Set forth below and elsewhere in this Annual Report on Form 10-K and in other documents that the Corporation files with the SEC are risks that should be considered in evaluating an investment in the Corporation’s common stock, as well as risks and uncertainties that could cause the actual future results of the Company to differ from those expressed or implied in the forward-looking statements contained in this Report and in other public statements the Company makes. Additionally, because of the following risks and uncertainties, as well as other variables which may affect the Company’s operating results in the conduct of its business, the Company’s past financial performance should not be considered an indicator of future performance. Risks Related to Our Business and Operations If we fail to maintain strong relationships with our authors, illustrators and other creative talent, as well as to develop relationships with new creative talent, our business could be adversely affected. The Company’s business, in particular the trade publishing and entertainment portions of the business, is highly dependent on maintaining strong relationships with the authors, illustrators, animators and other creative talent who produce the products and services that are sold to its customers. Developing new relationships with creative talent is another important enabler of our business. Any overall weakening of our existing relationships, or the failure to develop successful new relationships, could have an adverse impact on the Company’s business and financial performance. If we fail to adapt to new purchasing patterns or trends, our business and financial results could be adversely affected. The Company’s business is affected significantly by changes in customer purchasing patterns or trends in, as well as the underlying strength of, the trade, educational and entertainment markets for children. In particular, the Company’s educational publishing business may be adversely affected by budgetary restraints and other changes in educational funding as a result of new policies which could be implemented at the federal level or otherwise resulting from new legislation or regulatory action at the federal, state or local level, or by changes in the procurement process, to which the Company may be unable to adapt successfully. In addition, there are many competing demands for educational funds, and there can be no guarantee that the Company will be successful in continuing to obtain sales of its educational programs and materials from any available funding. Further, changes in educational practices affecting structure or content of educational materials or requiring adaption to new learning approaches, particularly in grades pre-K through 6, as well as those which may arise from new legislation or policies at the state or local level directed at content or teaching practices and materials, to which the Company is unable to successfully adapt could result in a loss of business adversely affecting the Company's business and financial performance. In addition, in a highly politicized environment, the content of some of the products being sold by the Company could become controversial, negatively impacting sales made to schools, through partnerships with government agencies or through sponsorships and funding programs. Within the School Reading Events business, the Company's financial performance could be adversely impacted if its U.S. book clubs channel is unable to adapt to internal changes and the external market. The Company has recently taken a new holistic approach to serving its customers through the reorganization of the Company’s Trade, Book Fairs and Clubs businesses into a combined Children's Book Group. The Children’s Book Group’s ability to execute on the new customer-centric strategies and obtain the operational improvements expected to be derived from the reorganization, if not aligned with its customer purchasing behaviors, or the benefits expected to be achieved from the reorganization are not otherwise realized, could result in the Company’s results being negatively impacted. In addition, the Company’s trade business depends on successfully developing and commercializing new titles and original intellectual property that resonate with consumers and can be leveraged across multiple lines of business. While the Company continues to invest in new properties and expand its portfolio, changes in consumer preferences or challenges in achieving broad market appeal could affect the performance of these initiatives and, in turn, impact revenues, profitability, and growth prospects. Increases in certain operating costs and expenses that are beyond our control and can significantly affect our profitability could adversely affect our operating performance. The Company’s major expense categories include employee compensation, printing, paper and distribution (such as postage, shipping and fuel) costs. Compensation costs are influenced by general economic factors, including those affecting the costs of health insurance, post-retirement benefits and any trends specific to the employee skill sets that the Company requires. Potential shortages for warehouse labor, driver labor and other required skills, as well as labor supply chain issues, such as the impact of union strikes, may cause the Company's costs to increase beyond increases normally expected. Paper prices fluctuate based on worldwide demand and supply for paper in general, as well as for the specific types of paper used by the Company. The Company is also subject to inflationary pressures on printing, paper, transportation 9 and labor costs. While the Company has taken steps to manage and budget for certain expected operating cost increases, if there is a significant disruption in the supply of paper or a significant increase in paper costs, or in its shipping or fuel costs, beyond those currently anticipated, which would generally be beyond the control of the Company, or if the Company’s strategies to try to manage these costs, including additional cost savings initiatives, are ineffective, the Company’s results of operations could be adversely affected. In addition, the bankruptcy of a supplier may result in unanticipated price increases for the Company. We maintain an experienced and dedicated employee base that executes the Company’s strategies. Failure to attract, retain and develop this employee base could result in difficulty with executing our strategy. The Company’s employees, notably its senior executives, editorial staff members, and