Legacy Education Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA LEGACY EDUCATION INC. INDEX TO FINANCIAL STATEMENTS LEGACY EDUCATION INC. CONSOLIDATED FINANCIAL STATEMENTS for the fiscal years ended June 30, 2025 and 2024 90 Legacy Education Inc. (dba High Desert Medical College) (dba Central Coast College) (dba Integrity College of Health) (dba Contra Costa Medical Career College) Consolidated Financial Statements for the fiscal years ended June 30, 2025 and 2024 Table of Contents Page Report of Independent Registered Public Accounting Firm F-2 Financial Statements: Consolidated Balance Sheets F-3 Consolidated Income Statements F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-6 Notes to Consolidated Financial Statements F-7 to F-23 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Members of the Board of Directors of Legacy Education Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Legacy Education Inc. (the “Company”) as of June 30, 2025 and 2024, and the related consolidated income statements, consolidated statements of changes in stockholders’ equity, and consolidated cash flows for each of the years in the two-year period ended June 30, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two years ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ L J Soldinger Associates, LLC We have served as the Company’s auditor since 2018. Deer Park, IL September 25, 2025 PCAOB ID No. 318 F- 2 Legacy Education Inc. Consolidated Balance Sheets June 30, 2025 June 30, 2024 ASSETS Current assets Cash and cash equivalents $ 20,316,357 $ 10,376,149 Accounts receivable, net of $ 1,641,052 and $ 688,848 allowance for doubtful accounts as of June 30, 2025 and June 30, 2024, respectively 15,050,841 13,038,241 Prepaid expenses 1,383,405 1,032,325 Other receivables 302,424 140,894 Total current assets 37,053,027 24,587,609 Property and equipment, net 2,484,304 989,952 Operating lease right-of-use asset 15,781,177 3,575,369 Financing lease right-of-use asset 311,711 340,048 Intangible assets 3,858,027 1,054,947 Goodwill 6,852,076 1,929,326 Accounts receivable, long-term 1,966,137 1,381,194 Deferred income tax assets 395,546 898,000 Security deposits 503,133 416,605 Total assets $ 69,205,138 $ 35,173,050 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities $ 4,929,530 $ 3,862,895 Accrued income tax payable 596,250 1,443,335 Deferred, unearned tuition 4,956,396 2,585,747 Other current liabilities 3,197 24,201 Current portion of debt 875,350 574,244 Debt owed, related party 50,000 50,000 Current portion of financing lease 63,989 57,260 Current portion of operating lease liability 2,306,061 1,868,560 Total current liabilities 13,780,773 10,466,242 Debt, net of current portion 481,264 123,862 Financing lease, net of current portion 151,420 215,409 Other liabilities - 905 Operating lease liability, net of current portion 13,748,161 1,947,620 Total liabilities 28,161,618 12,754,038 Commitments and contingencies - - Stockholders’ equity Preferred stock: $ 0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding - - Common stock: $ 0.001 par value, 100,000,000 shares authorized, 12,452,670 and 9,291,149 shares issued and outstanding as of June 30, 2025 and June 30, 2024, respectively 12,453 9,291 Additional paid in capital 27,273,365 16,186,251 Retained earnings 13,757,702 6,223,470 Total stockholders’ equity 41,043,520 22,419,012 Total liabilities and stockholders’ equity $ 69,205,138 $ 35,173,050 The accompanying notes are an integral part of these consolidated financial statements. F- 3 Legacy Education Inc. Consolidated Income Statements 2025 2024 For the fiscal years ended June 30, 2025 2024 Revenue Tuition and related income, net $ 64,168,025 $ 46,000,316 Operating expenses Educational services 34,246,953 26,351,326 General and administrative 19,267,153 12,999,164 General and administrative – related party 225,875 168,000 Depreciation and amortization 441,718 265,036 Total costs and expenses 54,181,699 39,783,526 Operating income 9,986,326 6,216,790 Other income and expense Interest expenses ( 112,731 ) ( 118,162 ) Interest income 1,149,234 886,834 Total other income 1,036,503 768,672 Income before income tax expenses 11,022,829 6,985,462 Income tax expenses ( 3,488,597 ) ( 1,870,610 ) Net income $ 7,534,232 $ 5,114,852 Net income per share Basic net income per share $ 0.65 $ 0.55 Diluted net income per share $ 0.59 $ 0.53 Weighted average number of common stock outstanding Basic weighted average shares outstanding 11,581,383 9,291,149 Diluted weighted average shares outstanding 12,685,036 9,691,149 The accompanying notes are an integral part of these consolidated financial statements. F- 4 Legacy Education Inc. Consolidated Statements of Changes in Stockholders’ Equity for the fiscal years ended June 30, 2025 and 2024 Shares Amount Shares Amount capital Deficit) Total Preferred Stock Common Stock Additional paid in Retained Shares Amount Shares Amount capital Earnings Total Balance, June 30, 2023 - $ - 9,291,149 $ 9,291 $ 14,304,175 $ 1,108,618 $ 15,422,084 Stock-based compensation - - - - 1,882,076 - 1,882,076 Net income - - - - - 5,114,852 5,114,852 Balance, June 30, 2024 - - 9,291,149 9,291 16,186,251 6,223,470 22,419,012 Balance - - 9,291,149 9,291 16,186,251 6,223,470 22,419,012 True up, reverse split - - 2,013 2 ( 2 ) - - Issuance of common stock under acquisition agreement - - 118,906 119 999,881 - 1,000,000 Issuance of common stock, net of offering costs - - 2,875,000 2,875 9,159,970 - 9,162,845 Exercise of options - - 165,602 166 374,465 - 374,631 Stock-based compensation - - - - 552,800 - 552,800 Net income - - - - - 7,534,232 7,534,232 Balance, June 30, 2025 - $ - 12,452,670 $ 12,453 $ 27,273,365 $ 13,757,702 $ 41,043,520 Balance - $ - 12,452,670 $ 12,453 $ 27,273,365 $ 13,757,702 $ 41,043,520 The accompanying notes are an integral part of these consolidated financial statements. F- 5 Legacy Education Inc. Consolidated Statements of Cash Flows 2025 2024 For the fiscal years ended June 30, 2025 2024 Cash flows provided by (used in) operating activities: Net income $ 7,534,232 $ 5,114,852 Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Non cash compensation 552,800 1,882,076 Depreciation & amortization 441,718 265,036 Deferred income tax 502,454 ( 730,000 ) Provision for allowance for doubtful accounts for accounts receivable and contracts receivable 2,529,500 348,788 Changes in assets and liabilities: Accounts receivable ( 2,993,192 ) ( 6,440,025 ) Prepaid expenses ( 327,148 ) ( 370,766 ) Other receivable ( 161,530 ) 560 Related party receivable - 69,975 Other assets ( 54,293 ) ( 183,917 ) Accounts payable and accrued liabilities 1,056,269 1,283,922 Income tax payable ( 847,085 ) 1,296,280 Deferred unearned tuition ( 465,486 ) ( 887,979 ) Net cash provided by operating activities 7,768,239 1,648,802 Cash flows used in investing activities: Cash paid under APA ( 6,133,087 ) - Purchases of property and equipment ( 844,320 ) ( 423,710 ) Net cash used in investing activities ( 6,977,407 ) ( 423,710 ) Cash flows provided by (used in) financing activities: Proceeds from IPO, net of offering cost 9,162,845 - Proceeds from exercise of options 374,631 - Principal payment on finance lease ( 57,260 ) ( 67,379 ) Principal payments on debt ( 330,840 ) ( 171,170 ) Net cash provided by (used in) financing activities 9,149,376 ( 