fc-20250831x10k

 UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

 __________________

 Form 10-K

 __________________

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 2025

 OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___ TO ___

 Franklin Covey Co.
 (Exact name of registrant as specified in its charter)

 Utah

 001-11107

 87-0401551

 (State or other jurisdiction of incorporation or organization)

 (Commission File No.)

 (IRS Employer Identification No.)

 13907 South Minuteman Drive, Suite 500
 Draper, Utah 84020
 (Address of principal executive offices, including zip code)

 Registrant's telephone number, including area code: ( 801) 817-1776

 Securities registered pursuant to Section 12(b) of the Act:

 Title of Each Class

 Trading
 Symbol

 Name of Each Exchange on Which Registered

 Common Stock, $.05 Par Value

 FC

 New York Stock Exchange

 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 and post such files). Yes No

 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 As of February 28, 2025, the aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant was approximately $ 349.5 million, which was based upon the closing price of $31.98 per share as reported by the New York Stock Exchange.

 As of October 31, 2025, the Registrant had 12,155,832 shares of Common Stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE
 Parts of the Registrant's Definitive Proxy Statement for the Annual Meeting of Shareholders, which is scheduled to be held on January 23, 2026, are incorporated by reference in Part III of this Form 10-K.

 Franklin Covey Co.

 Item 1

 Business

 Item 1A

 Risk Factors

 Item 1B

 Unresolved Staff Comments

 Item 1C

 Cybersecurity

 Item 2

 Properties

 Item 3

 Legal Proceedings

 Item 4

 Mine Safety Disclosures

 Item 5

 Market for the Registrant's Common Equity, Related Shareholder Maters, and Issuer Purchases of Equity Securities

 Item 6

 Reserved

 Item 7

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8

 Financial Statements and Supplementary Data

 Report of Independent Registered Public Accounting Firm PCAOB ID No. 34

 Item 9

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A

 Controls and Procedures

 Item 9B

 Other Information

 Item 9C

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10

 Directors, Executive Officers and Corporate Governance

 Item 11

 Executive Compensation

 Item 12

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13

 Certain Relationships and Related Transactions, and Director Independence

 Item 14

 Principal Accountant Fees and Services

 Item 15

 Exhibits and Financial Statement Schedules

 Item 16

 Form 10-K Summary

 Signatures

 Disclosure Regarding Forward-Looking Statements

 This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and such forward-looking statements involve risks and uncertainties. Statements about future revenues, costs, margins, cost savings, foreign currency exchange rates, earnings, cash flows, initiatives, strategy, objectives, targets, expectations, growth, or profitability are forward-looking statements based on management's estimates, assumptions, and projections. Words such as "could," "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," and variations on such words, including similar expressions, are used to identify these forward-looking statements. These forward-looking statements are only predictions, subject to risks and uncertainties, and actual results could differ materially from those discussed in this, and other reports, filed by us with the Securities and Exchange Commission (SEC) and elsewhere. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Risks, uncertainties, and other factors that might cause such differences, some of which could be material, include, but are not limited to, the factors discussed under the section of this report entitled "Risk Factors."

 Forward-looking statements in this report are based on management's current views and assumptions regarding future events and speak only as of the date when made. Franklin Covey Co. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by federal securities laws.

 In this Annual Report on Form 10-K, unless the context requires otherwise, the terms "the Company," "Franklin Covey," "FranklinCovey," "us," "we," and "our" refer to Franklin Covey Co. and its subsidiaries.

 ITEM 1. BUSINESS

 General Information

 Franklin Covey is a global company focused on organizational performance improvement. Our mission is to "enable greatness in people and organizations everywhere," and our global structure is designed to help individuals and organizations achieve results that require collective behavior change. From the foundational work of Dr. Stephen R. Covey in leadership and personal effectiveness, and Hyrum W. Smith in productivity and time management, we have developed deep expertise that extends to helping organizations and individuals achieve desired results through lasting behavioral change. We believe that our clients are able to utilize our content and offerings to create cultures which include high-performing, collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results for all of their key stakeholders.

 The Company was incorporated in 1983 under the laws of the state of Utah, and we merged with the Covey Leadership Center in 1997 to form Franklin Covey Co. Our consolidated net revenue for the fiscal year ended August 31, 2025 totaled $267.1 million and our shares of common stock are traded on the New York Stock Exchange (NYSE) under the ticker symbol "FC."

 Our fiscal year ends on August 31 of each year. Unless otherwise noted, references to fiscal years apply to the 12 months ended August 31 of the specified year.

 The Company's principal executive offices are located at 13907 South Minuteman Dr., Suite 500, Draper, Utah 84020, and our telephone number is (801) 817-1776. Our website, where you can find information about us, is www.franklincovey.com.

 Franklin Covey Services and Offerings

 Our mission is to "enable greatness in people and organizations everywhere." To accomplish this mission, we partner with senior executives and talent leaders to achieve breakthrough performance by engaging leaders and teams throughout an organization in focused, highly effective ways that drive their strategies forward. Our solutions are designed to transform our clients' results and bring a unique blend of technology, content, and consulting expertise to the most critical challenges they face. Our solutions are researched-backed, grounded in time-proven principles, and have been tested in thousands of implementations in business, government, and educational organizations throughout the world.

 FranklinCovey solutions are delivered as a combination of subscription-based access to proprietary content, implementation tools, assessments, and expert consulting and advisory services to help clients engage and align their people around their desired outcomes. Our subscription offerings include the All Access Pass (AAP), which is primarily sold through our Enterprise Division, and the Leader in Me membership, which is designed specifically for our Education Division. These subscriptions enable clients to scale our solutions throughout their organizations and maximize the impact on their results.

 We believe that our Enterprise Division's AAP is a powerful way to deliver our solutions to clients of various sizes, including large, multinational organizations. As part of their engagement, clients can deploy complete content offerings such as The 7 Habits of Highly Effective People, The Four Disciplines of Execution, The Speed of Trust, and Multipliers, or use individual concepts from any of these well-known offerings to create a custom solution to fit their organization's goals. Strategic deployments are supported by expert consultants and coaches, who work with clients to align our solutions and implementation processes in ways that maximize their impact on client results. The AAP also includes access to Franklin Covey's AI Coach, which helps individuals deepen their learning and application of our content. Our AAP-based solutions can be deployed in numerous languages, enabling multinational clients to achieve impact throughout their operations. This global capability also provides us with substantial international sales opportunities.

 In our Education Division, we offer the Leader in Me membership, which provides access to the Leader in Me online service, and authorizes Education clients to use Franklin Covey's proprietary intellectual property. The Leader in Me online service provides access to digital curriculum, leadership lessons, illustrated leadership stories, and a variety of other resources to enable an educational institution to effectively implement and utilize the Leader in Me program. In addition to the content and materials, we provide experienced coaches and consultants to assist schools with the implementation of the Leader in Me program. The coaches and consultants who serve in the Education Division are primarily former educators, including teachers, principals, and administrators, who have a deep understanding of the current challenges facing educators and students and understand how the Leader in Me program can effectively address these challenges. We believe that the Leader in Me solution provides measurable results in the areas of student leadership, improved school culture, and increased academic proficiency.

 Each division operates globally with a common brand and a business model designed to provide clients around the world with the same high level of service. We have sales and support associates throughout the United States and Canada, and operate wholly owned subsidiaries that serve clients in Austria, Australia, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom. In foreign locations where we do not have a directly owned office, we may contract with independent licensee partners who deliver our content and provide services in approximately 150 other countries and territories around the world.

 Further information about our content and services can be found on our website at www.franklincovey.com. However, the information contained in, or that can be accessed through, our website does not constitute any part of this Annual Report.

 Business Development

 Our business is currently structured around two divisions, the Enterprise Division and the Education Division. The Enterprise Division consists of our North America, International Direct Office, and International Licensee segments and is focused on selling our solutions to corporations, governments, not-for-profits, and other related organizations. Franklin Covey solutions delivered through the Enterprise Division are designed to help organizational leaders achieve breakthrough

 results on mission critical objectives. Our Education Division is centered around the principles found in the Leader in Me and is dedicated to helping educational institutions build cultures that will produce great results, including increased student performance, improved school culture, and increased parental and teacher involvement.

 Following the launch of our AAP subscription service and Leader in Me membership, we have consistently sought to improve our content, technology, services, and overall client experience with these subscription-based offerings. We believe that continued investments in content, technology, and personnel who can provide highly credible consulting, coaching, and related delivery services are key to our ongoing client growth and our growth in subscription and subscription services revenue.

 In addition to the internal development of our solutions, we have on occasion sought to grow our capability and sales through acquisitions of businesses and content licenses, and opening new international offices. Over the past few years, our growth investment efforts have included the following:

 Increased Investment in Content and Delivery Platforms – Over the past several years, we have significantly increased our investments in content and delivery platforms. In prior years we invested in significant revisions to our flagship The 7 Habits of Highly Effective People offering, which launched in early fiscal 2025, on new Leader in Me content, and for enhancements to our Impact Platform. During fiscal 2024 we also acquired a license for The Teacher Believed in Me content, which is expected to provide new opportunities for growth in our Leader in Me membership and related offerings. We believe continuing investments in our content and offerings are critical to our growth and ability to attract and retain clients.

 Artificial Intelligence (AI) – With the rapid rise of AI, we believe there will be an increasing premium on human leadership and interaction to leverage AI in the workplace as organizations pursue their strategic agendas. We believe these skills will include the ability to set vision, focus teams, serve customers, and communicate effectively with human co-workers in partnership with agentic AI interfaces. We are strengthening our platforms and offerings to leverage the quickly changing capabilities and opportunities related to AI to improve our solutions and help clients develop and engage their people to achieve their strategic goals. We believe that AI provides an opportunity for increased scale, improved impact, and deeper client engagement with our solutions.

 New Direct Office in France – In early fiscal 2025, we opened a new direct office operation in France, which was previously served by a licensee partner. We believe converting our operations in France from a licensee partnership to direct ownership will provide additional growth in revenue and operating income in future periods.

 We seek to consistently add new capabilities that will help us deliver value to clients and increase the impact of our solutions. As a result, we expect to make additional investments in technology, content, and consulting expertise in fiscal 2026 and in future periods as market conditions allow. These investments may include hiring additional personnel, the acquisition of license rights, and business acquisitions. For further information regarding our business development, refer to the section entitled, "Key Strategic Objectives" in Item 7 of this Annual Report on Form 10-K.

 Our Associates

 We have approximately 1,120 associates worldwide, who are mostly full-time employees. We also utilize independent contractors and temporary personnel to supplement our workforce. None of our associates are represented by a union or collective bargaining agreement, and we have never experienced a material labor interruption due to labor disagreements. For more information regarding our associates refer to the Human Capital Resources disclosures found later in this section.

 Our Industry and Competitors

 FranklinCovey is a focused solutions provider in the People and Organizational Performance industry. Companies in this industry offer clients a range of services, including advisory and consulting expertise, leadership development programs,

 HR technologies, learning platforms, and training content libraries. FranklinCovey partners with senior executives and talent leaders in both the Enterprise and Education markets to help organizations achieve performance improvement by engaging leaders and teams in focused and effective ways that support strategic execution.

 The addressable market for these offerings is large and diversified. According to Training Industry's 2025 State of the Industry Report, U.S. corporate training expenditures are estimated at approximately $188 billion (about $400 billion globally). IBIS World estimates U.S. spending on Human Resource Consulting at approximately $39 billion. In addition, our offerings address operating budgets allocated by leaders to achieve mission-critical objectives and business transformations. The addressable market for our Education solutions is also significant, including external curriculum budgets (estimated at around $2 billion in the U.S.) as well as funding from state, federal, and local governments, foundations, and other community sources.

 Competitors for FranklinCovey's Enterprise Division include consulting firms such as McKinsey & Company, Deloitte, and Accenture; recruitment and advisory firms such as Korn Ferry and Heidrick & Struggles; leadership development organizations such as Development Dimensions International (DDI), LHH, and Blanchard; coaching providers such as Better Up, CoachHub, and Ezra; sales-training organizations such as RAIN Group, Sandler, and Challenger; HR-technology providers such as Workboard, Amplify, and Cornerstone; and learning-library providers such as Udemy Business and Linked In Learning.

 Competitors for the Education Division include solutions providers such as 7 Mindsets, Capturing Kids' Hearts, Second Step, Responsive Classroom, and CharacterStrong.

 We believe that the principal competitive factors in our industry include:

 Quality and relevance of learning content.
 Credible advisory and consulting expertise.
 Effectiveness of implementation methodologies.
 Strength of go-to-market operations and client support.
 Skills and experience of professionals who develop and deliver solutions.
 Ability to create measurable value for clients.
 Reputation and client references.
 Competitive pricing.
 Global reach and delivery capability.
 Brand recognition and market presence

 Given the size and attractiveness of our target markets, competition continues to evolve as new and existing competitors continue to innovate, novel technologies—particularly artificial intelligence (AI)—reshape delivery models, and emerging solution approaches raise client expectations.

 We believe FranklinCovey is well positioned within this environment due to:
 The quality and depth of our content;
 The breadth and flexibility of our delivery options, including the All Access Pass and Leader in Me membership offerings;
 Our global reach and delivery capability, which allow multinational clients to deploy solutions consistently across geographies; and
 The measurable impact our offerings are designed to achieve on client organizations and results.

 We have a relatively broad base of clients, which includes thousands of organizational, governmental, educational, and individual clients in both the United States and in other countries that are served through our directly owned operations. We have thousands of additional organizational clients throughout the world which are served through our global licensee partner network, and we believe that our content, in all its forms, delivers results that encourage strong client loyalty. Our

 clients are in a broad array of industries, and we are not dependent on a single client or industry group. During the periods presented in this report, none of our clients were responsible for more than 10% of our consolidated revenues.

 Our Intellectual Property

 Our success has resulted in part from our proprietary content, methodologies, and other intellectual property rights. We seek to protect our intellectual property both globally and domestically through a combination of trademarks, copyrights, and confidentiality agreements. We claim rights for 706 trademarks in the United States and foreign countries, and we have obtained registration in the United States and numerous foreign countries for many of our trademarks including FranklinCovey, The 7 Habits of Highly Effective People, The 4 Disciplines of Execution, and The 7 Habits. We consider our trademarks and other proprietary rights to be important and material to our business and we regularly review the status of our trademarks and renew them to prevent the trademark protection from lapsing.

 We claim 265 registered copyrights, and own sole or joint copyrights on our books, manuals, text and other printed information provided in our training programs, and other electronic media products, including audio and video media. We may license, rather than sell, facilitator workbooks and other seminar and training materials in order to protect our intellectual property rights therein. We place trademark and copyright notices on our instructional, marketing, and advertising materials. In order to maintain the proprietary nature of our product information, we enter into written confidentiality agreements with certain executives, product developers, sales professionals, training consultants, other employees, and licensees. Additionally, we actively monitor and seek to eliminate unauthorized use of our intellectual property.

 Our Products and Sustainability

 We offer nearly all of our training materials and related accessories in digital format. If a client chooses to use paper-based materials in their training programs, we also offer printed materials. Our printed training materials are primarily comprised of paper, which we believe is a renewable and sustainable resource and all of our primary printer's paper suppliers are Forest Stewardship Council (FSC) certified. We purchase our training materials and related products from vendors and suppliers located both domestically and internationally, and we are not dependent upon any one vendor for the production of our training and related materials as the raw materials for these products are readily available. Our training materials are primarily warehoused and distributed from an independent warehouse facility located in Des Moines, Iowa.

 Seasonality

 Our fourth quarter of each fiscal year may have higher sales and operating income than other fiscal quarters primarily due to increased revenues in our Education Division (when school administrators and faculty have professional development days) and to increased sales that typically occur during that quarter from year-end incentive programs. Overall, training sales are moderately seasonal because of the timing of corporate training, which is not typically scheduled as heavily during holiday and certain vacation periods.

 Human Capital Resources

 Our mission is to "enable greatness in people and organizations everywhere." We believe this mission statement is both a guiding purpose and the foundation of our culture. When associates thrive, clients achieve lasting results, and shareholders realize sustained value. To fulfill our mission, we execute two interconnected strategies. First, we advance our culture by positioning Franklin Covey as an employer of choice for achievers with heart—supported by measurable plans that foster engagement across today's shifting workplace. Second, we strengthen our talent ecosystem by recruiting and developing capabilities for both today and tomorrow, refining leadership pipelines, and equipping our people to deliver enduring value for clients, communities, and investors. We strive to live our mission by applying the same principles we teach. The following two core truths anchor our approach:

 Greatness exists in everyone.

 That greatness can be consistently activated through principles and practices that strengthen collaboration, leadership, and performance.

 A Culture Built by Achievers With Heart

 Achievers with Heart are the culture carriers and business accelerators at Franklin Covey, making us a differentiator in the marketplace. They drive engagement, inspire innovation, and deliver measurable results for associates, clients, and shareholders. An "Achiever with Heart" is every individual who consistently delivers meaningful results while embodying the principles of character, collaboration, and service. Our associates are equally defined by what we accomplish and how we accomplish it.

 The Franklin Covey associate value proposition is anchored in our four core values — valuing the whole person, living the principles we teach, creating lasting client impact, and pursuing individual and collective growth. These values serve as the foundation of the employee life cycle, guiding how we attract, engage, develop, and retain talent. They are reinforced by four cultural pillars that define what it means to work at FranklinCovey:

 Connection: Ensuring every associate feels respected, included, and able to contribute at their highest level.

 Learning: Providing continuous access to FranklinCovey's world-class content, mentorship, and leadership development opportunities.

 Differences: Leveraging diverse perspectives, skills, and experiences to build stronger teams, culture, and outcomes.

 Respect: Ensuring every associate feels respected, valued, and supported through fair pay practices, comprehensive benefits, and a culture of trust and collaboration.

 The Council is a body of leaders serving as stewards of FranklinCovey's culture, accelerating business priorities through a high-engagement, high-performance posture. As a catalyst for innovation and inclusion, the Council is committed to shaping a workplace in which every associate is empowered to deliver meaningful outcomes—for clients, for communities, and for shareholders.

 Culture & Employee Engagement. In fiscal 2025, through the Winning Culture Survey—FranklinCovey's assessment of engagement and cultural wellness—led and validated by Culture Amp, associates reaffirmed that our culture remains one of our most significant competitive advantages.

 FranklinCovey's commitment to the employee experience is reflected in strong engagement outcomes. In fiscal 2025, associates reported a 77% favorable engagement score, affirming that our culture continues to be a source of strength and differentiation. Notably, 90% of associates expressed pride in working at Franklin Covey, and 84% said they would recommend the Company as a great place to work. These results underline the impact of aligning learning, development, and engagement to create a workplace where employees feel valued, supported, and inspired to deliver their best.

 Executive Rewards. We have engaged ClearBridge, LLC (ClearBridge) as an advisor to the Organization and Compensation Committee to assist us with our executive compensation and benefits arrangements. During fiscal 2025, ClearBridge initiated a comprehensive competitive compensation review for all current executives to ensure alignment with market benchmarks and shareholder expectations.

 Compensation. In fiscal 2025 we designed and implemented the following structural components designed to support effective Compensation Administration at FranklinCovey.

 Established a formal Total Rewards Philosophy, providing a clear framework for compensation decisions and transparency across the organization.

 Developed and implemented a Global Job Framework and market-based pay ranges for all roles, tailored by country to reflect local market conditions.

 Completed a Company-wide market assessment for all positions, ensuring internal equity and external competitiveness.

 Introduced international compensation practices to support global consistency while respecting regional nuances.

 Benefits. Fiscal 2025 was routine in the area of benefits, in which management conducted a market competitiveness assessment of employee benefits offerings in partnership with our health and welfare advisor. This year, management elected to make minimal targeted plan changes to preserve overall value for employees while effectively managing cost for the organization.

 At Franklin Covey, our "Total Rewards" approach reflects a sustained commitment to treating associates as the central driver of organizational performance. By investing in the whole person through competitive compensation, benefits, and development opportunities, we strengthen engagement, retention, and long-term capability. We believe this foundation supports a culture that enhances productivity and differentiates us in the marketplace.

 Talent Management, Development, and Growth

 Our Senior Vice President of People Services ensures alignment between our global business strategy and the systems that strengthen talent, leadership, and organizational effectiveness. This function oversees human resource operations, Total Rewards, talent acquisition, learning and development, and payroll.

 We recruit top talent by leveraging advanced sourcing techniques, including data-driven talent analytics, targeted digital outreach, and proactive pipeline development to identify and engage high-performing candidates. Our onboarding experience fully immerses associates into Franklin Covey's culture within their first 90 days, with a focus on connection, inclusion, and development. This experience includes certification in The 7 Habits of Highly Effective People, which serves as the cultural operating system of our Company.

 Organizational Performance & Culture. In high-performing organizations, success is never accidental. We believe it emerges from disciplined alignment among people, strategy, and the outcomes they are working to achieve. At FranklinCovey, we view organizational performance as the measure of how well a company translates goals into results while sustaining momentum, culture, and capability. In fiscal 2025, our senior leaders engaged in an intensive Executive Design Session (EDS) process to clarify the organization's most critical performance needs. These sessions created a forum to align on strategic intent, identify barriers to high performance, and chart a course toward sustainable improvement.

 The EDS process produced strategic recommendations, which we have started to implement into our highest level of strategic planning. Combined with insights from the Winning Culture Survey, these recommendations have served as the roadmap for advancing our people, performance, and culture work throughout fiscal 2025. These recommendations now form the basis of our strategic direction for fiscal 2026 and beyond. These Company level EDS recommendations include:

 Strengthen Our Cultural Foundation: Ensure that every associate experiences The 7 Habits 5.0, reinforcing the universal operating system of our culture and strengthening shared language, principles, and behaviors.

 Launch the FC Leadership Academy: Establish a dedicated Leadership Academy to drive consistent development of both individual contributors and leaders, ensuring long-term organizational capability and succession strength.

 Implement The 4 Disciplines of Execution (4DX): Deploy the 4DX framework across the organization to drive clarity, focus, accountability, and disciplined execution of Wildly Important Goals.

 Engage in Ongoing Strategic Dialogue: Implement an ongoing strategic dialogue campaign to enhance transparency, clarity, and alignment across Franklin Covey. This multi-channel approach ensures consistent communication, reinforces cultural priorities, and empowers associates to actively participate in our strategic journey.

 Enduring performance and culture depend on more than vision; they require a workforce that continuously learns, practices, and applies proven principles. We support these concepts by providing associates with personalized access to development resources that connect strategic priorities to daily work, reinforce desired behaviors, and build organizational capability over time.

 Learning in Action. At FranklinCovey, learning is embedded in the way we work. Associates are encouraged to take co-ownership of their development journeys, with unlimited access to the All Access Pass, our digital platform for transformative learning. Through a blend of microcourses, application challenges, modules, and exercises, associates engage in just-in-time learning experiences that deepen skills, reinforce cultural principles, and equip them to lead at every level. This approach ensures that growth is not only possible but intentional, aligning personal development with organizational performance.

 Our Commitment to Our People

 At FranklinCovey, we recognize that our people are our most important asset and that culture is a critical driver of performance. We believe that our culture—built on the principles of valuing the whole person, fostering trust, and creating a culture of winning together—ensures associates are part of high-performing teams, engaged in meaningful work, and supported in an environment of respect. Sustaining this culture enables associates to thrive, strengthens client relationships and impact, and delivers enduring value for shareholders, reinforcing human capital as a cornerstone of our long-term success.

 Government Contracts

 Our U.S. government contracts are subject to the approval of appropriations by the U.S. Congress to fund the agencies contracting for our offerings and products. Additionally, our contracts at the state and local levels, including contracts with school districts and other public educational institutions, are subject to various governmental authorizations and funding approvals and mechanisms. Governmental contracts may be terminated at any time by the government entity without cause or penalty. Our operations in fiscal 2025 were adversely impacted by governmental contracting actions, including the postponement or cancellation contracts during the fiscal year.

 Information About Our Executive Officers

 After 24 years of service, effective May 1, 2025, Stephen D. Young stepped down from his role as Executive Vice-President and Chief Financial Officer (CFO). Jessica G. Betjemann was appointed as Executive Vice-President and Chief Financial Officer and began her service on May 1, 2025. Effective August 31, 2025, Jennifer C. Colosimo stepped down from her role as President of the Enterprise Division. Holly Procter, the Company's Chief Revenue Officer, was appointed as the new President of the Enterprise Division, effective September 1, 2025. Effective August 31, 2025, Meisha R. Sherman stepped down from her role as Chief People Officer. Stephanie Talbot, Senior Vice-President of People Services, assumed the leadership role for our Human Resources. Unless noted in the following biographical information, the remaining executives served in their described roles throughout the fiscal year ended August 31, 2025.

 Jessica G. Betjemann, 54, joined Frankin Covey on May 1, 2025 and currently serves as Executive Vice-President and Chief Financial Officer. Ms. Betjemann brings more than 30 years of experience building financial value and managing

 investment decisions for a variety of companies. Most recently, Ms. Betjemann served as Executive Vice President and CFO of Gogo, Inc. (NASDAQ: GOGO), a leading provider of inflight connectivity services for the business aviation market. Ms. Betjemann previously served as Gogo's Senior Vice President of Finance, Chief Accounting Officer, and Treasurer, expanding her role after joining Gogo as Vice President, Financial Planning and Analysis in 2016.
 Prior to joining Gogo in 2016, Ms. Betjemann served as Vice President of Strategic Business Planning at Nokia and held several senior leadership roles in strategy and business operations at Alcatel-Lucent from 2007 to 2015. Prior to 2007, Ms. Betjemann held various strategy and finance roles at Lucent Technologies and AT&T. Ms. Betjemann earned a Master of Business Administration degree in finance, marketing, and international business from the Stern School of Business at New York University and a Bachelor of Arts degree in mathematics and economics from Lafayette College in Easton, Pennsylvania.

 M. Sean Covey, 61, currently serves as President of the Franklin Covey Education Division, and has led the growth of this division from its infancy to its status today. The Education Division works with thousands of education entities throughout the world in the K-12 and Higher Education markets. Mr. Covey previously ran the Franklin Covey international licensee network and has been an executive officer since September 2008. Sean also served as the Executive Vice-President of Innovations from 2003 to 2018, where he led the development of many of our offerings, including the The 4 Disciplines of Execution and The Leader in Me. Prior to 2006, Sean ran the Franklin Covey retail chain of stores. Previous to Franklin Covey, Mr. Covey worked for the Walt Disney Company, Trammel Crow Ventures, and Deloitte & Touche Consulting. Mr. Covey is also a New York Times best-selling author and has authored or coauthored several books, including The 4 Disciplines of Execution, The Leader in Me, and the international bestseller The 7 Habits of Highly Effective Teens. Mr. Covey graduated from Brigham Young University (BYU) with a Bachelor's degree in English and later earned an MBA from Harvard Business School. While at BYU, Sean was the quarterback for the football team where he earned several honors and led his team to two bowl games. Sean is also the founder and chairman of "Bridle Up Hope," a global non-profit organization with a mission to inspire hope, confidence, and resilience in young women through equestrian training, life skills development, and service.

