LGCY 10-K & 10-Q changes, risk factors and insider trading

Our institutions are subject to the educational laws and regulations of the State of California where our physical campuses are located.located, and CCC’s new additional location in Houston will be subject to the educational laws and regulations of the State of Texas. We also may be subject to the educational laws of other states if we acquire a new institution in the state or if one of our institutions institutions adds a new campus in the state or otherwise conducts other operations in the state covered by applicable state educational law including, but not limited to, student recruitment, advertising or certain types of distance education. State educational laws establish standards and requirements for, among other things, student instruction, faculty qualifications, campuses and facilities, educational programs, financial stability, administrative staff, marketing and recruiting, distribution of information to current and prospective students, payment of refunds to students who withdraw, private and institutional loans, distance education, student services, student complaints, student admissions, transfer of academic credits, substantive changes, acquisitions, and policies and minimum graduation and job placement outcomes for institutions and/or their individual educational programs. Our institutions are authorized to operate by BPPE. CCC must obtain approval from the TWC to operate its planned new campus in Houston, Texas, and has not yet submitted its application to the TWC; however, no assurance can be provided that we will receive the TWC approval or the THECB approvals described below in a timely manner, or at all. We also may be required to obtain approvals and comply with requirements of state agencies that regulate certain occupational educational programs such as, for example, VN and phlebotomy. The California Board of Registered NursesNursing approves the Associate degree of Nursing program at HDMC. The VN programs at HDMC, Integrity, and CCMCC are approved by BVNPT. The phlebotomy programs at HDMCHDMC, CCC and CCCCCMCC are approved by the California Department of Public Health. CCC will also require Texas Board of Nursing approval to offer VN and registered nursing programs at the new planned campus in Houston, Texas. CCC has submitted a letter of intent to the Texas Board of Nursing and expects to submit its application after it receives TWC approval. In addition, CCC will require approval from the THECB to offer degree programs at the Houston campus, and expects to submit its applications to the THECB for UT, cardiac sonography, MRI and registered nursing degree programs at the same time as its TWC application. In addition, we are subject to state consumer protection laws.

State education laws and regulations may limit our campuses’ ability to operate or to award degrees, diplomas, or certificates or offer new programs. Moreover, under the HEA, authorization by state education agencies is necessary to maintain eligibility to participate in the Title IV Programs. ED regulations also require institutions offering postsecondary education through distance education to students located in a state in which the institution is not physically located (as determined by the institution at the time of a student’s initial enrollment and, if applicable, upon formal receipt of information from the student that their location has changed to another state) to meet state educational requirements in that state or participate in a state authorization reciprocity agreement in order to disburse Title IV funds to such students. We have obtained approval to offer portions of our programs via distance education from ACCET for CCC, CCMCC and HDMC, ABHES for Integrity, and from the BPPE for HDMC, CCC, CCMCC and Integrity. The State of California does not, however, however, presently participate in any state authorization reciprocity agreement whereby our institutions may offer programs via distance education education to students located in other states without our obtaining applicable authorizations from those other states. Our institutions presently presently do not have any state postsecondary authorizations outside of California, although CCC plans to seek postsecondary authorization in Texas and has not yet submitted its application to the TWC. CCC does not currently plan to provide programs via distance education to residents of states other than California and Texas, and the other Legacy institutions only provide distance education to residents of California.

In addition, an institution must make disclosures readily available to enrolled and prospective students regarding whether programs leading leading to professional licensure or certification meet state educational requirements, and provide a direct disclosure to students in writing if the program leading to professional licensure or certification does not meet state educational requirements in the state in which the student is located (which is only California for our current students, and will include Texas once students begin classes at the planned campus in Houston). Under ED’s rules effective July 1, 2024, an institution must certify that its programs satisfy the applicable educational requirements for professional licensure or certification needed to practice or find employment in an occupation for which the program prepares a student in the state in which the school is located or where a student is located or intends to seek employment (which, although our current students are located in California, could be a state other than than California and could require us to refrain from enrolling students in a state if our program does not satisfy the applicable educational educational requirements in the state). We believe the Title IV-eligible educational programs offered by our institutions satisfy all such currently applicable state educational requirements for professional licensure or certification.

State legislatures often consider legislation affecting regulation of postsecondary educational institutions. Our institutions are located in California (although we anticipate CCC will soon operate a location in Texas) which has expansive laws and regulations impacting for-profit schools like our institutions. Enactment of this legislation and ensuing regulations, or changes in interpretation of existing regulations, may impose substantial costs on our institutions and require them to modify their operations in order to comply with the new regulations.

If we are unable to comply with applicable past, current or future state education, consumer protection, licensing, authorization or other requirements,requirements in California, Texas, and in any other states in which we may operate in the future, or determine that we are unable to cost effectively comply with new or revised requirements, we could be subject to loss of state authorization and to monetary fines or penalties or limitations on the manner in which we conduct our business, or we could lose enrollments, eligibility to participate in the Title IV Programs and revenues, in any affected states, which could materially affect our results of operations and our growth opportunities.

Institutional Accreditation. In the U.S., accrediting agencies are non-governmental entities that periodically review the academic quality of an institution’s instructional programs and its administrative and financial operations to ensure the institution has the resources to perform its educational mission. Accrediting agencies impose standards that extend to most aspects of an institution’s operations and educational programs including, but not limited to, requirements to maintain threshold graduation and job placement rates for its educational programs. ED requires an institution to be accredited by an ED-recognized accrediting agency in order for the institution to participate in the Title IV Programs. HDMC, CCC, and CCMCC are currently accredited by ACCET through April 2029, April 2030, and April 2026, 2031, respectively. Integrity is accredited by ABHES through February 2026.2032. ED requires an institution to be accredited by an ED-recognized accrediting agency in order for the institution to participate in the Title IV Programs. ACCET and ABHES are ED-recognized accrediting agencies. The failure failure to comply with accreditation standards could subject an institution to additional oversight and reporting requirements, accreditation proceedings such as a show-cause directive, an action to defer or deny action related to an institution’s application for a new grant of accreditation, or an action to suspend or revoke an institution’s accreditation or a program’s approval. If our institutions or programs are subject to negative accreditation actions or are placed on probationary accreditation status, we may experience adverse publicity, impaired ability to attract and retain students, and substantial expense to obtain unqualified accreditation status. The inability to obtain reaccreditation following periodic reviews or any final loss of institutional accreditation after exhaustion of the administrative agency processes would result in a loss of Title IV Program funds and state authorization for the affected institution. Such events and any related claims brought against us could have a material adverse impact on our business, reputation, financial condition, results of operations and cash flows.

Programmatic Accreditation. Many states and professional associations require professional programs to be accredited. While programmatic accreditation is not a sufficient basis to qualify for institutional Title IV Program certification, programmatic accreditation may improve employment opportunities for program graduates in their chosen field. Moreover, ED requires an institution to hold programmatic accreditation for an educational program if required by a state or federal agency (including as a condition of employment in the occupation for which the institutional program prepares the students). The veterinary technology program at CCC is accredited by the American Veterinary Medical Association. Integrity’s Registered Nurse to Bachelor of Science in Nursing holdsprogram pre-has received initial accreditation candidacy status from the Commission for Nursing Education Accreditation. In the Spring 2026 visit cycle, ABHES conducted a reaccreditation visit for CCMCC’s Associate of Applied Science in Surgical Technology. CCMCC was granted reaccreditation for the program, with no comments, through February 28, 2033. Additionally, CCC isand HDMC are pursuing initial initial programmatic accreditation with ABHES for the Surgical Technology Associate of Applied Science programprogram. forABHES considerationcompleted its Fall during the Spring 2026 visit cycle.for TheCCC’s Associateprogram ofand Appliedits Sciencevisit report is pending; CCC expects the ABHES commission to consider the program in January 2027, with a decision expected in Surgicalmid-February Technology2027. atHDMC CCMCCexpects isto accreditedsubmit its self-study in November 2026 for a Spring 2027 visit, with consideration by the ABHES commission expected in July 2027 and will engagea decision expected in reaccreditationAugust in the Spring 2026 visit cycle.2027. All of the Title IV-eligible educational programs offered by our institutions are within the scope of institutional accreditation from either ACCET or ABHES, and we do not believe any of our Title IV-eligible educational programs that do not hold programmatic accreditation are required to hold programmatic accreditation by any currently applicable state or federal agency. Those of our programs that do not have programmatic accreditation, where available, or fail to maintain such accreditation, may experience adverse publicity, loss of access to Title IV funds, declining enrollments, litigation or other claims from students or suffer other adverse impacts, which could result in it being impractical for us to continue offering such programs.

