
LIBOR Margin	300.00%
London Interbank Offered Rate (LIBOR) [Member] | Pricing Tier II [Member]
Debt Instrument [Line Items]
LIBOR Margin	275.00%
London Interbank Offered Rate (LIBOR) [Member] | Pricing Tier III [Member]
Debt Instrument [Line Items]
LIBOR Margin	250.00%
London Interbank Offered Rate (LIBOR) [Member] | Pricing Tier IV [Member]
Debt Instrument [Line Items]
LIBOR Margin	225.00%

XML

DEBT (Details) - Schedule of Maturities of Long-term Debt - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Schedule of Maturities of Long-term Debt [Abstract]
2022	$ 533,500
2023	556,800
2024	581,200
2025	605,400
2026	8,707,800
Total	$ 10,984,700	$ 18,811,700

XML

COMMITMENTS AND CONTINGENCIES (Details)	Feb. 28, 2021 USD ($)
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Accounts Payable, Other	$ 1,061,200
Inventory [Member]
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	37,577,300
Usborne Books and More [Member] | Inventory [Member]
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	26,141,100
Kane Miller [Member] | Inventory [Member]
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	11,231,500
Other Suppliers [Member] | Inventory [Member]
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	204,700
Equipment [Member]
COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Purchase Commitment, Remaining Minimum Amount Committed	$ 1,693,600

XML

STOCK-BASED COMPENSATION (Details) - USD ($)	1 Months Ended	3 Months Ended	12 Months Ended
	Jun. 30, 2002	Feb. 28, 2021	Feb. 28, 2021	Feb. 28, 2019
STOCK-BASED COMPENSATION (Details) [Line Items]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			37 months 3 days
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount (in Dollars)		$ 2,878,200	$ 2,878,200
2002 Plan [Member]
STOCK-BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	exercise price on options granted is equal to the market price at the date of grant
The 2019 Long-term Incentive Plan [Member]
STOCK-BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		600,000	600,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			5 years	24 months
Share-based Compensation Arrangement by Share-based Payment Award, Description			The 2019 LTI Plan established up to 600,000 shares of restricted stock to be granted to certain members of management based on exceeding specified net revenues and pre-tax performance metrics during fiscal years 2019, 2020 and 2021. Restricted shares granted under the 2019 LTI Plan “cliff vest” after five years.The restricted share awards granted under the 2019 LTI Plan contain both service and performance conditions. The Company recognizes share compensation expense only for the portion of the restricted share awards that are considered probable of vesting.  Shares are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employee have been established.  The fair value of these awards is determined based on the closing price of the shares on the grant date. The probability of restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment.
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture		305,000	151,000	308,000
Shares Issued, Price Per Share (in Dollars per share)		$ 6.30	$ 6.30	$ 9.94
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares			8,000	5,000
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount (in Dollars)		$ 1,571,200	$ 1,571,200	$ 1,307,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			48 months
Maximum [Member] | 2002 Plan [Member]
STOCK-BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	10 years

XML

STOCK-BASED COMPENSATION (Details) - Schedule of Stock Option Activity - $ / shares	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Schedule of Stock Option Activity [Abstract]
Outstanding at beginning of year	0	10,000
Outstanding at beginning of year	$ 0	$ 2.63
Exercised	0	10,000
Exercised	$ 0	$ 2.63
Expired	0	0
Expired	$ 0	$ 0
Outstanding at end of year	0	0
Outstanding at end of year	$ 0	$ 0

XML

STOCK-BASED COMPENSATION (Details) - Share-based Payment Arrangement, Cost by Plan - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Share-based Payment Arrangement, Cost by Plan [Abstract]
Share-based compensation expense	$ 938,600	$ 665,100

XML

STOCK-BASED COMPENSATION (Details) - Nonvested Restricted Stock Shares Activity	12 Months Ended
	Feb. 28, 2021 $ / shares shares
Nonvested Restricted Stock Shares Activity [Abstract]
Outstanding, Shares | shares	308,000
Outstanding, Weighted Average Fair Value | $ / shares	$ 9.94
Granted, Shares | shares	305,000
Granted, Weighted Average Fair Value | $ / shares	$ 6.30
Vested, Shares | shares	0
Vested, Weighted Average Fair Value | $ / shares	$ 0
Forfeited, Shares | shares	(13,000)
Forfeited, Weighted Average Fair Value | $ / shares	$ (7.70)
Outstanding, Shares | shares	600,000
Outstanding, Weighted Average Fair Value | $ / shares	$ 8.14