238,549 ) Net increase cash and cash equivalents and restricted cash 9,940,208 986,543 Cash and cash equivalents and restricted cash, beginning of year 10,376,149 9,389,606 Cash and cash equivalents and restricted cash, end of year $ 20,316,357 $ 10,376,149 Supplemental disclosure of cash flow information Cash paid during the periods for interest $ 136,267 $ 118,162 Cash paid during the periods for income taxes $ 3,833,228 $ 1,304,329 Supplemental disclosure of noncash activities Non-cash purchase of financed lease assets $ - $ 340,048 Non-cash purchase of equipment $ 567,451 $ 145,694 Prepaid expense reclassifies to offering cost $ 276,866 $ - Common stock issued as part of APA $ 1,000,000 $ - Promissory note under APA $ 400,000 $ - Net identifiable assets acquired under APA $ ( 205,670 ) $ - The accompanying notes are an integral part of these consolidated financial statements. F- 6 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 1 - Nature of Business For purposes of these financial statements, “Legacy,” the “Company,” “we,” “our,” “us,” or similar references refers to Legacy Education Inc. and its consolidated subsidiaries, unless the context requires otherwise. Legacy Education, LLC was formed on October 19, 2009 in the state of California as a limited liability company. The Company operates as a career institution that focuses on real-life training by utilizing educational practices in different job markets. The Company offers programs in career paths such as healthcare, veterinary, medical information technology, business management, and green technology. The Company’s institutions are accredited by the Accrediting Council for Continuing Education and Training (“ACCET”) or the Accrediting Bureau of Health Education Schools (“ABHES”) and approved to operate in the state of California by the Bureau for Private Postsecondary Education (“BPPE”). The consolidated financial statements include accounts of Legacy Education Inc. d/b/a High Desert Medical College (“HDMC”) and its wholly-owned subsidiary, Legacy Education Monterey LLC (“Monterey”) d/b/a Central Coast College (“CCC”), its wholly-owned subsidiary, Advanced Health Services, LLC d/b/a Integrity College of Health (“Integrity”) and Legacy Education Antioch, LLC (“Antioch”) d/b/a Contra Costa Medical Career College (“CCMCC”). Pursuant to an Agreement and Plan of Merger and Reorganization (the “Reorganization Merger”), dated September 1, 2021, effective as of September 3, 2021 (the “Effective Date”), Legacy Education Merger Sub, LLC, a wholly-owned subsidiary of Legacy Education Inc. formed solely for the purpose of implementing the Reorganization Merger, merged with and into Legacy Education, LLC, with Legacy Education, LLC surviving the merger and becoming a wholly-owned subsidiary of Legacy Education Inc., a corporation formed on March 18, 2020 in the State of Nevada for the sole purpose of restructuring the Company from a member-owned Limited Liability Corporation to a shareholder-owned C-Corporation. On the Effective Date, in exchange for each Class A Unit owned in Legacy Education, LLC, the members of Legacy Education, LLC received one share of common stock in Legacy Education Inc. in a one for one exchange. The members immediately prior to the Reorganization Merger became the 100 % owners of Legacy Education Inc. immediately following the Reorganization Merger. HDMC offers instruction in thirty-three programs including ultrasound technician, ultrasound technician associate of applied science degree, medical billing and coding, vocational nursing, clinical medical assisting, pharmacy technician, dental assisting, medical administrative vocational nursing associate of applied science degree and registered nursing. CCC, a wholly-owned subsidiary of HDMC, offers instruction in healthcare career training programs, and veterinary career training. Integrity, a wholly-owned subsidiary of HDMC, is an accredited college offering instruction in medical assisting, vocational nursing, medical insurance coding and billing, diagnostic medical sonography (ultrasound technician) and Bachelors of Science in nursing (RN to BSN). CCMCC, a wholly owned subsidiary of HDMC effective as of December 18, 2024, is accredited by ACCET and has been granted temporary approval to participate in the Financial Student Aid programs by the Department of Education (“ED”) following the consummation of the transaction discussed below in Note 3. CCMCC offers vocational nursing, surgical technology, sterile processing technician, medical assisting, diagnostic medical sonography, EKG/ECG technician, and medical administrative assistant/billing and coding specialist programs. The accompanying consolidated financial statements, and all per share information contained herein, have been retroactively adjusted to reflect the reverse stock split described in Note 13. F- 7 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 2 – Summary of Significant Accounting Principals Principal of Consolidation The audited consolidated financial statements include the accounts of HDMC and its wholly-owned subsidiaries, CCC, Integrity and CCMCC. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the assumptions used in the evaluation of the Company’s distinct performance obligations, the valuation of equity instruments and allowance for credit losses related to accounts receivable. Reclassifications Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net income. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. As of June 30, 2025 and 2024 approximately $ 10.38 million and $ 2.15 million, respectively, of cash equivalents was held in instruments considered level 1 securities as defined in the “Fair Value of Financial Instruments” note below. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Normal repairs and maintenance are expensed as incurred. Expenditures that materially extend the useful life of an asset are capitalized. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures, machinery, computer equipment, and vehicles generally have estimated useful lives of ten, seven, four, and five years, respectively. Leasehold improvements are depreciated over the shorter of their lease term or their useful life. Leases The Company accounts for leases in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842 Leases, which requires the recognition of assets and liabilities by lessees for those leases classified as operating leases under GAAP. The Company determines if an arrangement is a lease at inception and evaluates the lease agreement to determine whether the lease is a finance or operating lease. The guidance requires that a lessee should recognize on the balance sheet a liability to make lease payments and a right-to-use asset representing the Company’s right to use the underlying assets for the term of the lease. The guidance allows a lessee who enters into a lease with a term of 12 months or less to make an accounting policy election by class of underlying assets not to recognize assets and liabilities. Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payment over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. See Note 12 for more information about the Company’s lease-related obligations. Goodwill and Intangibles The Company has implemented the Business Combinations Topic FASB ASC 350, Intangibles - Goodwill and Other. Goodwill represents the excess of the purchase price over the fair market value of the net assets (including intangibles) acquired on December 31, 2019, January 15, 2019 and on December 18, 2024. Goodwill, tradename, and accreditation are deemed to have an indefinite life, and course curriculum has a definite life of approximately 18 years. Goodwill and indefinite life intangible assets are not amortized but are subject to, at a minimum, annual impairment tests. The Company expenses costs to maintain or extend intangible assets as incurred. F- 8 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 The Company reviews intangible assets (with a definite life), excluding goodwill, accreditation and tradenames, for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. The Company measures the recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets are expected to generate. If the carrying value of the assets are not recoverable, the impairment recognized is measured as the amount by which the carrying value of the asset exceeds its fair value. There were no impairments for the periods presented. The Company tests goodwill, accreditation and trade names for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. There were no goodwill, accreditation or trade names impairments for the periods presented. The Company amortizes intangible assets with definite lives on a straight-line basis. Long-Lived Assets The Company evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows. The Company had no long-lived asset impairments as of June 30, 2025 and June 30, 2024. Revenue Recognition Revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company follows the five steps approach for revenue recognition under FASB ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of consideration is probable. The Company evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. The Company’s contracts include promises for educational services and course materials which are distinct performance obligations. Tuition revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable is recorded for the portion of tuition not paid in advance. In some instances, installment billing is available to students which reduces the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with installment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed. The Company’s refund policy may permit students who do not complete a course to be eligible for a refund for the portion of the course they did not attend. Refunds generally result in a reduction of deferred revenue during the period that the student drops or withdraws from a class. F- 9 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 The transaction price is stated in the contract and known at the time of contract inception, as such there is variable consideration for situations when a student drops from a program based on the Company’s refund policy and additional charges if a student requires additional hours to complete the program beyond the contracted end date. The Company believes that its experience with these situations is of little predictive value because the future performance of students is dependent on each individual and the amount of variable consideration is highly susceptible to factors outside of the Company’s influence. Accordingly, no variable consideration has been included in the transaction price or recognized as income until the constraint has been eliminated. Revenue is allocated to each performance obligation based on its standalone selling price. Any discounts within the contract are allocated across all performance obligations unless observable evidence exists that the discount relates to a specific performance obligation or obligations in the contract. The Company generally determines standalone selling prices based on prices charged to students. The Company excludes from revenue taxes assessed by a governmental authority as these are agency transactions collected on their behalf from the customer. Significant judgments include the allocation of the contract price across performance obligations, the methodology for earning tuition ratably over the instruction period, estimates for the amount of variable consideration included in the transaction price as well as the determination of the impact of the constraints preventing the variable consideration from being recognized in revenue. Disaggregation of Revenue The tuition and related revenue consist of the following during the years ended June 30, 2025 and 2024: Schedule of Disaggregation of Revenue 2025 2024 Tuition and lab fees (recognized over time) $ 56,906,769 $ 41,200,761 Books, registration and other fees (recognized at a point in time) 7,261,256 4,799,555 Total revenue $ 64,168,025 $ 46,000,316 Segment Reporting The Company operates one reportable business segment offering career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through its accredited academic institutions. The Company’s primary revenue source is derived from educational programs and services provided at its colleges through tuition and lab fees as well as fees for supporting educational programs such as books and registration costs. Operating as a cohesive educational services company, the Company offers its products and services in the State of California at a series of institutions, using a centralized management approach for all educational services and support functions. The Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”). The CODM evaluates the Company’s performance based on consolidated net income. This measure aligns with the Company’s consolidated financial statements and serves as the basis for resource allocation and performance assessment. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM monitors profitability and strategic growth initiatives on a consolidated basis, without disaggregating profit or loss into separate operating segments. The Company determined there are no significant segment expenses that require a separate disclosure. The consolidated net income is used to assess overall company performance, benchmark against industry standards, and identify profitability trends, which guides resource allocation and investment in expansion and program upgrades. The CODM also evaluates company performance using operating income. Operating income provides the CODM with a focused view of the Company’s profitability excluding the effects of financing activities, tax strategies, and other non-operating items. This measure enables the CODM to assess operational efficiency, monitor performance trends, and evaluate the effectiveness of strategies aimed at revenue generation and cost management. Allowance for Credit Losses The Company records an allowance for credit losses for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. The Company determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. The Company applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The Company writes off account receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. Bad debt expense is recorded as a general and administrative expense in the accompanying statements of operations. The Company performs an analysis annually to determine which accounts are uncollectable and then writes them off. Refunds The Company pays or credits refunds within 45 days of a student’s cancellation or withdrawal for students who have completed 60 % or less of the period of attendance based on a pro rata calculation. Once the student has completed more than 60 % of a period of attendance, all Title IV funds are considered earned and no refunds are due to ED. Advertising The Company expenses advertising cost as incurred. Advertising costs amounted to $ 4,749,214 and $ 4,124,485 for the years ended June 30, 2025, and 2024, respectively. Advertising costs are included in general and administrative expenses on the consolidated income statements. F- 10 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Share-Based Compensation The Company utilizes FASB ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. The Company’s estimate of expected volatility was based on the volatility of peers. