What changed in this filing

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Item 1. Business

2025-09-25 compared with 2024-10-01 · 1122 added, 699 removed, 1101 unchanged (62% of the section changed)

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High Desert Medical College, which we acquired in July 2010, Central

Coast College, which we acquired in January 2019, 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

For purposes of our financial statements, the acquisition of Integrity is deemed to have been effective as of December 31,

Desert Medical College

Coast College, which we acquired in January 2019, Integrity College of Health which we acquired in September 2020, and Contra Costa Medical

Career College, which we acquired in December 2024.

Desert Medical College (“HDMC”)

was established in the State of California in 2002 and began offering classes in 2003.

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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, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing

and coding, veterinary assistant, phlebotomy technician avocational, nursing assistant avocational, and UT Associate of Applied Science

degree programs.

HDMC also plans to offer an emergency medical technician (EMT) program beginning in October 2024 and is in the process

of obtaining approvals for the program (for which HDMC is not planning to apply for ED approval to make Title IV Program funds available

for students who enroll in the program).

As of June 30, 2024, HDMC had 1,537 students enrolled in its programs.

Coast College

to add a branch campus in Temecula, California in order to accommodate 250 to 400 additional students.

HDMC offers ultrasound tech (“UT”),

vocational nursing (“VN”), VN Associate of Applied Science degree program, Associate Degree of Nursing, nursing assistant,

MRI Associate of Applied Science, cardiac sonography, 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”) to offer a surgical technology Associate of Applied Science program and sterile

processing technician program and plans to begin doing so in October 2025, pending receipt of approval from the Bureau for Private Postsecondary

Education (“BPPE”) and ED.

As of June 30, 2025, HDMC had 1,956 students

enrolled in its programs.

Coast College (“CCC”)

was established in the State of California in 1983.

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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, and VN.

CCC also offers an avocational phlebotomy technician program.

CCC also has obtained approval from ACCET to

offer the following programs and plans to begin doing so in October 2024, pending additional approvals:

surgical technology (Associate

of Applied Science), dental assisting, and sterile processing technician.

CCC is also in the process of applying for approvals for a

pharmacy technician program and an Associate Degree in Nursing program that it intends to provide in the future.

As of June 30, 2024,

CCC had 462 students enrolled in its programs.

College of Health

accounting, medical

administrative assistant, medical assisting, nursing assistant, UT, UT Associate of Applied Science, veterinary assistant,

veterinary assistant, veterinary technology, Associate of Applied Science, VN, surgical technology (Associate of Applied Science),

dental assisting, sterile processing technician, and pharmacy technician.

CCC also offers an

avocational phlebotomy technician 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, CCC had 495 students enrolled in its programs.

College of Health (“Integrity”)

was established in the State of California in 2007.

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billing and coding, veterinary assistant, and Diagnostic Medical Sonography programs.

Integrity also plans to offer an emergency medical

technician (EMT) program beginning in October 2024 and is in the process of obtaining approvals for the program (for which Integrity

is not planning for ED approval to make Title IV funds available for students who enroll in the program).

For purposes of our financial

statements, Legacy Education, L.L.C.

Integrity earned initial accreditation from

the National League for Nursing Commission for Nursing Education Accreditation (NLN CNEA) for its Bachelor of Science in Nursing RN-

BSN Track in June 2025.

Integrity also plans to offer an emergency medical technician (“EMT”) program beginning in early

2026 and is in the process of obtaining approvals for the program (for which Integrity is not planning to seek ED approval because it

does not intend to make Title IV funds available for students who enroll in the program).

For purposes of our financial statements, Legacy

Education, L.L.C.

is deemed to have acquired Integrity in December 2019.

As of June 30, 2024, Integrity had 167 students

enrolled in its programs.

2003, HDMC began offering classes in Lancaster, CA (main campus).

2008, HDMC began offering classes in Bakersfield, CA (branch campus).

October 2009, our current Chief Executive Officer, LeeAnn Rohmann founded our company.

July 2010, we acquired HDMC.

2011 to 2013, HDMC received VA approval, Workers Investment Act approval and Department of Rehabilitation approval for its programs.

April 2013, HDMC received ACCET accreditation.

December 2013, HDMC received BVNPT accreditation of new licensed vocational nurses curriculum on a provisional basis, which provision

was removed in 2017.

March 2014, HDMC became eligible to participate in the Title IV Programs and, in April 2014, received its first disbursements under

the Title IV Programs.

2015 to 2017, HDMC added pharmacy technician and dental assisting programs, went through re-accreditation with ACCET, received approval

to participate in Cal Grant programs, and was removed from provisional status by BVNPT.

January 2018, the UT AAS degree program was approved by BPPE and ACCET to offer through interactive distance learning.

July 2018, HDMC received branch approval for the Temecula, CA campus.

July 2018, HDMC introduced medical billing and coding programs and online UT AAS program.

December 2018, we entered into the management services agreement with Integrity.

December 2018, ED conducted and completed a program review at HDMC to confirm compliance with Title IV regulations, noting only minor

January 2019, we acquired CCC.

January 2019, HDMC received approval for licensed vocational nurse students (20 students) for Bakersfield, CA.

February 2019, the UT AAS degree program was approved by ED.

February 2019, HDMC opened its campus in Temecula, CA.

April 2020, CCC was re-accredited by ACCET through April 2025 for all programs.

December 2019, we acquired a 24.5% ownership interest in Integrity.

September 2020, we acquired the remaining 75.5% interest in Integrity

2021 and 2022 we received per hybrid approval for all programs, launched new accredited programs of Cardiac Sonography AAS, Vocational

Nursing AAS, Ultrasound AAS in CCC, obtain Vocational Nursing program in HDMC Temecula.

2023, we launched new accredited programs of Certified Nurse Assistant program at HDMC, Magnetic Resonance Imaging AAS (HDMC), Veterinary

Assisting (ICH), Vocational Nursing (CCC), RN approval (HDMC)

January 2024, we started our first Associates Degree of Nursing program (HDMC).

As of June 30, 2025, Integrity had 202 students enrolled in

its programs.

Costa Medical Career College (“CCMCC”)

offers the following certificate and degree programs:

surgical technology (Associate of Applied Science), sterile processing technician,

pharmacy technician, diagnostic medical sonography, medical assisting with phlebotomy, dental assisting, vocational nursing, clinical

medical assisting, EKG/ECG technician, medical administrative assistant/billing and coding specialist and medical assisting and phlebotomy

As of June 30, 2025, CCMCC had 448 students enrolled in its programs.

In 2003, HDMC began offering

classes in Lancaster, CA (main campus).

In 2008, HDMC began offering

classes in Bakersfield, CA (branch campus).

In October 2009, our current

Chief Executive Officer, LeeAnn Rohmann founded our Company.

In July 2010, we acquired

the assets of HDMC.

From 2011 to 2013, HDMC

received VA approval, Workers Investment Act approval and Department of Rehabilitation approval for its programs.

In April 2013, HDMC received

ACCET accreditation.

In December 2013, HDMC

received Board of Professional Nursing and Psychiatric Technicians (“BVNPT”)

accreditation of new licensed vocational nurses curriculum on a provisional basis, which provision was removed in 2017.

In March 2014, HDMC became

eligible to participate in the Title IV Programs and, in April 2014, received its first disbursements under the Title IV Programs.

From 2015 to 2017, HDMC

added pharmacy technician and dental assisting programs, went through re-accreditation with ACCET, received approval to participate

in Cal Grant programs, and was removed from provisional status by BVNPT.

In January 2018, the UT

Associate of Applied Science (“AAS”) degree program was approved by BPPE and ACCET to offer through interactive distance learning.

In July 2018, HDMC received

branch approval for the Temecula, CA campus.

In July 2018, HDMC introduced

medical billing and coding programs and online UT AAS program.

In December 2018, we entered

into the management services agreement with Integrity.

In December 2018, ED conducted

and completed a program review at HDMC to confirm compliance with Title IV regulations, noting only minor findings.

In January 2019, we acquired

In January 2019, HDMC received

approval for licensed vocational nurse students (20 students) for Bakersfield, CA.

In February 2019, the UT

AAS degree program was approved by ED.

In February 2019, HDMC

opened its campus in Temecula, CA.

In December 2019, we acquired

a 24.5% ownership interest in Integrity.

In September 2020, we acquired

the remaining 75.5% interest in Integrity.

In 2021 and 2022, we received

hybrid approval for all programs, launched new accredited programs of Cardiac Sonography AAS, Vocational Nursing AAS, and Ultrasound

AAS in CCC, and obtained the Vocational Nursing program in HDMC Temecula.

In 2023, we launched new

accredited programs of Certified Nurse Assistant program at HDMC, Magnetic Resonance Imaging AAS (HDMC), Veterinary Assisting (ICH),

Vocational Nursing (CCC), RN approval (HDMC).

In January 2024, we started

our first Associates Degree of Nursing program (HDMC).

April 2024, HDMC was re-accredited by ACCET through April 2029 for all programs.

the United States, the post-secondary education marked is large, fragmented, and competitive.

In December 2024 we acquired the assets of Contra Costa Medical Career College

April 2025, CCC was re-accredited by ACCET through April 2030 for all programs.

June 2025 Integrity earned initial accreditation from the National League for Nursing Commission

for Nursing Education Accreditation (NLN CNEA) for its Bachelor of Science in Nursing RN-

BSN Track through February 2031.

the United States, the post-secondary education market is large, fragmented, and competitive.

According to National Center for Educational

Statistics, as of 2022, degree granting career colleges served approximately 1.2 million undergraduate students, which was approximately

6.3% of the estimated 19.0 million total undergraduates in degree programs.

Statistics, as of the 2022-23 school year, degree granting career colleges served approximately 1.7 million undergraduate students, which was approximately 8.0% of the estimated 21.5 million total undergraduates in degree

Further, the COVID-19 pandemic significantly reduced the

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According to estimates released by the National

Student Clearinghouse Research Center, total enrollments in all higher education sectors declined 0.7% and 2.5% in the fall of 2022 and

2021, respectively.

Enrollment at proprietary colleges increased 2.6% in the fall of 2022 and declined 2.1% in the fall of 2021.

industry is heavily dependent on continued availability of federal student financial assistance under Title IV of the Higher Education

Act (“Title IV Programs”), and concerns about potential reductions in such funding also could negatively affect demand for

higher education.

Student Clearinghouse Research Center, total enrollments in all higher education sectors increased 2.4% and 3.2% in the spring of 2024 and 2025, respectively.

Enrollment at proprietary colleges increased 5.1% and 3.7% in the spring of 2024 and 2025, respectively.

The industry is heavily dependent

on continued availability of federal student financial assistance under Title IV of the Higher Education Act (“Title IV Programs”),

and concerns about potential reductions in such funding also could negatively affect demand for higher education.

Notwithstanding

weaker demand dynamics in past years, including the more recent adverse impact from the COVID-19 pandemic, we believe that over time,

demand for post-secondary education in the United States will continue to increase as a result of demographic, economic, and social trends.

weaker demand dynamics in past years, including the more recent adverse impact from the COVID-19 pandemic, we believe that over

time, demand for post-secondary education in the United States will continue to increase as a result of demographic, economic, and

social trends.

The 2022 U.S.

Census Bureau reported that approximately 64.5 million adults over the age of 25 in the United States did not have more

than a high school education, and approximately 33.0 million adults over the age of 25 had some college experience but had not completed

a college degree.

Census Bureau reported that approximately 64.0 million adults over the age of 25 in the United States

did not have more than a high school education, and approximately 32.2 million adults over the age of 25 had some college experience

but had not completed a college degree.

Other trends that could positively impact demand for our programs include:

demand by employers for certain types of professional and skilled workers;

in the number of high school graduates from 2.8 million in 1999-2000 to an estimated 3.7 million in 2019-2020, according to the National

Center for Education Statistics;

significant and measurable income premium and enhanced employment prospects attributable to post-secondary education;

number of initiatives underway to reduce the cost of a post-secondary education;

continued demand from working adults for programs offered by accredited institutions.

increasing demand by employers

for certain types of professional and skilled workers;

growth in the number of

high school graduates from 2.8 million in 1999-2000 to an estimated 3.8 million in 2022-2023, according to the National Center for

Education Statistics;

the significant and measurable

income premium and enhanced employment prospects attributable to post-secondary education;

a number of initiatives

underway to reduce the cost of a post-secondary education;

a continued demand from

working adults for programs offered by accredited institutions.

Market Opportunity

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and advice, more so than your traditional college students.

to the Bureau of Labor Statistics, employment in the healthcare industry is projected to grow 16% from 2020 to 2030 resulting in over

2.6 million new jobs.

