UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

~~[X]~~☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May~~November 3130, 2025

~~[ ]~~☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-11107

FRANKLIN COVEY CO.

(Exact name of registrant as specified in its charter)

Utah		87-0401551
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
13907 South Minuteman Dr., Suite 500		84020
13907 South Minuteman Dr., Suite 500Draper, Utah		84020
Draper, Utah		(Zip Code)
(Address of principal executive offices)		(Zip Code)
(Address of principal executive offices)
Registrant’s telephone number,		(801) 817-1776
including area code

~~2200~~Registrant’s ~~West~~telephone ~~Parkway~~number, ~~Boulevard~~including area code (801) 817-1776

Salt Lake City, UT 84119-2099

(Former name, former address and former fiscal year, if changed since last report)

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


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.05 Par Value	FC	New York Stock Exchange

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 ☒ T 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 such files). Yes T ☒ 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 the 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 T☒ 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ ☐ No T ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

1211,~~641~~552,~~822~~552 shares of common stock, $0.05 par value per share, as of ~~June~~December 3031, 2025‎

Table of Contents


		Page

Part I.	Financial Information	3

Item 1	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Changes In Shareholders’ Equity	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

Part Ii.	Other Information	24

Item 1.	Legal Proceedings	24
Item 1.A	Risk Factors	24
Item 2.	Unregistered Sales Of Equity Securities And Use Of Proceeds	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures		26

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per-share amounts)

		May 31,			August 31,
			November 30,				August 31,
		~~2025~~	2025		~~2024~~		2025
		~~(unaudited)~~	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	~~33,707~~$		$17,525	~~48,663~~	$		31,698
Accounts receivable, less allowance for credit losses of $2,328 and $3,015		49,843			86,002
Accounts receivable, less allowance for credit losses of $2,994 and $2,929				59,135				68,415
Inventories		~~4,062~~		5,303	~~4,002~~			5,165
Prepaid expenses and other current assets		~~23,391~~		27,061	~~21,586~~			24,199
Total current assets		~~111,003~~		109,024	~~160,253~~			129,477
Property and equipment, net		~~9,867~~		13,527	~~8,736~~			14,324
Intangible assets, net		~~35,648~~		33,862	~~37,766~~			34,551
Goodwill		~~31,220~~		31,220	~~31,220~~			31,220
Deferred income tax assets		~~854~~		233	~~870~~			231
Other long-term assets		~~29,692~~		33,397	~~22,694~~			33,109
	$	~~218,284~~$		$221,263	~~261,539~~	$		242,912
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	~~816~~$		$831	~~835~~	$		823
Current portion of financing obligation		221			3,112
Accounts payable				5,531				8,780
Accounts payable		6,234			7,862
Deferred revenue				96,010				106,534
Deferred subscription revenue		83,488			101,218
Customer deposits				24,971				16,327
Customer deposits		20,054			16,972
Accrued liabilities				21,389				24,828
Accrued liabilities		21,494			32,454
Total current liabilities				148,732				157,292
Total current liabilities		132,307			162,453
Other liabilities				13,423				14,718
Notes payable, less current portion		-			775
Deferred income tax liabilities				5,096				3,991
Financing obligation, less current portion		1,312			1,312
Total liabilities				167,251				176,001
Other liabilities		15,939			10,732
Shareholders’ equity:
Deferred income tax liabilities		3,147			3,132
Common stock, $0.05 par value; 40,000 shares authorized, 27,056 shares issued				1,353				1,353
Total liabilities		152,705			178,404
Additional paid-in capital				229,327				230,251
Shareholders’ equity:
Retained earnings				122,983				126,272
Common stock, $0.05 par value; 40,000 shares authorized, 27,056 shares issued		1,353			1,353
Accumulated other comprehensive loss				(1,238	)			(1,032	)
Additional paid-in capital		230,375			231,813
Treasury stock at cost, 15,053 shares and 14,565 shares				(298,413	)			(289,933	)
Retained earnings		121,900			123,204
Total shareholders’ equity				54,012				66,911
Accumulated other comprehensive loss		(863)			(768)
		$		221,263		$		242,912
Treasury stock at cost, 14,427 shares and 14,084 shares		(287,186)			(272,467)
Total shareholders’ equity		65,579			83,135
	$	218,284		$	261,539

See notes to condensed consolidated financial statements

‎

Table of Contents

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STATEMENTS

OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per-share amounts)

		~~Quarter Ended~~	Quarter Ended			~~Three Quarters Ended~~
		May 31,			May 31,		May 31,			May 31,
			November 30,				November 30,
		~~2025~~	2025		~~2024~~		~~2025~~2024			~~2024~~
		~~(unaudited)~~	(unaudited)				~~(unaudited)~~
Revenue	$	~~67,121~~$		$64,045	~~73,373~~	$	~~195,819~~	69,086	$	~~203,109~~
Cost of revenue		~~15,799~~		15,671	~~17,167~~		~~46,040~~	16,375		~~47,773~~
Gross profit		~~51,322~~		48,374	~~56,206~~		~~149,779~~	52,711		~~155,336~~
Selling, general, and administrative		~~46,676~~		46,121	~~45,110~~		~~138,966~~	47,204		~~130,088~~
Restructuring costs		~~4,739~~		3,444	~~701~~		~~6,723~~	1,984		~~3,008~~
Impairment of asset		-			-		-			928
Building exit costs				674				-
Depreciation		~~1,012~~		1,099	~~990~~		~~2,979~~	950		~~2,994~~
Amortization		~~1,098~~		687	~~1,062~~		~~3,294~~	1,098		~~3,204~~
Income (loss) from operations		~~(2,203)~~		(3,651	~~8,343~~)		~~(2,183)~~	1,475		~~15,114~~
Interest income		~~211~~		114	~~268~~		~~765~~	290		~~857~~
Interest expense		~~(135)~~		(95	~~(247~~)		~~(470)~~	(178	)	~~(916)~~
Income (loss) before income taxes		~~(2,127)~~		(3,632	~~8,364~~)		~~(1,888)~~	1,587		~~15,055~~
Income tax benefit (provision)		~~718~~		343	~~(2,643)~~		~~584~~	(406	)	~~(3,609)~~
Net income (loss)	$	~~(1,409)~~$		$(3,289	~~5,721~~)	$	~~(1,304)~~	1,181	$	~~11,446~~
Net income (loss) per share:
Basic	$	~~(0.11)~~$		$(0.27	~~0.43~~)	$	~~(0.10)~~	0.09	$	~~0.87~~
Diluted		~~(0.11)~~		(0.27	~~0.43~~)		~~(0.10)~~	0.09		~~0.85~~
Weighted average number of common shares:
Basic		~~12,891~~		12,210	~~13,160~~		~~13,028~~	13,092		~~13,222~~
Diluted		~~12,891~~		12,210	~~13,378~~		~~13,028~~	13,271		~~13,499~~
COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$	~~(1,409)~~$		$(3,289	~~5,721~~)	$	~~(1,304)~~	1,181	$	~~11,446~~
Foreign currency translation adjustments,
Foreign currency translation adjustments, net of income taxes of $0, and $0				(206	)			(202	)
net of income taxes of $0, $0, $0, and $0		149			(175)		(95)			(263)
Comprehensive income (loss)		$		(3,495	)	$		979
Comprehensive income (loss)	$	(1,260)		$	5,546	$	(1,399)		$	11,183

See notes to condensed consolidated financial statements‎

Table of Contents

FRANKLIN COVEY CO.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Quarters Ended
		Quarter Ended
		May 31,			May 31,
			November 30,				November 30,
		~~2025~~	2025		~~2024~~		2024
		~~(unaudited)~~	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	~~(1,304)~~$		$(3,289	~~11,446~~)	$		1,181
Adjustments to reconcile net income (loss) to net cash
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
provided by operating activities:
Depreciation and amortization				1,786				2,048
Depreciation and amortization		6,273			6,198
Amortization of capitalized curriculum costs				1,189				1,033
Amortization of capitalized curriculum costs		3,269			2,340
Stock-based compensation				1,429				2,167
Stock-based compensation		5,730			7,092
Deferred income taxes				1,105				(216	)
Impairment of asset		-			928
Amortization of right-of-use operating lease assets				247				162
Deferred income taxes		12			(169)
Changes in assets and liabilities:
Amortization of right-of-use operating lease assets		392			596
Decrease in accounts receivable, net				9,209				24,190
Changes in assets and liabilities:
Decrease (increase) in inventories				(146	)			161
Decrease in accounts receivable, net		36,253			21,436
Decrease (increase) in prepaid expenses and other assets				(399	)			1,781
Increase in inventories		(42)			(434)
Decrease in accounts payable and accrued liabilities				(6,164	)			(10,912	)
Decrease in prepaid expenses and other assets		2,429			2,032
Decrease in deferred revenue and customer deposits				(2,725	)			(7,079	)
Decrease in accounts payable and accrued liabilities		(9,931)			(8,305)
Increase (decrease) in income taxes payable/receivable				(1,630	)			(143	)
Decrease in deferred revenue and customer deposits		(15,756)			(5,154)
Decrease in other long-term liabilities				(514	)			(228	)
Increase (decrease) in income taxes payable/receivable		(7,662)			628
Net cash provided by operating activities				98				14,145
Decrease in other long-term liabilities		(624)			(249)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash provided by operating activities		19,039			38,385
Purchases of property and equipment				(1,727	)			(998	)
CASH FLOWS FROM INVESTING ACTIVITIES
Curriculum development costs				(2,023	)			(1,432	)
Purchases of property and equipment		(4,050)			(2,618)
Reacquisition of license rights				-				(324	)
Curriculum development costs		(4,095)			(5,195)
Net cash used for investing activities				(3,750	)			(2,754	)
Reacquisition of license rights		(324)			-
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used for investing activities		(8,469)			(7,813)
Principal payments on financing obligation				-				(945	)
CASH FLOWS FROM FINANCING ACTIVITIES
Purchases of common stock for treasury				(10,674	)			(5,954	)
Principal payments on notes payable		(835)			(4,585)
Proceeds from sales of common stock held in treasury				289				320
Principal payments on financing obligation		(2,890)			(2,618)
Net cash used for financing activities				(10,385	)			(6,579	)
Purchases of common stock for treasury		(22,991)			(25,844)
Effect of foreign currency exchange rates on cash and cash equivalents				(136	)			(181	)
Proceeds from sales of common stock held in treasury		1,103			1,077
Net increase (decrease) in cash and cash equivalents				(14,173	)			4,631
Net cash used for financing activities		(25,613)			(31,970)
Cash and cash equivalents at the beginning of the period				31,698				48,663
Effect of foreign currency exchange rates on cash and cash equivalents		87			(258)
Cash and cash equivalents at the end of the period		$		17,525		$		53,294
Net decrease in cash and cash equivalents		(14,956)			(1,656)
Supplemental disclosure of cash flow information:
Cash and cash equivalents at the beginning of the period		48,663			38,230
Cash paid for income taxes		$		353		$		745
Cash and cash equivalents at the end of the period	$	33,707		$	36,574
Cash paid for interest				68				143
Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:
Cash paid for income taxes	$	7,050		$	2,692
Acquisition of property and equipment and capitalized curriculum financed by accounts payable		$		1,583		$		305
Cash paid for interest		428			931
Consideration for reacquired license rights from liabilities of seller				-				168
Non-cash investing and financing activities:
Acquisition of right-of-use operating lease assets for operating lease liabilities				310				-
Acquisition of property and equipment and capitalized curriculum
financed by accounts payable	$	751		$	111
Consideration for reacquired license rights from liabilities of seller		168			-
Acquisition of right-of-use operating lease assets for operating lease liabilities		6,256			1,042
Acquisition of content rights financed by accrued liabilities and other liabilities		678			1,500

See notes to condensed consolidated financial statements‎

~~FRANKLIN~~Table ~~COVEY~~of ~~CO.~~Contents

~~CONDENSED~~FRANKLIN ~~CONSOLIDATED~~COVEY ~~STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~CO.

~~(in~~CONDENSED ~~thousands~~CONSOLIDATED ~~and~~STATEMENTS ~~unaudited)~~OF CHANGES IN SHAREHOLDERS’ EQUITY

									Accumulated
	Common		Common		Additional				Other	Treasury		Treasury
	Stock		Stock		Paid-In		Retained		Comprehensive	Stock		Stock
	Shares		Amount		Capital		Earnings		Loss	Shares		Amount
Balance at August 31, 2024	27,056	$	1,353	$	231,813	$	123,204	$	(768)	(14,084)	$	(272,467)
Issuance of common stock from
treasury					(6,707)					363		7,027
Purchases of common shares
for treasury										(146)		(5,954)
Stock-based compensation					2,167
Cumulative translation
adjustments									(202)
Net income							1,181
Balance at November 30, 2024	27,056		1,353		227,273		124,385		(970)	(13,867)		(271,394)
Issuance of common stock from
treasury					60					16		295
Purchases of common shares
for treasury										(251)		(8,704)
Stock-based compensation					1,346
Unvested stock award					(536)					27		536
Cumulative translation
adjustments									(42)
Net loss							(1,076)
Balance at February 28, 2025	27,056		1,353		228,143		123,309		(1,012)	(14,075)		(279,267)
Issuance of common stock from
treasury					15					20		414
Purchases of common shares
for treasury										(372)		(8,333)
Stock-based compensation					2,217
Cumulative translation
adjustments									149
Net loss							(1,409)
Balance at May 31, 2025	27,056	$	1,353	$	230,375	$	121,900	$	(863)	(14,427)	$	(287,186)

(in thousands and unaudited)

See notes to condensed consolidated financial statements


															Accumulated
	Common			Common			Additional								Other			Treasury				Treasury
	Stock			Stock			Paid-In				Retained				Comprehensive			Stock				Stock
	Shares			Amount			Capital				Earnings				Loss			Shares				Amount
Balance at August 31, 2025		27,056	$		1,353	$		230,251		$		126,272		$		(1,032	)		(14,565	)	$		(289,933	)
Issuance of common stock from treasury								(2,353	)										136				2,643
Purchases of common shares for treasury																			(624	)			(11,123	)
Stock-based compensation								1,429
Cumulative translation adjustments																(206	)
Net loss												(3,289	)
Balance at November 30, 2025		27,056	$		1,353	$		229,327		$		122,983		$		(1,238	)		(15,053	)	$		(298,413	)

‎FRANKLIN COVEY CO.

6CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY –

~~FRANKLIN~~PRIOR ~~COVEY CO.~~YEAR

~~CONDENSED~~(in ~~CONSOLIDATED~~thousands ~~STATEMENTS~~and ~~OF CHANGES IN SHAREHOLDERS’ EQUITY –~~unaudited)

PRIOR YEAR


														Accumulated
	Common			Common			Additional							Other			Treasury				Treasury
	Stock			Stock			Paid-In				Retained			Comprehensive			Stock				Stock
	Shares			Amount			Capital				Earnings			Loss			Shares				Amount
Balance at August 31, 2024		27,056	$		1,353	$		231,813		$		123,204	$		(768	)		(14,084	)	$		(272,467	)
Issuance of common stock from treasury								(6,707	)									363				7,027
Purchases of common shares for treasury																		(146	)			(5,954	)
Stock-based compensation								2,167
Cumulative translation adjustments															(202	)
Net income												1,181
Balance at November 30, 2024		27,056	$		1,353	$		227,273		$		124,385	$		(970	)		(13,867	)	$		(271,394	)

~~(in~~See ~~thousands~~notes ~~and~~to ~~unaudited)~~condensed consolidated financial statements

									Accumulated
	Common		Common		Additional				Other	Treasury		Treasury
	Stock		Stock		Paid-In		Retained		Comprehensive	Stock		Stock
	Shares		Amount		Capital		Earnings		Loss	Shares		Amount
Balance at August 31, 2023	27,056	$	1,353	$	232,373	$	99,802	$	(987)	(13,974)	$	(253,887)
Issuance of common stock from
treasury					(10,569)					601		10,925
Purchases of common shares
for treasury										(409)		(16,308)
Stock-based compensation					2,897
Cumulative translation
adjustments									51
Net income							4,851
Balance at November 30, 2023	27,056		1,353		224,701		104,653		(936)	(13,782)		(259,270)
Issuance of common stock from
treasury					143					10		185
Purchases of common shares
for treasury										(52)		(2,105)
Stock-based compensation					1,368
Unvested stock award					(436)					23		436
Cumulative translation
adjustments									(139)
Net income							874
Balance at February 29, 2024	27,056		1,353		225,776		105,527		(1,075)	(13,801)		(260,754)
Issuance of common stock from
treasury					8					20		385
Purchases of common shares
for treasury										(188)		(7,431)
Stock-based compensation					2,828
Cumulative translation
adjustments									(175)
Net income							5,721
Balance at May 31, 2024	27,056	$	1,353	$	228,612	$	111,248	$	(1,250)	(13,969)	$	(267,800)

~~See~~Table ~~notes~~of ~~to condensed consolidated financial statements‎~~Contents

7FRANKLIN COVEY CO.

~~FRANKLIN~~NOTES ~~COVEY~~TO ~~CO.~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~(unaudited)

~~(unaudited)~~NOTE 1 – BASIS OF PRESENTATION

~~NOTE~~Franklin 1Covey –Co. ~~BASIS~~(hereafter OFreferred ~~PRESENTATION~~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.

~~Franklin~~The ~~Covey~~accompanying ~~Co.~~unaudited ~~(hereafter~~condensed ~~referred~~consolidated tofinancial asstatements usreflect, ~~we,~~in ~~our, or~~ the ~~Company)~~opinion isof amanagement, ~~global~~all ~~company~~adjustments ~~focused~~(consisting onof ~~organizational~~normal ~~performance~~recurring ~~improvement. Our~~accruals) ~~mission~~necessary is to ~~“enable~~present ~~greatness~~fairly inthe ~~people~~financial position and ~~organizations~~results ~~everywhere,”~~of ~~and~~operations ~~our~~of ~~global~~the ~~structure~~Company isas ~~designed~~of tothe ~~help~~dates ~~individuals~~ and ~~organizations~~for ~~achieve~~the ~~sustained~~periods ~~superior performance through changes in human behavior~~indicated. WeCertain ~~are~~information ~~fundamentally a content~~ and ~~solutions~~footnote ~~company,~~disclosures ~~and~~normally weincluded ~~believe~~in ~~that~~financial ~~our~~statements ~~offerings~~prepared ~~and~~in ~~services~~accordance ~~create~~with aaccounting ~~connection~~principles ~~between~~generally ~~capabilities~~accepted ~~and~~in ~~results. We~~the ~~have~~United aStates ~~wide range~~ of ~~content~~America ~~delivery options, including: the All Access Pass~~ (~~AAP~~GAAP) ~~subscription,~~have ~~The~~been ~~Leader~~condensed inor Meomitted ~~membership,~~pursuant ~~and~~to ~~other~~Securities ~~intellectual property licenses; digital online learning; onsite training; training led through certified facilitators; blended learning;~~ and ~~organization-wide~~Exchange ~~transformational~~Commission ~~processes,~~(SEC) ~~including~~rules ~~consulting~~ and ~~coaching~~regulations. WeThe ~~believe~~information ~~our~~included ~~investments~~ in ~~digital~~this ~~delivery~~quarterly ~~modalities~~report ~~have~~on ~~enabled~~Form us10-Q toshould ~~deliver~~be ~~our~~read ~~content to clients~~ in aconjunction ~~high-quality~~with ~~learning~~the ~~environment~~consolidated ~~whether~~financial ~~those~~statements ~~clients~~and ~~are~~related ~~working~~notes ~~remotely~~included ~~or meeting~~ in ~~a centralized location. We believe that~~ our ~~clients~~Annual ~~are~~Report ~~able~~on toForm ~~utilize our content to create cultures which produce high~~10-~~performing,~~K ~~collaborative individuals, led by effective, trust-building leaders who execute with excellence and deliver measurably improved results~~ for ~~all of their key stakeholders. 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~~fiscal ~~Division,~~year ~~which~~ended ~~consists~~August ~~of our North America~~31, ~~International Direct Office, and International Licensee segments, and the Education Division, which is comprised of our Education practice~~2025.

WeThe ~~have~~preparation ~~some~~ of ~~the~~financial ~~best-known~~statements ~~offerings~~ in ~~the~~conformity ~~training~~with ~~industry,~~GAAP ~~including~~requires aus ~~suite~~to ofmake ~~individual-effectiveness~~estimates and ~~leadership-development~~assumptions ~~training~~that ~~content~~affect ~~based on~~ the ~~best-selling~~reported ~~books,~~amounts ~~The 7 Habits~~ of ~~Highly~~assets ~~Effective~~and ~~People,~~liabilities ~~The~~and ~~Speed~~the ofdisclosure ~~Trust, The Leader in Me, The 4 Disciplines~~ of ~~Execution,~~contingent ~~and~~assets ~~Multipliers,~~ and ~~proprietary~~liabilities ~~content~~at in the ~~areas~~dates of ~~Leadership,~~the ~~Execution,~~financial ~~Productivity~~statements, ~~Educational Improvement,~~ and ~~Sales~~the ~~Performance. Our~~reported ~~offerings~~amounts ~~are~~of ~~described~~revenues inand ~~further~~expenses ~~detail~~during atthe ~~www~~reporting periods.~~franklincovey.com.~~ ~~The~~Actual ~~information~~results ~~posted~~could ondiffer ~~our~~from ~~website~~those ~~is not incorporated into this report~~estimates.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and results of operations ~~of the Company as of the dates and~~ for the ~~periods~~quarter ~~indicated. Certain~~ended ~~information~~November ~~and~~30, ~~footnote~~2025, ~~disclosures~~are ~~normally~~not ~~included~~necessarily inindicative ~~financial~~of ~~statements~~results ~~prepared~~expected infor ~~accordance with accounting principles generally accepted in~~ the ~~United~~entire ~~States~~fiscal ofyear ~~America~~ending ~~(GAAP)~~August ~~have~~31, ~~been~~2026, ~~condensed~~ or omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. The information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for ~~the~~any ~~fiscal~~future ~~year ended August 31, 2024~~periods.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.Inventories

~~The~~Our ~~results~~inventories ofare ~~operations~~stated ~~for~~at the ~~quarter~~lower ~~and~~of ~~three~~cost ~~quarters~~or ~~ended~~net ~~May~~realizable 31value, ~~2025,~~cost ~~are~~being ~~not~~determined ~~necessarily~~using ~~indicative~~the offirst-in, ~~results~~first-out ~~expected~~method, ~~for~~and ~~the~~were ~~entire~~comprised ~~fiscal~~of ~~year~~finished ~~ending~~goods ~~August~~at ~~31,~~each ~~2025,~~of orthe ~~for~~balance ~~any~~sheet ~~future~~dates ~~periods~~presented in this report.

~~Inventories~~Accounting Pronouncement Issued Not Yet Adopted

~~Our~~On ~~inventories~~December 14, 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 ~~stated~~currently atassessing the ~~lower~~anticipated impact of ~~cost~~this orstandard ~~net~~on ~~realizable~~our ~~value,~~consolidated ~~cost~~financial ~~being~~statements. The ~~determined~~amendments ~~using~~are ~~the~~effective ~~first-in~~for our annual periods beginning September 1, ~~first-out~~2025, ~~method~~with early adoption permitted, and ~~were~~should ~~comprised~~be ofapplied ~~finished~~either ~~goods~~prospectively ator ~~each~~retrospectively. The ofCompany is currently evaluating the ~~balance~~ASU ~~sheet~~to ~~dates~~determine ~~presented~~its inimpact ~~this~~on ~~report~~our disclosures.

~~Accounting~~In ~~Pronouncement~~November ~~Issued~~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 ~~Not~~intangible ~~Adopted~~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

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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 7

8Table of Contents

~~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.

InOn ~~November~~September ~~2023~~18, 2025, the FASB issued ASU ~~No. 2023~~2025-0706, ~~Segment~~Targeted ~~Reporting (Topic 280):~~ Improvements to ~~Reportable~~the ~~Segment~~Accounting ~~Disclosures. This~~for ~~ASU~~Internal-Use isSoftware, ~~intended~~which toamends ~~improve~~certain ~~the~~aspects ~~reportable~~of ~~segment~~the ~~disclosure~~accounting ~~primarily~~for byand ~~requiring~~disclosure ~~entities~~of tosoftware ~~provide~~costs ~~more~~under ~~disaggregated~~ASC ~~expense information about their reportable segments~~350-40. ~~The~~This ~~new~~ASU ~~guidance~~makes ~~also~~targeted ~~improves~~improvements ~~interim~~to ~~disclosure~~the ~~requirements,~~accounting ~~clarifies~~for ~~circumstances~~software incosts. ASU ~~which~~2025-06 analso ~~entity~~supersedes ~~can~~the ~~disclose~~guidance ~~multiple~~for ~~segment~~website ~~measures~~development ofcosts ~~profit~~along orwith ~~loss,~~the ~~provides~~recognition ~~new segment disclosure~~ requirements for ~~entities~~development ~~with~~costs aspecific ~~single~~to ~~reportable segment, and contains other disclosure requirements~~websites. ~~ASU~~This ~~2023-07~~guidance is effective for ~~public~~all entities infor ~~fiscal~~annual ~~years~~reporting periods beginning after December 15, ~~2023~~2027, and interim reporting periods within ~~fiscal~~those ~~years~~annual ~~beginning~~reporting ~~after December 15, 2024~~periods. Early adoption is permitted~~. Since~~ ~~this~~in ~~guidance~~an ~~only~~interim ~~impacts~~or ~~disclosures,~~annual wereporting doperiod in which financial statements have not ~~expect~~yet ~~the~~been ~~adoption~~issued ofor ~~ASU~~made ~~2023-07~~available tofor ~~have~~issuance. The aCompany ~~material~~is currently evaluating the ASU to determine its impact on our ~~consolidated~~ financial statements.

OnNOTE ~~December~~2 ~~14,~~– ~~2023,~~PURCHASES ~~the~~OF ~~FASB~~COMMON 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. For public companies, the guidance in ASU 2023-09 is effective for annual periods beginning after December 15, 2024. We are currently assessing the anticipated impact of this standard on our consolidated financial statements.STOCK

~~NOTE~~Our 2purchases –of ~~PURCHASES~~common OFstock ~~COMMON~~during ~~STOCK~~the first quarter of fiscal 2026 consisted of shares purchased on the open market and shares withheld for income taxes on stock-based compensation awards. Our stock-based compensation plans allow shares to be withheld to cover statutory income taxes if elected by the award recipient. These shares are valued at the market price on the date the shares are withheld. Our fiscal 2026 purchases of common stock through November 30, 2025, were comprised of the following (in thousands):

Our purchases of common stock during the first three quarters of fiscal 2025 consisted of shares purchased on the open market and shares withheld for income taxes on stock-based compensation awards. Our stock-based compensation plans allow shares to be withheld to cover statutory income taxes if elected by the award recipient. These shares are valued at the market price on the date the shares are withheld. Our fiscal 2025 purchases of common stock through May 31, 2025, were comprised of the following (in thousands):


	Shares		Cost
Shares withheld for taxes on stock-
based compensation awards		42	$	725
Open market purchases		582		10,398
		624	$	11,123

	Shares		Cost
Shares withheld for taxes on stock-
based compensation awards		146	$	5,954
Open market purchases		623		17,037
		769	$	22,991

We financed $0.4 million of open market stock purchases through accrued liabilities financing at November 30, 2025.

On ~~April~~August 1814, ~~2024,~~2025 ~~our~~we ~~Board~~initiated ~~of Directors approved~~ a ~~new~~10b5-1 plan to purchase up to $5010.0 million of our ~~outstanding~~ common stock~~. The~~ ~~previously~~through ~~existing~~daily ~~common~~transactions. This ~~stock~~10b5-1 ~~purchase~~ plan was ~~canceled,~~completed ~~and~~in ~~the~~October ~~new common share purchase plan does not have an expiration date~~2025. ~~The~~On ~~actual~~November ~~timing~~17, ~~number~~2025, ~~and~~we ~~value~~initiated ofa ~~common shares purchased under the~~ new 10b5-1 plan ~~will~~to bepurchase ~~determined~~up atto ~~our~~$20.0 ~~discretion~~million ~~and will depend on a number~~ of ~~factors, including, among others, general market and business conditions, the trading price of~~ our common ~~shares,~~stock ~~and~~through ~~applicable~~daily ~~legal requirements~~transactions. We ~~have~~anticipate nothat ~~obligation~~this torepurchase ~~purchase any common shares under the authorization, and the purchase~~ plan ~~may~~will be ~~suspended,~~completed ~~discontinued,~~in orthe ~~modified~~second atquarter ~~any~~of ~~time~~fiscal ~~for any reason~~2026.

NOTE 3 – REVENUE

Contract Balances

Our deferred ~~subscription~~ revenue totaled $89100.3 2 million at ~~May 31~~November 30, 2025, and $~~107~~111.9 7 million at August 31, ~~2024~~2025, of which $54.91 million and $65.7 1 million were classified as components of other long-term liabilities at ~~May 31~~November 30, 2025 and August 31, ~~2024~~2025, respectively. During the quarter ~~and three quarters~~ ended ~~May 31~~November 30, 2025, we recognized $3637.85 million ~~and $108.8 million~~ of previously deferred ~~subscription~~ revenue~~, respectively~~.

Deferred ~~subscription~~ revenue primarily consists of billings or payments received in advance of revenue being recognized from subscription services. Deferred revenue is recognized in revenue as the applicable revenue recognition criteria are met. We generally invoice customers in annual installments upon execution of a contract. The 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 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 in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025. During the first quarter of fiscal 2026, we entered into non-cancelable contracts for the delivery of the All Access Pass (AAP) and related

~~offering~~Table ~~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 The Leader in Me membership are recorded as revenue in accordance with our general policy for services and products as described in our Annual Report on Form 10-K for the fiscal year ended August 31, 2024.Contents

~~Remaining~~services ~~Performance~~and ~~Obligations~~materials in the Enterprise Division. These contract amounts are recorded in deferred revenue until the performance obligations are satisfied or until the end of the contract term.