creative talent, have substantial experience in the publishing, education and entertainment markets. In addition, the Company continues to implement a strategic information technology transformation process, requiring diverse levels of relevant expertise and experience. If the Company were unable to continue to adequately maintain and develop a workforce of this nature meeting the foregoing needs, including the development of new skills in the context of a rapidly changing business environment created by technology, involving new business processes and increased access to data and data analytics, it could negatively impact the Company’s operations and growth prospects. In order to develop and maintain its workforce, the Company must provide competitive salaries and benefits and the costs of such salaries and benefits are driven by employment market conditions over which the Company has no control. Additionally, high industry-wide demand for truck drivers may impact the Company's ability to hire and retain adequate staffing levels to deliver book fairs in the number anticipated. Further, the Company's entertainment business is dependent on writers, animators and other talent, who are essential to the development and production of its film and television programs. Any labor dispute, work stoppage, work slowdown, strike by, or a lockout of, one or more of these groups that provide personnel essential to the production of film and television content could delay or halt the Company’s ongoing production activities, or could cause a delay or interruption in the release of new film and television content. The Company has also been engaged in a significant cost management exercise, which has included a reduction in its employee base. If the Company fails to maintain an appropriate employee base to meet the requirements of servicing its business units, including the ability to take advantage of growth opportunities which may present themselves, this could adversely affect the Company’s ability to meet its growth expectations as disclosed from time to time. The failure of third-party providers to provide contracted outsourcing of business processes and information technology services could cause business interruptions and could increase the costs of these services to the Company. The Company outsources certain business processes to reduce complexity and increase efficiency for activities such as distribution, manufacturing, product development, transactional processing, information technologies and various administrative functions. Increasingly, the Company is engaging third parties to provide software as a service ("SaaS"), which can reduce the Company’s internal execution risk, but increases the Company’s dependency upon third parties to execute business critical information technology tasks. If outsourced providers (including SaaS providers) are unable to provide these services, fail to execute their contracted functionality, or experience a substantial data breach, the Company could experience damage to its reputation and disruptions to its distribution and other business activities and may incur higher costs. Failure to realize anticipated cost savings and benefits from the Company's continuous improvement efforts, or business disruptions as a result of these efforts, could adversely affect our business and financial performance. The Company continues to explore opportunities to enhance the efficiency of its cost and organizational structure, which includes actions to restructure its cost base. The rapidly changing environment in which the Company operates increases the risk that not all of the Company's strategic initiatives will deliver the expected benefits within the anticipated timeframes. The Company's ability to achieve certain of the anticipated cost savings could be dependent on the use of artificial intelligence ("AI") and other technologies and the Company may not be successful implementing such technologies. In addition, these efforts may disrupt business activities or the ability of the Company to take advantage of potential growth opportunities, which could adversely affect the Company's business prospects, financial condition, and performance. The Company's entertainment business depends on key relationships with buyers of film and television content and uncertainty with buyers or changes in demand for film and television content may impact the financial performance of the entertainment business. The media and content industry in which the Company's entertainment business operates is rapidly evolving, including the market and demand for film and television content, with the entrance of new major streaming platforms and consolidation of traditional platforms, as well as the changing viewing habits of children and youth. While the 10 Company believes that the demand for high-quality content will continue, industry trends may continue to change and the Company's entertainment business may be adversely affected by such changing industry trends, including potential impacts of mergers and acquisitions in the industry. There can be no certainty that demand for content will be sustained over the long term, that consumers will have an appetite for the programming produced by the Company's entertainment business or that the Company will be able to identify and be responsive to new content trends. The rapid development and proliferation of generative artificial intelligence technologies could subject us to increased competitive pressure and legal risks. Generative artificial intelligence ("Generative AI") technologies pose a broader and more fundamental set of risks to the Company's core business model that the Company may be unable to fully anticipate or mitigate. Competitive displacement of traditional publishing. Generative AI tools are now capable of producing children's stories, illustrations, educational content, and entertainment scripts at materially lower cost and at greater speed than traditional human-led editorial and creative processes. As these tools continue to improve in quality and become more widely accessible, they may enable authors, educators, and other content producers to develop and distribute children's books and educational materials without engaging traditional publishing services of the kind provided by the Company. This could reduce demand for the Company's trade publishing capabilities and diminish its competitive position relative to self-publishing alternatives. The growing use of self-publishing technologies by authors already represents a competitive