This growth rate is much stronger than other industries.

In addition, the aging population has a greater demand

for healthcare.

According to the Bureau of Labor Statistics, employment in the healthcare and social assistance industry is projected to grow 8.4% from

2024 to 2034 resulting in over 1.9 million new jobs.

This growth rate is much stronger than other industries, largely due to the aging

population and the growing prevalence of chronic conditions.

Growth Strategies

growth strategy goals consist of the following:

for moderate growth in existing programs.

of registered nursing programs in Bakersfield and Salinas, California.

Associate of Applied Sciences degrees to our shorter programs.

registered dental assisting to our dental assistant program.

programs in dental hygiene and surgical technician.

Launch of new program offerings, including online offerings.

new branch campuses, including in Fresno and Santa Ana, California and beyond.

new institutions (new locations, new programs) outside of California, including in Nevada, Colorado and New Mexico and programs in

business, automotive and trade to increase national footprint.

benchmark standards for completion and placement.

Plan for moderate growth

in existing programs.

Approval of registered

nursing programs in Bakersfield and Salinas, California.

Add Associate of Applied

Sciences degrees to our shorter programs.

Add registered dental assisting

to our dental assistant program.

New programs in dental

hygiene and surgical technician.

Continued launch of new

program offerings, including online offerings.

Launch new branch campuses,

including in California and beyond.

Acquire new institutions

(new locations, new programs) outside of California, including in Nevada, Colorado and New Mexico and programs in business, automotive

and trade to increase national footprint.

Meet benchmark standards

for completion and placement.

business strategy is based on helping our graduates succeed, which we believe will drive our financial results.

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the following operating strategies:

on student and graduate success, including improving retention rates while maintaining high standards of academic quality and rigor;

and improving upon our ability to offer affordable degrees, where graduates receive a high return on their investment;

and optimizing our relationship-based marketing efforts and increasingly personalizing the prospective student experience;

strengthening and expanding our product offering and the alignment of our offering with employer needs.

Focusing on student and

graduate success, including improving retention rates while maintaining high standards of academic quality and rigor;

Maintaining and improving

upon our ability to offer affordable degrees, where graduates receive a high return on their investment;

Expanding and optimizing

our relationship-based marketing efforts and increasingly personalizing the prospective student experience;

Further strengthening and

expanding our product offering and the alignment of our offering with employer needs.

are focused on the following operational priorities to deliver these strategies:

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Our marketing strategy is designed to attain greater strategic control over our new enrollment growth and strengthen engagement

with prospective as well and current students and graduates, who can act as advocates for our institutions.

with prospective as well as current students and graduates, who can act as advocates for our institutions.

and Diversification.

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obtain a degree, the quality and size of our alumni base, and our relationship with other learning institutions.

of our local competitors include San Joaquin Valley College, Charter College Lancaster, Career Care Institute, UEI College, Bakersfield

of our local competitors include San Joaquin Valley College, Career Care Institute, UEI College, Bakersfield

College and the Pima Medical Institute.

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Our websites’ integrated marketing campaigns direct prospective students to call us or visit the

HDMC, CCC and Integrity websites where they will find details regarding our programs and campuses and can request additional information

HDMC, CCC, Integrity and CCMCC websites where they will find details regarding our programs and campuses and can request additional information

regarding the programs that interest them.

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by offering annual seminars at our training facilities to further familiarize these individuals on the strengths of our programs.

Our recruiting efforts are conducted by a group of approximately 10 campus-based and field representatives who meet directly

with prospective students during presentations conducted at high schools, or during a visit to one of our campuses.

Students enrolling in our programs must have a high school diploma or a General Educational Development Certificate and demonstrate

recruiting efforts are conducted by a group of approximately 20 campus-based and field representatives who meet directly with

prospective students during presentations conducted at high schools, or during a visit to one of our campuses.

enrolling in our programs must have a high school diploma or a General Educational Development Certificate and demonstrate

competence in writing and logical reasoning.

Students must also complete an application and pass one or more entrance assessments, including

the Wonderlic Scholastic Level Exam (SLE) or HESI for the Veterinary Nurse program.

While each of our programs has different admissions

criteria, we screen all applications and counsel the students on the most appropriate program to increase the likelihood that our students

complete the requisite coursework and obtain and sustain employment following graduation.

As of June 30, 2024, our diverse student body

war comprising 72% Hispanic, 10% White, 6% Black/African American, 5% Asian, and 2% American Indian students.

The age distribution shows

43% of our students are 25 and older, while 57% are 24 and younger, with a significant majority of 92% being women and 8% men.

For programs leading to a degree students must also complete an application and pass

one or more entrance assessments, including the Wonderlic Scholastic Level Exam (“SLE”) or HESI for the Vocational Nursing programs.

While each of our programs has different admissions criteria, we screen all applications and counsel the students

on the most appropriate program to increase the likelihood that our students complete the requisite coursework and obtain and

sustain employment following graduation.

As of June 30, 2025, our diverse population was comprised of 61% Hispanic, 13% Black/African American, 12% White, 5% Asian, 1% Native Hawaiian or Other Pacific

Islander, and 1% American Indian or Alaksa Native.

The age distribution shows 49% of our students are 25 and older, while 51% are 24 or

younger, with a significant majority of 88% being Women and 12% being Men.

We enroll students continuously throughout the year, with our largest classes enrolling in late summer or early fall following

high school graduation.

We had 2,187 students enrolled as of June 30, 2024, an increase of 28.2% compared to 1,705

students as of June 30, 2023 Our expanding student body reflects the trust and confidence in our educational offerings and our

ability to prepare students for successful careers.

We had 3,101 students enrolled as of June 30, 2025, an increase of 42% compared to 2,187 students as of June

Our expanding student body reflects the trust and confidence in our educational offerings and our ability to prepare students

for successful careers.

chart below outlines our quarterly consolidated new student starts and end of quarter student enrollment across our colleges.

September 30,

December 31, 2022

September 30, 2024

December 31, 2023

Ending Enrollment

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retention rate of 86%, our focus on student success and support throughout their educational journey is evident.

Our core mission is to prepare students for competitive careers in their chosen fields.

core mission is to prepare students for competitive careers in their chosen fields.

As of June 30, 2025, we boast an average

placement rate of 78%, with individual rates of 76% for High Desert Medical College, 73% for Central Coast College, and an impressive

placement rate of 74.5%, with individual rates of 74.9% for High Desert Medical College, 74.1% for Central Coast College, and 74.6%

for Integrity College of Health.

Additionally, our students have achieved a 79% NCLEX Pass Rate and a 64% Vet Tech Pass Rate, demonstrating

the effectiveness of our programs.

CCMCC has achieved an average placement rate of 73.8%.

Additionally, our students

have achieved an 81.8% NCLEX Pass Rate and a 50.0% Veterinary Technician National Exam Pass Rate, demonstrating the effectiveness of

our programs.

and Employees

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instructional development seminars, annual reviews, technical upgrade training, faculty development plans and weekly staff meetings.

also employ non-faculty staff in student services, academic advising and academic support, enrollment services, administration, financial

aid, information technology, human resources, finance and other administrative functions.

The staff of each campus typically includes

a campus director, a career services coordinator, a financial-aid officer and a career advisor and instructors, all of whom are industry

professionals with experience in our areas of study.

also employ non-faculty staff in student services, academic advising and academic support, enrollment services, administration,

financial aid, information technology, human resources, finance and other administrative functions.

The staff of each campus

typically includes a campus director, a director of education, a registrar, a career services coordinator, a financial-aid officer, a business officer

and a career advisor and instructors, all of whom are industry professionals with experience in our areas of study.

of June 30, 2025, we had approximately 103 full-time faculty, including program directors, as well as approximately 147 part-time faculty.

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or relocation of existing locations and changes in corporate structure and ownership.

of our institutions (HDMC, CCC, and Integrity) participate in the Title IV Programs, as well as other federal and state financial aid

programs and are subject to extensive regulation by ED, other federal and state educational agencies and accreditors.

CCC and HDMC are

approved to offer, and must comply with applicable requirements related to, veterans education assistance administered by the Department

of Veterans Affairs (“VA”), Cal Grants administered by the California Student Aid Commission, and funds administered under

the Workforce Innovation and Opportunity Act.

We derive a substantial portion of our revenue and cash flows from the Title IV Programs

and a significant portion of our students rely on financial aid received under the Title IV Programs in order to attend our institutions.

To participate in the Title IV Programs, an institution must receive and maintain authorization by the appropriate state education agencies,

be accredited by an accrediting body recognized by ED, hold programmatic accreditation 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), and be certified by ED as

an eligible institution.

of our institutions (HDMC, CCC, Integrity and CCMCC) participate in the Title IV Programs, as well as other federal and state financial

aid programs and are subject to extensive regulation by ED, other federal and state educational agencies and accreditors.

and CCMCC are approved to offer, and must comply with applicable requirements related to, veterans education assistance administered

by the Department of Veterans Affairs (“VA”).

CCC and HDMC are also approved to offer and must comply with applicable requirements

related to Cal Grants administered by the California Student Aid Commission, and funds administered under the Workforce Innovation and

Opportunity Act.

We derive a substantial portion of our revenue and cash flows from the Title IV Programs and a significant portion of

our students rely on financial aid received under the Title IV Programs in order to attend our institutions.

To participate in the Title

IV Programs, an institution must receive and maintain authorization by the appropriate state education agencies, be accredited by an

accrediting body recognized by ED, hold programmatic accreditation 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), and be certified by ED as an eligible institution.

laws, regulations, standards and policies of our regulators change periodically and are subject to new and changing interpretation by

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See “Risk Factor

- If our institutions fail to comply with the extensive regulatory requirements applicable to our business, we could incur financial

penalties, restrictions on our operations, loss of federal and state financial aid funding for our students, loss of accreditation, or

loss of our authorization to operate our institutions or our educational programs .”

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 three institutions,

collectively consisting of three main campuses and two additional locations:

HDMC with locations in Lancaster, Bakersfield, and Temecula,

CCC with a location in Salinas, and Integrity with a location in Pasadena.

Generally, the recertification process includes a review by

ED of an institution’s educational programs and locations, administrative capability, financial responsibility and other oversight

The current expiration date of the program participation agreements for HDMC and CCC is September 30, 2026.

currently participating in the Title IV Programs under a temporary provisional program participation agreement in connection with its

change in ownership and control resulting from our acquisition of the institution.

The temporary provisional program participation agreement

had an expiration date of November 30, 2020 but continues on a month-to-month basis thereafter based on the institution’s submission

to ED of certain required documentation and remains in effect until the conclusion of ED’s review of Integrity’s pending

application for approval of its change in ownership and control.

- If our institutions fail to comply with the extensive educational regulatory requirements applicable to our business, we could incur

financial penalties, restrictions on our operations, loss of federal and state financial aid funding for our students, loss of accreditation,

or loss of our authorization to operate our institutions or our educational programs .”

the provisions of the Higher Education Act (“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.

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 with a location in Salinas, Integrity with a location 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.

Integrity and CCMCC are currently participating in the Title IV Programs under a temporary provisional

program participation agreement in connection with their 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

agreement continues on a month-to-month basis thereafter based on the institution’s submission to ED of certain required documentation

and remains in effect until the conclusion of ED’s review of Integrity’s and CCMCC’s pending applications for approval

of their change in ownership and control.

typically provides provisional certification to an institution following a change in ownership resulting in a change of control and also

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capability and financial responsibility.

Our Integrity institution is currently approved under a temporary provisional program participation

agreement which (as described in a subsequent section) permits an institution to continue participating in the Title 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.

Our Integrity and CCMCC institutions are currently approved under a temporary provisional program

participation agreement which (as described in a subsequent section) permits an institution to continue participating in the Title 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

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The revised certification regulations are expansive, complex and could

be difficult for our institutions to comply with its applicable requirements as interpreted by ED.

be difficult for our institutions to comply with their applicable requirements as interpreted by ED.

If ED finds that any of our institutions

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The California Board of Registered Nurses approves the Associate degree of Nursing program at HDMC.

The VN programs at HDMC and Integrity

are approved by BVNPT.

The VN programs at HDMC, Integrity

and CCMCC are approved by BVNPT.

The phlebotomy programs at HDMC and CCC are approved by California Department of Public Health.

In addition, we

are subject to state consumer protection laws.

we are subject to state consumer protection laws.

general in many states have become more active in enforcing consumer protection laws, including, for example, laws related to marketing,

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Further, some state attorneys

general have partnered with the CFPB, the FTC, and other federal and state agencies to review industry practices and collaborate on enforcement

actions against educational institutions.