ED Recognition of Accrediting Agencies. Our participation in Title IV Programs is dependent on ED continuing to recognize the accrediting agencies that accredit our colleges and universities. Each of our institutions is currently are accredited by an ED- recognizedED-recognized accrediting agency. The standards and practices of these agencies have become a focus of attention by state attorneys general, members of Congress, ED’s Office of Inspector General and ED over recent years. ED held negotiated rulemaking sessions between January and March 2024, and the negotiators did not reach consensus on proposed language. ED terminated the negotiated rulemaking process for accreditation as of December 20, 2024. However, ED published a proposed regulatory agenda in early September 2025 that, among other things, includes a proposal to engage in negotiated rulemaking to provide institutions flexibility to change accreditors and “remove other burdensome requirements that erect barriers to entry for new accreditation agencies.” This proposal is in its early stages and, therefore, we cannot predict whether and how such a rulemaking would impact the accreditors that accredit our institutions or the accreditation requirements applicable to our institutions.

If ED withdraws recognition from ACCET and/or ABHES,ABHES in the future, ED may continue our schools’ eligibility for a period of up to 18 months from the date of the withdrawal of recognition, and our schools could apply for accreditation from other ED-recognized accrediting agencies. agencies. ED could impose provisional certification and other conditions and restrictions on our schools during this period. If ACCET and/or ABHES lose recognition from ED and our schools are unable to obtain accreditation from a different ED-recognized accrediting agency in the required time period, our schools could lose eligibility to participate in Title IV Programs.

MoreOn recently, on July 4, 2025, thePresident PresidentTrump signed into law the One Big Beautiful Bill Act (“OBBBA”), which has a generalbecame effective date of July 1, 2026 and makes changes to the HEA, including thechanges impacting Title IV programs. ED intends to conductconducted a negotiated rulemaking process in 2025 and 2026 for the purpose of establishing new regulations impactingimplementing the new OBBBA requirements. See “Education Regulations – Negotiated Rulemaking.” Consequently, we expect the new requirements will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact of the new OBBBA requirements under future ED regulations and guidance. We are currently assessing, and will continue to assess, the potential impact of the requirements on us and our institutions.

The OBBBA also establishes a new accountability measure that applies to our degree programs and that is based on a comparison of graduate graduate earnings to the earnings of working adults without degrees under a complex formula that ED is expected to address in future regulations. Under the new accountability measure, an associate degree program would lose its Title IV loan eligibility if the median earnings of a cohort of graduates are less than the median earnings of working adults with a high school diploma and no further degrees for two out of three years. ED will create a process for appealing the programmatic median earnings data. Institutions that do not meet the accountability measure for one year will also be required to notify students of the risk of losing eligibility. Our institutions offer a limited number of associate degree programs that will be subject to the new accountability measure.degrees. We cannot yet predict with certainty whether our degree programs will meet the accountability measure or whether they will be at risk of losing eligibility to participate in the Title IV loan programs.

The OBBBA also restricts student eligibility for the Pell GrantGrant. bySee disqualifying“Education studentsRegulations with– aNegotiated studentRulemaking.” Based aidon indexour thatassessment, equalswe ordo exceeds twicenot thecurrently amount of the total maximum Pell Grant, and disqualifying students who receive grant aid from non-federal sources that equals or exceeds the student’s cost of attendance for that period. We are evaluating whether and to what extentexpect this change mightto have a material impact on the Pell eligibility of some of our students and whether alternative sources of financial aid, such as third-party loans, might be necessary for these students. The OBBBA also establishes Workforce Pell Grants for eligible students enrolled in certain short-term educational programs that meet eligibility requirements. TheSee eligibility“Education requirementsRegulations include- criteriaNegotiated relatedRulemaking.” We do not plan to theparticipate program’s length and a determination of eligibility byin the Workforce state.Pell ManyGrants ofat ourthis programs are longer than the eligibility requirements,time but we aremay evaluating whetherevaluate potential opportunities existunder forthe otherregulations currentin orthe future programs at our institutions.future.

AsThere previously reported, there are indications based on recent elections that the new administration, and potentially the U.S. Congress, will attempt to dissolve ED, diminish its operational role, and/or transfer some or all of its functions to one or more agencies. See our Quarterly Report on Form 10-Q, filed with the SEC on February 13, 2025, for the section titled “Regulatory Updates” for additional information. In March 2025, ED implemented a reduction in force (“RIF”) that, coupled with resignations by ED staff, reportedly reduced ED’s workforce by approximately half. The RIF also eliminated several school participation divisions, including the school participation division that previously oversaw the operations of our institutions, and eliminated or significantly reduced several other offices or divisions within ED. We currently are working with other offices and personnel at ED on some of our pending matters, but it is possible that we could encounter delays and difficulties obtaining timely ED approval of recent and future acquisitions of other schools. See “Education Regulations – School Acquisitions” and “Education Regulations – Change of Control.” We also could encounter delays and difficulties obtaining timely ED approval of new campuses or other educational programs for which we wish to offer Title IV funds to students and which require ED approval. See “Education Regulations – Opening Additional Campuses and Adding Educational Programs.”

In March 2025, thePresident PresidentTrump issued an Executive Order calling for all necessary steps to close ED although the executive order did not indicate the process or timing for accomplishing this task nor identify where some of the functions of ED might be transferred. In 2025 and 2026, ED announced several new interagency agreements under which other federal agencies will provide certain services to ED. We continue continue to monitor developments in this area, but cannot yet predict whether the administration or Congress will be successful in closing or or further reducing ED and/or transferring some or all of its functions to one or more agencies, or whether such a proposal would disrupt or change the availability of Title IV funds to us and our students or change the rules applicable to us and our schools to continue receiving Title IV funds.funds, or whether our operations will be impacted by the implementation of the interagency agreements. We also cannot predict the success of any litigation challenging any efforts to close or restructure ED. Any executive or legislative action impacting ED, the availability of Title IV funds, or the rules applicable to us could have a material adverse effect on us and our institutions.

OnWe July 24, 2025, ED announced it intends to establish two negotiated rulemaking committees: one that will consider changes to the federal student loan programs and one that will consider institutional and programmatic accountability, including changes to the Pell Grant. The rulemaking is intended to implement recent changes to the Title IV, HEA programs included in the OBBBA. See “Education Regulations – Congressional Action.” We expect the new requirementsregulations will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact of ofthe regulations and guidance including any regulations further implementing the new OBBBA requirements under future ED regulations and guidance.requirements. We are currently assessing, and will continue to assess, the potential impact of the new requirements on us and our institutions and to monitor the negotiated rulemaking process.

On April 4, 2025, ED announced its intention to conduct negotiated rulemaking to prepare proposed regulations on topics pertaining to Title IV regulations, potentially including Public Service Loan Forgiveness, loan repayment programs, and “streamlining” current federal student financial assistance regulations. ED held public hearings to discuss the rulemaking agenda on April 29, 2025 and May 1, 2025 and requested comments on rulemaking topics be submitted by May 5, 2025. The Public Service Loan Forgiveness Committee met from June 30, 2025 to July 2, 2025. WeED cannotpublished predicta notice of proposed rulemaking on public service loan forgiveness on August 18, 2025, and published the ultimatefinal timing,regulations content,on andOctober impact31, 2025 with an effective date of anyJuly 1, 2026. The regulations andinclude guidanceprovisions EDthat, among mightother propose andthings, ultimatelyamend adopt.components In addition,of the Presidentpublic directedservice federalloan agenciesforgiveness on April 9, 2025 to identify existing regulations that are unlawful or otherwise objectionable and to take steps to repeal or modify these regulations. We cannot predict what rules ED might attempt to repeal or modify, the timing and outcome of these efforts, or the impact of any regulatory repeals of modifications on our business and schools.program.