risk to the Company's trade publishing business, and the integration of Generative AI into self-publishing workflows is likely to significantly amplify this risk over time. Competition from AI-enabled educational technologies. The Company’s Education segment operates in markets that are being reshaped by the continued advance of generative artificial intelligence (AI). While digital and adaptive learning technologies have been used in education for more than a decade, newer AI-enabled tools—including large language model–based tutoring and virtual instructional assistants—are increasingly being adopted and evaluated by schools and school districts, and the pace and extent of adoption vary across grade levels and product segments. As these technologies evolve, some educators and school systems may choose to allocate a greater portion of their instructional budgets toward AI-based or other technology-enabled learning solutions rather than traditional literacy programs, curriculum materials and related products. In addition, these technologies may increase competitive pressures, reduce demand for certain of the Company's offerings, or require the Company to make additional investments in product development and innovation. If the Company is unable to respond effectively to these changes, its revenues, market position and operating results could be adversely affected. Copyright and training data liability. There is significant uncertainty and ongoing litigation in the United States and other jurisdictions regarding the extent to which the use of copyrighted works to train Generative AI models constitutes copyright infringement and gives rise to liability. The Company's extensive portfolio of published works may have been used, without authorization, in training datasets for Generative AI systems operated by third parties, potentially giving rise to claims that the Company may assert. Conversely, to the extent the Company incorporates Generative AI tools into its own content development or editorial processes, it may face claims that content so generated infringes the intellectual property rights of third parties whose works were used in training those models. The legal standards applicable to such claims remain unsettled and are subject to ongoing judicial and legislative development, and adverse outcomes in this area of law could expose the Company to significant liability or require it to materially alter its use of AI-enabled tools. There can be no assurance that the Company will be able to adapt its business model and operations sufficiently rapidly or effectively to address the foregoing risks, and the Company's failure to do so could have a material adverse effect on its business, financial condition, and results of operations. The Company may not be able to sustain, manage or effectively execute on its strategy with respect to its acquisition of 9 Story, which may impact the Company's financial performance. The expected financial benefits of the Company's acquisition of 9 Story depend, among other things, on its ability to realize synergies with 9 Story and develop new programming utilizing Scholastic's current and future intellectual property that achieves market and audience acceptance. If the Company is unable to do this, the Company's business, financial condition, and performance could be materially and adversely affected. A significant amount of goodwill and other identifiable intangible assets have been recorded as a result of acquisitions and the Company may never realize the full carrying value of these assets. 11 The Company has recorded a significant amount of goodwill and other identifiable intangible assets as a result of acquisitions. At May 31, 2026, there was $199.4 million of goodwill and $77.9 million of intangible assets on the Company's Consolidated Balance Sheet. The intangible assets are principally composed of customer lists, customer contracts/relationships, intellectual property, trade names and internally developed software. Failure to achieve business objectives and financial projections could result in asset impairments, which would result in noncash charges to the Company's Consolidated Statement of Operations. Goodwill and intangible assets with indefinite lives are tested for impairment on an annual basis and when events or changes in circumstances indicate that impairment may have occurred. Intangible assets with definite lives, which were $75.8 million at May 31, 2026, are tested for impairment only when events or changes in circumstances indicate that an impairment may have occurred. Determining whether an impairment exists can be difficult as a result of increased uncertainty and requires management to make significant estimates and judgments. A noncash intangible asset impairment charge could have a material adverse effect on the Company's financial position and results of operations. See Note 13, “Goodwill and Other Intangibles” of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data” for further information related to goodwill and intangible assets. Risks Related to Competition If we cannot anticipate technology trends and develop new products or adapt to new technologies responding to changing customer preferences, this could adversely affect our revenues or profitability. The Company operates in highly competitive markets that are subject to rapid change, including, in particular, changes in customer preferences and changes and advances in relevant technologies, including rapid advances in AI. There are substantial uncertainties associated with the Company’s efforts to develop successful trade publishing, educational, and media products and services, including digital products and services, for its customers, as well as to adapt its print and other materials to new digital technologies, such as the internet cloud technologies, tablets, mobile and other devices and school-based technologies, as well as uncertainties involving the use of AI in connection with the foregoing. The Company makes significant investments in new products and services that may not be profitable, or whose profitability may be significantly lower than the Company anticipates or has experienced historically. In particular, in the context of the Company’s current focus on key digital opportunities, the markets are continuing to develop and the Company may be unsuccessful in establishing itself as a significant factor in any relevant market segment which does develop. Many aspects of markets which could develop for children and schools, such as the nature of