What changed in this filing

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Item 1A. Risk Factors

2025-09-25 compared with 2024-10-01 · 793 added, 357 removed, 1049 unchanged (52% of the section changed)

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

of our institutions (HDMC, CCC, and Integrity) participates in the federal student aid programs authorized by Title IV of the Higher

Education Act of 1965 (“HEA”), as amended (“Title IV Programs”), as well as other federal and state financial

aid programs and are subject to extensive regulation by the U.S.

Department of Education (“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 qualify as an eligible institution to participate in the Title IV Programs,

an institution must among other things receive and maintain authorization by the appropriate state education agencies, be accredited

by an accreditor recognized by ED, and be certified by ED as an eligible institution.

Each of our institutions (HDMC,

CCC, Integrity, and CCMCC) participates in the federal student aid programs authorized by Title IV of the HEA, as amended (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, HDMC, and CCMCC are approved to offer, and must comply with applicable requirements related to, veterans

education assistance administered by the 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

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 qualify as an eligible institution

to participate in the Title IV Programs, an institution must among other things receive and maintain authorization by the appropriate

state education agencies, be accredited by an accreditor recognized by ED, 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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outcomes for institutions and/or their individual educational programs.

Our institutions are authorized to operate by the California

Bureau for Private Postsecondary Education (“BPPE”).

Our institutions are authorized to operate by BPPE.

We also may be required to obtain approvals and comply with requirements

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

The VN programs at HDMC and Integrity are approved by

The VN programs at HDMC, Integrity, and CCMCC are approved

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.

In addition, 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 Consumer Financial Protection Bureau (“CFPB”), the Federal Trade Commission (“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 HDMC and CCC, ABHES for Integrity, and from the 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 obtaining applicable authorizations from those other states.

Our institutions presently do not have

any state postsecondary authorizations outside of California.

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

The State of California does not, however,

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 obtaining applicable authorizations from those other states.

Our institutions presently

do not have any state postsecondary authorizations outside of California.

addition, an institution must make disclosures readily available to enrolled and prospective students regarding whether programs leading

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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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to participate in the Title IV Programs.

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

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.

ACCET and ABHES are ED-recognized accrediting agencies.

The failure to comply

with accreditation standards could subject an institution to additional oversight and reporting requirements, accreditation proceedings

such as a show-cause directive, an action to defer or deny action related to an institution’s application for a new grant of accreditation,

or an action to suspend or revoke an institution’s accreditation or a program’s approval.

If our institutions or programs

are subject to negative accreditation actions or are placed on probationary accreditation status, we may experience adverse publicity,

impaired ability to attract and retain students, and substantial expense to obtain unqualified accreditation status.

The inability to

obtain reaccreditation following periodic reviews or any final loss of institutional accreditation after exhaustion of the administrative

agency processes would result in a loss of Title IV Program funds and state authorization for the affected institution.

Such events and

any related claims brought against us could have a material adverse impact on our business, reputation, financial condition, results

of operations and cash flows.

failure to comply with accreditation standards could subject an institution to additional oversight and reporting requirements, accreditation

proceedings such as a show-cause directive, an action to defer or deny action related to an institution’s application for a new

grant of accreditation, or an action to suspend or revoke an institution’s accreditation or a program’s approval.

institutions or programs are subject to negative accreditation actions or are placed on probationary accreditation status, we may experience

adverse publicity, impaired ability to attract and retain students, and substantial expense to obtain unqualified accreditation status.

The inability to obtain reaccreditation following periodic reviews or any final loss of institutional accreditation after exhaustion

of the administrative agency processes would result in a loss of Title IV Program funds and state authorization for the affected institution.

Such events and any related claims brought against us could have a material adverse impact on our business, reputation, financial condition,

results of operations and cash flows.

Accreditation.

Many states and professional associations require professional programs to be accredited.

While programmatic accreditation

is not a sufficient basis to qualify for institutional Title IV Program certification, programmatic accreditation may improve employment

opportunities for program graduates in their chosen field.

