What changed in this filing

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Item 1A. Risk Factors

2026-05-15 compared with 2023-11-03 · 424 added, 455 removed, 190 unchanged (82% of the section changed)

The SEC requires the company to identify risks that are specific to

its business and its financial condition.

The company is still subject to all the same risks that all companies in its business, and all

companies in the economy, are exposed to.

These include risks relating to economic downturns, political and economic events and technological

developments (such as hacking and the ability to prevent hacking).

Additionally, early-stage companies are inherently riskier than more

developed companies.

The SEC requires the company to identify risks that

are specific to its business and its financial condition.

The company is still subject to all the same risks that all companies in its

business, and all companies in the economy, are exposed to.

These include risks relating to economic downturns, political and economic

events and technological developments (such as hacking and the ability to prevent hacking).

Additionally, early-stage companies are inherently

riskier than more developed companies.

You should consider general risks as well as specific risks when deciding whether to invest.

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Our success depends substantially on the value of our brand, which could be materially and adversely affected by the high level of competition in the industry, our ability to anticipate and satisfy consumer preferences, shifting views of franchising and our ability to obtain and retain high-profile strategic partnership arrangements.

Our and our franchisees’

stores may be unable to attract and retain clients, which would materially and adversely affect our business, results of operations and financial condition.

Our and our franchisees’ stores may be unable to attract and retain clients, which would materially and adversely affect our business, results of operations and financial condition.

Our intellectual property rights, including trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.

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Our success depends substantially on the value of our brand.

Our success is dependent in large part upon our ability to maintain

and enhance the value of our brand, our store clients’

connection to our brand and a positive relationship with our franchisees.

Our success is dependent in large part upon our ability

to maintain and enhance the value of our brand, our store clients’ connection to our brand and a positive relationship with our

Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity

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Some of these incidents may relate to our policies, the way we manage our relationships with our franchisees,

our growth strategies, our development efforts or the ordinary course of our, or our franchisees’, businesses.

Other incidents that

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actions taken (or not taken) by one or more franchisees or their employees relating to health, safety, welfare or otherwise;

data security breaches or fraudulent activities associated with our and our franchisees’

payment systems;

regulatory, investigative or other actions relating to our and our franchisees’

data privacy practices;

data security breaches or fraudulent activities associated with our and our franchisees’ payment systems;

regulatory, investigative or other actions relating to our and our franchisees’ data privacy practices;

litigation and legal claims;

third-party misappropriation, dilution or infringement or other violation of our intellectual property;

regulatory, investigative or other actions relating to our franchisees’

illegal activity targeted at us or others;

regulatory, investigative or other actions relating to our franchisees’ illegal activity targeted at us or others;

conduct by individuals affiliated with us which could violate ethical standards or otherwise harm the reputation of our brand.

Consumer demand for our stores and our brand’s value could diminish

significantly if any such incidents or other matters erode consumer confidence in us, our consultants or our reputation as a franchising

brand, which would likely result in fewer clients sold or renewed and, ultimately, lower royalty revenue, which in turn could materially

and adversely affect our results of operations and financial condition.

The high level of competition in the franchising industry could

materially and adversely affect our business.

Consumer demand for our stores and our brand’s

value could diminish significantly if any such incidents or other matters erode consumer confidence in us, our consultants or our reputation

as a franchising brand, which would likely result in fewer clients sold or renewed and, ultimately, lower royalty revenue, which in turn

could materially and adversely affect our results of operations and financial condition.

The high level of competition in the franchising industry could materially

and adversely affect our business.

We compete with the following industry participants:

other franchising

other franchising consultants;

business consultants;

business brokers;

and other businesses that rely on emerging business’

discretionary spending.

and other businesses that rely on emerging

business’ discretionary spending.

We may not be able to compete effectively in the markets in which we operate.

Competitors may attempt to copy

our business model, or portions thereof, which could erode our market share and brand recognition and impair our growth rate and profitability.

Competitors, including companies that are larger and have greater resources than us, may compete with us to attract clients in our markets.

This competition may limit our ability to attract and retain existing clients and our ability to attract new clients, which in each case

could materially and adversely affect our results of operations and financial condition.

If we are unable to anticipate and satisfy consumer preferences

and shifting views of franchising, our business may be adversely affected.

Our success depends on our ability to anticipate and satisfy consumer

preferences relating to franchising.

Our business is and all of our services are subject to changing consumer preferences that cannot

be predicted with certainty.

Developments or shifts in research or public opinion on the types of franchising services we provide could

negatively impact the business or consumers’

preferences for franchising services could shift rapidly to different types of franchising

centers or at-home fitness options;

Competitors may

attempt to copy our business model, or portions thereof, which could erode our market share and brand recognition and impair our growth

rate and profitability.

Competitors, including companies that are larger and have greater resources than us, may compete with us to attract

clients in our markets.

This competition may limit our ability to attract and retain existing clients and our ability to attract new clients,

which in each case could materially and adversely affect our results of operations and financial condition.

If we are unable to anticipate and satisfy consumer preferences and

shifting views of franchising, our business may be adversely affected.

Our success depends on our ability to anticipate and

satisfy consumer preferences relating to franchising.

Our business is and all of our services are subject to changing consumer preferences

that cannot be predicted with certainty.

Developments or shifts in research or public opinion on the types of franchising services we

provide could negatively impact the business or consumers’ preferences for franchising services could shift rapidly to different

types of franchising centers or at-home fitness options;

and we may be unable to anticipate and respond to shifts in consumer preferences.

It is also possible

that competitors could introduce new products and services that negatively impact consumer preference for our business model, or that

consumers would prefer franchising opportunities outside of business operations that do not align with our business model.

predict and respond to changes in public opinion, public research and consumer preferences could adversely impact our business.

If we fail to obtain and retain high-profile strategic partnership

arrangements, or if the reputation of any of our partners is impaired, our business may suffer.

A principal component of our marketing program is to partner with high-profile

marketing partners to help us extend the reach of our brand.

We may not be able to attract and partner with new marketing partners in

In addition, if the actions of our partners were to damage their reputation, our partnerships may be less attractive to our

current or prospective clients.

Any of these failures by us or our partners could adversely affect our business and revenues.

Our and our franchisees’

stores may be unable to attract

and retain clients, which would materially and adversely affect our business, results of operations and financial condition.

Our target market is business educated people seeking to expand and

help clients with finding the right franchise opportunity for their situation.

The success of our business depends on our and our franchisees’

ability to attract and retain clients.

Our and our franchisees’

marketing efforts may not be successful in attracting clients business

levels may materially decline over time, especially at locations in operation for an extended period of time.

Some of the factors that

could lead to a decline in new clients include changing desires and behaviors of consumers or their perception of our brand, a shift to

digital fitness versus our core bricks and mortar fitness offerings, changes in business spending trends and general economic conditions,

market maturity or saturation, a decline in our ability to deliver quality service at a competitive price, an increase in monthly clientship

dues due to inflation, direct and indirect competition in our industry and a decline in the public’s interest in franchising, among

other factors.