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. The Company accounts for forfeitures upon occurrence. Fair Value of Financial Instruments The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, deferred, unearned tuition, debt and finance lease obligations. The carrying values of the Company’s financial instruments approximate fair value. FASB ASC 820, Fair Value Measurements (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories: Level 1 — Quoted market prices for identical assets or liabilities in active markets or observable inputs; Level 2 — Significant other observable inputs that can be corroborated by observable market data; and Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data. Concentration of Credit Risk A substantial portion of revenues and ending accounts receivable at June 30, 2025 and June 30, 2024 are a direct result of the Company’s participation in Financial Student Aid (“FSA”) programs, which represents a primary source of student tuition. The FSA programs are subject to political budgetary considerations. There is no assurance that funding will be maintained at current levels. The FSA programs are subject to significant regulatory requirements. Any regulatory violation could have a material effect on the Company. The Company maintains its cash and cash equivalents in various financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation up to $ 250,000 . The Company performs ongoing evaluations of these institutions to limit concentration risk exposure. The Company maintains cash balances in excess of these limits from time to time. As of June 30, 2025 and June 30, 2024, $ 10.38 million and $ 2.15 million, respectively, was maintained in a redeemable money market account bearing interest at approximately 4.5 % per annum. Commitments and Contingencies The Company accrues for a contingent obligation when it is probable that a liability has been incurred and the amount is reasonably estimable. When the Company becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the Company records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the Company will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The Company expenses legal fees as incurred. F- 11 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Income Taxes GAAP requires management to evaluate tax positions taken by the Company and recognize a tax liability if the Company has taken an uncertain position that is more likely than not would be sustained upon examination by the Internal Revenue Service. Management has analyzed the Company’s tax positions and believes there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statement. The Company accounts for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized. The Company expenses penalties and interest related to federal and state income taxes as incurred. Penalties, if any, are included in general and administrative expenses on the income statement. The estimated federal and state effective tax rates are 21 % and 8.84 %, respectively. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, the Company is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find the securities less attractive as a result, there may be a less active trading market for securities and the prices of securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards (that is, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies). The Company intends to take advantage of the benefits of this extended transition period. Additionally, the Company is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. The Company will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of the common stock held by non-affiliates equals or exceeds $250 million as of the as of the last business day of its most recently completed second fiscal quarter, or (2) the annual revenues equaled or exceeded $100 million during its most recently completed fiscal year and the market value of the common stock held by non-affiliates equals or exceeds $700 million as of the last business day of its most recently completed second fiscal quarter. Earnings Per Share FASB ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS is calculated using the treasury stock method, and reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. F- 12 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share for years ended June 30, 2025 and 2024: Schedule of Reconciliation of Basic and Diluted 2025 2024 Numerator Net income $ 7,534,232 $ 5,114,852 Denominator Weighted-average shares outstanding, basic 11,581,383 9,291,149 Common stock warrants 55,583 - Dilutive impact of share-based instruments 1,048,070 400,000 Weighted-average shares outstanding, diluted 12,685,036 9,691,149 Net income per share Basic $ 0.65 $ 0.55 Diluted $ 0.59 $ 0.53 Recent Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. The amendments are effective for fiscal years beginning after December 15, 2019. Subsequently, the FASB issued the final ASU to delay adoption for smaller reporting companies for fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 on July 1, 2023 and it did not have a material impact on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The Company adopted ASU 2020-06 on July 1, 2024 and it did not have a material impact on its consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2025. The adoption of ASU 2023-07 is reflected in Note 2, “Summary of Significant Accounting Policies - Segment Reporting.”