Financial Analysis

Note 6 DEBT In March 2026, the Company executed a new credit agreement with Regent Bank (the Lender). The loan agreement establishes a revolving promissory note in the principal amount up to $2,000,000. Interest shall be calculated each month on the outstanding borrowings. The credit agreement was secured by the assets of the Company including accounts receivable, inventory, equipment and excess land. The Lender also required the personal guarantee of Craig White, President, Chief Executive Officer, and Chairman of the Board of the Company. Available credit under the current revolving line of credit with the Companys Lender was $2,000,000 as of May 31, 2026. Features of the loan agreement include: (i) $2.0 million revolving loan with maturity date of March 6, 2027. (i)(a) The revolving loan bears variable interest at a rate per annum equal to the U.S. Prime Rate + 2.00%. (i)(b) The U.S. Prime Rate was 6.75% as of May 31, 2026, making the total interest rate equal to 8.75%. …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Note 11 FINANCIAL INSTRUMENTS The following methods and assumptions are used in estimating the fair-value disclosures for financial instruments: - The carrying amounts reported on the balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of these instruments. - The estimated fair value of our assets held for sale was $450,000 as of May 31, 2026 and $563,600 February 28, 2026, respectively. …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 8 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: May 31, February 28 2026 2026 Deferred tax assets: Allowance for credit losses $ 19,700 $ 29,600 Inventory overhead capitalization 208,700 182,700 Inventory valuation allowance 100,200 96,900 Inventory valuation allowance noncurrent 232,500 217,300 Allowance for sales returns 27,200 27,200 Net operating loss carry forward (1) 399,600 109,300 Disallowed interest (2) 2,001,300 2,001,300 Accruals 20,100 12,100 Total deferred tax assets 3,009,300 2,676,400 Deferred tax liabilities: Property, plant, and equipment (1,082,400 ) (1,121,600 ) Total deferred tax liabilities (1,082,400 ) (1,121,600 ) Valuation allowance (3) (1,926,900 ) (1,554,800 ) Net deferred tax assets $ - $ - (1) The Companys net operating loss (NOL) carry forward was generated from losses incurred in fiscal 2025 and first quarter of fiscal 2027. The Companys NOL can be carried forward indefinitely but are limited to an 80% maximum offset of taxable income. (2) The Companys disallowed interest was generated from interest expense that was not deductible for tax purposes due to a maximum allowable deduction of 30% of taxable income. The disallowed interest is carried forward to be deduc …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

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 the following new accounting standard updates (ASU) apply to us: New Accounting Standards or Updates Not Yet Adopted In December 2025, the FASB issued ASU 2025-12, Codification Improvements (ASU 2025-12). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. Entities are required to apply the amendments to ASC 260 retrospectively. All other amendments may be applied prospectively or retrospectively. We have adopted ASU 2025-12 and implemented its changes. In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-11, Interim Reporting (Topic 270) Improvements to Interim Disclosure Requirements. The standard clarifies disclosure requirements for interim financial statements and is effective for interim periods beginning after December 15, 2 …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 10 BUSINESS SEGMENTS We have two reportable segments: PaperPie and Publishing. These reportable segments are business units that offer different methods of distribution to different types of customers. They are managed separately based on the fundamental differences in their operations. Our PaperPie segment markets its products through a network of independent Brand Partners using a combination of internet sales, direct sales, home shows, and book fairs. Our Publishing segment markets its products to retail accounts, which include book, school supply, toy and gift stores, museums, trade and specialty wholesalers, through commissioned sales representatives, and our internal tele-sales group. See Note 7 for the impact of our updated Usborne distribution agreement on the Publishing segment. The accounting policies for the segments are the same as those for 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. Direct expenses are composed of payroll, commissions, general and administrative, and operating and selling expenses. Corporate expenses, depreciation, interest expense, other income, and income taxes are not allocated to the segments but are listed in the Other row below. Corporate expenses include the executive department, accounting department, information services department, general office management, warehouse operations …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Note 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Unaudited Condensed Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim condensed financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. The Unaudited Condensed Financial Statements include all adjustments considered necessary for a fair presentation of the financial position and results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed herein. Accordingly, the Unaudited Condensed Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. However, we believe that the disclosures made are adequate to make the information not misleading. These interim Unaudited Condensed Financial Statements should be read in conjunction with our audited financial statements as of and for the year ended February 28, 2026 included in our Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year due to the seasonality of our product sales. Use of Estimates in the Preparation of Financial Statements The preparation of the Unaudited Condensed Financial Statements in conformity with GAAP requires management to make estimates …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing