What changed in this filing

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Item 1A. Risk Factors

2026-09-24 compared with 2025-09-25 · 719 added, 601 removed, 1241 unchanged (52% of the section changed)

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

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.

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 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.

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

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institutions are subject to the educational laws and regulations of the State of California where our physical campuses are located,

We also may be subject to the educational laws of other states if we acquire a new institution in the state or if one of our institutions

adds a new campus in the state or otherwise conducts other operations in the state covered by applicable state educational law including,

but not limited to, student recruitment, advertising or certain types of distance education.

State educational laws establish standards

and requirements for, among other things, student instruction, faculty qualifications, campuses and facilities, educational programs,

financial stability, administrative staff, marketing and recruiting, distribution of information to current and prospective students,

payment of refunds to students who withdraw, private and institutional loans, distance education, student services, student complaints,

student admissions, transfer of academic credits, substantive changes, acquisitions, and policies and minimum graduation and job placement

outcomes for institutions and/or their individual educational programs.

and CCC’s new additional location in Houston will be subject to the educational laws and regulations of the State of Texas.

also may be subject to the educational laws of other states if we acquire a new institution in the state or if one of our

institutions adds a new campus in the state or otherwise conducts other operations in the state covered by applicable state

educational law including, but not limited to, student recruitment, advertising or certain types of distance education.

educational laws establish standards and requirements for, among other things, student instruction, faculty qualifications, campuses

and facilities, educational programs, financial stability, administrative staff, marketing and recruiting, distribution of

information to current and prospective students, payment of refunds to students who withdraw, private and institutional loans,

distance education, student services, student complaints, student admissions, transfer of academic credits, substantive changes,

acquisitions, and policies and minimum graduation and job placement outcomes for institutions and/or their individual educational

Our institutions are authorized to operate by BPPE.

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

of state agencies that regulate certain occupational educational programs such as, for example, VN and phlebotomy.

The California Board

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

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.

CCC must obtain approval from the TWC to operate its planned new

campus in Houston, Texas, and has not yet submitted its application to the TWC;

however, no assurance can be provided that we will

receive the TWC approval or the THECB approvals described below in a timely manner, or at all.

We also may be required to obtain

approvals and comply with requirements of state agencies that regulate certain occupational educational programs such as, for

example, VN and phlebotomy.

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

VN programs at HDMC, Integrity, and CCMCC are approved by BVNPT.

The phlebotomy programs at HDMC, CCC and CCMCC are approved by the

California Department of Public Health.

CCC will also require Texas Board of Nursing approval to offer VN and registered nursing

programs at the new planned campus in Houston, Texas.

CCC has submitted a letter of intent to the Texas Board of Nursing and expects

to submit its application after it receives TWC approval.

In addition, CCC will require approval from the THECB to offer degree

programs at the Houston campus, and expects to submit its applications to the THECB for UT, cardiac sonography, MRI and registered

nursing degree programs at the same time as its TWC application.

In addition, we are subject to state consumer protection

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

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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

to professional licensure or certification meet state educational requirements, and provide a direct disclosure to students in writing

if the program leading to professional licensure or certification does not meet state educational requirements in the state in which

the student is located (which is only California for our current students).

Under ED’s rules effective July 1, 2024, an institution

must certify that its programs satisfy the applicable educational requirements for professional licensure or certification needed to

practice or find employment in an occupation for which the program prepares a student in the state in which the school or where a student

is located or intends to seek employment (which, although our current students are located in California, could be a state other than

California and could require us to refrain from enrolling students in a state if our program does not satisfy the applicable educational

requirements in the state).

We believe the Title IV-eligible educational programs offered by our institutions satisfy all such currently

applicable state educational requirements for professional licensure or certification.

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, although CCC plans to seek postsecondary

authorization in Texas and has not yet submitted its application to the TWC.

CCC does not currently plan to provide programs via distance education to residents of states other than California

and Texas, and the other Legacy institutions only provide distance education to residents of California.

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

leading to professional licensure or certification meet state educational requirements, and provide a direct disclosure to students

in writing if the program leading to professional licensure or certification does not meet state educational requirements in the

state in which the student is located (which is only California for our current students, and will include Texas once students begin

classes at the planned campus in Houston).

Under ED’s rules effective July 1, 2024, an institution must certify that its

programs satisfy the applicable educational requirements for professional licensure or certification needed to practice or find

employment in an occupation for which the program prepares a student in the state in which the school is located or where a student

is located or intends to seek employment (which, although our current students are located in California, could be a state other

than California and could require us to refrain from enrolling students in a state if our program does not satisfy the applicable

educational requirements in the state).

We believe the Title IV-eligible educational programs offered by our institutions satisfy

all such currently applicable state educational requirements for professional licensure or certification.

legislatures often consider legislation affecting regulation of postsecondary educational institutions.