. Note 3 – Acquisition On December 18, 2024, Antioch completed its acquisition of CCMCC for a base purchase price of $ 8,000,000 . Under the asset purchase agreement (“APA”), Antioch acquired certain assets and assumed certain liabilities of CCMCC. Under the terms of the APA as consideration for the sale, Antioch paid Sellers $ 6,600,000 subject to a working capital adjustment, entered into a $ 400,000 promissory note, described in Note 10, and issued 118,906 shares of HDMC’s common stock with a combined value equivalent to $ 1,000,000 held in an escrow account for a period of one year. The working capital adjustment was required to equal zero on the transaction date and includes certain acquired assets and assumed liabilities. As of the date of this report, the net working capital adjustment has been determined to be $ 466,920 for a total purchase price of $ 7,533,080 . The acquisition was accounted for in accordance with the acquisition method of accounting. Under this method, the cost of the target is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess estimated fair values of the identifiable net assets over the amount paid was $ 7,738,750 which has been allocated between goodwill and other intangible assets and is included on the accompanying consolidated balance sheet. F- 13 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 The following is a summary of the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition: Schedule of Assets and Liabilities Acquisition Current and other assets $ 2,157,783 Property and equipment 483,036 Total assets acquired 2,640,819 Liabilities assumed (excluding debt - see Note 9) ( 2,846,489 ) Net assets acquired $ ( 205,670 ) Purchase price $ 7,533,080 Trade name $ 940,000 Accreditation 1,730,000 Course Curriculum 146,000 Goodwill 4,922,750 Total excess purchase price $ 7,738,750 The amounts recorded above related to the acquisition are subject to adjustment as the Company has not yet completed the final allocation of the purchase price. The Company has one year from the date of acquisition to complete its valuation of assets and liabilities assumed. Following are the supplemental consolidated financial results of the Company and CCMCC on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2024 (i.e., July 1, 2023). Schedule of Revenue and Net Income from Subsidiary 2025 2024 For the Years Ended June 30, 2025 2024 Revenue $ 68,180,441 $ 53,121,798 Net income $ 8,838,779 $ 5,294,148 The pro forma financial information presented above has been prepared by combining the Company’s historical results and the historical results of CCMCC and adjusting those results to reflect the effects of the acquisition as if it occurred on July 1, 2023. These results do not purport to be indicative of the results of operations had the acquisition occurred on the date indicated above, or that may result in the future, and do not reflect potential synergies or additional costs following the acquisition. Note 4 - Intangible Assets The Company’s intangible assets consisted of the following as of June 30, 2025 and June 30, 2024: Schedule of Intangible Assets June 30, 2025 June 30, 2024 Goodwill $ 6,852,076 $ 1,929,326 Trade name 1,736,100 796,100 Accreditation 1,818,200 88,200 Course curriculum 344,000 198,000 Total cost of intangibles $ 10,750,376 $ 3,011,626 Less accumulated amortization ( 40,273 ) ( 27,353 ) Intangibles net $ 10,710,103 $ 2,984,273 As of June 30, 2025 and June 30, 2024, no impairment of the Company’s goodwill, nor other intangibles with an indefinite life was required related to its previous acquisitions of CCC, Integrity and CCMCC. The Company recognized $ 12,920 and $ 5,011 , respectively, in amortization expense for years ended June 30, 2025 and 2024. Although the ACCET accreditation has an indefinite life, the accreditation requires renewal every five years. CCC’s ACCET accreditation was most recently renewed in April 2025 and its next renewal is in April 2030. CCMCC’s accreditation was most recently renewed in April 2022 and its next renewal is in April 2026. Although ABHES accreditation has an indefinite life, the accreditation requires renewal every five years. Integrity’s next ABHES accreditation renewal is in February 2026. 100 % of goodwill is expected to be deductible for federal income tax purposes and will be amortized over 15 years on a straight-line basis. F- 14 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 5 - Property and Equipment Property and equipment consist of the following: Schedule of Property and Equipment June 30, 2025 June 30, 2024 Leasehold improvements $ 1,299,825 $ 561,108 Machinery and equipment 1,389,417 1,032,286 Computer equipment 1,427,842 704,846 Furniture, fixtures and other equipment 342,886 266,923 Total 4,459,970 2,565,163 Property and equipment gross 4,459,970 2,565,163 Less accumulated depreciation and amortization ( 1,975,666 ) ( 1,575,211 ) Property and equipment, net $ 2,484,304 $ 989,952 Depreciation and amortization expense associated with property and equipment totaled $ 400,455 and $ 260,025 for years ended June 30, 2025 and 2024, respectively. Note 6 – Accounts Receivable, Long-Term TuitionFlex The TuitionFlex Program is designed to create a flexible tuition credit program for students and families to help bridge the financial gap, all in accordance with applicable federal Truth-In-Lending regulations. Through this program, we offer payment plans to all students, regardless of financial need, for up to 5 years. The long-term portion of student receivables utilizing the TuitionFlex program was $ 1,966,137 and $ 1,381,194 as of June 30, 2025 and June 30, 2024, respectively. Note 7 – Prepaid Expenses The prepaid expenses consist of the following as of June 30, 2025 and June 30, 2024: Schedule of Prepaid Expenses June 30, 2025 June 30, 2024 Books $ 190,928 $ 199,122 Supplies and other prepaid expenses 1,192,477 833,203 Total prepaid expenses $ 1,383,405 $ 1,032,325 Note 8 – Other Receivables The other receivables consist of the following as of June 30, 2025 and June 30, 2024: Schedule of Other Receivables June 30, 2025 June 30, 2024 Other advance 94,454 94,454 Receivable from CCMCC Seller 170,250 - Employee retention credit 37,720 46,440 Total other receivables $ 302,424 $ 140,894 The Company paid $ 106,846 of federal income taxes on behalf of a foreign investor in Legacy in the year ended June 30, 2020, and the amount due back to the Company as of each of June 30, 2025 and June 30, 2024 was $ 94,454 . During the fiscal year ended June 30, 2021, the Company applied for certain Employee Retention Credits (“ERTC”) under the CARES Act in the approximate amount of $ 2.9 million. The remaining balance of the ERTC receivable as of June 30, 2025 and June 30, 2024 was $ 37,720 and $ 46,440 , respectively. F- 15 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 9 – Accounts Payable and Accrued Liabilities Accounts payable and accrued expenses as of June 30, 2025 and June 30, 2024 consist of the following: Schedule of Accounts Payable and Accrued Expenses June 30, 2025 June 30, 2024 Accounts payable $ 1,391,620 $ 1,532,576 Accrued payroll and payroll taxes 1,081,600 641,594 Accrued vacation 611,136 447,482 Accrued bonuses 1,710,204 1,200,000 Accrued other expenses 134,970 41,243 Total $ 4,929,530 $ 3,862,895 Note 10 - Debts and Other Liabilities (1) Promissory Notes and Related Parties Debt The Company received $ 750,000 in proceeds from several creditors, including $ 150,000 from related parties in the form of unsecured promissory notes. Under the terms of the unsecured promissory notes, the principal shall be due and payable on the earlier to occur (i) the 9-month anniversary of the first advance under each promissory note; or (ii) the completion of an initial public offering by payee (“Maturity Date”), and the promissory note shall bear interest at a monthly rate of 1 % based upon the amount outstanding as of any calculation date. Interest shall be payable monthly commencing on the 15th day of each calendar month following the date funds are first advanced. The maturity dates on these promissory notes were extended to March 31, 2021 . The noteholders agreed to defer the repayment of the principal balance until the completion of an initial public offering and subsequently agreed to defer the repayment until demanded or paid. Schedule of Carrying Amount of Promissory Note June 30, 2025 June 30, 2024 Promissory note issued on November 12, 2019 $ 500,000 $ 500,000 Promissory note issued on December 30, 2019, related party 50,000 50,000 Total other debt $ 550,000 $ 550,000 A further note issued on February 6, 2020 in the amount of $ 100,000 was repaid in cash in September 2023. (2) Equipment Loan In January 2023, the Company entered into an equipment loan for $ 30,744 . The note accrues interest at a rate of 6.0 % per annum and requires 48 equal monthly payments. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 13,015 and $ 20,929 , respectively. In August 2023, the Company entered into an equipment loan for $ 35,580 . The note accrues interest at a rate of 10.14 % per annum and requires 48 equal monthly payments. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 19,660 and $ 27,723 , respectively. In November 2023, the Company entered into an equipment loan for $ 14,610 . The note accrues interest at a rate of 10.72 % per annum and requires 48 equal monthly payments. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 9,265 and $ 12,582 , respectively. In December 2023, the Company entered into an equipment loan for $ 11,920 . The note accrues interest at a rate of 13.53 % per annum and requires 36 equal monthly payments. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 6,160 and $ 9,853 , respectively. F- 16 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 In February 2024, the Company entered into an equipment loan for $ 35,612 . The note accrues interest at a rate of 8 % per annum and requires 36 equal monthly payments. The first payment was on April 1, 2024. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 21,795 and $ 32,950 , respectively. In June 2024, the Company entered into an equipment loan for $ 48,966 . The note accrues interest at a rate of 11.16 % per annum and requires 48 equal monthly payments. The first payment was on June 1, 2024. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 37,752 and $ 48,125 , respectively. In July 2024, the Company entered into an equipment loan for $ 39,189 . The note accrues interest at a rate of 11.15 % per annum and requires 48 equal monthly payments. The first payment was on July 1, 2024. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 30,946 and $ 0 , respectively. In June 2025, the Company entered into an equipment loan for $ 528,176 . The note accrues interest at a rate of 9.392 % per annum and requires 48 equal monthly payments. The first payment was on June 26, 2025. As of June 30, 2025 and June 30, 2024, the principal balance of the promissory note was $ 515,029 and $ 0 , respectively. (3) CCMCC acquisition Seller Loan As part of the acquisition described in Note 3, Antioch issued the seller of CCMCC a promissory note in the principal amount of $ 400,000 . Under the terms of the note, interest shall accrue at 6 % and shall be repaid in twelve equal monthly payments of principal and interest. As of June 30, 2025, the principal balance of the promissory note of $ 202,992 is presented as a current liability on the accompanying consolidated balance sheet. (4) Bank Loan On December 31, 2019, the Company acquired Integrity, assuming its two bank loans, which are secured by all business assets of the Company. Schedule of Bank Loans June 30, 2025 June 30, 2024 Bank loan #1, monthly payment $ 803.69 , due in 110 months , effective interest rate 6.44 % $ - $ 24,447 Bank loan #2, monthly payment $ 5,672.86 starting on November 23, 2020, due in 48 months - 21,495 Total bank loans $ - $ 45,942 Future maturities over the remaining term of total debt for (1) to (3) are as follows: Schedule of Future Maturities over Remaining Term of Debt 2026 (1) $ 925,350 2027 178,687 2028 164,600 2029 137,977 Long-term debt 1,406,614 Less: current portion (1) ( 925,350 ) Long-term portion of debt $ 481,264 (1) Includes $ 50,000 related party debt Note 11 - Related Party Transactions A shareholder of the Company was paid $ 90,000 and $ 90,000 as consulting fees in the years ended June 30, 2025 and 2024, respectively. A director of the Company was paid $ 135,875 and $ 78,000 , respectively, as consulting fees in the years ended June 30, 2025 and 2024, respectively. F- 17 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 A company controlled by a director of the Company was paid $ 152,279 and $ 127,970 , respectively, as consulting fees during the years ended June 30, 2025 and 2024, respectively. Director’s fees of $ 35,500 , $ 33,750 , and $ 28,000 , respectively, were paid to 3 individual directors in the year ended June 30, 2025. During the year ended June 30, 2024, one director received $ 18,000 and two directors each received $ 4,500 . In December 2019, the Company received $ 50,000 of proceeds from a promissory note, entered into with an executive of the Company, which bears interest at the rate of 12 % per annum and matures on the earlier of the nine-month anniversary of the loan or the completion of an initial public offering. The Company completed an initial public offering in September 2024, and the parties agreed to carry the note as due on demand. The balance of this note was $ 50,000 and $ 50,000 as of June 30, 2025 and June 30, 2024, respectively. Note 12 – Lease Commitments Finance Leases In July 2023, the Company entered into an equipment lease for $ 340,048 . The related finance liability has an implied interest rate of 11.16 % per annum and requires 5 equal annual payments due on September 1 of each year. As of June 30, 2025 and June 30, 2024, the balance of the finance liability was $ 215,409 and $ 272,669 , respectively. The present value of future minimum lease payments due at June 30, 2025, was as follows: Schedule of Future Minimum Capital Lease Payments 2026 $ 81,459 2027 81,459 2028 81,458 Total minimum payments 244,376 Less: amount representing interest ( 28,967 ) Present value of minimum payments $ 215,409 Less: current portion ( 63,989 ) Long term portion $ 151,420 The Company has determined to amortize the lease over the useful life of the equipment or ten years and put the equipment into service in September 2024. The Company recorded amortization of $ 28,337 and $ 0 in the years ended June 30, 2025 and 2024, respectively. Operating Leases The Company leases its instructional facilities under non-cancelable operating leases expiring at various dates through 2034. In most cases, the facility leases require the Company to pay various operating expenses of the facilities in addition to base monthly lease payments. In certain cases, the Company has options available under its leases to renew, and certain leases contain ordinary rental escalations on the space. Rent expense for the certain leases described above is recorded evenly over each lease term. The difference between rent expense recorded and the amount paid is reflected as deferred rent on the accompanying balance sheets for those leases with rent escalation clauses. The Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. As of June 30, 2025, the weighted average incremental borrowing rate used by the Company was approximately 6.7 %, and the weighted average remaining years left on outstanding leases was 7.58 years. The present value of future minimum lease payments due at June 30, 2025 was as follows: Schedule of Future Minimum Operating Lease Payments 2026 $ 3,304,306 2027 2,591,045 2028 2,525,777 2029 