ED’s current proposed regulatory agenda published in early September 2025 indicates an intent to address several topics (including through rulemaking), including accreditation, changes in ownership, cash management, administrative capability, andprogram length requirements, financial responsibility requirements, civil rights investigations,requirements and privacythe of90/10 Rule. education records. Whether via sub-regulatory guidance or a rulemaking process, weWe cannot predict how ED’s actions on these topics will impact schools like ours. Future regulatory actions by ED or other agencies that regulate our institutions are likely to occur and to have significant impacts on our business, require us to change our business practices and incur costs of compliance and of developing and implementing changes in operations, as has been the case with past regulatory changes.

ED’s financial value transparencytransparency, gainful employment, and gainful employmentaccountability regulations may limit the programs we can offer students and increase our cost of operations.

InOn May 2021, ED announced its intention to initiate a rulemaking process on several topics, including gainful employment. On May 19, 2023, ED published a notice of proposed rulemaking on financial value transparency and gainful employment, and on October 10, 2023, ED published final regulations which became effective on July 1, 2024. Multiple lawsuits were filed challenging these regulations and these were consolidated into one case. We cannot predict the outcome of this case.

In 1994, pursuant to certain provisions of the Higher Education Act, ED published its first version of the “borrower defense to repayment” (“BDR”) regulations which generally allow federal student loan borrowers to assert a defense to repaying their federal loans based on the conduct of the institution they attended. The amount of loans discharged by ED pursuant to an adjudicated BDR claim may be assessed by ED as a Title IV Program liability against the institution. On November 1, 2016, the Department adopted revised BDR regulations that became effective on July 1, 2017. Under the 2017 version of the BDR regulations, borrowers with federal student loans disbursed after July 1, 2017 can assert a defense to repayment and be eligible for relief based on a nondefault, favorable, contested judgementjudgment against the institution from a state or federal court; a claim that the institution failed to perform its obligations under a contract with the student or a claim the institution committed a “substantial misrepresentation” on which the borrower reasonably relied to his or her detriment. On September 23, 2019, the Department again revised its BDR regulations effective July 1, 2020, and created a distinct standard and process for BDR applications applicable to federal student loans first disbursed after July 1, 2020. Under the 2019 version of the BDR regulations, a borrower can assert a defense to repayment and be eligible for relief if the borrower establishes that the institution made a misrepresentation of material fact upon which the borrower reasonably relied in deciding to obtain their loan; the misrepresentation related to the borrower’s enrollment or continuing enrollment at the institution or the provision of education services for which the loan was made; and the borrower was financially harmed by the misrepresentation.

Among other things, the 2022 version of the BDR regulations also amended the processes for borrowers to receive from ED a discharge of the obligation to repay certain Title IV Program loans when the BDR applications received on or after, or that were pending with ED as of, of, July 1, 2023. The 2022 version of the BDR regulations applies the revised federal BDR standard to all BDR claims received on or after, after, or pending with the Secretary as of, July 1, 2023, but would not allow for recovery against institutions for discharged amounts first disbursed prior to July 1, 2023 unless the BDR claim would have been approved under the substantive BDR standard applicable to the time period in which the loan was disbursed as set forth in the prior versions of the BDR regulations. The defenses to repayment are based on certain acts or omissions, including misrepresentations, by an institution or a covered party. The regulations establish detailed procedures and standards for the loan discharge processes, including the information required for borrowers to receive a loan discharge, and the authority of ED to seek recovery from the institution of the amount of discharged loans. The 2022 version of the BDR regulations were to take effect on July 1, 2023, in addition to certain closed school loan discharge provisions that are part of the same rule, but are currently enjoined and delayed. The Career Colleges and Schools of Texas (“CCST”) filed a complaint challenging the regulations in February 2023. In April 2024, the U.S. Court of Appeals for the Fifth Circuit granted a preliminary injunction to block enforcement of the 2022 version of the BDR regulations while the case is pending. Further, the OBBBA, enacted July 4, 2025, delays the effective date of the 2022 version of the revised BDR regulations for ten years, until July 1, 2035.Therefore,2035. Therefore, the 2022 version of the BDR regulations are not in effect, but the previous BDR regulations in effect prior to July 1, 2023, which first became effective in 2020, generally remain in effect in the meantime and apply different substantive standards and procedures based on when a BDR claimant’s loans were disbursed. CCST filed an amended complaint in March 2026 to also challenge the version of the BDR regulations that became effective in 2020. We cannot predict the outcome of this pending litigation.

On June 22, 2022, ED reached a settlement with plaintiffs in the case titled Sweet v. Cardona, which was filed by student loan borrowers to challenge ED’s adjudication of BDR claims. The settlement resulted in automatic relief of claims pending as of June 22, 2022 that were filed against institutions on a list of about 150 institutions named in the settlement agreement, which did not include any of our institutions. In addition, under the settlement, any borrower who filed a defense to repayment claim between June 22, 2022 and November 15, 2022 are “Post-Class Applicants” whose applications willwere to be adjudicated under the 2016 version of the BDR regulations and will be decided by January 2026. HDMC received and timely responded to seven BDR applications from Post-Class Applicants. CCC, Integrity, Integrity, and CCMCC (at least since we acquired CCMCC) havedid not receivedreceive any BDR applications from Post-Class Applicants. It is possible that we could receive BDR claims in the future. If we or our representatives are found to have engaged in certain acts or omissions under the broad definitions contained in the 2016 version of the BDR regulations, or other BDR regulations that could be in place in the future, we could be subject to substantial repayment obligations and subject to other sanctions.

The enjoined 2022 version of the BDR regulations, and the versions of the BDR regulations that are currently in effect and that could be in effect in the future, could have a material adverse effect on our business, financial condition, results of operations, and cash flows and result in the imposition of significant restrictions on us and our ability to operate, including a requirement that our institutions to submit a letter of credit based on expanded standards of financial responsibility. See “Risk Factors - A failure to maintain compliance with ED’s “financial responsibility” requirements would have negative impacts on our operations.”

ED’s current proposed regulatory agenda first published in early September 2025 includes an intent to address certain issues including financial responsibility requirements via negotiated rulemaking. We cannot predict whether or how ED will address these requirements or the impact theany future changes to financial responsibility responsibility requirements may have on our schools.

EDED’s publishedcurrent aproposed notice in early September 2025 regarding itsregulatory agenda for regulatory initiatives which, among other things, indicatedincludes an intent to address certain issues including administrative capability requirements. We cannot predict whether ED intends to address these requirements through negotiated rulemaking, published guidance, or other actions, nor can we predict the impact on our institutions of any changes that might occur to the administrative capability requirements. We are continuing to monitor developments on this topic.

An institution participating in the Title IV Programs may not provide any commission, bonus or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruiting or admission activities or in making decisions regarding the awarding of Title IV Program funds. This statutory prohibition under the HEA, and as implemented by ED, applies to all institutional employees and service providers who are engaged in or responsible for any student recruitment or admission activity or making decisions regarding the award of financial aid. We cannot predict how ED will interpret and enforce the incentive compensation prohibition. The prohibition on incentive compensation has had and will continue to have a significant impact on the productivity of our employees, on the retention of our employees and on our business and results of operations. Failure to comply with the incentive compensation prohibition could result in loss of an institution’s certification to participate in the Title IV Programs, limitations on Title IV Program participation or financial penalties. On July 17, 2024, ED announced it will issue guidance related to the incentive compensation rule no sooner than later that year, but it has not yet issued such guidance.