Our intellectual property rights, including trademarks, trade

names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.

Our intellectual property (including our brand) is important to our

continued success.

We seek to protect our trademarks, trade names, copyrights, trade dress and other intellectual property by exercising

our rights under applicable state, provincial, federal and international laws.

Policing unauthorized use and other violations of our intellectual

property rights is difficult, and the steps we take may not prevent misappropriation, infringement, dilution or other violations of our

intellectual property, especially internationally where foreign nations may not have laws to protect against “squatting,”

or in “first-to-file”

nations where trademark rights can be obtained despite a third party’s prior use of our intellectual

It is also possible that competitors could introduce new products and services that negatively impact consumer preference for our business

model, or that consumers would prefer franchising opportunities outside of business operations that do not align with our business model.

Failure to predict and respond to changes in public opinion, public research and consumer preferences could adversely impact our business.

If we fail to obtain and retain high-profile

strategic partnership arrangements, or if the reputation of any of our partners is impaired, our business may suffer.

A principal component of our marketing program is

to partner with high-profile marketing partners to help us extend the reach of our brand.

We may not be able to attract and partner with

new marketing partners in the future.

In addition, if the actions of our partners were to damage their reputation, our partnerships may

be less attractive to our current or prospective clients.

Any of these failures by us or our partners could adversely affect our business

and revenues.

Our and our franchisees’ stores may be

unable to attract and retain clients, which would materially and adversely affect our business, results of operations and financial condition.

Our target market is business educated people seeking

to expand and help clients with finding the right franchise opportunity for their situation.

The success of our business depends on our

and our franchisees’ ability to attract and retain clients.

Our and our franchisees’ marketing efforts may not be successful

in attracting clients business levels may materially decline over time, especially at locations in operation for an extended period of

Some of the factors that could lead to a decline in new clients include changing desires and behaviors of consumers or their perception

of our brand, a shift to digital fitness versus our core bricks and mortar fitness offerings, changes in business spending trends and

general economic conditions, market maturity or saturation, a decline in our ability to deliver quality service at a competitive price,

an increase in monthly clientship dues due to inflation, direct and indirect competition in our industry and a decline in the public’s

interest in franchising, among other factors.

Our intellectual property rights, including

trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.

Our intellectual property (including our brand) is

important to our continued success.

We seek to protect our trademarks, trade names, copyrights, trade dress and other intellectual property

by exercising our rights under applicable state, provincial, federal and international laws.

Policing unauthorized use and other violations

of our intellectual property rights is difficult, and the steps we take may not prevent misappropriation, infringement, dilution or other

violations of our intellectual property, especially internationally where foreign nations may not have laws to protect against “squatting,”

or in “first-to-file” nations where trademark rights can be obtained despite a third party’s prior use of our intellectual

If we were to fail to successfully protect our intellectual property rights for any reason, or if any third party misappropriates,

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make it more difficult to attract new clients.

We may also from time to time be required to initiate litigation to

enforce our intellectual property rights.

Third parties may also assert that we have infringed, diluted, misappropriated or otherwise

violated their intellectual property rights, which could lead to litigation against us.

Litigation, even where we are likely to prevail,

is inherently uncertain and could divert the attention of management, result in substantial costs and diversion of resources and negatively

affect our clientship sales and profitability regardless of whether we are able to successfully enforce or defend our rights.

our efforts to enforce and defend our intellectual property rights, title defects can arise from conduct of third parties that we cannot

anticipate or control, or our exclusive ownership and control over our intellectual property, especially our rights in trademarks and

trade secrets, could be diminished or impaired.

We may also from time to time be required to initiate

litigation to enforce our intellectual property rights.

Third parties may also assert that we have infringed, diluted, misappropriated

or otherwise violated their intellectual property rights, which could lead to litigation against us.

Litigation, even where we are likely

to prevail, is inherently uncertain and could divert the attention of management, result in substantial costs and diversion of resources

and negatively affect our clientship sales and profitability regardless of whether we are able to successfully enforce or defend our rights.

Despite our efforts to enforce and defend our intellectual property rights, title defects can arise from conduct of third parties that

we cannot anticipate or control, or our exclusive ownership and control over our intellectual property, especially our rights in trademarks

and trade secrets, could be diminished or impaired.

For example, under U.S.

law a third party’s prior use of a trademark similar to

a SportsQuest trademark could impair our rights in our trademarks, which, despite reasonable research and efforts, we may not have been

able to discover or anticipate.

law a third party’s prior use of a trademark similar

to a SportsQuest trademark could impair our rights in our trademarks, which, despite reasonable research and efforts, we may not have

been able to discover or anticipate.

In addition, our trade secrets and confidential information could be compromised through misappropriation

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results of operations, financial condition and cash flow.

We and our franchisees rely heavily on information systems, and

any material failure, interruption or weakness may prevent us from effectively operating our business and damage our reputation.

We and our franchisees may rely on information systems managed by third

parties, to interact with our franchisees and clients and collect, maintain, store and transmit member information, billing information

and other personally identifiable information, including for the operation of stores, collection of cash, legal and regulatory compliance,

management of our supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions and

other processes and procedures.

We and our franchisees rely heavily on information

systems, and any material failure, interruption or weakness may prevent us from effectively operating our business and damage our reputation.

We and our franchisees may rely on information systems

managed by third parties, to interact with our franchisees and clients and collect, maintain, store and transmit member information, billing

information and other personally identifiable information, including for the operation of stores, collection of cash, legal and regulatory

compliance, management of our supply chain, accounting, staffing, payment of obligations, ACH transactions, credit and debit card transactions

and other processes and procedures.

Our ability to efficiently and effectively manage our franchisee and corporate-owned operations depends

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service is beyond our control.

Our and our franchisees’

operations depend upon our ability,

and the ability of our franchisees and third-party service providers (as well as their third-party service providers), to protect our

computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic

Our and our franchisees’ operations depend upon

our ability, and the ability of our franchisees and third-party service providers (as well as their third-party service providers), to

protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic

events, as well as from internal and external security breaches, viruses, denial-of-service attacks and other disruptions.

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information systems, or those of our franchisees and third-party service providers (as well as their third-party service providers), fail

and our or our partners’

third-party back-up or disaster recovery plans are not adequate to address such failures, our revenues

and our or our partners’ third-party back-up or disaster recovery plans are not adequate to address such failures, our revenues

and profits could be reduced and the reputation of our brand and our business could be materially adversely affected, which in turn may

materially and adversely affect our results of operations and financial condition.

Use of email marketing and social media may adversely impact

our reputation or subject us to fines or other penalties.

There has been a substantial increase in the use of email and social

media platforms, including v-logs, blogs, chat platforms, social media websites and other forms of internet-based communication, which

allow access to a broad audience of consumers and other interested persons.

Use of email marketing and social media may

adversely impact our reputation or subject us to fines or other penalties.

There has been a substantial increase in the use of

email and social media platforms, including v-logs, blogs, chat platforms, social media websites and other forms of internet-based communication,

which allow access to a broad audience of consumers and other interested persons.