~~Whenever 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.~~ Remaining ~~transaction~~Performance price represents contracted revenue that has not yet been recognized, including unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price is influenced by factors such as inflation, the average length of the contract term, and the ability of the Company to continue to enter into multi-year non-cancellable contracts. At May 31, 2025, we had $151.4 million of remaining performance obligations, including our deferred subscription revenue. The remaining performance obligation does not include customer deposits, as these amounts are generally refundable at the client’s request prior to the satisfaction of the obligation.Obligations

~~Disaggregated~~Whenever ~~Revenue~~possible, ~~Information~~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. Remaining transaction price represents contracted revenue that has not yet been recognized, including unearned revenue and unbilled amounts that will be recognized as revenue in future periods. Transaction price is influenced by factors such as inflation, the average length of the contract term, and the ability of the Company to continue to enter into multi-year non-cancellable contracts. At November 30, 2025, we had $172.3 million of remaining performance obligations, including our deferred revenue. The remaining performance obligation does not include customer deposits, as these amounts are generally refundable at the client’s request prior to the satisfaction of the obligation.

~~Refer~~Disaggregated toRevenue ~~Note 7, Segment~~ Information~~, to these unaudited condensed consolidated financial statements for our disaggregated revenue information.~~

~~NOTE~~Refer 4to –Note ~~STOCK-BASED~~7, ~~COMPENSATION~~Segment Information, to these unaudited condensed consolidated financial statements for our disaggregated revenue information.

~~Our~~NOTE ~~stock-based~~4 ~~compensation~~– ~~expense~~STOCK-BASED ~~was comprised of the following for the periods presented (in thousands):~~COMPENSATION

		Quarter Ended			Three Quarters Ended
		May 31,		May 31,		May 31,		May 31,
		2025		2024		2025		2024
Long-term incentive awards	$	1,741	$	2,355	$	4,270	$	5,707
Strive acquisition compensation		160		165		525		550
Unvested stock awards		240		240		720		640
Employee stock purchase plan		76		68		215		195
	$	2,217	$	2,828	$	5,730	$	7,092

Our stock-based compensation expense was comprised of the following for the periods presented (in thousands):

During the quarter and three quarters ended May 31, 2025, we issued 20,841 shares and 426,114 shares, respectively, of our common stock under various stock-based compensation arrangements, including our employee stock purchase plan (ESPP).


		Quarter Ended
		November 30,			November 30,
		2025			2024
Long-term incentive awards	$		962	$		1,679
Strive acquisition compensation			180			185
Unvested stock awards			240			240
Employee stock purchase plan			47			63
	$		1,429	$		2,167

AtDuring ~~each~~the ~~reporting~~quarter ~~date,~~ended weNovember ~~reevaluate~~30, ~~the~~2025, ~~expected~~we ~~number~~issued of136,143 shares ~~to vest under the terms~~ of our ~~performance-based~~common ~~long-term~~stock ~~incentive~~under ~~plan~~various ~~awards and adjust the amount of~~ stock-based compensation ~~based~~arrangements, onincluding ~~any revisions to the number of~~ shares ~~expected~~sold tothrough ~~vest. During the second quarter of fiscal 2025, revisions to these estimates reduced~~ our employee stock~~-based~~ ~~compensation~~purchase byplan $1(ESPP).~~0 million.~~

~~Annual~~Fiscal 2026 Long-Term Incentive ~~Performance and Retention~~ Plan Award

WeOn ~~have~~November a13, ~~long-term equity incentive plan for client partners~~2025, ~~managing~~the ~~directors,~~Organization and ~~certain~~Compensation ~~other~~Committee ~~associates~~granted ~~that~~a wenew ~~believe are critical to our~~ long-term ~~success. The~~incentive ~~number~~plan of(LTIP) ~~shares~~award ~~granted~~ to ~~sales-related~~our ~~roles~~executive isofficers ~~generally~~and ~~based on the achievement of specified annual revenue goals while~~ other ~~awards~~members ~~are for an amount determined by the Organization and Compensation Committee~~ of ~~the Board of Directors~~management. ~~These~~The ~~time-based~~fiscal ~~awards~~2026 ~~are~~LTIP ~~granted~~award ~~after~~consists ~~the completion~~ of ~~each fiscal year and vest over a~~ three~~-year~~ ~~service period~~tranches, ~~with~~ one~~-third~~ ofwith ~~the shares vesting on August 31 of each year following the grant. We granted~~ a ~~total of 92,930 unvested share units in fiscal 2025 to participants under the terms of this long~~time-~~term~~based ~~incentive~~vesting ~~plan. The~~condition ~~compensation~~and ~~cost~~two ofwith ~~these awards is included in the long~~performance-~~term~~based ~~incentive~~vesting ~~awards~~conditions ~~category~~as indescribed ~~the preceding table.~~below:

•

10Time-Based Award Shares – 25% of a participant’s fiscal 2026 LTIP award shares vest over a three-year service period. The 2026 LTIP time-based awards step-vest with one-third vesting in each of November 2026, 2027, and 2028. The total number of time-based shares that may be earned by participants in the 2026 LTIP award is 78,309 shares. The number of shares awarded in this tranche is not variable and will not fluctuate based on financial or performance measures

•

~~Fiscal~~Performance-Based ~~2025~~Award ~~Board~~Shares – The remaining 75% of ~~Directors~~a ~~Unvested~~participant’s ~~Share~~fiscal ~~Award~~2026 LTIP award is based on cumulative net revenue and cumulative Adjusted EBITDA achieved over a three-year measurement period consisting of fiscal 2026, fiscal 2027, and fiscal 2028. 70% of the performance-based shares will be earned on cumulative net revenue and 30% of the performance-based shares will be earned on cumulative Adjusted EBITDA. The number of shares that eventually vest to participants in this tranche is variable and may be 50% of the award (minimum award threshold) up to 175% of the participant’s award (maximum threshold). The number of shares that may be earned for achieving 100% of the performance-based objectives totals 234,942

Our annual unvested stock award granted to non-employee members of the Board of Directors is administered under the terms of our omnibus incentive plan, and is designed to provide our non-employee directors, who are not eligible to participate in our employee stock purchase plan, an opportunity to obtain an interest in the Company through the acquisition of shares of our common stock as part of their compensation. The annual award is normally granted in January of each year on the same day as our annual shareholders’ meeting. For the fiscal 2025 award, each eligible director received a whole share grant equal to $120,000 with a one-year vesting period. Our Board of Directors unvested stock award activity during the three quarters ended May 31, 2025 consisted of the following:9

			Weighted-Average
			Grant Date
	Number of		Fair Value
	Shares		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
May 31, 2025	27,336	$	35.12

Table of Contents

~~Employee~~shares. The ~~Stock~~maximum ~~Purchase~~number ~~Plan~~of shares that may be awarded in connection with the performance-based tranches of the 2026 LTIP totals 411,087 shares

WeAnnual ~~have~~Long-Term anIncentive ~~ESPP~~Performance 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 fiscal quarter. During the quarter and ~~three~~Retention ~~quarters ended May 31, 2025, we sold 16,020 shares and 36,816 shares of our common stock to participants in the ESPP.~~ Plan

~~NOTE~~We 5have –a ~~RESTRUCTURING~~long-term ~~COSTS~~equity incentive plan for client partners, managing directors, and certain other associates that we believe are critical to our long-term success. The number of shares granted to sales-related roles is generally based on the achievement of specified annual revenue goals while other awards are for an amount determined by the Organization and Compensation Committee of the Board of Directors. These time-based awards are granted after the completion of each fiscal year and vest over a three-year service period, with one-third of the shares vesting on August 31 of each year following the grant. We granted a total of 150,752 unvested share units in fiscal 2026 to participants under the terms of this long-term incentive plan. The compensation cost of these awards is included in the long-term incentive awards category in the preceding table.

~~Our~~Employee ~~fiscal~~Stock ~~2025~~Purchase restructuring costs were for the continued implementation of our new Enterprise Division 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. Through May 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.Plan

~~During~~We ~~the~~have ~~quarter~~an ~~ended~~ESPP ~~May~~that ~~31,~~offers ~~2025,~~qualified weemployees ~~expensed~~the ~~$4.7~~opportunity ~~million for severance~~ to ~~approximately~~purchase 45shares ~~associates~~of ~~who~~our ~~were~~common ~~impacted~~stock byat ~~changes~~a toprice ~~our~~equal ~~new go-~~to~~-market~~ ~~strategy~~85% ~~and cost reduction initiatives. Approximately $3.8 million~~ of the ~~restructuring~~average ~~was~~fair ~~attributable~~market tovalue ~~the~~of ~~North~~our ~~America~~common ~~segment,~~stock ~~$0.2~~on ~~million for~~ the ~~International~~last ~~Direct~~trading ~~Office~~day ~~segment,~~of ~~$0.1~~each ~~million~~fiscal ~~for the International Licensees segment, and $0~~quarter.~~6 million for the Education Division.~~ WeDuring ~~expect to pay~~ the ~~majority~~quarter ofended ~~these~~November ~~severance~~30, ~~benefits~~2025, ~~during~~we ~~the~~sold ~~fourth~~17,441 ~~quarter~~shares of ~~fiscal~~our ~~2025~~common ~~and~~stock ~~had~~to ~~$4.7~~participants ~~million included~~ in ~~accrued liabilities on our condensed consolidated balance sheet at May 31, 2025, for~~ the ~~third quarter restructuring event~~ESPP.

InNOTE ~~the~~5 ~~first~~– ~~quarter~~RESTRUCTURING 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. The severance benefits were paid during the second quarter of fiscal 2025 and there were no remaining accrued restructuring liabilities from the first quarter restructuring event on our condensed consolidated balance sheet at May 31, 2025.COSTS

‎During the quarter ended November 30, 2025, we expensed $3.4 million for restructuring costs to streamline our organizational structure and reduce operating costs. The restructuring charge was comprised of severance costs to approximately 45 associates who were impacted by the event. Approximately $2.3 million of the restructuring charge was attributable to the North America segment, $0.4 million was for the International segment, and $0.7 million was for the Education Division. We expect to pay the majority of these severance benefits during the first and second quarters of fiscal 2026 and at November 30, 2025, had $1.7 million included in accrued liabilities on our condensed consolidated balance sheet for this restructuring event.

11NOTE 6 – EARNINGS (LOSS) PER SHARE

~~NOTE~~The 6following –schedule ~~EARNINGS~~shows the calculation of net income (~~LOSS~~loss) ~~PER~~per ~~SHARE~~common share for the periods presented (in thousands, except per-share amounts).

The following schedule shows the calculation of net income (loss) per common share for the periods presented (in thousands, except per-share amounts).


	Quarter Ended
		November 30,				November 30,
		2025				2024
Numerator for basic and diluted income per share:
Net income (loss)	$		(3,289	)	$		1,181

Denominator for basic and diluted income per share:
Basic weighted average shares outstanding			12,210				13,092
Effect of dilutive securities:
Stock-based compensation awards			-				179
Diluted weighted average shares outstanding			12,210				13,271

EPS Calculations:
Net income (loss) per share:
Basic	$		(0.27	)	$		0.09
Diluted			(0.27	)			0.09

	Quarter Ended				Three Quarters Ended
		May 31,		May 31,		May 31,		May 31,
		2025		2024		2025		2024
Numerator for basic and
diluted income per share:
Net income (loss)	$	(1,409)	$	5,721	$	(1,304)	$	11,446
Denominator for basic and
diluted income per share:
Basic weighted average shares
outstanding		12,891		13,160		13,028		13,222
Effect of dilutive securities:
Stock-based compensation awards		-		218		-		277
Diluted weighted average
shares outstanding		12,891		13,378		13,028		13,499
EPS Calculations:
Net income (loss) per share:
Basic	$	(0.11)	$	0.43	$	(0.10)	$	0.87
Diluted		(0.11)		0.43		(0.10)		0.85

Since we incurred a net loss for the quarter ended November 30, 2025, no potentially dilutive securities are included in the calculation of net loss per share because their inclusion would be anti-dilutive. The number of dilutive stock-based compensation awards as of November 30, 2025 would have been approximately 144,000 shares.

Since we incurred a net loss for the quarter and three quarters ended May 31, 2025, no potentially dilutive securities are included in the calculation of net loss per share because their inclusion would be anti-dilutive. The number of dilutive stock-based compensation awards as of May 31, 2025 would have been approximately 116,000 shares.10

~~NOTE~~Table 7of ~~– SEGMENT INFORMATION~~Contents

~~Segments~~NOTE 7 – SEGMENT INFORMATION

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. Beginning with the first quarter of fiscal 2025, our chief operating decision maker (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 5 Restructuring Costs. As a result, we realigned our reportable segments to those shown below.Segments

Our ~~operations~~sales ~~consist~~are primarily comprised of ~~five~~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 and International 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 2026, our CODM began to manage our business, allocate resources, and evaluate performance based on changes that were made in the Company’s reporting and management structure. Accordingly, we realigned our reportable segments asto ~~described~~those shown below:.

~~North America –~~ Our ~~North~~operations ~~America~~consist ~~segment has a depth~~ of ~~expertise~~three inoperating ~~helping organizations solve problems that require changes in human behavior, including leadership, productivity, execution, trust,~~ and ~~sales~~reportable ~~performance. We~~segments ~~have~~as adescribed ~~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.~~below:

•

~~International~~North ~~Direct~~America ~~Offices~~ – Our ~~international~~North ~~direct~~America ~~offices~~segment ~~provide~~has ~~the~~a ~~same~~depth ~~offerings~~of ~~and~~expertise ~~content~~ in ~~countries~~helping ~~outside~~organizations ofsolve ~~North~~problems ~~America,~~that ~~which~~require ~~includes~~changes ~~Australia,~~in ~~Austria,~~human ~~China~~behavior, ~~France~~including leadership, ~~Germany~~productivity, ~~Ireland~~execution, ~~Japan~~trust, ~~New~~and ~~Zealand,~~sales ~~Switzerland,~~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 ~~Kingdom~~States and Canada.

•

International ~~Licensees~~ – Our International segment includes the operations of our international direct offices and international licensees. 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. The 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 sales are primarily comprised of royalty revenues received from the licensees.~~

•

12Education Practice – Centered around the principles found in The Leader in Me, the Education practice 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.

~~Education~~Our ~~Practice~~reportable –segments ~~Centered~~reflect ~~around~~ the ~~principles~~structure ~~found~~of inthe ~~The~~Company’s ~~Leader~~internal inorganization ~~Me,~~and the ~~Education~~financial ~~practice~~information isthe ~~dedicated~~CODM toregularly ~~helping~~reviews ~~educational~~to ~~institutions~~assess ~~build~~Company aperformance ~~culture~~and ~~that~~allocate ~~will~~resources. The ~~produce~~CODM ~~great~~reviews ~~results. We~~the ~~believe~~performance ~~these~~of ~~results~~each ~~are~~segment ~~manifested~~using byinternal ~~increases~~reports inwhich ~~student~~provide ~~performance,~~variance ~~improved~~analysis ~~school~~of ~~culture,~~actual ~~decreased~~results ~~disciplinary~~by ~~issues,~~segment ~~and~~compared ~~increased~~to ~~teacher~~budget, ~~engagement~~forecast, and ~~parental~~the ~~involvement~~prior year. ~~This~~The ~~segment~~primary ~~includes~~measurement ~~our~~tool ~~domestic~~used ~~and~~in ~~international~~segment ~~Education~~performance ~~practice~~analysis ~~operations~~is Adjusted EBITDA, which ~~are~~may ~~focused~~not onbe ~~sales~~calculated toas ~~educational~~similarly ~~institutions~~titled ~~such~~amounts asdisclosed ~~elementary~~by ~~schools,~~other ~~high~~companies. The ~~schools,~~prior ~~and~~period ~~colleges~~segment ~~and~~information ~~universities~~has been recast to conform with the new reporting segment presentation described above.

~~Corporate~~Our ~~and~~operations ~~Other~~are –not ~~Our~~capital ~~corporate~~intensive and ~~other~~we ~~information~~do ~~includes~~not ~~leasing~~own ~~operations,~~any ~~shipping~~manufacturing ~~and~~facilities ~~handling~~or ~~revenues~~equipment. Accordingly, ~~royalty~~we ~~revenues~~do ~~from~~not ~~Franklin~~allocate ~~Planner~~assets ~~Corp~~to the reportable segments for analysis purposes., Interest expense and interest income are primarily generated at the ~~cost~~corporate oflevel ~~certain~~and ~~administrative~~are ~~functions~~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.

We have determined that the Company’s CODM continues to be the Chief Executive Officer, and the primary measurement tool used in business unit performance analysis is Adjusted EBITDA, which may not be calculated as similarly titled amounts disclosed by other companies. Adjusted EBITDA is a non-GAAP financial measure. For reporting purposes, our consolidated Adjusted EBITDA may be calculated as net income or loss excluding interest, income taxes, depreciation expense, intangible asset amortization expense, stock-based compensation, and certain other charges such as restructuring and headquarters moving costs. We reference this non-GAAP financial measure in our decision making because it provides 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.11

~~Our~~Table ~~operations~~of are not capital intensive and we do not own any manufacturing facilities or equipment. Accordingly, we do not allocate assets to the reportable segments 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.Contents

13Other 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 (in thousands).

We account for the following segment information on the same basis as the accompanying unaudited condensed consolidated financial statements (in thousands). The prior period segment information has been recast to conform with the new reporting segment presentation described above.


Quarter Ended		North						Education				Segment
November 30, 2025		America			International			Division				Total
Net revenue	$		36,255	$		11,205	$		16,092		$		63,552
Cost of revenue			6,700			2,532			6,185				15,417
Associate costs			21,016			4,924			8,733				34,673
Other segment items			3,270			1,315			2,110				6,695
Segment Adjusted EBITDA	$		5,269	$		2,434	$		(936	)	$		6,767

Other revenues													493
Less:
Unallocated corporate expenses(1)													3,578
Stock-based compensation													1,429
Restructuring costs													3,444
Building exit costs													674
Depreciation													1,099
Amortization													687
Loss from operations													(3,651	)
Interest income													114
Interest expense													(95	)
Loss before income taxes											$		(3,632	)

Reconciliation of revenue:
Segment revenues	$		63,552
Other revenues(2)			493
Consolidated revenue	$		64,045


Quarter Ended		North						Education				Segment
November 30, 2024		America			International			Division				Total
Net revenue	$		40,137	$		11,442	$		16,464		$		68,043
Cost of revenue			7,316			2,465			6,054				15,835
Associate costs			20,889			5,372			8,474				34,735
Other segment items			3,188			2,185			1,670				7,043
Segment Adjusted EBITDA			8,744			1,420			266				10,430

Other revenues													1,043
Less:
Unallocated corporate expenses(1)													3,799
Stock-based compensation													2,167
Restructuring costs													1,984
Depreciation													950
Amortization													1,098
Income from operations													1,475
Interest income													290
Interest expense													(178	)
Income before income taxes											$		1,587

Reconciliation of revenue:
Segment revenues	$		68,043
Other revenues(2)			1,043
Consolidated revenue	$		69,086

		Revenue From
Quarter Ended		External				Adjusted
May 31, 2025		Customers		Gross Profit		EBITDA
Enterprise Division:
North America	$	37,054	$	30,708	$	6,201
International direct offices		7,496		5,490		313
International licensees		2,716		2,379		1,349
		47,266		38,577		7,863
Education practice		18,640		12,227		2,053
Corporate and eliminations		1,215		518		(2,609)
Consolidated	$	67,121	$	51,322	$	7,307
Quarter Ended
May 31, 2024
Enterprise Division:
North America	$	40,592	$	33,425	$	10,822
International direct offices		8,540		6,629		1,268
International licensees		2,747		2,463		1,352
		51,879		42,517		13,442
Education practice		20,235		13,270		3,142
Corporate and eliminations		1,259		419		(2,660)
Consolidated	$	73,373	$	56,206	$	13,924
Three Quarters Ended
May 31, 2025
Enterprise Division:
North America	$	111,711	$	92,503	$	19,788
International direct offices		21,936		16,163		(884)
International licensees		8,749		7,742		4,449
		142,396		116,408		23,353
Education practice		50,169		31,968		2,006
Corporate and eliminations		3,254		1,403		(8,318)
Consolidated	$	195,819	$	149,779	$	17,041
Three Quarters Ended
May 31, 2024
Enterprise Division:
North America	$	116,439	$	96,101	$	30,421
International direct offices		24,533		18,744		2,318
International licensees		8,951		7,941		4,626
		149,923		122,786		37,365
Education practice		49,815		31,420		2,778
Corporate and eliminations		3,371		1,130		(7,803)
Consolidated	$	203,109	$	155,336	$	32,340

(1) Unallocated corporate expenses primarily consist of administrative overhead expenses.

‎(2) Other revenues consist of shipping and handling revenue, leasing revenue (in fiscal 2025), and royalty revenue from Franklin Planner Corp.

1412

ATable ~~reconciliation~~ of ~~our consolidated Adjusted EBITDA to consolidated net income (loss) is provided below (in thousands).~~Contents

	Quarter Ended				Three Quarters Ended
		May 31,		May 31,		May 31,		May 31,
		2025		2024		2025		2024
Segment Adjusted EBITDA	$	7,307	$	13,924	$	17,041	$	32,340
Stock-based compensation		(2,217)		(2,828)		(5,730)		(7,092)
Restructuring costs		(4,739)		(701)		(6,723)		(3,008)
Headquarters moving costs		(444)		-		(498)		-
Impaired asset		-		-		-		(928)
Depreciation		(1,012)		(990)		(2,979)		(2,994)
Amortization		(1,098)		(1,062)		(3,294)		(3,204)
Income (loss) from operations		(2,203)		8,343		(2,183)		15,114
Interest income		211		268		765		857
Interest expense		(135)		(247)		(470)		(916)
Income (loss) before income taxes		(2,127)		8,364		(1,888)		15,055
Income tax benefit (provision)		718		(2,643)		584		(3,609)
Net income (loss)	$	(1,409)	$	5,721	$	(1,304)	$	11,446

Disaggregated Revenue

~~Disaggregated~~The ~~Revenue~~following table presents our revenue disaggregated by geographic region (in thousands).

The following table presents our revenue disaggregated by geographic region (in thousands).


	Quarter Ended
		November 30,			November 30,
		2025			2024
Americas	$		53,188	$		57,730
Asia Pacific			5,779			6,563
Europe/Middle East/Africa			5,078			4,793
	$		64,045	$		69,086

	Quarter Ended				Three Quarters Ended
		May 31,		May 31,		May 31,		May 31,
		2025		2024		2025		2024
Americas	$	57,011	$	62,084	$	165,469	$	169,840
Asia Pacific		5,609		6,460		17,209		19,438
Europe/Middle East/Africa		4,501		4,829		13,141		13,831
	$	67,121	$	73,373	$	195,819	$	203,109

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 and contractually committed materials and services sold in connection with the All Access Pass. Subscription revenue includes sales of our subscription services such as the All Access Pass and Leader in Me membership, including Education coaching days which are contracted with the Leader in Me membership. 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 fiscal 2025 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
Quarter Ended November 30, 2025		Products			Subscription			Royalties			Other			Consolidated
Enterprise Division:
North America	$		13,652	$		22,286	$		317	$		-	$		36,255
International			5,313			2,961			2,931			-			11,205
			18,965			25,247			3,248			-			47,460
Education practice			3,181			11,772			1,139			-			16,092
Corporate and eliminations			-			-			298			195			493
Consolidated	$		22,146	$		37,019	$		4,685	$		195	$		64,045

Quarter Ended November 30, 2024
Enterprise Division:
North America	$		16,266	$		23,537	$		334	$		-	$		40,137
International			5,688			2,850			2,904			-			11,442
			21,954			26,387			3,238			-			51,579
Education practice			4,747			10,470			1,247			-			16,464
Corporate and eliminations			-			-			313			730			1,043
Consolidated	$		26,701	$		36,857	$		4,798	$		730	$		69,086

1513

~~The~~Table ~~following table presents our revenue disaggregated by type~~ of ~~service (in thousands).~~Contents

Quarter Ended		Services and						Leases and
May 31, 2025		Products		Subscriptions		Royalties		Other		Consolidated
Enterprise Division:
North America	$	14,139	$	22,534	$	381	$	-	$	37,054
International direct offices		5,266		2,182		48		-		7,496
International licensees		80		293		2,343		-		2,716
		19,485		25,009		2,772		-		47,266
Education practice		6,214		11,774		652		-		18,640
Corporate and eliminations		-		-		298		917		1,215
Consolidated	$	25,699	$	36,783	$	3,722	$	917	$	67,121
Quarter Ended
May 31, 2024
Enterprise Division:
North America	$	16,727	$	23,490	$	375	$	-	$	40,592
International direct offices		5,955		2,538		47		-		8,540
International licensees		57		303		2,387		-		2,747
		22,739		26,331		2,809		-		51,879
Education practice		9,117		10,397		721		-		20,235
Corporate and eliminations		-		-		313		946		1,259
Consolidated	$	31,856	$	36,728	$	3,843	$	946	$	73,373
Three Quarters Ended
May 31, 2025
Enterprise Division:
North America	$	42,358	$	68,353	$	1,000	$	-	$	111,711
International direct offices		14,597		7,213		126		-		21,936
International licensees		210		908		7,631		-		8,749
		57,165		76,474		8,757		-		142,396
Education practice		14,566		32,334		3,269		-		50,169
Corporate and eliminations		-		-		649		2,605		3,254
Consolidated	$	71,731	$	108,808	$	12,675	$	2,605	$	195,819
Three Quarters Ended
May 31, 2024
Enterprise Division:
North America	$	44,478	$	70,968	$	993	$	-	$	116,439
International direct offices		16,918		7,491		124		-		24,533
International licensees		373		960		7,618		-		8,951
		61,769		79,419		8,735		-		149,923
Education practice		16,783		29,662		3,370		-		49,815
Corporate and eliminations		-		-		939		2,432		3,371
Consolidated	$	78,552	$	109,081	$	13,044	$	2,432	$	203,109

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~NOTE~~Management’s 8discussion –and ~~CORPORATE~~analysis ~~HEADQUARTERS~~of ~~LEASE~~financial condition and results of operations (Management’s Discussion and Analysis) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in forward-looking statements are set forth below under the heading “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.”

OnWe ~~December~~suggest ~~20,~~that ~~2024, we signed a new lease agreement (~~the ~~Lease)~~following ~~for~~discussion ~~one~~and ~~floor~~analysis ofbe aread ~~five-story office building located~~ in ~~Draper,~~conjunction ~~Utah~~with tothe ~~house~~Consolidated ~~our~~Financial ~~corporate~~Statements ~~headquarters. The~~and ~~Lease~~Management’s ~~requires~~Discussion ~~initial~~and ~~base~~Analysis ~~rent~~ of ~~approximately~~Financial ~~$0.8~~Condition ~~million~~and ~~per~~Results ~~year~~of ~~with~~Operations ~~annual~~included ~~rent~~in ~~escalations. The~~our ~~initial~~Annual ~~lease~~Report ~~term~~on isForm ~~for 130 months with a~~ 10-~~month~~K ~~rent~~for ~~holiday. Based on~~ the ~~guidance~~fiscal ~~found~~year ~~in Accounting Standards Codification 842 Leases, we determined that the lease commencement date occurred during the quarter~~ ended ~~May~~August 31, 2025, as ~~the~~filed ~~leased~~with ~~space was made available to us for making leasehold improvements prior to occupying~~ the ~~property. The~~SEC ~~Lease~~on ~~added~~November ~~$6.4 million of right of use assets~~12, ~~which are included in other long-term assets, and $6.3 million of lease liabilities, which are primarily included in other long-term liabilities, in our condensed consolidated balance sheet at May 31,~~ 2025.

The master lease on our current headquarters campus, which is accounted for as a financing obligation on the accompanying condensed consolidated balance sheets, expires in June 2025. At the conclusion of the master lease agreement, the longNon-~~term~~GAAP ~~portion of the financing obligation, which totaled $1.3 million, will be written off against the corresponding carrying value of the land and the balances will be eliminated.~~Measures

16This Management’s Discussion and Analysis includes the concept of Adjusted EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income or loss excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items such as restructuring and headquarters moving costs. We reference this non-GAAP measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the operating performance of prior periods and we believe it provides investors with greater transparency to evaluate our operational activities and financial results. For a reconciliation of our reportable segment Adjusted EBITDA to income or loss before income taxes, a related GAAP measure, refer to Note 7, Segment Information, to our unaudited condensed consolidated financial statements.

~~ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND~~ RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations (Management’s Discussion and Analysis) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations and are subject to various uncertainties and changes in circumstances. Important factors that could cause actual results to differ materially from those described in forward-looking statements are set forth below under the heading “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.”Overview

WeFranklin ~~suggest~~Covey ~~that~~Co. ~~the~~is ~~following~~a ~~discussion~~global company focused on individual and ~~analysis~~organizational beperformance ~~read~~improvement. Our mission is to “enable greatness in ~~conjunction~~people ~~with~~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 ~~Consolidated~~connection ~~Financial~~between ~~Statements~~capabilities and ~~Management’s~~results. Our ~~Discussion~~business is currently structured around two divisions, the Enterprise Division and ~~Analysis~~the Education Division. The Enterprise Division consists of ~~Financial~~our ~~Condition~~North America and ~~Results~~International ofsegments ~~Operations~~and ~~included~~is infocused on selling our ~~Annual~~offerings ~~Report~~to oncorporations, ~~Form~~governments, 10not-K for-profits, and other related organizations. Our offerings delivered through the ~~fiscal~~Enterprise ~~year~~Division ~~ended~~are ~~August 31,~~designed ~~2024,~~to ashelp ~~filed~~organizations ~~with~~and individuals achieve their own great results. Our Education Division is centered around the ~~SEC~~principles onfound ~~November~~in 12The Leader in Me and is dedicated to helping educational institutions build cultures that will produce great results, ~~2024~~including increased student performance, improved school culture, and increased parental and teacher involvement.