Moreover, ED requires an institution to hold programmatic accreditation for

an educational program if required by a state or federal agency (including as a condition of employment in the occupation for which the

institutional program prepares the students).

The veterinary technology program at CCC is accredited by the American Veterinary Medical

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.

While programmatic

accreditation is not a sufficient basis to qualify for institutional Title IV Program certification, programmatic accreditation may

improve employment opportunities for program graduates in their chosen field.

Moreover, ED requires an institution to hold

programmatic accreditation for an educational program if required by a state or federal agency (including as a condition of

employment in the occupation for which the institutional program prepares the students).

The veterinary technology program at CCC is

accredited by the American Veterinary Medical Association.

Integrity’s Registered Nurse to Bachelor of Science in Nursing

holds pre- accreditation candidacy status 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.

On July 17, 2024, ED announced

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

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

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 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

ED’s Office of Inspector General and ED over recent years.

ED held negotiated rulemaking sessions between January and March 2024,

and the negotiators did not reach consensus on proposed language.

ED terminated the negotiated rulemaking process for accreditation as

of December 20, 2024.

However, ED published a proposed regulatory agenda in early September 2025 that, among other things, includes a

proposal to engage in negotiated rulemaking to provide institutions flexibility to change accreditors and “remove other burdensome

requirements that erect barriers to entry for new accreditation agencies.” This proposal is in its early stages and, therefore,

we cannot predict whether and how such a rulemaking would impact the accreditors that accredit our institutions or the accreditation

requirements applicable to our institutions.

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 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.

may revise the laws governing the Title IV Programs or reduce funding for those programs which could reduce our enrollment and revenue

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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, 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 (as

defined herein) 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 (as defined herein) 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 affected.

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.

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.

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.

action could affect access to Title IV funding which could reduce our enrollment and revenue and increase costs of operations .

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

will attempt to dissolve ED, diminish its operational role, and/or transfer some or all of its functions to one or more agencies.

our Quarterly Report on Form 10-Q, filed with the SEC on February 13, 2025, for the section titled “Regulatory Updates” for

additional information.

In March 2025, ED implemented a reduction in force (“RIF”) that, coupled with resignations by ED

staff, reportedly reduced ED’s workforce by approximately half.

The RIF also eliminated several school participation divisions,

including the school participation division that previously oversaw the operations of our institutions, and eliminated or significantly

reduced several other offices or divisions within ED.

We currently are working with other offices and personnel at ED on some of our

pending matters, but it is possible that we could encounter delays and difficulties obtaining timely ED approval of recent and future

acquisitions of other schools.

See “Education Regulations – School Acquisitions” and “Education Regulations –

Change of Control.” We also could encounter delays and difficulties obtaining timely ED approval of new campuses or other educational

programs for which we wish to offer Title IV funds to students and which require ED approval.

See “Education Regulations –

Opening Additional Campuses and Adding Educational Programs.”

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.

ED or other rulemaking could materially and adversely affect our operations, business, results of operations, financial condition and

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“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 in

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 calculations.

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 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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final regulations which became effective on July 1, 2024.

Multiple lawsuits have been filed challenging these regulations, however, we

cannot predict the outcome of these cases.

Multiple lawsuits 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

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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.

“borrower defense to repayment” regulations may subject us to significant repayment liability to ED for discharged federal

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disclosures of judicial and arbitration filings and awards pertaining to a borrower defense claim.

other things, the 2022 version of the BDR regulations also amended the processes for BDR applications received on or after, or that were

pending with ED as of, July 1, 2023.

The 2022 version of the BDR regulations applies the revised federal BDR standard to all BDR claims

received on or after, or pending with the Secretary as of, July 1, 2023, but would not allow for recovery against institutions for discharged

amounts first disbursed prior to July 1, 2023 unless the BDR claim would have been approved under the substantive BDR standard applicable

to the time period in which the loan was disbursed as set forth in the prior versions of the BDR regulations.