Under the HEA, a proprietary institution that derives more than 90% of its total revenue from the Title IV Programs or, for fiscal years beginning beginning on or after January 1, 2023, from all federal educational assistance funds, for two consecutive fiscal years becomes immediately ineligible to participate in the Title IV Programs and may not reapply for eligibility until the end of at least two fiscal years (“90/10 Rule”). An institution whose receipts of applicable funds exceedsexceed 90% of revenue for a single fiscal year will be placed on provisional certification, be required to notify ED and its students of the possibility of a loss of Title IV Program eligibility, and may be subject to other enforcement measures, including a requirement to submit a letter of credit. See “Business - Education Regulations - Financial Responsibility Standards.” We have calculated the 90/10 Rule percentages for the 2024, 2023, and 2022 fiscal years as follows for HDMC, CCC, and Integrity: HDMC 87.55%, 84.53%, and 82.17%; CCC 79.51%, 74.48%, and 72.34%; Integrity 84.19%, 88.14%, and 85.43% respectively. CCMCC’s 90/10 Rule percentage for its 2022 fiscal year was 21.76%, and for its 2023 fiscal year was 48.63%. CCMCC’s next 90/10 Rule percentage will be reported to ED in connection with the Company’s next annual financial statement and compliance audit submissions. Our calculations of the 90/10 Rule percentage for the 2025 fiscal year for HDMC, CCC, Integrity, and CCMCC are due on December 31, 2025 and each are expected to be below 90%. The 90/10 calculations for our institutions are subject to review and potential recalculation by ED. In addition, the 90/10 Rule is complex and there is some ambiguity in certain technical aspects of the calculation methodology under the 90/10 Rule. If ED comes out with additional guidance or interpretations that are different than our interpretations, ED could recalculate the 90/10 Rule percentages of our institutions, which could result in one or more of the percentages exceeding 90%. All of these calculations are subject to review, differing interpretations, and potential recalculation by ED which makes it more difficult for our institutions to comply with the 90/10 Rule. A loss of eligibility to participate in Title IV Programs for any of our institutions would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations. Moreover, if an institution violated the 90/10 Rule and became ineligible to participate in Title IV Programs but continued to disburse Title IV Program funds, ED would would require the institution to repay all Title IV Program funds received by the institution after the effective date of the loss of eligibility.

TheARPA American Rescue Plan Act (“ARPA”) amended the 90/10 Rule by treating other federal student financial assistance funds in the same manner as Title IV Program funds in the 90/10 Rule percentage. This amendment requires our institutions to limit the combined amount of Title IV Program funds and other federal student financial assistance funds in a fiscal year to no more than 90% in a fiscal year as calculated under the 90/10 Rule. ED published final regulations on the 90/10 Rule on October 28, 2022. The final regulations became effective July 1, 2023 and applied to fiscal years beginning on or after January 1, 2023 (which was the fiscal yearsyear ending June 30, 2024 for our schools). The new rule modified how institutions counted revenue when calculating compliance with the 90/10 Rule, and added a requirement to notify students of the potential loss of eligibility resulting from not meeting the 90/10 standard, among other changes. ED has published a Notice in the Federal Register listing the types of funds that are considered federal education assistance funds under the new 90/10 Rule. The funds include GI Bill funding and Military Tuition Assistance, among other sources of funds. We expect the change in the 90/10 Rule will increase our 90/10 Rule percentages and make it more difficult to comply with the 90/10 Rule and could require changes to maintain compliance.

ED regulations have restricted the ability of institutions to limit the amount of Title IV Program loans that students and parents may borrow borrow which can impact our ability to control compliance with the 90/10 Rule at our institutions. However, under a provision of the OBBBA that will bebecame effective July 1, 2026, institutions are permitted to limit the total amount of loans that a student may borrow, and that a parent may borrow on behalf of a student, as long as the limit is applied consistently to all students in a program of study. In addition, there is a lack of clarity regarding some of the technical aspects of the calculation methodology under the 90/10 Rule, which may lead to regulatory action or investigations by ED. Changes in, or new interpretations of, the calculation methodology or other industry practices under the 90/10 Rule could further significantly impact our compliance with the 90/10 Rule, and responding to any review or investigation by ED involving us could require a significant amount of resources. Efforts to reduce the 90/10 Rule percentage for our institutions have involved and may in the future involve taking measures that involve interpretations of the 90/10 Rule that are without clear precedent, reduce our revenue or increase our operating expenses (or all of the foregoing, in each case perhaps significantly). Because of the changes to the 90/10 Rule made by ARPA and ED, we may be required to make structural changes to our business to remain in compliance, which changes may materially alter the manner in which we conduct our business and materially and adversely impact our business, financial condition, results of operations and cash flows. Furthermore, these required changes could be unsuccessful and could make more difficult our ability to comply with other important regulatory requirements, such as the cohort default rate regulations.

However, we cannot predict the need or timing of any such changes, whether these changes would be successful in maintaining compliance with the 90/10 Rule or whether such changes will have other adverse effects on our business. ED’s current proposed regulatory agenda includes an intent to address certain Title IV eligibility issues via negotiated rulemaking, including amendments to the 90/10 Rule. We cannot predict whether or when ED may amend the 90/10 Rule or the impact any changes to the 90/10 Rule may have on our schools.

Our institutions could lose their eligibility to participate in the Title IV Programs or have other limitations placed upon them if their federal student loan cohort default rates are greater than the standards set forth in the HEA and implemented by ED.

In September 2025, ED released the final cohort default rates for the 2022 federal fiscal year. These are the most recent final rates published published by ED. The rates for our existing institutions for the 2022, 2021, and 2020 federal fiscal years respectively are as follows: HDMC 0%, 0% and 0%; CCC 0%, 0% and 0%, Integrity 0%, 0%, and 0%; and CCMCC 0%, 0%, and 0%. Consequently, none of our institutions had a cohort default rate equal to or greater than 30% for the 2022, 2021, and 2020 federal fiscal years. In March 2026, ED released the draft cohort default rates for the 2023 federal fiscal year. The draft rates for our institutions for the 2023 federal fiscal year are as follows: HDMC 0.3%, CCC 1.4%, Integrity 0%, and CCMCC 0.5%. During the COVID-19 pandemic, ED temporarily suspended federal student loan repayment obligations. This suspension, which lasted over three years, contributed to a reduction in our cohort default rates. Our cohort default rates could be substantially higher for the periods after October 2023, when the suspension expired if borrowers do not timely repay their federal student loans. We are engaging in activities aimed at reminding borrowers of their obligations to repay loans and to reduce the number of borrowers who default on their loans; however, we cannot predict or guarantee that these activities will be successful or that the cohort default rates will not increase or exceed applicable eligibility thresholds.

If ED denies, or significantly conditions, recertification of any of our institutions to participate in the Title IV Programs, that institution could not conduct its business as it is currently conducted.conducted and it could have an adverse effect on our business and results of operations.

Under the provisions of the HEA, an institution must apply to ED for continued certification to participate in the Title IV Programs at least every six years or when it undergoes a change in ownership resulting in a change of control. ED defines an institution to consist of both a main campus and its additional locations, if any. Under this definition, for ED purposes, we operate the following four institutions, collectively consisting of four main campuses and two additional locations: HDMC with locations in Lancaster, Bakersfield, and Temecula; CCC locatedwith a location in Salinas; and a planned new location in Houston, Texas, Integrity located in Pasadena, and CCMCC with a location in Antioch. Generally, the recertification process includes a review by ED of an institution’s educational programs and locations, administrative capability, financial responsibility and other oversight categories. The current expiration date of the program participation agreements for HDMC and CCC is September 30, 2026. Integrity2026, and CMCCthese areinstitutions currentlyhave participatingtimely applied for recertification by ED and remain eligible to participate in the Title IV Programs during ED’s review of the recertification applications. The current expiration date of the program participation agreement for Integrity is March 31, 2029. CCMCC is currently participating in the Title IV Programs under a temporary provisional program participation agreement in connection with theirthe change in ownership and control resulting from our acquisition of the institutions. The CCMCC temporary provisional program participation agreement had an expiration date of January 31, 2025 and the Integrity temporary provisional program participation agreement had an expiration date of November 30, 2020, but each temporary provisional program participation agreementit continues on a month-to-month basis thereafter based on the institution’s submission to ED of certain required documentation documentation and remains in effect until the conclusion of ED’s review of Integrity’s and CCMCC’s pending applicationsapplication for approval of its change in ownership and control.