These actions increase the likelihood of scrutiny of marketing, advertising, recruiting, financing,

and other practices of educational institutions and may result in unforeseen consequences, increasing risk and making our operating environment

more challenging.

general have partnered with federal and state agencies to review industry practices and collaborate on enforcement actions against educational

institutions.

These actions increase the likelihood of scrutiny of marketing, advertising, recruiting, financing, and other practices

of educational institutions and may result in unforeseen consequences, increasing risk and making our operating environment more challenging.

media coverage regarding the allegations of state consumer protection law violations by us or other for-profit education companies could

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We have obtained approval to offer portions of our programs via distance education from ACCET

for CCC and HDMC, ABHES for Integrity, and from BPPE for HDMC, CCC, and Integrity.

The State of California does not, however, presently

participate in any state authorization reciprocity agreement whereby our institutions may offer programs via distance education to students

located in other states without our applicable state authorizations from those other states.

Our institutions presently do not have any

state postsecondary authorizations outside of California.

In addition, an institution must make disclosures readily available to enrolled

and prospective students regarding whether programs 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).

ED’s rules effective July 1, 2024, an institution must certify that its programs satisfy the applicable educational requirements

for CCC, CCMCC and HDMC, ABHES for Integrity, and from BPPE for HDMC, CCC, CCMCC and Integrity.

The State of California does not,

however, presently participate in any state authorization reciprocity agreement whereby our institutions may offer programs via distance

education to students located in other states without our applicable state authorizations from those other states.

Our institutions presently

do not have any state postsecondary authorizations outside of California.

In addition, an institution must make disclosures readily available

to enrolled and prospective students regarding whether programs 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).

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

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offered by our institutions satisfy all currently applicable state educational requirements for professional licensure or certification.

ED also commenced a negotiated rulemaking process to develop new regulations on topics that include state authorization and convened

a negotiated rulemaking committee to consider proposals from January through March 2024.

On July 17, 2024, ED announced that proposed

rules related to cash management, state authorization and accreditation will be published by next year.

We cannot predict the ultimate

timing or content of any new regulations that might emerge from this process.

See Risk Factors at “ Additional ED or other rulemaking

could materially and adversely affect our operations, business, results of operations, financial condition and cash flows.”

legislatures often consider legislation affecting regulation of postsecondary educational institutions.

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effectively comply with new or revised requirements, we could be subject to liabilities, sanctions and other consequences.

Factor – Any failure to comply with educational laws and regulatory requirements, including educational requirements, or new

state legislative or regulatory initiatives affecting our institutions, could have a material adverse effect on our total student enrollment,

Factor – Any failure to comply with state laws and regulatory requirements, including educational requirements, or new state

legislative or regulatory initiatives affecting our institutions, could have a material adverse effect on our total student enrollment,

results of operations, financial condition and cash flows .”

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educational programs.

HDMC and CCC are currently accredited by ACCET through April 2029 and April 2025, respectively.

Integrity is accredited

by ABHES through February 2026.

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, respectively.

Integrity is accredited by ABHES through February 2026.

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 to comply with accreditation

standards could subject an institution to additional requirements, sanctions, and consequences including the potential loss of accreditation.

See “Risk Factor - If one or more of our institutions fails to maintain institutional accreditation, or if certain of our programs

cannot obtain or maintain programmatic accreditation, our student enrollments would diminish and our business would suffer .”

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 American Veterinary Medical

Integrity’s Registered Nurse to Bachelor of Science in Nursing holds pre-accreditation candidacy status from the Commission

for Nursing Education Accreditation.

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.

to comply with accreditation standards could subject an institution to additional requirements, sanctions, and consequences including

the potential loss of accreditation.

See “Risk Factor - If one or more of our institutions fails to maintain institutional accreditation,

or if certain of our programs cannot obtain or maintain programmatic accreditation, our student enrollments would diminish, and our business

would suffer .”

Programmatic Accreditation .

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 American Veterinary Medical Association.

Registered Nurse to Bachelor of Science in Nursing has received initial accreditation from the Commission for Nursing Education Accreditation.

Additionally, CCC is pursuing initial programmatic accreditation with ABHES for the Surgical Technology Associate of Applied Science program

for consideration during the Spring 2026 visit cycle.

The Associate of Applied Science in Surgical Technology at CCMCC is accredited by

ABHES and will engage in reaccreditation in the Spring 2026 visit cycle.

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.

Recognition of Accrediting Agencies.

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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, and are the subject of upcoming rulemaking.

ED held negotiated

rulemaking sessions between January and March 2024, and the negotiators did not reach consensus on proposed language.

ED proposed expanding

requirements related to accrediting agencies’ conflict of interest policies and student achievement standards, for example.

July 17, 2024, ED announced that proposed rules related to cash management, state authorization and accreditation will be published by

ED has indicated during negotiated rulemaking its intent to require accreditors to take action against institutions more promptly

when accreditors identify noncompliance and to modify accreditor review of substantive changes and limit the time an institution can

remain in noncompliance with accrediting agency standards, which could increase the amount of enforcement activities by accrediting agencies

against institutions like ours.

ED also proposed expanding requirements related to accrediting agencies’ conflict of interest policies

and student achievement standards, for example.

focus may make the accreditation review process longer and potentially more challenging for our institutions when they undergo their

normal accreditation review processes.

It may also make the process by which ED evaluates and recognizes accreditors as appropriate Title

IV Program gatekeepers longer and more challenging for our accreditors.

ED recognized accreditors are facing increased political pressure

as part of this recognition process to apply heightened levels of scrutiny or review and/or apply new requirements or standards to for-profit

institutions.

These pressures may result in future modifications to accreditation criteria, practices or other policies and procedures,

with which our institutions may not be able to comply.

If ED withdraws recognition from ACCET and/or ABHES, 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 the other ED-recognized accrediting 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 quired time period, our schools could lose eligibility to participate in Title IV

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 proposed expanding requirements related to accrediting

agencies’ conflict of interest policies and student achievement standards, for example.

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.

ED withdraws recognition from ACCET and/or ABHES, 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 the other ED-recognized accrediting 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.

Congressional

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condition and results of operations.

However, recent elections have increased the number and influence of legislators and regulators

who have been critical of the for-profit postsecondary education sector that includes our institutions, which has led and could continue

to lead to significant legislative changes in connection with amendments to the HEA, annual appropriations, or other changes to laws,

that have been and may continue to be adverse to our institutions and other for-profit institutions.

Moreover, current requirements for

student or school participation in Title IV Programs may change or one or more of the present Title IV Programs could be replaced by

other programs with materially different student or school eligibility requirements.

For example, ARPA was signed into law in March 2021

and included, among other things, a provision that amended the 90/10 Rule in the HEA.

See “Risk Factors - Our institutions could

lose their eligibility to participate in federal student financial aid programs if the percentage of their revenues derived from applicable

federal student aid programs is too high.” If we cannot comply with the provisions of the HEA, as they may be enforced or amended,

or if the cost of such compliance is excessive, or if funding is materially reduced, our revenues or profit margin could be materially

adversely affected.

Current requirements for student or school participation in Title IV Programs may change or one

or more of the present Title IV Programs could be replaced by other programs with materially different student or school eligibility

requirements.

For example, the American Rescue Plan Act of 2021 (“ARPA”) was signed into law in March 2021 and included,

among other things, a provision that amended the 90/10 Rule in the HEA.

See “Risk Factors - Our institutions could lose their

eligibility to participate in the Title IV programs if the percentage of their revenues derived from applicable federal educational student

aid programs is too high.” If we cannot comply with the provisions of the HEA, as they may be enforced or amended, or if the

cost of such compliance is excessive, or if funding is materially reduced, our revenues or profit margin could be materially adversely

recently, on July 4, 2025, the President signed into law the One Big Beautiful Bill Act (“OBBBA”), which has a general effective

date of July 1, 2026 and makes changes to the HEA, including the Title IV programs.

ED intends to conduct a negotiated rulemaking process

in 2025 for the purpose of establishing new regulations impacting 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.

Among other things, the

OBBBA establishes limits on the amount of Title IV loans students and parents can borrow.

These limits will not apply to students that

will be enrolled as of the effective date, up until their expected time of completion as defined by the OBBBA.

The OBBBA establishes

a limit of $20,000 annually and $65,000 in total for PLUS loans taken out by parent borrowers for undergraduate programs.

The OBBBA also

creates a lifetime loan limit of $257,500 for all borrowers.

It also requires institutions to prorate loans for students attending less

than full-time.

We are in the process of evaluating the impact these loan limitations may have on our institutions and enrollments and

the extent to which alternative sources of funding such as third-party loans may be needed for some of our students.

OBBBA also establishes a new accountability measure that applies to our degree programs and that is based on a comparison of

graduate earnings to the earnings of working adults without degrees under a complex formula that ED is expected to address in future

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

Our institutions offer a limited number of associate degree programs that will be subject to the new accountability

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.

OBBBA also restricts student eligibility for the Pell Grant by disqualifying students with a student aid index that equals or exceeds

twice the 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 extent this change might impact

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.

The eligibility requirements include criteria related to the program’s length and

a determination of eligibility by the state.

Many of our programs are longer than the eligibility requirements, but we are evaluating

whether opportunities exist for other current or future programs at our institutions.

Additionally,

the OBBBA delays the effective date of the 2022 version of the revised borrower defense to repayment regulations and closed school loan

discharge regulations for ten years, until July 1, 2035.

See “Education Regulations - Borrower Defense to Repayment Regulations.”

Congressional

committees and members actively continue to propose and consider legislation on a wide range of topics related to the Title IV programs

that could impact further the amount of Title IV funding available to schools and students and impose additional accountability requirements

on institutions and also that could eliminate or modify certain rules that are less favorable to schools like ours.

However, the process

of Congressional passage of new legislation is ongoing, is subject to further negotiation and amendment, and is further subject to Congressional

Therefore, the timing and outcome of this process and the scope of any additional legislation that might be enacted cannot

be predicted with any certainty at this time.

We are continuing to monitor the process.

As previously reported, there are indications based on recent elections that the new administration, and potentially

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 the Company’s 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.

“Education Regulations – Opening Additional Campuses and Adding Educational Programs.”

March 2025, the President 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.

to monitor developments in this area, but cannot yet predict whether the administration or Congress will be successful in closing 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.

We also cannot predict the success of any litigation challenging any efforts to close or restructure ED.

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.

Value Transparency and Gainful Employment Regulations.

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Multiple lawsuits

have been filed challenging these regulations, however, we cannot predict the outcome of these cases.

The financial value transparency

and gainful employment regulations include standards for annually evaluating postsecondary educational programs based on the calculation

of debt-to-earnings rates and an “earnings premium” measure.

The rule establishes formulae for calculating these rates using

data such as student debt, student earnings data, and median earnings data for working adults with only a high school diploma or GED,

which the rule uses to compare to median earnings data of the institution’s graduates.

Under the regulations, ED will annually

calculate and publish the debt-to-earnings rates and median earnings data for our educational programs.

If these calculations show that

any of our educational programs do not comply with debt-to-earnings or median earnings regulatory thresholds for two of three consecutive

years, those educational programs would lose Title IV Program eligibility.

ED also requires institutions to provide warnings to current

and prospective students about programs in danger of losing of Title IV Program eligibility which could negatively impact our retention

of current students and enrollment of new students in these programs.

The regulations also require certifications and data reporting

to ED and providing required student disclosures related to gainful employment.

Some of the data ED will use to calculate the debt-to-earnings

rates and earnings premium measures is not yet readily accessible to institutions.

Therefore, it is difficult for us to predict how our

institutions will perform under the new standards and the extent to which our programs could lose Title IV Program eligibility under

the new standards.

We also do not have control over some of the factors that could impact the rates and measures for our programs which

could make it difficult to mitigate the impact of the regulations on our programs.

However, the new regulations could require us to modify

or eliminate programs to comply with the new regulations and could result in the loss of Title IV Program eligibility for our programs

that fail to comply with the regulations which could have a material adverse effect on our student population and our revenues.

were filed challenging these regulations, and these were consolidated into one case.

We cannot predict the outcome of this case.

financial value transparency and gainful employment regulations include standards for annually evaluating postsecondary educational programs

based on the calculation of debt-to-earnings rates and an “earnings premium” measure.

The rule establishes formulae for calculating

these rates using data such as student debt, student earnings data, and median earnings data for working adults with only a high school

diploma or GED, which the rule uses to compare to median earnings data of the institution’s graduates.

Under the regulations, ED

will annually calculate and publish the debt-to-earnings rates and median earnings data for our educational programs.

If these calculations

show that any of our educational programs do not comply with debt-to-earnings or median earnings regulatory thresholds for two of three

consecutive years, those educational programs would lose Title IV Program eligibility.

ED also requires institutions to provide warnings

to current and prospective students about programs in danger of losing of Title IV Program eligibility which could negatively impact

our retention of current students and enrollment of new students in these programs.

The regulations also require certifications and data

reporting to ED and providing required student disclosures related to gainful employment.

Some of the data ED will use to calculate the

debt-to-earnings rates and earnings premium measures is not yet readily accessible to institutions.

Therefore, it is difficult for us

to predict how our institutions will perform under the new standards and the extent to which our programs could lose Title IV Program

eligibility under the new standards.

We also do not have control over some of the factors that could impact the rates and measures for

our programs which could make it difficult to mitigate the impact of the regulations on our programs.

However, the new regulations could

require us to modify or eliminate programs to comply with the new regulations and could result in the loss of Title IV Program eligibility

for our programs that fail to comply with the regulations which could have a material adverse effect on our student population and our

As noted elsewhere, our degree programs also will be subject to a new separate earnings measure under the OBBBA.

Factor - ED’s financial value transparency and gainful employment regulations may limit the programs we can offer students and

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other things, the revised 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 is received on or after, or pending with ED as of

of the obligation to repay certain Title IV Program loans when the BDR applications are received on or after, or pending with ED as of

July 1, 2023.

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BDR regulations were to take effect on July 1, 2023, in addition to certain closed school loan discharge provisions part of the same

rule, but are currently enjoined by the U.S.

Court of Appeals for the Fifth Circuit, pursuant to litigation captioned Career Colleges

and Schools of Texas v.

Department of Education, No.

The Career Colleges and Schools of Texas (“CCST”) filed

a complaint challenging the regulations in February 2023.

In April 2024, the Fifth Circuit granted a preliminary injunction to block

enforcement of the revised 2022 version of the BDR regulations while the case is pending.

Therefore, the amendments to the BDR regulations

that were to take effect on July 1, 2023 are not in effect, but the previous BDR regulations in effect prior to July 1, 2023, generally

remain in effect in the meantime and apply different substantive standards and procedures based on when a BDR claimant’s loans

were disbursed.

We cannot predict the outcome of this case or if and when the revised BDR regulations could take effect.

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 revised 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, the amendments

to the BDR regulations that were to take effect on July 1, 2023 are not in effect, but the previous BDR regulations in effect prior to

July 1, 2023, generally remain in effect in the meantime and apply different substantive standards and procedures based on when a BDR

claimant’s loans were disbursed.

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 will 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.

Integrity have not received any BDR applications from Post-Class Applicants.

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 will 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, and CCMCC (at least since we acquired CCMCC) have not received 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.

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

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 “Financial Responsibility Standards.”

current ED administration has been more active in processing BDR applications and has recently distributed claims to institutions for

an opportunity to respond to borrower allegations.

ED may, on its own or in response to other constituencies, allocate additional resources

to reviewing and adjudicating BDR applications from federal student loan borrowers.

We cannot predict how many BDR applications have

been filed by our former students, but if we receive such claims from ED, we may incur significant costs in responding to the borrower

allegations and, if adjudicated as valid by ED, repaying the federal government for the amount of loans discharged pursuant to such claims.

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 “Education Regulations

- Financial Responsibility Standards.”

recent years, ED has been more active in processing BDR applications and has recently distributed claims to institutions for an opportunity

to respond to borrower allegations.

ED may, on its own or in response to other constituencies, allocate additional resources to reviewing

and adjudicating BDR applications from federal student loan borrowers.

We cannot predict how many BDR applications have been filed by

our former students, but if we receive such claims from ED, we may incur significant costs in responding to the borrower allegations

and, if adjudicated as valid by ED, repaying the federal government for the amount of loans discharged pursuant to such claims.

also grants closed school loan discharges to students when it determines the student’s institution or campus has closed.

When an institution

or location meets ED’s definition of a closed school or location, affected students can apply for a discharge of the Title IV loans

incurred for the program of study the student did not complete due to the closure, and ED grants the discharge if the student meets certain

requirements.

ED also may seek to recover the cost of the discharge from the institution.

If any of our locations or institutions close,

our institutions could be subject to liabilities for closed school loan discharges.

In conjunction with the 2022 revisions to the BDR

rule, ED also revised the closed school loan discharge provisions.

However, these revisions are also enjoined as well as delayed under

We cannot predict the outcome of any future revisions to the closed school loan discharge provisions that ED may initiate.

Revenue Test.

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 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 exceeds 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 “Financial

Responsibility Standards.” 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 require the institution to repay all Title IV Program funds received by the

institution after the effective date of the loss of eligibility.

have calculated the 90/10 Rule percentage for the 2023, 2022 and 2021 fiscal years as follows for HDMC, CCC and Integrity:

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 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 exceeds 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 “Education Regulations - Financial Responsibility Standards.” 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

require the institution to repay all Title IV Program funds received by the institution after the effective date of the loss of

We have calculated the 90/10 Rule percentage

for the 2024, 2023, and 2022 fiscal years as follows for HDMC, CCC, and Integrity:

HDMC 87.55%, 84.53%, and 82.17%;

74.48%, and 72.34%;

CCC 74.48%, 72.34% and 71.18%;

and Integrity 84.19%, 88.14%, and 85.43%, respectively.

Our 90/10 calculations are subject

to review and potential recalculation by ED.

As a result, we do not expect the ARPA amendment to the 90/10 Rule to apply to our 90/10

Rule percentages until our 2023 fiscal year.

In addition, the 90/10 Rule is complex and there is some ambiguity in certain technical

aspects of the calculation methodology by ED under the 90/10 Rule.

If ED comes out with additional guidance of 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 percent.

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.

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 require the institution to repay all Title IV Program funds received by the institution after the effective date

of the loss of eligibility.

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 calculation.

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 will be the fiscal year 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 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.

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 our operations in order to maintain compliance.

ED regulations restrict the ability of instructions to limit the amount of Title IV Program loans that students and parents may borrow

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 by ED under the 90/10

If ED comes out with additional guidance of 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%.

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 require the

institution to repay all Title IV Program funds received by the institution after the effective date of the loss of eligibility.

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 calculation.

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.

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 year 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 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 our operations in order to maintain compliance.

regulations have restricted the ability of institutions to limit the amount of Title IV Program loans that students and parents may borrow

which can impact our ability to control compliance with the 90/10 Rule at our institutions.

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 investigation

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.

However, under a provision of the OBBBA that

will be 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 investigation 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.

to reduce the 90/10 Rule percentage for our institutions have and may in the future involve taking measures that involve interpretations

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would have negative impacts on our operations .”

September 2023, ED released the final cohort default rates for the 2020 federal fiscal year.

These are the most recent final rates published

The rates for our existing institutions for the 2020, 2019, and 2018 federal fiscal years are as follows:

In September 2025, ED released the final cohort

default rates for the 2022 federal fiscal year.

These are the most recent final rates published by ED.

The rates for our existing institutions

for the 2022, 2021, and 2020 federal fiscal years are as follows:

HDMC 0%, 0%, and 0%;

CCC 0%, 0% and 0%;

and Integrity 0%, 2.5%, and 4.0%., respectively Consequently, none of our institutions had a cohort default rate

equal to or greater than 30% for the 2020, 2019, or 2018 federal fiscal years.

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 the suspension expired if borrowers do not

timely repay their federal student loans.

Integrity 0%, 0%, and 0%;

CCMCC 0%, 0%, and 0%, respectively.

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.

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.

Responsibility Standards.

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financial responsibility measurement is the institution’s composite score, which is calculated by ED based on three ratios:

equity ratio, which measures the institution’s capital resources, ability to borrow and financial viability;

primary reserve ratio, which measures the institution’s ability to support current operations from expendable resources;

net income ratio, which measures the institution’s ability to operate at a profit.

the equity ratio, which

measures the institution’s capital resources, ability to borrow and financial viability;

the primary reserve ratio,

which measures the institution’s ability to support current operations from expendable resources;

the net income ratio, which

measures the institution’s ability to operate at a profit.

assigns a strength factor to the results of each of these ratios on a scale from negative 1.0 to positive 3.0, with negative 1.0 reflecting

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that institution may establish its eligibility to participate in the Title IV Programs on an alternative basis by, among other things:

a letter of credit in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the

institution’s most recently completed fiscal year;

a letter of credit in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently

completed fiscal year accepting provisional certification;

complying with additional ED monitoring requirements and agreeing to receive

Title IV Program funds under an arrangement other than ED’s standard advance funding arrangement.

posting a letter of credit

in an amount equal to at least 50% of the total Title IV Program funds received by the institution during the institution’s

most recently completed fiscal year;

posting a letter of credit

in an amount equal to at least 10% of the Title IV Program funds received by the institution during its most recently completed fiscal

year accepting provisional certification;

complying with additional ED monitoring requirements and agreeing to receive Title IV Program

funds under an arrangement other than ED’s standard advance funding arrangement.

in the future, we are required to satisfy ED’s standards of financial responsibility on an alternative basis, including potentially

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including loss of Title IV Program eligibility.

annually evaluates the financial responsibility of HDMC, CCC, and Integrity on a consolidated basis.

We have calculated our composite

score for the 2023 fiscal year to be 3.0;

however, this score is subject to determination by ED based on its review of our consolidated

audited financial statements for the 2023 fiscal year.

However, if our composite scores in the future were to decrease, we may become

subject to the additional requirements noted above or our Title IV Program eligibility could be affected.

We cannot predict how long

it will take ED to make its determination or the outcome of its determination.

On January 30, 2024, due to a failure to timely return

unearned Title IV funds to ED, Integrity was required to submit an acceptable form of financial protection for 25% of the refunds that

were made for the fiscal year ended June 30, 2023 in the amount of $18,828.

ED annually evaluates the financial responsibility

of HDMC, CCC, Integrity, and CCMCC on a consolidated basis.

We have calculated our composite score for the 2024 fiscal year to be 3.0;

however, this score is subject to determination by ED based on its review of our consolidated audited financial statements for the 2024

Our next composite score will be calculated based on audited financial statements for the 2025 fiscal year due for submission

to ED by December 31, 2025.

We expect the composite score for the 2025 fiscal year to exceed 1.5, but the final composite score is subject

to our final calculation and to determination by ED based on its review of our consolidated financial statements for the 2025 fiscal year.

However, if our composite scores in the future were to decrease, we may become subject to the additional requirements noted above or our

Title IV Program eligibility could be affected.

We cannot predict how long it will take ED to make its determination or the outcome of

its determination.

On January 30, 2024, due to a failure to timely return unearned Title IV funds to ED, Integrity was required to submit

an acceptable form of financial protection for 25% of the refunds that were made for the fiscal year ended June 30, 2023 in the amount

October 31, 2023, ED published final regulations with a general effective date of July 1, 2024 that, among other things, amended the

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The mandatory triggering events include:

institution with a composite score of less than 1.5 has a recalculated composite score of less than 1.0 as determined by ED as a

result of an institutional liability from a monetary award or judgment or settlement resulting from a legal proceeding;

institution (or an entity that has submitted financial statements to ED in connection with a change in ownership) is subject to a

government enforcement action (sued by a federal or state authority or via a qui tam action) and the action has been pending for

120 days and no motion to dismiss is pending or has been granted;

institution’s recalculated composite score is less than 1.0 after ED initiates action to recoup funds from institution after

BDR claim decided in borrower’s favor;

institution or entity that submitted an application with ED for a change of ownership has a recalculated composite score is less

than 1.0 after a final monetary judgment, award or settlement that was entered against it at any point through the end of the second

full fiscal year after the change of ownership;

proprietary institution with a composite score of less than 1.5 or that underwent a change of ownership in the current or previous

fiscal year has a recalculated composite score of.

less than 1.0 as determined by ED as a result of a withdrawal of owner’s

equity from the institution unless certain exceptions apply;

least half of Title IV funds in the institution’s most recently completed fiscal year are for “failing” gainful

employment programs;

institution is required to submit a teach-out plan due to financial concerns;

SEC takes certain actions against a publicly listed entity that directly or indirectly owns at least 50% of an institution or such

entity fails to comply with certain filing requirements;

institution did not receive at least 10 percent of its revenue from sources other than Federal educational assistance as calculated

under 90/10 rule during its most recently completed fiscal year;

institution’s two most recent cohort default rates are 30 percent or greater, unless a pending appeal could reduce one of the

institution’s composite score is less than 1.0 when recalculated to reflect the offset of distribution after a contribution;

institution or entity included in financial statements is subject to adverse or impermissible conditions under a financing arrangement

as a result of ED action;

institution declares financial exigency to government agency or accrediting agency;

institution or an owner files for a receivership or is ordered to appoint a receiver.