The defenses to repayment

are based on certain acts or omissions, including misrepresentations, by an institution or a covered party.

The regulations establish

detailed procedures and standards for the loan discharge processes, including the information required for borrowers to receive a loan

discharge, and the authority of ED to seek recovery from the institution of the amount of discharged loans.

The 2022 version of the BDR

regulations were to take effect on July 1, 2023, in addition to certain closed school loan discharge provisions 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 2022 version of the BDR regulations while the case is pending.

Therefore, the 2022 version of the BDR regulations

other things, the 2022 version of the BDR regulations also amended the processes for borrowers to receive from ED a discharge of the

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

July 1, 2023.

The 2022 version of the BDR regulations applies the revised federal BDR standard to all BDR claims received on or after,

or pending with the Secretary as of, July 1, 2023, but would not allow for recovery against institutions for discharged amounts first

disbursed prior to July 1, 2023 unless the BDR claim would have been approved under the substantive BDR standard applicable to the time

period in which the loan was disbursed as set forth in the prior versions of the BDR regulations.

The defenses to repayment are based

on certain acts or omissions, including misrepresentations, by an institution or a covered party.

The regulations establish detailed

procedures and standards for the loan discharge processes, including the information required for borrowers to receive a loan discharge,

and the authority of ED to seek recovery from the institution of the amount of discharged loans.

The 2022 version of the BDR regulations

were to take effect on July 1, 2023, in addition to certain closed school loan discharge provisions part of the same rule, but are currently

enjoined and delayed.

The Career Colleges and Schools of Texas (“CCST”) filed a complaint challenging the regulations in

February 2023.

In April 2024, the U.S.

Court of Appeals for the Fifth Circuit granted a preliminary injunction to block enforcement of

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

Further, the OBBBA, enacted July 4, 2025, delays the effective date

of the 2022 version of the revised BDR regulations for ten years, until July 1, 2035.Therefore, the 2022 version of the BDR regulations

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.

June 22, 2022, ED reached a settlement with plaintiffs in the case titled Sweet v.

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HDMC received and timely responded to seven BDR applications from Post-Class Applicants.

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

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.

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compliance with ED’s “financial responsibility” requirements would have negative impacts on our operations .”

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.

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.

failure to maintain compliance with ED’s “financial responsibility” requirements would have negative impacts on our

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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.

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

We have calculated our composite

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audited financial statements for the 2024 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 the ED to make its determination or the outcome of its determination.

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 the ED to make its determination or the outcome of its determination.

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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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.

failure to maintain compliance with ED’s “administrative capability” requirements would negatively impact our operations.

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

Those revisions took effect

on July 1, 2024.

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

Those revisions, effective

July 1, 2024, modified the criteria for administrative capability such that they now include, among other things, that the institution:

with all applicable federal student financial aid requirements;

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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.

institutions could be subject to liabilities and sanctions if they violate ED regulations and guidance limiting compensation to individuals

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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.

related to the incentive compensation rule no sooner than later that year, but it has not yet issued such guidance.

institutions could lose their eligibility to participate in the Title IV programs if the percentage of their revenues derived from applicable

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CCC 79.51%, 74.48%, and 72.34%;

and Integrity 88.14%, 85.43%, and 89.47%, respectively.

Our 90/10 calculations are subject to review and potential recalculation by ED.

In addition, the 90/10 Rule is complex and there is some

ambiguity in certain technical aspects of the calculation methodology under the 90/10 Rule.

If ED comes out with additional guidance

or interpretations that are different than our interpretations, ED could recalculate the 90/10 Rule percentages of our institutions,

which could result in one or more of the percentages exceeding 90 percent.

All of these calculations are subject to review, differing

interpretations, and potential recalculation by ED which makes it more difficult for our institutions to comply with the 90/10 Rule.

A loss of eligibility to participate in Title IV Programs for any of our institutions would have a significant impact on the rate at

which our students enroll in our programs and on our business and results of operations.