the relevant software and devices or hardware, the size of the market, relevant methods of delivery and relevant content, as well as pricing models, are still evolving and will, most likely, be subject to change on a recurring basis until a pattern develops and becomes more defined. This could specifically impact the Company's ability to execute on a digital and print literacy solution, which requires a multi-year investment, through internal development, third party providers and/or acquisitions. In addition, the Company faces market risks associated with systems development and service delivery in its evolving school ordering and ecommerce businesses, as well as in responding to changes in how schools plan to utilize technology for virtual or remote learning and the potential impact on the demand for printed materials in schools. If we cannot develop new products or services that are accepted by the market as quickly or as efficiently as our competitors, we may experience a material adverse impact on our operating results. Our financial results would suffer if we fail to successfully differentiate our offerings and meet market needs in school-based book fairs and book clubs, two of our core businesses. The Company’s school-based book fairs and book clubs businesses, which comprise the Company's reading events business, produce a substantial amount of the Company’s revenues. The Company is subject to the risks that it will not successfully continue to develop and execute new promotional strategies for the school-based book fairs and book clubs components of the reading events business in response to future customer trends or technological changes or that it will not otherwise meet market needs in this newly combined business in a timely or cost-effective fashion. The book clubs component also relies on attracting and retaining new sponsor-teachers to promote and support the distribution of its offerings. If the Company cannot attract new millennial and younger teachers and meet the changing preferences and demands of these teachers, its revenues and cash flows could be negatively impacted. The Company has differentiated itself from competitors by providing curated offerings in both of the book clubs and book fairs components of the reading events business designed to make reading attractive for children, in furtherance of its mission as a champion of literacy. Competition from mass market and online distributors using customer-specific curation tools could reduce this differentiation, posing a risk to the Company's results. The competitive pressures we face in our businesses could adversely affect our financial performance and growth prospects. 12 The Company is subject to significant competition, including from other trade and educational publishers and media, entertainment and internet companies, as well as retail and internet distributors, many of which are substantially larger than the Company and have much greater resources. To the extent the Company cannot meet challenges from existing or new competitors and develop new product offerings at attractive price points to meet customer preferences or needs, the Company’s revenues and profitability could be adversely affected. In its educational publishing business, the Company invests in various literacy program solutions, including both digital and print products, covering grades pre-K through 6 which can be in direct competition with traditional basal textbook offerings, as well as new digital instruction offerings with associated assessment tools, to meet the perceived needs of the modern curriculum. There can be no assurance that the Company will be successful in having school districts adopt the Company's literacy program solutions in preference to basal textbooks or new digital instruction products offered by others or be successful in state adoptions, nor, in the case of basal textbook publishers, that such publishers will not successfully adapt their business models to the development of new forms of core curriculum, which could have an adverse effect on the return on the Company’s investments in this area, as well as on its financial performance and growth prospects. Traditional basal textbook publishers also generally maintain larger sales forces than the Company, and sell across several academic disciplines, allowing them a larger presence than the Company. Additionally, demand for many of the Company’s product offerings, particularly books sold through school channels, is subject to price sensitivity. Failure to maintain a competitive pricing model could reduce revenues and profitability. Changes in the mix of our major customers in our trade distribution channel or in their purchasing patterns may affect the profitability of our trade publishing business. The Company’s distribution channels include online retailers and ecommerce sites, digital delivery platforms and expanding social media and other marketing platforms. An increased concentration of retailer power has also resulted in the increased importance of mass merchandisers as well as of publishing best sellers to meet consumer demand. Currently, the Company’s top five U.S. trade customers make up approximately 74% of the Company’s U.S. trade business and 15% of the Company’s total revenues. Adverse changes in the mix of the major customers of the trade business, including the type of customer, which may also be engaged in a competitive business, or in their purchasing patterns or financial condition or the nature of their distribution arrangements with the trade business including any requirements related to environmental sustainability with which the Company must comply could negatively affect the profitability of the Company’s trade business and the Company’s financial performance. The inability to obtain and publish best-selling new titles could cause our future results to decline in comparison to historical results. The Company invests in authors and illustrators for its trade publication business, and has a history of publishing hit titles. The inability to publish best-selling new titles in future years could negatively impact the Company. In addition, competition among electronic and print book retailers, including the decrease in the number of independent booksellers, could decrease prices for new title releases, as well as the number of outlets for book sales. The growing use of self-publishing technologies by authors also increases competition and could result in the decreased use of traditional publishing services. The effects of any of the foregoing