Franklin Covey (FC) risk factors, FY2025 10-K

Other

1. 01We operate in an intensely competitive industry and our competitors may develop programs, services, or courses that adversely affect our ability to sell our offerings
2. 02Our business depends on renewals of subscription-based offerings and sales of new subscription-based services for a significant portion of our revenue, and our failure to renew at historical rates or generate new sales of such offerings will lead to a decrease in our revenues
3. 03providing offerings and products of the quality and timeliness necessary to withstand competition
4. 04Failure to maintain our reputation, brand image, and culture could negatively impact our business
5. 05We have only a limited ability to protect our intellectual property rights, which are important to our success25% rewritten
6. 06The loss of governmental funding and contributions from charitable organizations could harm our Education Division’s ability to grow and expand into new schools in the future
7. 07We depend on key personnel, the loss of whom could harm our business
8. 08If we are unable to attract, retain, and motivate high-quality employees, including sales personnel and training consultants, we may not be able to grow our business as projected or may not be able to compete effectively
9. 09Our work with governmental clients exposes us to additional risks that are inherent in the government contracting process
10. 10Political and economic factors such as pending elections, the outcome of elections, revisions to governmental tax policies, sequestration, debt ceiling negotiations, and reduced tax revenues can affect the number and terms of new governmental contracts signed
11. 11Some terminology, language, or content in our offerings may be deemed offensive by certain individuals due to rapidly changing societal norms, which may cause damage to our brand or reputation

Cybersecurity and Information Technology Risks

1. 12The All Access Pass and Leader in Me subscription services are internet-based platforms, and as such we are subject to increased risks of cyber-attacks and other security breaches that could have a material adverse effect on our business25% rewritten
2. 13We could incur additional liabilities and our reputation could be damaged if we do not protect client data or if our information systems are breached79% rewritten
3. 14Technology is rapidly evolving, and if we do not continue to develop and improve our offerings and technology platforms, in response to these changes, our business could suffer
4. 15Our use of AI technologies may not be successful and may present business, compliance, and reputational risks
5. 16We may fail to meet analyst expectations, which could cause the price of our stock to decline
6. 17Our business performance may not be sufficient for us to meet the financial guidance that we provide publicly
7. 18Our future quarterly operating results are subject to factors that can cause fluctuations in our stock price
8. 19We may need additional capital in the future, and this capital may not be available to us on favorable terms or at all30% rewritten
9. 20Respond to competitive pressures
10. 21Failure to comply with the terms and conditions of our credit facility may have an adverse effect upon our business and operations
11. 22We may not be able to generate sufficient cash to service our indebtedness, and we may be forced to take other actions to satisfy our payment obligations under our indebtedness, which may not be successful

General Business Risks

1. 23Adverse resolution of litigation may harm our operating results or financial conditionNew
2. 24Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and operations35% rewritten
3. 25Our results of operations may be adversely impacted by the costs of persistent and rising inflation if we are unable to pass these costs on to our clients
4. 26Our global operations pose complex management, foreign currency, legal, tax, and economic risks, which we may not adequately address
5. 27Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements, and violation of these regulations could harm our business
6. 28We have operations in China, which exposes us to risks inherent in doing business in that country
7. 29The Company’s use of accounting estimates involves judgment and could impact our financial results
8. 30Ineffective internal controls could impact our business and operating results
9. 31Extreme weather conditions and natural disasters could negatively impact our operating results and financial condition
10. 32The impacts of climate change and related regulatory responses could adversely affect our business