Moreover, if an institution violated the 90/10

Rule and became ineligible to participate in Title IV Programs but continued to disburse Title IV Program funds, ED would require the

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

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

CCMCC’s 90/10 Rule percentage

for its 2022 fiscal year was 21.76%, and for its 2023 fiscal year was 48.63%.

CCMCC’s next 90/10 Rule percentage will be reported to ED in connection with the Company’s next

annual financial statement and compliance audit submissions.

Our calculations of the

90/10 Rule percentage for the 2025 fiscal year for HDMC, CCC, Integrity, and CCMCC are due on December 31, 2025 and each are expected

to be below 90%.

The 90/10 calculations for our institutions are subject to review and potential recalculation by ED.

In addition, the

90/10 Rule is complex and there is some ambiguity in certain technical aspects of the calculation methodology under the 90/10 Rule.

ED comes out with additional guidance or interpretations that are different than our interpretations, ED could recalculate the 90/10

Rule percentages of our institutions, which could result in one or more of the percentages exceeding 90%.

All of these calculations

are subject to review, differing interpretations, and potential recalculation by ED which makes it more difficult for our institutions

to comply with the 90/10 Rule.

A loss of eligibility to participate in Title IV Programs for any of our institutions would have a significant

impact on the rate at which our students enroll in our programs and on our business and results of operations.

Moreover, if an institution

violated the 90/10 Rule and became ineligible to participate in Title IV Programs but continued to disburse Title IV Program funds, ED

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

American Rescue Plan Act (“ARPA”) amended the 90/10 Rule by treating other federal student financial assistance funds in

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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 years 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.

became effective July 1, 2023 and applied to fiscal years beginning on or after January 1, 2023 (which was the fiscal years 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

ED has published a Notice in the Federal Register listing the types of funds that are considered federal education assistance

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require changes to maintain compliance.

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

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 investigations

Changes in, or new interpretations of, the calculation methodology or other industry practices under the 90/10 Rule could further

significantly impact our compliance with the 90/10 Rule, and responding to any review or investigation by ED involving us could require

a significant amount of resources.

Efforts to reduce the 90/10 Rule percentage for our institutions have and may in the future involve

taking measures that involve interpretations of the 90/10 Rule that are without clear precedent, reduce our revenue or increase our operating

expenses (or all of the foregoing, in each case perhaps significantly).

Because of the changes to the 90/10 Rule made by ARPA and ED,

we may be required to make structural changes to our business to remain in compliance, which changes may materially alter the manner

in which we conduct our business and materially and adversely impact our business, financial condition, results of operations and cash

Furthermore, these required changes could be unsuccessful and could make more difficult our ability to comply with other important

regulatory requirements, such as the cohort default rate regulations.

However, 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 investigations by ED.

Changes in, or new interpretations of, the calculation methodology or other industry practices under

the 90/10 Rule could further significantly impact our compliance with the 90/10 Rule, and responding to any review or investigation by

ED involving us could require a significant amount of resources.

Efforts to reduce the 90/10 Rule percentage for our institutions have

and may in the future involve taking measures that involve interpretations of the 90/10 Rule that are without clear precedent, reduce

our revenue or increase our operating expenses (or all of the foregoing, in each case perhaps significantly).

Because of the changes

to the 90/10 Rule made by ARPA and ED, we may be required to make structural changes to our business to remain in compliance, which changes

may materially alter the manner in which we conduct our business and materially and adversely impact our business, financial condition,

results of operations and cash flows.

Furthermore, these required changes could be unsuccessful and could make more difficult our ability

to comply with other important regulatory requirements, such as the cohort default rate regulations.

we cannot predict the need or timing of any such changes, whether these changes would be successful in maintaining compliance with the

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negative impacts on our operations.

October 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 respectively are as follows:

1.1%, and 3.4%;

CCC 0.0%, 1.4%, and 2.5%;

and Integrity 0.0%, 2.5%, and 4.0%.

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.