~~Non~~For Franklin Covey, fiscal 2025 was a year of transition and transformation as we initiated a new go-~~GAAP~~to-market ~~Measures~~and sales strategy in North America. In addition, our fiscal 2025 results of operations were adversely impacted by various macroeconomic factors, including reduced U.S. federal government spending and geopolitical tensions that produced instability in certain regions of the world. This resulted in a reduction of invoiced amounts and net revenue for fiscal 2025, which will continue to impact fiscal 2026 as we recognize a lower base of previously deferred revenue. Despite these headwinds, we have retained the vast majority of our client base and now with the bulk of our transformation investments coming to completion, we believe these efforts are beginning to bear fruit. We view fiscal 2026 to be a year of execution and a return to growth, and believe fiscal 2027 will continue the momentum and provide accelerating and compounding growth and cash flow. We believe the transformative investments made in our Enterprise North America go-to-market strategy plus our continued investments in content and technology position us for meaningful growth in the future.

This Management’s Discussion and Analysis includes the concept of Adjusted EBITDA, which is a non-GAAP financial measure. We define Adjusted EBITDA as net income or loss excluding the impact of interest, income taxes, intangible asset amortization, depreciation, stock-based compensation expense, and certain other items such as restructuring and headquarters moving costs. We reference this non-GAAP measure in our decision making because it provides supplemental information that facilitates consistent internal comparisons to the operating performance of prior periods and we believe it provides investors with greater transparency to evaluate our operational activities and financial results. For a reconciliation of our reporting segment Adjusted EBITDA to net income (loss), a related GAAP measure, refer to Note 7, Segment Information, to our unaudited condensed consolidated financial statements.14

~~RESULTS~~Table OFof ~~OPERATIONS~~Contents

~~Overview~~During the first quarter of fiscal 2026, we were encouraged by strong growth in Enterprise North America invoiced amounts. This is a primary lead metric that we believe demonstrates the positive momentum building from our go-to-market investments.

~~Franklin~~Our ~~Covey~~consolidated ~~Co.~~revenue isfor athe ~~global~~quarter ~~company~~ended ~~focused~~November on30, ~~individual~~2025, ~~and~~was ~~organizational performance improvement~~$64. ~~Our~~0 ~~mission is to “enable greatness in people and organizations everywhere~~million,” ~~and~~compared ~~our~~with ~~worldwide~~$69.1 ~~resources~~million ~~are organized to help individuals and organizations achieve sustained superior performance at scale through changes~~ in ~~human~~the ~~behavior. We~~first ~~believe~~quarter ~~that~~of ~~our~~fiscal ~~content~~2025 and ~~services~~reflected ~~create~~ the ~~connection~~impact ~~between~~of ~~capabilities~~conditions ~~and~~previously ~~results~~described. ~~Our~~Foreign ~~business~~exchange isrates ~~currently~~did ~~structured~~not ~~around~~have ~~two~~a ~~divisions,~~material ~~the~~impact ~~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 ~~offerings~~consolidated torevenue ~~corporations,~~during ~~governments, not-for-profits, and other related organizations. Our offerings delivered through~~ the ~~Enterprise~~first ~~Division~~quarter ~~are~~of ~~designed~~fiscal ~~to help organizations and individuals achieve their own great results~~2026. ~~Our~~The ~~Education~~Company’s ~~Division~~revenue isperformance ~~centered~~during ~~around~~ the ~~principles~~quarter ~~found~~ended inNovember ~~The Leader in Me and is dedicated to helping educational institutions build cultures that will produce great results~~30, ~~including increased student performance~~2025, ~~improved~~included ~~school~~the ~~culture,~~following ~~and~~key ~~increased parental and teacher involvement.~~metrics:

~~During~~Enterprise ~~the~~Division ~~quarter~~revenues ~~ended~~for ~~May~~the ~~31,~~first ~~2025,~~quarter ~~our~~of ~~operations~~fiscal ~~were~~2026 ~~heavily~~totaled ~~impacted~~$47.5 bymillion ~~various~~compared ~~macroeconomic~~with ~~factors,~~$51.6 ~~including~~million ~~specific~~in ~~actions~~the tofirst ~~reduce~~quarter ~~U.S.~~of ~~federal~~fiscal ~~government~~2025. Enterprise ~~spending,~~Division ~~threatened~~revenue orperformance ~~enacted~~was ~~tariffs~~impacted ~~that~~by ~~have~~a ~~created~~$3.9 ~~significant~~million ~~business~~decrease ~~environment~~in ~~uncertainty,~~North ~~and~~America ~~ongoing~~segment ~~geopolitical~~revenues ~~tensions~~and ~~which~~a ~~continue~~$0.2 tomillion ~~produce~~decrease ~~instability~~ in ~~certain~~International ~~areas~~segment ~~of the world~~revenues. ~~While~~Revenue ~~threatened~~performance orin ~~enacted~~these ~~tariffs~~segments ~~have~~were ~~not~~adversely ~~directly~~ impacted ~~our operations, the uncertainty created~~ by ~~the~~canceled ~~threatened~~government ~~tariffs~~contracts, ~~have~~ongoing ~~adversely~~geopolitical ~~impacted~~tensions, ~~our clients both domestically~~ and ~~internationally. In~~other ~~response~~macroeconomic todifficulties, ~~the~~which ~~economic~~hampered ~~uncertainty,~~subscription ~~many~~revenue ofgrowth ~~our~~in ~~clients~~fiscal 2025 and ~~prospective~~which ~~clients~~now ~~have~~flow ~~sought~~through toas ~~reduce~~we ~~their~~recognize ~~spending~~previously todeferred ~~maintain profitability~~revenue. Despite these ~~macroeconomic~~difficult ~~issues~~conditions, we ~~are~~were ~~pleased~~encouraged ~~that~~by the ~~majority~~growth ofin ~~our~~invoiced ~~clients~~amounts ~~are~~in ~~renewing~~the ~~their~~North ~~All~~America ~~Access~~segment ~~Pass subscriptions and Leader~~ in Methe ~~memberships. Our~~first ~~solutions are designed to help clients achieve their own great purposes and manage difficult and uncertain times. The Company’s recently implemented new go-to-market strategy entered its second~~ quarter ofas ~~operations~~previously ~~and~~described, ~~these~~which ~~initiatives~~we ~~are~~believe ~~designed~~will totranslate ~~enable us~~ to ~~systematically~~increased ~~drive~~reported ~~growth~~revenue in ~~both~~future ~~the breadth and depth of our client relationships at scale~~quarters.

17Education Division revenues in the first quarter of fiscal 2026 were $16.1 million compared with $16.5 million in the prior year. The decrease was primarily due to reduced classroom and training materials sales. In the first quarter of fiscal 2025, we entered into a new state-wide initiative that included large materials orders during the first year of the contract. Materials orders from this contract did not repeat at the same level in fiscal 2026. However, decreased materials revenue was partially offset by increased training and coaching revenue and membership subscription revenues as the Education Division delivered over 100 more training and coaching days than in the prior year.

~~Our~~Consolidated ~~consolidated~~subscription ~~revenue~~and subscription services revenues for the ~~third~~first quarter ~~ended~~of ~~May~~fiscal ~~31,~~2026 ~~2025,~~were ~~was~~ $6752.10 million, compared with $7355.48 million in the ~~third~~first quarter of ~~fiscal 2024 and reflected~~ the ~~impact~~prior ~~of conditions previously described~~year. ~~Foreign~~For ~~exchange~~the ~~rates~~quarter ~~did~~ended ~~not~~November ~~have~~30, a2025, ~~material~~subscription ~~impact~~and oncontractually ~~our~~committed ~~consolidated~~ revenue ~~during~~invoiced ~~the~~was ~~third quarter~~$26. ~~The~~0 ~~Company’s~~million ~~revenue~~compared ~~performance~~with ~~during~~$24.7 ~~the~~million ~~third~~in ~~quarter of~~ fiscal 2025 ~~included the following key metrics:~~.

~~oEnterprise~~Consolidated ~~Division~~deferred ~~revenues~~revenue ~~for~~on ~~the~~November ~~third~~30, ~~quarter~~2025, ofincreased ~~fiscal~~5% ~~2025~~to ~~totaled~~ $47100.32 million compared with $5195.97 million inon ~~fiscal~~November ~~2024. Enterprise Division revenue performance was impacted by a $3.5 million decrease in North America segment revenues and a $1.0 million decrease in International Direct Office revenues~~30, ~~which were both affected by macroeconomic uncertainties and canceled government contracts~~2024. ~~These challenging economic and business conditions adversely impacted new logo sales and expansion activity in the third quarter.~~

~~oEducation~~As ~~Division revenues in the third quarter~~ of ~~fiscal~~November ~~2025~~30, ~~were $18.6 million compared with $20.2 million in the prior year. The decrease was primarily due to reduced classroom materials sales. In the third quarter of fiscal 2024~~2025, we58% ~~entered into a new state-wide initiative and other new district-wide initiatives that included large materials orders during the first year~~ of ~~the~~our ~~contracts. Materials~~AAP ~~orders from these~~ contracts ~~did~~are ~~not~~for ~~repeat~~ at ~~the~~least ~~same~~two ~~level in fiscal 2025. However~~years, ~~decreased~~compared ~~materials~~with ~~revenue~~55% ~~was~~at ~~partially~~November ~~offset~~30, by2024, ~~increased training~~ and ~~coaching revenue and membership subscription revenues. Delivery of training and coaching days remained strong in~~ the ~~third~~percentage ~~quarter~~ of ~~fiscal~~contracted ~~2025~~amounts ~~and~~represented ~~benefited~~by ~~from higher revenue per day than in same period of the prior~~ multi-year~~. Education~~ ~~deferred~~contracts ~~subscription~~was ~~revenue~~61% atcompared ~~May~~with ~~31, 2025, increased 21~~60% ~~over the balance~~ at ~~May~~November 3130, 2024.

~~oConsolidated~~Unbilled ~~subscription~~deferred ~~and~~revenue ~~subscription~~on ~~services~~November ~~revenues~~30, ~~for the third quarter of fiscal~~ 2025, ~~were~~was $5772.71 million compared with $6073.80 million inon ~~the~~November ~~third~~30, ~~quarter of fiscal~~ 2024. ~~For~~Unbilled ~~the~~deferred ~~quarter~~revenue ~~ended~~represents ~~May~~business ~~31,~~that ~~2025~~is contracted, ~~subscription~~but ~~revenue~~unbilled ~~invoiced~~and ~~was~~therefore ~~$31.7~~excluded ~~million~~from ~~compared~~our ~~with~~balance ~~$34~~sheet.~~5 million in fiscal 2024.~~

~~oConsolidated~~The ~~deferred~~following ~~subscription~~is ~~revenue~~a onsummary ~~May~~of ~~31,~~other ~~2025,~~unaudited ~~increased~~consolidated 7%financial toinformation ~~$89.3~~from ~~million~~the ~~compared~~first ~~with~~quarter ~~$83.8~~of ~~million~~fiscal 2026, which ended on ~~May~~November 3130, ~~2024.~~2025:

•

~~oAs~~Cost of ~~May~~Revenue/Gross 31Profit – For the quarter ended November 30, 2025, ~~58%~~our cost of ~~our~~revenue ~~AAP~~totaled ~~contracts~~$15.7 ~~are~~million compared with $16.4 million in the prior year. Gross profit for atthe ~~least~~first ~~two~~quarter ~~years,~~of fiscal 2026 was $48.4 million compared with ~~55%~~$52.7 atmillion ~~May~~in ~~31,~~the ~~2024,~~prior ~~and~~year. The decrease in gross profit was primarily due to decreased revenue as described above. Gross margin for the ~~percentage~~first quarter of ~~contracted~~fiscal ~~amounts~~2026 ~~represented~~remained bystrong ~~multi-year~~and ~~contracts~~ was 6275.5% of revenue compared with 6076.3% asin the prior year. The decrease was primarily due to increased fixed costs related to the delivery of ~~May~~consulting 31days and live seminar presentations in our Education and International segments, ~~2024~~combined with lower revenue.

oUnbilled deferred subscription revenue on May 31, 2025, was $62.0 million compared with $69.4 million on May 31, 2024. Unbilled deferred revenue represents business that is contracted, but unbilled and therefore excluded from our balance sheet.15

~~The~~Table ~~following is a summary~~ of ~~other unaudited consolidated financial information from the third quarter of fiscal 2025, which ended on May 31, 2025:~~Contents

•

~~Cost~~Operating ofExpenses ~~Revenue/Gross Profit~~ – ~~For~~Our ~~the~~operating ~~quarter~~expenses ~~ended~~for ~~May~~the ~~31,~~first ~~2025,~~quarter ~~our cost~~ of ~~revenue~~fiscal 2026 totaled $1552.80 million ~~compared~~and ~~with~~increased $170.28 million incompared with the prior year~~. Gross~~, ~~profit~~which ~~for~~was ~~the~~primarily ~~third~~due ~~quarter~~to ofa ~~fiscal 2025 was~~ $511.3 5 million ~~compared~~increase ~~with~~in restructuring charges and a $560.2 7 million increase in ~~the~~building ~~prior~~exit ~~year~~costs which primarily consist of legal expenses. ~~The~~These ~~decrease~~increases inwere ~~gross~~partially ~~profit~~offset ~~was~~by ~~primarily~~decreased ~~due~~selling, togeneral, ~~decreased~~and ~~revenue~~administrative as(SG&A) ~~described~~expenses ~~above. Gross~~driven ~~margin~~by ~~for~~cost reduction efforts, and decreased stock-based compensation expense. During the ~~third~~first quarter of fiscal ~~2025~~2026, ~~remained~~we ~~strong~~continued to restructure our business to reduce costs and ~~was~~streamline ~~76.5%~~certain areas of ~~revenue~~our ~~compared~~operations. We ~~with~~incurred 76$3.6%4 inmillion ~~the~~of ~~third~~expense ~~quarter~~for this restructuring activity, which consisted primarily of ~~fiscal~~severance ~~2024~~and related costs.

•

~~Operating~~Income ~~Expenses~~Taxes – Our ~~operating~~income ~~expenses~~tax benefit for the ~~third~~ quarter ofended ~~fiscal~~November ~~2025~~30, ~~totaled $53.5 million and increased $5.7 million compared with the prior year~~2025, ~~which~~ was ~~primarily due to a~~ $4.0.3 million ~~increase~~on ina ~~restructuring~~pre-tax ~~charges~~loss ~~and a~~ of $1(3.6) million, ~~increase~~resulting in ~~selling,~~an ~~general,~~effective ~~and~~benefit ~~administrative~~rate ~~(SG&A)~~of ~~expenses~~9.4%. ~~During~~By ~~the~~comparison, ~~third~~our first quarter of fiscal 2025, weincome ~~continued~~tax toprovision ~~restructure~~was ~~our~~$0.4 ~~sales~~million ~~force~~on inpre-tax ~~the~~income ~~Enterprise Division and to reduce costs in certain areas~~ of ~~our operations. We incurred~~ $41.76 million, ofreflecting ~~expenses~~an ~~for~~effective ~~these~~income ~~restructuring~~tax ~~activities~~rate ~~primarily~~of ~~for severance and related costs~~25.6%. The ~~increase~~lower ineffective ~~SG&A~~tax ~~expenses~~benefit ~~was~~rate ~~primarily~~in ~~due~~the tofirst ~~increased~~quarter ~~associate~~of ~~costs~~fiscal ~~related~~2026 tois ~~new~~primarily ~~personnel,~~due ~~including~~to ~~new~~a ~~sales~~significant ~~and~~decrease ~~sales~~in ~~support~~non-deductible ~~personnel~~executive ~~hired~~compensation incompared ~~connection~~ with the ~~implementation~~first ofquarter ~~our new go-to-market strategy and the restructuring~~ of ~~our~~fiscal ~~North America sales force~~2025.

