FRANKLIN COVEY CO

Item 1. LEGAL PROC EEDINGS

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