The rising popularity of social media and other consumer-oriented

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on social media platforms or similar platforms at any time and may harm our business, brand, reputation, marketing partners, financial

condition, and results of operations, regardless of the information’s accuracy.

We also use email and social media platforms as marketing tools.

example, we maintain social media accounts and may occasionally email clients to inform them of certain offers or promotions.

and regulations, including Federal Trade Commission (“FTC”) enforcement, rapidly evolve to govern the use of these platforms

and devices, the failure by us, our employees, our franchisees or third parties acting at our direction to abide by applicable laws and

regulations in the use of these platforms and devices could adversely impact our and our franchisees’

business, financial condition

and results of operations or subject us to fines or other penalties.

If we fail to properly maintain the confidentiality and integrity

of our data, including credit card, debit card, bank account information and other personally identifiable information, our reputation

and business could be materially and adversely affected.

In the ordinary course of business, we and our franchisees collect,

maintain, store and transmit member and employee data, including credit and debit card numbers, bank account information, driver’s

condition, and results of operations, regardless of the information’s accuracy.

We also use email and social media platforms as marketing

For example, we maintain social media accounts and may occasionally email clients to inform them of certain offers or promotions.

As laws and regulations, including Federal Trade Commission (“FTC”) enforcement, rapidly evolve to govern the use of these

platforms and devices, the failure by us, our employees, our franchisees or third parties acting at our direction to abide by applicable

laws and regulations in the use of these platforms and devices could adversely impact our and our franchisees’ business, financial

condition and results of operations or subject us to fines or other penalties.

If we fail to properly maintain the confidentiality

and integrity of our data, including credit card, debit card, bank account information and other personally identifiable information,

our reputation and business could be materially and adversely affected.

In the ordinary course of business, we and our franchisees

collect, maintain, store and transmit member and employee data, including credit and debit card numbers, bank account information, driver’s

license numbers, dates of birth and other highly sensitive personally identifiable information, in information systems that we maintain

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and could be an attractive target of a criminal attack by malicious third parties with a wide range of motives and expertise, including

lone wolves, organized criminal groups, “hacktivists,”

disgruntled current or former employees and others.

lone wolves, organized criminal groups, “hacktivists,” disgruntled current or former employees and others.

The integrity and

protection of member and employee data is critical to us.

Despite the security measures we have in place to comply with applicable

laws and rules, our facilities and systems, and those of our franchisees and third-party service providers (as well as their third-party

service providers), may be vulnerable to security breaches, acts of cyber terrorism or sabotage, vandalism or theft, computer viruses,

loss or corruption of data, programming or human errors or other similar events.

Furthermore, the size and complexity of our information

systems, and those of our franchisees and our third-party service providers (as well as their third-party service providers), make such

systems potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, franchisees or vendors,

or from attacks by malicious third parties.

Because such attacks are increasing in sophistication and change frequently in nature, we,

our franchisees and our third-party service providers may be unable to anticipate these attacks or implement adequate preventative measures,

and any compromise of our systems, or those of our franchisees and third-party service providers (as well as their third-party service

providers), may not be discovered and remediated promptly.

Changes in consumer behavior following a security breach or perceived breach,

act of cyber terrorism or sabotage, vandalism or theft, computer viruses, loss or corruption of data or programming or human error or

other similar event affecting a competitor, large retailer or financial institution may materially and adversely affect our business,

Despite the security measures we have in place to

comply with applicable laws and rules, our facilities and systems, and those of our franchisees and third-party service providers (as

well as their third-party service providers), may be vulnerable to security breaches, acts of cyber terrorism or sabotage, vandalism or

theft, computer viruses, loss or corruption of data, programming or human errors or other similar events.

Furthermore, the size and complexity

of our information systems, and those of our franchisees and our third-party service providers (as well as their third-party service providers),

make such systems potentially vulnerable to security breaches from inadvertent or intentional actions by our employees, franchisees or

vendors, or from attacks by malicious third parties.

Because such attacks are increasing in sophistication and change frequently in nature,

we, our franchisees and our third-party service providers may be unable to anticipate these attacks or implement adequate preventative

measures, and any compromise of our systems, or those of our franchisees and third-party service providers (as well as their third-party

service providers), may not be discovered and remediated promptly.

Changes in consumer behavior following a security breach or perceived

breach, act of cyber terrorism or sabotage, vandalism or theft, computer viruses, loss or corruption of data or programming or human error

or other similar event affecting a competitor, large retailer or financial institution may materially and adversely affect our business,

which in turn may materially and adversely affect our results of operations and financial condition.

Additionally, the handling of personally identifiable information by

our, or our franchisees’, businesses are regulated at the federal, state and international levels, as well as by certain industry

groups, such as the Payment Card Industry Security Standards Council, NACHA, and individual credit card issuers.

Federal, state, international

and industry groups may also consider and implement from time to time new privacy and security requirements that apply to our businesses.

Compliance with contractual obligations and evolving privacy and security laws, requirements and regulations may result in cost increases

due to necessary system changes, new limitations or constraints on our business models and the development of new administrative processes.

They also may impose further restrictions on our handling of personally identifiable information that are housed in one or more of our,

or our franchisees’

databases, or those of our third-party service providers.

Noncompliance with privacy laws or industry group

requirements or a security breach or perceived non-compliance or breach involving the misappropriation, loss or other unauthorized disclosure

of personal, sensitive or confidential information, whether by us or by one of our franchisees or vendors, could have material adverse

effects on our and our franchisees’

business, operations, brand, reputation and financial condition, including decreased revenue,

material fines and penalties, litigation, increased financial processing fees, compensatory, statutory, punitive or other damages, adverse

actions against our licenses to do business and injunctive relief by court or consent order.

Despite our efforts, the handling of personally

identifiable information may not be in compliance with applicable law, or this information could be disclosed or lost due to a hacking

event or unauthorized access to our information system, or through publication or improper disclosure, any of which could affect the value

of our brand.

We maintain and we require our franchisees to maintain cyber risk insurance, but in the event of a significant data security

breach, this insurance may not cover all of the losses that we would be likely to suffer.

The occurrence of cyber incidents, or a deficiency in cybersecurity,

could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information,

and/or damage to our employee and business relationships and reputation, all of which could harm our brand and our business.

We could be in the future, subject to cyber incidents or other adverse

events that threaten the confidentiality, integrity or availability of information resources, including intentional attacks or unintentional

events where parties gain unauthorized access to systems to disrupt operations, corrupt data or steal confidential information about customers,

franchisees, vendors and employees.

Such attacks have become more common, and many companies have recently experienced serious cyber incidents

and breaches of their information technology systems.

As our reliance on technology has increased, so have the risks posed to our systems,

both internal and those we have outsourced.

The three primary risks that could directly result from the occurrence of a cyber incident

include operational interruption, damage to the relationship with clients and private data exposure, which each in turn could create additional

risks and exposure.

We maintain insurance coverage to address cyber incidents, and have also implemented processes, procedures and controls

to help mitigate these risks.