ED typically provides provisional certification to an institution following a change in ownership resulting in a change of control and also may provisionally certify an institution for other reasons, including, but not limited to, noncompliance with certain standards of administrative capability and financial responsibility. OurIntegrity Integrityis currently approved under a provisional program participation agreement following ED’s approval of its change in ownership and CCMCC institutions areis currently approved under a temporary provisional program participation agreement which (as described in the subsequent section) permits an institution to continue participating in the Titleagreement. IV Programs on a month-to-month basis while ED reviews the change in ownership and as long as the institution timely submits certain documentation to ED during the process. An institution that is provisionally certified receives fewer due process rights than those received by other institutions in the event ED takes certain adverse actions against the institution, is required to obtain prior ED approvals of new campuses and educational programs and may be subject to heightened scrutiny by ED. However, provisional certification does not otherwise limit an institution’s access to Title IV Program funds.

On October 31, 2023, ED published a final rule revising its Title IV Program certification regulations, with an effective date of July 1, 2024. The rule codifies additional grounds for placing an institution on provisional certification, including a determination by ED that an institution is at risk of closure and ED’s consideration of supplementary performance measures that include an institution’s withdrawal rate, recruiting expenses, and licensure pass rate. The revised certification regulations also increase the number of requirements contained in an institution’s Program Participation Agreement (including, for example, a requirement to comply with all state laws related to closure), require certain ownership entities to sign the Program Participation Agreement, establish new standards for maximum program length (including a prohibition on the length of certain educational programs from exceeding the required minimum number of hours established by applicable state(s) for entry-level training requirements for the occupation for which the programs train students), require certification that an institution’s programs meet applicable educational requirements for graduates to obtain required occupational licensure or certification in a state, and restricts the ability of institutions to withhold transcripts. The revised regulations also impose new potential conditions on provisionally certified institutions, including but not limited to the submission of teach-out and/or document retention plans, growth restrictions, acquisition restrictions, additional reporting requirements, limitations on written arrangements, and additional conditions applicable to institutions found to have engaged in substantial misrepresentations or institutions seeking to convert to nonprofit status following a change in ownership. The revised certification regulations are expansive, complex and could be difficult for our institutions to comply with as its applicable requirements are interpreted by ED. If ED finds that any of our institutions do not fully satisfy all required eligibility and certification standards, ED could limit, condition, suspend, terminate, revoke, or decline to renew our institutions’ participation in the Title IV Programs or impose liabilities or other sanctions. Continued Title IV Program eligibility is critical to the operation of our business. If our institutions become ineligible to participate in the Title IV Programs, or have that participation significantly conditioned, we may be unable to conduct our business as it is currently conducted which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

When a company acquires an institution that is eligible to participate in the Title IV Programs, the acquisition generally will result in the institution undergoing a change of ownership resulting in a change of control as defined by ED and under the rules of other agencies and accreditors. Upon such a change, an institution’s eligibility to participate in the Title IV Programs is generally suspended until it has applied for recertification by ED as an eligible school under its new ownership, which requires that the school also re- establishre-establish its state authorization and accreditation. ED may temporarily and provisionally certify an institution seeking approval of a change of control under certain circumstances while ED reviews the institution’s application. The temporary provisional certification typically remains in effect on a month-to-month basis during ED’s review of the application as long as the school timely submits certain documentation during the course of ED’s review. ED’s current proposed regulatory agenda published in early September of 2025 includes an intent to address certain issues including change of ownership requirements. We cannot predict how ED will address these requirements or the impact the changes to change of ownership requirements may have on our schools.

Legacy Education Antioch, LLC, a wholly-owned subsidiary of Legacy LLC (as defined herein) (the “Buyer”) entered into thean APA with the Company, Legacy Education, LLC, a wholly-owned subsidiary of the Company, CCMCC, CCMCC Online and, solely with respect to certain portions of the APA, Stacey Orozco and Bulmaro Orozco, the sole owners of CCMCC and CCMCC Online. The CCMCC Transaction was consummated on December 18, 2024.

You should read the following discussion and analysis of our financial condition and plan of operations together with and our accompanying consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. All amounts in this report are in U.S. dollars, unless otherwise noted.

We provide career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through our accredited academic institutions: High Desert Medical College, which we acquired in July 2010, Central Coast College, which we acquired in January 2019, Contra Costa Medical Career College, which we acquired in December 2024, and Integrity College of Health. On December 31, 2019, we entered into a Membership Interest Purchase Agreement with the sole member of Integrity. We purchased from the sole member of Integrity on that date 24.5% of her interest and obtained an exclusive option to acquire her remaining membership interest upon payment of $100, which was exercised on September 15, 2020. For purposes of our financial statements, the acquisition of Integrity is deemed to have been effective as of December 31, 2019. As of June 30, 2025,2026, we enrolled 3,1013,377 students.

HDMC was established in the State of California in 2002 and began offering classes in 2003. It started with campuses in Lancaster, California, and added its first branch in 2008 in Bakersfield, California. Due to enrollment growth and high demand for its services, HDMC expanded to add a branch campus in Temecula, California in order to accommodate 250 to 400 additional students. HDMC offers UT, VN, VN Associate of Applied Science degree program, Associate Degree of Nursing, nursingNursing assistant,Assistant, MRI Associate of Applied Science, cardiacCardiac sonography,Sonography, Pharmacy Technician, Dental Assisting, Clinical pharmacyMedical technician,Assisting, dentalMedical assisting,Administrative clinicalAssisting, medicalMedical assisting, medical administrative assisting programs, medical billingBilling and coding, veterinaryCoding, assistant,Veterinary phlebotomyAssistant, technicianPhlebotomy Technician avocational, nursing assistant avocational, UT Associate of Applied Science degree programs, and anEMT, EMTSurgical program. HDMC also has obtained approval ACCET to offer a surgical technologyTechnology Associate of Applied Science programScience, and sterileSterile Processing Technician processing technician program and plans to begin doing so in October 2025, pending receipt of approval from the BPPE and ED.programs. As of June 30, 2025,2026, HDMC had 1,9562,097 students enrolled in its programs.

CCC was established in the State of California in 1983. In 1991, CCC moved to its current location in Salinas, California to accommodate growing enrollment numbers and the addition of new training programs. In September 2026, CCC entered into a lease for a new, additional location in Houston, Texas, which CCC currently projects to open in November 2026, subject to receipt of the required regulatory and accreditation approvals.

CCC offers the following certificate or degree programs: businessComputer administrative specialist, computer specialistSpecialist: accounting,Accounting, medicalMedical administrative assistant,Administrative medicalAssistant, assisting,Medical nursingAssisting, assistant,Nursing Assistant, UT, UT Associate of Applied Science, Veterinary Assistant, Veterinary Technology Associate of Applied Science, veterinary assistant, veterinary technology Associate of Applied Science, VN, surgicalSurgical technologyTechnology (Associate of Applied Science), dentalDental assisting,Assisting, sterileSterile processingProcessing technicianTechnician, Pharmacy Technician, MRI Associate of Applied Science, and pharmacyCardiac Sonography technician.Associate of Applied Science. CCC also offers an avocational phlebotomyPhlebotomy technicianTechnician program. CCC also has obtained approval from ACCET to offer an MRI Associate of Applied Science Program and cardiac sonography Associate of Applied Science programs and plans to begin doing so in October 2025, pending receipt of additional approvals. As of June 30, 2025,2026, CCC had 495576 students enrolled in its programs.