 Colleen Dom, 63, was appointed the Executive Vice-President of Operations in September 2013. Ms. Dom began her career with the Company in 1985 and served as the first Client Service Coordinator, providing service and seminar support for some of the Company's very first clients. Prior to her appointment as an Executive Vice-President, Ms. Dom served as Vice-President of Domestic Operations since 1997 where she had responsibility for the Company's North American operations, including client support, supply chain, and feedback operations. During her time at Franklin Covey Co., Colleen has been instrumental in creating and implementing systems and processes that have supported the Company's strategic objectives and has more than 35 years of experience in client services, sales support, operations, management, and supply chain. Due to her valuable understanding of the Company's global operations, Ms. Dom has been responsible for numerous key assignments that have enhanced client support, optimized operations, and built capabilities for future growth. Prior to joining the Company, Ms. Dom worked in retail management and in the financial investment industry.

 Holly Procter, 39, currently serves as President of the Enterprise Division at Franklin Covey. Ms. Procter joined the Company in June 2024 and was appointed Chief Revenue Officer and a member of the executive leadership team in November 2024. Ms. Procter's career spans enterprise software, technology, consulting, and healthcare. She has held leadership positions at Fortune 500 companies such as Linked In, as well as at high-growth startups WeWork, Clari, and Incredible Health. With more than 18 years of experience, Holly has led initiatives in go-to-market strategy and revenue cadence design, global sales enablement, deployment of advanced sales technologies, international expansion, product launches, and the recruitment and development of high-performing revenue organizations. Prior to joining Franklin Covey, Ms. Procter served as Chief Revenue Officer at Incredible Health from May 2023 to June 2024. From February 2020 to April 2023, she was Senior Vice President and Global Head of Sales at Clari. Ms. Procter holds both a Master of Business Administration and a bachelor's degree in business administration, management, and marketing from the University of Nebraska–Lincoln. She is also certified as a Six Sigma Green Belt.

 Paul S. Walker, 50, currently serves as the Company's President and Chief Executive Officer, and was appointed to our Board of Directors effective July 1, 2023. Mr. Walker began his career with the Company in 2000 in the role of business developer, and quickly moved to become a Client Partner and then an Area Director. In 2007, Mr. Walker became General

 Manager of the North America Central Region. In 2014, Paul assumed responsibility for the Company's United Kingdom operations in addition to his role as General Manager of the Central Region. In 2016, Mr. Walker relocated to the Company's Salt Lake City, Utah headquarters where he served as Executive Vice-President of Global Sales and Delivery and as President of the Company's Enterprise Division until November 2019 when Paul was appointed President and Chief Operating Officer. During his time at Franklin Covey, Mr. Walker has led many digital transformation projects, including the transition to the All Access Pass. Mr. Walker graduated from Brigham Young University with a Bachelor of Arts in Communications.

 Available Information

 We regularly file reports with the Securities and Exchange Commission. These reports include, but are not limited to, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and security transaction reports on Forms 3, 4, or 5. The SEC also maintains electronic versions of the Company's reports, proxy and information statements, and other information that the Company files with the SEC on its website at www.sec.gov.

 The Company makes our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other reports filed or furnished with the SEC available to the public, free of charge, through our website at www.franklincovey.com. These reports are provided through our website as soon as is reasonably practicable after we file or furnish these reports with the SEC. Unless expressly noted, the information on our website or any other website is not incorporated by reference in this Annual Report on Form 10-K or any other filing we make with the SEC.

 ITEM 1A. RISK FACTORS

 Our industry and business environment, domestic and international economic conditions, governmental actions, geopolitical circumstances, international relationships, cybersecurity threats, and other specific risks may affect our future business decisions and financial performance. The matters discussed below may cause our future results to differ from past results or those described in forward-looking statements and could have a material effect on our business, financial condition, liquidity, results of operations, and stock price, and should be considered in evaluating Franklin Covey Co.

 The risks included here are not exhaustive. Other sections of this report may include additional risk factors which could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing industry and global environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Further, the disclosure of risks identified below does not imply that the risk has already materialized.

 Training Industry and Strategic Risks

 We operate in an intensely competitive industry and our competitors may develop programs, services, or courses that adversely affect our ability to sell our offerings.

 The training and consulting services industry is intensely competitive with relatively easy entry. Competitors continually introduce new programs, services, and delivery methods that may compete directly with our offerings, or that may make our offerings uncompetitive or obsolete. Larger competitors may have superior abilities to compete for clients and skilled professionals, reducing our ability to deliver quality work to our clients. Some of our competitors may have greater financial and other resources than we do. In addition, one or more of our competitors may develop and implement training courses or methodologies that may adversely affect our ability to sell our offerings and products to new clients. Any one of these circumstances could have an adverse effect on our ability to obtain new business, keep existing clients, and successfully deliver our services.

 Our business depends on renewals of subscription-based offerings and sales of new subscription-based services for a significant portion of our revenue, and our failure to renew at historical rates or generate new sales of such offerings will lead to a decrease in our revenues.

 A large portion of our success depends on our ability to generate renewals of our subscription-based offerings, which primarily consist of the AAP and the Leader in Me membership, and produce new sales of our offerings and products to both new and existing clients. Currently, the majority of our revenue is generated from subscription-based offerings and related materials sales. Generating new sales of our subscription-based offerings and products, both to new and existing clients, is a challenging, costly, and often time-consuming process. If we are unable to generate new sales, due to competition, economic uncertainty, or other factors, our revenues will be adversely affected.

 Our subscription contracts are typically for periods of 12 months or longer. Our ability to maintain contract renewals is subject to numerous factors, including:

 delivering high-quality content, solutions, and coaching to our clients;
 understanding and anticipating market and technology trends and the changing needs of our clients; and
 providing offerings and products of the quality and timeliness necessary to withstand competition.

 Additionally, as we continue to adjust our offerings and products to meet our clients' needs, we may shift the type and pricing of our offerings, which may adversely impact client renewal rates. There can be no guarantee that we will be able to maintain consistent customer renewals in future periods. If we are not able to generate new sales and maintain contract renewals, our business and results of operations may be adversely affected.

 Failure to maintain our reputation, brand image, and culture could negatively impact our business.

 Our success depends on our ability to maintain and enhance our brand image and reputation. Maintaining, promoting, and growing our brands will depend on our design and marketing efforts, including advertising and consumer campaigns, content and platform innovation and quality, and our efforts in these respects may not have the desired impact on our brand image and reputation. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment, including our increasing reliance on social media and digital dissemination of advertising campaigns on our digital platforms and through our digital experiences. We could be adversely impacted if we fail to achieve any of these objectives.

 Our brand value also depends on our ability to maintain a positive consumer perception of our corporate integrity, purpose, and brand culture. Negative claims or publicity involving us, our culture and values, our products, services and experiences, consumer data, or any of our affiliates could seriously damage our reputation and brand image, regardless of whether such claims are accurate. Further, our reputation and brand image could be damaged as a result of our support of, association with or lack of support or disapproval of certain social causes, as well as any decisions we make to continue to conduct, or change, certain of our activities in response to such considerations. Social media, which accelerates and potentially amplifies the scope of negative publicity, can increase the challenges of responding to negative claims. Adverse publicity about regulatory or legal action against us, or by us, could also damage our reputation and brand image, undermine consumer confidence in us, and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. If the reputation, perception, or image of any of our brands is tarnished or if we receive negative publicity, our financial condition and results of operations could be materially and adversely affected.

 We have only a limited ability to protect our intellectual property rights, which are important to our success.

 Our financial success is partially dependent on our ability to protect our proprietary offerings and other intellectual property. The existing laws of some countries in which we provide services might offer only limited protection of our intellectual property rights. To protect our intellectual property, we rely upon a combination of confidentiality policies, nondisclosure and other contractual arrangements, as well as copyright and trademark laws. In addition, the rapid growth

 and utilization of artificial intelligence (AI) may infringe on our trademarked and copyrighted materials. The steps we take to protect our intellectual property may not be adequate to prevent or deter infringement or other misappropriation of our intellectual property, and we might not be able to detect unauthorized use of, or take appropriate and timely steps to enforce, our intellectual property rights.

 The loss of proprietary content or the unauthorized use of our intellectual property may create greater competition, loss of revenue, and adverse publicity, and may also limit our ability to reuse that intellectual property with other clients. Any limitation on our ability to provide a service or solution could cause us to lose revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future engagements.

 The loss of governmental funding and contributions from charitable organizations could harm our Education Division's ability to grow and expand into new schools in the future.

 Schools in the United States benefit from governmental funding initiatives, such as the Elementary and Secondary School Emergency Relief (ESSER) program, which provide additional funding for schools to pursue improvement programs such as our Leader in Me offering. In addition, we partner with charitable organizations to fund the Leader in Me programs in many schools across the country. Supported by numerous studies and endorsements, we believe the Leader in Me program provides meaningful and measurable improvement to the academic environment of schools, which enable the educational institutions to utilize governmental funding and attract additional support from charitable organizations to implement our Leader in Me offering. If governmental funding for school improvement expires or is reduced, or charitable organizations decide not to continue to support the Leader in Me programs in schools, our results of operations, cash flows, and financial position may be adversely impacted.

 We depend on key personnel, the loss of whom could harm our business.

 Our future success will depend, in part, on the continued service of key executive officers and personnel. The loss of the services of key individuals could harm our business. Our future success also depends on our ability to identify, attract, and retain additional qualified senior personnel. Competition for such individuals in the current labor market and in our industry is intense, and we may not be successful in attracting and retaining such personnel.

 If we are unable to attract, retain, and motivate high-quality employees, including sales personnel and training consultants, we may not be able to grow our business as projected or may not be able to compete effectively.

 Our success and ability to grow are partially dependent on our ability to hire, retain, and motivate sufficient numbers of talented people with the increasingly diverse skills needed to serve our clients and grow our business. Competition for skilled personnel is intense at all levels of experience and seniority. There is a risk that we will be unable to hire and retain a sufficient number of employees with the skills or backgrounds we require, or that it will prove difficult to retain them in a competitive and inflationary labor market. If we are unable to hire and retain talented sales and delivery employees with the skills, and in the locations, we require, we might not be able to grow our business at projected levels or may not be able to effectively deliver our content and services. If we need to hire additional personnel to maintain a specified number of sales personnel or are required to re-assign personnel from other geographic areas, it could increase our costs and adversely affect our profit margins. In addition, the inability of newly hired sales personnel to achieve increased sales metrics as they progress may inhibit our ability to attain anticipated sales growth.

 Our work with governmental clients exposes us to additional risks that are inherent in the government contracting process.

 Our clients include national, state, provincial, and local governmental entities, and our work with these governmental entities has various risks inherent in the governmental contracting process. These risks include, but are not limited to, the following:

 Governmental entities typically fund projects through appropriated monies. While these projects are often planned and executed as multi-year projects, the governmental entities usually reserve the right to change the

 scope of, or terminate, these projects for lack of approved funding, budgetary changes, and other discretionary reasons. Changes in governmental priorities or other political developments, including disruptions in governmental operations, could result in reductions in the scope of, or in termination of, our existing contracts.
 Governmental entities often reserve the right to audit our contract costs, including allocated indirect costs, and conduct inquiries and investigations of our business practices with respect to our government contracts. Findings from an audit may result in our being required to prospectively adjust previously agreed upon rates for our work, which may adversely affect our future margins.
 If a governmental client discovers improper activities in the course of audits or investigations, then we may become subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions, or debarment from doing business with other agencies of that government.
 Political and economic factors such as pending elections, the outcome of elections, revisions to governmental tax policies, sequestration, debt ceiling negotiations, and reduced tax revenues can affect the number and terms of new governmental contracts signed.

 The occurrences or conditions described above could affect not only our business with the particular governmental agency involved, but also our business with other agencies of the same or other governmental entities. Additionally, because of their visibility and political nature, governmental contracts may present a heightened risk to our reputation. Any of these factors could have an adverse effect on our business or our results of operations.

 Some terminology, language, or content in our offerings may be deemed offensive by certain individuals due to rapidly changing societal norms, which may cause damage to our brand or reputation.

 Our mission is to enable greatness in individuals and organizations everywhere regardless of race, religion, gender, or other individual characteristics. We write and design our content and materials to accomplish this mission and believe that the principles we teach improve lives. Through our directly owned offices and international licensees, our content is delivered in numerous countries around the world in different languages and in different cultures. The language, graphics, and examples used in our content and materials may be understood and interpreted differently by individuals based on culture, experience, societal norms, and other factors. As a result, some individuals may find some of the content in our materials offensive. While we have an ongoing review process to remove potentially offensive terms or images from our materials, a rapidly changing cultural and social environment may create unfavorable interpretations of language or images faster than we can identify and remediate them. Although our intent is to educate and improve individual lives and organizational cultures without offense, an unfavorable interpretation by an individual or organization of the language, concepts, or images used in our content or materials may harm our reputation and brand, cause us to lose business, and adversely affect our results of operations.

 Cybersecurity and Information Technology Risks

 The All Access Pass and Leader in Me subscription services are internet-based platforms, and as such we are subject to increased risks of cyber-attacks and other security breaches that could have a material adverse effect on our business.

 As part of selling subscription-based services, we collect, process, and retain a limited amount of sensitive and confidential information regarding our customers. Because our subscription services are internet-based platforms, our facilities and systems may be vulnerable to external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, stolen intellectual property, programming or human errors, or other similar events.

 We strive to employ global best practices in securing and monitoring code, applications, systems, processes, and data, and our data protection practices are regularly reviewed and validated by an external auditing firm. However, no information security program is perfect, and these efforts may be insufficient to protect sensitive information against illegal activities.

 The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our customers or our own proprietary information, software, methodologies, and business secrets could result in significant

 legal and financial exposure, damage to our reputation, or a loss of confidence in the security of our systems, products, and services, which could have a material adverse effect on our business, financial condition, or results of operations. To the extent we are involved in any future cyber-attacks or other security incidents, our brand and reputation could be affected, and these conditions could also have a material adverse effect on our business, financial condition, or results of operations.

 For further information on our cybersecurity efforts and Board of Directors oversight, please refer to Item 1C Cybersecurity as found in this Annual Report on Form 10-K.

 We could incur additional liabilities and our reputation could be damaged if we do not protect client data or if our information systems are breached.

 We are dependent on information technology networks and systems to process, transmit, and store electronic information and to communicate between our locations around the world and with our clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of personal and confidential data. We are also required at times to manage, utilize, and store personal data, including sensitive or confidential client or employee data. As a result, we are subject to numerous U.S. and foreign jurisdiction laws and regulations designed to protect this information, such as the various U.S. federal and state laws governing the protection of personal data. If we, our associates, business partners, or our service providers negligently disregard or intentionally breach our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to notification requirements, monetary damages, fines, and/or criminal prosecution, as well as litigation from parties impacted by a breach of their data or harm to their systems as a result of malware or other security incidents within our own networks or systems. Unauthorized disclosure, loss or alteration of personal, sensitive, or confidential client or employee data or client or end-user systems, whether through systems failure, employee negligence, fraud, or misappropriation could damage our reputation and cause us to lose clients.

 Global legal requirements relating to the processing of personal data continue to proliferate and evolve. The violation of these laws can result in significant penalties. For example, under the privacy law in the EU and UK, the General Data Protection Regulation (GDPR), fines of up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater, could be imposed. In addition, over twenty U.S. states have enacted general consumer data privacy laws since 2018. We have implemented policies, controls, and procedures, including a team dedicated to data protection, to comply with the requirements of these new privacy laws. However, these new procedures and controls may not be completely effective in preventing breaches or unauthorized processing of personal data. In addition, we continue to see jurisdictions around the world make new laws as they revise and enforce their privacy laws. Accordingly, we will need to continue evolving our compliance measures over time, and there is some risk that common interpretations of the requirements in such laws may not necessarily align with opinions of applicable regulators or potential litigants, such that the risk of fines and litigation may be increased in countries with newer laws.

 In addition, some privacy laws, particularly GDPR, impose restrictions on cross-border transfers of personal data to the United States. Current regulatory guidance regarding those transfers imposes heightened privacy obligations, including the obligation to conduct a transfer impact assessment and, depending on a party's role in the transfer and the laws and practices of the destination country, to implement additional security measures, and update internal privacy practices. Privacy advocates in the EU and UK have filed lawsuits seeking to impose even more stringent restrictions on cross-border transfers due to concerns about the ability of the U.S. government to compel recipients in the U.S. to provide personal data for national intelligence and law enforcement purposes. If successful, these measures could impair our ability to import personal data from Europe to the United States or other countries and may thereby decrease demand for our products and services as our customers that are subject to such laws may seek alternatives that do not involve personal data transfers out of Europe or the UK. In addition, we are subject to regulations in China relating to the collection, use, transfer, security, and other processing of personal information in or from China. Our inability to transfer personal data to the United States and other countries may decrease the functionality or effectiveness of our products and services, increase costs, and adversely impact our marketing efforts, plans, and activities.

 Our efforts to effectively secure and monitor code, applications, systems, processes, and other data may be insufficient to protect sensitive information against illegal activities. We are exposed to additional risks and liabilities from the various data protection laws enacted within the jurisdictions where we operate, as well as a risk of litigation in jurisdictions where there is a private right of action related to violations.

 Technology is rapidly evolving, and if we do not continue to develop and improve our offerings and technology platforms, in response to these changes, our business could suffer.

 Since the introduction of our online subscription services, our dependence on the use of sophisticated technologies and information systems, particularly including technologies and information systems provided by third parties, has increased. Moreover, our technology platforms will require us to continue cash investments (including business acquisitions) to expand existing offerings, improve the client experience, and develop complementary offerings. Our future success depends in part on our ability to adapt our services and infrastructure while maintaining and continuing to improve the performance, features, security, and reliability of our services in response to the evolving demands of the marketplace. Failure to adapt and improve these areas could have an adverse effect on our business, including our results of operations, financial position, and cash flows.

 Our use of AI technologies may not be successful and may present business, compliance, and reputational risks.

 We are working to integrate AI technologies in our offerings and processes. If we fail to keep pace with rapidly evolving AI technological developments, our competitive position and business results may be negatively impacted. Our use of AI technologies will require resources to develop, test, and maintain such products, which could be costly. Third parties may be able to use AI to create technology that could reduce demand for our products. In addition, the introduction of AI technologies, particularly generative AI, into new or existing offerings may result in new or expanded risks and liabilities, due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, data privacy or security risks, as well as other factors that could adversely affect our business, reputation, and financial results. For example, the use of AI technologies could lead to unintended consequences, such as accuracy issues, cybersecurity risks, unintended biases, and discriminatory outputs, which could impact our ability to protect our data, intellectual property, and client information, or could expose us to intellectual property infringement claims.

 Public Company Risks

 We may fail to meet analyst expectations, which could cause the price of our stock to decline.

 Our common stock is publicly traded on the NYSE, and at any given time various securities analysts follow our financial results and issue reports on us. These periodic reports include information about our historical financial results as well as the analysts' estimates of our future performance. The analysts' estimates are based on their own opinions and are often different from our estimates or expectations. The price of our common stock could, however, decline if an analyst downgrades our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If analysts do not continue to follow us or if our operating results are below the estimates or expectations of public market analysts and investors, our stock price could decline. If our stock price is volatile, we may become involved in securities litigation following a decline in price. Any litigation could result in substantial costs and a diversion of management's attention and resources that are needed to successfully run our business.

 Our business performance may not be sufficient for us to meet the financial guidance that we provide publicly.

 We may provide financial guidance to the public based upon expectations regarding our financial performance. Such financial guidance is based on assumptions that may not always prove to be accurate and may vary from actual results. If we fail to meet the financial guidance that we provide, or if we find it necessary to revise such guidance during the year, the market value of our common stock could be adversely affected.

 Our future quarterly operating results are subject to factors that can cause fluctuations in our stock price.

 Historically, our stock price has experienced significant volatility. We expect that our stock price may continue to experience volatility in the future due to a variety of potential factors that may include the following:

 Fluctuations in our quarterly results of operations and cash flows
 Overall market volatility
 Variations between our actual financial results and market expectations
 Changes in key balances, such as cash and deferred revenues
 Currency exchange rate fluctuations
 Unexpected asset impairment charges

 These factors, among others, may have an adverse effect upon our stock price in the future.

 Liquidity and Capital Resource Risks

 We may need additional capital in the future, and this capital may not be available to us on favorable terms or at all.

 We may need to raise additional funds through public or private debt offerings or equity financing in order to:

 Develop new services, programs, or offerings
 Take advantage of opportunities, including business acquisitions
 Respond to competitive pressures

 Going forward, we will continue to incur costs necessary for the day-to-day operation and potential growth of the business and may use our available revolving line of credit facility and other financing alternatives, if necessary, for these expenditures. We obtained a credit agreement in March 2023 (2023 Credit Agreement) that expires in March 2028. We expect to regularly renew or amend our lending agreement in the future to maintain the availability of this credit facility. Additional potential sources of liquidity available to us include factoring receivables, issuance of additional equity, or issuance of debt from public or private sources. If necessary, we will evaluate all of these options and select one or more of them depending on overall capital needs and the associated cost of capital.

 Any additional capital raised through the sale of equity could dilute current shareholders' ownership percentage in us. Furthermore, we may be unable to obtain the necessary capital on terms or conditions that are favorable to us, or at all.

 Failure to comply with the terms and conditions of our credit facility may have an adverse effect upon our business and operations.

 Our 2023 Credit Agreement requires us to comply with customary non-financial terms and conditions as well as specified financial ratios. Failure to comply with these terms and conditions or maintain adequate financial performance to comply with specific financial ratios entitles the lender to certain remedies, including the right to immediately call due any amounts owed on the credit agreement. Such events would have an adverse effect upon our business and operations as there can be no assurance that we may be able to obtain other forms of financing or raise additional capital on terms that would be acceptable to us.

 We may not be able to generate sufficient cash to service our indebtedness, and we may be forced to take other actions to satisfy our payment obligations under our indebtedness, which may not be successful.

 Our ability to make scheduled payments on or to refinance our indebtedness depends on our future performance, including the performance of our subsidiaries, which will be affected by financial, business and economic conditions, competition, and other factors. We are unable to control many of these factors, such as the general economy, economic conditions in the industries in which we operate, and competitive pressures. Our cash flow may be insufficient to allow us to pay

 principal and interest on our indebtedness and to meet our other obligations. If our cash flows and capital resources are insufficient to fund our debt service obligations, then we may be forced to reduce or delay investments and capital expenditures or to sell assets, seek additional capital, or restructure or refinance our indebtedness. These alternative measures may be unsuccessful, and we may not meet our scheduled debt service obligations. In addition, the terms of existing or future debt agreements, including our 2023 Credit Agreement and subsequent modifications, may restrict us from pursuing any of these alternatives.

 In the event that we need to refinance all or a portion of our outstanding indebtedness before maturity or as it matures, we may not be able to obtain terms as favorable as the terms of our existing indebtedness or refinance our existing indebtedness at all. If interest rates or other factors existing at the time of refinancing result in higher interest rates upon refinancing, then we will incur higher interest expense. Furthermore, if any rating agency changes our credit rating or outlook, our debt and equity securities could be negatively affected, which could adversely affect our financial condition and financial results.

 General Business Risks

 Adverse resolution of litigation may harm our operating results or financial condition.

 We are subject to various legal proceedings and claims in the ordinary course of business domestically and internationally. Any litigation can be costly, lengthy, and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of lawsuits could materially harm our business, operating results, or financial condition.

 For example, on December 20, 2024, our previous headquarters office landlord filed a lawsuit alleging breach of lease for failure to perform certain equipment repairs and replacements. While we believe that the premises and associated equipment were in sound operating condition, and that no such repairs were warranted or needed and we intend to respond to all claims vigorously, we cannot predict with certainty the outcome of current or future legal proceedings. The outcome of legal proceedings, whether or not meritorious, is inherently uncertain. Defending against claims requires significant management attention and financial resources. We may incur costs through defense expenses, settlements, or adverse judgments. These proceedings could materially harm our business operations, financial results and condition, management focus and resources, and reputation and brand value. The costs and distractions of litigation, particularly if claims increase in scope or number, could materially impact our business success and shareholder value.

 Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and operations.

 The global credit and financial markets have from time to time experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. The financial markets and the global economy may also be adversely affected by various factors, including the current or anticipated impact of military conflict, including the conflict between Russia and Ukraine, terrorism, other geopolitical events, such as war, natural or environmental disasters, international economic instability, public health emergencies, market uncertainty, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers, and other governmental trade or market control programs. Sanctions imposed by the United States and other countries in response to such conflicts, including the one in Ukraine, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. There can be no assurance that a deterioration in markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment, long-term government shut down, or continued unpredictable and unstable market conditions.

 Our results of operations may be adversely impacted by the costs of persistent and rising inflation if we are unable to pass these costs on to our clients.

 In recent years, inflation has increased significantly in the United States and in many of the countries where we conduct business. Inflation increases the cost of many aspects of our business, including the cost of our products and materials sold, benefit costs, travel expenses, and associate salaries since we must increase our compensation to retain key personnel. If we are unable to increase our prices to sufficiently offset the increased costs of doing business, our results of operations and profitability may be adversely impacted.

 Our global operations pose complex management, foreign currency, legal, tax, and economic risks, which we may not adequately address.

 We have directly owned offices that serve clients in Austria, Australia, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom. We also have licensed operations in numerous other foreign countries. As a result of these foreign operations and their impact upon our financial statements, we are subject to a number of risks, including, but not limited to:

 Restrictions on the movement of cash
 The absence in some jurisdictions of effective laws to protect our intellectual property rights
 Political instability
 Compliance with extensive and evolving laws and regulations that are often ambiguous or inconsistently enforced
 Currency exchange rate fluctuations

 These and other related risks could adversely affect our ability to access sources of liquidity, increase costs related to regulatory compliance, and adversely affect our results of operations.

 Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business.

 Because we provide services to clients in many countries, we are subject to numerous, and sometimes conflicting, regulations on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, internal and disclosure control obligations, data privacy, and labor relations. Violations of these regulations in the conduct of our business could result in fines, criminal sanctions against us or our officers, prohibitions on doing business, and damage to our reputation. Violations of these regulations in connection with the performance of our obligations to our clients also could result in liability for monetary damages, fines, unfavorable publicity, and allegations by our clients that we have not performed our contractual obligations. Due to the varying degrees of development of the legal systems of the countries in which we operate, local laws may be insufficient to protect our rights.

 In many parts of the world, including countries in which we operate, practices in the local business community might not conform to international business standards and could violate anticorruption regulations, including the United States Foreign Corrupt Practices Act, which prohibits giving anything of value intended to influence the awarding of government contracts. Although we have policies and procedures to ensure legal and regulatory compliance, our employees, licensee operators, and agents could take actions that violate these requirements. Violations of these regulations could subject us to criminal or civil enforcement actions, including fines and suspension or disqualification from United States federal procurement contracting, any of which could have an adverse effect on our business.

 We have operations in China, which exposes us to risks inherent in doing business in that country.