However, these measures do not guarantee that our reputation and financial results will not be adversely

affected by such an incident.

Because our franchisees accept electronic forms of payment from their

customers, our business requires the collection and retention of customer data, including credit and debit card numbers and other personally

identifiable information in various information systems that we and our franchisees maintain and in those maintained by third parties

with whom we and our franchisees contract to provide credit card processing.

We also maintain important internal company data, such as

personally identifiable information about our employees and franchisees and information relating to our operations.

Our use of personally

identifiable information is regulated by foreign, federal and state laws, as well as by certain third-party agreements.

As privacy and

information security laws and regulations and contractual obligations with third parties evolve, we may incur additional costs to ensure

that we remain in compliance with those laws and regulations and contractual obligations.

If our security and information systems are

compromised or if we, our employees or franchisees fail to comply with these laws, regulations, or contract terms, and this information

is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and could disrupt our operations

and result in costly litigation, judgments, or penalties arising from violations of federal and state laws and payment card industry regulations.

Under certain laws, regulations and contractual obligations, a cyber

incident could also require us to notify customers, employees or other groups of the incident or could result in adverse publicity, loss

of sales and profits or an increase in fees payable to third parties.

We could also incur penalties or remediation and other costs that

could adversely affect the operation of our business, which in turn may materially and adversely affect our results of operations and

financial condition.

If we fail to successfully implement our growth strategy, which

includes new franchisees, our ability to increase our revenues and operating profits could be adversely affected.

Additionally, the handling of personally identifiable

information by our, or our franchisees’, businesses are regulated at the federal, state and international levels, as well as by

certain industry groups, such as the Payment Card Industry Security Standards Council, NACHA, and individual credit card issuers.

state, international and industry groups may also consider and implement from time to time new privacy and security requirements that

apply to our businesses.

Compliance with contractual obligations and evolving privacy and security laws, requirements and regulations

may result in cost increases due to necessary system changes, new limitations or constraints on our business models and the development

of new administrative processes.

They also may impose further restrictions on our handling of personally identifiable information that

are housed in one or more of our, or our franchisees’ databases, or those of our third-party service providers.

Noncompliance with

privacy laws or industry group requirements or a security breach or perceived non-compliance or breach involving the misappropriation,

loss or other unauthorized disclosure of personal, sensitive or confidential information, whether by us or by one of our franchisees or

vendors, could have material adverse effects on our and our franchisees’ business, operations, brand, reputation and financial condition,

including decreased revenue, material fines and penalties, litigation, increased financial processing fees, compensatory, statutory, punitive

or other damages, adverse actions against our licenses to do business and injunctive relief by court or consent order.

Despite our efforts,

the handling of personally identifiable information may not be in compliance with applicable law, or this information could be disclosed

or lost due to a hacking event or unauthorized access to our information system, or through publication or improper disclosure, any of

which could affect the value of our brand.

We maintain and we require our franchisees to maintain cyber risk insurance, but in the event

of a significant data security breach, this insurance may not cover all of the losses that we would be likely to suffer.

The occurrence of cyber incidents, or a deficiency

in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential

information, and/or damage to our employee and business relationships and reputation, all of which could harm our brand and our business.

We could be in the future, subject to cyber incidents

or other adverse events that threaten the confidentiality, integrity or availability of information resources, including intentional attacks

or unintentional events where parties gain unauthorized access to systems to disrupt operations, corrupt data or steal confidential information

about customers, franchisees, vendors and employees.

Such attacks have become more common, and many companies have recently experienced

serious cyber incidents and breaches of their information technology systems.

As our reliance on technology has increased, so have the

risks posed to our systems, both internal and those we have outsourced.

The three primary risks that could directly result from the occurrence

of a cyber incident include operational interruption, damage to the relationship with clients and private data exposure, which each in

turn could create additional risks and exposure.

We maintain insurance coverage to address cyber incidents, and have also implemented

processes, procedures and controls to help mitigate these risks.

However, these measures do not guarantee that our reputation and financial

results will not be adversely affected by such an incident.

Because our franchisees accept electronic forms of

payment from their customers, our business requires the collection and retention of customer data, including credit and debit card numbers

and other personally identifiable information in various information systems that we and our franchisees maintain and in those maintained

by third parties with whom we and our franchisees contract to provide credit card processing.

We also maintain important internal company

data, such as personally identifiable information about our employees and franchisees and information relating to our operations.

use of personally identifiable information is regulated by foreign, federal and state laws, as well as by certain third-party agreements.

As privacy and information security laws and regulations and contractual obligations with third parties evolve, we may incur additional

costs to ensure that we remain in compliance with those laws and regulations and contractual obligations.

If our security and information

systems are compromised or if we, our employees or franchisees fail to comply with these laws, regulations, or contract terms, and this

information is obtained by unauthorized persons or used inappropriately, it could adversely affect our reputation and could disrupt our

operations and result in costly litigation, judgments, or penalties arising from violations of federal and state laws and payment card

industry regulations.

Under certain laws, regulations and contractual obligations,

a cyber incident could also require us to notify customers, employees or other groups of the incident or could result in adverse publicity,

loss of sales and profits or an increase in fees payable to third parties.

We could also incur penalties or remediation and other costs

that could adversely affect the operation of our business, which in turn may materially and adversely affect our results of operations

and financial condition.

If we fail to successfully implement our growth

strategy, which includes new franchisees, our ability to increase our revenues and operating profits could be adversely affected.

Our growth strategy relies in large part upon new franchisees.

franchisees face many challenges in opening new operation, including:

Our franchisees

face many challenges in opening new operation, including:

availability and cost of financing;

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general economic and business conditions.

Our growth strategy also relies on our ability to identify, recruit

and enter into agreements with a sufficient number of franchisees.

In addition, our ability and the ability of our franchisees to successfully

open and operate new stores in new or existing markets may be adversely affected by a lack of awareness or acceptance of our brand, as

well as a lack of existing marketing efforts and operational execution in these new markets.

To the extent that we are unable to implement

effective marketing and promotional programs and foster recognition and affinity for our brand in new domestic and international markets,

our and our franchisees’

new stores may not perform as expected and our growth may be significantly delayed or impaired.

Economic, political and other risks associated with our international operations

could adversely affect our profitability and international growth prospects.

We may have stores operating in certain other countries around the

Our international operations would be subject to a number of risks inherent to operating in foreign countries, and any expansion

of our international operations will increase the impact of these risks.

Our growth strategy also relies on our ability to

identify, recruit and enter into agreements with a sufficient number of franchisees.

In addition, our ability and the ability of our franchisees

to successfully open and operate new stores in new or existing markets may be adversely affected by a lack of awareness or acceptance

of our brand, as well as a lack of existing marketing efforts and operational execution in these new markets.

To the extent that we are

unable to implement effective marketing and promotional programs and foster recognition and affinity for our brand in new domestic and

international markets, our and our franchisees’ new stores may not perform as expected and our growth may be significantly delayed

Economic, political and other risks

associated with our international operations could adversely affect our profitability and international growth

We may have stores operating in certain other countries

around the world.