factors could have an adverse impact on the Company's business, financial condition or results of operation. Risks Related to Our Financial Condition and Capital Structure Changes in interest rates, constraints on access to capital, or deterioration in credit market conditions could adversely affect the Company's financial condition, liquidity, and ability to fund its operations and strategic objectives. The Company's operations and strategic plans, including its ongoing investments in digital transformation, entertainment production, and the integration of acquisitions such as 9 Story, require access to adequate liquidity and financing on commercially reasonable terms. The Company utilizes its credit facilities to support its working capital requirements and capital expenditure programs. Borrowings under any floating-rate credit facilities are subject to variability in interest rates and, accordingly, an increase in prevailing interest rates would increase the Company's cost of borrowing and could adversely affect the Company's interest expense and cash flows. Tightening in credit market conditions or a deterioration in the Company's operating performance, financial position, or credit profile could adversely affect its ability to access the capital markets or to renew or replace its existing credit facilities on favorable terms, or at all. 13 Risks Related to Information Technology and Systems Privacy breaches and other cyber security risks related to our business could negatively affect our reputation, credibility and business. Like many businesses, the Company faces cybersecurity risks that include attempts to deploy malicious software to intrude on the Company’s networks to steal private information of the Company and its customers and other parties, to commence denial of service attacks or to cause other disruption. We have experienced cyberattacks in the past and it is possible that we or third-party service providers on whom we rely may experience such attacks in the future. None of the breaches we have suffered to date have resulted in any material adverse impact on our business. Notwithstanding the investments we have made in cybersecurity products, training and services, we cannot be assured that our cybersecurity measures will always be effective in preventing unauthorized access to our systems and other illegal intrusions or other cyberattacks. A successful cyberattack on the Company could have a material adverse affect on our operations and operating results. In certain of its businesses the Company holds or has access to personal data, including that of customers or received from schools. Adverse publicity stemming from a data breach, whether or not valid, could reduce demand for the Company’s products or adversely affect its relationship with teachers or educators, impacting participation in the book fairs or book clubs components of the Company's reading events business or decisions to purchase educational materials or programs produced by the Company's Education segment. Further, a failure to adequately protect personal data, including that of customers or children, or other data security failure, such as cyber-attacks from third parties, could lead to legal actions, fines and penalties, significant remediation costs and reputational damage, including loss of future business. Failure of one or more of our information technology platforms could affect our ability to execute our operating strategy. The Company relies on a variety of information technology platforms to execute its operations, including human resources, payroll, finance, order-to-cash, procurement, vendor payment, inventory management, distribution and content management systems as well as its internal operating systems. Many of these systems are integrated via internally developed interfaces and modifications. Failure of one or more systems could lead to operating inefficiencies or disruptions and a resulting decline in revenue or profitability. As the Company continues the implementation of its enterprise-wide customer and content management systems and the migration to SaaS and cloud-based technology solutions, in its initiatives to integrate its separate legacy platforms into a cohesive enterprise-wide system, there can be no assurance that it will be successful in its efforts or that the implementation of the remaining stages of these initiatives in the Company's global operations will not involve disruptions in its systems or processes having a short term adverse impact on its operations and ability to service its customers. While we have developed policies and controls to minimize the risks to our information technology platform, including the formulation of disaster recovery plans and business continuity plans, there can be no assurance that a failure of our information technology platform, in whole or in part, any disruption or any data security breach would not adversely affect our business and have an adverse impact on our operations and financial results. Risks Related to Laws and Regulations Our reputation is one of our most important assets, and any adverse publicity or adverse events, such as a violation of privacy laws or regulations, could cause significant reputational damage and financial loss. The businesses of the Company focus on children’s reading, learning and education, and its key relationships are with educators, teachers, parents and children. In particular, the Company believes that, in selecting its products, teachers, educators and parents rely on the Company’s reputation for quality books and educational materials and programs appropriate for children. Negative publicity, either through traditional media or through social media, could tarnish this relationship. In the ordinary course of our business, we collect and store in our internal and external data centers, cloud services and networks sensitive data, including but not limited to personal information of our customers, including information received from children. The Company is subject to privacy laws and regulations in the conduct of its business in the United States and in other jurisdictions in which it conducts its international operations, many of which vary significantly, relating to the collection and use of personal information. Significant regulations include the European Union General Data Protection Regulation, which became enforceable on May 25, 2018, and the California Consumer Privacy Act, which became effective in January 2020. As of 2026, approximately 20 states have enacted comprehensive consumer privacy laws, with additional amendments and new requirements continuing to take effect. 