 Operating in China exposes us to political, legal, and economic risks. In particular, the political, legal, and economic climate in China, both nationally and regionally, is fluid and unpredictable. Our ability to operate in China may be adversely affected by changes in U.S. and Chinese laws and regulations such as those related to, among other things,

 taxation, import and export tariffs, intellectual property, currency controls, network security, employee benefits, and other matters. In addition, we or third parties with whom we contract, may not obtain or retain the requisite legal permits to continue to operate in China, and costs or operational limitations may be imposed in connection with obtaining and complying with such permits. In other cases, we may be forced to spend a significant amount of resources to obtain the requisite legal permits or otherwise be required to forfeit such permits. Moreover, the Chinese government may impose additional regulations regarding our business. The government may regulate or apply a substantially different set of requirements to our business than anticipated, in which case we may need to invest a significant amount of resources and time before we can operate in the country. Any of these events may materially and adversely affect our business, financial condition, and results of operations. In addition, Chinese trade regulations are in a state of flux, and we may become subject to other forms of taxation, tariffs, and duties in China. Furthermore, third parties that we rely on in China may disclose our confidential information or intellectual property to competitors or third parties, which could result in the illegal distribution and sale of counterfeit versions of our products. If any of these events occur, our business, financial condition, and results of operations could be materially and adversely affected.

 The Company's use of accounting estimates involves judgment and could impact our financial results.

 Our most critical accounting estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations found in Item 7 of this report under the section entitled, Use of Estimates and Critical Accounting Policies. In addition, as discussed in various footnotes to our financial statements as found in Item 8, we make certain estimates for loss contingencies, including decisions related to legal proceedings and reserves. Because, by definition, these estimates and assumptions involve the use of judgment, our actual financial results may differ from these estimates. If our estimates or assumptions underlying such contingencies and reserves prove incorrect, we may be required to record additional adjustments or losses relating to such matters, which would negatively affect our financial results.

 Ineffective internal controls could impact our business and operating results.

 Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results may be harmed and we could fail to meet our financial reporting obligations.

 Extreme weather conditions and natural disasters could negatively impact our operating results and financial condition.

 Extreme weather conditions in the areas in which our suppliers, customers, distribution facilities, offices, and headquarters are located could adversely affect our operating results and financial condition. Moreover, natural disasters such as earthquakes, hurricanes, wildfires, and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our customers, vendors, and suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition. In particular, if a natural disaster or severe weather event were to occur in an area in which we or our suppliers, customers, distribution facilities, and vendors are located, our continued success would depend, in part, on the safety and availability of the relevant personnel and facilities and proper functioning of our or third parties' computer, network, telecommunication, and other systems and operations. If we were to experience a local or regional disaster or other business continuity event or concurrent events, then we could experience operational challenges, in particular depending upon how a local or regional event may affect our human capital across our operations or with regard to particular aspects of our operations, such as key executive officers or personnel. Further, if we are unable to find alternative suppliers, replace capacity at key distribution locations, or quickly repair damage to our information technology systems, our ability to serve our customers could be adversely affected. These events could result in reputational damage, lost sales, cancellation charges, or markdowns, all of which could have an adverse effect on our business, results of operations, and financial condition.

 The impacts of climate change and related regulatory responses could adversely affect our business.

 Sustainability and protecting our natural environment are significant priorities at Franklin Covey and we strive to implement practices and policies that support this concern. We recognize that there are inherent climate-related risks wherever business is conducted; however, we cannot predict the long-term impacts on us from climate change or related regulatory responses. We expect to face increasing regulations relating to climate change, including, for example, disclosure of the impacts of climate change on our business. A failure to uphold or make strides toward achieving publicly stated climate goals may harm the Company's reputation with customers, suppliers, and employees. This increased scrutiny will likely require us to expend significant resources and could adversely affect our results of operations and financial condition. Additionally, we expect that the complexity of compliance with climate disclosure regulations will increase as various countries take different approaches to such regulation. We will continue to monitor the impacts of these issues on our business and consider responsive action as needed.

 Further, climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, which may affect our business operations, either in a particular region or globally, as well as the activities of our vendors, suppliers, and customers. For example, the delivery of our services is dependent on reliable and relatively inexpensive electricity. If electricity is not readily available or affordable, we may not be able to deliver our products and services and therefore our operating results may be adversely impacted. In addition, the physical changes prompted by climate change could result in changes in regulations or consumer preferences, which could in turn affect our business, operating results, and financial condition.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. CYBERSECURITY

 Cybersecurity risk management is a key component of our overall risk management efforts at Franklin Covey. We have cybersecurity processes, technologies, and controls in place to assist in our efforts to assess, identify, and manage material risks from cybersecurity threats that may impact the confidentiality, integrity, and availability of our information systems, networks, and offerings. Cybersecurity risk is addressed at both management and Board of Director levels as described below.

 Management's Role in Assessing Cybersecurity Risk and Directing Strategy

 At the management level, primary responsibility for assessing and managing cybersecurity threats and material risks rests with our Chief Information Officer (CIO), who reports directly to our Executive Vice-President of Operations. Our CIO has over two decades of experience in information technology and cybersecurity and is a Certified Information Systems Security Professional (CISSP). The CIO leads a team of five other information system professionals, three of whom also have CISSP credentials. Our CIO and cybersecurity team are responsible for understanding, managing, and communicating cybersecurity risk to our management and works with our legal department to oversee compliance with various legal, regulatory, and contractual cybersecurity requirements.

 Our cybersecurity program is aligned with the National Institute of Standards and Technology (NIST) 800 Cybersecurity Framework and uses a layered strategy, relying on technology and human processes to safeguard our systems and client data. Our cybersecurity strategy utilizes numerous layers of security controls, processes, and procedures across our information systems and networks, including but not limited to, multi-factor authentication, identity access management, endpoint security, mobile security, application security, network security, web security, and encryption. We also use systems and processes designed to reduce the impact of a security incident at a third-party vendor or customer. Additionally, we use processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party technology and systems, including technology and systems we use for encryption and authentication; employee email; content delivery to customers; back-office support and operations; and other functions. The Company

 provides ongoing mandatory cybersecurity training for associates that is intended to help them understand cybersecurity risks and comply with our cybersecurity policies.

 We engage third party professionals to assess our cybersecurity program and to perform audits of portions of our cybersecurity control environment based on risk or where necessary to ensure regulatory compliance. In addition, our internal audit function regularly meets with the cybersecurity team and periodically tests the control framework and operation of our cybersecurity incident response plan. The results of these tests are presented directly to the Audit Committee of the Board of Directors.

 The cybersecurity team meets frequently to monitor the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents. In the event of a cybersecurity incident, we have developed an incident response plan which is designed to "respond, restore, and resume" operation of our information systems and platforms. Our incident response plan also governs our immediate response to attacks, including detection, notification, escalation, assessment, and remediation efforts. The cybersecurity team routinely tests the incident response plan across the organization to validate the procedures for appropriately assessing and escalating risks and incidents. Our cybersecurity team may also coordinate its incident response efforts with external advisors and key stakeholders if necessary.

 Board of Director Oversight

 The Audit Committee of the Board of Directors has the primary responsibility for cybersecurity risk oversight, including risk priorities, resource allocation, and oversight structures. The Audit Committee and Board of Directors receive regular reports from the CIO on a variety of topics including cybersecurity strategy, the threat landscape, recent developments and trends, and key initiatives. Our incident response plan includes documented protocols which govern established reporting thresholds for escalating cybersecurity incidents within the Company and where appropriate, to the Audit Committee or full Board of Directors.

 Cybersecurity Risks, Threats, and Incidents

 While we have not experienced any material cybersecurity incidents, there can be no guarantee that we, or any third parties with which we interact, will not be the subject of future successful attacks, threats, or incidents. We rely significantly on information technology for the operation of our business, including our All Access Pass and Leader in Me portals. For more information on cybersecurity risks we face, refer to Part I, Item 1A Risk Factors under the section entitled Cybersecurity and Information Technology Risks, which should be read in conjunction with the information presented in this Item 1C.

 ITEM 2. PROPERTIES

 During the fourth quarter of fiscal 2025, we relocated our principal executive offices to a new site in Draper, Utah. The new executive office occupies approximately 26,000 square feet of leased space that is accounted for as an operating lease. The lease on the new headquarters expires in March 2036 and includes two five-year renewal options that may be exercised at our discretion. This facility accommodates our executive team and corporate administration, as well as other professionals and is utilized by personnel in both our Enterprise and Education Divisions. We also occupy leased sales and administrative offices in various countries around the world, which are accounted for as operating leases:

 Banbury, England
 Tokyo, Japan
 China: Beijing and Shanghai

 We consider our existing facilities to be in good condition and suitable for our current and expected level of operations in the upcoming fiscal year and in future periods.

 ITEM 3. LEGAL PROCEEDINGS

 From time to time, we are the subject of certain legal actions, which we consider routine to our business activities. Information regarding material legal proceedings can be found in Note 9, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements, included in Item 8 of this report and is incorporated herein by reference.

 ITEM 4. MINE SAFETY DISCLOSURES

 Not applicable.

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

 Our common stock is listed and traded on the NYSE under the symbol "FC."

 We did not pay or declare dividends on our common stock during the fiscal years ended August 31, 2025 or 2024. Any determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our results of operations, financial condition, terms of our financing arrangements, and such other factors as the Board of Directors deems relevant. We currently anticipate that we will retain all available funds to finance future growth and business opportunities, pay our liabilities, and to repurchase outstanding shares of our common stock.

 As of October 31, 2025, we had 12,155,832 shares of common stock outstanding, which were held by 429 shareholders of record. A number of our shareholders hold their shares in street name; therefore, we believe that there are substantially more beneficial owners of our common stock.

 Purchases of Common Stock

 The following table summarizes our purchases of common stock during quarter ended August 31, 2025:

 Period

 Total Number of Shares Purchased

 Average Price Paid Per Share

 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)
 (in thousands)

 June 1, 2025 to June 31, 2025

 -

 $

 -

 -

 $

 27,873

 July 1, 2025 to July 31, 2025

 -

 $

 -

 -

 $

 27,873

 August 1, 2025 to August 31, 2025

 167,753

 $

 19.91

 167,753

 $

 46,659

 Total Common Shares

 167,753

 $

 19.91

 167,753

 (1) On April 18, 2024, our Board of Directors approved a plan to purchase up to $50.0 million of our outstanding common stock. Through May 31, 2025, we purchased $22.1 million of our common stock on this Board authorized plan. On August 11, 2025, the Board of Directors approved a replenishment of the plan to purchase up to $50.0 million of common stock. On August 14, 2025 we initiated a 10b5-1 plan to purchase up to $10.0 million of our common stock through daily purchases. This 10b5-1 plan was completed in the first quarter of fiscal 2026.

 The actual timing, number, and value of common shares purchased under our board-approved purchase plan will be determined at our discretion and will depend on a number of factors, including, among others, general market and business conditions, the trading price of common shares, and applicable legal requirements. We have no obligation to purchase any common shares under the authorization, and the purchase plan may be suspended, discontinued, or modified at any time for any reason. Amounts shown in the table include the commissions, fees, and 1% excise tax applicable to our purchases of common stock for treasury.

 Performance Graph

 The following graph demonstrates a five-year comparison of cumulative total returns for Franklin Covey Co. common stock, the S&P SmallCap 600 Index, and the S&P 600 Commercial & Professional Services Index. The graph assumes an investment of $100 on August 31, 2020 in each of our common stock, the stocks comprising the S&P SmallCap 600 Index, and the stocks comprising the S&P 600 Commercial & Professional Services Index. Each of the indices assumes that all dividends were reinvested.

 The stock performance shown on the performance graph above is not necessarily indicative of future performance. The Company will not make or endorse any predictions as to our future stock performance.

 The performance graph above is being furnished solely to accompany this Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K, and is not being filed for purposes of Section 18 of the Exchange Act, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 ITEM 6.

 Reserved.

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

 The following Management's Discussion and Analysis of Financial Condition and Results of Operations (Management's Discussion and Analysis) is intended to provide a summary of the principal factors affecting the results of operations, liquidity and capital resources, and the critical accounting estimates of Franklin Covey Co. (also referred to as we, us, our, the Company, FranklinCovey, and Franklin Covey) and subsidiaries. This discussion and analysis should be read together with the accompanying consolidated financial statements and related notes contained in Item 8 and the Risk Factors discussed in Item 1A of this Annual Report on Form 10-K. Forward-looking statements in this discussion are qualified by

 the cautionary statement under the heading "Safe Harbor Statement Under the Private Securities Litigation Reform Act Of 1995" contained later in Item 7 of this Annual Report on Form 10-K.

 Non-GAAP Measures

 This Management's Discussion and Analysis includes the concepts of adjusted earnings before interest, income taxes, depreciation, and amortization (Adjusted EBITDA) and "constant currency," which are non-GAAP measures. We define Adjusted EBITDA as net income excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items such as restructuring charges and building exit costs. Constant currency is a non-GAAP financial measure that removes the impact of fluctuations in foreign currency exchange rates and is calculated by translating the current period's financial results at the same average exchange rates in effect during the prior year and then comparing this amount to the prior year.

 We reference these non-GAAP financial measures in our decision making because they provide supplemental information that facilitates consistent internal comparisons to the historical operating performance of prior periods, and we believe it provides investors with greater transparency to evaluate operational activities and financial results. For a reconciliation of our segment Adjusted EBITDA to income before income taxes, a related GAAP measure, refer to Note 17 Segment Information to our consolidated financial statements as presented in Item 8 of this Annual Report on Form 10-K.

 EXECUTIVE SUMMARY

 General Overview

 Franklin Covey Co. is a global company focused on individual and organizational performance improvement. Our mission is to "enable greatness in people and organizations everywhere," and our worldwide resources are organized to help individuals and organizations achieve sustained superior performance at scale through changes in human behavior. We believe that our content and services create the connection between capabilities and results. In the training and consulting marketplace, we believe there are three important characteristics that distinguish us from our competitors.

 1.World Class Content – Our content is based on timeless principles of human effectiveness and is designed to help people change both their mindset and behavior. When our content is applied consistently in an organization, we believe the culture of that organization will change and improve to enable the organization to get desired results and achieve its own great purposes.

 2.Breadth and Scalability of Delivery Options – We have a wide range of content delivery options, including: the All Access Pass and Leader in Me membership subscriptions, coaching and consulting, organization-wide transformational processes, intellectual property licenses, digital online learning, on-site training, training led through certified facilitators, and blended learning. We believe our expert delivery consultants combined with investments in digital delivery modalities have enabled us to deliver our content to clients in a high-quality learning environment whether those clients are working remotely or in a centralized location.

 3.Global Capability – We have sales professionals in the United States and Canada who serve clients in the private sector, in government, and in educational institutions; wholly owned subsidiaries that serve clients in Australia, Austria, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom; and we contract with independent licensee partners who deliver our content and provide services in approximately 150 countries and territories around the world. Our capabilities allow us to serve a wide range of clients from small locally owned entities to large multinational enterprises.

 We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training content based on the best-selling books, The 7 Habits of Highly Effective People, The Speed of Trust, Multipliers, The 4 Disciplines of Execution, and Trust & Inspire, and proprietary content in the areas of Execution, Sales Performance, Productivity, Customer Loyalty, Leadership, and Education. We believe that our offerings help individuals, teams, and entire organizations transform their results through achieving systematic, sustainable, and

 measurable changes in human behavior. Our offerings are described in further detail at www.franklincovey.com. The information contained in, or that can be accessed through, our website does not constitute a part of this Annual Report on Form 10-K, and the descriptions found therein should not be viewed as a warranty or guarantee of results.

 Our fiscal year ends on August 31, and unless otherwise indicated, fiscal 2025, fiscal 2024, and fiscal 2023 refer to the twelve-month periods ended August 31, 2025, 2024, 2023, and so forth.

 Key Strategic Objectives

 The theme of our fiscal 2026 Company kickoff was, "Deep Roots, Bold Future." Building on our enduring areas of competitive strength and the significant growth investments we made in fiscal 2025, we plan to focus on the following four strategic objectives that we intend to execute with discipline in fiscal 2026 to help us achieve our vision of helping our clients achieve their missions and strategic objectives.

 Clarify our position in the market. FranklinCovey is not just a training company. We believe we are a trusted leadership and performance partner and that our comprehensive solutions can help drive breakthroughs in performance as our clients engage leaders and teams across their organizations to move their strategies forward. In fiscal 2026, our message to potential and current clients is designed to firmly position us in this more strategic, outcomes-oriented place in the market.

 Focus and declare who we serve. In fiscal 2026 we intend to significantly increase the precision and impact of our outcome-oriented messaging to our target buyers, namely, senior executive leaders who own the responsibility for achieving strategic outcomes and who can make the spending decisions to do what it takes to achieve them. Our messaging target also includes senior, performance-oriented talent and human resource leaders who serve as internal partners to these executives inside of their organizations. As we increase the effectiveness of our messaging, we expect that we will engage with more significant clients in more strategic ways, driving better results for our clients and for FranklinCovey.

 Build and sell like a "solutions leadership" company. A solutions leadership company is differentiated by the strength of its products and services. We intend to increasingly position and package our solutions as integrated offerings that drive collective action and deliver breakthrough results for clients. Our trusted content and frameworks will be more frequently combined with consulting and technology to help clients achieve measurable outcomes at scale—enabling lasting client impact and durable growth for FranklinCovey.

 Model what we teach, internally and visibly. As we pursue our growth strategy, we will heavily use and model our own methodologies and frameworks. This process includes further investments in our already strong culture to increase our ability to execute with even higher trust and accountability as we engage our own leaders and teams in achieving our own breakthrough results.

 We believe the pursuit of these strategic priorities will enable us to make more progress toward our mission of enabling greatness in both people and organizations and our vision to impact billions. In addition, we believe that successful implementation of these objectives will provide our associates with additional resources and opportunities for growth and impact in the future and will drive results that are expected to provide return to our shareholders.

 Other key factors that influence our operating results include: the number of organizations that are active customers; the scale and duration of our engagements with them; the number of people engaged in our solution implementations within those organizations; the continuation or renewal of existing services contracts, especially subscription renewals; the availability of budgeted spending in our solution areas among our clients and prospective clients, which, in certain content categories, can be significantly influenced by general economic conditions; client satisfaction with our offerings and services; the number and productivity of our international licensee operations; and our ability to manage operating costs necessary to develop and provide meaningful offerings and related products to our clients.

 Fiscal 2025 Financial Overview

 Fiscal 2025 was a challenging year as our operations and financial results were adversely impacted by various macroeconomic factors, including threatened or enacted tariffs that have created significant business environment uncertainty, specific actions to reduce U.S. federal government spending, a general weakening of economic conditions both domestically and internationally, and ongoing geopolitical tensions which continue to produce instability in certain regions of the world. While threatened or enacted tariffs have not directly impacted our operations, the uncertainty created by the threatened tariffs have adversely impacted our clients both domestically and internationally. In response to the economic uncertainty, many of our clients and prospective clients have sought to reduce their spending to maintain profitability, which led to delayed decision making, decreased contract expansion, and lower client retention. Despite these challenging macroeconomic issues, we are pleased that the majority of our clients are renewing their All Access Pass subscriptions and Leader in Me memberships. Our solutions are designed to help clients improve their key metrics and manage through difficult and uncertain times. During fiscal 2025, we implemented a new go-to-market strategy in North America, and these initiatives are designed to enable us to systematically drive growth in both the breadth and depth of our client relationships at scale. We believe these initiatives will provide strong growth in amounts invoiced during fiscal 2026, which will then translate into meaningful growth in reported revenue toward the back half of fiscal 2026 and increasing in future periods.

 Our consolidated revenue for the fiscal year ended August 31, 2025, totaled $267.1 million, compared with record-high revenues of $287.2 million in fiscal 2024 and reflected the impact of business conditions and macroeconomic challenges previously described. In constant currency, our consolidated revenue was $267.3 million for fiscal 2025. The Company's revenue performance during fiscal 2025 included the following key metrics:

 Enterprise Division revenue in fiscal 2025 totaled $188.1 million compared with $208.1 million in the prior year. Enterprise Division revenue performance was primarily impacted by a $15.8 million decrease in North America segment revenues and a $4.0 million decrease in International Direct Office revenues, which were each adversely impacted by macroeconomic uncertainties, decreased U.S. government spending, and trade tensions from threatened or enacted tariffs. These challenging economic and business conditions adversely impacted new logo sales, expansion activity, and client retention throughout the fiscal year.

 For the fiscal year ended August 31, 2025, Education Division revenue increased to $74.6 million compared with $74.2 million in the prior year. Fiscal 2025 revenue growth was primarily attributable to increased coaching and consulting revenue and increased membership subscription revenue, which were partially offset by decreased sales of classroom and training materials, primarily due to a new state-wide initiative and district contracts that included large training materials orders in fiscal 2024. Delivery of training and coaching days remained strong during fiscal 2025 as the Education Division delivered a similar number of training and coaching days when compared with fiscal 2024. Education subscription and subscription services revenues in fiscal 2025 increased 4% compared with the prior year and Education deferred subscription revenue at August 31, 2025, increased 13% over the balance at August 31, 2024.

 Consolidated subscription and subscription services revenues for fiscal 2025 totaled $225.9 million compared with $231.8 million in fiscal 2024. For the fiscal year ended August 31, 2025, subscription revenue invoiced was $151.7 million compared with $156.8 million in the prior year.

 At August 31, 2025, we had $111.7 million of deferred subscription revenue compared with $107.9 million at August 31, 2024. Our deferred subscription revenue at August 31, 2025 and 2024 includes $5.1 million and $6.7 million, respectively, of deferred subscription revenue that was classified as long-term based on expected recognition. Our unbilled deferred revenue at August 31, 2025 was $72.8 million compared with $75.2 million at the end of fiscal 2024. Unbilled deferred revenue represents business that is contracted, but unbilled and therefore excluded from our balance sheet.

 The following table sets forth our consolidated revenue by division and by reportable segment for the fiscal years indicated (in thousands):

 %

 %

 2025

 2024

 2023

 Enterprise Division:

 $

 147,609

 (10)

 $

 163,384

 $

 157,906

 29,344

 (12)

 33,327

 (6)

 35,359

 11,111

 (3)

 11,436

 (3)

 11,819

 188,064

 (10)

 208,147

 205,084

 74,618

 74,210

 70,318

 Corporate and other

 4,385

 (10)

 4,876

 (5)

 5,119

 Consolidated revenue

 $

 (7)

 $

 $

 Gross profit consists of net revenue less the cost of services provided or the cost of goods sold. Our cost of revenue includes the direct costs of delivering content onsite at client locations, including presenter costs; content royalties; materials used in the production of training products and related assessments; amortization of previously capitalized curriculum development costs; and freight. Gross profit may be affected by, among other things, the mix of services sold to clients, prices of materials, travel, labor rates, changes in product discount levels, and freight costs. Our consolidated cost of revenue in fiscal 2025 totaled $63.5 million compared with $66.2 million in fiscal 2024. Consolidated gross profit for the fiscal year ended August 31, 2025 was $203.6 million compared with $221.1 million in the prior year and decreased primarily due to lower revenue as described above. Our gross margin for fiscal 2025 decreased slightly to 76.2% compared with 77.0% in fiscal 2024 primarily due to changes in the mix of services and products sold during the year.

 Our operating expenses in fiscal 2025 totaled $197.9 million, an increase of $9.8 million, compared with $188.0 million in the prior year. The increase was primarily due to a $6.7 million increase in selling, general, and administrative (SG&A) expenses and a $3.7 million increase in restructuring costs. The increase in SG&A expenses was primarily due to a $5.5 million increase in associate expenses primarily related to new personnel, including new sales and sales support personnel hired in connection with the implementation of our new go-to-market strategy in North America; $2.1 million of costs related to the exit from our previous corporate campus, including relocation and litigation expenses; and $1.6 million of increased software subscription costs for new software programs being used in the normal course of business. These increases were partially offset by a $4.3 million decrease in share-based compensation expense resulting from less awards outstanding during the year and the determination that certain performance tranches of long-term incentive awards would not vest. During fiscal 2025, we continued to restructure our sales force in North America and to reduce costs in certain areas of our operations. We incurred $6.7 million of expenses for these restructuring activities in fiscal 2025, which primarily consisted of severance and related costs, compared with $3.0 million in fiscal 2024.

 Our effective income tax rate for fiscal 2025 was approximately 49% compared with an effective income tax rate of approximately 29% in fiscal 2024. Our effective tax rate for fiscal 2025 was higher than the statutory tax rate primarily due to an increase in the valuation allowance against our deferred income tax assets in some foreign jurisdictions and non-deductible executive compensation, which were partially offset by the tax differential on foreign income. Our effective rate in fiscal 2024 was higher than statutory rates primarily due to non-deductible executive compensation and an increase in the valuation allowance against our deferred income tax assets in some foreign jurisdictions, which were partially offset by benefits for share-based compensation deductions in excess of the corresponding book expense and the tax differential on income subject to both U.S. and foreign taxes.

 Net income for the year ended August 31, 2025 was $3.1 million, or $0.24 per diluted share, compared with $23.4 million, or $1.74 per diluted share, in fiscal 2024. Our Adjusted EBITDA in fiscal 2025 was $28.8 million compared with $55.3 million in fiscal 2024, reflecting the above-noted factors. In constant currency, our fiscal 2025 Adjusted EBITDA was $29.0 million. Adjusted EBITDA and constant currency Adjusted EBITDA are non-GAAP financial measures. For additional information regarding our use of non-GAAP financial measures, see the discussion under the heading Non-GAAP Measures above.

 Further details regarding these items can be found in the comparative analysis of fiscal 2025 with fiscal 2024 as discussed within this Management's Discussion and Analysis.

 Our liquidity, financial position, and capital resources remained strong throughout fiscal 2025. At August 31, 2025, we had $31.7 million of cash, with no borrowings on our $62.5 million revolving credit facility, even after spending $26.4 million on purchases of our common stock and $15.8 million on capital assets during fiscal 2025. At August 31, 2024 we had $48.7 million of cash, and no borrowings on our revolving credit facility. For further information regarding our liquidity and cash flows, refer to the Liquidity and Capital Resources discussion found within this Management's Discussion and Analysis.

 For a discussion of the results of operations and changes in financial condition for fiscal 2024 compared with fiscal 2023, refer to Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our fiscal 2024 Form 10-K, which was filed with the SEC on November 12, 2024.

 Results of Operations

 The following table sets forth, for the fiscal years indicated, the percentage of total sales represented by the line items through income before income taxes in our consolidated income statements. This table should be read in conjunction with the accompanying discussion and analysis, the consolidated financial statements, and the related notes to the consolidated financial statements.

 2025

 2024

 2023

 Amounts shown as a percent of total revenue

 100.0

 100.0

 100.0

 23.8

 23.0

 23.9

 76.2

 77.0

 76.1

 Selling, general, and administrative

 68.4

 61.3

 63.4

 2.5

 1.0

 0.2

 Impaired asset

 -

 0.3

 -

 1.5

 1.4

 1.5

 1.6

 1.5

 1.6

 Total operating expenses

 74.0

 65.5

 66.7

 2.2

 11.5

 9.4

 0.3

 0.4

 0.4

 (0.2)

 (0.4)

 (0.6)

 2.3

 11.5

 9.2

 FISCAL 2025 COMPARED WITH FISCAL 2024 RESULTS OF OPERATIONS

 Enterprise Division

 North America Segment
 The North America segment includes our personnel that serve clients in the United States and Canada. The following comparative information is for our North America segment in the periods indicated (in thousands):

 % of

 % of

 2025

 Sales

 2024

 Sales

 $

 147,609

 100.0

 $

 163,384

 100.0

 $

 (15,775)

 25,008

 16.9

 26,964

 16.5

 (1,956)

 122,601

 83.1

 136,420

 83.5

 (13,819)

 SG&A expenses

 95,203

 64.5

 89,779

 54.9

 5,424

 Adjusted EBITDA

 $

 27,398

 18.6

 $

 46,641

 28.5

 $

 (19,243)

 Revenue. In fiscal 2025, our North America segment revenue was $147.6 million compared with $163.4 million in the prior year. North America segment revenues in fiscal 2025 were adversely impacted by the uncertain macroeconomic environment and by canceled or postponed government contracting. During fiscal 2025, North America subscription and subscription service revenues were $131.1 million compared with $138.9 million in fiscal 2024. While we remain optimistic about the future impact of our new North America go-to-market strategy and sales force restructuring, continued economic uncertainty, including threatened or enacted tariffs and continued decreases in governmental spending, including due to the U.S. federal government shutdown, may prevent us from achieving expected sales goals until these conditions stabilize or are resolved. Foreign exchange rates had a $0.2 million adverse impact on North America segment revenues and a $0.1 million adverse impact on operating results during fiscal 2025.