an institution with a composite

score of less than 1.5 has a recalculated composite score of less than 1.0 as determined by ED as a result of an institutional liability

from a monetary award or judgment or settlement resulting from a legal proceeding;

an institution (or an entity

that has submitted financial statements to ED in connection with a change in ownership) is subject to a government enforcement action

(sued by a federal or state authority or via a qui tam action) and the action has been pending for 120 days and no motion to dismiss

is pending or has been granted;

the institution’s

recalculated composite score is less than 1.0 after ED initiates action to recoup funds from institution after BDR claim decided

in borrower’s favor;

an institution or entity

that submitted an application with ED for a change of ownership has a recalculated composite score is less than 1.0 after a final

monetary judgment, award or settlement that was entered against it at any point through the end of the second full fiscal year after

the change of ownership;

a proprietary institution

with a composite score of less than 1.5 or that underwent a change of ownership in the current or previous fiscal year has a recalculated

composite score of.

less than 1.0 as determined by ED as a result of a withdrawal of owner’s equity from the institution unless

certain exceptions apply;

at least half of Title

IV funds in the institution’s most recently completed fiscal year are for “failing” gainful employment programs;

the institution is required

to submit a teach-out plan due to financial concerns;

the SEC takes certain actions

against a publicly listed entity that directly or indirectly owns at least 50% of an institution or such entity fails to comply with

certain filing requirements;

the institution did not

receive at least 10 percent of its revenue from sources other than Federal educational assistance as calculated under 90/10 rule

during its most recently completed fiscal year;

the institution’s

two most recent cohort default rates are 30 percent or greater, unless a pending appeal could reduce one of the rates;

the institution’s

composite score is less than 1.0 when recalculated to reflect the offset of distribution after a contribution;

the institution or entity

included in financial statements is subject to adverse or impermissible conditions under a financing arrangement as a result of ED

the institution declares

financial exigency to government agency or accrediting agency;

the institution or an owner

files for a receivership or is ordered to appoint a receiver.

also may determine that an institution lacks financial responsibility if one or more of the following discretionary triggering events

occurs and the event is likely to have a significant adverse effect on the financial condition of the institution:

show cause or similar order from the institution’s accrediting agency or a government authority;

notice from the institution’s state authorizing or licensing agency of an intent to withdraw or terminate the institution’s

state authorization or licensure if the institution does not take steps to comply with state requirements;

institution (or an owner entity covered by the regulation) is subject to a default, delinquency, or other adverse creditor event

or to a condition not permitted under the regulation under or related to a loan agreement or other financing agreement or has a judgement

awarding monetary relief entered against it that is subject to appeal or under appeal;

is a significant fluctuation in Pell Grant and/or Direct Loans received by an institution during a period of award years;

annual drop-out rates from the institution as determined by ED;

requires the institutions to provide additional financial reporting due to a failure to meet financial responsibility standards or

indicators of significant change in the financial condition of the institution;

forms a group process to consider pending borrower defense to repayment claims that could be subject to recoupment;

program is discontinued that enrolls more than 25% of the institution’s total enrolled students who receive Title IV Program

institution closes a location that enrolls more than 25% of its total enrolled students who receive Title IV Program funds;

institution, or one of its programs, is cited by a State agency for failing to meet requirements;

institution, or one of its programs, loses eligibility to participate in another Federal educational assistance program;

publicly traded company that directly or indirectly owns at least 50% of the institution discloses in public securities exchange

filing that it is under investigation for possible violation of law;

institution is cited by another federal agency and risks losing education assistance funds by that agency;

institution is required to submit a teach-out plan due to concerns other than those constituting a mandatory triggering event;

other event or condition that ED finds is likely to have significant adverse effect on the financial condition of the institution.

a show cause or similar

order from the institution’s accrediting agency or a government authority;

a notice from the institution’s

state authorizing or licensing agency of an intent to withdraw or terminate the institution’s state authorization or licensure

if the institution does not take steps to comply with state requirements;

the institution (or an

owner entity covered by the regulation) is subject to a default, delinquency, or other adverse creditor event or to a condition not

permitted under the regulation under or related to a loan agreement or other financing agreement or has a judgement awarding monetary

relief entered against it that is subject to appeal or under appeal;

there is a significant

fluctuation in Pell Grant and/or Direct Loans received by an institution during a period of award years;

high annual drop-out rates

from the institution as determined by ED;

ED requires the institutions

to provide additional financial reporting due to a failure to meet financial responsibility standards or indicators of significant

change in the financial condition of the institution;

ED forms a group process

to consider pending borrower defense to repayment claims that could be subject to recoupment;

a program is discontinued

that enrolls more than 25% of the institution’s total enrolled students who receive Title IV Program funds;

the institution closes

a location that enrolls more than 25% of its total enrolled students who receive Title IV Program funds;

the institution, or one

of its programs, is cited by a State agency for failing to meet requirements;

the institution, or one

of its programs, loses eligibility to participate in another Federal educational assistance program;

a publicly traded company

that directly or indirectly owns at least 50% of the institution discloses in public securities exchange filing that it is under

investigation for possible violation of law;

the institution is cited

by another federal agency and risks losing education assistance funds by that agency;

the institution is required

to submit a teach-out plan due to concerns other than those constituting a mandatory triggering event;

any other event or condition

that ED finds is likely to have significant adverse effect on the financial condition of the institution.

regulations require an institution to notify ED of the occurrence of a mandatory or discretionary triggering event and, in some cases,

provide an opportunity to provide certain information to ED to demonstrate why the event does not establish the institution’s lack

provide an opportunity to submit certain information to ED to demonstrate why the event does not establish the institution’s lack

of financial responsibility or require the submission of a letter of credit and impose other conditions or requirements.

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access to Title IV Program funds, which would materially and adversely reduce the enrollments and revenues of our institutions.

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 how ED will address these requirements or the impact the changes to financial

responsibility requirements may have on our schools.

of Title IV Program Funds.

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proposed amended regulations related to return of Title IV calculations.

Our institutions are required to perform return of Title IV

calculations and the final version of the amended regulations may impact our performance of these mandatory calculations.

We cannot predict

the ultimate timing, content and effective date of the final amended regulations, or any future rulemaking process by ED that would result,

though it is possible such future regulations are more onerous or could negatively impact our institutions.

ED published the final regulations on January 3, 2025, with

a general effective date of July 1, 2026.

The regulations codify ED’s guidance requiring the date of determination of withdrawal

to be documented within 14 days after the student’s last date of attendance for institutions that take attendance;

remove the option

for clock-hour programs to use the “cumulative” method to calculate Title IV earned;

and changes Return of Title IV calculations

for programs offered in modules.

We are evaluating whether and the extent to which the new regulations may negatively impact our performance

of return of title IV.

ED has promulgated a substantial number of new regulations in recent years that impact our business, including, but

not limited to, the “borrower defense to repayment” regulations discussed in the risk factors above, as well as rules regarding

not limited to, the “borrower defense to repayment” regulations discussed in the risk factors below, as well as rules regarding

compensation for persons engaged in certain aspects of admissions and financial aid, state authorization, clock and credit hours, prohibitions

on “substantial misrepresentations,” gainful employment, certification procedures, financial responsibility, administrative

capability, ability to benefit, closed school loan discharges, the 90/10 Rule, changes in ownership, Title IX, and other topics.

and other regulations have had significant impacts on our business, requiring a large number of reporting and operational changes and

resulting in changes to and elimination of certain educational programs.

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.

Recent and upcoming elections may result in changes at ED and other federal agencies

that are likely to lead to future regulatory actions that could be aimed at for-profit postsecondary institutions like our institutions.

See “Risk Factors - Our institutions could lose their eligibility to participate in federal student financial aid programs if

the percentage of their revenues derived from applicable federal student aid programs is too high.” In October through December

2023, ED conducted negotiated rulemaking to develop new regulations related to student debt relief.

In addition, in January through March

2024, ED conducted negotiated rulemaking to prepare proposed regulations on a variety of topics including but not limited to cash management,

state authorization, distance education, return of Title IV, and accreditation.

On July 24, 2024, ED published proposed regulations to

the Federal Register related to return of Title IV calculations and distance education.

Our institutions are required to perform return

of Title IV calculations and the upcoming final version of the regulations may impact our performance of these mandatory calculations.

If our institutions begin offering distance education programs, the proposed rules on distance education could impact our reporting requirements

and our performance of the return of Title IV calculation.

If ED publishes final regulations by November 1, 2024, the regulations typically

would have a general effective date of July 1, 2025.

On July 17, 2024, ED announced that proposed rules related to cash management, state

authorization and accreditation will be published by next year.

We cannot predict the ultimate timing, content and effective date of

the regulations that will emerge from these processes.

ED could consider additional topics for proposed regulations during the negotiated

rulemaking process or by initiating additional rulemaking processes.

On July 17, 2024, ED announced that it will conduct negotiated rulemaking

on third-party servicer requirements for institutions and servicers but did not provide a timeline.

The negotiated rulemaking process

is likely to lead to future ED regulations that could negatively impact schools like ours.

ED also has announced its intention to propose

regulations that would increase the information security requirements applicable to institutions participating in the Title IV Programs,

including with respect to sensitive personal data residing in school information systems, but we cannot predict the ultimate timing,

content, and impact of any regulations ED might propose and ultimately adopt.

capability, ability to benefit, closed school loan discharges, the 90/10 Rule, changes in ownership, Title IX, cash management, return

of Title IV funds, distance education, accreditation and other topics.

These and other regulations have had significant impacts on our

business, requiring a large number of reporting and operational changes and resulting in changes to and elimination of certain educational

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 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 and to monitor the negotiated rulemaking

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.

We cannot predict the ultimate timing, content, and impact of any regulations and guidance ED might propose

and ultimately adopt.

In addition, the President directed federal agencies 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

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, and financial responsibility requirements,

civil rights investigations, and privacy of education records.

Whether via sub-regulatory guidance or a rulemaking process, we 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.

cannot predict with certainty the ultimate combined impact of the regulatory changes which have occurred in recent years, nor can we

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timely submits certain documentation during the course of ED’s review.

ED’s 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.

time required for ED to act on such an application may vary substantially.

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have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Education Antioch, LLC, a wholly-owned subsidiary of Legacy LLC (as defined herein) (the “Buyer”) entered into the APA with

Legacy Education Inc., Legacy Education, LLC, a wholly-owned subsidiary of the Company (“Legacy LLC” and together with the

Company and the Buyer, the “Buyer Parties”), CCMCC, Contra Costa Medical Career College Online, Inc.

(“CCMCC Online”

and together with CCMCC, “Sellers”) and, solely with respect to certain portions of the APA, Stacey Orozco and Bulmaro Orozco,

the sole owners CCMCC and CCMCC Online (the “CCMCC Transaction”).

The CCMCC Transaction was consummated on December 18, 2024.

a company acquires an institution that is eligible to participate in the Title IV Programs, like CCMCC, 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

educational 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-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.

Legacy timely submitted a materially complete change in

ownership application to ED and CCMCC is now a party to a temporary provisional program participation agreement (“TPPPA”)

that allows CCMCC to continue participating in the Title IV Programs.

CCMCC also timely filed the required documentation for the TPPPA

to remain in effect during ED’s review of the change of ownership.

On March 11, 2025, CCMCC provided additional financial information

requested by ED.

TPPPA contains conditions on its participation in the Title IV Programs that are typically imposed by ED when a change of ownership occurs.

These conditions include restrictions on growth (e.g., the addition of new programs and locations, increase in credential level, change

in program length), bi-weekly and monthly financial reporting, and a reporting requirement related to certain types of student complaints.

If CCMCC does not timely comply with these reporting requirements, or its reports contain information of concern to ED, ED may request

further information from CCMCC or the Company or take action against CCMCC or the Company.

cannot predict the timing or outcome of ED’s review of the change of ownership of CCMCC.

The time required for ED to act on such

an application for approval of a change of ownership resulting in a change of control may vary substantially.

ED recertification of an

institution following a change of control will be on a provisional basis if ED approves the institution’s application and could

contain restrictions or conditions depending on the outcome of its review of the institution under the new ownership including its administrative

capability and financial stability.

approval processes for state and accrediting agencies vary in scope and timing with some agencies requiring approval prior to the acquisition

and others not conducting their review until after the acquisition has taken place.

With regard to the agencies that accredit CCMCC and

CCMCC Online, authorize them to operate in the state of California, or approve their programs:

Bureau for Private Postsecondary Education (“BPPE”) :

Institutions that are licensed by BPPE by means of accreditation,

like CCMC, are required to notify BPPE of the change within 30 days of the change and demonstrate that the substantive change was

made in accordance with the institution’s accreditation standards.