Our international operations would be subject to a number of risks inherent to operating in foreign countries,

and any expansion of our international operations will increase the impact of these risks.

These risks include, among others:

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increased costs in maintaining international franchise and marketing efforts;

franchisees’

difficulty in raising adequate capital;

franchisees’ difficulty in raising adequate capital;

problems entering international markets with different cultural bases and consumer preferences;

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operating in new, developing or other markets in which there are significant uncertainties regarding the interpretation, application and enforceability of laws and regulations relating to contract and intellectual property rights.

As a result, those new stores may be less successful than stores in

our existing markets.

Further, effectively managing growth can be challenging, particularly as we continue to expand into new international markets

where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our

mission and standards.

As a result, those new stores may be less successful

than stores in our existing markets.

Further, effectively managing growth can be challenging, particularly as we continue to expand

into new international markets where we must balance the need for flexibility and a degree of autonomy for local management

against the need for consistency with our mission and standards.

Our financial results are affected by the operating and financial

results of, and our relationships with, our franchisees.

A substantial portion of our revenues come from royalties, which are

generally based on a percentage of gross monthly clientship dues and annual fees at our franchise stores or, in certain cases, a sliding

scale based on gross monthly clientship dues, other fees and commissions generated from activities associated with our franchisees, and

equipment sales to our franchisees.

A substantial portion of our revenues come from royalties,

which are generally based on a percentage of gross monthly clientship dues and annual fees at our franchise stores or, in certain cases,

a sliding scale based on gross monthly clientship dues, other fees and commissions generated from activities associated with our franchisees,

and equipment sales to our franchisees.

As a result, our financial results are largely dependent upon the operational and financial results

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Negative economic conditions, including recession, public health emergencies, inflation, increased unemployment

levels and the effect of decreased consumer confidence or changes in consumer behavior, could materially harm our franchisees’

levels and the effect of decreased consumer confidence or changes in consumer behavior, could materially harm our franchisees’ financial

condition, which would cause our royalty and other revenues to decline and materially and adversely affect our results of operations and

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Our franchisees could take actions that harm our business.

Our franchisees are contractually obligated to operate their stores

in accordance with the operational, safety and health standards set forth in our agreements with them, including adherence to applicable

laws and regulations.

Our franchisees are contractually obligated to operate

their stores in accordance with the operational, safety and health standards set forth in our agreements with them, including adherence

to applicable laws and regulations.

However, franchisees are independent third parties and their actions are outside of our control.

we cannot be certain that our franchisees will have the business acumen or financial resources necessary to operate successful franchises

in their approved locations, and certain state franchise laws limit our ability to terminate or not renew these franchise agreements.

In addition, we cannot be certain that our franchisees will have the business acumen or financial resources necessary to operate successful

franchises in their approved locations, and certain state franchise laws limit our ability to terminate or not renew these franchise agreements.

Our franchisees own, operate and oversee the daily operations of their stores.

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could be harmed, which in turn could materially and adversely affect our results of operations and financial condition.

Although we believe we generally maintain positive working relationships

with our franchisees, disputes with franchisees could damage our brand image and reputation and our relationships with our franchisees

We are subject to a variety of additional risks associated with

our franchisees.

Our franchise business model subjects us to a number of risks, any

one of which may impact our royalty revenues collected from our franchisees, may harm the goodwill associated with our brand, and may

materially and adversely impact our business and results of operations.

Although we believe we generally maintain positive

working relationships with our franchisees, disputes with franchisees could damage our brand image and reputation and our relationships

with our franchisees generally.

We are subject to a variety of additional risks associated with our

Our franchise business model subjects us to a number

of risks, any one of which may impact our royalty revenues collected from our franchisees, may harm the goodwill associated with our brand,

and may materially and adversely impact our business and results of operations.

Bankruptcy of franchisees.

A franchisee bankruptcy could

have a substantial negative impact on our ability to collect payments due under such franchisee’s franchise agreement(s).

In a franchisee

bankruptcy, the bankruptcy trustee may reject its franchise agreement(s), ADA(s) and/or franchisee lease/sublease pursuant to Section 365

under the U.S.

bankruptcy code, in which case there would be no further royalty payments from such franchisee, and we may not ultimately

recover those payments in a bankruptcy proceeding of such franchisee in connection with a damage claim resulting from such rejection.

bankruptcy could have a substantial negative impact on our ability to collect payments due under such franchisee’s franchise agreement(s).

In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreement(s), ADA(s) and/or franchisee lease/sublease pursuant

to Section 365 under the U.S.

bankruptcy code, in which case there would be no further royalty payments from such franchisee, and

we may not ultimately recover those payments in a bankruptcy proceeding of such franchisee in connection with a damage claim resulting

from such rejection.

Franchisee changes in control.

Our franchises are operated

by independent business owners.

Although we have the right to approve franchise owners, and any transferee owners, we cannot predict in

advance whether a particular franchise owner will be successful.

If an individual franchise owner is unable to successfully establish,

manage and operate the store, the performance and quality of service of the store could be adversely affected, which could reduce clients

and negatively affect our royalty revenues and brand image.

Although our agreements prohibit “changes in control”

of a franchisee

without our prior consent as the franchisor, our form franchise agreement, and state franchise relationship laws limit our ability to

withhold our consent to the transfer of a store to a new owner.

In any transfer situation, the transferee may not be able to perform its

obligations under its franchise agreements and successfully operate the store.

In such a case the performance and quality of service of

the store could be adversely affected, which could also reduce clients and negatively affect our royalty revenues and brand image.

In addition, in the event of the death or permanent disability of a

franchisee (if a natural person) or a principal of a franchisee entity, the executors and representatives of the franchisee are required

to appoint an operator approved by us to manage the store.

There is, however, no assurance that any such operator would be found or, if

found, would be able to successfully operate its s tore.

In the event that an acceptable operator is not found, the franchisee

would be in default under its franchise agreement and, among other things, the franchise agreement and the franchisee’s right to

operate the store under the franchise agreement could be terminated.

If a new operator is not found or approved by us, or the new operator

is not as successful in operating the store as the then - deceased franchisee or franchisee principal, the gross EFT of the store

may be affected and could adversely affect our business and operating results.

Our franchises

are operated by independent business owners.

Although we have the right to approve franchise owners, and any transferee owners, we cannot

predict in advance whether a particular franchise owner will be successful.

If an individual franchise owner is unable to successfully

establish, manage and operate the store, the performance and quality of service of the store could be adversely affected, which could

reduce clients and negatively affect our royalty revenues and brand image.

Although our agreements prohibit “changes in control”

of a franchisee without our prior consent as the franchisor, our form franchise agreement, and state franchise relationship laws limit

our ability to withhold our consent to the transfer of a store to a new owner.

In any transfer situation, the transferee may not be able

to perform its obligations under its franchise agreements and successfully operate the store.