Our institutions are located

in California which has expansive laws and regulations impacting for-profit schools like our institutions.

Enactment of this legislation

and ensuing regulations, or changes in interpretation of existing regulations, may impose substantial costs on our institutions and require

them to modify their operations in order to comply with the new regulations.

in California (although we anticipate CCC will soon operate a location in Texas) which has expansive laws and regulations impacting

for-profit schools like our institutions.

Enactment of this legislation and ensuing regulations, or changes in interpretation of

existing regulations, may impose substantial costs on our institutions and require them to modify their operations in order to

comply with the new regulations.

we are unable to comply with applicable past, current or future state education, consumer protection, licensing, authorization or other

requirements, or determine that we are unable to cost effectively comply with new or revised requirements, we could be subject to loss

of state authorization and to monetary fines or penalties or limitations on the manner in which we conduct our business, or we could

lose enrollments, eligibility to participate in the Title IV Programs and revenues, in any affected states, which could materially affect

our results of operations and our growth opportunities.

requirements in California, Texas, and in any other states in which we may operate in the future, or determine that we are unable to

cost effectively comply with new or revised requirements, we could be subject to loss of state authorization and to monetary fines or

penalties or limitations on the manner in which we conduct our business, or we could lose enrollments, eligibility to participate in

the Title IV Programs and revenues, in any affected states, which could materially affect our results of operations and our growth opportunities.

one or more of our institutions fails to maintain institutional accreditation, or if certain of our programs cannot obtain or maintain

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educational programs.

ED requires an institution to be accredited by an ED-recognized accrediting agency in order for the institution

to participate in the Title IV Programs.

HDMC, CCC, and CCMCC are currently accredited by ACCET through April 2029, April 2030, and April

2026, respectively.

HDMC, CCC, and CCMCC are currently accredited by ACCET through April 2029, April 2030, and April 2031, respectively.

Integrity is accredited by ABHES through February 2032.

ED requires an institution to be accredited by an ED-recognized accrediting agency

in order for the institution to participate in the Title IV Programs.

ACCET and ABHES are ED-recognized accrediting agencies.

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

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

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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.

program has received initial accreditation from the Commission for Nursing Education Accreditation.

In the Spring 2026 visit cycle,

ABHES conducted a reaccreditation visit for CCMCC’s Associate of Applied Science in Surgical Technology.

CCMCC was granted

reaccreditation for the program, with no comments, through February 28, 2033.

Additionally, CCC and HDMC are pursuing initial

programmatic accreditation with ABHES for the Surgical Technology Associate of Applied Science program.

ABHES completed its Fall

2026 visit for CCC’s program and its visit report is pending;

CCC expects the ABHES commission to consider the program in

January 2027, with a decision expected in mid-February 2027.

HDMC expects to submit its self-study in November 2026 for a Spring

2027 visit, with consideration by the ABHES commission expected in July 2027 and a decision expected in August 2027.

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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agencies that accredit our colleges and universities.

Each of our institutions currently are accredited by an ED- recognized accrediting

Each of our institutions is currently accredited by an ED-recognized accrediting

The standards and practices of these agencies have become a focus of attention by state attorneys general, members of Congress,

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

ED held negotiated rulemaking sessions between January and March 2024,

and the negotiators did not reach consensus on proposed language.

ED terminated the negotiated rulemaking process for accreditation as

of December 20, 2024.

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

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

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

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

requirements applicable to our institutions.

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.

held negotiated rulemaking sessions between April and May 2026 to consider amendments to the regulations respecting the Secretary’s

recognition of accrediting agencies and related institutional eligibility requirements for the Title IV Programs.

The negotiators reached

consensus on the proposed rule, which covers topics including institutions switching from one accreditor to another, the recognition

process for accrediting agencies, and the recognition criteria for accrediting agencies, including requirements for their standards and

policies regarding acceptance of transfer credit, institutional outcomes, academic freedom, and violations of federal and state law.

The consensus language is expected to be incorporated into a notice of proposed rulemaking and will undergo a period of public notice

and comment before ED makes any amendments and publishes the final regulations.

Therefore, we cannot predict the ultimate content and

timing of the final regulations.

The earliest the new regulations could go into effect is July 1, 2027.

Any future regulations or regulatory

changes resulting from this negotiated rulemaking process could impact the ability of the accreditors that accredit our institutions

to maintain recognition by ED and the accreditation requirements applicable to our institutions.

We cannot predict whether and how such

rulemaking would impact our institutions and operations.

ED withdraws recognition from ACCET and/or ABHES in the future, ED may continue our schools’ eligibility for a period of up to

18 months from the date of the withdrawal of recognition, and our schools could apply for accreditation from other ED-recognized accrediting

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.

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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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.

July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”), which became effective July 1, 2026

and makes changes to the HEA, including changes impacting Title IV programs.