•

18Net Income (Loss) and Adjusted EBITDA – For the first quarter of fiscal 2026, we realized a net loss of $(3.3) million, or $(0.27) per share, compared with net income of $1.2 million, or $0.09 per diluted share, in the first quarter of fiscal 2025, reflecting the factors previously discussed. Our Adjusted EBITDA for the quarter ended November 30, 2025, totaled $3.7 million compared with $7.7 million in the prior year. Foreign exchange rates had an insignificant impact on our Adjusted EBITDA for the quarter ended November 30, 2025.

•

~~Income~~Liquidity ~~Taxes~~and Financial Position – Our ~~income~~liquidity ~~tax~~and ~~benefit~~financial ~~for~~position ~~the~~remained ~~quarter~~strong ~~ended~~throughout ~~May~~the ~~31,~~first ~~2025,~~quarter ~~was~~of $0fiscal 2026.7 At ~~million~~November on30, a2025, ~~pre-tax~~we ~~loss~~had of $~~(2.1)~~80 million, ~~for~~of anavailable ~~effective~~liquidity ~~benefit~~which ~~rate~~consisted of 33$17.~~8%. In~~5 ~~the~~million ~~third quarter~~ of ~~the~~cash ~~prior~~and ~~year,~~ our ~~income~~full ~~tax~~undrawn ~~provision was~~ $262.65 million online ~~pre-tax~~of ~~income~~credit ofeven after using $810.47 million, ~~reflecting~~of ancash ~~effective~~to ~~income~~purchase ~~tax~~shares ~~rate~~ of ~~31.6%. The~~our ~~slightly~~common ~~higher~~stock ~~benefit~~during ~~rate in~~ the ~~current~~first quarter isof ~~primarily~~fiscal attributable to our expectation that withholding taxes on foreign-source income will remain consistent year-over-year, while pre-tax income is expected to be lower, thus increasing the impact on our effective rate2026.

~~Net~~Further ~~Income~~details ~~(Loss)~~regarding ~~and~~our ~~Adjusted~~results EBITDA – For the third quarter of fiscal 2025, we realized a net loss of $(1.4) million, or $(0.11) per share, compared with net income of $5.7 million, or $0.43 per diluted share, in the third quarter of the prior year, reflecting the factors previously discussed. Our Adjusted EBITDA for the quarter ended ~~May~~November 3130, 2025, ~~exceeded~~are ~~our~~provided ~~previously~~throughout ~~announced expectations and totaled $7.3 million compared with $13.9 million in~~ the ~~third~~following ~~quarter~~Management’s ofDiscussion ~~fiscal~~and ~~2024~~Analysis. ~~Foreign exchange rates had a $0.5 million favorable impact on our Adjusted EBITDA for the quarter ended May 31, 2025.~~

~~Liquidity~~Quarter ~~and~~Ended ~~Financial~~November ~~Position – Our liquidity and financial position remained strong throughout the third quarter of fiscal 2025. At May 31~~30, 2025, weCompared ~~had~~with ~~over $95 million of available liquidity which consisted of $33.7 million of cash and our full undrawn $62.5 million line of credit even after purchasing $23.0 million of our common stock during~~ the ~~first~~Quarter ~~three~~Ended ~~quarters~~November of30, ~~fiscal 2025.~~2024

~~Further~~Enterprise ~~details regarding our results for the quarter ended May 31, 2025, are provided throughout the following Management’s Discussion and Analysis.~~Division

~~Quarter~~North ~~Ended~~America ~~May 31, 2025 Compared with the Quarter Ended May 31, 2024~~Segment

~~Enterprise~~The ~~Division~~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):

North America Segment


		Quarter Ended					Quarter Ended
		November 30,		% of			November 30,		% of
		2025		Sales			2024		Sales			Change
Revenue	$		36,255		100.0	$		40,137		100.0	$		(3,882	)
Cost of revenue			6,700		18.5			7,316		18.2			(616	)
Gross profit			29,555		81.5			32,821		81.8			(3,266	)
SG&A expenses			24,286		67.0			24,077		60.0			209
Adjusted EBITDA	$		5,269		14.5	$		8,744		21.8	$		(3,475	)

~~The~~Revenue. For the quarter ended November 30, 2025, North America segment ~~includes~~revenue ~~our~~was ~~personnel~~$36.3 ~~that~~million ~~serve~~compared ~~clients~~with $40.1 million in the ~~United~~prior ~~States~~year. North America segment revenues for the quarter were adversely impacted by lower invoiced amounts in prior periods, canceled or postponed government contracting, and ~~Canada~~ongoing macroeconomic uncertainty. ~~The~~However, ~~following~~we ~~comparative~~were ~~information~~encouraged isby ~~for~~strong ~~our~~growth in North America segment invoiced amounts in the ~~periods~~first ~~indicated~~quarter (of fiscal 2026 and believe the new go-to-market strategy is gaining momentum. During the first quarter of fiscal 2026, North America AAP subscription plus subscription services revenues were $32.2 million compared with $36.0 million in ~~thousands):~~the prior year, reflecting the decline in invoiced amounts during fiscal 2025 and decreased services revenues. Rolling four quarter North America AAP subscription and subscription service revenues were $134.6 million compared

		Quarter Ended			Quarter Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	37,054	100.0	$	40,592	100.0	$	(3,538)
Cost of revenue		6,346	17.1		7,167	17.7		(821)
Gross profit		30,708	82.9		33,425	82.3		(2,717)
SG&A expenses		24,507	66.1		22,603	55.7		1,904
Adjusted EBITDA	$	6,201	16.7	$	10,822	26.7	$	(4,621)

~~Revenue. For~~Table the quarter ended May 31, 2025, North America segment revenue was $37.1 million compared with $40.6 million in the prior year. North America segment revenues for the quarter were adversely impacted by the uncertain macroeconomic environment and by canceled or postponed government contracting. During the third quarter of fiscal 2025, total Enterprise Division AAP subscription plus subscription services revenues were $39.9 million compared with $42.6 million in the prior year. Rolling four quarter AAP subscription and subscription service revenues were $160.2 million compared with $163.3 million for the corresponding period ended May 31, 2024. We remain optimistic about the expected results of our new North America go-to-market strategy and sales force restructuring as our new North America sales force structure is in place and began executing on their directives earlier in fiscal 2025. However, continued economic uncertainty, including threatened or enacted tariffs, may prevent us from achieving expected sales goals in the near term. Foreign exchange rates had an insignificant impact on North America revenues and operating results during the third quarter of fiscal 2025.Contents

~~Gross~~with ~~Profit~~$144. ~~Gross~~5 ~~profit~~million ~~was~~for ~~impacted~~the bycorresponding ~~lower~~period ~~revenue~~ended asNovember ~~described~~30, ~~above~~2024. We remain optimistic about the expected results of our new North America ~~gross~~go-to-market ~~margin~~strategy ~~remained~~as ~~strong~~our ~~during~~new ~~the~~North ~~quarter~~America ~~ended~~sales ~~May~~structure ~~31,~~is ~~2025,~~in place and ~~increased~~executing toon 82their directives.9% However, ofthe ~~revenue~~continued ~~compared~~uncertain ~~with~~macroeconomic 82environment may prevent us from achieving expected sales goals during fiscal 2026.3% Foreign inexchange rates had an insignificant impact on North America revenues and operating results during the ~~third~~first quarter of fiscal ~~2024~~2026.

19Gross Profit. Gross profit was impacted by lower revenue as described above. North America gross margin remained strong and relatively flat during the quarter ended November 30, 2025, and was 81.5% of revenue compared with 81.8% in the prior year.

SG&A Expense. North America segment SG&A expenses ~~increased~~remained ~~primarily~~relatively ~~due~~flat towhen ~~associate~~compared ~~costs~~with ~~resulting from new sales and sales support personnel primarily related to our new go-to-market strategy and~~ the ~~restructuring~~prior ~~of our North America sales force~~year.

International ~~Direct~~Segment ~~Offices~~

Our International segment consists of our directly owned international offices and our international licensees that provide our services and products in countries or regions that are not served by a directly owned office. 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):

		~~Quarter Ended~~	Quarter Ended			~~Quarter Ended~~						Quarter Ended
		May 31,	% of			May 31,	% of
			November 30,				% of					November 30,		% of
		~~2025~~	~~Sales~~2025			~~2024~~	Sales			~~Change~~		2024		Sales			Change
Revenue	$	~~7,496~~$	~~100.0~~	11,205	$	~~8,540~~	~~100.0~~	100.0	$	~~(1,044)~~	$		11,442		100.0	$		(237	)
Cost of revenue		~~2,006~~	~~26.8~~	2,532		~~1,911~~	~~22.4~~	22.6		95			2,465		21.5			67
Gross profit		~~5,490~~	~~73.2~~	8,673		~~6,629~~	~~77.6~~	77.4		~~(1,139)~~			8,977		78.5			(304	)
SG&A expenses		~~5,177~~	~~69.1~~	6,239		~~5,361~~	~~62.8~~	55.7		~~(184)~~			7,557		66.0			(1,318	)
Adjusted EBITDA	$	~~313~~$	~~4.2~~	2,434	$	~~1,268~~	~~14.8~~	21.7	$	~~(955)~~	$		1,420		12.4	$		1,014

Revenue. International ~~Direct Office~~ revenues for the quarter ended ~~May~~November 3130, 2025, ~~were~~decreased ~~adversely~~primarily ~~affected~~due byto ~~ongoing~~lower ~~economic~~revenue ~~uncertainty~~from ~~and~~our ~~geopolitical~~China ~~tensions~~office, aswhich ~~previously~~continues ~~discussed. Third~~to ~~quarter~~be ~~revenues~~adversely ~~decreased~~impacted ~~in Japan~~ by ~~22%,~~international ingeopolitical ~~the~~tensions. Excluding ~~United~~China, ~~Kingdom~~our byrevenue ~~21%,~~from ~~and~~the inInternational ~~China~~segment byincreased 154% and ~~were~~our ~~reflective~~licensee ofrevenue ~~the~~increased ~~macroeconomic~~8% ~~conditions~~compared ~~and~~with ~~their~~the ~~impact~~first onquarter ~~existing~~of ~~and~~fiscal ~~potential clients~~2025. ~~Decreases~~Our revenue in ~~these~~international ~~offices~~markets ~~were~~is ~~partially~~highly ~~offset~~dependent byupon ~~increased~~regional ~~revenue~~macroeconomic ~~recognized~~strength, ~~through~~which ~~our~~can ~~new~~vary ~~France~~significantly ~~office. The~~in ~~fluctuation~~the ofcurrent ~~foreign~~global macroeconomic environment. Foreign exchange rates had aan ~~$0.1~~insignificant ~~million favorable~~ impact on ~~our~~the ~~International Direct Office~~ revenue and anoperating ~~insignificant~~results ~~impact~~of onour ~~operating~~International ~~results~~segment in the ~~third~~first quarter of fiscal ~~2025~~2026. We believe ~~the resolution of multiple~~ international ~~trade~~revenues ~~issues and improving economic conditions~~ will ~~lead~~improve ~~to improved sales performance~~ in future periods~~. However,~~ ~~the~~as ~~successful~~multiple ~~resolution~~international oftrade ~~these macroeconomic~~ issues isare ~~not~~resolved ~~within our control~~ and ~~may~~economic ~~not~~conditions ~~generate~~stabilize ~~expected~~and ~~revenue growth at our International Direct Offices in future periods~~strengthen.

Gross Profit. Gross profit in the International ~~Direct Office~~ segment decreased primarily due to reduced revenue in our China office as ~~described~~previously ~~above~~described. Gross margin for the ~~third~~first quarter of fiscal ~~2025~~2026 was 7377.24% of ~~sales~~revenue compared with 7778.65% in the prior year and decreased primarily due to aincreased ~~shift~~fixed incosts related to the ~~mix~~delivery of ~~services~~live ~~delivered~~seminars ~~and~~combined ~~products~~with ~~sold~~lower ~~during~~revenue ~~the~~in ~~third~~our ~~quarter~~China ofoffice when compared with fiscal 2025. Excluding ~~when~~China, ~~compared~~our ~~with~~International gross margin was 79.5% for the first quarter of fiscal ~~2024~~2026.

SG&A Expenses. International ~~Direct Office~~ SG&A expenses decreased $01.23 million primarily due to cost reduction initiatives enacted to offset the impact of decreased revenue and decreased bad debt expense compared with the prior year.

~~International Licensees Segment~~17

InTable ~~foreign~~of 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):Contents

		Quarter Ended			Quarter Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	2,716	100.0	$	2,747	100.0	$	(31)
Cost of revenue		337	12.4		284	10.3		53
Gross profit		2,379	87.6		2,463	89.7		(84)
SG&A expenses		1,030	37.9		1,111	40.4		(81)
Adjusted EBITDA	$	1,349	49.7	$	1,352	49.2	$	(3)

Education Division

~~Revenue. International~~Our ~~licensee~~Education ~~revenue~~Division is ~~primarily~~ comprised of ~~royalties on sales of~~ our ~~content~~domestic byand ~~the~~international ~~licensees. For~~Education ~~the~~practice ~~quarter~~operations ~~ended~~(focused ~~May~~on ~~31,~~sales 2025, our International Licensees’ revenue was essentially flat when compared with the prior year at $2.7 million as licensee royalty revenues were relatively flat for the quarter. Our International Licensees’ operations continue to beeducational ~~unfavorably~~institutions) ~~impacted by difficult macroeconomic conditions, such as geopolitical trade tensions~~ and ~~economic~~includes ~~uncertainty, which have negatively impacted the industries that some of~~ our ~~licensees~~widely ~~serve. While~~acclaimed weThe ~~remain~~Leader ~~optimistic about future growth~~ in ~~our~~Me ~~International Licensee operations, ongoing economic uncertainty and geopolitical instability may impair or reduce their growth compared with our expectations~~program. ~~Foreign~~The ~~exchange~~following ~~rates~~comparative ~~had~~information anis ~~immaterial~~for ~~impact~~our onEducation ~~International~~Division ~~Licensee~~in ~~revenues and operating results for~~ the ~~quarter~~periods ~~ended~~indicated ~~May~~(in ~~31, 2025.~~thousands):

Gross Profit. Despite consistent revenue performance when compared with the prior year, gross profit for the quarter ended May 31, 2025 decreased compared to fiscal 2024 primarily due to changes in the mix of services and products sold.