2,414,604 2030 2,475,882 After 2030 7,336,011 Total future minimum operating lease payments 20,647,625 Less: imputed interest ( 4,593,403 ) Total 16,054,222 Current portion of operating lease 2,306,061 Long term portion of operating lease $ 13,748,161 Total rent expense and related taxes and operating expenses under operating leases for the years ended June 30, 2025 and 2024 were $ 4,483,574 and $ 3,368,780 , respectively. F- 18 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Supplemental balance sheet information related to leases was as follows: Schedule of Balance Sheet Information Related to Leases June 30, 2025 June 30, 2024 Operating lease right-of-use assets $ 15,781,177 $ 3,575,369 Operating lease liability - current $ 2,306,061 $ 1,868,560 Operating lease liability – non-current 13,748,161 1,947,620 Total operating lease liability $ 16,054,222 $ 3,816,180 Other supplemental information: Schedule of Other supplemental Information 2025 2024 For the years ended June 30, 2025 2024 Cash paid for operating lease $ 2,998,952 $ 1,900,505 Note 13 – Stockholders’ Equity Reverse Stock Split On September 9, 2024, the Company’s stockholders approved an amendment to the Company’s articles of incorporation to effectuate a 1-for-2 reverse split of the Company’s common stock. The amendment to the Company’s articles of incorporation was filed with the Nevada Secretary of State on September 9, 2024. The consolidated financial statements, and all share and per share information contained herein, have been retroactively adjusted to reflect the reverse stock split. As of June 30, 2025 and June 30, 2024, the Company had 110,000,000 shares of authorized capital, par value $ 0.001 , of which 100,000,000 shares are designated as common stock, and 10,000,000 shares are designated as preferred stock. Equity Transactions In August 2024, 76,000 stock options were exercised at $ 0.52 per share of common stock. On September 27, 2024, the Company completed its initial public offering of 2,500,000 shares of common stock, priced at $ 4.00 per share. Concurrently, the Company issued 2,013 shares as true up shares as a result of the 1-for-2 reverse split. In conjunction with the offering, the Company granted stock purchase warrants to purchase an aggregate of 143,750 shares of its common stock at an exercise price of $ 4.60 per share to underwriters. During the three months ended December 31, 2024, in connection with the initial public offering, the Company issued 375,000 common shares in respect to the underwriters’ option to purchase up to an additional 375,000 shares of common stock to cover allotments. On December 18, 2024, the Company issued 118,906 common shares pursuant to the terms of the APA. A total of 89,602 stock options were exercised during the year ended June 30, 2025 at $ 3.74 per share. No shares were issued during the year ended June 30, 2024. As of June 30, 2025 and June 30, 2024 the Company had 12,452,670 and 9,291,149 shares of common stock outstanding, respectively, and no shares of preferred stock issued and outstanding. F- 19 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 14 - Warrants Equity Classified Warrants September 2024 Common Stock Warrants In September 2024, the Company issued warrants to certain underwriters to purchase 143,750 shares of the Company’s common stock in connection with the Company’s initial public offering for services provided. The warrants were immediately exercisable at a price of $ 4.60 per share and have an expiration date of September 27, 2029. At issuance, the fair value of the warrants was determined to be $ 227,700 using the Black-Scholes model. As the warrants are accounted for as an equity issuance cost, the fair value of the warrants was recorded within additional paid-in capital on the Company’s consolidated balance sheets. The warrants are not remeasured in future periods as they meets the conditions for equity classification. The Company valued the warrants, based on a Black-Scholes Option Pricing Method, which included the following inputs: Schedule of inputs for Warrant Fair Value measurement Expected term 5 years Expected volatility 45 % Risk-free interest rate 3.50 % Expected dividend yield 0.00 % Note 15 - Share-Based Compensation Plans Stock Options The Company utilizes ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Black Scholes option pricing model was used to estimate the fair value of the options granted. This option pricing model requires a number of assumptions, of which the most significant are: expected stock price volatility, the expected pre-vesting forfeiture rate, and the expected option term (the amount of time from the grant date until the options are exercised or expire). The Company estimated a volatility factor utilizing a weighted average of comparable published volatilities of its peers. The Company applied the simplified method to determine the expected term of stock-based compensation grants. In prior years, the Company had granted time vested options to purchase shares of common stock with exercise prices ranging from $ 0.52 - $ 1.80 on the date of grant by the Board. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes Merton model. On April 1, 2024, the Company granted stock options to purchase an aggregate of 1,425,171 shares of its common stock at an exercise price of $ 3.74 per share to employees, directors, consultants and non-employee service providers pursuant to its 2021 Equity Incentive Plan. On September 27, 2024, the Company granted stock options to purchase an aggregate of 250,000 shares of its common stock at an exercise price of $ 4.00 per share to employees, directors, consultants and non-employee service providers pursuant to its 2021 Equity Incentive Plan. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes-Merton model. On April 2, 2025, the Company granted stock options to purchase an aggregate of 479,648 shares of its common stock at an exercise price of $ 7.25 per share to employees and directors pursuant to its 2021 Equity Incentive Plan. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes-Merton model. F- 20 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 A summary of the activity related to stock option units granted is as follows: Summary of Stock Option Units Granted Summary of Stock Options Outstanding Total Options Weighted Average Exercise Price per Option Weighted Average Remaining Contractual Term (Years) Outstanding as of June 30, 2023 400,000 1.54 4.14 Granted 1,425,171 3.74 10 Exercised - - - Forfeited, canceled, or expired - - - Outstanding as of June 30, 2024 1,825,171 3.26 8.30 Exercisable as of June 30, 2024 1,387,534 3.11 7.84 Granted 729,648 6.14 10 Exercised ( 165,602 ) 2.26 - Forfeited, canceled, or expired - - - Outstanding as of June 30, 2025 2,389,217 4.21 8.20 Exercisable as of June 30, 2025 1,506,764 3.42 7.51 A summary of the activity related to vested and unvested stock option units granted is as follows: Summary of Vested and Unvested Stock Options Units Granted Options Outstanding Weighted Average Exercise Price Weighted Average Grant Date Fair Value Average Remaining Contractual Life (Years) Balance – June 30, 2023, unvested - $ - $ - - Options issued 1,425,171 3.74 1.84 10.00 Options vested ( 987,534 ) 3.74 1.84 10.00 Options expired - - - - Options exercised - - - - Balance – June 30, 2024, unvested 