Company risk disclosure on third‑party joint ventures, capital needs, and regulatory compliance for KUE subsidiaries

Such interests may involve risks in connection with such third-party involvement, including the possibility that a third-party may be in a position to take (or block) action in a manner contrary to the Company’s objectives or may have financial difficulties resulting in a negative impact on such interest. Acquisitions made with third parties in joint ventures or other entities also may involve carried interests and/or other fees payable to such third party partners or co-venturers. There can be no assurance that desirable minority shareholder rights will be available or that such rights will provide sufficient protection of the Company’s interests. 6.1.9 Certain of the Company's businesses may require additional capital Certain of the Company’s businesses, especially those in development phases, may require additional financing to satisfy their working capital requirements. The amount of the additional financing needed will depend upon the maturity and objectives of the particular business. The Company may seek to raise any required capital from different sources, and subsidiaries in foreign countries may raise capital locally. The availability of capital is generally a function of capital market conditions that are beyond the control of the Company. There can be no assurance that the Company will be able to predict accurately the future capital requirements necessary for success or that additional funds will be available from any source as needed. An inability to timely raise capital may materially and adversely affect the Company and/or its business. 6.1.10 KUE’s subsidiaries operate in regulated industries; failure to comply with governmental regulation and licensing requirements could have a material adverse effect on operations The pre-K-12 education business is highly regulated and is often subsidized with government funding or reimbursement programs. In addition, KUE and its subsidiaries may require the consent or approval of applicable regulatory authorities in order to acquire or operate particular businesses, including in foreign jurisdictions where the Company has limited or no experience with the regulatory framework. Failure to comply with applicable laws or regulations, or failure or inability to obtain applicable approvals, could have a material adverse effect on the operations of KUE and/or its subsidiaries. For example, KLC's centers and school programs are subject to numerous state and local regulations and licensing requirements. KLC has policies and procedures in place to assist in complying with such regulations and requirements. Although these regulations vary from jurisdiction to jurisdiction, government agencies generally review, among ciher things, the fitness and adequacy of buildings and equipment, the ratio of staff personnel to enrolled children, staff training, record keeping, children's dietary program, the daily curriculum, and compliance with health and safety standards and transportation safety. In most jurisdictions, these agencies conduct scheduled and unscheduled inspections of the centers and licenses must be renewed periodically. Most jurisdictions establish requirements for background checks or other clearance procedures for new employees of child care centers and school programs. Repeated failures by any of KLC's centers to comply with applicable regulations may result in sanctions against that center or program and other centers or programs in the same jurisdiction, including probation or, in more serious cases, suspension or revocation of a center's or program's license to operate. In addition, this type of action could attract negative publicity extending beyond that jurisdiction. A licensing authority may determine that a particular center or program is in violation of applicable regulations and may take action against that center or program and possibly other centers or programs in the same jurisdiction, For more information, see "The Operating Company (KLC OpCo)} — Licensing and Government Regulation." 6.1.11 Future legislation or new regulations may place additional burdens on the Company and have a material adverse effect on operations Additional, different and/or more stringent regulations and licensing requirements may become applicable in the future due to changes in laws and regulations, judicial or administrative interpretations of existing laws and regulations, changes in the Company's business strategy or for other reasons. State authorities 48 HOUSE_OVERSIGHT_024481