CCMCC submitted an Application for a Change of Business

Organization/Control/Ownership to BPPE on January 16, 2025 which included ACCET’s approval of the change of ownership.

dated January 31, 2025, BPPE approved CCMCC to operate under its new ownership.

Council for Continuing Education and Training (“ACCET”) :

ACCET accreditation standards require that institutions

undergoing a change in ownership or control submit notice at least ten days prior to a prospective agreement for the change.

also requires submission of an application for approval of the change in ownership or control within ten days following the change.

CCMCC submitted the application on December 27, 2024.

By letter dated January 15, 2025, ACCET provisionally reinstated CCMCC’s

accreditation following the change in ownership, and by letter dated September 4, 2025, ACCET granted final approval of the change

of ownership.

California State Approving

Agency for Veterans Education (“CSAAVE”) :

CSAAVE requires approved institutions to make a post-change submission

to CSAAVE for approval of the change when there has been a material change to the institution’s current approval.

CCMCC provided

notice to CSAAVE of the change on November 12, 2024, and submitted the change of ownership forms.

On April 28, 2025, CCMCC provided additional

information to CSAAVE regarding its reapproval and on May 1, 2025, CSAAVE approved the application.

Accreditation Bureau

of Health Education Schools (“ABHES”) :

ABHES requires institutions that hold ABHES programmatic accreditation to

notify it of any change in organizational oversight or legal structure, and to submit a completed application for change in legal

status, ownership, or control within five days after the change.

CCMCC submitted the application on December 23, 2024.

dated January 29, 2025, ABHES approved the change in ownership.

California Board of

Vocational Nursing and Psychiatric Technicians (“BVNPT”) :

BVNPT instructed CCMCC to submit formal notification of

the change of ownership after receiving BVNPT’s approval to admit a new class of students.

CCMCC received such approval on

February 4, 2025 and submitted the required form for the change of ownership on February 12, 2025, and is awaiting approval.

California Department

of Public Health, Laboratory Field Services (“CDPH”) :

CDPH requires certain training programs undergoing a change

of ownership to notify CDPH within 30 days after the change has occurred and submit a new application package.

CCMCC notified CDPH

of the change and submitted the application on February 6, 2025, and is awaiting approval.

agencies require us to obtain other approvals in connection with the CCMCC Transaction, we will be required to undergo an application

process for approvals from the applicable agencies and could be subject to conditions or restrictions (or loss of approval) depending

on the outcome of the approval process.

If any applicable agencies determine that we did not follow required procedures in providing

notification and seeking approval of the CCMCC Transaction, or if any agencies do not approve the CCMCC Transaction, we could be subject

to sanctions by the applicable agencies including loss of CCMCC’s approvals from these agencies.

In addition to school acquisitions, other types of transactions can also cause a change of control.

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from the states and our accreditors vary widely.

July 30, 2024, ED provided written confirmation the offering as described would not constitute a change of control under its regulations.

However, subsequent offerings, transactions or other events could be deemed to be a change of control in the future.

requires institutions to periodically report changes in ownership even when a change does not result in a change in control or require

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or restrictions imposed by ED on one or more of our institutions.

institutions may encounter difficulty timely identifying and reporting to ED on the electronic application for each of our institutions

our approximately 400 owners following the initial public offering.

institutions may encounter difficulty timely identifying and reporting to ED on the electronic application for each of our institutions’ several hundred owners.

Integrity may also encounter additional difficulty reporting ownership

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to appoint directors could result in a change in ownership or control requiring regulatory approval.

also are in the process of verifying with our education regulators (other than ED) and accreditors whether they will treat the offering

as a change in ownership or control requiring agency approval.

If agencies require us to obtain approvals in connection with the offering,

we will be required to undergo an application process for approvals from the applicable agencies and could be subject to conditions or

restrictions depending on the outcome of the approval process.

We would be required to make or obtain notices and/or approvals prior

to the offering from those agencies that require notice and/or approval to be made or obtained prior to the occurrence of a change in

ownership or control.

If we move forward with the offering without making or obtaining required pre-closing notices and approvals prior

to the offering, we could be subject to sanctions by the applicable agencies including loss of our approvals from these agencies.

We have verified that most of our education regulators and accreditors

do not treat the initial public offering as a change in ownership or control requiring agency approval.

If agencies require us to obtain

approvals in connection with the initial public offering, we will be required to undergo an application process for approvals from the

applicable agencies and could be subject to conditions or restrictions depending on the outcome of the approval process.

notified us that we moved forward with the initial public offering without making or obtaining required pre-closing notices and approvals

prior to the initial public offering, we could be subject to sanctions by the applicable agencies including loss of our approvals from

these agencies.

On July 30, 2024, ED provided written confirmation the initial public offering as described would not constitute a change

of control under its regulations.

However, subsequent offerings, transactions or other events could be deemed to be a change of control

in the future.

regard to the agencies that institutionally accredit our institutions or authorize them to operate in the state of California:

BPPE regulations require that institutions that are authorized based on their accredited status and which undergo a change in ownership

timely submit notice of such change with accompanying documentation to demonstrate that the change was made in accordance with the

applicable accreditation standards.

If BPPE deems the offering to constitute a change in ownership under its regulations, it could

require our institutions to undergo a notification and approval process before the offering takes place, or it may require only a

notification and approval process after the offering.

On August 8, 2024, BPPE responded to our request for guidance regarding a potential

change of ownership process and stated that it would look to the determinations of ABHES and ACCET with respect to the offering.

BPPE also requested that we provide either confirmations from ABHES and ACCET that the offering is not a change of control under

their respective accreditation standards or, if it is considered to be a change of control the approvals of that change from ABHES

and ACCET, as applicable.

As described below, ABHES and ACCET have provided written confirmation that the offering as described would

not constitute a change in legal status, ownership or control under the respective standards.

Based on those responses from ABHES

and ACCET, we are seeking confirmation that our institutions need not undergo an approval process with BPPE prior to the offering.

ABHES accreditation standards require that institutions undergoing a change in legal status, ownership or control submit an application

for approval of the change at least 90 days in advance, and that ABHES must approve the change before it takes place.

ABHES accreditation

standards also require institutions undergoing a change in legal status, ownership or control to submit an additional application

within five days after the change, which would also be subject to ABHES approval.

We requested guidance from ABHES regarding whether

the offering as described will constitute a change in in legal status, ownership or control for the purposes of its accreditation

On August 12, 2024, ABHES provided written confirmation that the offering as described would not constitute a change in

legal status, ownership or control under its standards.

ACCET accreditation standards require that institutions undergoing a change in ownership or control submit a notice at least ten

days prior to such a change, and further submit an application for approval of such a change within ten days following the change.

We requested guidance from ACCET regarding whether the offering as described will constitute a change in ownership or control under

its accreditation standards and confirmation no approval would be required from ACCET.

On September 6, 2024, ACCET provided written

confirmation that the offering as described would not constitute a change in ownership or control under its standards.

agencies may also require pre-closing notice, application or approval (unless those agencies determine the offering is not a change of

control requiring approval), including, for example, AVMA CVTEA (which requires submission of a substantive change report at least 60

days prior to the next CVTEA meeting and approval prior to closing), and the California Board of Registered Nursing (which requires pre-closing

approval of a change of ownership before it occurs and requires post-closing approval of a change in organizational structure).

requested confirmation from AVMA CVTEA and the California Board of Registered Nursing that the offering as described will not be treated

as a change in ownership that requires approval before the offering occurs, but have not received a determination from either agency.

If one or both agencies determines we were required to obtain the agency’s approval prior to the offering under its statutes, rules

or standards, then, as noted above, we could be subject to sanctions by one or both of these agencies including loss of our approvals

from one or both of these agencies.

Other agencies that regulate our institutions have standards requiring post-closing notice and/or

approval or no published standards, such as the VA, and other state boards, but these agencies may determine pre-closing notice and/or

approval is required.

are in the process of initiating communications with our education regulators and accreditors on this subject and have not received responses

as to whether they will treat the offering as a change in ownership or control requiring agency approval.

If we are required to go through

a change of ownership and/or control review process with these agencies, one or more of these agencies could impose additional conditions

or restrictions or delay or decline to issue an approval.

If an agency does not require us to go through a change of ownership and/or

control review process, we may be required to submit notices or other information to the agency which could result in further scrutiny

or inquiries by the agency.

BPPE regulations require that institutions that are authorized based on their accredited status and which undergo a change in ownership timely submit notice of such change with accompanying documentation to demonstrate that the change was made in accordance with the applicable accreditation standards.

On August 8, 2024, BPPE responded to our request for guidance regarding a potential change of ownership process and stated that it would look to the determinations of ABHES and ACCET with respect to the initial public offering.

As described below, ABHES and ACCET have provided written confirmation that the initial public offering as described would not constitute a change in legal status, ownership or control under the respective standards.

Based on those responses from ABHES and ACCET, we sought confirmation that our institutions need not undergo an approval process with BPPE prior to the offering, and BPPE confirmed on September 11, 2024 that the initial public offering would not be viewed as a change in control and would not require approval from BPPE.

ABHES accreditation standards require that institutions undergoing a change in legal status, ownership or control submit an application for approval of the change at least 90 days in advance, and that ABHES must approve the change before it takes place.

ABHES accreditation standards also require institutions undergoing a change in legal status, ownership or control to submit an additional application within five days after the change, which would also be subject to ABHES approval.

We requested guidance from ABHES regarding whether the initial public offering as described will constitute a change in in legal status, ownership or control for the purposes of its accreditation standards.

On August 12, 2024, ABHES provided written confirmation that the initial public offering as described would not constitute a change in legal status, ownership or control under its standards.

ACCET accreditation standards require that institutions undergoing a change in ownership or control submit a notice at least ten days prior to such a change, and further submit an application for approval of such a change within ten days following the change.

We requested guidance from ACCET regarding whether the initial public offering as described will constitute a change in ownership or control under its accreditation standards and confirmation no approval would be required from ACCET.

On September 6, 2024, ACCET provided written confirmation that the initial public offering as described would not constitute a change in ownership or control under its standards.

The California Board of Registered Nursing requires

pre-closing approval of a change of ownership before it occurs and requires post-closing approval of a change in organizational structure.

We requested confirmation from the California Board of Registered Nursing that the initial public offering as described will not be treated

as a change in ownership that requires approval before the offering occurs, but have not received a determination from the agency.

the California Board of Registered Nursing determines we were required to obtain the agency’s approval prior to the initial public

offering under its statutes, rules or standards, then, as noted above, we could be subject to sanctions by this agency including potential

loss of our approval.

are in the process of initiating communications with our education regulators and accreditors on this subject and have not received

responses as to whether they will treat the initial public offering as a change in ownership or control requiring agency approval.

If we are required to go through a change of ownership and/or control review process with these agencies, one or more of these

agencies could impose additional conditions or restrictions or delay or decline to issue an approval.

If an agency does not require

us to go through a change of ownership and/or control review process, we may be required to submit notices or other information to

the agency which could result in further scrutiny or inquiries by the agency.

change of control could occur as a result of future transactions in which the Company or our institutions are involved.

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may be required to obtain approval of certain educational programs.

Our Integrity institution is provisionally certified and required

to obtain prior ED approval of new locations and educational programs.

If an institution erroneously determines that an educational program

is eligible for purposes of the Title IV Programs, the institution would likely be liable for repayment of Title IV Program funds provided

to students in that educational program.

Our expansion plans are based, in part, on our ability to add new educational programs at our

existing schools and make periodic updates to our programs.

Our Integrity and CCMCC institutions are provisionally certified

and required to obtain prior ED approval of new locations and educational programs.

If an institution erroneously determines that an

educational program is eligible for purposes of the Title IV Programs, the institution would likely be liable for repayment of Title

IV Program funds provided to students in that educational program.

Our expansion plans are based, in part, on our ability to add new

educational programs at our existing schools and make periodic updates to our programs.

addition to ED, some of the state education agencies and our accreditors also have requirements that may affect our schools’ ability

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adverse publicity relating to such matters or the industry generally.

April 5, 2024, the Company executed a Letter of Intent with Contra Costa which describes a potential transaction whereby the Company

would acquire substantially all of the assets of Contra Costa.

The Company contemplates it would teach-out the Contra Costa students

and subsequently establish CCMCC as an additional location of CCC, in each case subject to all required regulatory approvals and the

execution of a definitive agreement with Contra Costa for a mix of cash and Company common stock.