14 These laws vary significantly in scope, application, and enforcement and create a complex and evolving compliance environment. In addition, the Company is also subject to the regulatory requirements of the Children’s Online Privacy Protection Act ("COPPA") in the United States relating to access to, and the use of information received from, children in respect to the Company’s online offerings. Since the businesses of the Company are primarily centered on children, failures of the Company to comply with the requirements of COPPA and similar laws in particular, as well as failures to comply generally with applicable privacy laws and regulations, as referred to above, could lead to significant reputational damage, legal claims, fines and other penalties and costs, including loss of future business. Restructuring of federal education programs and agencies, including significant changes to or the potential elimination of the U.S. Department of Education, could materially reduce demand for the Company's educational products and adversely affect its Education business. The Company's Education segment is materially dependent on the availability of federal, state, and local education funding to school districts and other educational institutions for the purchase of literacy programs, educational materials, and related products and services. Federal education funding, including programs administered under the Elementary and Secondary Education Act (including Title I grants targeted at schools serving high concentrations of students from low-income households) and other federal education initiatives, represents a significant source of funding available to the school districts and educational institutions that are the Company's primary customers in this segment. Since 2025, the federal government has undertaken significant restructuring of the U.S. Department of Education, including material reductions in staffing levels and proposals to reorganize, curtail, or eliminate certain federal education programs and agencies. The scope and ultimate outcome of these restructuring efforts remain subject to significant uncertainty, including as a result of ongoing legislative, regulatory, and judicial proceedings. Any substantial reduction, reorganization, or elimination of federal education funding programs could materially reduce the budgets available to school districts to purchase the Company's literacy programs and educational materials, adversely affecting the Company's Education revenues and growth prospects. While states and localities may seek to offset reductions in federal funding, there is no assurance they will do so, and they may instead reduce their own education budgets or reprioritize available funds away from the literacy materials and programs the Company provides. Any such reduction in available funding at the federal, state, or local level, or any material change in the procurement processes or funding eligibility criteria applicable to the purchase of literacy programs and educational materials, could have a material adverse effect on the Company's Education business, financial condition, and results of operations. Failure to meet the demands of regulators, and the associated high cost of compliance with regulations, as well as failure to enforce compliance with our Code of Ethics and other policies, could negatively impact us. The Company operates in multiple countries and is subject to different regulations throughout the world. In the United States, the Company is regulated by the Internal Revenue Service, the Securities and Exchange Commission, the Federal Trade Commission and other regulating bodies. Failure to comply with these regulators, including providing these regulators with accurate financial and statistical information that often is subject to estimates and assumptions, or the high cost of complying with relevant regulations, including a significant increase in new regulations resulting from changes in the regulatory environment, could negatively impact the Company. In addition, the decentralized and global nature of the Company’s operations makes it more difficult to communicate and monitor compliance with the Company’s Code of Ethics and other material Company policies and to assure compliance with applicable laws and regulations, some of which have global applicability, such as the Foreign Corrupt Practices Act in the United States and the UK Bribery Act in the United Kingdom. Failures to comply with the Company’s Code of Ethics and violations of such laws or regulations, including through employee misconduct, could result in significant liabilities for the Company, including criminal liability, fines and civil litigation risk, and result in damage to the reputation of the Company. 15 The evolving, fragmented and rapidly changing landscape of Environmental, Social and Governance ("ESG") reporting requirements and environmental regulatory obligations at the federal, state, and international levels could expose the Company to significant compliance costs, fines, penalties, and reputational harm. ESG reporting requirements and related environmental regulatory obligations are evolving rapidly across the multiple jurisdictions in which the Company operates, and the regulatory landscape in this area continues to change in ways that are difficult to predict and that may impose significant compliance burdens on the Company. In the United States, ESG-related regulatory requirements have expanded significantly at the state level, with individual states, notably California, enacting mandatory climate disclosures of various types. Additional states have enacted or are actively developing similar requirements, resulting in an environment where the Company may simultaneously be subject to multiple overlapping state-level ESG reporting obligations, each with their own filing deadlines and compliance standards. The pace with which such state-level requirements are being introduced or revised means that the Company may not have adequate advance notice of new obligations to implement the systems, processes, and reporting infrastructure required to achieve timely compliance. In addition, jurisdictions outside of the United States have adopted their own ESG reporting obligations. In particular, the European Union's (EU's) Corporate Sustainability Reporting Directive ("CSRD") requires detailed, audited sustainability disclosures from companies operating within EU jurisdictions above