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 respectively

are as follows:

HDMC 0%, 0% and 0%;

CCC 0%, 0% and 0%, Integrity 0%, 0%, and 0%;

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

Consequently, none

of our institutions had a cohort default rate equal to or greater than 30% for the 2022, 2021, and 2020 federal fiscal years.

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.

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.

any of our institutions were to lose eligibility to participate in the Title IV Programs due to student loan default rates being higher

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could not conduct its business as it is currently conducted.

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;

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.

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 located in Salinas;

and Integrity located 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 categories.

The current expiration

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

Integrity is 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.

Integrity located in Pasadena, and CCMCC with a location in Antioch.

Generally, the

recertification process includes a review by ED of an institution’s educational programs and locations, administrative capability,

financial responsibility and other oversight categories.

The current expiration date of the program participation agreements for HDMC

and CCC is September 30, 2026.

Integrity and CMCC 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 its 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 the 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

institutions in the event ED takes certain adverse actions against the institution, is required to obtain prior ED approvals of new campuses

and educational programs and may be subject to heightened scrutiny by ED.

However, provisional certification does not otherwise limit

an institution’s access to Title IV Program funds.

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

participation agreement which (as described in the 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 institutions in the event ED takes certain adverse actions against the institution, is required to obtain prior ED approvals

of new campuses and educational programs and may be subject to heightened scrutiny by ED.

However, provisional certification does not

otherwise limit an institution’s access to Title IV Program funds.

October 31, 2023, ED published a final rule revising its Title IV Program certification regulations, with an effective date of July 1,

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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.

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.

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 entered into the APA with the Company, Legacy Education, LLC, a wholly-owned

subsidiary of the Company, CCMCC, CCMCC Online and, solely with respect to certain portions of the APA, Stacey Orozco and Bulmaro Orozco,

the sole owners CCMCC and CCMCC Online.

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.

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.

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.

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.

types of transactions could constitute a change in ownership and control that requires the institution to obtain approvals from ED and

applicable state and accrediting agencies in order to remain eligible to participate in the Title IV Programs and continue to operate

as an accredited institution in the states where the institution operates.

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

ED, most of our state education agencies,

our accreditors, and other regulators have standards pertaining to the change of control of schools, but these standards are not uniform.

ED regulations describe some transactions that constitute a change of control, including the transfer of a controlling interest in the

voting stock of an institution or the institution’s parent corporation including our Company.

A significant purchase or disposition

of our common stock could be determined by ED to be a change of control under this standard.

On October 28, 2022, ED published a final

rule revising its change in ownership regulations, which became effective July 1, 2023.

The new requirements, such as requiring notice

to ED and current and prospective students at least 90 days prior to a change in ownership, could make it more difficult to execute a

change in ownership or an acquisition, which could make it less desirable to acquire an ownership interest in our Company, or which could

result in conditions or restrictions as a result of a transaction involving us or an acquired institution.

In addition, ED’s revisions

to its financial responsibility standards published on October 31, 2023 and effective July 1, 2024 impose additional financial tests,

and potentially additional letter of credit requirements, related to changes in ownership.

of our state education agencies, our accreditors, and other regulators include the sale of a controlling interest of common stock in

the definition of a change of control although some agencies could determine that the sale or disposition of a smaller interest would

result in a change of control.

A change of control under the definition of one of these agencies would require the affected school to

reaffirm its state authorization, accreditation, or other approval.

Some agencies would require approval prior to a sale or disposition

that would result in a change of control in order to maintain authorization or accreditation.

The requirements to obtain such reaffirmation

from the states and our accreditors vary widely.

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

While ED’s regulations require reporting of owners holding at least a five percent ownership interest (as well as

changes representing at least 5% but under 25% on a quarterly basis or sooner if the institution plans to undergo a change in ownership),

the recently implemented overhaul of ED’s electronic application system through which institutions report ownership requests a

disclosure of all owners regardless of their ownership percentage.

The new electronic application also requests granular detail about

reported owners.

We may not have access to contemporaneous ownership information given the day-to-day fluctuations of trading on the

public market.

