Desperado

Happy Fall! Here we are again, cooler nights, the colors of the leaves changing, AND when Usborne Consultants come out of their summer hibernation and start pushing their offers, begging friends and family to have a party, do an event or two, a book fair, ohh wait. No, not many book fairs this year. Nor many fundraisers either.

There is no doubt whatsoever that Usborne is having trouble. And they aren’t going to tell you. Remember, the name of the game is no negativity. Sadly, they keep these things hidden from the very people who try to make them money. They also are keeping their investors in the dark.

We’re here to shed light on some issues that have been happening over the summer and are spilling into the fall.

CEO Randall White gloated to consultants about his new 6,330 recruits the company managed to gain during their recruiting deal in June. This information was only announced via weekly newsletters to consultants only and in a closed Fan Club Facebook Page. Since Randall did not disclose this information publicly, it is considered Selective Disclosure and Insider Trading.

Per the SEC:

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

https://www.sec.gov/news/press-release/2013-2013-51htm

If you think internal communications to consultants doesn’t matter, it does. Why? A couple of years ago, Randall offered a money back guarantee on his stock to any consultant who purchased stock in his company. He extended this offer to friends and family of consultants after a consultant asked. Therefore, there are consultants who do own stock in Educational Development Corp (NASDAQ: EDUC) and could find information like this useful in deciding whether to buy or sell stock. What is truly alarming about Randall’s disclosure to consultants is that he failed to mention that 4,000 consultants became inactive due to lack of sales over a six month period. This was mostly due to the shipping disaster during the winter holiday of 2016. According to Google, interest in UBAM is approaching 75% than its all time high. Most will argue that looking at trends via google does not matter. We believe it matters, because we want to show a pattern of lies and deceit that happens daily between Randall, investors and consultants. The trend shows people are losing faith in the company.

And guess what? Another recruit incentive has begun:

Join in October and *earn a $20.00 Gift Code towards UBAM Branded Merchandise at www.myUBAMBoutique.com!

Consultants with JOIN DATES between October 1st – 31st, 2017, qualify for a $20 Gift Code toward http://www.myubamboutique.com upon submission of their first party with minimum retail sales of $100.00 within their first 30 days (party must close before October 31, 2017)

Recruiting Challenge:

Any UBAM consultant with five NEW recruits in October (start dates must be between October 1st – 31st, 2017), will earn a Spring 2018 Business Bundle of new catalogs and new titles (value $250) to be sent directly to earners in December. Earn this Business Bundle, and be the first to receive the new books and catalogs for the Spring season.

Neato! Join to pump numbers up to Randall’s investors and lenders and get a $20.00 code for some lousy products with UBAM all over it. AND, get some new catalogs with a ton of typos and out of print/stock titles printed. Whoopie-Do!

A sale started today, 09/28/17 to get rid of inventory in the warehouse. Consultants were not allowed to share what books were supposed to go on sale prior to the sale because Home Office wants to look like a real company and tell Consultants this kind of information is internal and confidential, but we got the list, and it’s on their site now, assuming you can get on their site. We’ll have it on Twitter and Facebook for you.

These are not even best-selling books. And for the record, The Last Thirteen and Conspiracy 365 are finally going out of print.

What can we expect to happen during this sale?

  1. Consultants will buy these books at deep discount prices (that’s a sarcastic comment by the way) so when a customer is looking for a book and it’s gone for good, they can charge the customer full price.
  2. Consultants cannot buy these books and put the order in as a book fair, so they can earn free books are a result. Sucks to be them. But it’s ok, they’ll sell downline for full price.
  3. They posted news about this sale a week ago, but would not disclose when the sale would go live. Why? Probably waiting to get approval from Mid-First Bank to even add the sale to the e-commerce site.
  4. This sale will indeed cause customers to receive Book Bucks. Home Office won’t tell anyone the availability of the number of copies they have on hand, because they have never been able to create some sort of system to show what books are in stock and their actual quantity in the warehouse.
  5. Will the system crash? Ohh this is laughable. Home Office even admits that these types of sales create so much “excitement” from Consultants themselves (not actual customers) buying up the books and surely there will be some issues. I mean, DUH!

So don’t delay, act now, supplies are running out.  Takes 2-8 weeks to arrive.

At this point in the game, one has to wonder.. just what in the hell is really going on?! Home Office is going to tell you until they are blue in the face everything is fine, that their relationships with their bank, investors and anyone else who gives a crap about this scam are sunshine and rainbows. Hell, we even got another video from Home Office this week:

Fall Update from Home Office from Uzzies Uncensored on Vimeo.