ED conducted a negotiated rulemaking process in 2025 and

2026 for the purpose of establishing new regulations implementing 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.

Negotiated Rulemaking.” 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, 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, restricts student eligibility for the Pell Grant, and establishes Workforce Pell Grants for eligible students enrolled

in certain short-term educational programs that meet eligibility requirements.

See “Risk Factors - Additional ED or other rulemaking

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

“Risk Factors - ED’s financial value transparency, gainful employment, and accountability regulations may limit the programs we can offer students

and increase our cost of operations.”

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.

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.

See “Education Regulations – Negotiated Rulemaking.”

Based on our assessment, we do not currently expect this change to have a material impact on the Pell eligibility of our

OBBBA also establishes Workforce Pell Grants for eligible students enrolled in certain short-term educational programs that meet

eligibility requirements.

See “Education Regulations - Negotiated Rulemaking.” We do not plan to participate in the

Workforce Pell Grants at this time but we may evaluate potential opportunities under the regulations in the future.

Additionally,

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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

are indications that the new administration, and potentially the U.S.

Congress, will attempt to dissolve ED, diminish its operational

role, and/or transfer some or all of its functions to one or more agencies.

In March 2025, ED implemented a reduction in force (“RIF”)

that, coupled with resignations by ED staff, reportedly reduced ED’s workforce by approximately half.

The RIF also eliminated several

school participation divisions, including the school participation division that previously oversaw the operations of our institutions,

and eliminated or significantly reduced several other offices or divisions within ED.

We currently are working with other offices and

personnel at ED on some of our pending matters, but it is possible that we could encounter delays and difficulties obtaining timely ED

approval of recent and future acquisitions of other schools.

See “Education Regulations – School Acquisitions” and

“Education Regulations – Change of Control.” We also could encounter delays and difficulties obtaining timely ED approval

of new campuses or other educational programs for which we wish to offer Title IV funds to students and which require ED approval.

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

March 2025, President Trump 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

and 2026, ED announced several new interagency agreements under which other federal agencies will provide certain services to ED.

continue 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, 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.

receiving Title IV funds, or whether our operations will be impacted by the implementation of the interagency agreements.

We also cannot

predict the success of any litigation challenging any efforts to close or restructure ED.

Any executive or legislative action impacting

ED, the availability of Title IV funds, or the rules applicable to us could have a material adverse effect on us and our institutions.

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

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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.

July 24, 2025, ED announced its intent to establish two negotiated rulemaking committees:

to implement recent changes to the Title IV,

HEA programs included in the OBBBA.

The first of the two negotiated rulemaking committees (the RISE Committee) convened for one session

in September and October and one session in November.

On November 6, 2025, the RISE Committee reached consensus on proposed regulations

related to topics including, for example, new federal student loan borrowing limits for certain borrowers and educational programs, and

the agreed upon language was incorporated into a notice of proposed rulemaking published January 30, 2026.

After a period of public notice

and comment, ED published the final rule in the Federal Register on May 1, 2026.

The final rule includes reduced limits on PLUS loans

taken out by parent borrowers for undergraduate students to the amounts of $20,000 annually and $65,000 in the aggregate per dependent

It also limits aggregate loans over a student borrower’s lifetime to $257,500.

This limitation does not apply to student

borrowers during the expected time to complete their credential if the student is enrolled in a program as of June 30, 2026 and a Direct

Loan was made for the program prior to July 1, 2026.

Institutions will also be required to reduce federal student loan limits for students

who are enrolled as less than full-time students or enrolled in a period of enrollment of less than one full academic year.

The new regulations

went into effect on July 1, 2026 along with the relevant changes in the OBBBA, which became effective on that date.

second of the two negotiated rulemaking committees (the AHEAD Committee) convened for one session in December 2025 and one session in

January 2026.

On December 12, 2025, the AHEAD Committee reached consensus on proposed regulations related to Pell Grants, including the

new Workforce Pell program.

The agreed upon language was incorporated into a notice of proposed rulemaking published March 9, 2026 and

ED solicited comments on the proposed rule with such comments due by April 8, 2026.

ED published the final regulations on May 19, 2026.

The regulations clarify which educational programs are eligible for the Workforce Pell program introduced by the OBBBA.

Under the OBBBA

and the final regulations, to be eligible a program must meet certain short-term length requirements (at least 8 but less than 15

weeks and (i) at least 150 but less than 600 clock hours, (ii) at least four but less than sixteen semester or trimester hours, or (iii)

at least six but less than 24 quarter hours) and comply with certain other prohibitions.

The regulations also clarify processes for approval

by state governors, the Secretary of Education, and a separate “value-added earnings” measure.

Among other requirements,

approval from a governor requires the governor to determine the program prepares students for an occupation that aligns with the state’s

workforce needs, and the Secretary determines whether the program meets completion, placement rate, and value-added earnings requirements.

