Educational Development Corporation — Fiscal 2027 Second Quarter Earnings Summary

Financial Performance

• Net revenues for the quarter ended August 31, 2026, were $4.1 million, down from $4.6 million in the prior year quarter.
• Year-to-date net revenues were $8.8 million, compared to $11.7 million in the prior year period.
• Loss before income taxes was $(1.6) million for the quarter, an improvement from $(1.8) million in the prior year quarter; year-to-date loss before taxes was $(2.9) million versus $(3.2) million previously.
• Net loss totaled $(1.6) million for the quarter, compared to $(1.3) million in the prior year quarter; year-to-date net loss was $(3.0) million versus $(2.4) million previously.
• Loss per share was $(0.19) for the quarter and $(0.35) year-to-date, compared to $(0.15) and $(0.28) respectively in the prior year periods.
• Income tax expense was $16,500 for the quarter and $33,000 year-to-date, compared to a benefit of $455,500 and $829,600 in the prior year periods.
• Cash position decreased slightly from $1.3 million at the end of February 2026 to $1.2 million at the end of August 2026.

Business Segments and Product Lines

• Average active PaperPie Brand Partners totaled 5,100 for the quarter, down from 5,800 in the prior year quarter.
• Year-to-date average active PaperPie Brand Partners were 5,200, compared to 6,800 in the prior year period.
• Active Brand Partners increased by over 19% through the first half of fiscal 2027, rising from 4,300 to 5,100.
• The company executed product and recruiting promotions to increase Brand Partner headcount and sales.
• Promotions helped convert excess inventory into cash.
• A $100,000 one-time write-down was recorded in the first quarter on 'assets held for sale,' including the legacy pick & pack distribution system currently marketed for sale.

Management Commentary and Tone

• CEO Craig White stated that recruiting and product promotions were successful in increasing Brand Partner headcount and sales.
• Management expressed pride in generating positive cash flow during the company's slowest quarter of the year.
• Management noted that losses before taxes were better than the prior year despite reduced revenue levels, attributing this to a cost reduction plan.
• A cost reduction plan implemented at the beginning of the year is expected to reduce overall general and administrative expenses by over $1.2 million for the fiscal year.
• Management is optimistic that increasing Brand Partner levels and sales will lead to a return to profitability.
• Management anticipates that once profitability is affirmed, deferred tax assets will become realizable, resulting in a tax gain of approximately $0.28 per share as of August 31, 2026.
• Earnings per share were lower due to the inability to realize the deferred tax asset associated with pre-tax losses.

Other Key Points

• The company is a publishing entity specializing in books and educational products for children, owning Kane Miller Books, Learning Wrap-Ups, and SmartLab Toys.
• EDC is the exclusive US MLM distributor of Usborne Publishing Limited children's books.
• Products are sold via 4,000 retail outlets and independent Brand Partners through social media, book fairs, home events, and internet sales.
• The Fiscal 2027 Second Quarter Earnings Call was scheduled for October 14, 2026, at 3:30 PM CT.
• Forward-looking statements include risks related to recruiting and retaining Brand Partners, procuring books, shipping volumes, financing, economic conditions, regulatory changes, cybersecurity, and the COVID-19 pandemic.