Access to information regarding Non-Objecting Beneficial Owners is expensive and this information is typically not current

by the time obtained.

Moreover, we cannot predict whether investors will timely report investments such that we could access accurate

beneficial ownership information and even if investors do comply with reporting requirements, certain passive investors would not typically

be reported until 45 days following our fiscal year end.

We are as yet uncertain regarding our ability to timely obtain ownership information

and timely report this information to ED.

Failure to timely report ownership changes could result in adverse action by ED, or conditions

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’ several hundred owners.

Integrity may also encounter additional difficulty reporting ownership

given ED has not yet approved the prior change in control of Integrity and, as a result, we could encounter difficulty obtaining access

to the electronic application.

ED has informed us that it only will require us to report owners with a five percent or greater ownership

interest in the Company although this guidance could change in the future and we could encounter difficulty identifying and timely reporting

owners under current or future ED guidance.

Our institutions will also be required to timely report any additional changes to ownership

percentages and given the frequency such changes can occur for a publicly traded company, we may have difficulty timely complying with

ED’s reporting requirements.

These difficulties could result in adverse action by ED, or conditions or restrictions imposed by

ED on one or more of our institutions.

we decide to issue preferred stock or additional common stock in the future, this issuance could result in a change in ownership or control

requiring regulatory approval.

ED considers both control rights and beneficial ownership interest among other factors when evaluating

whether a change in ownership resulting in a change in control has occurred.

Similarly, changes to our board of directors or the right

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

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.

If an agency 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 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

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.

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.

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.

If 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.

Some corporate

reorganizations and some changes in the board of directors of the Company are examples of such transactions.

Once we become a publicly

traded corporation, ED regulations provide that a change of control also could occur in one of at least two ways:

(a) if a person acquires

ownership and control of the corporation so that the corporation is required to file a Current Report on Form 8-K with the Securities

and Exchange Commission disclosing the change of control or (b) if the corporation has a shareholder that owns at least 25% of the total

outstanding voting stock of the corporation and is the largest shareholder of the corporation, and that shareholder ceases to own at

least 25% of such stock or ceases to be the largest shareholder.

These standards are subject to interpretation by ED.

the potential adverse effects of a change of control could influence future decisions by us and our stockholders regarding the sale,

purchase, transfer, issuance or redemption of our stock.

In addition, the adverse regulatory effect of a change of control also could

discourage bids for shares of our common stock and could have an adverse effect on the market price of our shares.

failure to comply with laws and regulations regarding prohibited misrepresentation could result in sanctions, liabilities or litigation

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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 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 amended 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.

our institutions open new campuses or add or change new educational programs, we may be required to obtain approvals from ED and our

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certified 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 Medical Career College (“CCMCC”), CCMCC Online,

Inc., and Contra Costa Community Outreach Clinic and Laboratory (collectively, “Contra Costa”) which describes a potential

transaction whereby the Company would acquire substantially all of the assets of Contra Costa for a mix of cash and Company common stock.

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.

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

our students’ access to financial aid from state sources, from federal sources other than the Title IV Programs, or from alternative

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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 for 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 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 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 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 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 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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failure to issue refunds, and improper lending relationships.

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

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 regulation of student loans in the future, the likelihood of these results

would increase.

and regulatory agencies and third parties may conduct compliance reviews and audits or bring actions against us that could result in

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the institution’s administration of Title IV Program funds.

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

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 actions.

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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without merit.

failure of any of our institutions to detect and prevent financial aid fraud could result in liabilities, loss of accreditation or Title

IV eligibility, or third-party claims.

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 the 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.

Related to Our Business

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and impose a significant strain on our financial resources and management personnel regardless of whether such claim has merit.

may acquire other companies or technologies which could divert our management’s attention, result in dilution to our shareholders

and otherwise disrupt our operations and adversely affect our operating results.

may in the future seek to acquire or invest in businesses, applications and services or technologies that we believe could complement

or expand our services, enhance our technical capabilities or otherwise offer growth opportunities.