To comply with the value-added earnings measure, the program’s total published tuition and fees may not exceed the value-added

earnings (as defined in the final regulations) of working students who received a Pell Grant for enrollment in the program and completed

the program within the applicable cohort period.

The new regulations went into effect on July 20, 2026.

Many of our programs are longer

than the eligibility requirements for the Workforce Pell program, therefore we do not plan to participate at this time, but may evaluate

potential opportunities under the regulations in the future.

January 9, 2026, the AHEAD Committee reached consensus on proposed regulations that create new accountability measures based in part

on the accountability metrics in the OBBBA and the metrics in the existing gainful employment rules.

The consensus language was incorporated

into a notice of proposed rulemaking published April 20, 2026 which underwent a period of public notice and comment (with such comments

due by May 20).

ED published the final regulations on July 1, 2026.

The new earnings premium measure applies to all degree and non-degree

programs at all institutions and eliminates the debt-to-earnings rate measure in the existing gainful employment regulations.

one or more of our programs fail to comply with the new requirements, those programs could lose access to Title IV Direct Loans, and

potentially all Title IV eligibility, which could have a material adverse effect on our student population and our revenues.

regulations could also require us to modify or eliminate programs to comply with the new regulations.

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.

- Financial Value Transparency, Gainful Employment, and Accountability Regulations.”

expect the new regulations will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact

of the regulations and guidance including any regulations further implementing the new OBBBA requirements.

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

and will continue to assess, the potential impact of the new requirements on us and our institutions and to monitor the negotiated rulemaking

held negotiated rulemaking sessions between April and May 2026 to consider amendments to the regulations respecting the Secretary’s

recognition of accrediting agencies and related institutional eligibility requirements for the Title IV Programs.

See “Education

Regulations – ED Recognition of Accrediting Agencies.” The negotiators reached consensus on the proposed rule, and the consensus

language is expected to be incorporated into a notice of proposed rulemaking and will undergo a period of public notice and comment before

ED makes any amendments and publishes the final regulations.

The earliest date the new regulations could take effect is July 1, 2027.

Any future regulations or regulatory changes resulting from this negotiated rulemaking process could impact the ability of the accreditors

that accredit our institutions to maintain recognition by ED and the accreditation requirements applicable to our institutions.

predict whether and how such rulemaking would impact our institutions and operations.

April 4, 2025, ED announced its intention to conduct negotiated rulemaking to prepare proposed regulations on topics pertaining to Title

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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.

ED published a notice of proposed rulemaking on public service loan forgiveness on August 18, 2025, and

published the final regulations on October 31, 2025 with an effective date of July 1, 2026.

The regulations include provisions that,

among other things, amend components of the public service loan forgiveness program.

current proposed regulatory agenda indicates an intent to address several topics (including through rulemaking), including changes in

ownership, cash management, administrative capability, program length requirements, financial responsibility requirements and the 90/10

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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could have a material adverse effect on our student population and our institutions, including the need to cease offering a number of

financial value transparency and gainful employment regulations may limit the programs we can offer students and increase our cost of

May 2021, ED announced its intention to initiate a rulemaking process on several topics, including gainful employment.

On May 19, 2023,

ED published a notice of proposed rulemaking on financial value transparency and gainful employment, and on October 10, 2023, ED published

final regulations which became effective on July 1, 2024.

Multiple lawsuits were filed challenging these regulations and these were consolidated

into one case.

We cannot predict the outcome of this case.

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

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

The rule establishes formulae for calculating

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

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

Under the regulations, ED

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

If these calculations

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

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

ED also requires institutions to provide warnings

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

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

The regulations also require certifications and data

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

Some of the data ED will use to calculate the

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

Therefore, it is difficult for us

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

eligibility under the new standards.

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

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

However, the new regulations could

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

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

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

financial value transparency, gainful employment, and accountability regulations may limit the programs we can offer students and increase

our cost of operations.

May 19, 2023, ED published a notice of proposed rulemaking on financial value transparency and gainful employment, and on October 10,

2023, ED published final regulations which became effective on July 1, 2024.

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

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

If these calculations show

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

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

Multiple lawsuits were filed challenging these regulations

and these were consolidated into one case in the U.S.

District Court for the Northern District of Texas.

ED subsequently filed a motion

for summary judgment, which was granted by the court on October 2, 2025, upholding the validity of the regulations.

On November 24, 2025,

the plaintiffs appealed the summary judgment ruling.

We cannot predict the outcome of the appeal at the Fifth Circuit Court of Appeals.

rule establishes formulae for calculating these rates using data such as student debt, student earnings data, and median earnings data

for working adults with only a high school diploma or GED, which the rule uses to compare to median earnings data of the institution’s

Under the regulations, ED will annually calculate and publish the debt-to-earnings rates and median earnings data for our

educational programs.