applicable revenue and employee thresholds, applying standards developed under the European Sustainability Reporting Standards ("ESRS"). These international requirements may vary materially from each other and from U.S. requirements, further creating a complex compliance landscape. In addition to reporting obligations, various jurisdictions impose binding carbon emissions reduction targets, among other requirements. The timelines for such targets are subject to revision and may be accelerated by regulatory authorities without adequate notice, creating a risk that the Company may be unable to adapt its operations and supply chain practices quickly enough to achieve compliance. The Company's printing and distribution operations, may have difficulty in achieving the emissions reductions required under applicable regulatory frameworks within the required timeframes. Non-compliance with ESG reporting requirements or emissions reduction obligations — whether as a result of missed filing deadlines, incomplete or inaccurate disclosures, or failure to achieve required reductions in the Company's carbon footprint — could result in investigations, fines and civil penalties, restrictions on the Company's ability to operate or sell products in affected jurisdictions, and reputational harm. The significant cost of building and maintaining the reporting infrastructure, third-party verification arrangements, and internal controls required to comply with these evolving obligations could materially increase the Company's operating costs. There can be no assurance that the Company will be able to identify and respond to new ESG-related regulatory requirements applicable to the Company with sufficient timeliness, or that the Company will achieve all applicable environmental targets within required timeframes. Failure to do so could have a material adverse effect on the Company's business, financial condition, results of operations, and reputation. Changes in tax laws or a change in tax status may result in a loss of government tax credits in the Company's entertainment business. The Company, through its economic control of 9 Story, presently benefits from significant Canadian government tax credits at both the federal and provincial level. The Company's entertainment business finances a significant portion of its production budgets from such government tax credits and certain anticipated government tax credits are used as collateral for the production loans. Pursuant to an opinion issued by the Minister of Canadian Heritage with respect to the Company’s investment in 9 Story, the Company anticipates that 9 Story will continue to be eligible for such tax credits. The Company could lose its Canadian government tax credits and incentives if the Canadian regulated business into which the Company has invested (9 Story) ceases to be controlled by Canadian nationals. In order to preserve the benefits, the Company's voting equity ownership of 9 Story is limited to 25% of the total voting equity shares outstanding. Further, 9 Story’s business is managed by a board of directors, a majority of whose members are Canadian nationals who are not otherwise affiliated with the Company, consistent with the Company’s representations to the Canadian Ministry of Heritage. There can be no assurance that the individual tax incentive programs currently available to the Company will not be reduced, amended, or eliminated or that the Company or any specific production will continue to qualify for them, any of which may have an adverse effect on the Company’s entertainment business, results of operations, or financial condition. 16 Risks Related to Our Intellectual Property The loss of or failure to obtain rights to intellectual property material to our businesses would adversely affect our financial results. The Company’s products generally comprise intellectual property delivered through a variety of media. The ability to achieve anticipated results depends in part on the Company’s ability to defend its intellectual property against infringement, as well as the breadth of rights obtained. The Company’s ability to do so is subject to the legal protections available under intellectual property laws in the U.S. and other applicable jurisdictions. Unauthorized parties may attempt to illegally use the Company’s intellectual property and the measures that are available for us to enforce our proprietary rights may not be sufficient to fully address or prevent all third-party infringement. Further, it is possible that AI and other advanced technologies will make unauthorized use of the Company’s intellectual property more feasible and enforcement of our intellectual property rights more difficult as intellectual property becomes easier to replicate or use without authorization. The Company’s operating results could be adversely affected by inadequate legal and technological protections for its intellectual property and proprietary rights in some jurisdictions, markets and media, as well as by the costs of dealing with claims alleging infringement of the intellectual property rights of others, including claims involving business method patents in the ecommerce and internet areas and the licensing of photographs in the trade and educational publishing areas. The Company’s revenues could be constrained by limitations on the rights that the Company is able to secure to exploit its intellectual property in different media and distribution channels, as well as geographic limitations on the exploitation of such rights. Risks Related to External Factors Because we procure products and sell our products and services in foreign countries, changes in currency exchange rates, changes in applicable laws and regulations as well as other risks and uncertainties, could adversely affect our operations and financial results. The Company has various operating subsidiaries domiciled in foreign countries. In addition, the Company sells products and services to customers located in foreign countries where it does not have operating subsidiaries, and a significant portion of the Company’s revenues are generated from outside of the United States. The Company’s business processes, including distribution, sales, sourcing of content, marketing and advertising, are, accordingly, subject to multiple national, regional and local laws, regulations and policies. The Company could be adversely affected by noncompliance with existing foreign laws, regulations and policies, including those pertaining to foreign rights and exportation. In addition, changes in foreign