 Gross Profit. Gross profit was impacted by lower revenue as described above. North America gross margin remained strong during fiscal 2025 and was 83.1% of revenue compared with 83.5% in the prior year.

 SG&A Expense. North America SG&A expenses increased primarily due to associate costs resulting from new sales and sales support personnel primarily related to our new go-to-market strategy and the reorganization of our North America sales force in fiscal 2025.

 International Direct Offices

 Our directly owned international offices serve clients in Australia, Austria, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom. The following comparative information is for our International Direct Office segment in the periods indicated (in thousands):

 % of

 % of

 2025

 Sales

 2024

 Sales

 $

 29,344

 100.0

 $

 33,327

 100.0

 $

 (3,983)

 7,738

 26.4

 7,812

 23.4

 (74)

 21,606

 73.6

 25,515

 76.6

 (3,909)

 SG&A expenses

 22,008

 75.0

 22,157

 66.5

 (149)

 Adjusted EBITDA

 $

 (402)

 (1.4)

 $

 3,358

 10.1

 $

 (3,760)

 Revenue. International Direct Office revenues for fiscal 2025 were adversely affected by ongoing economic uncertainty and geopolitical tensions as previously discussed. Revenues decreased in Japan by 23%, in China by 21%, and in the United Kingdom by 15%, and were reflective of the macroeconomic conditions and their impact on existing and potential clients. Decreases in these offices were partially offset by increased revenue recognized through our new France office and a slight increase in Australia. The fluctuation of foreign exchange rates had a $0.4 million favorable impact on our International Direct Office revenue and a $0.1 million favorable impact on operating results in fiscal 2025. We believe the resolution of multiple international trade issues and improving economic conditions will lead to improved sales performance in future periods. However, the successful resolution of these macroeconomic issues is not within our control and may not generate expected revenue growth at our International Direct Offices in future periods.

 Gross Profit. Gross profit in the International Direct Office segment decreased primarily due to reduced revenue as described above. Gross margin for the third quarter of fiscal 2025 was 73.6% of sales compared with 76.6% in the prior year and decreased primarily due to a shift in the mix of services delivered and products sold during fiscal 2025 when compared with fiscal 2024.

 SG&A Expenses. International Direct Office SG&A expenses decreased $0.1 million primarily due to cost reduction initiatives enacted to offset the impact of decreased revenue.

 International Licensees Segment
 In foreign locations where we do not have a directly owned office, our training and consulting services are delivered through independent licensees. The following comparative information is for our international licensee operations in the periods indicated (in thousands):

 % of

 % of

 2025

 Sales

 2024

 Sales

 $

 11,111

 100.0

 $

 11,436

 100.0

 $

 (325)

 1,422

 12.8

 1,350

 11.8

 9,689

 87.2

 10,086

 88.2

 (397)

 SG&A expenses

 4,230

 38.1

 4,352

 38.1

 (122)

 Adjusted EBITDA

 $

 5,459

 49.1

 $

 5,734

 50.1

 $

 (275)

 Revenue. International licensee revenue is primarily comprised of royalties on sales of our content by the licensees. In fiscal 2025, our International Licensees' revenue decreased primarily due to decreases in our share of AAP revenue and a 2% decrease in royalty revenue. Throughout fiscal 2025, our foreign licensees have encountered ongoing macroeconomic uncertainty and geopolitical instability in the regions where they operate, which have adversely impacted their operations. Foreign exchange rates had an immaterial impact on International Licensee revenues and operating results during fiscal 2025.

 Gross Profit. Gross profit decreased primarily due to decreased revenue as previously described. Gross margin remained strong at 87.2% compared with 88.2% in the prior year and declined due to decreased royalty revenue compared with the prior year.

 SG&A Expense. International licensee SG&A expenses decreased by $0.1 million compared with the prior year primarily due to cost cutting efforts implemented during fiscal 2025 in response to decreased revenue.

 Our Education Division is comprised of our domestic and international Education practice operations (focused on sales to educational institutions) and includes our widely acclaimed Leader in Me program. The following comparative information is for our Education Division in the periods indicated (in thousands):

 % of

 % of

 2025

 Sales

 2024

 Sales

 $

 74,618

 100.0

 $

 74,210

 100.0

 $

 26,883

 36.0

 26,681

 36.0

 47,735

 64.0

 47,529

 64.0

 SG&A expenses

 39,551

 53.0

 37,718

 50.8

 1,833

 Adjusted EBITDA

 $

 8,184

 11.0

 $

 9,811

 13.2

 $

 (1,627)

 Revenue. Education Division revenue for fiscal 2025 increased to $74.6 million compared with $74.2 million in fiscal 2024. Fiscal 2025 revenue growth was primarily attributable to increased coaching and consulting revenue and increased membership subscription revenue, which were partially offset by decreased sales of classroom and training materials, primarily due to a new state-wide initiative and district contracts that included large training materials orders in fiscal 2024. These materials orders did not repeat at the same levels in fiscal 2025. Delivery of training and coaching days remained strong during fiscal 2025 as the Education Division delivered a similar number of training and coaching days when compared with fiscal 2024. Education subscription and subscription services revenues in fiscal 2025 increased 4% compared with the prior year and Education deferred subscription revenue at August 31, 2025, increased 13% over the balance at August 31, 2024. Education Division growth during fiscal 2025 was partially offset by changes in foreign exchange rates, which adversely impacted revenue and operating results by $0.4 million. We continue to be pleased with the strength and momentum of our Education Division, which added 624 new The Leader in Me schools in a very challenging funding environment during fiscal 2025. We believe the momentum generated in fiscal 2025 will continue into fiscal 2026, but our expectations may be impacted by a number of factors outside of our control, including available

 funding from governmental agencies in the midst of spending reductions. At August 31, 2025, over 8,000 schools around the world were using The Leader in Me program.

 Gross Profit. Education Division gross profit increased primarily due to increased revenue as previously described. Education segment gross margin remained strong and was 64.0% in each of fiscal 2025 and fiscal 2024.

 SG&A Expenses. Education SG&A expenses increased primarily due to increased associate expenses from new personnel, changes to compensation plans, and increased commissions on higher revenue.

 Other Operating Expense Items

 Depreciation – Depreciation expense increased $0.2 million to $4.1 million compared with $3.9 million in the prior year. The increase was primarily due to new capital assets purchased in fiscal 2025. We currently expect depreciation expense will total approximately $4.5 million in fiscal 2026.

 Amortization – Amortization expense increased to $4.4 million compared with $4.2 million in fiscal 2024. The increase was primarily due to the reacquisition of license rights for our France operations, which occurred in the first quarter of fiscal 2025. We currently expect definite-lived intangible asset amortization expense will total approximately $3 million during fiscal 2026.

 Interest Expense – Our interest expense, which totaled $0.6 million in fiscal 2025, decreased $0.5 million primarily due to reduced term loan debt and a reduced principal balance on our financing obligation (long-term lease on our corporate campus) compared with the prior year.

 Income Taxes

 Our income tax provision fiscal 2025 totaled $3.0 million on pre-tax income of $6.1 million for an effective income tax rate of 49% compared with income tax expense of $9.6 million on pre-tax income of $33.0 million for an effective tax rate of approximately 29% for the fiscal year ended August 31, 2024. Our effective income tax rate for fiscal 2025 was higher than the statutory tax rate primarily due to tax expense of $1.5 million for increases to the valuation allowance against deferred tax assets in some foreign jurisdictions and $0.9 million related to non-deductible executive compensation, which were partially offset by a $0.5 million benefit in tax differential on foreign income. Our effective income tax rate for fiscal 2024 was higher than the statutory tax rate primarily due to tax expense of $3.2 million for non-deductible executive compensation and a $1.2 million increase in the valuation allowance against our deferred income tax assets, which were partially offset by a $2.6 million benefit for share-based compensation deductions in excess of the corresponding book expense and a $0.5 million benefit in tax differential on income subject to both U.S. and foreign taxes.

 On July 4, 2025, the One Big Beautiful Bill Act was enacted, introducing significant amendments to U.S. tax law with varying effective dates. Key provisions relevant to Franklin Covey include the expansion of bonus depreciation, the permanent reinstatement of immediate expensing for research and development costs, and revisions to international tax rules. The legislation did not have a material impact on income tax expense or effective tax rate for fiscal 2025. Franklin Covey will continue to monitor future regulatory guidance and assess any potential impacts in subsequent periods.

 We paid $7.7 million in cash for income taxes during fiscal 2025. We anticipate our total cash paid for income taxes over the coming years to approximate our total income tax provision.

 LIQUIDITY AND CAPITAL RESOURCES

 Introduction

 Our cash at August 31, 2025 totaled $31.7 million, with no borrowings on our $62.5 million revolving credit facility. Of our $31.7 million of cash at August 31, 2025, $12.2 million was held outside the U.S. by our foreign subsidiaries. We routinely repatriate cash from our foreign subsidiaries and consider cash generated from foreign activities a key

 component of our overall liquidity position. Our primary sources of liquidity are cash flows from the sale of services and products in the normal course of business and available proceeds from our credit facility. Our primary uses of liquidity include payments for operating activities, purchases of our common stock, capital expenditures (including curriculum development), working capital expansion, debt payments, and potential business acquisitions.

 The following table summarizes our cash flows from operating, investing, and financing activities for the past three years (in thousands):

 2025

 2024

 2023

 Total cash provided by (used for):

 Operating activities

 $

 28,977

 $

 60,257

 $

 35,738

 Investing activities

 (16,888)

 (11,310)

 (13,550)

 Financing activities

 (28,781)

 (38,655)

 (44,179)

 Effect of exchange rates on cash

 (273)

 (296)

 Increase (decrease) in cash and

 cash equivalents

 $

 (16,965)

 $

 10,433

 $

 (22,287)

 Our Current Credit Agreement

 On March 27, 2023, we entered into a credit agreement with KeyBank National Association (KeyBank) leading a group of financial institutions (collectively, the Lenders), which replaced our previous credit agreement. The 2023 Credit Agreement provides up to $70.0 million in total credit, of which $7.5 million was used to replace the outstanding term loan balance from the previous credit agreement. The remaining $62.5 million is available as a revolving line of credit or for future term loans. We believe the 2023 Credit Agreement provides significant flexibility and financial resources to allow us to grow the business in future periods.

 The 2023 Credit Agreement matures on March 27, 2028, and interest rate for borrowings on the 2023 Credit Agreement is based on the Secured Overnight Financing Rate (SOFR) and is a tiered structure that varies according to the Leverage Ratio as defined 2023 Credit Agreement (refer to Note 5, Secured Credit Agreement to our consolidated financial statements for the interest rate structure).

 As defined in the 2023 Credit Agreement, we are (i) required to maintain a Leverage Ratio of less than 3.00 to 1.00 and a Fixed Charge Coverage Ratio greater than 1.15 to 1.00; and (ii) we are restricted from making certain distributions to stockholders, including repurchases of common stock. However, we are permitted to make distributions, including through purchases of outstanding common stock, provided that we are in compliance with the Leverage Ratio and Fixed Charge Coverage Ratio financial covenants before and after such distribution. At August 31, 2025, we believe that we were in compliance with the terms and covenants contained in the 2023 Credit Agreement.

 At August 31, 2025 our debt structure was relatively simple and consisted of notes payable to the former owners of Strive Talent, Inc., and obligations for leased office and warehousing space. For further information on our notes payable and leasing obligations, refer to the notes to our consolidated financial statements as presented in Item 8 of this Annual Report on Form 10-K.

 The following discussion is a description of the primary factors affecting our cash flows and their effects upon our liquidity and capital resources during the fiscal year ended August 31, 2025.

 Cash Flows from Operating Activities

 Our primary source of cash from operating activities was the sale of services and products to our customers in the normal course of business. Our primary uses of cash for operating activities were payments for SG&A expenses, direct costs necessary to conduct training programs, to fund working capital changes, and to suppliers for materials used in training manuals sold. Our cash provided by operating activities during fiscal 2025 was $29.0 million compared with $60.3 million in fiscal 2024. The decrease in cash flows from operating activities was primarily attributable to lower operating

 income in fiscal 2025 as previously discussed, and changes in working capital, including a $5.9 million decrease in taxes payable as we no longer benefit from the utilization of our net operating loss position compared with the prior year. While we expect our cash flows from operating activities to improve in future periods, certain conditions are beyond our control or influence such as general macroeconomic conditions, general business environment uncertainty, further reductions in government spending, and conditions in international locations which impact our financial results at our international direct offices and international licensees.

 Cash Flows from Investing Activities and Capital Expenditures

 For the fiscal year ended August 31, 2025, our cash used for investing activities totaled $16.9 million. Our primary uses of cash for investing activities consisted of purchases of property and equipment in the normal course of business and additional investments in the development of our content and offerings.

 Cash used for purchases of property and equipment during fiscal 2025 totaled $8.3 million and consisted primarily of computer software and hardware, and leasehold improvements at our new headquarters office, which we moved into during the fourth quarter of fiscal 2025. We expect to continue to use cash to pay for the leasehold improvements and furniture during the first half of fiscal 2026. Including the payments for these leasehold improvements, we currently anticipate that our purchases of property and equipment in fiscal 2026 will total between approximately $5 million and $7 million.

 During fiscal 2025, we spent $7.6 million on the development of our various offerings and related content. During the first half of fiscal 2025, we launched a significantly refurbished The 7 Habits of Highly Effective People offering and expect to release new and refurbished content in fiscal 2026 and in future years. We believe continued investment in our offerings and content is key to future growth and the development of our business. We currently expect that our capital spending for curriculum development will total between approximately $8 million and $10 million in fiscal 2026.

 In the first quarter of fiscal 2025, we reacquired the license rights to sell our content in France for $0.3 million in cash and $0.2 million of forgiven receivables from the former licensee. The operations of the newly opened direct office in France are included in the International Direct Office segment. We look forward to expanding our business and operations in France over the coming years.

 Cash Flows from Financing Activities

 Our net cash used for financing activities during fiscal 2025 totaled $28.8 million. Our primary uses of financing cash were $26.4 million used to purchase shares of our common stock, which consisted of shares purchased on the open market and shares withheld for income taxes on stock-based compensation awards, and $3.9 million used for principal payments on our financing obligation and notes payable. Partially offsetting these uses of cash for financing activities were $1.5 million of proceeds received from ESPP participants to purchase shares of our common stock during the fiscal year.

 On April 18, 2024, our Board of Directors approved a plan to purchase up to $50.0 million of our outstanding common stock. Through May 31, 2025, we purchased $22.1 million of our common stock on this Board authorized plan. On August 11, 2025, the Board of Directors approved a replenishment of the plan to purchase up to $50.0 million of common stock. On August 14, 2025 we initiated a 10b5-1 plan to purchase up to $10.0 million of our common stock through daily transactions. This 10b5-1 plan was completed in the first quarter of fiscal 2026.

 Our uses of financing cash during fiscal 2026 will include purchases of our common stock. However, the timing and amount of common stock purchases is dependent on a number of factors, including available resources, and we are not obligated to make purchases of our common stock during any future period.

 Sources of Cash and Liquidity

 We expect to meet the obligations on our notes payable, pay for projected capital expenditures, and meet other obligations in fiscal 2026 and beyond, from current cash balances, future cash flows from operating activities, and proceeds from our

 available line of credit if necessary. Going forward, we will also continue to incur costs necessary for the day-to-day operation of the business and may use additional credit and other financing alternatives, if necessary, for these expenditures. During fiscal 2023 we entered into a five-year credit agreement which we expect to renew and amend on a regular basis to maintain the long-term borrowing capacity of this credit facility. Additional potential sources of liquidity available to us include factoring receivables, issuance of additional equity, or issuance of debt to public or private sources. If necessary, we will evaluate all of these options and select one or more of them depending on overall capital needs and the associated cost of capital.

 We believe that our existing cash and cash equivalents, cash generated by operating activities, and the availability of external funds as described above, will be sufficient for us to maintain our operations for the next 12 months and into the future. However, our ability to maintain adequate capital for our operations in the future is dependent upon a number of factors, including sales trends, macroeconomic activity and uncertainty, our ability to contain costs, levels of capital expenditures, collection of accounts receivable, and other factors. Some of the factors that influence our operations are not within our control, such as general economic conditions and the introduction of new offerings or technology by our competitors. We will continue to monitor our liquidity position and may pursue additional financing alternatives, as described above, to maintain sufficient resources for future growth and capital requirements. However, there can be no assurance such financing alternatives will be available to us on acceptable terms, or at all.

 Material Cash Requirements

 We do not operate any manufacturing, mining, or other capital-intensive facilities, and we have not structured any special purpose entities, or participated in any commodity trading activities, which would expose us to potential undisclosed liabilities or create adverse consequences to our liquidity. However, we have cash expenditures and are subject to various contractual obligations that are required to run our business. Our material cash requirements include the following:

 Associate and Consultant Compensation – Associate and consultant compensation is our largest expense and most significant recurring use of cash. Our compensation plans for associates and delivery consultants include fixed (salaried) and variable elements as well as the cost of benefits, and may fluctuate with sales, financial results, and hiring/retention activity. During fiscal 2025, we expensed approximately $172 million for associate and delivery consultant cash compensation. Associate compensation expense is included in SG&A expense and consultant compensation is included in our cost of revenue. Our associate costs include variable compensation such as commissions, incentives, and bonuses, and may fluctuate from year-to-year.

 Information Technology – Our business is reliant on computer software and hardware. Our subscription service portals require ongoing development, recurring maintenance, security upgrades, and utilize various software applications. In addition, we utilize various software programs to run our business, including applications for customer resource management, general ledger, cybersecurity, spreadsheets, word processing, e-mail, etc. Including capitalized hardware and software, we spent approximately $16 million for information technology software and hardware during fiscal 2025.

 Content Development – We believe that ongoing investment in our content and offerings is key to our future success. Our innovations group is responsible for the development of new content as well as refreshing and maintaining our existing content. Including capitalized development, we spent approximately $8 million (excluding innovation associate compensation discussed above) for the development and maintenance of our offerings and content in fiscal 2025.

 Income Taxes – We are required to pay income taxes in the various jurisdictions where we operate. During fiscal 2025, we paid $7.7 million in cash for income taxes. We believe our use of cash for income taxes in future periods will more closely resemble our income tax provision and will fluctuate based on profitability as we have previously utilized most of our deferred tax assets.

 Contractual Obligations – In addition to the expenses described above, which we believe are required to successfully run our business, we have other longer-term contractual obligations, which require additional cash payments. We have summarized our significant contractual obligations at August 31, 2025 in the following table (in thousands):

 Description

 2026

 2027

 2028

 2029

 2030

 Thereafter

 Total

 Minimum operating lease

 payments

 $

 $

 1,110

 $

 $

 $

 $

 5,468

 $

 9,993

 Strive contingent

 compensation

 -

 -

 -

 -

 -

 Strive note payable

 -

 -

 -

 -

 -

 Purchase obligations

 4,488

 -

 -

 -

 -

 -

 4,488

 $

 6,782

 $

 1,110

 $

 $

 $

 $

 5,468

 $

 16,086

 CRITICAL ACCOUNTING ESTIMATES

 Our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The significant accounting policies that we used to prepare our consolidated financial statements are outlined primarily in Note 1 and in Note 2 (revenue recognition policies) to the consolidated financial statements, which are presented in Part II, Item 8 of this Annual Report on Form 10-K. Some of those accounting policies require us to make assumptions and use judgments that may affect the amounts reported in our consolidated financial statements. Management regularly evaluates its estimates and assumptions and bases those estimates and assumptions on historical experience, factors that are believed to be reasonable under the circumstances, and requirements under accounting principles generally accepted in the United States of America. Actual results may differ from these estimates under different assumptions or conditions, including changes in economic and political conditions and other circumstances that are not within our control, but which may have an impact on these estimates and our actual financial results.

 The following items require the most significant judgment and often involve complex estimates:

 Revenue Recognition

 We account for revenue in accordance with Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). For the All Access Pass, judgment is required to determine whether the intellectual property and web-based functionality and content are considered distinct and accounted for separately, or not distinct and accounted for together.

 We have determined to account for the AAP as a single performance obligation and recognize the associated transaction price ratably over the term of the underlying contract beginning on the commencement date of each contract, which is the date the Company's platforms and resources are made available to the customer. This determination was reached after considering that our web-based functionality and content, in combination with our intellectual property, each represent inputs that transform into a combined output that represents the intended outcome of the AAP, which is to provide a continuously accessible, customized, and dynamic learning and development solution only accessible through the AAP platform.

 Judgment is required to determine the stand-alone selling price (SSP) for each distinct performance obligation in a revenue contract. Where we have more than one distinct performance obligation, we must allocate the transaction price to each performance obligation based on its relative SSP. The SSP is the price which we would sell a promised product or service separately to a customer. In determining the SSP, we consider the size and volume of transactions, price lists, historical sales, and contract prices. We may modify our pricing from time-to-time in the future, which could result in changes to the SSP.

 Stock-Based Compensation

 Our shareholders have approved a performance-based long-term incentive plan that provides for grants of stock-based performance awards to certain managerial personnel and executive management as directed by the Organization and Compensation Committee of the Board of Directors. Under the terms of some equity awards, the number of common shares that are vested and issued to participants is variable and is based upon the achievement of specified performance objectives during defined service periods. Due to the variable number of common shares that may be issued under some of our equity awards, we reevaluate our performance-award grants on a quarterly basis and adjust the number of shares expected to be awarded based upon actual and estimated financial results of the Company compared with the performance goals set for the award. Adjustments to the number of shares expected to vest, and to the corresponding compensation expense, are made on a cumulative basis at the adjustment date based upon the new estimated probable number of common shares to be awarded.

 The analysis of our performance awards contains uncertainties because we are required to make assumptions and judgments about the timing and/or the eventual number of shares that will vest in each grant. The assumptions and judgments that are essential to the analysis include forecasted sales and operating income levels during the service periods. These forecasted amounts may be difficult to predict over the life of the awards due to changes in our business, such as from the introduction of subscription-based services, or other external factors, such as the recent pandemic, and their impact on our financial results. Events such as these may leave some previously approved performance measures obsolete or unattainable. The evaluation of performance awards and the corresponding use of estimated amounts may produce additional volatility in our consolidated financial statements as we record cumulative adjustments to the estimated service periods and/or number of common shares expected to vest as described above. For example, uncertainties related to macroeconomic factors and prevailing business conditions resulted in a significant reversal of previously recognized performance award stock-based compensation expense in fiscal 2025.

 Accounts Receivable Valuation

 Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Our allowance for credit losses calculation contains uncertainties because the calculation requires us to make assumptions and judgments regarding the collectability of customer accounts, which may be influenced by a number of factors that are not within our control, such as the financial health of each customer. We regularly review the collectability assumptions of our allowance for credit losses calculation and compare them against historical collections. Adjustments to the assumptions may either increase or decrease our total allowance for credit losses and may adversely impact our financial results. For example, a 10% increase to our allowance for credit losses at August 31, 2025 would decrease our reported income from operations by approximately $0.3 million.

 For further information regarding the calculation of our allowance for credit losses, refer to the notes to our financial statements as presented in Item 8 of this Annual Report on Form 10-K.

 Valuation of Indefinite-Lived Intangible Assets and Goodwill

 Intangible assets that are deemed to have an indefinite life and goodwill balances are not amortized, but rather are tested for impairment on an annual basis, or more often if events or circumstances indicate that a potential impairment exists. The Covey trade name intangible asset originated from the merger with the Covey Leadership Center in 1997 and has been deemed to have an indefinite life. This intangible asset is quantitatively tested for impairment using the present value of estimated royalties on trade name related revenues, which consist primarily of training seminars and related products, and international licensee royalties.

 Goodwill is recorded when the purchase price for a business acquisition exceeds the estimated fair value of the net tangible and identified intangible assets acquired. Under current accounting guidance, an annual or interim goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value.

 We tested goodwill for impairment at August 31, 2025 at the reporting unit level using a quantitative approach. Based on the results of this analysis, we determined that it was more likely than not that the fair value of each of our reporting units was more than their carrying values. This determination and the underlying valuation model required judgment to estimate future cash flows and operating results and considered current operating results, expected future operating results, and various other factors such as macroeconomic conditions. Some of these factors are not within our control.

 On an interim basis, we consider whether events or circumstances are present that may lead to the determination that goodwill may be impaired. These circumstances include, but are not limited to, the following:

 significant underperformance relative to historical or projected future operating results;
 significant change in the manner of our use of acquired assets or the strategy for the overall business;
 significant change in prevailing interest rates;
 significant negative industry or economic trends;
 significant change in market capitalization relative to book value; and/or
 significant negative change in market multiples of the comparable company set.

 If, based on events or changing circumstances, we determine it is more likely than not that the fair value of a reporting unit does not exceed its carrying value, then we would be required to test goodwill for impairment.

 Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable, but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates. In addition, we make certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. The timing and frequency of our goodwill impairment tests are based on an ongoing assessment of events and circumstances that would indicate a possible impairment. Based on the results of our goodwill impairment analysis during fiscal 2025, we determined that no impairment existed at August 31, 2025, as we determined that it was more likely than not that each reportable operating segment's estimated fair value exceeded its carrying value.

 Impairment of Long-Lived Assets

 Long-lived tangible assets and finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We use an estimate of undiscounted future net cash flows of the assets over their remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the anticipated future cash flows of the assets, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset's estimated fair value, which may be based upon discounted cash flows over the estimated remaining useful life of the asset. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis, which is then depreciated or amortized over the remaining useful life of the asset. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets.

 Our impairment evaluation calculations contain uncertainties because they require us to make assumptions and apply judgment in order to estimate future cash flows, forecast the useful lives of the assets, and select a discount rate that reflects the risk inherent in future cash flows. Although we have not made any recent material changes to our long-lived assets impairment assessment methodology, if forecasts and assumptions used to support the carrying value of our long-lived tangible and finite-lived intangible assets change in the future, significant impairment charges could result that would adversely affect our results of operations and financial condition.

 Acquisitions and Contingent Consideration Liabilities

 We record acquisitions resulting in the consolidation of an enterprise using the purchase method of accounting. Under this method, the acquiring company records the assets acquired, including intangible assets that can be identified and named, and liabilities assumed based on their estimated fair values at the date of acquisition. The purchase price in excess of the fair value of the assets acquired and liabilities assumed is recorded as goodwill. If the assets acquired, net of liabilities assumed, are greater than the purchase price paid, then a bargain purchase has occurred and the Company will recognize the gain immediately in earnings. Among other sources of relevant information, we use independent appraisals or other valuations to assist in determining the estimated fair values of the assets and liabilities. Various assumptions are used in the determination of these estimated fair values including discount rates, market and volume growth rates, product or service selling prices, cost structures, royalty rates, and other prospective financial information.