ED published final regulations on July 1, 2026 that create new accountability measures based in part on the accountability metrics in

the OBBBA and the metrics in the existing gainful employment rules.

The new earnings premium measure applies to all degree and non-degree

programs at all institutions and eliminates the debt-to-earnings rate measure in the existing gainful employment regulations.

earnings premium measure for undergraduate programs (as opposed to the separate measure for graduate programs), the median annual earnings

of program completers are compared to the “earnings threshold,” which is the median earnings of holders of high school diplomas

who are working adults aged 25-34 using the methodology prescribed in the regulations.

If a program does not meet the applicable standard,

the institution must provide a prescribed warning to students and prospective students explaining that it has not passed ED’s standards

based on reported earnings of program graduates and that the program could lose access to Direct Loans based on the next calculated metrics.

The warning must also include information about accessing the program information website maintained by ED and explain that the student

must acknowledge the student viewed the warning in order for the institution to disburse Title IV funds to the student.

If the program

fails the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated,

this would result in the program’s loss of eligibility for Title IV Direct Loans once ED completes a termination action under its

established proceedings, unless the institution successfully appeals under those proceedings.

If more than 50% of an institution’s

Title IV-recipient students enrolled in, or more than 50% of the institution’s total Title IV funds are from, programs that fail

the earnings premium measure in two out of three consecutive award years for which the earnings premium measure is calculated, the institution

could be deemed not administratively capable and be placed on provisional status, and the programs could potentially lose access to all

Title IV HEA funds if the institution does not successfully appeal the determination.

If the institution meets this threshold in at least

one of the three most recent consecutive award years, the institution must provide a warning explaining that program could also lose

access to the other Title IV funds.

The final rule also, among other things, describes the process and formulas for calculating earnings

accountability measures, revises the requirements for institutional reporting to ED, specifies the period of ineligibility for programs

that fail the earnings premium measure, allows for limited retention of eligibility during orderly program closure, and modifies the

institutional data ED is required to disclose on its program information website (this data will continue to include a program’s

earnings premium measure).

new regulations will go into effect on July 1, 2027 with certain provisions having taken effect on August 31, 2026.

It is expected that the first accountability measure calculations will take place in early 2027, and that programs cannot lose

eligibility under the new rules until July 1, 2028 after the second accountability measures have been calculated.

These dates are

subject to change.

We are currently evaluating the potential impact of the regulations on the Company.

If one or more of our

programs fail to comply with the new requirements, those programs could lose access to Title IV Direct Loans, and potentially all

Title IV eligibility, which could have a material adverse effect on our student population and our revenues.

The new regulations

could also require us to modify or eliminate programs to comply with the new regulations.

expect the new regulations will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact

of the regulations and guidance including any regulations further implementing the new OBBBA requirements.

We are currently assessing,

and will continue to assess, the potential impact of the new requirements on us and our institutions and to monitor the negotiated rulemaking

issued guidance on August 11, 2026 requiring institutions that failed to report, or fully report, gainful employment data for prior

years to provide such data by January 15, 2027.

If one or more of our institutions fail to meet the October 1, 2026 reporting

deadline for the most recent year of gainful employment data or fail to provide any missing gainful employment data for prior years

by January 15, 2027, ED could impose fines or sanctions or could take administrative action against our institutions.

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

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Under the 2017 version of the BDR regulations, borrowers with federal student loans disbursed

after July 1, 2017 can assert a defense to repayment and be eligible for relief based on a nondefault, favorable, contested judgement

after July 1, 2017 can assert a defense to repayment and be eligible for relief based on a nondefault, favorable, contested judgment

against the institution from a state or federal court;

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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.

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.

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

The 2022 version of the BDR regulations were to take effect on July 1, 2023, in addition to certain closed school loan

discharge provisions that are part of the same rule, but are currently enjoined and delayed.

The Career Colleges and Schools of

Texas (“CCST”) filed a complaint challenging the regulations in February 2023.

In April 2024, the U.S.

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

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

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

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

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, which first became effective in 2020, generally remain in effect in the meantime

and apply different substantive standards and procedures based on when a BDR claimant’s loans were disbursed.

CCST filed an

amended complaint in March 2026 to also challenge the version of the BDR regulations that became effective in 2020.

predict the outcome of this pending litigation.

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

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In addition, under the settlement, any borrower who filed a defense to repayment claim between June 22, 2022 and

November 15, 2022 are “Post-Class Applicants” whose applications will be adjudicated under the 2016 version of the BDR regulations

and will be decided by January 2026.

November 15, 2022 are “Post-Class Applicants” whose applications were to be adjudicated under the 2016 version of the BDR regulations

and decided by January 2026.

HDMC received and timely responded to seven 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.

