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BUSINESS SEGMENTS
 6 Months Ended
Aug. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

Note 11 – 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 and building facilities management. Our assets and liabilities are not allocated on a segment basis. Separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. For the Company, the Chief Executive Officer is the CODM.

Information by reporting segment for the six-month periods ended August 31, 2025 and 2024, are as follows:

 

NET REVENUES
 
    Three Months Ended
August 31,		     Six Months Ended
August 31,		  
    2025     2024     2025     2024  
PaperPie   $ 3,731,200     $ 5,440,300     $ 9,791,500     $ 14,340,600  
Publishing     889,900       1,068,900       1,936,000       2,162,000  
Total   $ 4,621,100     $ 6,509,200     $ 11,727,500     $ 16,502,600  

 

EARNINGS (LOSS) BEFORE INCOME TAXES
 
   Three Months Ended
August 31,		   Six Months Ended
August 31,		 
   2025   2024   2025   2024 
PaperPie  $(14,700)  $(470,700)  $447,000   $300,400 
Publishing   205,700    255,200    413,500    486,800 
Other   (1,941,200)   (2,250,600)   (4,060,000)   (5,000,300)
Total  $(1,750,200)  $(2,466,100)  $(3,199,500)  $(4,213,100)

 

PAPERPIE OPERATING RESULTS

 

The following table summarizes the operating results of the PaperPie segment for the three and six months ended August 31, 2025 and 2024:

 

    Three Months Ended
August 31,		     Six Months Ended
August 31,		  
    2025     2024     2025     2024  
Net revenues   $ 3,731,200     $ 5,440,300     $ 9,791,500     $ 14,340,600  
                                 
Cost of goods sold     1,569,400       2,440,100       4,038,700       5,526,500  
Gross margin     2,161,800       3,000,200       5,752,800       8,814,100  
                                 
Operating expenses                                
Operating and selling     554,500       1,180,100       1,294,100       2,672,900  
Sales commissions     1,245,300       1,827,100       3,226,800       4,860,900  
General and administrative     376,700       463,700       784,900       979,900  
Total operating expenses     2,176,500       3,470,900       5,305,800       8,513,700  
                                 
Operating income (loss)   $ (14,700 )   $ (470,700 )   $ 447,000     $ 300,400  

PUBLISHING OPERATING RESULTS

 

The following table summarizes the operating results of the Publishing segment for the three and six months ended August 31, 2025 and 2024:

 

    Three Months Ended
August 31,		     Six Months Ended
August 31,		  
    2025     2024     2025     2024  
Net revenues   $ 889,900     $ 1,068,900     $ 1,936,000     $ 2,162,000  
                                 
Cost of goods sold     363,600       422,400       863,600       870,000  
Gross margin     526,300       646,500       1,072,400       1,292,000  
                                 
Operating expenses:                                
Operating and selling     69,900       123,700       152,200       269,900  
Sales commissions     23,700       23,700       54,200       48,900  
General and administrative     227,000       243,900       452,500       486,400  
Total operating expenses     320,600       391,300       658,900       805,200  
                                 
Operating income   $ 205,700     $ 255,200     $ 413,500     $ 486,800  

 

Information for the Other segment above for the three and six months ended August 31, 2025 and 2024 is set forth below:

 

OTHER NON-SEGMENT LOSS BEFORE INCOME TAXES

 

    Three Months Ended
August 31,		     Six Months Ended
August 31,		  
    2025     2024     2025     2024  
Operating and selling:   $       $       $       $    
Freight     74,200       82,700       223,900       286,100  
Computer support     40,900       (700 )     63,900       36,900  
Total operating and selling expenses     115,100       82,000       287,800       323,000  
                                 
General and administrative:                                
Payroll     949,900       1,066,100       1,913,100       2,381,600  
Depreciation     274,600       393,500       551,400       786,000  
Building and warehouse rents     216,300       170,900       454,000       342,600  
Outside services     100,200       107,400       251,800       221,500  
Property taxes     41,300       92,700       155,300       185,400  
Property insurance     34,600       50,800       109,400       120,500  
Professional service fees     56,700       59,700       116,400       118,600  
Dues and subscriptions     54,600       59,000       108,100       129,400  
Other     171,200       197,900       301,200       353,100  
Total general and administrative expenses     1,899,400       2,198,000       3,960,700       4,638,700  
                                 
Interest expense     603,200       545,700       1,107,500       1,122,400  
Other income     (676,500 )     (575,100 )     (1,296,000 )     (1,083,800 )
Total other non-segment loss before income taxes   $ 1,941,200     $ 2,250,600     $ 4,060,000     $ 5,000,300