Integrity was established in the State of California in 2007. Integrity’s campus is located in Pasadena, California. Integrity offers VN, VN Associate of Applied Science, RN to BSN, medicalMedical assisting,Assisting, medicalMedical billingBilling and coding,Coding, veterinaryVeterinary assistant,Assistant, Sterile Processing Technician, and Diagnostic Medical Sonography programs. Integrity also plans to offer an EMT program beginning in early 2026 and is in the process of obtaining approvals for the program (for which Integrity is not planning forto seek ED approval because it does not intend to make Title IV funds available for students who enroll in the program). Integrity has filed its application for the program with BPPE, is awaiting final approval and expects to begin offering the program in late 2026. Integrity earned initial accreditation from NLN CNEA for its Bachelor of Science in Nursing RN to BSN Track in June 2025. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of June 30, 2025,2026, Integrity had 202196 students enrolled in its programs.

CCMCC was established in the State of California in 2007. CCMCC’s campus is located in Antioch, California. CCMCC offers the following certificate and degree programs: surgicalVN, technologySurgical Technology (Associate of Applied Science), sterileSterile processingProcessing technician,Technician, Pharmacy Technician, Diagnostic pharmacyMedical technician,Sonography, diagnosticMedical medical sonography, medical assistingAssisting with phlebotomy,Phlebotomy, dentalDental assisting,Assisting, vocationalClinical nursing,Medical clinical medical assisting,Assisting, EKG/ECG technician,Technician, medicalMedical administrative assistantAdministrative Assistant/billingBilling and codingCoding specialistSpecialist, and medicalPhlebotomy assisting(avocational) programs. CCMCC also has obtained approval from ACCET and phlebotomyBPPE to avocational.offer programs in Cardiac Sonography Associate of Applied Science, Veterinary Assistant, and MRI Associate of Applied Science, and plans to begin offering the programs in the second quarter of fiscal 2027. As of June 30, 2025,2026, CCMCC had 448508 students enrolled in its programs.

We currently believe our liquidity position is stable and we expect to be able to fund our business for at least the next 12 months. We believe that we have sufficient capital to withstand a potential downturn in our business. Regulatory agencies have also provided regulatory capital relief to institutions as a result of the crisis as discussed below.

General and administrative. This expense includes bad debt expense, share-based compensation, legal and professional fees, insurance, accreditation fees, and travel of employees engaged in corporate management, finance, human resources, compliance and other corporate functions. This expense also includes marketing and advertising costs, which are expensed in the fiscal year incurred.

This expense reflects interest paid under notes issued to our investors, Internal Revenue Service interest, non-cash interest related to unit option grants, interest related to notes associated with CCC, and other debt related interest.

This income relates to interest received from investments.investments as well as interest income related to student notes.

The Company records an allowance for credit losses for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. The Company determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. The Company applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The Company writes off accountaccounts receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. Bad debt expense is recorded as a general and administrative expense in the accompanying statements of operations. The Company performsevaluates anexpected analysiscredit annuallylosses toon determinea whichperiodic accountsbasis areutilizing uncollectablehistorical collection experience, aging of receivables, student status, current economic conditions, and thenother writesrelevant them off.collectability factors.

GAAP requires management to evaluate tax positions taken by us and recognize a tax liability if we have taken an uncertain position that is more likely than not would not be sustained upon examination by the Internal Revenue Service. Management has analyzed our tax positions and believes there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statement.statements.

The Company utilizes Accounting Standards Codification (“ASC”) 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. The Company’s estimate of expected volatility was based on the volatility of peers. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. The Company accounts for forfeitures upon occurrence.

We test goodwill and other indefinite-lived assets for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. There were no goodwill or other indefinite-lived intangible asset impairments for the periods presented, and based on current qualitative impairment tests, goodwill and other indefinite-lived intangible assets are not asat risk of failing.failing the quantitative impairment test.

Revenue. Our revenue was approximately $80.1 million in fiscal 2026 compared to approximately $64.2 million in fiscal 2025 compared to approximately $46.0 million in fiscal 2024,2025, an increase of approximately $18.2 $15.9 million, or approximately 24.8%, 39.5%.driven by new student starts of 3,483 resulting in a 9% increase in student enrollment to 3,377. The increase was primarilyalso due to increased student enrollment andimpacted by the increasetiming of the CCMCC acquisition in pricingDecember 2024 in which a full year of revenue was reported in the current year while only half certainin programs.the prior year.

Educational services. Our educational service expense was approximately $34.2$42.9 million in fiscal 20252026 compared to approximately $26.4$34.2 million in fiscal 2024,2025, an increase of approximately $7.8$8.7 million, or approximately 29.5%.25.3%. The increase was primarily attributable to the increased increased instructional and staffing costs required to support the increase in enrollments as well as increased rent and books, supplies, externship fees and ouran investments in our RN program offset by a decreaseincrease in non-cash compensation charge of $1.3approximately $0.6 million. As a percentage of revenue, educational services expense increased from 53.4% to 53.6% primarily due to increased non-cash compensation as well as books, supplies and externship fees.

General and administrative expense. Our general and administrative expense was approximately $19.3$24.2 million in fiscal 2026, compared to approximately $19.1 million in fiscal 2025, comparedan to approximately $13.0 million in fiscal 2024, an increase of approximately $6.3$5.1 million, or approximately 48.2%.26.7%. TheGeneral increaseand administrative wasexpense increased primarily attributabledue to an increase inhigher marketing expense, professional feesfees, and increased bad debt expense.expense associated with higher student enrollment, growth in accounts receivable balances, and the Company’s periodic reassessment of expected credit losses and write-offs associated with inactive student accounts. As a percentage of revenue, general and administrative expense increased from 29.8% to 30.2% primarily due to increases in office supplies and other general and administrative expenses offset by a reduction in bad debt as a percentage of revenue. Of the total general and administrative expense, $4.7$5.9 million and $4.1$4.7 million relate to marketing expenses for fiscal 20252026 and 2024,2025, respectively. Bad debt expense was approximately $4.0 million, or 5% of revenue in fiscal 2026 compared to approximately $3.4 million, or 5.3% of revenue in fiscal 2025.

IncomeGeneral taxand administrative – related party expense. Our incomegeneral taxand administrative – related party expense was approximately $3.5 $0.5 million in fiscal 20252026, compared to an approximately $1.9$0.4 million expense in fiscal 2024.2025. The increase iswas primarily dueattributable to the increaseincreased investment in income.corporate advisors.

NetDepreciation and Income.amortization. WeOur haddepreciation netand incomeamortization ofexpense was approximately $7.5 $0.6 million in fiscal 20252026 as compared to approximately $5.1 $0.4 million in fiscal 2024, an increase of approximately $2.4 million, due to reasons mentioned above.2025.

Net cash provided by operating activities was approximately $4.0 million in fiscal year 2026, compared to approximately $7.8 million in fiscal year 2025, anda netdecrease cash provided in operating activities wasof approximately $1.6$3.7 millionmillion. inThe fiscaldecrease 2024was primarily primarily dueattributable to anthe increase to net income of $2.4$9.0 million and the increase in collections related to accounts receivable in fiscal 2025.2026, compared to a $3.9 million increase in fiscal 2025, partially offset by the $1.6 million increase in net income and the $0.6 million increase in the provision for credit losses.

Net cash used in investing activities was approximately $1.3 million in fiscal year 2026 and approximately $7.0 million in fiscal year 20252025, a and approximately $0.4 million in fiscal year 2024, an increasedecrease of approximately $6.6$5.6 million due primarily to the cash paid for the acquisition of CCMCC.CCMCC in fiscal year 2025, with no comparable acquisition in fiscal year 2026.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2025. The adoption of ASU 2023-07 is reflected in Note 2 to our audited consolidated financial statements included herein, “Summary of Significant Accounting Policies - Segment Reporting.”.