		Quarter Ended							Quarter Ended
		November 30,			% of				November 30,		% of
		2025			Sales				2024		Sales			Change
Revenue	$		16,092			100.0		$		16,464		100.0	$		(372	)
Cost of revenue			6,185			38.4				6,054		36.8			131
Gross profit			9,907			61.6				10,410		63.2			(503	)
SG&A expenses			10,843			67.4				10,144		61.6			699
Adjusted EBITDA	$		(936	)		(5.8	)	$		266		1.6	$		(1,202	)

20Revenue. Education Division revenue for the quarter ended November 30, 2025, decreased 2%, or $0.4 million, compared with the first quarter of the prior year. The decrease in Education Division revenue was primarily due to decreased sales of classroom and training materials, due in part to a new initiative with a state that began in the first quarter of fiscal 2025 that did not repeat at the same level in fiscal 2026, and a symposium event that did not repeat. These declines were partially offset by increased coaching and consulting revenue and increased membership subscription revenues resulting from schools which started The Leader in Me during fiscal 2025. Materials revenue declined $0.7 million over the prior year, which included $0.4 million of classroom and training materials from the state-wide initiative in fiscal 2025. The delivery of training and coaching days remained strong during the first quarter of fiscal 2026 as the Education Division delivered over 100 more training and coaching days than in the prior year. Training and coaching days are recognized as revenue when they are delivered. Education subscription and subscription services revenues in the first quarter of fiscal 2026 decreased 2% compared with the same period of the prior year due to decreased materials revenue. Foreign exchange rates had an immaterial impact on Education Division revenue and operating results for the first quarter of fiscal 2026. We continue to be pleased with the strength and momentum of our Education Division, which added 624 new Leader in Me schools in a very challenging funding environment during fiscal 2025. We believe the momentum generated in fiscal 2025 will continue through the remainder of fiscal 2026. At November 30, 2025, over 8,000 schools around the world were using The Leader in Me program.

~~These~~Gross ~~changes~~Profit. Education inDivision ~~product~~gross ~~mix~~profit ~~reduced~~decreased ~~International~~primarily ~~Licensee~~due ~~gross~~to ~~margin~~revenue ~~from~~performance 89as previously discussed.7% Education insegment ~~fiscal~~gross ~~2024~~margin declined to 8761.6% compared with 63.2% in the ~~current~~prior year as a result of increased fixed costs associated with school memberships, increased materials costs, and increased platform costs combined with lower revenue during the first quarter of fiscal 2026.

SG&A Expenses. ~~International~~ Education ~~licensee~~ SG&A expenses ~~decreased~~increased ~~$0.1 million~~ primarily due to ~~cost-cutting~~increased ~~initiatives~~associate ~~implemented~~expenses ~~during~~from ~~fiscal~~new ~~2025~~personnel, changes to compensation plans, increased commissions on previously deferred revenue, and increases to the allowance for credit losses.

~~Education~~Other ~~Division~~Operating Expense Items

~~Our~~Depreciation ~~Education~~Expense ~~Division~~– isOur ~~comprised~~depreciation ofexpense ~~our~~for ~~domestic~~the ~~and~~quarter ~~international~~ended ~~Education~~November ~~practice~~30, ~~operations~~2025, ~~(focused~~increased on$0.1 ~~sales~~million to ~~educational~~$1.1 ~~institutions)~~million, ~~and~~compared ~~includes~~with ~~our~~$1.0 ~~widely~~million ~~acclaimed~~in ~~The~~the ~~Leader~~prior year, primarily due to new assets acquired in Methe ~~program. The~~fourth ~~following~~quarter ~~comparative~~of ~~information~~the isprior ~~for~~year in connection with our ~~Education~~new ~~Division~~headquarters inoffice. We ~~the~~currently ~~periods~~anticipate ~~indicated~~that (depreciation expense will total approximately $4.5 million in ~~thousands):~~fiscal 2026.

		Quarter Ended			Quarter Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	18,640	100.0	$	20,235	100.0	$	(1,595)
Cost of revenue		6,413	34.4		6,965	34.4		(552)
Gross profit		12,227	65.6		13,270	65.6		(1,043)
SG&A expenses		10,174	54.6		10,128	50.1		46
Adjusted EBITDA	$	2,053	11.0	$	3,142	15.5	$	(1,089)

Amortization Expense – Compared with the prior year, our amortization expense decreased $0.4 million to $0.7 million primarily due to the re-evaluation of the useful lives of content and license rights originally acquired in the merger with the Covey Leadership Center. These intangible assets continue to be some of our primary revenue and cash flow generating assets. Based on the re-evaluation of these intangible assets, we extended the useful lives of these assets by approximately 5 years. We currently anticipate our finite-lived intangible asset amortization expense will total $3.0 million in fiscal 2026.

~~Revenue. For the third quarter of fiscal 2025, Education Division revenue was $~~18.6 million compared with $20.2 million in the third quarter of fiscal 2024. The decrease in Education Division revenue during the quarter was primarily due to a $2.2 million decrease in training materials revenue, which was partially offset by increased coaching and consulting revenue and increased membership subscription revenues resulting primarily from new schools which started The Leader in Me during fiscal 2024. During the third quarter of fiscal 2024 a new state-wide initiative began that included $1.4 million of classroom materials sales and we also recognized significant materials sales from other new district-wide initiatives. These contracts included large materials orders in the first year and did not repeat at the same level in fiscal 2025. The delivery of training and coaching services remained strong during the third quarter of fiscal 2025 and benefited from higher revenue per day than the prior year. Training and coaching days are recognized as revenue when they are delivered. Education subscription and subscription services revenues in the third quarter of fiscal 2025 decreased 2% compared with the same period of the prior year due to decreased materials revenue. Foreign exchange rates had an immaterial impact on Education Division revenue and operating results for the third quarter of fiscal 2025.

~~Gross~~Table ~~Profit. Education Division gross profit in the third quarter~~ of ~~fiscal 2025 decreased primarily due to revenue performance as previously described. Education Division gross margin remained strong and was consistent with the prior year at 65.6% of sales.~~Contents

~~SG&A~~Interest ~~Expenses.~~Income ~~Education~~– ~~SG&A~~Our ~~expenses~~interest ~~were~~income ~~relatively~~decreased ~~flat~~by ~~compared~~$0.2 ~~with~~million ~~the~~to ~~prior~~$0.1 ~~year~~million ~~and~~in ~~increased slightly due to~~ the ~~impact~~first ofquarter ~~new personnel, recognition~~ of ~~previously~~fiscal ~~deferred~~2026 ~~commissions, and increased salaries~~ compared with the prior year~~. These~~ ~~increases~~due ~~were~~to ~~mostly~~decreased ~~offset~~cash byand ~~decreased~~lower ~~variable~~interest ~~pay~~rates ~~and~~on ~~marketing~~those ~~expenses~~balances.

~~Other~~Interest ~~Operating~~ Expense ~~Items~~– First quarter interest expense of $0.1 million decreased by $0.1 million compared with the first quarter of fiscal 2025 due to decreased debt balances as payments have been made in the normal course of business.

~~Interest~~Income Expense – Our interest expense of $0.1 million decreased by $0.1 million compared with the third quarter of fiscal 2024 due to decreased term loan and financing obligation liabilities as payments have been made in the normal course of business.Taxes

~~Income~~Our ~~Taxes~~income tax benefit for the quarter ended November 30, 2025, was $0.3 million on a pre-tax loss of $(3.6) million, for an effective benefit rate of 9.4%. In the first quarter of the prior year, our income tax provision was $0.4 million on pre-tax income of $1.6 million, reflecting an effective income tax rate of 25.6%. Our effective tax benefit rate for the first quarter of fiscal 2026 was lower than the effective rate for the first quarter of fiscal 2025 primarily due to a significant decrease in non-deductible executive compensation in the first quarter of fiscal 2026 compared with the first quarter of fiscal 2025.

~~Our~~During ~~income tax benefit for~~ the ~~quarter~~first ~~ended May 31, 2025, was $0.7 million on a pre-tax loss of $(2.1) million, for an effective benefit rate of 33.8%. In the third~~ quarter of ~~the~~fiscal ~~prior~~2026 ~~year,~~we ~~our~~paid ~~income tax provision was~~ $20.~~6 million on pre-tax income of $8.~~4 million, ~~reflecting an effective income tax rate~~ of ~~31.6%. The~~cash ~~slightly~~for ~~higher benefit rate in the current quarter is primarily attributable to our expectation that withholding taxes on foreign-source~~ income ~~will remain consistent year-over-year, while pre-tax income is expected to be lower, thus increasing the impact on our effective rate~~taxes.

‎LIQUIDITY AND CAPITAL RESOURCES

21Introduction

~~Three~~At ~~Quarters~~November ~~Ended~~30, ~~May~~2025 31we had $80 million of available liquidity, ~~2025~~which ~~Compared~~consisted of $17.5 million in cash combined with our undrawn $62.5 million revolving credit facility. Of our $17.5 million of cash on November 30, 2025, $8.6 million was held outside the ~~Three~~U.S. ~~Quarters~~by ~~Ended~~our ~~May~~foreign 31subsidiaries. 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, ~~2024~~opportunistic purchases of our common stock, working capital expansion, and capital expenditures (including curriculum development).

~~Enterprise~~We ~~Division~~previously entered into a credit agreement (the 2023 Credit Agreement) with KeyBank National Association leading a group of financial institutions. 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. The 2023 Credit Agreement matures on March 27, 2028.

~~North~~As ~~America~~defined ~~Segment~~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 November 30, 2025, we believe that we were in compliance with the terms and covenants contained in the 2023 Credit Agreement.

The following ~~comparative~~discussion ~~information~~ is ~~for~~a description of the primary factors affecting our ~~North~~cash ~~America~~flows ~~segment~~and intheir effects upon our liquidity and capital resources during the ~~periods~~quarter ~~indicated~~ended ~~(in~~November ~~thousands):~~30, 2025.

		Three Quarters			Three Quarters
		Ended			Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	111,711	100.0	$	116,439	100.0	$	(4,728)
Cost of revenue		19,208	17.2		20,338	17.5		(1,130)
Gross profit		92,503	82.8		96,101	82.5		(3,598)
SG&A expenses		72,715	65.1		65,680	56.4		7,035
Adjusted EBITDA	$	19,788	17.7	$	30,421	26.1	$	(10,633)

Cash Flows Provided By Operating Activities

~~Revenue. North~~Our ~~America~~primary ~~segment~~source ~~revenue for the first three quarters~~ of ~~fiscal~~cash ~~2025~~from ~~totaled~~operating ~~$111.7~~activities ~~million~~was ~~compared~~the ~~with~~sale ~~$116.4~~of ~~million~~services into ~~fiscal~~our ~~2024. North~~customers ~~America segment revenues were adversely impacted by continued business environment uncertainties and by canceled government contracts resulting from efficiency initiatives, which began~~ in the ~~second~~normal ~~quarter~~course of ~~fiscal 2025~~business. Our ~~results~~primary ~~for~~uses ~~the~~of ~~first~~cash ~~three~~for ~~quarters~~operating ofactivities ~~fiscal 2025~~ were ~~also~~payments ~~somewhat~~for ~~lower~~SG&A ~~than~~expenses, ~~our~~direct ~~expectations~~costs asnecessary weto ~~implemented~~conduct atraining ~~new~~programs, ~~go-~~to~~-market~~ ~~strategy~~fund ~~and~~working ~~transitioned~~capital ~~our~~changes, ~~sales~~and ~~force~~to insuppliers ~~North~~for ~~America~~materials toused ain ~~more~~training ~~focused~~manuals ~~structure~~sold. ~~For~~Our ~~the~~cash ~~first~~provided ~~three~~by ~~quarters~~operating ofactivities ~~fiscal~~during ~~2025,~~the ~~total~~first ~~Enterprise~~quarter ~~AAP~~of ~~subscription~~fiscal ~~plus~~2026 ~~subscription~~was ~~services revenues were~~ $~~117.~~0.1 million compared with $~~121~~14.61 million in the first quarter of fiscal ~~2024~~2025. ~~While~~The wedecrease ~~remain~~in ~~optimistic~~cash ~~about~~flows ~~the~~from ~~expected~~operating ~~results~~activities ofwas ~~our~~primarily ~~North~~attributable ~~America~~to ~~sales~~unfavorable ~~force~~changes ~~restructuring~~in ~~and~~working ~~associated~~capital ~~growth initiatives~~balances, ~~other~~including ~~factors~~less ~~such~~cash ascollected ~~further~~from ~~reductions~~receivables, ~~in government spending~~ and ~~continued~~lower ~~uncertainty~~operating income in the ~~business~~first ~~environment~~quarter incompared ~~North~~with ~~America~~the ~~may~~prior ~~delay~~year. We orexpect ~~lower~~our ~~expected~~cash ~~revenue~~flows ~~growth~~ from ~~these~~operating ~~initiatives. Foreign~~activities ~~exchange~~will ~~rates~~improve ~~had~~in anfuture ~~insignificant~~periods ~~impact~~of onfiscal ~~North~~2026; ~~America~~however ~~revenues~~certain ~~and~~conditions ~~operating~~are ~~results~~beyond ~~for~~our ~~the~~control, ~~three~~including ~~quarters~~ongoing ~~ended~~difficulties ~~May~~in ~~31,~~the ~~2025.~~

Gross Profit. Gross profit decreased due to revenue performance as discussed above. North America gross margin remained strong during the first three quarters of fiscal 2025 and increased to 82.8% compared with 82.5% in fiscal 2024.19

~~SG&A~~Table 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 restructuring of our North America sales force), compensation increases, and benefit costs, as well as increased advertising and promotional costs from the launch of our refreshed The 7 Habits of Highly Effective People offering in the first quarter of fiscal 2025.Contents

~~International~~macroeconomic ~~Direct~~environment ~~Offices~~and further governmental actions, and our cash flows from operating activities may be less than our expectations.

~~The~~Cash ~~following~~Flows ~~comparative~~Used ~~information~~For isInvesting ~~for~~Activities ~~our~~and ~~International~~Capital ~~Direct Office segment in the periods indicated (in thousands):~~Expenditures

		Three Quarters			Three Quarters
		Ended			Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	21,936	100.0	$	24,533	100.0	$	(2,597)
Cost of revenue		5,773	26.3		5,789	23.6		(16)
Gross profit		16,163	73.7		18,744	76.4		(2,581)
SG&A expenses		17,047	77.7		16,426	67.0		621
Adjusted EBITDA	$	(884)	(4.0)	$	2,318	9.4	$	(3,202)

For the quarter ended November 30, 2025, our cash used for investing activities totaled $3.8 million. Our primary uses of cash for investing activities consisted of additional investments in the development of our offerings and purchases of property and equipment in the normal course of business.

~~Revenue. International~~In ~~Direct Office revenues for~~ the first ~~three~~quarter ~~quarters~~ of fiscal ~~2025~~2026, ~~were~~we ~~adversely~~spent ~~affected by ongoing economic uncertainty and geopolitical tensions as previously discussed~~$2. ~~Fiscal~~0 ~~2025~~million ~~year-to-date~~on ~~revenues decreased in China by 22%, in Japan by 19%, in~~ the ~~United~~development ~~Kingdom~~of ~~by 15%, and in~~ our ~~Germany,~~various ~~Switzerland,~~offerings and ~~Austria~~related ~~operations by 3% compared with fiscal 2024~~content. ~~These~~We ~~decreases~~believe ~~were~~continued ~~partially~~investment ~~offset~~in byour ~~increased~~offerings ~~sales~~and ~~through~~content ~~our~~is ~~Australia~~key ~~office~~to future growth and bythe ~~revenue~~development ~~from~~of our ~~new France office~~business. ~~The~~We ~~fluctuation~~currently ofexpect ~~foreign~~that ~~exchange~~our ~~rates~~capital spending for ~~the~~curriculum ~~first~~development ~~three~~will ~~quarters~~total ofbetween ~~fiscal~~approximately ~~2025 had a~~ $~~0.1~~8 million ~~impact on International Direct Office revenue~~ and an$10 ~~insignificant~~million ~~impact~~in onfiscal ~~operating results~~2026.