If CCMCC incurs any liabilities associated

with prior noncompliance with applicable laws or ED discharge of Title IV loans for students who do not complete the teach-out, ED could

interpret its rules to require us to assume these liabilities.

If ED or other regulators impose conditions or decline to provide requisite

approvals associated with the acquisition, the teach-out, or the addition of the CCMCC campus as an additional location of CCC, it could

impair our ability to expand our CCC institution through the acquisition of substantially all of the assets of Contra Costa.

Administrative

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On October 31, 2023, ED published new regulations revising and expanding its administrative capability standards.

Those revisions, effective July 1, 2024.

The criteria for administrative capability include, among other things, that the institution:

with all applicable federal student financial aid requirements;

capable and sufficient personnel to administer the Title IV Programs;

the Title IV Programs with adequate checks and balances in its system of internal controls over financial reporting;

the function of authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both

and maintain records required under the Title IV Program regulations;

and apply an adequate system to identify and resolve discrepancies in information from sources regarding a student’s application

for financial aid under the Title IV Programs;

acceptable methods of defining and measuring the satisfactory academic progress of its students;

to the Office of the Inspector General any credible information indicating that any applicant, student, employee, third party servicer

or other agent of the school has been engaged in any fraud or other illegal conduct involving the Title IV Programs;

be, and not have any principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is

cause for debarment or suspension;

adequate financial aid counseling to its students;

in a timely manner all reports and financial statements required by the Title IV Program regulations;

adequate career services and geographically accessible clinical or externship opportunities to it students;

funds to students in a timely manner that best meets their needs;

not have programs that “fail” gainful employment rates and measures and that represent 50 percent or more of its total

receipts under the Title IV Programs in the most recent award year;

not engage in substantial misrepresentations or aggressive and deceptive recruitment tactics;

otherwise appear to lack administrative capability.

Those revisions, effective July 1, 2024, modified the criteria for administrative capability such that they now include, among other

things, that the institution:

comply with all applicable

federal student financial aid requirements;

have capable and sufficient

personnel to administer the Title IV Programs;

administer the Title IV

Programs with adequate checks and balances in its system of internal controls over financial reporting;

divide the function of

authorizing and disbursing or delivering Title IV Program funds so that no office has the responsibility for both functions;

establish and maintain

records required under the Title IV Program regulations;

develop and apply an adequate

system to identify and resolve discrepancies in information from sources regarding a student’s application for financial aid

under the Title IV Programs;

have acceptable methods

of defining and measuring the satisfactory academic progress of its students;

refer to the Office of

the Inspector General any credible information indicating that any applicant, student, employee, third party servicer or other agent

of the school has been engaged in any fraud or other illegal conduct involving the Title IV Programs;

not be, and not have any

principal or affiliate who is, debarred or suspended from federal contracting or engaging in activity that is cause for debarment

or suspension;

provide adequate financial

aid counseling to its students;

submit in a timely manner

all reports and financial statements required by the Title IV Program regulations;

provide adequate career

services and geographically accessible clinical or externship opportunities to its students;

disburse funds to students

in a timely manner that best meets their needs;

does not have programs

that “fail” gainful employment rates and measures and that represent 50 percent or more of its total receipts under the

Title IV Programs in the most recent award year;

does not engage in substantial

misrepresentations or aggressive and deceptive recruitment tactics;

not otherwise appear to

lack administrative capability.

by us to satisfy any of these or other administrative capability criteria could cause our institutions to be subject to sanctions or

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and results of operations.

published a notice in early September 2025 regarding its agenda for regulatory initiatives which, among other things, indicated 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.

on Payment of Commissions, Bonuses and Other Incentive Payments.

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On July 17, 2024, ED announced it will issue guidance related to the incentive compensation rule no sooner than

later this year, which could, among other things, modify existing published ED guidance related to the incentive compensation rule.

Reviews Regarding Compliance with Regulatory Standards and Effect of Regulatory Violations.

Because we operate in a highly regulated

industry, we are subject to compliance reviews and audits as well as claims of noncompliance and lawsuits by government agencies, regulatory

agencies and third parties.

Our institutions are subject to audits, program reviews, site visits, and other reviews by various federal

and state regulatory agencies, including, but not limited to, ED, ED’s Office of Inspector General, state education agencies and

other state regulators, the U.S.

later that year, but it has not yet issued such guidance.

Compliance Reviews Regarding Compliance

with Regulatory Standards and Effect of Regulatory Violations.

Because we operate in a highly regulated industry, we are subject

to compliance reviews and audits as well as claims of noncompliance and lawsuits by government agencies, regulatory agencies and third

Our institutions are subject to audits, program reviews, site visits, and other reviews by various federal and state regulatory

agencies, including, but not limited to, ED, ED’s Office of Inspector General, state education agencies and other state regulators,

Department of Veterans Affairs and other federal agencies, and by our accrediting agencies.

each of our institutions must retain an independent certified public accountant to conduct an annual audit of the institution’s

administration of Title IV Program funds.

The institution must submit the resulting audit report to ED for review.

In addition, each of our institutions

must retain an independent certified public accountant to conduct an annual audit of the institution’s administration of Title IV

Program funds.

Each of our institutions must submit the resulting audit report to ED for review.

one of our institutions fails to comply with accrediting or state licensing requirements, such school and its main and/or branch campuses

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funds before receiving such funds from ED.

It could also impose letters of credit, restrict participation, or take actions such as suspensions

or emergency action.

violations of Title IV Program requirements by us or any of our institutions could be the basis for ED to limit, suspend, terminate,

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liabilities, injunctions, loss of eligibility for Title IV Programs or other adverse outcomes .”

Aid Fraud Detection .

Institutions must detect and prevent financial aid fraud attempts.

For example, ED requires institutions

to maintain systems to identify conflicting information that affects a student’s eligibility for financial aid and resolve it before

disbursing aid.

ED also requires institutions to report suspicions of fraud to ED’s Office of the Inspector General.

If our efforts

to detect and prevent financial aid fraud are unsuccessful or found to be deficient, it could lead to a finding of noncompliance with

Title IV requirements, accreditation standards, or other agencies, and could result in liabilities, loss of accreditation or Title IV

eligibility, as well as third-party claims.

Financial Assistance Programs.

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such as programs administered by the U.S.

Department of Veterans Affairs and under the Workforce Innovation and Opportunity Act.

some of our students receive state financial aid in the form of grants, loans or scholarships.

The eligibility and compliance requirements

for these federal and state financial aid programs are extensive and vary among the funding agencies and by program.

Our failure to comply

with legal requirements applicable to federal and state financial assistance programs could result in repayment liabilities, sanctions,

or loss of eligibility to participate in those programs which could impact our results of operations and also impact our compliance with

ED’s 90/10 Rule which requires our institutions to generate revenues from sources other than the Title IV Programs and other federal

financial assistance.

Department of Veterans Affairs and under the Workforce Innovation and Opportunity Act (“WIOA”).

In addition, some of our students receive state financial aid in the form of grants, loans or scholarships.

The eligibility and compliance

requirements for these federal and state financial aid programs are extensive and vary among the funding agencies and by program.

failure to comply with legal requirements applicable to federal and state financial assistance programs could result in repayment liabilities,

sanctions, or loss of eligibility to participate in those programs which could impact our results of operations and also impact our compliance

with ED’s 90/10 Rule which requires our institutions to generate revenues from sources other than the Title IV Programs and other

federal financial assistance.

that provide financial aid to our students face budgetary constraints, which in certain instances has reduced the level of state financial

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may be required to meet negotiated performance goals set by the state agency administering WIOA funds.

On June 21, 2024, the U.S.

Health, Education, Labor and Pensions (HELP) Committee released a discussion draft of a bill to reauthorize the WIOA.

Among other changes,

the draft proposes to impose a repayment penalty on certain providers with eligible programs for which program competitors have not met

the newly established credential attainment rates or job placement rates.

currently proposed in the discussion draft bill, the repayment penalty would only apply to for-profit entities.

If any of our institutions’

programs that receive WIOA funds do not meet the established performance levels and if the draft becomes law, our institutions could

be required to repay between 5 and 20 percent of the WIOA funds received for training services in that program.

If our participating

institutions and their programs were to not meet other WIOA requirements, they would risk losing eligibility to participate in the program.

Further, reauthorization of the Workforce Innovation and Opportunity Act could result in changes to the process for determining funding

for its programs, which could affect our institutions’ revenues.

addition to the Title IV Programs and other government-administered programs, all of our schools participate in alternative loan programs

for their students.

Alternative loans fill the gap between what the student receives from all financial aid sources and what the student

may need to cover the full cost of his or her education.

We also extend credit for tuition and fees to many of our students that attend

our campuses.

We are required to comply with applicable federal and state laws related to certain consumer and educational loans and

credit extensions and are subject to review by federal and state agencies responsible for overseeing compliance with these requirements.

Our failure to comply with these requirements could result in repayment liabilities, sanctions, investigations or litigation which could

impact our results of operations.

Members of Congress have made

proposals to reauthorize WIOA but no reauthorization bills have been passed.

If passed, proposals to reauthorize WIOA that increase requirements

or impose penalties could impact our schools.

our participating institutions and their programs were to not meet other WIOA requirements, they would risk losing eligibility to participate

in the program.

Further, reauthorization of the WIOA could result in changes to the process for determining funding for its programs,

which could affect our institutions’ revenues.

addition to the Title IV Programs and other government-administered programs, all of our schools participate in alternative loan

programs for their students.

Alternative loans fill the gap between what the student receives from all financial aid sources and

what the student may need to cover the full cost of his or her education.

We also extend credit for tuition and fees to many of our

students that attend our campuses.

We are required to comply with applicable federal and state laws related to certain consumer and

educational loans and credit extensions and education financing and are subject to review by federal and state agencies responsible

for overseeing compliance with these requirements.

Our failure to comply with these requirements could result in repayment

liabilities, sanctions, investigations or litigation which could impact our results of operations.

January 20, 2022, the CFPB announced its intent to examine the operations of postsecondary schools that extend private loans directly

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tuition payment plans, including coercive debt collection practices, high fees, and confusing consumer disclosures.

Our institutions

may be subject to greater scrutiny by the CFPB than in the past, and failure to comply with applicable laws and requirements could result

in repayment liabilities, sanctions, investigations or litigation which could impact our results of operations.

In May 2025, the

CFPB indicated it would deprioritize regulation of student loans.

Failure to comply with applicable laws and requirements could result

in repayment liabilities, sanctions, investigations or litigation which could impact our operations.

If the CFPB prioritizes education

of student loans in the future, the likelihood of these results would increase.

and Curricula

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Nursing Assistant

Pit and Fissure Sealant

Course (Avocational)

California Dental Practice Act

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Course (Avocational)

Emergency Medical Technician Certification

Technician Associate of Applied Science Degree Program

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Degree of Nursing

High Desert Medical College Associate Degree of Nursing Program (AND) provides students with a high-quality education in a dynamic, supportive

and engaging environment.

The nursing curriculum at High Desert Medical College prepares the student to become a Registered Nurse with

an associate degree.

The program promotes a culture of educational excellence among a diverse student population in collaboration with

healthcare partners that leads to an associate degree in nursing licensure.

An entry-level professional with the ability to utilize the

latest healthcare technology while utilizing current evidence-based practice and clinical reasoning.

The acquisition of the knowledge,

skills and attitudes to provide safe patient-centered care that meets the changing health care needs of diverse individuals, families,

communities and desire for life-long learning.

The program strives to foster a commitment to individual excellence, integrity, lifelong

learning and professional development within each graduate.

High Desert Medical College Associate Degree of Nursing Program (ADN) provides students with a high-quality education in a dynamic,

supportive and engaging environment.

The nursing curriculum at High Desert Medical College prepares the student to become a

Registered Nurse with an associate degree.

The program promotes a culture of educational excellence among a diverse student

population in collaboration with healthcare partners that leads to an associate degree in nursing licensure.

An entry-level

professional with the ability to utilize the latest healthcare technology while utilizing current evidence-based practice and

clinical reasoning.

The acquisition of the knowledge, skills and attitudes to provide safe patient-centered care that meets the

changing health care needs of diverse individuals, families, communities and desire for life-long learning.

The program strives to

foster a commitment to individual excellence, integrity, lifelong learning and professional development within each

Technician Diploma Program

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Students should expect two to three hours of homework per class.

Medical Technician Certification Program

EMT program prepares entry-level healthcare professionals to manage emergencies.

EMTs assess scenes, prioritize care, provide immediate

treatment, and coordinate patient transport.

Graduates qualify to take the National Registry Emergency Medical Technician (NREMT) computerized

certification exam to obtain the National EMT Certification.