The pursuit of potential acquisitions

may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions,

whether or not they are consummated.

addition, we do not have any experience in acquiring other businesses.

If we acquire additional businesses, we may not be able to integrate

the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition.

We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

integrate or benefit from acquired technologies or services in a profitable manner;

unanticipated costs or

liabilities associated with the acquisition;

difficulty integrating

the accounting systems, operations and personnel of the acquired business;

difficulties and additional

expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

difficulty converting the

customers of the acquired business onto our platform and contract terms, including disparities in the revenue, licensing, support

or professional services model of the acquired company;

diversion of management’s

attention from other business concerns;

adverse effects to our

existing business relationships with business partners and customers as a result of the acquisition;

the potential loss of key

use of resources that are

needed in other parts of our business;

use of substantial portions

of our available cash to consummate the acquisition.

addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible

assets, which must be assessed for impairment at least annually.

In the future, if our acquisitions do not yield expected returns, we

may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our

results of operations.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could

adversely affect our operating results.

In addition, if an acquired business fails to meet our expectations, our operating results, business

and financial position may suffer.

Related to Our Common Stock

are subject to the rules and regulation of the NYSE American and are required to comply with certain continued exchange listing

standards and requirements or be subject to delisting.

must meet certain financial and liquidity criteria to maintain the listing of our common stock on the NYSE American.

to meet any of the NYSE American’s continued listing standards or we violate NYSE American listing requirements, our

common stock may be delisted.

A delisting of our common stock from NYSE American may materially impair our shareholders’

ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market

for, our common stock.

The delisting of our common stock could significantly impair our ability to raise capital and the value of your

stock price may be volatile, and you could lose all or part of your investment.

should consider an investment in our common stock to be risky, and you should invest in our common stock only if you can withstand a

significant loss and wide fluctuations in the market value of your investment.

The trading price of our common stock may fluctuate substantially.

This may be especially true for companies with a small public float.

These fluctuations could cause you to lose all or part of your investment

in our common stock.

Some factors that may cause the market price of our common stock to fluctuate, in addition to the other risks mentioned

in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K, are:

or anticipated variations in our revenues, earnings, cash flow and changes or revisions of our expected results;

announcements

of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

announcements

of new products, services and courses and expansions by us or our competitors;

announcements

of studies and reports relating to the quality of our product, service and course offerings or those of our competitors;

in the performance or market valuations of other education companies;

in the education market;

negative publicity about us, our competitors or our industry;

or departures of key personnel;

developments affecting us or our industry;

economic or political conditions.

addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences

a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition

and results of operations.

Furthermore, in the past, shareholders of public companies have often brought securities class action suits

against companies following periods of instability in the market price of their securities.

If we were involved in a class action suit,

it could divert a significant amount of our management’s attention and other resources from our business and operations and require

us to incur significant expenses to defend the suit, which could harm our results of operations.

Any such class action suit, whether

or not successful, could harm our reputation and restrict our ability to raise capital in the future.

In addition, if a claim is successfully

made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition

and results of operations.

sales and issuances of our securities could result in additional dilution of the percentage ownership of our shareholders and could cause

our share price to fall.

expect that significant additional capital will be needed in the future to continue our planned operations, including research and development,

increased marketing, hiring new personnel, commercializing our products, and continuing activities as an operating public company.

the extent we raise additional capital by issuing equity securities, our shareholders may experience substantial dilution.

common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from

time to time.

If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may

be materially diluted by subsequent sales.

Such sales may also result in material dilution to our existing shareholders, and new investors

could gain rights superior to our existing shareholders.

do not intend to pay cash dividends.

we have declared and paid cash dividends on our capital stock in 2023, we currently intend to retain all available funds and any future

earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

In addition, the terms of any future debt or credit facility may preclude us from paying any dividends.

As a result, capital appreciation,

if any, of our common stock will be your sole source of potential gain for the foreseeable future.

and economic conditions may negatively impact our business, financial condition, and share price.