437,637 $ 3.74 1.84 9.75 Options issued 729,648 6.14 2.05 10.00 Options vested ( 284,832 ) 3.80 1.86 Options expired - - - - Balance – June 30, 2025, unvested 882,453 $ 5.54 $ 3.40 9.36 The Company valued options issued in April 2024 using the Black Scholes model utilizing volatility 45 %, and a risk-free rate of 4.18 %. The fair value of the options was $ 1.84 per option. The Company valued options issued in September 2024 using the Black Scholes model utilizing volatility 45 %, and a risk-free rate of 3.75 %. The fair value of the options was $ 1.94 per option. The Company valued options issued in April 2025 using the Black Scholes model utilizing volatility 55 %, and a risk-free rate of 4.01 %. The fair value of the options was $ 4.05 per option. The Company recorded share-based compensation expense of $ 552,800 and $ 1,882,076 during the years ended June 30, 2025 and 2024, respectively, which is included in educational services in the consolidated income statements. Unamortized compensation expense associated with unvested options was $ 832,205 and $ 737,333 as of June 30, 2025 and June 30, 2024, respectively. The weighted average period over which these costs are expected to be recognized is approximately 2.00 and 2.75 years. F- 21 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 16 - Income Tax The Company has deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax liabilities is principally dependent upon achievement of projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. The Company has no valuation allowance as of June 30, 2025. On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. For businesses, the Act reduces the corporate federal tax rate from a maximum of 35 % to a flat 21 % rate. The rate reduction took effect on January 1, 2018. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted though income tax expense. The components of income tax expense (benefit) are as follows: Schedule of Components of Income Tax Expense (Benefit) June 30, 2025 June 30, 2024 Current: Federal $ 1,935,372 $ 1,779,079 State 1,050,770 821,531 Current income tax expense 2,986,142 2,600,610 Deferred: Federal 403,941 ( 513,740 ) State 98,514 ( 216,260 ) Deferred income tax expense 502,455 ( 730,000 ) Total income tax expense $ 3,488,597 $ 1,870,610 Income tax expense differed from the amount computed using the U.S. federal income tax rate of 21% for June 30, 2025 and 2024 as follows: Schedule of Federal Income Tax Expense June 30, 2025 June 30, 2024 Statutory U.S. federal income tax $ 2,314,794 $ 1,466,947 Non-deductible items ( 123,961 ) 57,841 Change in deferred items 417,037 ( 303,187 ) Provision to return - ( 151,584 ) State income taxes, net of federal benefit 769,790 821,531 Other 110,937 ( 20,938 ) Income tax expense $ 3,488,597 $ 1,870,610 Significant components of the Company’s deferred income tax assets included in deferred income taxes, non-current on the balance sheets are as follows: Schedule of Deferred Income Tax Assets and Liabilities June 30, 2025 June 30, 2024 Deferred tax assets: Lease liability and deferred rent $ 4,492,549 $ 72,000 Allowance for doubtful accounts 503,900 206,000 Accrued bonuses and vacation 582,994 492,000 Non-cash compensation 109,633 562,000 Deferred tax assets gross 5,689,076 1,332,000 Valuation allowance - - Deferred tax assets 5,689,076 1,332,000 Deferred tax liability: Right of use asset ( 4,503,369 ) Property and equipment and intangible assets ( 790,161 ) ( 434,000 ) Deferred tax liability ( 5,293,530 ) ( 434,000 ) Net deferred tax asset $ 395,546 $ 898,000 The Company is subject to taxation in the United States and the state of California. As of June 30, 2024, the earliest tax year still subject to examination for federal purposes is the fiscal year ended June 30, 2022 and state purposes is the fiscal year ended June 30, 2021. F- 22 Legacy Education Inc. Notes to Consolidated Financial Statements For Fiscal Years ended June 30, 2025 and 2024 Note 17 - Other Commitments and Contingency Regulatory In order for students to participate in Title IV federal financial aid programs, the Company is required to maintain certain standards of financial responsibility and administrative capability. In addition, the Company’s institutions are accredited by ACCET or ABHES and approved by other agencies and must comply with the applicable rules and regulations of the accrediting body and other agencies. As a result, the Company may be subject from time to time to audits, investigations, claims of noncompliance or lawsuits by governmental agencies, regulatory bodies, or third parties. While there can be no assurance that such matters will not occur and if they do occur will not have a material adverse effect on these financial statements, management believes that the Company has complied in all material respects with all applicable regulatory requirements as of the date of the financial statements. The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by ED, subject the Company to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act. Composite Score As described above, ED requires institutions to meet standards of financial responsibility. ED deems an institution financially responsible when the composite score is at least 1.5. The Company’s composite score was 3.0 for the fiscal year ended June 30, 2024. The composite score calculation for fiscal year ended June 30, 2025, has not yet been completed as of the date of these financial statements and is due on December 31, 2025. 90/10 Disclosure The Company derives a substantial portion of its revenues from student financial aid received by its students under the Title IV programs administered by ED pursuant to the Higher Education Act. To continue to participate in the student financial aid programs, the Company must comply with the regulations promulgated under the Higher Education Act. The regulations restrict the proportion of cash receipts for tuition and fees from eligible programs to not more than 90% from Title IV programs and other federal educational assistance funds (the “90/10 revenue test”). If an institution fails to satisfy the test for one year, its participation status becomes provisional for two consecutive fiscal years. If the test is not satisfied for two consecutive years, eligibility to participate in Title IV programs is lost for at least two fiscal years. Using ED’s cash-basis, regulatory formula under the 90/10 revenue test, as in effect for its 2024 fiscal year, HDMC, CCC and ICH derived 87.55%, 79.51% and 84.19% for its 90/10 revenue from Title IV program and other federal educational assistance funds, respectively, for the fiscal year ended June 30, 2024. The 90/10 calculations for fiscal year ended June 30, 2025, for each of our institutions are due to ED on December 31, 2025. Litigation The Company is unaware of any other pending or threatened litigation arising from services currently or formerly performed by the Company. The Company is unaware of any possible claiming that could have a material adverse effect on the Company’s business, results of operations or financial condition. Note 18 – Subsequent Events The Company has evaluated subsequent events and transactions that occurred up to the date the consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements. F- 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.