~~Gross~~Our ~~Profit. Gross~~cash ~~profit~~used infor purchases of property and equipment during the ~~International~~first ~~Direct~~quarter ~~Office~~of ~~segment~~fiscal ~~decreased~~2026 totaled $1.7 million and consisted primarily ~~due~~of toleasehold ~~reduced~~improvements ~~revenue~~on asour ~~previously~~new ~~described~~corporate headquarters, and computer software and hardware. ~~Gross~~We ~~margin~~currently ~~for~~anticipate ~~the~~that ~~first~~our ~~three~~purchases ~~quarters~~ of ~~fiscal~~property ~~2025~~and ~~remained~~equipment ~~strong~~will ~~and~~total ~~was~~between ~~73.~~approximately $5 million and $7% ofmillion ~~sales~~in fiscal 2026.

22Cash Flows Used For Financing Activities

~~compared~~In ~~with~~the ~~76.4%~~first inquarter of fiscal ~~2024~~2026, our net cash used for financing activities totaled $10.4 million. ~~The~~Our ~~fluctuation~~primary inuse ~~gross~~of ~~margin~~financing cash was ~~primarily~~$10.7 ~~due~~million used to ~~changes~~purchase inshares ~~the~~of ~~mix~~our common stock, which consisted of ~~services~~shares ~~delivered~~purchased on the open market and ~~products~~shares ~~sold~~withheld ~~compared~~for ~~with~~income taxes on stock-based compensation awards (Note 2). Partially offsetting our use of cash for purchasing shares of our common stock for treasury were $0.3 million of proceeds received from our ESPP participants to purchase shares of common stock during the ~~prior~~first ~~year~~quarter of fiscal 2026.

~~SG&A~~On ~~Expenses~~April 18, 2024, our Board of Directors approved a plan to purchase up to $50.0 million of our outstanding common stock. ~~International~~On ~~Direct~~August ~~Office~~11, ~~SG&A~~2025, ~~expenses~~the ~~increased~~Board ~~primarily~~of ~~due~~Directors approved a replenishment of the plan to ~~increased~~purchase ~~bad~~up ~~debt~~to ~~expense~~$50.0 ~~and~~million ~~increased~~of ~~advertising~~common ~~and~~stock. On ~~marketing~~August ~~expense~~14, ~~related~~2025 we initiated a 10b5-1 plan to ~~the~~purchase ~~launch~~up to $10.0 million of ~~the~~our common stock through daily transactions. This 10b5-1 plan was completed in October 2025. On November 17, 2025, we initiated a new ~~The~~10b5-1 7plan ~~Habits~~to purchase up to $20.0 million of ~~Highly~~our ~~Effective~~common ~~People~~stock ~~offering,~~through ~~which~~daily ~~occurred~~transactions. We anticipate that this repurchase plan will be completed in the ~~first~~second quarter of fiscal ~~2025~~2026.

~~International~~Our ~~Licensees~~uses ~~Segment~~of financing cash during the remainder of fiscal 2026 may 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 except as required by any outstanding 10b5-1 purchase plan.

~~The~~Sources ~~following~~of ~~comparative information is for our international licensee operations in the periods indicated (in thousands):~~Liquidity

		Three Quarters			Three Quarters
		Ended			Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	8,749	100.0	$	8,951	100.0	$	(202)
Cost of revenue		1,007	11.5		1,010	11.3		(3)
Gross profit		7,742	88.5		7,941	88.7		(199)
SG&A expenses		3,293	37.6		3,315	37.0		(22)
Adjusted EBITDA	$	4,449	50.9	$	4,626	51.7	$	(177)

We expect to pay the liabilities from our leases and notes payable; pay for projected capital expenditures; and meet other obligations in fiscal 2026 and beyond from current cash balances and future cash flows from operating activities. Going forward, we will 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. We previously entered into a new credit agreement (the 2023 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.

Revenue. For the first three quarters of fiscal 2025, our International Licensees’ revenue decreased primarily due to decreases in services revenue and in our share of AAP revenue. Licensee royalty revenues were essentially flat compared with fiscal 2024. During 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 for the first three quarters of fiscal 2025.20

~~Gross~~Table ~~Profit. Gross profit decreased due to lower licensee revenue compared with the prior year. However, International Licensee gross margin remained strong and was 88.5% in the first three quarters~~ of ~~fiscal 2025 compared with 88.7% in the first three quarters of the prior year.~~Contents

~~SG&A~~We ~~Expense~~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 at least the upcoming 12 months. ~~International~~However, ~~Licensee~~our ~~SG&A~~ability ~~expenses~~to maintain adequate capital for our operations in the ~~first~~future ~~three~~is ~~quarters~~dependent upon a number of ~~fiscal~~factors, ~~2025~~including ~~decreased~~sales ~~primarily~~trends, ~~due~~macroeconomic activity, our ability to ~~cost~~contain ~~cutting~~costs, ~~efforts~~levels ~~implemented~~of ~~during~~capital ~~fiscal~~expenditures, ~~2025~~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, business conditions in ~~response~~international locations, geopolitical tensions in various locations, and the introduction of new offerings or technology by our competitors. We will continue to ~~decreased~~monitor ~~revenue~~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.

~~Education~~Material ~~Division~~Uses of Cash and Contractual Obligations

~~The~~We ~~following~~do ~~comparative~~not ~~information~~operate isany ~~for~~manufacturing, ~~our~~mining, ~~Education~~or ~~Division~~other incapital-intensive ~~the~~facilities, ~~periods~~and ~~indicated~~we (have not structured any special purpose entities, or participated in ~~thousands)~~any commodity trading activities, which would expose us to potential undisclosed liabilities or create adverse consequences to our liquidity. However, we have normal ongoing cash expenditures and are subject to various contractual obligations that are required to run our business. Our material cash requirements include the following:

•

		Three Quarters			Three Quarters
		Ended			Ended
		May 31,	% of		May 31,	% of
		2025	Sales		2024	Sales		Change
Revenue	$	50,169	100.0	$	49,815	100.0	$	354
Cost of revenue		18,201	36.3		18,395	36.9		(194)
Gross profit		31,968	63.7		31,420	63.1		548
SG&A expenses		29,962	59.7		28,642	57.5		1,320
Adjusted EBITDA	$	2,006	4.0	$	2,778	5.6	$	(772)

Associate and Consultant Compensation

•

~~Revenue. Education~~Information ~~Division~~Technology revenue for the first three quarters of fiscal 2025 increased 1%, or $0.4 million, compared with the first three quarters of 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 the third quarter of fiscal 2024. These materials orders did not repeat at the same levels in the third quarter of fiscal 2025. Delivery of training and coaching days remained strong during the first three quarters of fiscal 2025 as the Education Division delivered approximately 70 more training and coaching days than in fiscal 2024. Education subscription and subscription services revenues in the first three quarters of fiscal 2025 increased 4% compared with the prior year and Education deferred subscription revenue at May 31, 2025, increased 21% over the balance at May 31, 2024. Education Division growth during the first three quarters of fiscal 2025 was partially offset by changes in foreign exchange rates, which adversely impacted revenue by $0.2 million and operating results by $0.4 million. We continue to be pleased with the strength and momentum of our Education Division, which added 728 new The Leader in Me schools during fiscal 2024. We believe the momentum generated in fiscal 2024 and over the first three quarters of Expenditures

•

23Content Development Costs

•

~~fiscal~~Income ~~2025 will continue through the remainder of fiscal 2025 as we continue to add new schools. At May 31, 2025, nearly 8,000 schools around the world were using The Leader in Me program.~~Taxes

•

~~Gross~~Other ~~Profit. Education~~Contractual Division gross profit increased primarily due to revenue growth as previously discussed. Education Division gross margin remained strong and increased to 63.7% compared with 63.1% in the same period of the prior year.Obligations

~~SG&A~~These ~~Expenses~~material cash requirements are discussed in more detail in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended August 31, 2025, which was filed with the SEC on November 12, 2025 (our Annual Report). ~~Education~~During ~~SG&A~~the ~~expenses~~quarter ~~increased~~ended ~~primarily~~November ~~due~~30, 2025, there have been no material changes to ~~new~~our ~~personnel~~expected uses of cash and ~~increased~~contractual ~~commissions~~obligations from those discussed in our Annual Report. However, current economic conditions and other forecasts may change and could alter our expected material uses of cash in future periods. For further information on ~~higher~~our ~~sales~~material ~~when~~uses ~~compared~~of ~~with~~cash and contractual obligations, refer to the ~~prior~~information ~~year~~included in our Annual Report.

~~Other~~CRITICAL ~~Operating~~ACCOUNTING ~~Expense Items~~ESTIMATES

~~Depreciation~~Our –consolidated ~~Through~~financial ~~May~~statements ~~31,~~were ~~2025,~~prepared in accordance with GAAP. For information on our ~~depreciation~~critical ~~expense~~accounting ~~was~~policies, ~~consistent~~see ~~with~~“Critical Accounting Estimates” in the ~~prior~~Management’s ~~year~~Discussion atand ~~$3.0~~Analysis ~~million~~of Financial Condition and Results of Operations included in ~~each~~Part ~~period~~II, Item 7 of our Annual Report. WeRefer ~~currently~~to ~~expect~~those ~~depreciation~~disclosures ~~expense~~for further information regarding our uses of estimates and critical accounting policies. There have been no significant changes to ~~total~~our ~~approximately~~previously $4disclosed ~~million~~estimates inor ~~fiscal~~critical ~~2025~~accounting policies.

Amortization – Amortization expense for the first three quarters of fiscal 2025 was $3.3 million compared with $3.2 million in the prior year. The slight 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 $4.5 million during fiscal 2025.Estimates

~~Interest~~Some ~~Expense~~of –the ~~Our~~accounting ~~interest~~guidance ~~expense~~we ofuse ~~$0.5~~requires ~~million~~us ~~decreased~~to bymake ~~$0.4~~estimates ~~million~~and ~~compared~~assumptions ~~with~~that affect the ~~first~~amounts ~~three~~reported ~~quarters~~in ofour ~~fiscal~~consolidated ~~2024~~financial ~~primarily~~statements. We ~~due~~regularly evaluate our estimates and assumptions and base those estimates and assumptions on historical experience, factors that are believed to ~~decreased~~be ~~term~~reasonable ~~loan~~under the circumstances, and ~~financing~~requirements ~~obligation~~under ~~liabilities~~GAAP. Actual asresults ~~payments~~may ~~have~~differ ~~been~~from ~~made~~these estimates under different assumptions or conditions, including changes in ~~the~~economic ~~normal~~conditions ~~course~~and ofother ~~business~~circumstances that are not within our control, but which may have an impact on these estimates and our actual financial results.

~~Income~~NEW ~~Taxes~~ACCOUNTING PRONOUNCEMENTS

~~For~~Refer ~~the~~to ~~first~~Note ~~three~~1 ~~quarters~~to ofour ~~fiscal~~unaudited ~~2025,~~condensed weconsolidated ~~recognized~~financial anstatements ~~income~~for ~~tax benefit of $0.6 million on~~ a ~~pre-tax~~description ~~loss~~ of ~~$(1.9)~~new ~~million,~~accounting ~~resulting~~pronouncements inthat anmay ~~effective~~impact ~~tax benefit rate of 30~~us.~~9%. For the corresponding period of the prior year, we recognized income tax expense of $3.6 million on pre-tax income of $15.1 million for an effective tax rate of 24.0%.~~

The year-to-date effective tax rate reflects the impact of permanent differences, including non-deductible expenses and foreign withholding taxes not eligible for U.S. foreign tax credits. We currently expect our annual effective tax rate for fiscal 2025 to be approximately 39%, which exceeds the combined U.S. federal and average state statutory rate, primarily due to non-deductible executive compensation under Internal Revenue Code Section 162(m).21

~~During~~Table ~~the first three quarters~~ of fiscal 2025 we paid $7.1 million of cash for income taxes, most of which related to our fiscal 2024 income tax liability. Over the long term, we expect annual cash tax payments to approximate our annual income tax provision.Contents

~~LIQUIDITY~~SAFE ~~AND~~HARBOR ~~CAPITAL~~STATEMENT ~~RESOURCES~~UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

~~Introduction~~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 revenue levels and financial results, our financial performance during fiscal 2026, our expectations regarding a new go-to-market strategy, future training and consulting revenue, expected increases in add-on subscription services revenue and delivered training and coaching days, anticipated renewals of subscription offerings, our ability to hire sales professionals, 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, expected effective income tax rates, our ability to maintain adequate capital for our operations for at least the upcoming 12 months, the expected impact of the resolution of significant macroeconomic issues and geopolitical tensions, the seasonality of future revenues, future compliance with the terms and conditions of our line of credit, the ability to borrow on our line of credit, expected collection 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 our 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; macroeconomic risks; litigation; unanticipated costs or capital expenditures; delays or unanticipated outcomes relating to our strategic plans; dependence on existing products or services; the rate and consumer acceptance of new product introductions, including the All Access Pass; 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 adversely affect our business.

AtThe ~~May 31,~~risks ~~2025~~included wehere ~~had~~are ~~over~~not ~~$95~~exhaustive. Other ~~million~~sections of ~~available~~this ~~liquidity,~~report ~~which~~may ~~consisted~~include ofadditional ~~$33.7 million~~factors inthat ~~cash~~could ~~combined~~adversely ~~with~~affect our ~~undrawn~~business ~~$62.5 million~~and ~~revolving~~financial ~~credit facility~~performance. ~~Of our $33.7 million of cash on May 31~~Moreover, ~~2025,~~we ~~$13.4 million~~operate ~~was~~in ~~held~~a ~~outside~~very ~~the~~competitive ~~U.S.~~and byrapidly ~~our~~changing ~~foreign subsidiaries~~environment. WeNew ~~routinely~~risk ~~repatriate~~factors ~~cash~~may ~~from~~emerge ~~our~~and ~~foreign~~it ~~subsidiaries~~is ~~and~~not ~~consider~~possible ~~cash~~for ~~generated~~our ~~from~~management ~~foreign~~to ~~activities~~predict aall ~~key~~such ~~component~~risk offactors, ~~our~~nor ~~overall~~can ~~liquidity~~we ~~position. Our~~assess ~~primary~~the ~~sources~~impact of ~~liquidity~~all ~~are~~such ~~cash~~risk ~~flows~~factors ~~from~~on ~~the~~our ~~sale~~business ofor ~~services and products in~~ the ~~normal~~extent ~~course~~to ofwhich ~~business~~any ~~and~~single ~~available~~factor, ~~proceeds~~or ~~from~~combination ~~our~~of ~~credit~~factors, ~~facility. Our~~may ~~primary~~cause ~~uses~~actual ofresults ~~liquidity~~to ~~include~~differ ~~payments~~materially ~~for~~

Filing Compare · FRANKLIN COVEY CO