HDMC was established in the State of California in 2002 and began offering classes in 2003. It started with campuses in Lancaster, California, California, and added its first branch in 2008 in Bakersfield, California. Due to enrollment growth and high demand for its services, HDMC expanded to add a branch campus in Temecula, California campus in order to accommodate 250 to 400 additional students. HDMC offers UT, VN, VN Associate of Applied Science degree program, Associate Degree of Nursing, nursing assistant, MRI Associate of Applied Science, cardiac sonography, Associate of Applied Science, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing and coding, veterinary assistant, phlebotomy technician avocational, nursing assistant avocational, UT Associate of Applied Science degree programs, and an EMT program. HDMC also has obtained approval from the Accrediting Council for Continuing Education and Training (“ACCET”), Bureau for Private Postsecondary Education (“BPPE”) and ED to offer aEMT, surgical technology Associate of Applied Science programand and sterile processing technician program.programs. As of DecemberMarch 31, 2025,2026, HDMC had 2,0332,244 students enrolled in its programs.

CCC offers the following certificate or degree programs: business administrative specialist, computer specialist: accounting, medical administrative assistant, medical assisting, nursing assistant, UT, UT Associate of Applied Science, veterinary assistant, veterinary technology Associate of Applied Science, VN, surgical technology, Associate of Applied Science, dental assisting, sterile processing technician, pharmacy technician, and pharmacyMRI technician.Associate of Applied Science. CCC also offers an avocational phlebotomy technician program. CCC also has obtained approval from ACCET andACCET, BPPE to offer an MRI Associate of Applied Science program and has obtained ACCET, BPPE, and ED approvals to offer a cardiacCardiac sonographySonography Associate of Applied Science program.Science. As of DecemberMarch 31, 2025,2026, CCC had 556 600 students enrolled in its programs.

Integrity was established in the State of California in 2007. Integrity’s campus is located in Pasadena, California. Integrity offers VN, VN Associate of Applied Science, Registered Nurse to Bachelor of Science in Nursing (“RN to BSN”), medical assisting, medical billing and coding, veterinary assistant, and Diagnostic Medical Sonography programs. Integrity also plans to offer an emergency medical technician technician (EMT) program and is in the process of obtaining approvals for the program (for which Integrity is not planning for ED approval to to make Title IV funds available for students who enroll in the program). Integrity also has obtained approval from ABHES and BPPE to offer a sterile processing technician program and will offer this program pending additional approvals.approval. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of DecemberMarch 31, 2025, 2026, Integrity had 214209 students enrolled in its programs.

Contra Costa was established in the state of California in 2007. Contra Costa’s campus is located in Antioch, California. Contra Costa offers VN, surgical technology, sterile processing technician, pharmacy technician, medical assisting with phlebotomy, clinical medical assisting dental assisting, diagnostic medical sonography, EKG/ECG technician, medical administrative assistant/billing and coding specialist, phlebotomy (avocational) programs. As of DecemberMarch 31, 2025,2026, Contra Costa had 431497 students enrolled in its programs.

The first of the two negotiated rulemaking committees (the RISE Committee) convened for one session in September and October and one session session in November. On November 6, 2025, the RISE Committee reached consensus on proposed regulations related to topics including, for example, new federal student loan borrowing limits for certain borrowers and educational programs.programs, and the agreed upon language was incorporated into a notice of proposed rulemaking published January 30, 2026. After a period of public notice and comment, ED published the final rule in the Federal Register on May 1, 2026. The OBBBAfinal andrule proposed regulations includeincludes reduced limits on PLUS loans taken out by parent borrowers for undergraduate students to the amounts of $20,000 annually and $65,000 in the aggregate per dependent child. They also limit aggregate loans over a student borrower’s lifetime, excluding PLUS loans,lifetime to $257,500. This limitation does not apply to student borrowers during the expected time to complete their their credential if the student is enrolled in a program as of June 30, 2026 and a Direct Loan was made for the program prior to July 1, 1, 2026. Institutions will also be required to reduce federal student loan limits for students who are enrolled as less than full-time students or enrolled in a period of enrollment of less than one full academic year. See Annual Report at Form 10-K “Education Regulations – Congressional Action.” The agreed upon language was incorporated into a notice of proposed rulemaking published January 30, 2026 and will undergo a period of public notice and comment before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We cannot predict the content of the final regulations, but we are currently evaluating the potential impact of the proposedfinal regulationsrule on our institutions, but the institutionsimplementation andof the final rule could impact our enrollments and the extent to which alternative sources of funding such as third-party loans may be needed for some of our students.

The second of the two negotiated rulemaking committees (the AHEAD Committee) convened for one session in December 2025 and one session in January 2026. On December 12, 2025, the AHEAD Committee reached consensus on proposed regulations related to Pell Grants, including the new Workforce Pell program. The proposed regulations clarify which educational programs are eligible for the Workforce Pell program introduced by the OBBBA. Under the OBBBA and the proposed regulations, to be eligible a program must meet certain short-term length requirements (at least 8 but less than 15 weeks and (i) at least 150 but less than 600 clock hours, (ii) at least four but less than sixteen semester or trimester hours, or (iii) at least six but less than 24 quarter hours) and comply with certain other prohibitions. The proposed regulations also clarify processes for approval by state governors, the Secretary of Education, and a separate “value-added earnings” measure. Among other requirements, approval from a governor requires the governor to determine the program prepares students for an occupation that aligns with the state’s workforce needs, and the Secretary determines whether the program meets completion, placement rate, and value-added earnings requirements. To comply with the value-added earnings measure, the program’s total published tuition and fees may not exceed the value-added earnings (as defined in the proposed regulations) of working students who received a Pell Grant for enrollment in the program and completed the program within the applicable cohort period. The agreed upon language was incorporated into a notice of proposed rulemaking published March 9, 2026 and ED solicited comments on the proposed rule with such comments due by April 8, 2026. ED will consider these comments before it makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We are evaluating potential opportunities under the proposed regulations.

On January 9, 2026, the AHEAD Committee reached consensus on proposed regulations that create new accountability measures based in part on the accountability metrics in the OBBBA and the metrics in the existing gainful employment rules. The new earnings premium measure applies to all degree and non-degree programs at all institutions and eliminates the debt-to-earnings rate measure in the existing gainful employment regulations. Under the earnings premium measure for undergraduate programs (as opposed to the separate measure for graduate programs), the median annual earnings of program completers are compared to the “earnings threshold,” which is the median earnings of holders of high school diplomas who are working adults aged 25-34 using the methodology prescribed in the regulations. If the median annual earnings of program completers fall below the earnings threshold, the Secretary informs the institution that the program is failing under the earnings premium measure and that the program could become ineligible for the Direct Loan programs based on its earnings premium measure for the next award year. The institution must provide a prescribed warning to students and prospective students explaining that it has not passed ED’s standards based on reported earnings of program graduates and that the program could lose access to Direct Loans based on the next calculated metrics. The warning must also include information about accessing the program information website maintained by ED and explain that the student must acknowledge the student viewed the warning in order for the institution to disburse Title IV funds to the student. If the program fails the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated, this would result in the program’s loss of eligibility for Title IV Direct Loans once ED completes a termination action under its established proceedings, unless the institution successfully appeals under those proceedings. Under the proposedconsensus regulations,language, if more than 50% of an institution’s Title IV-recipient students enrolled in, or more than 50% of the institution’s total Title IV funds are from, programs that fail the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated, the institution could be deemed not administratively capable and be placed on provisional status, and the programs could potentially lose access to all Title IV HEA funds if the institution does not successfully appeal the determination..determination. The proposedconsensus regulationslanguage also, among other things, describedescribes the process and formulas for calculating calculating earnings accountability measures, revise the requirements for institutional reporting to ED, specify the period of ineligibility for for programs that fail the earnings premium measure, allow for limited retention of eligibility during orderly program closure, and modify the institutional data ED is required to disclose on its program information website (this data will continue to include a program’s earnings premium measure.measure). See Annual Report at Form 10-K “Education Regulations – Administrative Capability.”