Tina? Honey. You’re trying too hard as the cruise director of this sinking ship. Tone it back a bit, because that spiel was just cheesy as hell. Randall? Hold onto your butts, here is the deal.

In early September, Educational Development Corp released an updated credit agreement here.

This is what we find interesting about this:

Have a look at Section 2.1 regarding Eligible Inventory. Since Randall seems to think that everything located inside and/or outside of his building should be considered inventory, MidFirst Bank decided to dumb it down for Randall by telling him what is NOT considered “Eligible Inventory”:

  1. Inventory classified as “long term” or “noncurrent” on Borrower’s balance sheet;
  2. Inventory classified as Supplies, Displayers, Racks or Kits;
  3. Inventory older than one year
  4. Inventory classified as obsolete goods, damaged goods and/or     goods not readily marketable;
  5. Inventory in transit;
  6. Inventory held by Borrower on consignment;
  7. Inventory subject to any floor planning arrangement;
  8. Inventory in which any Person other than Lender has a purchase money security interest or any other security interest, lien or claim;
  9. 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;
  10. Inventory that is subject to any agreement which would restrict Lender’s ability to sell or otherwise dispose of the same;
  11. Inventory located outside the United States of America;
  12. To the extent Inventory is in the custody of third party venders; and
  13. Inventory consisting of returned or repossessed goods.

Due to the above restrictions, we are assuming this Fall Frenzy Sale is to get rid of any books that are older than one year and will no longer count as eligible inventory. Don’t worry, Randall. You can still sell all of your damaged goods to consultants during the annual convention. They get super excited about cheap, damaged books.

This is still our favorite part:

Section 2.3 Additional Covenants. A new subsection (aa) is hereby added to Section 4.1 of the Loan Agreement to read as follows:

(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 IO 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.

Educational Development Corp cannot make any changes to its IT system without first notifying MidFirst Bank. Randall, any plans on firing your son? In plain writing the bank is pretty much telling you that he is too incompetent to be the VP of IT.

**At the time of this publication, we got an influx of emails stating, the site is slow, it is taking Consultants anywhere from 1.5-3 hours to check out, and they are having a hard time adding items to their cart without losing customer information. Mid-First has every right to implicate these new rules. And good that they finally are, because what is Randall wasting his money on? It’s not to better the company when the world of shopping for any item is online based. Re-read point #5 above about the outcomes of this sale. Enough said.

If today could not get any more fun in UBAM La-La Land, Educational Development Corp issued a press release today announcing their 2nd quarter earnings. It’s interesting to note that they knew what their earnings would look like and in hopes to push matters along, they announce a new recruiting blitz and put 100 titles collecting dust on sale. Nevertheless, it was really, really bad spinning why there was a 6% drop in growth. Guess the Imodium finally kicked in and no more explosive diarrhea.

“Randall White, CEO of Educational Development Corporation, announced that the Company had record net revenue of $51.1 million for the six months ended August 31, 2017, up 5% from the same period last year.  Net revenues for the second quarter were $24.3 million, down $1.6 million, or 6%, from the same quarter last year.

Per Mr. White, “During the past summer we implemented new technologies in our warehouse distribution system which has significantly increased our daily shipping capacity.  However, during the quarter our shipping lead times grew as a result of shutting down our picking lines to implement the new equipment and software changes.  We were still able to catch up on almost all of our delayed orders and are currently shipping most orders within two to three days of receipt. As a result of the improved shipping capacity and gained efficiencies, we expect to report continued improvement in our operating profit margins in this quarter, and are excited about our ability to stay current with shipping during the Fall Selling Season, which is our busiest time of the year.”

Want me to say it again? Their system is walking like an Egyptian right now thanks to that sale. There is always an excuse with Randall. Shipping this time around is just a poor excuse and completely irrelevant. A 2-week delay in shipments would not have caused sales to fall. But nice try, you can’t keep telling consultants one thing and shareholders another.

Be sure to watch that video. They make a stink about ALL orders being caught up and even some orders being shipped the same day. So which is it? He cannot talk his way out of this one, or maybe he will, via another conference call, but investors have to be smarter and ask the hard questions, you know the ones where his answer is “That’s not the way it is, PAL.” Randall plays a damn good game laying the blame when something doesn’t work in his favor. You just can’t spin this one. And this Fall ‘Hissy Fit Sale’ is not going to help them. The only ones who may buy cheap books will be consultants who hope to turn around and sell full price

That’s my story, tell me yours.

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