 Additionally, we are required to reassess the fair value of contingent consideration liabilities resulting from business acquisitions at each reporting period. Although subsequent changes to the contingent consideration liabilities do not affect the goodwill generated from the acquisition transaction, the valuation of expected contingent consideration often requires us to estimate future sales and/or profitability. These estimates require the use of numerous assumptions, many of which may change frequently and lead to increased or decreased operating income in future periods. We did not have any adjustments to the fair value of a contingent liability from a previous business acquisition in fiscal 2025. Business acquisitions in future periods may increase the volatility and amount of these charges. Changes to the fair value of contingent consideration liabilities are recorded as a component of SG&A expenses.

 Income Taxes

 We regularly evaluate our United States federal and various state and foreign jurisdiction income tax exposures. We account for certain aspects of our income tax provision using the provisions of ASC 740-10-05, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon final settlement. The provisions of ASC 740-10-05 also provide guidance on de-recognition, classification, interest, and penalties on income taxes, accounting for income taxes in interim periods, and require increased disclosure of various income tax items. Taxes and penalties are components of our overall income tax provision.

 We record previously unrecognized tax benefits in the financial statements when it becomes more likely than not (greater than a 50% likelihood) that the tax position will be sustained. To assess the probability of sustaining a tax position, we consider all available evidence. In many instances, sufficient positive evidence may not be available until the expiration of the statute of limitations for audits by taxing jurisdictions, at which time the entire benefit will be recognized as a discrete item in the applicable period.

 Our unrecognized tax benefits result from uncertain tax positions about which we are required to make assumptions and apply judgment to estimate the exposures associated with our various tax filing positions. The calculation of our income tax provision or benefit, as applicable, requires estimates of future taxable income or losses. During the course of the fiscal year, these estimates are compared to actual financial results and adjustments may be made to our tax provision or benefit to reflect these revised estimates. Our effective income tax rate is also affected by changes in tax law and the results of tax audits by various jurisdictions. Although we believe that our judgments and estimates discussed herein are reasonable, actual results could differ, and we could be exposed to losses or gains that could be material.

 We establish valuation allowances for deferred tax assets when we estimate it is more likely than not that the tax assets will not be realized. The determination of whether valuation allowances are needed on our deferred income tax assets contains uncertainties because we must project future income, including the use of tax-planning strategies, by individual tax jurisdictions. Changes in industry and economic conditions and the competitive environment may impact the accuracy of our projections. We regularly assess the likelihood that our deferred tax assets will be realized and determine if

 adjustments to our valuation allowance are necessary. These evaluations may produce additional volatility in our tax provision or benefit, net income or loss, and earnings or loss per share.

 RECENT ACCOUNTING PRONOUNCEMENTS

 Refer to Note 1 to the consolidated financial statements for information on recent accounting pronouncements.

 REGULATORY COMPLIANCE

 We are registered in states in which we do business that have a sales tax and we collect and remit sales or use tax on sales made in these jurisdictions. Compliance with environmental laws and regulations (including new laws and regulations relating to climate change) has not had a material effect on our operations. We believe we are in compliance with applicable governmental regulations in the United States and the countries in which we operate.

 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

 Certain statements made by the Company in this report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934 as amended (the Exchange Act). Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain words such as "believe," "anticipate," "expect," "estimate," "project," or words or phrases of similar meaning. In our reports and filings we may make forward-looking statements regarding, among other things, our expectations about future sales levels and financial results, future training and consulting sales activity, expected benefits from restructuring plans and growth initiatives, anticipated renewals of subscription offerings, the impact of new accounting standards on our financial condition and results of operations, the amount and timing of capital expenditures, anticipated expenses, including SG&A expenses, depreciation, and amortization, future gross margins, the release of new services or products, the adequacy of existing capital resources, our ability to renew or extend our line of credit facility, the amount of cash expected to be paid for income taxes, our ability to maintain adequate capital for our operations for at least the upcoming 12 months, the seasonality of future sales, future compliance with the terms and conditions of our line of credit, the ability to borrow on our line of credit, expected collections of accounts receivable, estimated capital expenditures, and cash flow estimates used to determine the fair value of long-lived assets. These, and other forward-looking statements, are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are disclosed from time to time in reports filed by us with the SEC, including reports on Forms 8-K, 10-Q, and 10-K. Such risks and uncertainties include, but are not limited to, the matters discussed in Item 1A of this Annual Report on Form 10-K for the fiscal year ended August 31, 2025, entitled "Risk Factors." In addition, such risks and uncertainties may include unanticipated developments in any one or more of the following areas: cybersecurity risks; unanticipated costs or capital expenditures; delays or unanticipated outcomes relating to our strategic plans and initiatives; dependence on existing products or services; the rate and consumer acceptance of new product introductions, including the All Access Pass and Impact Platform; competition; the impact of foreign exchange rates; the number and nature of customers and their product orders, including changes in the timing or mix of product or training orders; pricing of our products and services and those of competitors; adverse publicity; and other factors which may negatively affect our business.

 The risks included here are not exhaustive. Other sections of this report may include additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors may emerge and it is not possible for our management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any single factor, or combination of factors, may cause actual results to differ materially from those contained in forward-looking statements. Given these risks and uncertainties, investors should not rely on forward-looking statements as a prediction of actual results.

 The market price of our common stock has been and may remain volatile. Factors such as quarter-to-quarter variations in revenues and earnings or losses and our failure to meet expectations could have a significant impact on the market price of our common stock. In addition, the price of our common stock can change for reasons unrelated to our performance. Due

 to our relatively low market capitalization, the price of our common stock may also be affected by conditions such as a lack of analyst coverage and fewer potential investors.

 Forward-looking statements are based on management's expectations as of the date made, and the Company does not undertake any responsibility to update any of these statements in the future except as required by law. Actual future performance and results will differ and may differ materially from that contained in or suggested by forward-looking statements as a result of the factors set forth in this Management's Discussion and Analysis and elsewhere in our filings with the SEC.

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Market Risk of Financial Instruments

 We are exposed to financial instrument market risk primarily through fluctuations in foreign currency exchange rates and interest rates. To manage risks associated with foreign currency exchange and interest rates, we may make limited use of derivative financial instruments. Derivatives are financial instruments that derive their value from one or more underlying financial instruments. As a matter of policy, our derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. In addition, we do not enter into derivative contracts for trading or speculative purposes, nor are we party to any leveraged derivative instrument. During the fiscal years ended August 31, 2025, 2024, and 2023, we were not party to any foreign exchange contracts, interest rate swap agreements, or similar derivative instruments.

 Foreign Exchange Sensitivity

 Due to the global nature of our operations, we are subject to risks associated with transactions that are denominated in currencies other than the United States dollar, as well as the effects of translating amounts denominated in foreign currencies to United States dollars as a normal part of the reporting process. The objective of our foreign currency risk management activities is to reduce foreign currency risk in the consolidated financial statements. In order to manage foreign currency risks, we may make limited use of foreign currency forward contracts and other foreign currency related derivative instruments.

 Interest Rate Sensitivity

 At August 31, 2025, our long-term obligations primarily consisted of fixed-rate notes payable from the purchase of Strive Talent, Inc., and potential contingent consideration resulting from previous business acquisitions. Since our long-term obligations have a fixed interest rate, our overall interest rate sensitivity is primarily influenced by any amounts borrowed on our 2023 Credit Agreement. The effective interest rate on our line of credit facility is variable and was 6.0% at August 31, 2025. We did not have any borrowings against our 2023 Credit Agreement at August 31, 2025. However, if interest rates increase, and we borrow amounts on our 2023 Credit Agreement, we will incur additional interest expense on these variable-rate loans in future periods.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the shareholders and the Board of Directors of Franklin Covey Co.

 Opinion on Internal Control over Financial Reporting

 We have audited the internal control over financial reporting of Franklin Covey Co. and subsidiaries (the "Company") as of August 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

 We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended August 31, 2025, of the Company and our report dated November 12, 2025, expressed an unqualified opinion on those financial statements.

 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, included 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 the 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, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and 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/ Deloitte & Touche LLP

 Salt Lake City, Utah

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the shareholders and the Board of Directors of Franklin Covey Co.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated balance sheets of Franklin Covey Co. and subsidiaries (the "Company") as of August 31, 2025 and 2024, the related consolidated income statements and statements of comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended August 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of August 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2025, 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 August 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 12, 2025, expressed an unqualified opinion on 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 the 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 audit 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 Matter

 The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Revenue Recognition – Refer to Note 2 to the Financial Statements

 Critical Audit Matter Description

 The Company recognizes revenue upon the transfer of control of promised products and services to customers in an amount equal to the consideration expected to be received in exchange for those products and services. The contracts for the Company's Leader in Me subscription offering often include promises to transfer multiple products or services to a customer which are considered distinct performance obligations and should be accounted for separately. The transaction price is allocated to each performance obligation on a relative standalone selling price (SSP) basis. The SSP is the price which the Company would sell a promised product or service separately to a customer. In determining the SSP, the Company considers the size and volume of transactions, price lists, historical sales, and contract prices.

 Given the increased extent of audit effort in evaluating management's judgments in determining SSP, we identified the determination of SSP for the Leader in Me subscription offering as a critical audit matter.

 How the Critical Audit Matter Was Addressed in the Audit

 Our audit procedures related to the Company's determination of SSP for these performance obligations, included the following, among others:
 We tested the effectiveness of internal controls over the determination of SSP.
 We selected a sample of customer agreements and performed the following:
 oObtained and read customer contracts and invoices for each selection to evaluate if relevant contractual terms have been appropriately considered by management.
 oAssessed the terms in the customer agreement and evaluated the appropriateness of management's application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions.
 oAssessed the reasonableness of management's estimates of SSP for products and services and the allocation of the transaction price to identified performance obligations determined on a relative stand-alone selling basis.
 oTested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements.

 /s/ Deloitte & Touche LLP

 Salt Lake City, Utah

 We have served as the Company's auditor since 2016.

 CONSOLIDATED BALANCE SHEETS

 2025

 2024

 In thousands, except per-share data

 ASSETS

 Current assets:

 Cash and cash equivalents

 $

 31,698

 $

 48,663

 Accounts receivable, less allowance for credit losses of $ 2,929 and $ 3,015

 68,415

 86,002

 Inventories

 5,165

 4,002

 Prepaid expenses

 5,114

 5,111

 Other current assets

 19,085

 16,475

 Total current assets

 129,477

 160,253

 Property and equipment, net

 14,324

 8,736

 Intangible assets, net

 34,551

 37,766

 Goodwill

 31,220

 31,220

 Deferred income tax assets

 Other long-term assets

 33,109

 22,694

 $

 242,912

 $

 261,539

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:

 Current portion of notes payable

 $

 $

 Current portion of financing obligation

 -

 3,112

 Accounts payable

 8,780

 7,862

 Deferred subscription revenue

 106,534

 101,218

 Customer deposits

 16,327

 16,972

 Accrued liabilities

 24,828

 32,454

 Total current liabilities

 157,292

 162,453

 Notes payable, less current portion

 -

 Financing obligation, less current portion

 -

 1,312

 Other liabilities

 14,718

 10,732

 Deferred income tax liabilities

 3,991

 3,132

 Total liabilities

 176,001

 178,404

 Commitments and contingencies (Note 9)

 Shareholders' equity:

 Common stock, $ 0.05 par value; 40,000 shares authorized, 27,056 shares issued

 1,353

 1,353

 Additional paid-in capital

 230,251

 231,813

 Retained earnings

 126,272

 123,204

 Accumulated other comprehensive loss

 ( 1,032)

 ( 768)

 Treasury stock at cost, 14,565 shares and 14,084 shares

 ( 289,933)

 ( 272,467)

 Total shareholders' equity

 66,911

 83,135

 $

 242,912

 $

 261,539

 See accompanying notes to consolidated financial statements.

 CONSOLIDATED INCOME STATEMENTS AND STATEMENTS OF COMPREHENSIVE INCOME

 YEAR ENDED AUGUST 31,

 2025

 2024

 2023

 In thousands, except per-share amounts

 $

 $

 $

 63,498

 66,161

 67,031

 203,569

 221,072

 213,490

 Selling, general, and administrative

 182,684

 175,941

 177,951

 6,723

 3,008

 Impaired asset

 -

 -

 4,066

 3,905

 4,271

 4,392

 4,248

 4,342

 5,704

 33,042

 26,361

 1,123

 1,091

 ( 565)

 ( 1,119)

 ( 1,583)

 6,067

 33,046

 25,869

 Income tax provision

 ( 2,999)

 ( 9,644)

 ( 8,088)

 $

 3,068

 $

 $

 Net income per share:

 Basic

 $

 0.24

 $

 1.78

 $

 1.30

 Diluted

 0.24

 1.74

 1.24

 Weighted average number of common shares:

 Basic

 12,927

 13,171

 13,640

 Diluted

 13,053

 13,472

 14,299

 COMPREHENSIVE INCOME:

 $

 3,068

 $

 $

 Foreign currency translation adjustments, net of income

 tax provision of $( 21), $( 11), and $( 80)

 ( 264)

 ( 445)

 Comprehensive income

 $

 2,804

 $

 23,621

 $

 17,336

 See accompanying notes to consolidated financial statements.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 YEAR ENDED AUGUST 31,

 2025

 2024

 2023

 In thousands

 CASH FLOWS FROM OPERATING ACTIVITIES

 $

 3,068

 $

 $

 Adjustments to reconcile net income to net cash provided

 by operating activities:

 Depreciation and amortization

 8,458

 8,153

 8,613

 Amortization of capitalized curriculum development costs

 4,440

 3,172

 3,084

 Deferred income taxes

 1,468

 1,885

 4,748

 Stock-based compensation expense

 5,805

 10,142

 12,520

 Impaired asset

 -

 -

 Change in the fair value of contingent consideration liabilities

 -

 -

 Amortization of right-of-use operating lease assets

 Changes in assets and liabilities:

 Decrease (increase) in accounts receivable, net

 17,464

 ( 3,759)

 ( 9,452)

 Decrease (increase) in inventories

 ( 1,161)

 ( 692)

 Increase in prepaid expenses and other assets

 ( 1,447)

 ( 1,414)

 ( 88)

 Increase (decrease) in accounts payable and accrued liabilities

 ( 5,770)

 ( 9,541)

 Increase in deferred revenue and customer deposits

 3,151

 13,458

 8,806

 Increase (decrease) in income taxes payable/receivable

 ( 5,942)

 3,453

 ( 195)

 Decrease in other liabilities

 ( 1,167)

 ( 554)

 ( 687)

 Net cash provided by operating activities

 28,977

 60,257

 35,738

 CASH FLOWS FROM INVESTING ACTIVITIES

 Purchases of property and equipment

 ( 8,253)

 ( 3,694)

 ( 4,515)

 Capitalized curriculum development costs

 ( 7,561)

 ( 6,866)

 ( 9,035)

 Acquisition of license/content rights

 ( 1,074)

 ( 750)

 -

 Net cash used for investing activities

 ( 16,888)

 ( 11,310)

 ( 13,550)

 CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from term notes payable financing

 -

 -

 7,500

 Principal payments on notes payable

 ( 835)

 ( 5,835)

 ( 13,335)

 Principal payments on financing obligation

 ( 3,112)

 ( 3,538)

 ( 3,199)

 Purchases of common stock for treasury

 ( 26,374)

 ( 30,749)

 ( 35,555)

 Payment of contingent consideration liabilities

 -

 -

 ( 736)

 Cash paid for new secured credit agreement

 -

 -

 ( 393)

 Proceeds from sales of common stock held in treasury

 1,540

 1,467

 1,539

 Net cash used for financing activities

 ( 28,781)

 ( 38,655)

 ( 44,179)

 Effect of foreign currency exchange rates on cash and cash equivalents

 ( 273)

 ( 296)

 Net increase (decrease) in cash and cash equivalents

 ( 16,965)

 10,433

 ( 22,287)

 Cash and cash equivalents at beginning of the year

 48,663

 38,230

 60,517

 Cash and cash equivalents at end of the year

 $

 31,698

 $

 48,663

 $

 38,230

 Supplemental disclosure of cash flow information:

 Cash paid for income taxes

 $

 7,693

 $

 4,205

 $

 3,308

 Cash paid for interest

 1,107

 1,501

 Non-cash investing and financing activities:

 Acquisition of property and equipment and capitalized

 curriculum financed by accounts payable and accrued liabilities

 $

 3,255

 $

 1,036

 $

 Consideration for reacquired license rights from liabilities of seller

 -

 -

 Acquisition of content rights financed by accounts payable and other liabilities

 -

 See accompanying notes to consolidated financial statements.

 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

 Accumulated

 Other

 Common

 Common

 Additional

 Retained

 Comprehensive

 Treasury

 Treasury

 Stock Shares

 Stock Amount

 Paid-In Capital

 Earnings

 Loss

 Stock Shares

 Stock Amount

 In thousands

 Balance at August 31, 2022

 27,056

 $

 1,353

 $

 220,246

 $

 82,021

 $

 ( 542)

 ( 13,203)

 $

 ( 220,264)

 Issuance of common stock from

 treasury

 ( 127)

 1,666

 Purchase of treasury shares

 ( 885)

 ( 35,555)

 Unvested share award

 ( 266)

 12,520

 Cumulative translation

 adjustments

 ( 445)

 Balance at August 31, 2023

 27,056

 1,353

 232,373

 99,802

 ( 987)

 ( 13,974)

 ( 253,887)

 Issuance of common stock from

 treasury

 ( 10,266)

 11,733

 Purchase of treasury shares

 ( 776)

 ( 30,749)

 Unvested share award

 ( 436)

 10,142

 Cumulative translation

 adjustments

 Balance at August 31, 2024

 27,056

 1,353

 231,813

 123,204

 ( 768)

 ( 14,084)

 ( 272,467)

 Issuance of common stock from

 treasury

 ( 6,831)

 8,372

 Purchase of treasury shares

 ( 939)

 ( 26,374)

 Unvested share award

 ( 536)

 5,805

 Cumulative translation

 adjustments

 ( 264)

 3,068

 Balance at August 31, 2025

 27,056

 $

 1,353

 $

 230,251

 $

 126,272

 $

 ( 1,032)

 ( 14,565)

 $

 ( 289,933)

 See accompanying notes to consolidated financial statements.

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Franklin Covey Co. (hereafter referred to as we, us, our, or the Company) is a global company specializing in organizational performance improvement. We help individuals and organizations achieve results that require a change in human behavior and our mission is to "enable greatness in people and organizations everywhere." We have some of the best-known offerings in the training industry, including a suite of individual-effectiveness and leadership-development training and products based on the best-selling books, The 7 Habits of Highly Effective People, The Speed of Trust, The Leader In Me, The Four Disciplines of Execution, and Multipliers, and proprietary content in the areas of Leadership, Execution, Productivity, Sales Performance, and Educational improvement. Our offerings are described in further detail at www.franklincovey.com and elsewhere in this report. Through our organizational research and curriculum development efforts, we seek to consistently create, develop, and introduce new services and products that help individuals and organizations achieve their own great purposes.

 Fiscal Year

 Our fiscal year ends on August 31 of each year and our fiscal quarters end on the last day of November, February, and May. Unless otherwise noted, references to fiscal years apply to the 12 months ended August 31 of the specified year.

 Basis of Presentation

 The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, which consist of Franklin Development Corp., and our offices that serve clients in Japan, China, the United Kingdom, Ireland, Australia, New Zealand, Germany, France, Switzerland, and Austria. Intercompany balances and transactions are eliminated in consolidation.

 Use of Estimates

 The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, shareholders' equity, revenues, and expenses. Actual results could differ from those estimates.

 Cash and Cash Equivalents

 Our cash is deposited with financial institutions located throughout the United States of America and at banks in foreign countries where we operate subsidiary offices, and at times these deposits may exceed insured limits. We consider all highly liquid debt instruments with an original maturity date of three months or less to be cash equivalents. Of our $ 31.7 million of cash at August 31, 2025, $ 12.2 million was held outside the U.S. by our foreign subsidiaries. We routinely repatriate cash from our foreign subsidiaries and consider cash generated from foreign activities a key component of our overall liquidity position.

 Inventories

 Inventories are stated at the lower of cost or net realizable value, cost being determined using the first-in, first-out method. Cash flows from the sale of inventory are included in cash flows provided by operating activities in our consolidated statements of cash flows. At each of August 31, 2025 and 2024, our inventories were comprised primarily of training materials, books, training-related accessories, and consisted of finished goods.

 Provision is made to reduce excess and obsolete inventories to their estimated net realizable value. In assessing the valuation of our inventories, we make judgments regarding future demand requirements and compare these estimates with current and committed inventory levels. Inventory requirements may change based on projected customer demand, training curriculum life-cycle changes, and other factors that could affect the valuation of our inventories.

 Other Current Assets

 Significant components of our other current assets were as follows (in thousands):

 2025

 2024

 Deferred commissions

 $

 15,335

 $

 14,784

 Other current assets

 3,750

 1,691

 $

 19,085

 $

 16,475

 We defer commission expense on subscription-based sales and recognize the commission expense with the recognition of the corresponding revenue.

 Property and Equipment

 Property and equipment are recorded at cost. Depreciation expense, which includes depreciation on our previous corporate headquarters location that was accounted for as a financing obligation (Note 7), is calculated using the straight-line method over the lesser of the expected useful life of the asset or the contracted lease period. We generally use the following depreciable lives for our major classifications of property and equipment:

 Description

 Useful Lives

 Buildings

 20 years

 Machinery and equipment

 5 – 7 years

 Computer hardware and software

 3 – 5 years

 Furniture, fixtures, and leasehold improvements

 5 – 7 years

 At the end of the master lease on our previous headquarters corporate campus, we relocated our corporate headquarters and wrote off the property and equipment associated with the previous headquarters location. Our property and equipment were comprised of the following (in thousands):

 2025

 2024

 Land and improvements

 $

 -

 $

 1,312

 Buildings

 -

 28,240

 Machinery and equipment

 -

 Computer hardware and software

 36,544

 29,263

 Furniture, fixtures, and leasehold

 improvements

 3,959

 9,362

 40,503

 68,578

 Less accumulated depreciation

 ( 26,179)

 ( 59,842)

 $

 14,324

 $

 8,736

 We expense costs for repairs and maintenance as incurred. Gains and losses resulting from the sale of property and equipment are recorded in income from operations. Depreciation of capitalized subscription portal costs is included in depreciation expense in the accompanying consolidated income statements and statements of comprehensive income.

 Impairment of Long-Lived Assets

 Long-lived tangible assets and finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We use an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the anticipated future cash flows of the assets, we

 recognize an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires us to use estimates of future cash flows. If forecasts and assumptions used to support the realizability of our long-lived tangible and finite-lived intangible assets change in the future, significant impairment charges could result that would adversely affect our results of operations and financial condition.

 In a prior period, we initiated the development of a student leadership assessment. However, due to societal changes in perception regarding the collection of student information and potential legal challenges, during fiscal 2024 we determined that it was in the best interest of the Company to suspend further development of the student leadership assessment and impair the associated asset. Approximately $ 0.6 million of the capitalized costs were for software and were previously included in property and equipment, and $ 0.3 million was included in capitalized development, which is included in our other long-term assets. The student leadership assessment was being developed for use in our Education Division.

 Indefinite-Lived Intangible Assets and Goodwill Impairment Testing

 Intangible assets that are deemed to have an indefinite life and acquired goodwill are not amortized, but rather are tested for impairment on an annual basis or more often if events or circumstances indicate that a potential impairment exists. The Covey trade name intangible asset has been deemed to have an indefinite life. This intangible asset is tested for impairment using qualitative factors or the present value of estimated royalties on trade name related revenues, which consist primarily of training seminars and work sessions, international licensee sales, and related products. Based on the fiscal 2025 evaluation of the Covey trade name, we believe the fair value of the Covey trade name substantially exceeds its carrying value. No impairment charges were recorded against the Covey trade name during the periods presented in this report.

 Goodwill is recorded when the purchase price for a business acquisition exceeds the estimated fair value of the net tangible and identified intangible assets acquired. We test goodwill for impairment each year on August 31 or upon the occurrence of events or changes in circumstances which indicate that goodwill may be impaired. Goodwill is assigned to our reporting units, which are our operating segments, where discrete financial information is available that is regularly reviewed by management to evaluate segment performance.

 During the annual impairment testing process, we have the option to first perform a qualitative assessment (commonly referred to as Step Zero) over relative events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value or to perform a quantitative assessment where we estimate the fair value of each reporting unit using both an income and market approach. At August 31, 2025, we completed a quantitative assessment of our goodwill and concluded there were no impairments. Refer to Note 4, Intangible Assets and Goodwill for further information on our goodwill, including the allocation of our goodwill to our reportable segments.

 When we perform a quantitative analysis to assess the recoverability of our goodwill, we determine the estimated fair value of each reporting unit and compare it to the carrying value of the reporting unit, including goodwill. If the fair value is less than the carrying value of the net assets and related goodwill, an impairment charge is recognized for the difference. The estimated fair value of each reporting unit is calculated using a combination of the income approach (discounted cash flows) and the market approach (using market multiples derived from a set of companies with comparable market characteristics). The value estimated using a discounted cash flow model is weighted against the estimated value derived from the guideline company market approach method. The market approach method estimates the price reasonably expected to be realized from the sale of the reporting unit based on comparable companies. In developing the discounted cash flow analysis, our assumptions about future revenues and expenses, capital expenditures, and changes in working capital are based on our internal plan and assume a terminal growth rate thereafter. The discounted cash flow analysis is derived from valuation techniques in which one or more significant inputs are not observable and constitute Level 3 fair value measures.

 The determination of the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable, but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

 Capitalized Curriculum Development Costs

 During the normal course of business, we develop training courses and related materials that we sell to our clients. Capitalized curriculum development costs include certain expenditures to develop course materials such as video segments, course manuals, and other related materials. Our capitalized curriculum development spending in fiscal 2025, which totaled $ 7.6 million, was primarily to create new and refreshed offerings and content for the AAP and new offerings for our Education practice. Curriculum costs are capitalized when there is a major revision to an existing course that requires a significant re-write of the course materials, or a significant investment in new curriculum. Costs incurred to maintain existing offerings are expensed when incurred. In addition, development costs incurred in the research and development of new offerings and software products to be sold, leased, or otherwise marketed are expensed as incurred until economic and technological feasibility have been established.

 Capitalized development costs are amortized over three -to- five year useful lives, which are based on numerous factors, including expected cycles of major changes to the content. Capitalized curriculum development costs are reported as a component of other long-term assets in our consolidated balance sheets and totaled $ 18.0 million and $ 15.3 million at August 31, 2025 and 2024. Amortization of capitalized curriculum development costs is reported as a component of cost of revenue in the accompanying consolidated income statements and statements of comprehensive income.