If we or our representatives are found to have engaged in certain acts or omissions under the broad definitions contained in the 2016

version of the BDR regulations, or other BDR regulations that could be in place in the future, we could be subject to substantial repayment

obligations and subject to other sanctions.

CCC, Integrity,

and CCMCC (at least since we acquired CCMCC) did not receive any BDR applications from Post-Class Applicants.

If we or our representatives

are found to have engaged in certain acts or omissions under the broad definitions contained in the 2016 version of the BDR regulations,

or other BDR regulations that could be in place in the future, we could be subject to substantial repayment obligations and subject to

other sanctions.

March 2026, CCC has received six BDR applications from ED, HDMC has received eighteen BDR applications from ED, and Integrity has received

four BDR applications from ED.

CCC, HDMC, and Integrity have either timely responded to, or are in the process of timely responding to,

these BDR applications, disputing the validity of the claims.

CCMCC has not received any BDR applications in 2026.

ED published guidance

on March 30, 2026 explaining that it had resumed adjudicating BDR applications that are not impacted by the Sweet v.

Cardona settlement.

The guidance explains that ED will adjudicate the BDR applications under the currently effective regulations, and that ED will notify

institutions of the applications received.

It is possible that we could receive BDR claims in the future, including because the March

30, 2026 guidance indicates ED had not yet notified institutions of BDR claims that would be adjudicated under the version of the BDR

regulations that became effective in 2020.

If we or our representatives are found to have engaged in certain acts or omissions under

the definitions contained in the BDR regulations, or other BDR regulations that could be in place in the future, we could be subject

to substantial repayment obligations and subject to other sanctions.

enjoined 2022 version of the BDR regulations, and the versions of the BDR regulations that are currently in effect and that could be

in effect in the future, could have a material adverse effect on our business, financial condition, results of operations, and cash flows

and result in the imposition of significant restrictions on us and our ability to operate, including a requirement that our institutions

to submit a letter of credit based on expanded standards of financial responsibility.

and result in the imposition of significant restrictions on us and our ability to operate, including a requirement that our institutions submit a letter of credit based on expanded standards of financial responsibility.

See “Risk Factors - A failure to maintain

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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.

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.

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 the OBBBA.

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.

ED’s financial responsibility

standards also include other requirements which, among other things, can deem an institution to lack financial responsibility if (1) the

institution’s audited financial statements include an adverse, qualified, or disclaimed auditor’s opinion unless ED determines

such opinion does not have a significant bearing on the institution’s financial condition, or (2) a disclosure in the notes to the

financial statements about diminished liquidity, ability to continue operations, or ability to continue as a going concern unless ED determines

this condition has been alleviated.

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

We have calculated our composite

score for the 2024 fiscal year to be 3.0, however this score is subject to determination by ED based on its review of our consolidated

audited financial statements for the 2024 fiscal year.

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.

We have calculated our

composite score for the 2025 fiscal year to be 3.0, however this score is subject to determination by ED based on its review of our

consolidated audited financial statements for the 2025 fiscal year.

Our next composite score will be calculated based on audited

financial statements for the 2026 fiscal year due for submission to ED by December 31, 2026.

We expect the composite score for the

2026 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 2026 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.

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

form of financial protection for 25% of the refunds that were made for the fiscal year ended June 30, 2023 in the amount of $18,828.

On or about February 13, 2025, due to a failure to timely return unearned Title IV Program funds to ED in the 2023 fiscal year

(prior to the Company acquiring CCMCC), CCMCC was required to submit an acceptable form of financial protection in the amount of

Integrity and CCMCC have submitted the required financial protection to ED.

See “Education Regulations - Return of

Title IV Program Funds.”

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

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

BDR claim decided in borrower’s favor;

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

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

after a BDR claim is decided in the borrower’s favor;

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

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

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

fiscal year has a recalculated composite score of.

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

fiscal year has a recalculated composite score of less than 1.0 as determined by ED as a result of a withdrawal of owner’s

equity from the institution unless certain exceptions apply;

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

employment programs;

institution received at least half of its Title IV funds in the institution’s most recently completed fiscal year from

educational programs that are “failing” under the earnings accountability criteria;

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

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

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

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

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

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

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

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

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

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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.

current proposed regulatory agenda includes an intent to address certain issues including financial responsibility requirements via negotiated

We cannot predict whether or how ED will address these requirements or the impact any future 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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in a timely manner, all reports and financial statements required by the Title IV Program regulations;

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

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

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

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

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

does not have educational programs that “fail” accountability measures and that represent 50 percent or more of

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

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

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and results of operations.

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

to address certain issues including administrative capability requirements.

We cannot predict whether ED intends to address these requirements

through negotiated rulemaking, published guidance, or other actions, nor can we predict the impact on our institutions of any changes

that might occur to the administrative capability requirements.

We are continuing to monitor developments on this topic.

on the Company’s fiscal year end, our annual compliance audits and audited financial statements were due to ED on December 31, 2025.