In such a case the performance and quality

of service of the store could be adversely affected, which could also reduce clients and negatively affect our royalty revenues and brand

In addition, in the event of the death or permanent

disability of a franchisee (if a natural person) or a principal of a franchisee entity, the executors and representatives of the franchisee

are required to appoint an operator approved by us to manage the store.

There is, however, no assurance that any such operator would be

found or, if found, would be able to successfully operate its s tore.

In the event that an acceptable operator is not found,

the franchisee would be in default under its franchise agreement and, among other things, the franchise agreement and the franchisee’s

right to operate the store under the franchise agreement could be terminated.

If a new operator is not found or approved by us, or the

new operator is not as successful in operating the store as the then - deceased franchisee or franchisee principal, the gross EFT

of the store may be affected and could adversely affect our business and operating results.

Franchisee insurance.

Our form franchise agreement requires

each franchisee to maintain certain insurance types and levels.

Losses arising from certain extraordinary hazards, however, may not be

covered, and insurance may not be available (or may be available only at prohibitively expensive rates) with respect to many other risks,

or franchisees may fail to procure the required insurance.

Moreover, any loss incurred could exceed policy limits and policy payments

made to franchisees may not be made on a timely basis.

Any such loss or delay in payment could have a material adverse effect on a franchisee’s

ability to satisfy its obligations under its franchise agreement or other contractual obligations, which could cause the termination of

the franchisee’s franchise agreement and, in turn, may materially and adversely affect our operating and financial results.

Our form franchise

agreement requires each franchisee to maintain certain insurance types and levels.

Losses arising from certain extraordinary hazards,

however, may not be covered, and insurance may not be available (or may be available only at prohibitively expensive rates) with respect

to many other risks, or franchisees may fail to procure the required insurance.

Moreover, any loss incurred could exceed policy limits

and policy payments made to franchisees may not be made on a timely basis.

Any such loss or delay in payment could have a material adverse

effect on a franchisee’s ability to satisfy its obligations under its franchise agreement or other contractual obligations, which

could cause the termination of the franchisee’s franchise agreement and, in turn, may materially and adversely affect our operating

and financial results.

Some of our franchisees are operating entities.

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Franchise agreement termination;

Each franchise

agreement is subject to termination by us as the franchisor in the event of a default, generally after expiration of applicable cure periods,

although under certain circumstances a franchise agreement may be terminated by us upon notice without an opportunity to cure.

provisions under the former franchise agreement are drafted broadly and include, among other things, any failure to meet operating standards

and actions that may threaten our brand’s goodwill.

Moreover, a franchisee may have a right to terminate its franchise agreement

in certain circumstances.

Our ability to terminate a franchise agreement following a default that is not cured within the applicable cure

period, if any, and the ability of franchisees under certain circumstances to terminate a franchise agreement, could reduce our royalty

revenue, which in turn may materially and adversely affect our business and operating results.

In addition, each franchise agreement has an expiration date.

the expiration of a franchise agreement, we or the franchisee may, or may not, elect to renew the franchise agreement.

If the franchise

agreement is renewed, the franchisee will receive a “successor”

franchise agreement for an additional term.

Such option, however,

is contingent on the franchisee’s execution of the then-current form franchise agreement (which may include increased royalty payments,

advertising fees and other fees and costs), the satisfaction of certain conditions (including re-equipment and remodeling of the store

and other requirements) and the payment of a successor fee.

If a franchisee is unable or unwilling to satisfy any of the foregoing conditions,

the expiring franchise agreement will terminate upon expiration of its term.

If not renewed, a franchise agreement and the related payments

will terminate.

We may be unable to find a new franchisee to replace such lost revenues, which in turn may materially and adversely affect

our business and operating results.

franchise agreement is subject to termination by us as the franchisor in the event of a default, generally after expiration of applicable

cure periods, although under certain circumstances a franchise agreement may be terminated by us upon notice without an opportunity to

The default provisions under the former franchise agreement are drafted broadly and include, among other things, any failure to

meet operating standards and actions that may threaten our brand’s goodwill.

Moreover, a franchisee may have a right to terminate

its franchise agreement in certain circumstances.

Our ability to terminate a franchise agreement following a default that is not cured

within the applicable cure period, if any, and the ability of franchisees under certain circumstances to terminate a franchise agreement,

could reduce our royalty revenue, which in turn may materially and adversely affect our business and operating results.

In addition, each franchise agreement has an expiration

Upon the expiration of a franchise agreement, we or the franchisee may, or may not, elect to renew the franchise agreement.

franchise agreement is renewed, the franchisee will receive a “successor” franchise agreement for an additional term.

option, however, is contingent on the franchisee’s execution of the then-current form franchise agreement (which may include increased

royalty payments, advertising fees and other fees and costs), the satisfaction of certain conditions (including re-equipment and remodeling

of the store and other requirements) and the payment of a successor fee.

If a franchisee is unable or unwilling to satisfy any of the

foregoing conditions, the expiring franchise agreement will terminate upon expiration of its term.

If not renewed, a franchise agreement

and the related payments will terminate.

We may be unable to find a new franchisee to replace such lost revenues, which in turn may materially

and adversely affect our business and operating results.

Franchisee litigation;

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vicarious liability claims, litigation with or involving our relationship with franchisees, litigation alleging that the franchisees are

our employees or that we are the co-employer of our franchisees’

employees, employee allegations against the franchisee or us of

our employees or that we are the co-employer of our franchisees’ employees, employee allegations against the franchisee or us of

improper termination and discrimination, landlord/tenant disputes and intellectual property claims.

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In addition, we and our franchisees are subject to various regulatory efforts to enforce employment laws, such as efforts to

classify franchisors as the co-employers of their franchisees’

employees and legislation to categorize individual franchised businesses

classify franchisors as the co-employers of their franchisees’ employees and legislation to categorize individual franchised businesses

as large employers for the purposes of various employment benefits.

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We seek to have positive relationships with our franchisees,

based in part on our common understanding of our mutual rights and obligations under our agreements, to enable both the franchisees’

business and our business to be successful.

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upfront and ongoing investment, including periodic remodeling and equipment replacement.

If our franchisees’

costs are greater than

If our franchisees’ costs are greater than

expected, franchisees may need to outperform their operational plan to achieve their targeted return.

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Franchisee turnover.

There can be no guarantee of the retention

of any, including the top performing, franchisees in the future, or that we will maintain the ability to attract, retain, and motivate

sufficient numbers of franchisees of the same caliber.

The quality of existing franchisee operations may be diminished by factors beyond

our control, including franchisees’

failure or inability to hire or retain qualified managers and other personnel.

Training of managers

and other personnel may be inadequate.

These and other such negative factors could reduce franchise stores’

revenues, impact payments

to us from franchisees under the franchise agreements and could have a material adverse effect on our revenues, which in turn may materially

and adversely affect our business.

Our business is subject to various laws and regulations and changes

in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect our business.

We are subject to the FTC Franchise Rule, which is a trade regulation

imposed on franchising promulgated by the FTC that regulates the offer and sale of franchises in the United States and that requires us

to provide to all prospective franchisees certain mandatory disclosure in a FDD.