XML

STOCK REPURCHASE PLAN (Details) - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020	Feb. 04, 2019	Apr. 30, 2008
Share-based Payment Arrangement [Abstract]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased				1,000,000
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	514,594		800,000
Stock Repurchased During Period, Shares	22,565	254,475
Stock Repurchased During Period, Average Price Paid (in Dollars per share)	$ 7.27	$ 6.70
Stock Repurchased During Period, Value (in Dollars)	$ 163,800	$ 1,705,800

XML

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (Details) - Schedule of Quarterly Financial Information - USD ($)	3 Months Ended								12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020	Aug. 31, 2020	May 31, 2020	Feb. 29, 2020	Nov. 30, 2019	Aug. 31, 2019	May 31, 2019	Feb. 28, 2021	Feb. 29, 2020
Schedule of Quarterly Financial Information [Abstract]
Net Revenues	$ 40,343,000	$ 66,750,300	$ 59,250,100	$ 38,291,700	$ 20,161,900	$ 40,824,600	$ 24,438,000	$ 27,587,400	$ 204,635,100	$ 113,011,900
Gross Margin	28,608,800	47,152,500	41,940,600	26,896,200	13,681,100	27,544,700	16,391,600	18,531,200	144,598,100	76,148,600
Net Earnings	$ 2,168,300	$ 4,269,600	$ 4,255,000	$ 1,931,100	$ 538,100	$ 2,735,800	$ 1,007,600	$ 1,363,600	$ 12,624,000	$ 5,645,100
Basic Earnings Per Share (in Dollars per share)	$ 0.26	$ 0.51	$ 0.51	$ 0.23	$ 0.06	$ 0.33	$ 0.12	$ 0.17	$ 1.51	$ 0.68
Diluted Earnings Per Share (in Dollars per share)	$ 0.25	$ 0.51	$ 0.51	$ 0.23	$ 0.06	$ 0.33	$ 0.12	$ 0.17	$ 1.50	$ 0.68

XML

BUSINESS SEGMENTS (Details)	12 Months Ended
	Feb. 28, 2021
Segment Reporting [Abstract]
Number of Reportable Segments	2

XML

BUSINESS SEGMENTS (Details) - Schedule of Information by Industry Segment - USD ($)	3 Months Ended								12 Months Ended
	Feb. 28, 2021	Nov. 30, 2020	Aug. 31, 2020	May 31, 2020	Feb. 29, 2020	Nov. 30, 2019	Aug. 31, 2019	May 31, 2019	Feb. 28, 2021	Feb. 29, 2020
Segment Reporting Information [Line Items]
Net Revenues	$ 40,343,000	$ 66,750,300	$ 59,250,100	$ 38,291,700	$ 20,161,900	$ 40,824,600	$ 24,438,000	$ 27,587,400	$ 204,635,100	$ 113,011,900
Earnings (Loss) Before Income Taxes									17,230,800	7,751,900
Publishing [Member]
Segment Reporting Information [Line Items]
Net Revenues									8,625,800	9,701,300
Earnings (Loss) Before Income Taxes									2,571,600	2,682,000
Usborne Books and More [Member]
Segment Reporting Information [Line Items]
Net Revenues									196,009,300	103,310,600
Earnings (Loss) Before Income Taxes									32,820,600	17,444,600
Other Segments [Member]
Segment Reporting Information [Line Items]
Earnings (Loss) Before Income Taxes									$ (18,161,400)	$ (12,374,700)

XML

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Feb. 28, 2021	Feb. 29, 2020
Fair Value, Inputs, Level 2 [Member]
FAIR VALUE MEASUREMENTS (Details) [Line Items]
Long-term Debt, Fair Value	$ 11,078,800	$ 19,155,500

XML

DEFERRED REVENUES (Details) - USD ($)	12 Months Ended
	Feb. 28, 2021	Feb. 29, 2020
Disclosure Text Block [Abstract]
Deferred Revenue, Additions	$ 1,914,100	$ 385,300

XML

SUBSEQUENT EVENT (Details) - Subsequent Event [Member] - $ / shares	May 11, 2021	Apr. 01, 2021
SUBSEQUENT EVENT (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		3.12%
Dividends Payable, Date Declared	May 11, 2021
Common Stock, Dividends, Per Share, Declared	$ 0.10
Dividends Payable, Date of Record	Jun. 02, 2021