 Accrued Liabilities

 Significant components of our accrued liabilities were as follows (in thousands):

 2025

 2024

 Accrued compensation

 $

 14,384

 $

 18,463

 Other accrued liabilities

 10,444

 13,991

 $

 24,828

 $

 32,454

 Contingent Consideration Payments from Business Acquisitions

 Business acquisitions may include contingent consideration payments based on various future financial measures related to the acquired entity. Contingent consideration is required to be recognized at fair value as of the acquisition date. We estimate the fair value of these liabilities based on financial projections of the acquired company and estimated probabilities of achievement. Based on updated estimates and projections, the contingent consideration liabilities are adjusted at each reporting date to their estimated fair value. Changes in fair value subsequent to the acquisition date are reported in selling, general, and administrative expense in our consolidated income statements and statements of comprehensive income and may have a material impact on our operating results. Variations in the fair value of contingent consideration liabilities may result from changes in discount periods or rates, changes in the timing and amount of earnings estimates, and changes in probability assumptions with respect to the likelihood of achieving various payment criteria.

 Foreign Currency Translation and Transactions

 The functional currencies of our foreign operations are the reported local currencies. Translation adjustments result from translating our foreign subsidiaries' financial statements into United States dollars. The balance sheet accounts of our foreign subsidiaries are translated into United States dollars using the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated using average exchange rates for each month during the fiscal year. The resulting translation differences are recorded as a component of accumulated other comprehensive loss in shareholders' equity. We

 recognized net foreign currency transaction gains of $ 0.1 million in fiscal 2025, and net foreign currency transaction losses of $ 0.1 million in each of fiscal 2024 and fiscal 2023. Foreign exchange transaction gains and losses and are included as a component of selling, general, and administrative expenses in our consolidated income statements and statements of comprehensive income.

 Revenue Recognition

 We account for revenue in accordance with Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). For further information on our revenue, refer to Note 2, Revenue.

 Revenue is recognized as the net amount to be received after deducting estimated amounts for discounts and product returns.

 Shipping and Handling Fees and Costs

 All shipping and handling fees billed to customers are recorded as a component of revenue. All costs incurred related to the shipping and handling of products are recorded in cost of revenue.

 Advertising Costs

 Costs for advertising are expensed as incurred. Advertising costs included in selling, general, and administrative expenses totaled $ 5.5 million, $ 5.2 million, and $ 4.5 million for the fiscal years ended August 31, 2025, 2024, and 2023, respectively.

 Stock-Based Compensation

 We record the compensation expense for all stock-based payments, including grants of stock awards and the compensatory elements of our employee stock purchase plan, in our consolidated income statements and statements of comprehensive income based upon their fair values over the requisite service period. For more information on our stock-based compensation plans, refer to Note 12.

 Income Taxes

 Our income tax provision has been determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred income taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The income tax provision represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred income taxes result from differences between the financial and tax bases of our assets and liabilities and are adjusted for tax rates and tax laws when changes are enacted. A valuation allowance is provided against deferred income tax assets when it is more likely than not that all or some portion of the deferred income tax assets will not be realized. Interest and penalties related to uncertain tax positions are recognized as components of income tax benefit or expense in our consolidated income statements and statements of comprehensive income.

 We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate settlement.

 We provide for income taxes, net of applicable foreign tax credits, on temporary differences in our investment in foreign subsidiaries, which consist primarily of unrepatriated earnings.

 Comprehensive Income

 Comprehensive income includes changes to equity accounts that were not the result of transactions with shareholders. Comprehensive income is comprised of net income and other comprehensive income and loss items. Our other comprehensive income and losses generally consist of changes in the cumulative foreign currency translation adjustment, net of tax.

 Accounting Pronouncement Issued and Adopted

 In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU is intended to improve the reportable segment disclosure primarily by requiring entities to provide more disaggregated expense information about their reportable segments. The new guidance also improves interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. We adopted this ASU for fiscal 2025 and the related disclosures are included in Note 17, Segment Information. The amendments were effective for the Company's annual periods beginning September 1, 2024, and interim periods beginning September 1, 2025 and have been applied retrospectively to all prior periods presented in the financial statements.

 Accounting Pronouncements Issued Not Yet Adopted

 On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 provides guidance to enhance transparency about income tax information through improvements to income tax disclosures primarily related to the effective income tax rate reconciliation and income taxes paid. This new guidance also includes certain other amendments to improve the effectiveness of income tax disclosures. We are currently assessing the anticipated impact of this standard on our consolidated financial statements. The amendments are effective for our annual periods beginning September 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on our disclosures.

 In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires a public entity to disclose certain operating expenses disaggregated into categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization on an annual and interim basis. The guidance in ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The provisions within the update may be applied retrospectively for all periods presented in the financial statements. While we are still evaluating the specific impacts and adoption method, we anticipate this guidance will have a significant impact on our consolidated financial statement disclosures.

 On September 18, 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. This ASU makes targeted improvements to the accounting for software costs. ASU 2025-06 also supersedes the guidance for website development costs along with the recognition requirements for development costs specific to websites. This guidance is effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the ASU to determine its impact on our financial statements.

 2. REVENUE

 We earn revenue from contracts with customers primarily through the delivery of our All Access Pass (AAP) and the Leader in Me membership subscription offerings, through the delivery of training days and training course materials (whether digitally or in person), and through the licensing of rights to sell our content into geographic locations where the

 Company does not maintain a direct office. We also earn revenues from leasing arrangements that are not accounted for under Topic 606. Returns and refunds are generally immaterial, and we do not have any significant warranty obligations.

 We recognize revenue upon the transfer of control of promised products and services to customers in an amount equal to the consideration we expect to receive in exchange for those products or services. Although rare, if the consideration promised in a contract includes variable amounts, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained. We include the variable consideration in the transaction price only to the extent that it is probable a significant reversal of the amount of cumulative revenue recognized will not occur.

 The Company determines the amount of revenue to be recognized through application of the following steps:

 Identification of the contract with a customer
 Identification of the performance obligations in the contract
 Determination of the transaction price
 Allocation of the transaction price to the performance obligations in the contract
 Recognition of revenue when the Company satisfies the performance obligations

 Taxes assessed by a government authority that are collected from a customer are excluded from revenue.

 Subscription Revenues

 Subscription revenues primarily relate to the Company's AAP and the Leader in Me membership offerings. We have determined that it is most appropriate to account for the AAP as a single performance obligation and recognize the associated transaction price ratably over the term of the underlying contract beginning on the commencement date of each contract, which is the date the Company's platforms and resources are made available to the customer. This determination was reached after considering that our web-based functionality and content, in combination with our intellectual property, each represent inputs that transform into a combined output that represents the intended outcome of the AAP, which is to provide a continuously accessible, customized, and dynamic learning and development solution only accessible through the AAP platform.

 We typically invoice our customers annually upon execution of the contract or subsequent renewals. Amounts that have been invoiced are recorded in accounts receivable and in deferred subscription revenue until the transfer of control has occurred and the amount is recognized in revenue.

 Our Leader in Me membership offering is bifurcated into a portal membership obligation and a coaching delivery obligation. We have determined that it is appropriate to recognize revenue related to the portal membership over the term of the underlying contract and to recognize revenue from coaching as those services are performed. The combined contract amount is recorded in deferred subscription revenue until the performance obligations are satisfied. Any additional coaching or training days which are contracted independent of a Leader in Me membership are recorded as revenue in accordance with our general policy for services and products as described below.

 Services and Products

 We deliver Company-led training days from our offerings, such as The 7 Habits of Highly Effective People, at a customer's location or live-online based upon a daily consultant rate and a set price for training materials. These revenues are recognized as the training days occur and the services are performed. Customers also have the option to purchase training materials and present our offerings through internal facilitators and not through the use of a Franklin Covey consultant. Revenue is recognized from these product sales when the materials are shipped. Shipping revenues associated with product sales are recorded in revenue with the corresponding shipping cost being recorded as a component of cost of revenue.

 Royalties

 Our international strategy includes the use of licensees in countries where we do not have a wholly-owned direct office. Licensee companies are unrelated entities that have been granted a license to translate our content and offerings, adapt the content to the local culture, and sell our content in a specific country or region. We recognize revenue on the upfront fees from the sale of a territory to a licensee over the term of the initial contract. Licensees are then required to pay us royalties based upon a percentage of their sales to clients. We recognize royalty income each reporting period based upon sales information reported to us from the licensees. Refer to the disaggregated revenue information presented in Note 17, Segment Information, for our royalty revenues in the fiscal years presented in this report.

 Contracts with Multiple Performance Obligations

 We periodically enter into contracts that include multiple performance obligations. A performance obligation is a promise in a contract to transfer products or services that are distinct, or that are distinct within the context of the contract. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied. Determining whether products and services meet the distinct criteria that should be accounted for separately or combined as one unit of accounting requires significant judgment.

 When determining whether goods and services meet the distinct criteria, we consider various factors for each agreement including the availability of the services and the nature of the offerings and services. We allocate the transaction price to each performance obligation on a relative standalone selling price (SSP) basis. Judgment is required to determine the SSP for each distinct performance obligation. The SSP is the price which the Company would sell a promised product or service separately to a customer. In determining the SSP, we consider the size and volume of transactions, price lists, historical sales, and contract prices. We may modify our pricing from time-to-time in the future, which could result in changes to the SSP.

 Contract Balances

 As described above, our subscription revenue is recognized ratably over the term of the underlying contract beginning on the commencement date of each agreement. The timing of when these contracts are invoiced, cash is collected, and revenue is recognized impacts our accounts receivable and deferred subscription revenue accounts. We generally bill our clients in advance for subscription offerings or within the month that the training and products are delivered. As such, consideration due to the Company for work performed is included in accounts receivable and we do not have a significant amount of contract assets. Our receivables are generally collected within 30 to 150 days but typically no longer than 12 months. Deferred subscription revenue primarily consists of billings or payments received in advance of revenue being recognized from our subscription offerings. Furthermore, our clients, to expend funds in a particular budget cycle, may prepay for services or products which are recorded as customer deposits until the amount is applied to a subscription contract. Our deferred subscription revenue totaled $ 111.7 million at August 31, 2025 and $ 107.9 million at August 31, 2024, of which $ 5.1 million and $ 6.7 million were classified as components of other long-term liabilities at August 31, 2025 and August 31, 2024, respectively. We recognized $ 147.9 million of previously deferred subscription revenue during each of the fiscal years ended August 31, 2025 and 2024.

 Remaining Performance Obligations

 When possible, we enter into multi-year non-cancellable contracts which are invoiced either upon execution of the contract or at the beginning of each annual contract period. Our remaining performance obligation represents contracted revenue that has not yet been recognized, including unearned subscription revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price is influenced by factors such as seasonality, the average length of the contract term, and the ability of the Company to continue to enter multi-year non-cancellable contracts. At August 31, 2025 we had $ 184.4 million of remaining performance obligations, including $ 111.7 million of deferred revenue related to our subscription offerings. The remaining performance obligation does not include customer deposits as those amounts are generally refundable at the client's request prior to the satisfaction of the obligation.

 Costs Capitalized to Obtain Contracts

 We capitalize the incremental costs of obtaining non-cancellable subscription revenue, primarily from the All Access Pass and the Leader in Me membership offerings. These incremental costs consist of sales commissions paid to our sales force and include the associated payroll taxes and fringe benefits. As the same commission rates are paid annually when the customer renews their contract, the capitalized commission costs are generally amortized ratably on an annual basis consistent with the recognition of the corresponding subscription revenue. At August 31, 2025, we have $ 17.6 million of capitalized direct commissions, of which $ 15.3 million is included in other current assets and $ 2.3 million is in other long-term assets based on the expected recognition of the commission expense. During the fiscal year ended August 31, 2025, we capitalized $ 23.9 million of commission costs to obtain revenue contracts and amortized $ 22.7 million of deferred commissions to selling, general, and administrative expense. At August 31, 2024, we had $ 16.4 million of capitalized direct commissions, of which $ 14.8 million was included in other current assets and $ 1.6 million was in other long-term assets.

 Refer to Note 17, Segment Information, to these consolidated financial statements for our disaggregated revenue information.

 3. ACCOUNTS RECEIVABLE

 Our trade accounts receivable are recorded at cost less an allowance for estimated credit losses, which is the net amount we expect to collect.

 We make ongoing estimates relating to the collectability of our accounts receivable and maintain an allowance for credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate the allowance based upon consideration of numerous factors, including historical bad debts, the age of customer receivable balances, industry trends, macroeconomic factors in the markets which we operate, and judgments about the creditworthiness of our customers based on ongoing credit evaluations. The allowance is adjusted as necessary to reflect differences in current conditions as well as changes in forecasted macroeconomic conditions. Receivables that do not share the same risk characteristics as other trade receivables are evaluated on an individual basis, including those associated with customers that have a higher probability of default. We do not have a significant amount of notes or other receivables.

 The following schedule provides a reconciliation of the activity in our allowance for estimated credit losses during the periods indicated (in thousands):

 2025

 2024

 2023

 Beginning balance

 $

 3,015

 $

 3,790

 $

 4,492

 Charged to costs and expenses

 2,042

 ( 64)

 ( 66)

 Deductions

 ( 2,128)

 ( 711)

 ( 636)

 Ending balance

 $

 2,929

 $

 3,015

 $

 3,790

 The deductions on the foregoing table represent the write-off of amounts deemed uncollectible during the fiscal year presented. Our write-offs increased in fiscal 2025 due to activity in Japan and the United Kingdom which reflected business environment uncertainties and difficulties in these countries. During each of fiscal 2024 and 2023, we received payment from customers whose accounts we had previously reserved against because of potential pandemic-related uncertainties. Accordingly, we reversed a portion of the allowance during each of these fiscal years to reflect the payments. At August 31, 2024, we had no remaining reserve for pandemic-related credit losses. Recoveries of amounts previously written off were insignificant for the periods presented. No customer accounted for more than 10% of our sales or accounts receivable in any year presented.

 4. INTANGIBLE ASSETS AND GOODWILL

 Intangible Assets

 Our intangible assets were comprised of the following (in thousands):

 Gross Carrying

 Accumulated

 Net Carrying

 AUGUST 31, 2025

 Amount

 Amount

 Finite-lived intangible assets:

 Acquired content

 $

 49,812

 $

 ( 47,089)

 $

 2,723

 License rights

 34,428

 ( 28,631)

 5,797

 Customer lists

 15,982

 ( 15,736)

 Acquired technology

 7,282

 ( 4,641)

 2,641

 Trade names

 1,883

 ( 1,764)

 Non-compete agreements and other

 ( 905)

 110,317

 ( 98,766)

 11,551

 Indefinite-lived intangible asset:

 Covey trade name

 23,000

 -

 23,000

 $

 133,317

 $

 ( 98,766)

 $

 34,551

 AUGUST 31, 2024

 Finite-lived intangible assets:

 Acquired content

 $

 49,806

 $

 ( 45,501)

 $

 4,305

 License rights

 33,258

 ( 26,889)

 6,369

 Customer lists

 15,982

 ( 15,589)

 Acquired technology

 7,282

 ( 3,920)

 3,362

 Trade names

 1,883

 ( 1,586)

 Non-compete agreements and other

 ( 890)

 109,141

 ( 94,375)

 14,766

 Indefinite-lived intangible asset:

 Covey trade name

 23,000

 -

 23,000

 $

 132,141

 $

 ( 94,375)

 $

 37,766

 During fiscal 2024, we purchased the content rights for The Teacher Believed in Me (TBIM) for $ 1.5 million in cash. We believe the content in TBIM is compelling and fits well within our Leader in Me offering. While the author retains the copyright to TBIM, the agreement grants us broad rights for the development and use of TBIM content. The content license does not have an expiration date and the purchase price is payable in two installments of $ 0.8 million. We are amortizing the content license over a 10 -year useful life, which is similar to other licenses, and the final payment was made in January 2025.

 Our intangible assets are amortized over the estimated useful life of the asset. The range of remaining estimated useful lives and weighted-average amortization period over which we are amortizing the major categories of finite-lived intangible assets at August 31, 2025 were as follows:

 Category of Intangible Asset

 Range of Remaining Estimated Useful Lives

 Weighted Average
 Amortization Period

 Acquired content

 1 to 7 years

 30 years

 License rights

 2 to 8 years

 30 years

 Customer lists

 2 years

 12 years

 Acquired technology

 4 years

 7 years

 Trade names

 1 years

 5 years

 Non-compete agreements and other

 2 to 4 years

 3 years

 Our aggregate amortization expense from finite-lived intangible assets totaled $ 4.4 million, $ 4.2 million, and $ 4.3 million for the fiscal years ended August 31, 2025, 2024, and 2023. Amortization expense from our intangible assets over the next five years is expected to be as follows (in thousands):

 YEAR ENDING

 2026

 $

 2,665

 2027

 2,440

 2028

 2,168

 2029

 1,702

 2030

 Goodwill

 We performed our annual testing of goodwill in accordance with the accounting policies described in Note 1, Nature of Operations and Summary of Significant Accounting Policies. We completed a quantitative assessment of our goodwill as of August 31, 2025 and concluded there were no impairments. We do no t have any accumulated impairment charges against the carrying value of our goodwill. In connection with the new reporting structure as described in Note 17, Segment Information, we performed a quantitative analysis of the fair value of each segment and allocated goodwill from the historical Direct Office segment to the newly created North America and International Direct Office segments based on their relative fair values. At August 31, 2025 and 2024, goodwill was allocated to our segments as shown below (in thousands):

 2024

 Allocation

 2025

 $

 22,962

 $

 ( 3,837)

 $

 19,125

 -

 3,837

 3,837

 5,928

 -

 5,928

 Education practice

 2,330

 -

 2,330

 $

 31,220

 $

 -

 $

 31,220

 5. SECURED CREDIT AGREEMENT

 On March 27, 2023, we entered into a credit agreement (the 2023 Credit Agreement) with KeyBank National Association (KeyBank) leading a group of financial institutions (collectively, the Lenders). KeyBank acts as the sole administrative and collateral agent under the 2023 Credit Agreement. The 2023 Credit Agreement provides up to $ 70.0 million in total credit, of which $ 7.5 million was used to replace a previously outstanding term loan, which was fully repaid in June 2024. The remaining $ 62.5 million is available as a revolving line of credit or for future term loans.

 The 2023 Credit Agreement matures on March 27, 2028, and interest on term loan borrowings under the 2023 Credit Agreement was due and payable on the principal payment dates. Interest on all other borrowings is due the last day of each month. The interest rate for all borrowings on the 2023 Credit Agreement is based on the Secured Overnight Financing Rate (SOFR) and is a tiered structure that varies according to the Leverage Ratio calculated at the end of each fiscal quarter. At August 31, 2025 and 2024, we did no t have any outstanding term loan or line of credit debt, and the interest rate on the 2023 Credit Agreement was 6.0 % at August 31, 2025 and 6.9 % at August 31, 2024. We are also charged an unused credit commitment fee of 0.2 % per annum, which is paid quarterly.

 The Leverage Ratio as defined by the 2023 Credit Agreement is funded debt to adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) and determines the applicable interest rate as shown below:

 Leverage Ratio

 Interest Rate

 Less than 1.00

 SOFR plus 1.50 %

 Between 1.00 and 2.00

 SOFR plus 1.75 %

 Between 2.01 and 2.50

 SOFR plus 2.25 %

 Greater than 2.51

 SOFR plus 2.75 %

 The 2023 Credit Agreement also contains representations, warranties, and certain covenants. When any amounts are outstanding under the 2023 Credit Agreement, we are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, investments, forming or acquiring subsidiaries, and business combinations or acquisitions, among other customary covenants, subject to certain exceptions. As defined in the 2023 Credit Agreement, we are (i) required to maintain a Leverage Ratio of less than 3.00 to 1.00 and a Fixed Charge Coverage Ratio greater than 1.15 to 1.00; and (ii) we are restricted from making certain distributions to stockholders, including repurchases of common stock. However, we are permitted to make distributions, including through purchases of outstanding common stock, provided that we are in compliance with the Leverage Ratio and Fixed Charge Coverage Ratio financial covenants before and after such distribution. In the event of noncompliance with these financial covenants and other defined events of default, the Lenders are entitled to certain remedies, including acceleration of the repayment of amounts outstanding under the 2023 Credit Agreement. At August 31, 2025, we believe that we were in compliance with the covenants and conditions of the 2023 Credit Agreement.

 The 2023 Credit Agreement is secured by substantially all of our assets and certain of our subsidiaries, and provides for standard events of default, such as for non-payment and failure to perform or observe covenants, and contains standard indemnifications benefitting the Lenders. In connection with the 2023 Credit Agreement, the Company and certain of its subsidiaries, as applicable, also entered into a Security Agreement, Intellectual Property Security Agreement, and Guaranty of Payment.

 6. NOTES PAYABLE

 At August 31, 2025 and 2024, our notes payable consisted of an obligation to the former owners of Strive Talent, Inc., which was acquired in fiscal 2021. The note payable to the former owners of Strive is recorded at net present value and accrues interest at 3.6 % until the obligation is paid in full. The final $ 0.8 million payment on the Strive note payable is due in April 2026. The previously outstanding term loan payable to the bank under the 2023 Credit Agreement was repaid in full, as scheduled, in June 2024.

 7. FINANCING OBLIGATION

 We previously sold our corporate headquarters campus located in Salt Lake City, Utah, and entered into a 20 -year master lease agreement with the purchaser, an unrelated private investment group. The 20 -year master lease agreement expired in June 2025, and we elected to not renew the contract. Although the corporate headquarters facility was sold and we had no legal ownership of the property, the applicable accounting guidance prohibited us from recording the transaction as a sale since we subleased a significant portion of the property that was sold. We accounted for the corporate campus lease as a financing obligation on our consolidated balance sheet through its maturity in June 2025.

 At August 31, 2025, we were involved in litigation against the former landlord as described in Note 9, Commitments and Contingencies.

 The financing obligation on our corporate campus was comprised of the following (in thousands):

 2025

 2024

 Financing obligation payable in

 monthly installments of $ 341 at

 August 31, 2024, including

 principal and interest, with 2 %

 annual increases (imputed

 interest at 7.7 %), through

 June 2025

 $

 -

 $

 4,424

 Less current portion

 -

 ( 3,112)

 Total financing obligation,

 less current portion

 $

 -

 $

 1,312

 The $ 1.3 million difference between the carrying value of the financing obligation and the present value of the future minimum financing obligation payments represented the carrying value of the land sold in the financing transaction, which is not depreciated. At the conclusion of the master lease agreement, the remaining financing obligation and carrying value of the land were offset and eliminated from our consolidated financial statements.

 8. LEASES

 Lessee Obligations

 In the normal course of business, we lease office space, primarily for our corporate administration and international sales administration offices, in commercial office complexes that are conducive to these functions. During fiscal 2025, we entered into a new lease agreement for leased headquarters space following the termination of our previous campus lease, which was accounted for as a financing obligation (Note 7). We also rent warehousing and distribution facilities that are designed to provide secure storage and efficient distribution of our training products, books, and accessories, and certain office equipment. These leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we do not have significant amounts of variable lease payments.

 Some of our operating leases contain renewal options that may be exercised at our discretion after the completion of the base rental term. At August 31, 2025, we had operating leases with remaining terms ranging from less than one year to approximately 11 years. The amounts of assets and liabilities (in thousands) and other information related to our operating leases follows:

 2025

 2024

 Assets:

 Operating lease right of use assets

 Other long-term assets

 $

 6,933

 $

 1,140

 Liabilities:

 Current:

 Operating lease liabilities

 Accrued liabilities

 $

 $

 Long-Term:

 Operating lease liabilities

 Other long-term liabilities

 6,339

 $

 6,996

 $

 1,140

 Weighted Average Remaining Lease Term:

 Operating leases (years)

 9.9

 2.4

 Weighted Average Discount Rate:

 Operating leases

 6.9

 %

 6.7

 %

 We obtained $ 6.3 million, $ 1.1 million, and $ 0.6 million of right-of-use operating lease assets in exchange for operating lease liabilities during the fiscal years ended August 31, 2025, 2024, and 2023. During fiscal 2025, we paid $ 0.5 million of cash for amounts included in lease liabilities as reported in cash flows from operating activities. Amounts paid for lease liabilities in prior years were immaterial.

 Future minimum lease payments under our operating leases at August 31, 2025, are as follows (in thousands):

 YEAR ENDING

 2026

 $

 2027

 1,110

 2028

 2029

 2030

 Thereafter

 5,468

 Total operating lease payments

 9,993

 Less imputed interest

 ( 2,997)

 Present value of operating lease liabilities

 $

 6,996

 We recognize lease expense on a straight-line basis over the life of the lease agreement. Total lease expense, which consisted entirely of fixed payments, totaled $ 1.3 million, $ 1.1 million, and $ 1.2 million for the fiscal years ended August 31, 2025, 2024, and 2023.

 Lessor Accounting

 During the lease on our previous headquarters campus which expired in June 2025, we subleased the majority of the campus space to multiple tenants. These sublease agreements were accounted for as operating leases and we recognized sublease income on a straight-line basis over the life of the agreement. Sublease revenue totaled $ 1.5 million, $ 1.9 million, and $ 2.4 million during the fiscal years ended August 31, 2025, 2024, and 2023. We do not expect to recognize sublease revenues in the foreseeable future.

 9. COMMITMENTS AND CONTINGENCIES

 Warehouse Outsourcing Contract

 We have a warehousing services agreement with an independent warehouse and distribution company to provide product kitting, warehousing, and order fulfillment services at a facility in Des Moines, Iowa. Under the terms of this contract, we pay a fixed charge of approximately $ 106,000 per year for account management services and variable charges for other warehousing services based on specified activities, including shipping charges. The current warehousing contract expired on October 31, 2025. We are in the process of renewing the warehousing contract.

 During the fiscal years ended August 31, 2025, 2024, and 2023, we expensed $ 2.0 million, $ 2.2 million, and $ 2.7 million for services provided under the terms of our warehouse and distribution outsourcing contract. The total amount expensed each year includes freight charges, which are billed to us based upon activity. Freight charges included in the warehouse and distribution outsourcing costs totaled $ 1.4 million, $ 1.5 million, and $ 1.9 million during the fiscal years ended August 31, 2025, 2024, and 2023, respectively. Because of the variable component of the agreement, our payments for warehouse and distribution services may fluctuate in the future due to changes in revenue and levels of specified activities.

 Purchase Commitments

 During the normal course of business, we issue purchase orders to various vendors for products and services. At August 31, 2025, we had open purchase commitments totaling $ 4.5 million for products and services to be delivered primarily in fiscal 2026.

 Self-Insurance Liabilities

 We self-insure for certain associate medical benefits. The recorded liabilities for self-insured risks are calculated using actuarial methods and are not discounted. These liabilities include amounts for actual claims and claims incurred but not

 reported. Actual experience, including claim frequency and severity as well as health care inflation, could result in actual liabilities being more or less than amounts currently recorded. We have accrued $ 1.1 million and $ 1.0 million for associate medical claims at August 31, 2025 and 2024, respectively, which are included as components of accrued liabilities on our consolidated balance sheets. We maintain stop-loss coverage for our self-insurance plan which is capped at $ 0.2 million per individual.

 Letter of Credit

 At August 31, 2025 and 2024, we had a standby letter of credit for $ 10,000. No thing was drawn on this letter of credit at either August 31, 2025 or August 31, 2024.