laws, regulations, or government policies, including tax regulations and accounting standards, may adversely affect our operations and financial results. The Company is also exposed to fluctuations in foreign currency exchange rates and to business disruption caused by political, financial or economic instability or the occurrence of war or natural disasters or pandemics in foreign countries. In addition, the Company and its foreign operations could be adversely impacted by a downturn in general economic conditions on a more global basis caused by general political instability or unrest or changes in global economic affiliations or conditions, such as inflation. Trade policies and tariff regulations have changed significantly since 2025 and continue to evolve. The United States has imposed, modified, and in certain cases replaced tariffs on imported goods under various statutory authorities, while other countries have implemented or may implement responsive trade measures. Trade policies affecting imports from major trading partners, including China, Canada, Mexico, the European Union, and other countries, remain subject to ongoing regulatory, judicial, and political developments. In addition, uncertainty regarding future trade policies may make it more difficult to forecast costs, manage inventory, and plan pricing strategies. To the extent we are unable to mitigate increased costs through pricing actions, operational efficiencies, sourcing changes, or other measures, our gross margins, operating income, net income, and cash flows could be adversely affected. Certain of our activities are subject to weather and natural disaster risks as well as other events outside our control, which could disrupt our operations or otherwise adversely affect our financial performance. The Company conducts certain of its businesses and maintains warehouse and office facilities in locations that are at risk of being negatively affected by severe weather and natural disaster events, including those caused by climate change, such as hurricanes, tornadoes, floods, snowstorms, heat waves or earthquakes. Notably, much of the Company’s domestic distribution facilities are located in central Missouri. A disruption of these or other facilities could 17 impact the Company’s school-based reading events business, as well as its trade and education businesses. Additionally, disruptions due to weather, natural disaster, epidemics or pandemics could result in school closures, resulting in reduced demand for the Company’s products in its school channels during the affected periods. Further, the Company may not be able to achieve its book fair count goals and may be materially impacted if widespread pandemic-related closures occur this coming school year. Increases in school security associated with high profile school shootings and other tragic incidents could impact the accessibility to schools for the school book fairs component of the Company's reading events business. Risks Related to Stock Ownership Control of the Company resides in the Estate of our former Chairman of the Board, President and Chief Executive Officer through the Estate's ownership of Class A Stock, and the holders of the Common Stock generally have no voting rights with respect to transactions requiring stockholder approval. The voting power of the Corporation's capital stock is vested exclusively in the holders of Class A Stock, except for the right of the holders of Common Stock to elect one-fifth of the Board of Directors and except as otherwise provided by law or as may be established in favor of any series of preferred stock that may be issued. The Estate of Richard Robinson, the former Chairman of the Board, President and Chief Executive Officer of the Company, beneficially owns a majority of the outstanding shares of Class A Stock and is able to elect up to four-fifths of the Corporation's Board of Directors and, without the approval of the Corporation's other stockholders, to effect or block other actions or transactions requiring stockholder approval, such as a merger, sale of substantially all assets or similar transaction. Iole Lucchese, Chair of the Board of Directors, Executive Vice President and Chief Strategy Officer of the Company and President of Scholastic Entertainment, in her capacity as Scholastic special executor of the Estate under Mr. Robinson's will and revocable trust, controls the voting of the Estate's Class A Stock. The Company's common stock price may be subject to significant fluctuations. The Company's stock price may be subject to significant fluctuations, which could have an adverse effect on its business and the value of an investment in its common stock. The trading price of the Company's common stock has been and may continue to be subject to significant fluctuations and volatility in response to a variety of factors, including general economic and market conditions, changes in the Company's operating performance and financial results, industry trends and competitive pressures, and changes in analyst recommendations and perceptions. Note The risk factors listed above should not be construed as exhaustive of all possible risks that the Company may face. Additional risks not currently known to the Company or that the Company does not consider to be significant at the present time could also impact the Company's consolidated financial position and results of operations. 18 Forward-Looking Statements: This Annual Report on Form 10-K contains forward-looking statements relating to future periods. Additional written and oral forward-looking statements may be made by the Company from time to time in SEC filings and otherwise. The Company cautions readers that results or expectations expressed by forward-looking statements, including, without limitation, those relating to the Company’s future business prospects and strategic plans, ecommerce and digital initiatives, new product introductions, strategies, new education standards and policies, goals, revenues, improved efficiencies, general costs, manufacturing costs, medical costs, potential cost savings, merit pay, operating margins, working capital, liquidity, capital needs, the cost and timing of capital projects, interest costs, cash flows and income, are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to factors including those noted in this Annual Report and other risks and factors identified from time to time in the Company’s filings with the SEC. The Company disclaims any intention or obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise. 19