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mortgage market and a deteriorating real estate market, unstable

global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished

liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global

economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaults in recent years.

Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued

unstable or unpredictable economic and market conditions.

If these conditions continue to deteriorate or do not improve, it may make

any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.

Failure to secure any necessary financing

in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share

price and could require us to delay, curtail or abandon our business plans.

global credit markets and financial conditions, tariffs and volatile oil prices have led to periods of significant economic instability,

diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for

the global economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaults in

recent years.

Our general business strategy may be adversely affected by any such economic downturns, volatile business environments

and continued unstable or unpredictable economic and market conditions.

If these conditions continue to deteriorate or do not improve,

it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.

Failure to secure any

necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial

performance, and share price and could require us to delay, curtail or abandon our business plans.

Bylaws provide that the Eighth Judicial District Court of Clark County, Nevada will be the sole and exclusive forum for substantially

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of Incorporation, Bylaws and Nevada law, as applicable, among other things:

the board of directors with the ability to alter the Bylaws without stockholder approval;

advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon

at stockholder meetings;

that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum.

do not intend to pay cash dividends.

we have declared and paid cash dividends on our capital stock in 2023, we currently intend to retain all available funds and any future

earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

In addition, the terms of any future debt or credit facility may preclude us from paying any dividends.

As a result, capital appreciation,

if any, of our common stock will be your sole source of potential gain for the foreseeable future.

provide the board of directors

with the ability to alter the Bylaws without stockholder approval;

establish advance notice

requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder

provide that vacancies

on the board of directors may be filled by a majority of directors in office, although less than a quorum.

securities or industry analysts do not publish research or publish inaccurate or unfavorable research reports about our business, our

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We may take advantage of these provisions until the earlier of (i) the last day of our fiscal year following the fifth

anniversary of the closing of our initial public offering (ii) the last day of the fiscal year (a) in which we have total annual gross

revenue of at least $1.235 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our

equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second

fiscal quarter, and (iii) the date on which we have issued more than $1.0 billion of non-convertible debt in any three-year period.

exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced

disclosure obligations regarding executive compensation in our periodic reports and proxy statements and being exempt from the requirements

of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously

Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that

have different effective dates for public and private companies until those standards apply to private companies.

As such, our financial

statements may not be comparable to companies that comply with public company effective dates.

We cannot predict if investors will find

our shares less attractive because we may rely on these provisions.

If some investors find our shares less attractive as a result, there

may be a less active trading market for our shares and our share price may be more volatile.

anniversary of the closing of our initial public offering, (ii) the last day of the fiscal year in which we have total annual gross revenue

of at least $1.235 billion or more, (iii) the date on which we are deemed to be a large accelerated filer, which means the market value

of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed

second fiscal quarter, and (iv) the date on which we have issued more than $1.0 billion of non-convertible debt during the previous three-year

These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley

Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and being exempt from

the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments

not previously approved.

Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting

standards that have different effective dates for public and private companies until those standards apply to private companies.

our financial statements may not be comparable to companies that comply with public company effective dates.

We cannot predict if investors

will find our shares less attractive because we may rely on these provisions.

If some investors find our shares less attractive as a

result, there may be a less active trading market for our shares and our share price may be more volatile.

reporting obligations of being a public company in the U.S.

are expensive and time-consuming, and our management will be required to

devote substantial time to compliance matters.

a publicly traded company we incur significant additional legal, accounting and other expenses.

The obligations of being a public company

require significant expenditures and place significant demands on our management and other personnel, including costs resulting

from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices,

including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the listing requirements

of the stock exchange on which our securities are listed.

These rules require the establishment and maintenance of effective disclosure

and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among

many other complex rules that are often difficult to implement, monitor and maintain compliance with.

Moreover, despite recent reforms

made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly,

particularly after we are no longer an “emerging growth company” and/or a “smaller reporting company.” Our management

and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements and to keep

pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation or being delisted, among other

potential problems.

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 1A. Risk Factors