 Legal Matters and Loss Contingencies

 Franklin Saltlake LLC, the landlord (the Landlord) for leased premises which housed the Company's corporate offices previously located at 2200 West Parkway Blvd, Salt Lake City, Utah, filed suit on December 20, 2024, in Third District Court, Salt Lake County, Utah, alleging that we have breached the lease by failing to make certain repairs and replacements to equipment on the premises. The Landlord originally sought approximately $ 2.3 million in damages and a right to enter the premises to make the alleged repairs. The Landlord filed an amended complaint on February 11, 2025, and the Company filed a motion to dismiss on February 25, 2025, which was subsequently denied by the court. In April 2025, the Landlord increased its damage claim to $ 3.8 million. The Company vacated the premises on June 30, 2025; however, the Landlord contends that the Company is in holdover. The Landlord filed a supplemental complaint on September 18, 2025, alleging approximately $ 5 million in damages as well as claims for declaratory relief. The Company denies all material allegations; contends that the premises and associated equipment remain in sound operating condition and use, that no such repairs are warranted or needed, and that the Landlord's demands are contrary to the language of the Lease and reasonable commercial practice. The Company answered the most recent complaint and filed a counterclaim on October 2, 2025, asserting claims for breach of the covenant of good faith and fair dealing and declaratory relief. The case is currently in discovery. While we intend to vigorously defend, given the early stages of litigation, any outcome remains uncertain.

 10. SHAREHOLDERS' EQUITY

 Preferred Stock

 We have 14.0 million shares of preferred stock authorized for issuance. At August 31, 2025 and 2024, no shares of preferred stock were issued or outstanding.

 Purchases of Treasury Stock

 On April 18, 2024, our Board of Directors approved a plan to purchase up to $ 50.0 million of our outstanding common stock. Through May 31, 2025, we purchased $ 22.1 million of our common stock on this Board authorized plan. On August 11, 2025, the Board of Directors approved a replenishment of the plan to purchase up to $ 50.0 million of common stock. On August 14, 2025 we initiated a 10b5-1 plan to purchase $ 10.0 million of our common stock on daily basis, which we expect to be completed in the first quarter of fiscal 2026. We purchased 167,753 shares for $ 3.3 million in August 2025 under the terms of the replenished purchase plan.

 Purchases of common stock for treasury as presented in our consolidated statements of cash flows include both shares purchased on the open market and shares withheld for statutory taxes on our stock-based compensation awards (Note 12) and include the applicable 1 % excise tax. Shares withheld for income taxes are valued at the market price on the date the stock-based plan shares were distributed to participants. The composition of shares purchased by us were as follows for the periods presented (cost in thousands):

 Fiscal 2025

 Fiscal 2024

 Fiscal 2023

 Cost

 Cost

 Cost

 Open market purchases

 791,152

 $

 20,377

 524,548

 $

 20,416

 867,873

 $

 34,720

 Shares withheld on awards

 147,624

 5,997

 251,686

 10,333

 17,639

 938,776

 $

 26,374

 776,234

 $

 30,749

 885,512

 $

 35,555

 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

 Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into the following three levels based on reliability:

 Level 1 valuations are based on quoted prices in active markets for identical instruments that we can access at the measurement date.

 Level 2 valuations are based on inputs other than quoted prices included in Level 1 that are observable for the instrument, either directly or indirectly, for substantially the full term of the asset or liability including the following:

 a.quoted prices for similar, but not identical, instruments in active markets;
 b.quoted prices for identical or similar instruments in markets that are not active;
 c.inputs other than quoted prices that are observable for the instrument; or
 d.inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.

 The book values of our financial instruments at August 31, 2025 and 2024 approximated their fair values. The assessment of the fair values of our financial instruments is based on a variety of factors and assumptions. Accordingly, the fair values may not represent the actual values of the financial instruments that could have been realized at August 31, 2025 or 2024, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement. The following methods and assumptions were used to determine the fair values of our financial instruments, none of which were held for trading or speculative purposes.

 Cash, Cash Equivalents, and Accounts Receivable – The carrying amounts of cash, cash equivalents, and accounts receivable approximate their fair values due to the liquidity and short-term maturity of these instruments.

 Other Assets – Our other assets, including notes receivable, were recorded at the net realizable value of estimated future cash flows from these instruments.

 Debt Obligations – At August 31, 2025, our debt consisted primarily of a note payable to the former owners of Strive. Our revolving line of credit is a negotiated component of our 2023 Credit Agreement (Note 5). Since the interest rate for any obligation on our 2023 Credit Agreement is variable, the applicable interest rates and other conditions related to the revolving line of credit are reflective of current market conditions, and the carrying value of term loan and revolving line of credit (when applicable) obligations therefore approximate their fair value.

 Contingent Consideration Liabilities from Business Acquisitions

 The acquisition price of Jhana Education (Jhana), which was completed in fiscal 2017, included potential contingent consideration of up to $ 7.2 million through a specified measurement period, which lasted through July 2026. However, the contingent consideration metrics were met prior to the end of the measurement period, and we made the final contingent payments in fiscal 2023, which totaled $ 0.7 million. We measured the fair value of this contingent consideration liability at each reporting date based on a Monte Carlo simulation model. The fair value of the Jhana contingent consideration was a Level 3 measurement because we estimated consolidated Company and AAP sales over the measurement period. Changes to the fair value of the contingent consideration liabilities were recorded in selling, general, and administrative expenses in the accompanying consolidated income statements and statements of comprehensive income in the period of adjustment.

 12. STOCK-BASED COMPENSATION PLANS

 Overview

 We utilize various stock-based compensation plans as integral components of our overall compensation and associate retention strategy. Our shareholders have approved various stock incentive plans that permit us to grant performance awards, unvested stock awards, stock options, fully vested stock awards, and sell shares through the employee stock purchase plan (ESPP). The Organization and Compensation Committee of the Board of Directors (the Compensation Committee) has responsibility for the approval and oversight of our stock-based compensation plans.

 On January 14, 2022, our shareholders approved the Franklin Covey Co. 2022 Omnibus Incentive Plan (the 2022 Plan), which authorized 1,000,000 shares of common stock for issuance as stock-based payments. On January 24, 2025, our shareholders approved Amendment No. 1 to the 2022 Plan, which authorized an additional 575,000 shares for issuance under the terms of the 2022 Plan. A detailed description of the 2022 Plan is set forth in our Definitive Proxy Statement filed with the SEC on December 15, 2021. At August 31, 2025, the 2022 Plan had approximately 629,000 shares available for future grants.

 Our ESPP is administered under the terms of the Franklin Covey Co. 2017 Employee Stock Purchase Plan, which was approved by our shareholders at the annual meeting of shareholders held on January 26, 2018. For additional information regarding the Franklin Covey Co. 2017 Employee Stock Purchase Plan, please refer to our definitive Proxy Statement as filed with the SEC on December 22, 2017. At August 31, 2025, we had approximately 630,000 shares available for purchase by plan participants under the terms of the current shareholder approved ESPP.

 The total compensation expense of our various stock-based compensation plans was as follows (in thousands):

 2025

 2024

 2023

 Performance awards

 $

 3,879

 $

 8,275

 $

 10,767

 Strive acquisition compensation

 Unvested stock awards

 Compensation cost of the ESPP

 Fully vested stock awards

 $

 5,805

 $

 10,142

 $

 12,520

 No stock-based compensation was capitalized during the fiscal years presented in this report. We recognize forfeitures of stock-based compensation instruments as they occur. During fiscal 2025, we issued 455,020 shares of our common stock from shares held in treasury for various stock-based compensation arrangements, including our ESPP. Our stock-based compensation plans allow shares to be withheld from the award to pay the participants' statutory income tax liabilities. During fiscal 2025, we withheld 147,624 shares of our common stock, with a fair value of $ 6.0 million, for statutory income taxes on stock-based compensation awards.

 The following is a description of our stock-based compensation plans.

 Performance Awards

 The Compensation Committee has awarded various performance-based stock compensation awards to our associates as long-term incentive awards. Some awards are based on the achievement of future goals and some awards are based upon the achievement of previously defined metrics, such as the achievement of specified levels of sales or days delivered. Compensation expense is recognized as we determine it is probable that the shares will vest and adjustments to compensation expense to reflect the number of shares expected to be awarded are made on a cumulative basis at the date of the adjustment. We reevaluate the likelihood and/or the number of shares expected to vest under performance awards at each reporting date. If all of our long-term performance awards outstanding at August 31, 2025 were to vest at the maximum number of shares that may be earned by participants, we have $ 11.1 million of unrecognized compensation expense related to our performance awards, which would be recognized over a weighted average period of 1.3 years.

 Due to the impact of macroeconomic uncertainties and business conditions on our financial results in fiscal 2025 and projected financial results in the near term, we determined that the performance conditions for the fiscal 2025 long-term incentive plan (LTIP) and fiscal 2024 LTIP awards would not be met, and no awards would vest to participants. Accordingly, we reversed $ 1.9 million of previously recognized stock-based compensation expense in the fourth quarter of fiscal 2025.

 LTIP Awards – The Compensation Committee has awarded annual performance-based stock compensation awards to members of our senior management as long-term incentive awards. Our fiscal 2025 LTIP award has three tranches, which consist of 1) shares that vest over three years of service with one-third vesting in October of 2025, 2026, and 2027 (step vest); 2) cumulative net revenue for fiscal 2025 through fiscal 2027; and 3) cumulative Adjusted EBITDA for fiscal 2025 through fiscal 2027. Prior to fiscal 2025, all LTIP awards have two tranches, which consist of: 1) shares that vest after three years of service (cliff vest); and 2) shares that vest based on the highest amount of rolling four quarter qualified Adjusted EBITDA earned in a three-year measurement period. The number of shares that vest to participants based on the passage of time do not fluctuate on the achievement of financial metrics. The number of shares that vest to participants based on financial metrics is variable and for the fiscal 2025 LTIP may be 50 % of the award (minimum) or up to 100 % of the award (target and maximum). For the fiscal 2024 LTIP and fiscal 2023 LTIP, the number of shares may range from 50 % of the award (minimum), 100 % of the award (target), or up to 200 % (maximum) of the participant's award depending on the financial measures achieved. The following information is for our LTIP awards outstanding that included fiscal 2025 in the measurement period, which have been adjusted for forfeitures.

 Time-

 End of

 Award

 Grant

 Vested

 Revenue Shares

 Adjusted EBITDA Shares

 Service

 Name

 Date

 Minimum

 Maximum

 Minimum

 Maximum

 Period

 2025 LTIP

 July 11, 2025

 34,481

 34,662

 69,325

 14,863

 29,727

 August 31, 2027

 Qualified Adjusted EBITDA Shares

 Minimum

 Target

 Maximum

 2024 LTIP

 October 6, 2023

 24,677

 37,008

 74,016

 148,032

 -

 August 31, 2026

 2023 LTIP

 October 14, 2022

 25,767

 38,646

 77,275

 154,550

 -

 August 31, 2025

 We achieved approximately 95 % of the payout parameter for the fiscal 2023 LTIP award and distributed those shares to participants during the first quarter of fiscal 2026.

 Long-Term Incentive and Retention Equity Awards - On October 14, 2022, the Compensation Committee approved a new long-term incentive award for client partners, managing client partners, managing directors, and certain other associates that management believes are critical to our long-term success. For sales-related personnel, their award amounts are based upon meeting minimum sales levels and determining the value of the award based on their total sales performance for the fiscal year. For the other associates, their award amount was approved by the Compensation Committee. One-third of these award shares vest each year over a three-year service period and the number of shares earned does not fluctuate based on future financial metrics. During fiscal 2025, we granted 88,399 shares under the terms

 of this award to eligible associates. In fiscal 2024 we granted 48,740 shares to associates and granted 40,009 shares in fiscal 2023. These awards are expected to be granted annually by the Compensation Committee to retain these key associates.

 Strive Acquisition Compensation

 We structured two parts of the consideration for the fiscal 2021 acquisition of Strive Talent, Inc. (Strive) as potentially payable in shares of our common stock. Each of the following amounts may be payable in shares of our common stock or cash at our sole discretion:

 Contingent Consideration – A maximum of $ 4.2 million may be earned by the former principal owner of Strive over a five-year period ending in May 2026. The total value of this consideration is contingent upon sales and growth of the All Access Pass subscription and subscription services revenues during the five-year measurement period. We measure the contingent consideration each quarter and divide the total by the average of the closing share price of our common stock on the NYSE over the last 15 trading days of the quarter. Shares are required to be distributed within 45 days following the end of each quarter. Through August 31, 2025, we have recognized $ 2.8 million of stock-based compensation expense for the Strive contingent consideration payments.

 Bonus Payments – Approximately $ 1.0 million was payable 18 months following the Closing Date to stockholders and option holders of Strive who were still employed by the Company as of the 18 -month date, subject to certain exceptions. We expensed these awards evenly over the 18 -month service period and distributed the shares of stock to recipients in October 2022.

 We have reserved 200,000 shares of our common stock from our 2019 Omnibus Plan for payment of this consideration related to the acquisition of Strive.

 Unvested Stock Awards

 The annual Board of Director unvested stock award, which is administered under the terms of the Franklin Covey Co. Omnibus Incentive Plans, is designed to provide our non-employee directors, who are not eligible to participate in our ESPP, an opportunity to obtain an interest in the Company through the acquisition of our common stock as part of their compensation. For fiscal 2025, each eligible director received a whole-share grant equal to $ 120,000 with a one-year vesting period. The Board of Director unvested awards are generally granted in January (following the Annual Shareholders' Meeting) of each year, and shares granted under the terms of this annual award may not be voted or participate in any common stock dividends until they are vested.

 We issued 27,336 shares, 23,136 shares, and 15,882 shares of our common stock to eligible members of the Board of Directors during fiscal 2025, fiscal 2024, and fiscal 2023 as unvested stock awards. The fair value of shares awarded to the directors was $ 1.0 million in each of fiscal 2025 and 2024, and $ 0.7 million in fiscal 2023, as calculated on the grant date of the awards. The corresponding compensation cost of each award is recognized over the service period of the award, which is one year. The cost of the common stock issued from treasury for these awards was $ 0.5 million in fiscal 2025, $ 0.4 million in fiscal 2024, and $ 0.3 million in fiscal 2023. The following information applies to our unvested stock awards for the fiscal year ended August 31, 2025:

 Weighted-

 Average Grant-

 Date Fair

 Number of

 Value Per

 Share

 Unvested stock awards at

 August 31, 2024

 23,136

 $

 41.50

 Granted

 27,336

 35.12

 Forfeited

 -

 -

 Vested

 ( 23,136)

 41.50

 Unvested stock awards at

 August 31, 2025

 27,336

 $

 35.12

 At August 31, 2025, there was $ 0.3 million of unrecognized compensation cost left on our unvested stock awards, which is expected to be recognized over the remaining service period of approximately four months. The total recognized income tax benefit from unvested stock awards was $ 0.2 million for each of the fiscal years ended August 31, 2025, 2024, and 2023. The intrinsic value of our unvested stock awards at August 31, 2025 was $ 0.5 million.

 Employee Stock Purchase Plan

 We have an employee stock purchase plan that offers qualified employees the opportunity to purchase shares of our common stock at a price equal to 85 % of the average fair market value of our common stock on the last trading day of each quarter. ESPP participants purchased a total of 58,719 shares, 44,040 shares, and 40,141 shares of our common stock during the fiscal years ended August 31, 2025, 2024, and 2023, which had a corresponding cost basis of $ 1.2 million in fiscal 2025, $ 0.8 million in fiscal 2024, and $ 0.7 million in fiscal 2023. We received cash proceeds for these shares from ESPP participants totaling $ 1.5 million in each of fiscal 2025, 2024, and 2023.

 Fully Vested Stock Awards

 We have a stock-based incentive program that is designed to reward client partners and training consultants for exceptional long-term performance. The program grants shares of our common stock to client partners who have achieved certain cumulative sales goals and to training consultants who have delivered a specified number of training days during their career. Three individuals qualified for these awards in fiscal 2025, five qualified in fiscal 2024, and three qualified for these awards in fiscal 2023.

 13. EMPLOYEE BENEFIT PLANS

 We have defined contribution profit sharing plans for our employees that qualify under Section 401(k) of the Internal Revenue Code. These plans provide retirement benefits for employees meeting minimum age and service requirements. Qualified participants may contribute up to 75 % of their gross wages, subject to certain limitations. These plans also provide for matching contributions to the participants that are paid by the Company. The matching contributions, which were expensed as incurred, totaled $ 3.3 million, $ 2.9 million, and $ 3.0 million during the fiscal years ended August 31, 2025, 2024, and 2023, respectively. We do not sponsor or participate in any defined-benefit pension plans.

 14. RESTRUCTURING

 Fiscal 2025 Restructuring Activity

 Our fiscal 2025 restructuring costs were for the continued implementation of our new North America go-to-market strategy, alignment of personnel and refinements to the new model, and to reduce operating expenses in certain areas of our operations. In fiscal 2024, we began restructuring our North America sales force to a more focused structure that is designed to drive additional sales growth in the future. In the first quarter of fiscal 2025, we expanded this restructuring effort to certain areas of our International Direct Office segment. For the fiscal year ended August 31, 2025, the cost of

 these restructuring activities totaled $ 6.7 million and consisted of two restructuring events, one in each of the first and third quarters. The restructuring costs were primarily for severance and related personnel expenses.

 During the third quarter of fiscal 2025, we expensed $ 4.7 million for severance to approximately 45 associates who were impacted by changes to our new go-to-market strategy and cost reduction initiatives. Approximately $ 3.8 million of the restructuring was attributable to the North America segment, $ 0.2 million for the International Direct Office segment, $ 0.1 million for the International Licensees segment, and $ 0.6 million for the Education Division. The majority of these severance benefits were paid in the fourth quarter of fiscal 2025 and we expect to pay the remaining benefits during the first two quarters of fiscal 2026. We had $ 1.9 million included in accrued liabilities on our condensed consolidated balance sheet at August 31, 2025, for the third quarter restructuring event.

 In the first quarter of fiscal 2025, we expensed $ 2.0 million for severance to approximately 35 associates who were impacted by sales force restructuring activities. Approximately $ 1.6 million of this restructuring expense was attributable to the North America segment and $ 0.4 million was attributable to the International Direct Office segment. These severance benefits were paid during the second quarter of fiscal 2025 and there were no remaining accrued restructuring liabilities from this restructuring event on our consolidated balance sheet at August 31, 2025.

 Fiscal 2024 Restructuring Activity

 During fiscal 2024, we restructured certain areas of our operations to sharpen the focus of our efforts and resources on plans and initiatives to drive additional growth in the future. As a result of this restructuring plan, we reduced our workforce by more than 50 associates and incurred severance and legal expenses totaling $ 3.0 million. Approximately $ 2.5 million of the restructuring expense was attributable to the Direct Office segment, $ 0.4 million was attributable to the Education segment, and $ 0.1 million was attributable to corporate functions. The remaining restructuring liability at August 31, 2024 totaled $ 0.4 million and was included in accrued liabilities in our consolidated balance sheet. These accrued restructuring costs were paid in fiscal 2025.

 15. INCOME TAXES

 Our provision for income taxes consisted of the following (in thousands):

 2025

 2024

 2023

 Current:

 Federal

 $

 $

 ( 4,040)

 $

 -

 State

 ( 466)

 ( 1,675)

 ( 791)

 Foreign

 ( 1,852)

 ( 2,174)

 ( 2,389)

 ( 1,942)

 ( 7,889)

 ( 3,180)

 Deferred:

 Federal

 ( 1,303)

 2,309

 1,545

 State

 Foreign

 ( 395)

 Operating loss carryforward

 ( 3,245)

 ( 7,201)

 Valuation allowance

 ( 1,469)

 ( 1,154)

 Foreign tax credit carryforward

 reduction

 -

 -

 ( 65)

 ( 1,057)

 ( 1,755)

 ( 4,908)

 $

 ( 2,999)

 $

 ( 9,644)

 $

 ( 8,088)

 The allocation of our total income tax provision is as follows (in thousands):

 2025

 2024

 2023

 $

 ( 2,999)

 $

 ( 9,644)

 $

 ( 8,088)

 Other comprehensive income

 ( 21)

 ( 11)

 ( 80)

 $

 ( 3,020)

 $

 ( 9,655)

 $

 ( 8,168)

 Income before income taxes was generated as follows (in thousands):

 2025

 2024

 2023

 United States

 $

 8,698

 $

 32,456

 $

 23,574

 Foreign

 ( 2,631)

 2,295

 $

 6,067

 $

 33,046

 $

 25,869

 The differences between income taxes at the statutory federal income tax rate and the consolidated income tax rate reported in our consolidated income statements and statements of comprehensive income were as follows:

 2025

 2024

 2023

 Federal statutory income tax rate

 ( 21.0)

 %

 ( 21.0)

 %

 ( 21.0)

 %

 State income taxes, net of federal effect

 ( 9.8)

 ( 4.0)

 ( 4.7)

 Valuation allowance

 ( 24.2)

 ( 3.5)

 1.4

 Foreign tax credit carryforward

 reduction

 -

 -

 ( 0.3)

 Foreign rate differential

 8.8

 1.6

 ( 1.6)

 Uncertain tax positions

 3.6

 ( 0.3)

 ( 0.9)

 Non-deductible executive compensation

 ( 14.0)

 ( 9.7)

 ( 3.6)

 Non-deductible meals and entertainment

 ( 5.3)

 ( 0.8)

 ( 0.7)

 Other stock-based compensation

 3.6

 7.7

 ( 0.4)

 Return to provision adjustments

 8.7

 0.8

 0.6

 Other

 0.2

 -

 ( 0.1)

 ( 49.4)

 %

 ( 29.2)

 %

 ( 31.3)

 %

 Our effective income tax expense rate for fiscal 2025 of 49.4 % was higher than the statutory tax rate primarily due to tax expense of $ 1.5 million for increases to the valuation allowance against our deferred income tax assets in some foreign jurisdictions and $ 0.9 million related to non-deductible executive compensation, which were partially offset by a $ 0.5 million benefit in tax differential on foreign income. Pre-tax income for fiscal 2025 was significantly lower than in prior years. As a result, certain permanent items such as valuation allowance adjustments and non-deductible expenses, had a proportionally larger impact on the effective tax rate than in prior periods with higher earnings.

 Our effective income tax expense rate for fiscal 2024 of 29.2 % was higher than the statutory tax rate primarily due to tax expense of $ 3.2 million for non-deductible executive compensation and a $ 1.2 million increase in the valuation allowance against our deferred income tax assets, which were partially offset by a $ 2.6 million benefit for share-based compensation deductions in excess of the corresponding book expense and a $ 0.5 million benefit in tax differential on income subject to both U.S. and foreign taxes.

 Our effective income tax expense rate for fiscal 2023 of 31.3 % was higher than the statutory tax rate primarily due to tax expense of $ 0.9 million for non-deductible executive compensation and $ 0.4 million in tax differential on income subject to both U.S. and foreign taxes, which were partially offset by a $ 0.4 million decrease in the valuation allowance against our deferred income tax assets.

 We are subject to the anti-deferral provisions on Global Intangible Low-Taxed Income (GILTI) under the Tax Cut and Jobs Act of 2017. We have elected to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the Period Cost Method). We recorded no income tax expense in each of fiscal 2025 and fiscal 2024, and income tax expense of $ 0.2 million in fiscal 2023 under the GILTI provisions.

 The significant components of our deferred tax assets and liabilities were as follows (in thousands):

 2025

 2024

 Deferred income tax assets:

 Net operating loss carryforward

 $

 4,460

 $

 3,447

 Deferred revenue

 3,892

 2,970

 Capitalized development costs

 2,954

 2,156

 2,457

 3,760

 Operating lease liabilities

 1,509

 -

 Inventory and bad debt reserves

 Bonus and other accruals

 1,317

 Self-constructed tangible assets

 Foreign income tax credit

 carryforward

 -

 Property and equipment depreciation

 -

 Sale and financing of corporate

 headquarters

 -

 1,041

 Other

 Total deferred income tax assets

 18,516

 16,192

 Less: valuation allowance

 ( 3,936)

 ( 2,467)

 Net deferred income tax assets

 14,580

 13,725

 Deferred income tax liabilities:

 Intangibles step-ups – indefinite lived

 ( 5,451)

 ( 5,433)

 Intangibles step-ups – finite lived

 ( 1,291)

 ( 1,873)

 Intangible asset amortization

 ( 4,218)

 ( 4,217)

 Deferred commissions

 ( 4,109)

 ( 3,827)

 Operating lease right-of-use assets

 ( 1,494)

 -

 Property and equipment depreciation

 ( 1,157)

 ( 132)

 Unremitted earnings of foreign

 subsidiaries

 ( 453)

 ( 505)

 Other

 ( 167)

 -

 Total deferred income tax liabilities

 ( 18,340)

 ( 15,987)

 Net deferred income taxes

 $

 ( 3,760)

 $

 ( 2,262)

 Deferred income tax amounts are recorded as follows in our consolidated balance sheets (in thousands):

 2025

 2024

 Long-term assets

 $

 $

 Long-term liabilities

 ( 3,991)

 ( 3,132)

 Net deferred income tax liability

 $

 ( 3,760)

 $

 ( 2,262)

 Our U.S. federal net operating loss carryforwards were comprised of the following at August 31, 2025 (in thousands):

 Loss Carryforward

 Loss

 Loss

 Operating

 Loss Carryforward

 Expires

 Deductions

 Deductions

 Loss Carried

 for Year Ended

 Amount

 in Prior Years

 in Current Year

 Forward

 Acquired NOL - Jhana

 December 31, 2016

 2035

 $

 3,052

 $

 ( 1,124)

 $

 ( 215)

 $

 1,713

 July 15, 2017

 2036

 1,117

 -

 -

 1,117

 4,169

 ( 1,124)

 ( 215)

 2,830

 Acquired NOL - Strive

 December 31, 2020

 No Expiration

 1,133

 ( 1,000)

 ( 133)

 -

 April 25, 2021

 No Expiration

 -

 ( 553)

 -

 1,686

 ( 1,000)

 ( 686)

 -

 $

 5,855

 $

 ( 2,124)

 $

 ( 901)

 $

 2,830

 We have U.S. state net operating loss carryforwards generated in fiscal 2009 and before in various jurisdictions that expire primarily between September 1, 2026 and August 31, 2029. The U.S. state net operating loss carryforwards generated in fiscal 2019 through fiscal 2025 expire between August 31, 2029 and August 31, 2035. The state net operating loss carryforwards acquired through the purchase of Jhana stock expire between August 31, 2034 and August 31, 2036. The remaining state net operating loss carryforward acquired through the purchase of Strive stock expires August 31, 2041. The state net operating loss carryforwards generated in fiscal 2022 expire on August 31, 2042.

 During fiscal 2025 we generated a foreign tax credit amount of $ 1.2 million, of which $ 0.8 million was utilized, leaving a carryforward to future years of $ 0.4 million as of August 31, 2025.

 During fiscal 2023 we reversed the valuation allowance for certain foreign subsidiaries and increased the valuation allowance for certain other foreign subsidiaries, for a net decrease in our total valuation allowance. During fiscal 2024 we decreased the valuation allowance for a certain foreign subsidiary and increased the valuation allowance for certain other foreign subsidiaries, for a net increase in our total valuation allowance. During fiscal 2025 we increased the valuation allowance for certain foreign subsidiaries. The valuation allowance at August 31, 2025 relates primarily to the losses of certain foreign subsidiaries which we expect will expire unused.