In addition, we are subject to state franchise registration

and disclosure laws in approximately 14 states and various state business opportunity laws that regulate the offer and sale of franchises

by requiring us, unless otherwise exempt, to register our franchise offering in those states prior to our making any offer or sale of

a franchise in those states and to provide a FDD to prospective franchisees in accordance with such laws.

We are subject to franchise

disclosure laws in States that regulate the offer and sale of franchises by requiring us, unless otherwise exempt, to prepare and deliver

a franchise disclosure document to disclose our franchise offering in a prescribed format to prospective franchisees in accordance with

such laws, and that regulate certain aspects of the franchise relationship.

We are subject to similar franchise sales laws in Canada,Mexico,

and Australia (should we expand internationally), and may become subject to similar laws in other countries in which we may offer franchises

in the future.

Failure to comply with such laws may result in a franchisee’s right to rescind its franchise agreement

and damages, and may result in investigations or actions from federal or state franchise authorities, civil fines or penalties, and stop

orders, among other remedies.

We are also subject to franchise relationship laws in approximately 20 states and in various U.S.

that regulate many aspects of the franchise relationship including, depending upon the jurisdiction, renewals and terminations of franchise

agreements, franchise transfers, the applicable law and venue in which franchise disputes must be resolved, discrimination and franchisees’

right to associate, among others.

Our failure to comply with such franchise relationship laws could result in fines, damages and our inability

to enforce franchise agreements where we have violated such laws.

Although we believe that our FDDs, franchise sales practices and franchise

activities comply with such franchise sales laws and franchise relationship laws, our non-compliance could result in liability to franchisees

and regulatory authorities (as described above), inability to enforce our franchise agreements and a reduction in our anticipated royalty

revenue, which in turn may materially and adversely affect our business and results of operations.

We and our franchisees are also subject to the Fair Labor Standards

Act of 1938, as amended, and various other laws in the United States, Canada, Panama, Mexico and Australia governing such matters as minimum-wage

requirements, overtime and other working conditions.

Based upon our experience with hiring employees and operating corporate-owned stores,

we believe a significant number of our and our franchisees’

employees are paid at rates related to the U.S.

federal or state minimum

wage, and past increases in the U.S.

federal and/or state minimum wage have increased labor costs, as would future increases.

Any increases

in labor costs might result in our and our franchisees inadequately staffing stores.

Such increases in labor costs, and those that may

arise due to other changes in labor laws or as a result of low unemployment rates, could affect store performance and quality of service,

decrease royalty revenues and adversely affect our brand.

Our and our franchisees’

operations and properties are subject

to extensive U.S., Canadian, Panamanian, Mexican and Australian, federal, international, state, provincial and local laws and regulations,

including those relating to environmental, building and zoning requirements.

Our and our franchisees’

development of properties

depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental,

traffic and other regulations and requirements.

Failure to comply with these legal requirements could result in, among other things, revocation

of required licenses, administrative enforcement actions, fines and civil and criminal liability, which could adversely affect our business.

We and our franchisees are responsible at stores we each operate for

compliance with state, provincial and local laws that regulate the relationship between stores and their clients.

Many states and

provinces have consumer protection regulations that may limit the collection of clientship dues or fees prior to opening, require certain

disclosures of pricing information, mandate the maximum length of contracts and “cooling off”

periods for clients (after the

purchase of a clientship), set escrow and bond requirements for stores, govern member rights in the event of a member relocation or disability,

provide for specific member rights when a store closes or relocates, or preclude automatic clientship renewals.

Our or our franchisees’

failure to comply fully with these rules or requirements may subject us or our franchisees to fines, penalties, damages and civil liability,

or result in clientship contracts being void or voidable.

In addition, states or provinces may update these laws and regulations.

additional costs which may arise in the future as a result of changes to the legislation and regulations or in their interpretation could

individually or in the aggregate cause us to change or limit our business practices, which may make our business model less attractive

to our franchisees or our clients.

There can be no guarantee

of the retention of any, including the top performing, franchisees in the future, or that we will maintain the ability to attract, retain,

and motivate sufficient numbers of franchisees of the same caliber.

The quality of existing franchisee operations may be diminished by

factors beyond our control, including franchisees’ failure or inability to hire or retain qualified managers and other personnel.

Training of managers and other personnel may be inadequate.

These and other such negative factors could reduce franchise stores’

revenues, impact payments to us from franchisees under the franchise agreements and could have a material adverse effect on our revenues,

which in turn may materially and adversely affect our business.

Our business is subject to various laws and

regulations and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely

affect our business.

We are subject to the FTC Franchise Rule, which is

a trade regulation imposed on franchising promulgated by the FTC that regulates the offer and sale of franchises in the United States

and that requires us to provide to all prospective franchisees certain mandatory disclosure in a FDD.

In addition, we are subject to state

franchise registration and disclosure laws in approximately 14 states and various state business opportunity laws that regulate the offer

and sale of franchises by requiring us, unless otherwise exempt, to register our franchise offering in those states prior to our making

any offer or sale of a franchise in those states and to provide a FDD to prospective franchisees in accordance with such laws.

subject to franchise disclosure laws in States that regulate the offer and sale of franchises by requiring us, unless otherwise exempt,

to prepare and deliver a franchise disclosure document to disclose our franchise offering in a prescribed format to prospective franchisees

in accordance with such laws, and that regulate certain aspects of the franchise relationship.

We are subject to similar franchise sales

laws in Canada,Mexico, and Australia (should we expand internationally), and may become subject to similar laws in other countries in

which we may offer franchises in the future.

Failure to comply with such laws may result in a franchisee’s right to

rescind its franchise agreement and damages, and may result in investigations or actions from federal or state franchise authorities,

civil fines or penalties, and stop orders, among other remedies.

We are also subject to franchise relationship laws in approximately 20

states and in various U.S.

territories that regulate many aspects of the franchise relationship including, depending upon the jurisdiction,

renewals and terminations of franchise agreements, franchise transfers, the applicable law and venue in which franchise disputes must

be resolved, discrimination and franchisees’ right to associate, among others.

Our failure to comply with such franchise relationship

laws could result in fines, damages and our inability to enforce franchise agreements where we have violated such laws.

Although we believe

that our FDDs, franchise sales practices and franchise activities comply with such franchise sales laws and franchise relationship laws,

our non-compliance could result in liability to franchisees and regulatory authorities (as described above), inability to enforce our

franchise agreements and a reduction in our anticipated royalty revenue, which in turn may materially and adversely affect our business

and results of operations.

We and our franchisees are also subject to the Fair

Labor Standards Act of 1938, as amended, and various other laws in the United States, Canada, Panama, Mexico and Australia governing such

matters as minimum-wage requirements, overtime and other working conditions.

Based upon our experience with hiring employees and operating

corporate-owned stores, we believe a significant number of our and our franchisees’ employees are paid at rates related to the U.S.

federal or state minimum wage, and past increases in the U.S.

federal and/or state minimum wage have increased labor costs, as would future

Any increases in labor costs might result in our and our franchisees inadequately staffing stores.