Due to issues with ED’s systems which the Company raised to ED prior to the submission deadline, our institutions were

unable to access the eZ-Audit portal to upload the annual audit submissions to ED.

As such, ED could conclude that the annual audit

submissions were not filed timely as required and impose sanctions (which we would have the opportunity to appeal).

current proposed regulatory agenda includes an intent to address certain issues including administrative capability requirements.

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.

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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IV Programs, limitations on Title IV Program participation or financial penalties.

On July 17, 2024, ED announced it will issue guidance

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

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

federal educational assistance programs is too high.

the HEA, a proprietary institution that derives more than 90% of its total revenue from the Title IV Programs or, for fiscal years beginning

on or after January 1, 2023, from all federal educational assistance funds, for two consecutive fiscal years becomes immediately ineligible

to participate in the Title IV Programs and may not reapply for eligibility until the end of at least two fiscal years (“90/10

An institution whose receipts of applicable funds exceeds 90% of revenue for a single fiscal year will be placed on provisional

certification, be required to notify ED and its students of the possibility of a loss of Title IV Program eligibility, and may be subject

to other enforcement measures, including a requirement to submit a letter of credit.

See “Business - Education Regulations - Financial

Responsibility Standards.” We have calculated the 90/10 Rule percentages for the 2024, 2023, and 2022 fiscal years as follows for

HDMC, CCC, and Integrity:

HDMC 87.55%, 84.53%, and 82.17%;

the HEA, a proprietary institution that derives more than 90% of its total revenue from the Title IV Programs or, for fiscal years

beginning on or after January 1, 2023, from all federal educational assistance funds, for two consecutive fiscal years becomes

immediately ineligible to participate in the Title IV Programs and may not reapply for eligibility until the end of at least two

fiscal years (“90/10 Rule”).

An institution whose receipts of applicable funds exceed 90% of revenue for a single

fiscal year will be placed on provisional certification, be required to notify ED and its students of the possibility of a loss of

Title IV Program eligibility, and may be subject to other enforcement measures, including a requirement to submit a letter of

See “Business - Education Regulations - Financial Responsibility Standards.” If an institution violated the

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

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

have calculated the 90/10 Rule percentages for the 2025, 2024, and 2023 fiscal years as follows for HDMC, CCC, and Integrity:

86.82%, 87.55%, and 84.53%;

CCC 80.35%, 79.51%, and 74.48%;

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.

and Integrity 84.71%, 84.19%, and 88.14% respectively.

90/10 Rule percentage available at the time the Company was acquiring CCMCC was 48.63%, for its 2025 fiscal year was 59.80%, and the

percentage for the 2026 fiscal year is expected to be below 90%.

Our calculations of the 90/10 Rule percentage for the 2026 fiscal

year for HDMC, CCC, Integrity, and CCMCC are due on December 31, 2026 and each is expected to be below 90%.

The 90/10 calculations

for our institutions are subject to review and potential recalculation by ED.

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

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

If ED comes out with additional

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

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

All of these calculations are subject to review,

differing interpretations, and potential recalculation by ED which makes it more difficult for our institutions to comply with the

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

the same manner as Title IV Program funds in the 90/10 Rule percentage.

This amendment requires our institutions to limit the combined

amount of Title IV Program funds and other federal student financial assistance funds in a fiscal year to no more than 90% in a fiscal

year as calculated under the 90/10 Rule.

ED published final regulations on the 90/10 Rule on October 28, 2022.

The final regulations

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

funds under the new 90/10 Rule.

The funds include GI Bill funding and Military Tuition Assistance, among other sources of funds.

the change in the 90/10 Rule will increase our 90/10 Rule percentages and make it more difficult to comply with the 90/10 Rule and could

require changes to maintain compliance.

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

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

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.

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

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

loss of eligibility.

amended the 90/10 Rule by treating other federal student financial assistance funds in the same manner as Title IV Program funds in the

90/10 Rule percentage.

This amendment requires our institutions to limit the combined amount of Title IV Program funds and other federal

student financial assistance funds in a fiscal year to no more than 90% in a fiscal year as calculated under the 90/10 Rule.

final regulations on the 90/10 Rule on October 28, 2022.

The final regulations became effective July 1, 2023 and applied to fiscal years

beginning on or after January 1, 2023 (which was the fiscal year ending June 30, 2024 for our schools).

The new rule modified how institutions

counted revenue when calculating compliance with the 90/10 Rule, and added a requirement to notify students of the potential loss of

eligibility resulting from not meeting the 90/10 standard, among other changes.

ED has published a Notice in the Federal Register listing

the types of funds that are considered federal education assistance funds under the new 90/10 Rule.

The funds include GI Bill funding

and Military Tuition Assistance, among other sources of funds.