 Activity in our deferred income tax asset valuation allowance was as follows for the periods indicated (in thousands):

 2025

 2024

 2023

 Beginning balance

 $

 2,467

 $

 1,313

 $

 1,685

 Charged to costs and expenses

 1,497

 1,250

 Deductions

 ( 28)

 ( 96)

 ( 584)

 Ending balance

 $

 3,936

 $

 2,467

 $

 1,313

 Except for the deferred tax assets subject to valuation allowances, we have determined that projected future taxable income is adequate to allow for realization of all deferred tax assets. We considered sources of taxable income, including reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, and reasonable, practical tax-planning strategies to generate additional taxable income. Based on the factors described above, we concluded that realization of our deferred tax assets, except those subject to the valuation allowances described above, is more likely than not at August 31, 2025.

 A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):

 2025

 2024

 2023

 Beginning balance

 $

 1,639

 $

 1,618

 $

 1,597

 Additions based on tax positions

 related to the current year

 Additions for tax positions in

 prior years

 Reductions for tax positions of prior

 years resulting from the lapse of

 applicable statute of limitations

 ( 328)

 ( 255)

 ( 186)

 Other reductions for tax positions of

 prior years

 ( 70)

 ( 288)

 ( 271)

 Ending balance

 $

 1,333

 $

 1,639

 $

 1,618

 The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $ 1.1 million at August 31, 2025 and $ 1.3 million at each of August 31, 2024 and 2023. Included in the ending balance of gross unrecognized tax benefits at August 31, 2025 is $ 0.6 million related to individual states' net operating loss carryforwards. Interest and penalties related to uncertain tax positions are recognized as components of income tax expense. The net accruals and reversals of interest and penalties had an insignificant effect on our income tax expense in fiscal 2025 and 2024 and increased our income tax expense by $ 0.1 million in fiscal 2023. The balance of interest and penalties included in other long-term liabilities on our consolidated balance sheets was $ 0.4 million at each of August 31, 2025 and 2024. During the next 12 months, we expect an immaterial change in unrecognized tax benefits.

 We file United States federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The tax years that remain subject to examinations for our major tax jurisdictions are shown below.

 2018 - 2025

 Australia, Canada, and Japan

 2016 - 2025

 China

 2020 - 2025

 Germany, Switzerland, and Austria

 2021 - 2025

 United Kingdom, Singapore

 2025 - 2025

 France

 2021 - 2025

 United States – state and local income tax

 2022 - 2025

 United States – federal income tax

 16. EARNINGS PER SHARE

 The following schedule shows the components of the calculation of our earnings per share (EPS) for the periods indicated (in thousands, except per-share amounts).

 2025

 2024

 2023

 Numerator for basic and

 diluted earnings per share:

 $

 3,068

 $

 $

 Denominator for basic and

 diluted earnings per share:

 Basic weighted average shares

 outstanding

 12,927

 13,171

 13,640

 Effect of dilutive securities:

 awards

 Diluted weighted average shares

 outstanding

 13,053

 13,472

 14,299

 EPS Calculations:

 Net income per share:

 Basic

 $

 0.24

 $

 1.78

 $

 1.30

 Diluted

 0.24

 1.74

 1.24

 17. SEGMENT INFORMATION

 Reportable Segments

 Our sales are primarily comprised of training and consulting services and our internal reporting and operating structure is currently organized around two divisions: the Enterprise Division, which consists of our North America, International Direct Office, and International Licensee segments, and the Education Division, which is comprised of our Education practice. We have determined that our chief operating decision maker (CODM) continues to be the CEO. Beginning with the first quarter of fiscal 2025, our CODM began to manage our business, allocate resources, and evaluate performance based on changes that were made in the Company's management and reporting structure in connection with the restructuring activities discussed in Note 14, Restructuring.

 After these changes, the Company has identified four operating and reportable segments as described below:

 North America – Our North America segment has a depth of expertise in helping organizations solve problems that require changes in human behavior, including leadership, productivity, execution, trust, and sales performance. We have a variety of principle-based offerings that help build winning and profitable cultures. This segment includes our sales personnel and operations that serve the United States and Canada.

 International Direct Offices – Our international direct offices provide the same offerings and content in countries outside of North America, which includes Australia, Austria, China, France, Germany, Ireland, Japan, New Zealand, Switzerland, and the United Kingdom.

 International Licensees – Our independently owned international licensees provide our offerings and services in countries where we do not have a directly-owned office. These licensee partners allow us to expand the reach of our services to large multinational organizations as well as smaller organizations in their countries. This segment's revenue is primarily comprised of royalty revenues received from the licensees.

 Education Division – Centered around the principles found in The Leader in Me, the Education Division is dedicated to helping educational institutions build a culture that will produce great results. We believe these results are manifested by increases in student performance, improved school culture, decreased disciplinary issues, and increased teacher engagement and parental involvement. This segment includes our domestic and international Education practice operations, which are focused on sales to educational institutions such as elementary schools, middle schools, high schools, and colleges and universities.

 Our reportable segments reflect the structure of the Company's internal organization and the financial information the CODM regularly reviews to assess Company performance and allocate resources. The CODM reviews the performance of each segment using internal reports which provide variance analysis of actual results by segment compared to budget, forecast, and prior year. The primary measurement tool used in segment performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts disclosed by other companies. The prior period segment information has been recast to conform with the new reporting segment presentation described above.

 Our operations are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the divisions for analysis purposes. Interest expense and interest income are primarily generated at the corporate level and are not allocated. Income taxes are likewise calculated and paid on a corporate level (except for entities that operate in foreign jurisdictions) and are not allocated for analysis purposes.

 Other segment items in the following tables consist primarily of other normal operating expenses such as computer software subscription expense, advertising and promotion costs, travel and entertainment expenses, and necessary overhead costs such as legal and rent and utilities expense.

 North

 Direct

 Education

 Segment

 August 31, 2025

 America

 Offices

 Licensees

 Division

 Total

 Net revenue

 $

 147,609

 $

 29,344

 $

 11,111

 $

 74,618

 $

 262,682

 25,008

 7,738

 1,422

 26,883

 61,051

 Associate costs

 81,591

 16,551

 3,360

 32,400

 133,902

 Other segment items

 13,612

 5,457

 7,151

 27,090

 Segment Adjusted EBITDA

 $

 27,398

 $

 ( 402)

 $

 5,459

 $

 8,184

 $

 40,639

 4,385

 Less:

 Unallocated corporate expenses (1)

 16,267

 5,805

 6,723

 Building exit costs

 2,067

 4,066

 4,392

 5,704

 ( 565)

 $

 6,067

 Reconciliation of revenue:

 Segment revenues

 $

 262,682

 Other revenues (2)

 4,385

 Consolidated revenue

 $

 North

 Direct

 Education

 Segment

 August 31, 2024

 America

 Offices

 Licensees

 Division

 Total

 Net revenue

 $

 163,384

 $

 33,327

 $

 11,436

 $

 74,210

 $

 282,357

 26,964

 7,812

 1,350

 26,681

 62,807

 Associate costs

 77,451

 17,489

 3,414

 31,214

 129,568

 Other segment items

 12,328

 4,668

 6,504

 24,438

 Segment Adjusted EBITDA

 $

 46,641

 $

 3,358

 $

 5,734

 $

 9,811

 $

 65,544

 4,876

 Less:

 Unallocated corporate expenses (1)

 15,147

 10,142

 3,008

 Impaired asset

 3,905

 4,248

 33,042

 1,123

 ( 1,119)

 $

 33,046

 Reconciliation of revenue:

 Segment revenues

 $

 282,357

 Other revenues (2)

 4,876

 Consolidated revenue

 $

 North

 Direct

 Education

 Segment

 August 31, 2023

 America

 Offices

 Licensees

 Division

 Total

 Net revenue

 $

 157,906

 $

 35,359

 $

 11,819

 $

 70,318

 $

 275,402

 28,302

 8,472

 1,214

 25,574

 63,562

 Associate costs

 79,266

 17,732

 4,048

 30,135

 131,181

 Other segment items

 10,886

 4,697

 6,962

 23,161

 Segment Adjusted EBITDA

 $

 39,452

 $

 4,458

 $

 5,941

 $

 7,647

 $

 57,498

 5,119

 Less:

 Unallocated corporate expenses (1)

 14,558

 12,520

 4,271

 4,342

 26,361

 1,091

 ( 1,583)

 $

 25,869

 Reconciliation of revenue:

 Segment revenues

 $

 275,402

 Other revenues (2)

 5,119

 Consolidated revenue

 $

 (1) Unallocated corporate expenses primarily consist of administrative overhead expenses.
 (2) Other revenues consist of shipping and handling revenue, leasing revenue, and royalty revenue from Franklin Planner Corp.

 Disaggregated Revenue

 Our revenues are derived primarily from the United States. However, we also operate directly-owned offices or contract with licensees to provide our services in various countries throughout the world. Our consolidated revenues were derived from the following countries/regions (in thousands):

 2025

 2024

 2023

 Americas

 $

 226,757

 $

 242,494

 $

 233,479

 Asia Pacific

 23,074

 26,845

 28,640

 Europe/Middle East/Africa

 17,236

 17,894

 18,402

 $

 $

 $

 The following table presents our revenue disaggregated by our significant revenue generating activities. Sales of services and products include training and consulting services and related products such as training manuals. Subscription sales include revenues from our subscription services such as the All Access Pass and Leader in Me membership. Our Leader in Me membership offering is bifurcated into a portal membership obligation and a coaching delivery obligation. As these obligations are satisfied, the revenue is classified as subscriptions revenue in the following table. We receive royalty revenue from our international licensees and from other sources such as book publishing arrangements. Corporate royalties are amounts received from Franklin Planner Co. pursuant to a licensing arrangement. Leases and Other revenue is primarily comprised of lease revenues from sub-leases for space at our previous corporate headquarters campus and from shipping and handling revenues (in thousands).

 Services and

 Leases and

 August 31, 2025

 Products

 Subscriptions

 Royalties

 Other

 Total

 Enterprise Division:

 $

 54,872

 $

 91,173

 $

 1,564

 $

 -

 $

 147,609

 19,476

 9,672

 -

 29,344

 1,205

 9,604

 -

 11,111

 74,650

 102,050

 11,364

 -

 188,064

 24,697

 45,854

 4,067

 -

 74,618

 -

 -

 1,156

 3,229

 4,385

 Consolidated

 $

 99,347

 $

 147,904

 $

 16,587

 $

 3,229

 $

 August 31, 2024

 Enterprise Division:

 $

 66,484

 $

 95,240

 $

 1,660

 $

 -

 $

 163,384

 23,289

 9,830

 -

 33,327

 1,245

 9,780

 -

 11,436

 90,184

 106,315

 11,648

 -

 208,147

 28,349

 41,605

 4,256

 -

 74,210

 -

 -

 1,253

 3,623

 4,876

 Consolidated

 $

 118,533

 $

 147,920

 $

 17,157

 $

 3,623

 $

 August 31, 2023

 Enterprise Division:

 $

 67,643

 $

 88,864

 $

 1,399

 $

 -

 $

 157,906

 26,058

 9,128

 -

 35,359

 1,327

 10,066

 -

 11,819

 94,127

 99,319

 11,638

 -

 205,084

 26,804

 39,662

 3,852

 -

 70,318

 -

 -

 1,250

 3,869

 5,119

 Consolidated

 $

 120,931

 $

 138,981

 $

 16,740

 $

 3,869

 $

 Inter-segment sales were immaterial for the periods presented and were eliminated in consolidation.

 Other Geographic Information

 At August 31, 2025, we had wholly-owned direct offices that serve clients in Australia, New Zealand, China, Japan, the United Kingdom, Ireland, France, Germany, Switzerland, and Austria. Our long-lived assets, excluding intangible assets and goodwill, were held in the following locations for the periods indicated (in thousands):

 2025

 2024

 United States/Canada

 $

 45,682

 $

 28,552

 China

 1,064

 1,860

 Japan

 United Kingdom

 Australia

 Germany, Switzerland, and Austria

 $

 47,664

 $

 32,300

 18. RELATED PARTY TRANSACTIONS

 CoveyLink Worldwide, LLC

 We previously acquired the assets of CoveyLink Worldwide, LLC (CoveyLink). CoveyLink conducts training and provides consulting based upon the content found in the books The Speed of Trust and Trust & Inspire, which are authored by Stephen M.R. Covey, who is the brother of one of our executive officers.

 Prior to the acquisition date, CoveyLink had granted us a non-exclusive license for content related to The Speed of Trust book and derivative works such as Trust & Inspire, and related training courses for which we paid CoveyLink specified royalties. As part of the CoveyLink acquisition, we signed an amended and restated license for intellectual property that granted us an exclusive, perpetual, worldwide, transferable, royalty-bearing license to use, reproduce, display, distribute, sell, prepare derivative works of, and perform the licensed material in any format or medium and through any market or distribution channel. We are required to pay Stephen M.R. Covey royalties for the use of certain intellectual property developed by him. The amount expensed for these royalties totaled $ 1.7 million in each of the fiscal years ended August 31, 2025, 2024, and 2023. As part of the acquisition of CoveyLink, we signed an amended license agreement as well as a speaker services agreement. Based on the provisions of the speaker services agreement, we pay Stephen M.R. Covey a portion of the speaking revenues received for his presentations. We expensed $ 1.0 million, $ 1.0 million, and $ 1.4 million for payment on these presentations during the fiscal years ended August 31, 2025, 2024 and 2023. We had $ 0.5 million and $ 0.3 million accrued for these royalties and speaking fees at August 31, 2025 and 2024, respectively, which were included as components of accrued liabilities in our consolidated balance sheets.

 Other Related Party Transactions

 We pay an executive officer of the Company a percentage of the royalty proceeds received from the sales of certain books authored by him in addition to his annual salary. During each of the fiscal years ended August 31, 2025, 2024 and 2023, we expensed $ 0.1 million for these royalties. We had $ 0.1 million accrued to this executive officer at each of August 31, 2025 and 2024 as payable under the terms of these arrangements. These amounts are included as components of accrued liabilities in our consolidated balance sheets.

 19. SUBSEQUENT EVENT

 During the first quarter of fiscal 2026, we restructured certain areas of our operations to streamline our organizational structure and to reduce costs. The restructuring activity is expected to total between $ 3.0 million and $ 3.5 million and consists of severance and related legal costs.

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

 None.

 ITEM 9A. CONTROLS AND PROCEDURES

 Disclosure Controls and Procedures

 Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in the Company's reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 Evaluation of Disclosure Controls and Procedures

 An evaluation was conducted under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as of the end of the period covered by this report.

 Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

 Management's Report on Internal Control Over Financial Reporting

 The management of Franklin Covey Co. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company (including its consolidated subsidiaries) and all related information appearing in the Company's Annual Report on Form 10-K. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. 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 our assets;

 2.provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of management and/or of our Board of Directors; and

 3.provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use, or disposition of our assets that could have a material effect on our 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 in 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.

 Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth in Internal Control—Integrated Framework as issued by the Committee of Sponsoring Organizations

 of the Treadway Commission (2013 COSO Framework). Based upon this evaluation, our management concluded that our internal control over financial reporting was effective as of the end of the period covered by this Annual Report on Form 10-K.

 Our independent registered public accounting firm, Deloitte & Touche LLP, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued an audit report, included herein, on the effectiveness of our internal control over financial reporting. Their report is included in Item 8 of this Annual Report on Form 10-K.

 Changes in Internal Control Over Financial Reporting

 There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the fourth quarter ended August 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 ITEM 9B. OTHER INFORMATION

 During the three months ended August 31, 2025, none of our directors or officers adopted or terminated a "Rule 10-b5-1 trading arrangement" or " non-Rule 10-b5-1 trading arrangement" as each term is identified in Item 408 of Regulation S-K.

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not Applicable.

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Certain information required by this Item is incorporated by reference to the sections entitled "Nominees for Election to the Board of Directors," "Delinquent Section 16(a) Reports," "Corporate Governance," and "Board of Director Committees and Meetings" in our definitive Proxy Statement for the annual meeting of shareholders, which is scheduled to be held on January 23, 2026. The definitive Proxy Statement will be filed with the SEC pursuant to Regulation 14A of the Exchange Act. Executive officer biographies may be found in Item 1, under the section entitled "Information About Our Executive Officers," of this Annual Report on Form 10-K.

 The Board of Directors has determined that two of the Audit Committee members, Mr. Efrain Rivera and Mr. Donald J. McNamara, are "financial experts" as defined in Regulation S-K 407(d)(5) adopted under the Securities Exchange Act of 1934, as amended. Our Board of Directors has also determined that Mr. Rivera and Mr. McNamara are "independent directors" as defined by the NYSE.

 We have adopted a code of ethics for our senior financial officers that include the Chief Executive Officer, the Chief Financial Officer, the Chief Accounting Officer, and other members of our financial leadership team. This code of ethics is available on our website at www.franklincovey.com. We intend to satisfy any disclosure requirements under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of this Code of Business Conduct and Ethics by posting such information on our website at the address and location specified above.

 We have adopted an Insider Trading Policy governing transactions in our securities by our directors, officers, associates, and contract personnel that our management believes is reasonably designed to promote compliance with insider trading laws, rules, and regulations, and applicable listing standards of the NYSE. Although we have not adopted a formal policy governing insider trading restrictions on the Company itself, as a matter of practice the Company observes similar best practices and procedures with respect to transactions by the Company in its securities, including not transacting in its securities when in possession of material non-public information. The foregoing summary of the Insider Trading Policy

 does not purport to be complete and is qualified in its entirety by reference to the full text of the Insider Trading Policy attached hereto as Exhibit 19.

 ITEM 11. EXECUTIVE COMPENSATION

 The information required by this Item is incorporated by reference to the sections entitled "Compensation Discussion and Analysis," "Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our definitive Proxy Statement for the annual meeting of shareholders, which is scheduled to be held on January 23, 2025.

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

 Securities Authorized for Issuance Under Equity Compensation Plans

 [a]

 [b]

 [c]

 Plan Category

 Number of securities to be issued upon exercise of outstanding options, warrants, and rights

 Weighted-average exercise price of outstanding options, warrants, and rights

 Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column [a])

 (in thousands)

 (in thousands)

 Equity compensation plans approved by security holders

 683 (1)(2)

 $-

 1,259 (3)(4)

 (1) Excludes 27,336 shares of unvested stock awards that are subject to forfeiture.

 (2) Amount includes 682,688 performance share awards that may be awarded under the terms of various long-term incentive plans, including stock-based compensation plans associated with the acquisition of Strive in fiscal 2021. The number of shares eventually awarded to participants through some of our long-term incentive plans is variable and based upon the achievement of specified financial goals. For performance-based compensation awards where the number of shares may fluctuate within a range based on the achievement of the specified goal, this amount includes the maximum number of shares that may be awarded to participants. The actual number of shares issued to participants therefore, may be less than the amount disclosed. At August 31, 2025 we did not have any unexercised stock options outstanding. For further information on our stock-based compensation plans, refer to the notes to our financial statements as presented in Item 8 of this report.

 (3) Amount is comprised of the remaining shares authorized under our 2022 Omnibus Incentive Plan and 2017 Employee Stock Purchase Plan. The number of performance-based plan shares expected to be awarded at August 31, 2025 may change in future periods based upon the achievement of specified goals and revisions to estimates.

 (4) At August 31, 2025, we had approximately 630,000 shares authorized for purchase by participants in our Employee Stock Purchase Plan.

 Beneficial Ownership of Company Stock

 The remaining information required by this Item is incorporated by reference to the section entitled "Principal Holders of Voting Securities" in our definitive Proxy Statement for the annual meeting of shareholders, which is scheduled to be held on January 23, 2026.

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

 The information required by this Item is incorporated by reference to the section entitled "Certain Relationships and Related Transactions" and "Corporate Governance" in our definitive Proxy Statement for the annual meeting of shareholders, which is scheduled to be held on January 23, 2026.

 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 The information required by this Item is incorporated by reference to the section entitled "Principal Accountant Fees" in our definitive Proxy Statement for the annual meeting of shareholders, which is scheduled to be held on January 23, 2026.

 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 (a)List of documents filed as part of this report:

 1.Financial Statements. The consolidated financial statements of the Company and Report of Independent Registered Public Accounting Firm thereon included in the Annual Report to Shareholders on Form 10-K for the year ended August 31, 2025, are as follows:

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets at August 31, 2025 and 2024

 Consolidated Income Statements and Statements of Comprehensive Income for the fiscal years ended August 31, 2025, 2024, and 2023

 Consolidated Statements of Cash Flows for the fiscal years ended August 31, 2025, 2024, and 2023

 Consolidated Statements of Shareholders' Equity for the fiscal years ended August 31, 2025, 2024, and 2023

 Notes to Consolidated Financial Statements

 2.Financial Statement Schedules.

 Other financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the financial statements or notes thereto, or contained in this report.

 3.Exhibit List.

 Exhibit No.

 Exhibit

 Incorporated By Reference

 Filed Herewith

 2.1

 Stock Purchase Agreement by and among the stockholders of Strive Talent, Inc., William James Houghteling as the Stockholder Representative, and Franklin Covey Client Sales, dated as of April 26, 2021

 (13)

 3.1

 Articles of Restatement dated March 4, 2005 amending and restating the Company's Articles of Incorporation

 (4)

 3.2

 Amendment to Amended and Restated Articles of Incorporation of Franklin Covey

 (6)

 3.3

 Amended and Restated Bylaws of Franklin Covey Co.

 (8)

 4.1

 Specimen Certificate of the Registrant's Common Stock, par value $.05 per share

 (2)

 4.2

 Stockholder Agreements, dated May 11, 1999 and June 2, 1999

 (3)

 4.3

 Registration Rights Agreement, dated June 2, 1999

 (3)

 4.4

 Description of Securities Registered Under Section 12 of the Exchange Act

 (12)

 10.1*

 Forms of Nonstatutory Stock Options

 (1)

 10.2

 Master Lease Agreement, dated June 17, 2005, between Franklin SaltLake LLC (Landlord) and Franklin Development Corporation (Tenant)

 (5)

 10.3

 Purchase and Sale Agreement and Escrow Instructions between Levy Affiliated Holdings, LLC (Buyer) and Franklin Development Corporation (Seller) and Amendments

 (5)

 10.4

 Asset Purchase Agreement by and Among Covey/Link, LLC, CoveyLink Worldwide LLC, Franklin Covey Co., and Franklin Covey Client Sales, Inc. dated December 31, 2008

 (7)

 10.5

 Amended and Restated License of Intellectual Property by and Among Franklin Covey Co. and Covey/Link, LLC, dated December 31, 2008

 (7)

 10.6*

 Form of Change in Control Severance Agreement

 (9)

 10.7*

 Franklin Covey Co. 2017 Employee Stock Purchase Plan

 (10)

 10.8*

 Franklin Covey Co. 2019 Omnibus Incentive Plan

 (11)

 10.9*

 Franklin Covey Co. 2022 Omnibus Incentive Plan

 (14)

 10.10

 Credit Agreement by and between KeyBank National Association and Franklin Covey Co., dated March 27, 2023

 (15)

 10.11

 Security Agreement by and among KeyBank National Association and the subsidiary guarantors party thereto, dated March 27, 2023

 (15)

 10.12*

 Amendment No. 1 to the Franklin Covey Co. 2022 Omnibus Incentive Plan

 (16)

 10.13*

 Form of Indemnification Agreement

 (17)

 Insider Trading Policy

 (18)

 Subsidiaries of the Registrant

 Consent of Independent Registered Public Accounting Firm

 31.1

 Rule 13a-14(a) Certification of the Chief Executive Officer

 31.2

 Rule 13a-14(a) Certification of the Chief Financial Officer

 Section 1350 Certifications

 97*

 Franklin Covey Co. Incentive Compensation Recovery Policy

 (18)

 101.INS

 101.SCH

 101.CAL

 101.DEF

 Inline Taxonomy Extension Definition Linkbase

 101.LAB

 Inline Taxonomy Extension Label Linkbase

 101.PRE

 Inline Extension Presentation Linkbase

 _____________________________

 (1)Incorporated by reference to Registration Statement on Form S-1 filed with the Commission on April 17, 1992, Registration No. 33-47283.
 (2)Incorporated by reference to Amendment No. 1 to Registration Statement on Form S-1 filed with the Commission on May 26, 1992, Registration No. 33-47283.
 (3)Incorporated by reference to Schedule 13D (CUSIP No. 534691090 as filed with the Commission on June 14, 1999). Registration No. 005-43123.
 (4)Incorporated by reference to Report on Form 8-K filed with the Commission on March 10, 2005.**
 (5)Incorporated by reference to Report on Form 8-K filed with the Commission on June 27, 2005.**
 (6)Incorporated by reference to the Definitive Proxy Statement on Form DEF 14A (Appendix C) filed with the Commission on December 12, 2005.**
 (7)Incorporated by reference to Report on Form 10-Q filed with the Commission on April 9, 2009.**
 (8)Incorporated by reference to Report on Form 8-K filed with the Commission on February 1, 2012.**
 (9)Incorporated by reference to Report on Form 8-K filed with the Commission on March 14, 2012.**
 (10)Incorporated by reference to the Definitive Proxy Statement on Form DEF 14A (Appendix A) filed with the Commission on December 22, 2017.**
 (11)Incorporated by reference to the Definitive Proxy Statement on Form DEF 14A (Appendix A) filed with the Commission on December 20, 2018.**
 (12)Incorporated by reference to Report on Form 10-K/A filed with the Commission on December 2, 2019.**
 (13)Incorporated by reference to Report on Form 8-K filed with the Commission on April 29, 2021.**
 (14)Incorporated by reference to Report on Form 8-K filed with the Commission on January 14, 2022.**
 (15)Incorporated by reference to Report on Form 8-K filed with the Commission on March 30, 2023.**
 (16)Incorporated by reference to Report on Form 8-K filed with the Commission on January 24, 2025.**
 (17)Incorporated by reference to Report on Form 10-Q filed with the Commission on July 8, 2025.**
 (18)Incorporated by reference to Report on Form 10-K filed with the Commission on November 12, 2024.**

 Filed herewith and attached to this report.
 * Indicates a management contract or compensatory plan or agreement.
 ** Registration No. 001-11107.

 ITEM 16. FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 12, 2025.

 By:

 /s/ Paul S. Walker

 Paul S. Walker
 President and Chief Executive 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 dates indicated.

 Signature

 Title

 Date

 /s/ Robert A. Whitman

 Chairman of the Board of Directors

 Robert A. Whitman

 /s/ Anne H. Chow

 Anne H. Chow

 /s/ Craig Cuffie

 Craig Cuffie

 /s/ Donald J. McNamara

 Donald J. McNamara

 /s/ Joel C. Peterson

 Joel C. Peterson

 /s/ Nancy Phillips

 Nancy Phillips

 /s/ Efrain Rivera

 Efrain Rivera

 /s/ Derek van Bever

 Derek van Bever

 /s/ Paul S. Walker

 President, Chief
 Executive Officer, and Director

 Paul S. Walker

 /s/ Jessica G. Betjemann

 Chief Financial Officer

 Jessica G. Betjemann

 /s/ A. Derek Hatch

 Chief Accounting Officer

 A. Derek Hatch