Technician Certificate Program

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to seek certification from the State of California for a registration as a pharmacy technician and a national competency certification.

Technician Course (Avocational)

Technician Course

phlebotomy technician course (Avocational) is designed for employees who currently work or have worked in the medical field and are seeking

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The student will be trained to perform a variety of blood collection methods using proper techniques and precautions.

Dental Practice Act

& Fissure Sealant Course

specialized course is designed for dental professionals in California seeking expertise in the application of pit and fissure sealants.

Participants will acquire in-depth knowledge and hands-on skills necessary for effective sealant placement, emphasizing California-specific

regulations and ethical considerations.

The course aims to empower participants to integrate pit and fissure sealants into their preventive

dental care practices with confidence and compliance.

Dental Practice Act Course

course is presented pursuant to the Dental Board of California requirement that each licensee must take a minimum two-unit course in

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State of California statutes which constitute the Dental Practice Act.

Control Course

course covers the definition and implementation of sterilization methods and guidelines.

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current information on infection control practices and principles and is approved by the Dental Board of California.

Safety Course

the state of California, a Dental Assistant must have their California Radiation Safety (x-ray) certificate to be permitted to take x-rays

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throughout the program.

IV Theory Certificate

IV Therapy Certificate

course is designed to prepare licensed vocational nurses to start and superimpose intravenous fluid via primary or secondary infusion

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preparation of withdrawal sites.

Polishing Course

specialized course is designed for dental professionals in California seeking proficiency in coronal polishing procedures.

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Degree (Associate of Applied Science)

Computer Specialist Accounting

Computer Specialist:

Ultrasound Technician

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108-123 weeks

Surgical Technology

Associate of Applied Science

Sterile Processing Technician

Dental Assisting

Pharmacy Technician

Career Training Programs

Assisting Certificate

medical assisting program teaches skills such as:

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medical records, patient vital signs, venipuncture and injections, use of laboratory equipment and use of EKGs.

Administrative Assistant

Administrative Assistant Certificate

the medical administrative assistant program gives the student a comprehensive set of administrative skills needed to work in a medical

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electronic medical records and medical insurance billing.

Assistant Certificate

assistant training is designed for those who seek entry-level employment in the healthcare field.

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in healthcare to support their education.

Technician Course

Phlebotomists

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students to take the phlebotomy exam and apply to become a practicing, certified phlebotomist in the State of California.

Assistant Certificate

veterinary assistant program is designed to give hands-on experience working with animals and to prepare the students to successfully

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An externship is provided at the end of the program.

Technology Associate of Applied Science Degree Program

veterinary technology program offers an AAS degree.

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California State Veterinary Technician Examinations.

Technician Certificate Program

Technician Diploma Program

UT program is designed to prepare graduates for employment as an ultrasound technologist in the general abdomen, OB/GYN, small body parts

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Nursing Diploma Program

vocation nursing program is designed to provide the student with the basic knowledge, skills and abilities to perform the duties of a

vocation nurse in a health care environment.

The program is approved by the BVNPT as an accredited training program, the completion of

which meets the minimum requirements set forth as necessary for application to take the Vocation Nurse License examination.

vocational nursing program is designed to provide the student with the basic knowledge, skills and abilities to perform the duties of

a vocational nurse in a health care environment.

The program is approved by the BVNPT as an accredited training program, the completion

of which meets the minimum requirements set forth as necessary for application to take the Vocational Nurse License examination.

Technology Associate of Applied Science (“STAAS”) Degree Program

STAAS program is designed to prepare students to enter a medical career in the healthcare industry.

Surgical Technologists work to provide

quality patient care through functioning in a sterile environment and assisting physicians in operating rooms for procedures performed

in hospitals, outpatient surgery centers, physician’s offices and other medical facilities.

Processing Technician Certificate Program

sterile processing technician program is designed to prepare students to enter a medical career and play a critical role in preventing

Sterile processing technicians sterilize, clean, process, assemble, store, and distribute medical equipment and reusable surgical

instrumentation, utilizing infection control and safety practices during all phases of the process.

Assisting Certificate Program

dental assisting program prepares the graduate for an entry-level position in a dental office.

Graduates may find employment in dental

clinics as dental assistants.

With additional training and/or experience, graduates may be eligible for the radiation safety exam and

receive radiation safety certificate or be eligible for the coronal polish exam.

Graduates receive CPR and First Aid certification from

American Red Cross and a diploma in dental assisting.

Technician Certificate Program

pharmacy technician program is designed to provide students with the skills, knowledge and training for an entry-level position in retail,

hospitals or clinics or home health pharmacy settings or other positions in a pharmacy-related product/company.

Graduates are encouraged

to seek certification from the State of California for a registration as a pharmacy technician and a national competency certification.

Career Training Programs

Accounting Specialist

Accounting Specialist Certificate Program

computer accounting specialist program is designed to prepare students for a career in which they would maintain and prepare records,

post details of transactions, and reconcile bank statements in both large and small businesses in many industries.

Administrative Specialist

Administrative Specialist Certificate Program

business administrative specialist program is designed to prepare students for a career in which they would need office skills such as

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Veterinary Assistant

Vocation Nursing AAS

Vocational Nursing AAS

Associate of Applied Science

Career Training Programs

Nursing Diploma Program

VN program provides students with nursing skills for direct patient care.

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healthcare team in selected healthcare settings with individuals, families and communities across the life span.

Assistant Certificate Program

medical assistant program is designed to prepare students for entry-level positions as a medical assistant in either clinical and/or

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and emergency rooms.

Medical Sonography

Medical Sonography Diploma Program

diagnostic medical sonography program is designed to prepare graduates for employment as an ultrasound technologist in the general abdomen,

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The program includes a 960-hour externship.

Insurance Coding and Billing Specialist

Insurance Coding and Billing Specialist Certificate Program

medical insurance coding and billing program provides theory and clinical training geared to prepare the student for an entry level position

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well-rounded professionals through undergraduate general education.

Costa Medical Career College

offers start dates throughout the year for its various programs.

The programs currently offered as of June 30, 2025, are as follows:

Programs Offered

Area of Study

Program Length

Estimated Total

Fees, Charges

Surgical Technology

Associate of Applied Science

Sterile Processing Technician

Diagnostic Medical Sonography

Medical Assisting with Phlebotomy

Dental Assisting

Vocational Nursing

Clinical Medical Assisting

Coronal Polishing

Course (Avocational)

Infection Control

Course (Avocational)

Dental Radiology

Course (Avocational)

Pit and Fissure Sealant

Course (Avocational)

EKG/ECG Technician

Medical Administrative Assistant /Billing and Coding Specialist

Medical Assisting

Pharmacy Technician

Phlebotomy Technician

Course (Avocational)

Career Training Programs

of Applied Science in Surgical Technology Degree Program

STAAS program is designed to prepare students to enter a medical career in the healthcare industry.

Surgical Technologists work to provide

quality patient care through functioning in a sterile environment and assisting physicians in operating rooms for procedures performed

in hospitals, outpatient surgery centers, physician’s offices and other medical facilities.

Processing Technician Certificate Program

sterile processing technician program is designed to prepare students to enter a medical career and play a critical role in preventing

Sterile processing technicians sterilize, clean, process, assemble, store, and distribute medical equipment and reusable surgical

instrumentation, utilizing infection control and safety practices during all phases of the process.

Medical Sonography Diploma Program

diagnostic medical sonography program is designed to prepare graduates for employment as an ultrasound technologist in the general abdomen,

OB/GYN, small body parts and vascular.

The graduate can work in imaging centers, physician’s offices, clinics, mobile units or

hospitals that do not require a certification to be employed.

Students learn to use specialized equipment and are prepared for immediate

entry-level positions in the field through a combination of coursework, clinical labs, and access to the innovative Sonosim training

Students also receive real-world on-the-job experience through clinical experience.

Assisting with Phlebotomy Certificate Program

medical assisting program with phlebotomy is designed to prepare students to work in essential positions in the field of healthcare.

Medical Assistants are critical allied healthcare workers, performing important administrative and clinical duties in the offices of

doctors, medical clinics, and hospitals.

Assisting Certificate Program

dental assisting program is designed to prepare students to enter a dental career in the healthcare industry.

Dental Assistants work

closely with dentists to provide quality patient care, performing important administrative and clinical tasks to support dental offices.

Graduates may find employment in dental offices or clinics as dental assistants.

Nursing Diploma Program

VN program provides students with nursing skills for direct patient care.

Graduates should be able to function as part of the interdisciplinary

healthcare team in selected healthcare settings with individuals, families and communities across the life span.

Medical Assisting Certificate Program

clinical medical assisting program is designed to prepare students for entry-level positions as a medical assistant in either clinical

and/or administrative capacity.

Medical assistants are multi-skilled health professionals who perform a wide range of roles in physician’s

offices and other health care settings.

Medical assistants may also be employed by medical centers, medical specialty clinics, insurance

billing agencies, laboratories, and emergency rooms.

Administrative Assistant /Billing and Coding Specialist Certificate Program

medical administrative assistant/medical billing and coding program is designed to prepare students to enter the healthcare industry.

Medical Administrative Assistant / Medical Billing and Coding Specialists are administrative healthcare professionals, performing critical

tasks in support of doctors and medical practices.

Technician Certificate Program

EKG/ECG Technician course trains students in performing and interpreting electrocardiograms to help diagnose heart and cardiovascular

It covers essential concepts like EKG basics, waveforms, rhythms, and lead patterns, as well as advanced topics such as 12-lead

EKGs, axis interpretation, heart muscle damage, and pacemaker monitoring.

Assisting Certificate Program

medical assisting program is designed to prepare students to work in essential positions in the field of healthcare.

Medical Assistants

are critical allied healthcare workers, performing important administrative and clinical duties in the offices of doctors, medical clinics,

and hospitals.

pharmacy technician program is designed to prepare students for a pharmacy career in the healthcare industry.

Pharmacy technicians are

responsible for helping licensed pharmacists, by assisting in measuring, mixing, counting, labeling, and recording the correct dosages

of prescription medications.

Pharmacy Technicians are also responsible for establishing and maintaining patient record files, submitting

insurance claim forms, and managing prescription and over-the-counter medication inventories.

Polishing Course

specialized course is designed for dental professionals in California seeking proficiency in coronal polishing procedures.

will gain comprehensive knowledge and hands-on skills to perform effective coronal polishing, contributing to enhanced patient oral health

and aesthetic outcomes.

The course emphasizes California-specific regulations and ethical considerations, ensuring participants can confidently

integrate coronal polishing into their dental practice.

Control Course

course covers the definition and implementation of sterilization methods and guidelines.

Including patient medical history, infection

control, prevention of contamination, and the use of personal protective equipment.

In addition, verification of infection, disinfection,

care of treatment room, handling and disposal of hazardous waste, handling soiled instruments, hand pieces, burs, water and air syringes

are presented.

This course has been developed in accordance with the California Code of Regulations Section 1005 to provide the most

current information on infection control practices and principles and is approved by the Dental Board of California.

Radiology Course

Dental Board of California approved course is for dental assistants wanting to learn the proper techniques of dental x-rays.

will receive full instructional training in radiation safety.

The course includes conventional dental radiographs, processing, and mounting

Instruction in digital radiography is provided utilizing DEXIS.

& Fissure Sealant Course

specialized course is designed for dental professionals in California seeking expertise in the application of pit and fissure sealants.

Participants will acquire in-depth knowledge and hands-on skills necessary for effective sealant placement, emphasizing California-specific

regulations and ethical considerations.

The course aims to empower participants to integrate pit and fissure sealants into their preventive

dental care practices with confidence and compliance.

Technician Course

Phlebotomists

are trained allied health professionals who draw blood from patients for medical testing.

The Phlebotomy Technician course is designed

to supplement current healthcare experience and prepare students to become state-certified phlebotomists in the State of California.

believe that assisting our graduates in securing employment after completing their program of study is critical to our ability to attract

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and other content experts under work-for-hire agreements pursuant to which we own the course content in return for a fixed development

do not own any property.

We lease property in California for academic operations, corporate functions, enrollment services and student

support services.

Below is a table summarizing our leased properties as of June 30, 2024:

Number of Buildings

Lease Expiration

Bakersfield, CA

Lancaster, CA

facilities are utilized consistent with management’s expectations, and we believe such facilities are suitable and adequate for

current requirements and that additional space can be obtained on commercially reasonable terms to meet any future requirements.

time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.

is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

Except as set forth below, we are currently not aware of any such legal proceedings or claims that will have, individually or in the

aggregate, a material adverse effect on our business, financial condition or operating results.

website address is www.legacyed.com .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business