The consensus regulatory language will bewas incorporated into a notice of proposed rulemaking whichpublished isApril expected20, to be released in the coming months2026 and will undergo a period of public notice and comment (with such comments due by May 20) before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. It is expected that the first accountability measure calculations will take place in 2027 and “failures” can be determined beginning in July 2027, although programs would not lose eligibility until July 1, 2028. These dates are subject to change. We cannot predict the content of the final regulations, but we are currently evaluating the potential impact of the proposed regulations on the Company and are continuing to monitor the ongoing rulemaking process. If one or more of our programs fail to comply with the new requirement, requirement, those programs could lose access to Title IV Direct Loans, and potentially Pell Grant eligibility, which could have a material adverse adverse effect on our student population and our revenues. The new regulations could also require us to modify or eliminate programs to comply with the new regulations.

OnA January 26, 2026, ED announced it intends to establish a negotiated rulemaking committee that will meetmet in April and will meet again in May 2026 to consider amendments to the regulations respecting the Secretary’s recognition of accrediting agencies and related institutional eligibility requirements for the Title IV programs. ED’s stated goals for developing these regulations include simplification of the accreditor recognition process, consideration of the effect of accreditation on higher education costs and “credential inflation,” protecting against undue influence from private trade associations, eliminating discriminatory standards, and focusing on data-driven student outcomes. The topics under consideration could Amongchange, ED’sbut listinclude institutions switching from one accreditor to another, the recognition criteria for accrediting agencies, and accrediting agencies’ standards and requirements regarding acceptance of tentransfer proposedcredit, issuesinstitutional foroutcomes, negotiationacademic are topics such as reviewing accrediting agencies’ responsibilities to ensure they do not contravene Federal or State law,freedom, and determiningviolations of whetherfederal regulationsand shouldstate be revised or expanded to ensure accreditation standards do not impede innovation.law. Each of our institutions are currently accredited by an accrediting agency recognized by ED, and our participation in the Title IV Programs is dependent on ED continuing to recognize the accrediting agencies that accredit our institutions. See Annual Report at Form 10-K “Education Regulations – ED Recognition of Accrediting Agencies.” Any future regulations or regulatory changes resulting from this negotiated rulemaking process could impact the ability of the accreditors that accredit our institutions institutions to maintain recognition by ED and the accreditation requirements applicable to our institutions. We cannot predict whether and how such rulemaking would impact our institutions and operations.

TheED DOEhas haspublished new proposed new regulations during a negotiated rulemaking process that would replace the debt-to-earnings rate measure and the earnings premium measure in the existing financial value transparency and gainful employment regulations with a new earnings premium accountability framework based in part on the accountability measure introduced in the OBBBA. See “Regulatory Updates – Negotiated Rulemaking;” see also Annual Report at Form 10-K “Education Regulations – Congressional Action.”

We evaluate the recoverability of our long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows. We had no long-lived asset impairments as of DecemberMarch 31, 20252026 and JuneMarch 30,31, 2025, respectivelyrespectively.

Three Months Ended DecemberMarch 31, 20252026 Compared to Three Months Ended DecemberMarch 31, 20242025

The following table sets forth our consolidated statements of income data as a percentage of revenue for the three months ended DecemberMarch 31, 31, 20252026 and 20242025:

Revenue. Tuition and related Our revenue was approximately 19.2 million for the three months ended DecemberMarch 31, 20252026, increased by approximately $2.8 million, or 15%, to $21.4 million, compared to approximately $13.7 $18.6 million for the threesame monthsperiod endedin December 31, 2024, an increase of approximately $5.5 million, or approximately 40.7%2025 driven by a 49.4% increase in new student starts toof 593 from 397 last year1,078 resulting in a 16.8%9.4% increase in student enrollment. enrollment to 3,550.

Educational services. Our educationalEducational services expense was approximately $20.6 million for the sixthree months ended DecemberMarch 31, 20252026 comparedincreased to approximately $14.7 million for the six months ended December 31, 2024, an increase ofby approximately $5.9$0.9 million, or approximately9%, to 40.4%. $11.0 million, compared to $10.1 million in the prior year period. The increase was primarily attributabledriven to theby increased instructional and staffing requiredcosts toassociated support the increase in enrollments as well aswith increased rent,student enrollment, including externship fees and non-cashnon cash compensation charge. As a percentage of revenue, educational expenses declined from 54.9%54.4% to 53.6% 51.7% primarily due to operating efficiencies in employee compensation and facility costs offset by increases in externship fees and non cash compensation.

General and administrative expense. Our general and administrative expense was approximately $12.2$6.2 million for the sixthree months ended March December 31, 20252026 compared to approximately $8.3$4.6 million for the sixthree months ended DecemberMarch 31, 2024,2025, an increase of approximately $3.9$1.5 million, million, or approximately 46.9%.33.5%. The increase was primarily attributable to an increase in marketing expense, professional fees and bad debt expense.and professional fees. Of the total general and administrative expense, $3.0approximately $1.5 million and $2.3$1.2 million relaterelated to marketing advertising expense for the sixthree months ended December March 31, 20252026 and 2024,2025, respectively.

Depreciation and amortization. Our depreciation and amortization expense was approximately $0.3$0.2 million for the sixthree months ended DecemberMarch 31, 2026 2025 compared to approximately $0.1 million for the sixthree months ended DecemberMarch 31, 2024.2025. The increase was primarily attributable to capital expenditures associated with campus expansion and equipment purchases to support program growth.

Interest expense. Interest expense. Our interest expense was approximately $0.05 million$0.0 for the sixthree months ended DecemberMarch 31, 20252026 compared to approximately $0.06 million$0.0 for the sixthree months ended DecemberMarch 31, 2024.2025. The decrease was primarily attributable to repayments of outstanding debt balances.

Income tax expense. Our income tax expense was approximately $1.6$1.2 million for the sixthree months ended DecemberMarch 31, 20252026 compared to approximately $1.3$1.1 million for the sixthree months ended DecemberMarch 31, 2024, an increase of approximately $0.3 million, or approximately 20%. The increase is primarily attributable to the increase in income.2025.

Net Income. Our net income was approximately $4.2$3.0 million for the sixthree months ended DecemberMarch 31, 20252026 compared to approximately $3.5$2.8 million for the sixthree months ended DecemberMarch 31, 2024,2025, an increase of approximately $0.7$0.2 million, or approximately 21%,7.5%, due to the reasons mentioned above.

Our cash and cash equivalents were approximately $21.1$21.7 million and $20.3 million as of DecemberMarch 31, 2025,2026, and June 30, 2025, respectively.

Capital expenditures were approximately $0.8$1.0 million and $0.4$0.8 million for the sixnine months ended DecemberMarch 31, 2025,2026, and 2024,2025, respectively.

Cash Flow Activities for the SixNine Months Ended DecemberMarch 31, 20252026 and 20242025

Net cash provided by operating activities was approximately $2.1$2.9 million and $3.8$4.8 million for the sixnine months ended DecemberMarch 31, 2025,2026, and 2025, 2024, respectively. The decrease of approximately $1.7$1.9 million iswas primarily attributable to increaseincreases toin accounts receivable, prepaid expenses expenses and other receivables, partially offset by an increaseincreases in deferred unearned tuition and income taxes payable and a reduction to deferred unearned tuition.payable.

Net cash used in investing activities was approximately $0.8$1.0 million for the sixnine months ended DecemberMarch 31, 2025,2026, andcompared to approximately $6.6 $6.9 million for the sixnine months endedending DecemberMarch 31, 20242025. with cashCash used forin investing activities during both periods primarily related to purchases of property and equipmentequipment, while the prior year period also included cash paid in eachconnection of the respective reporting periods. During the six months ended December 31, 2024, the Company spent approximately $6.1 million towith the acquisition of CCMCC.Contra Costa Medical Career College.

Net cash used byin financing activities was approximately $0.6$0.5 million for the sixnine months ended DecemberMarch 31, 2025,2026, andcompared to net cash provided by financing activities of approximately $9.2$9.1 million for the sixnine months ended DecemberMarch 31, 2024.2025. The prior year increase was primarily attributable to net proceeds received from the Company’s initial public offering completed during the prior fiscal year.

We believe that inflation has not had a material impact on our results of operations for the three or sixnine months ended DecemberMarch 31, 2025,2026, and 2024.2025. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.