Such increases in labor

costs, and those that may arise due to other changes in labor laws or as a result of low unemployment rates, could affect store performance

and quality of service, decrease royalty revenues and adversely affect our brand.

Our and our franchisees’ operations and properties

are subject to extensive U.S., Canadian, Panamanian, Mexican and Australian, federal, international, state, provincial and local laws

and regulations, including those relating to environmental, building and zoning requirements.

Our and our franchisees’ development

of properties depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use,

environmental, traffic and other regulations and requirements.

Failure to comply with these legal requirements could result in, among

other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability, which could

adversely affect our business.

We and our franchisees are responsible at stores we

each operate for compliance with state, provincial and local laws that regulate the relationship between stores and their clients.

states and provinces have consumer protection regulations that may limit the collection of clientship dues or fees prior to opening, require

certain disclosures of pricing information, mandate the maximum length of contracts and “cooling off” periods for clients

(after the purchase of a clientship), set escrow and bond requirements for stores, govern member rights in the event of a member relocation

or disability, provide for specific member rights when a store closes or relocates, or preclude automatic clientship renewals.

our franchisees’ failure to comply fully with these rules or requirements may subject us or our franchisees to fines, penalties,

damages and civil liability, or result in clientship contracts being void or voidable.

In addition, states or provinces may update

these laws and regulations.

Any additional costs which may arise in the future as a result of changes to the legislation and regulations

or in their interpretation could individually or in the aggregate cause us to change or limit our business practices, which may make our

business model less attractive to our franchisees or our clients.

Risks related to our common stock

Provisions of our corporate governance documents could make an

acquisition of our Company more difficult and may prevent attempts by our stockholders to replace or remove our current management, even

if beneficial to our stockholders.

Our certificate of incorporation and bylaws and the Delaware General

Corporation Law (the “DGCL”) contain provisions that could make it more difficult for a third party to acquire us, even if

doing so might be beneficial to our stockholders.

Provisions of our corporate governance documents

could make an acquisition of our Company more difficult and may prevent attempts by our stockholders to replace or remove our current

management, even if beneficial to our stockholders.

Our certificate of incorporation and bylaws and the Delaware General Corporation

Law (the “DGCL”) contain provisions that could make it more difficult for a third party to acquire us, even if doing so might

be beneficial to our stockholders.

These provisions include:

the division of our board of directors into three classes and the election of each class for three-year terms;

the division of our board of directors into three classes and the election of each class for three

period terms;

advance notice requirements for stockholder proposals and director nominations;

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the required approval of holders of at least 75% of the voting power of the outstanding shares of our capital stock to adopt, amend or repeal certain provisions of our certificate of incorporation and bylaws or remove directors for cause.

In addition, Section 203 of the DGCL may affect the ability of

an “interested stockholder”

to engage in certain business combinations, for a period of three years following the time that

the stockholder becomes an “interested stockholder.”

While we have elected in our certificate of incorporation not to be subject

to Section 203 of the DGCL, our certificate of incorporation contains provisions that have the same effect as Section 203 of

the DGCL and accordingly will not be subject to such restrictions.

Because our board of directors is responsible for appointing the clients

of our management team, these provisions could in turn affect any attempt to replace current clients of our management team.

you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective measures, and

efforts by stockholders to change the direction or management of the Company may be unsuccessful.

Our stock price could be extremely volatile, and, as a result,

stockholders may not be able to resell shares at or above their purchase price.

Currently our common stock is listed on the Pink Sheets or OTC Markets

and it is thinly traded.

In addition, Section 203 of the DGCL may

affect the ability of an “interested stockholder” to engage in certain business combinations, for a period of three periods

following the time that the stockholder becomes an “interested stockholder.” While we have elected in our certificate of incorporation

not to be subject to Section 203 of the DGCL, our certificate of incorporation contains provisions that have the same effect as Section 203

of the DGCL and accordingly will not be subject to such restrictions.

Because our board of directors is responsible for

appointing the clients of our management team, these provisions could in turn affect any attempt to replace current clients of our management

As a result, you may lose your ability to sell your stock for a price in excess of the prevailing market price due to these protective

measures, and efforts by stockholders to change the direction or management of the Company may be unsuccessful.

Our stock price could be extremely volatile, and, as a result, stockholders

may not be able to resell shares at or above their purchase price.

Currently our common stock is listed on the Pink Sheets

or OTC Markets and it is thinly traded.

This situation means our stock price could fluctuate based on very low trading volume.

In addition, in recent

years the stock market in general has been highly volatile.

As a result, the market price and trading volume of our common stock is likely

to be similarly volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value of their

stock, including decreases unrelated to our results of operations or prospects, and could lose part or all of their investment.

of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere in this

report and others such as:

in recent periods the stock market in general has been highly volatile.

As a result, the market price and trading volume of our common stock

is likely to be similarly volatile, and investors in our common stock may experience a decrease, which could be substantial, in the value

of their stock, including decreases unrelated to our results of operations or prospects, and could lose part or all of their investment.

The price of our common stock could be subject to wide fluctuations in response to a number of factors, including those described elsewhere

in this report and others such as:

variations in our operating performance and the performance of our competitors;

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publication of research reports by securities analysts about us or our competitors or our industry;

the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

our failure or the failure of our competitors to meet analysts’

projections or guidance that we or our competitors may give fo the market.

the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give fo the market.

additions and departures of key employees.

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changes in general market and economic conditions.

In the past, securities class action litigation has often been initiated

against companies following periods of volatility in their stock price.

This type of litigation could result in substantial costs and

divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or

to settle litigation.

Because we do not currently pay any cash dividends on our common

stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for

We may retain future earnings, if any, for future operations, expansion

and debt repayment and do not currently pay any cash dividends on our common stock.

Any decision to declare and pay dividends in the future

will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial

condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant.

In addition, our

ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur,

including our securitized financing facility.

As a result, you may not receive any return on an investment in our common stock unless

you sell our common stock for a price greater than that which you paid for it.

In the past, securities class action litigation has

often been initiated against companies following periods of volatility in their stock price.

This type of litigation could result in substantial

costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments

or to settle litigation.

Because we do not currently pay any cash dividends

on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which

you paid for it.

We may retain future earnings, if any, for future

operations, expansion and debt repayment and do not currently pay any cash dividends on our common stock.

Any decision to declare and

pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results

of operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem

In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we

or our subsidiaries incur, including our securitized financing facility.

As a result, you may not receive any return on an investment

in our common stock unless you sell our common stock for a price greater than that which you paid for it.

Financial forecasting may differ materially from actual results.

Due to the inherent difficulty of predicting

future events and results, our forecasted financial and operational results may differ materially from actual results.

Discrepancies

between forecasted and actual results could cause a decline in the price of our stock.

Due to the inherent difficulty of predicting future

events and results, our forecasted financial and operational results may differ materially from actual results.

Discrepancies between

forecasted and actual results could cause a decline in the price of our stock.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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What changed 10-Q

Item 1A. Risk Factors