We expect the change in the 90/10 Rule will increase our 90/10 Rule percentages

and make it more difficult to comply with the 90/10 Rule and could require changes to maintain compliance.

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.

However, under a provision of the

OBBBA that became 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

In addition, there is a lack of clarity regarding some of the technical aspects of the calculation methodology under the

90/10 Rule, which may lead to regulatory action or investigations by ED.

Changes in, or new interpretations of, the calculation

methodology or other industry practices under the 90/10 Rule could further significantly impact our compliance with the 90/10 Rule,

and responding to any review or investigation by ED involving us could require a significant amount of resources.

Efforts to reduce

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

interpretations of the 90/10 Rule that are without clear precedent, reduce our revenue or increase our operating expenses (or all of

the foregoing, in each case perhaps significantly).

Because of the changes to the 90/10 Rule made by ARPA and ED, we may be required

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

conduct our business and materially and adversely impact our business, financial condition, results of operations and cash flows.

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

regulatory requirements, such as the cohort default rate regulations.

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

90/10 Rule or whether such changes will have other adverse effects on our business.

ED’s current proposed regulatory agenda includes

an intent to address certain Title IV eligibility issues via negotiated rulemaking, including amendments to the 90/10 Rule.

predict whether or when ED may amend the 90/10 Rule or the impact any changes to the 90/10 Rule may have on our schools.

institutions could lose their eligibility to participate in the Title IV Programs or have other limitations placed upon them if their

federal student loan cohort default rates are greater than the standards set by ED.

federal student loan cohort default rates are greater than the standards set forth in the HEA and implemented by ED.

HEA limits participation in the Title IV Programs by institutions whose percentage of former students who defaulted on the repayment

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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%;

These are the most recent final rates published

The rates for our existing institutions for the 2022, 2021, and 2020 federal fiscal years respectively are as follows:

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.

Consequently, none of our institutions had a cohort

default rate equal to or greater than 30% for the 2022, 2021, and 2020 federal fiscal years.

In March 2026, ED released the draft cohort

default rates for the 2023 federal fiscal year.

The draft rates for our institutions for the 2023 federal fiscal year are as follows:

HDMC 0.3%, CCC 1.4%, Integrity 0%, and CCMCC 0.5%.

During the COVID-19 pandemic, ED temporarily suspended federal student loan repayment

This suspension, which lasted over three years, contributed to a reduction in our cohort default rates.

Our cohort default

rates could be substantially higher for the periods after October 2023, when the suspension expired if borrowers do not timely repay

their federal student loans.

We are engaging in activities aimed at reminding borrowers of their obligations to repay loans and to reduce

the number of borrowers who default on their loans;

however, we cannot predict or guarantee that these activities will be successful

or that the cohort default rates will not increase or exceed applicable eligibility thresholds.

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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ED denies, or significantly conditions, recertification of any of our institutions to participate in the Title IV Programs, that institution

could not conduct its business as it is currently conducted.

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;

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.

could not conduct its business as it is currently conducted and it could have an adverse effect on our business and results of operations.

the provisions of the HEA, an institution must apply to ED for continued certification to participate in the Title IV Programs at least

every six years or when it undergoes a change in ownership resulting in a change of control.

ED defines an institution to consist of

both a main campus and its additional locations, if any.

Under this definition, for ED purposes, we operate the following four institutions,

collectively consisting of four main campuses and two additional locations:

HDMC with locations in Lancaster, Bakersfield, and Temecula;

CCC with a location in Salinas and a planned new location in Houston, Texas, Integrity located in Pasadena, and CCMCC with a location

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, and these institutions have timely applied for recertification by ED and remain eligible to participate in the Title IV Programs during ED’s review of the recertification applications.

expiration date of the program participation agreement for Integrity is March 31, 2029.

CCMCC is currently participating in the Title

IV Programs under a temporary provisional program participation agreement in connection with the 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 but it 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 CCMCC’s pending application 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 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.

Integrity is currently approved under a provisional program participation agreement following ED’s approval of its change in ownership and CCMCC is currently approved under a temporary provisional program participation agreement.

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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The revised certification regulations are expansive, complex and could

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

If ED finds that any of our institutions

do not fully satisfy all required eligibility and certification standards, ED could limit, condition, suspend, terminate, revoke, or

decline to renew our institutions’ participation in the Title IV Programs or impose liabilities or other sanctions.

Continued Title

IV Program eligibility is critical to the operation of our business.

If our institutions become ineligible to participate in the Title

IV Programs, or have that participation significantly conditioned, we may be unable to conduct our business as it is currently conducted

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

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

If ED finds that any of our institutions do not fully satisfy

all required eligibility and certification standards, ED could limit, condition, suspend, terminate, revoke, or decline to renew our

institutions’ participation in the Title IV Programs or impose liabilities or other sanctions.

Continued Title IV Program eligibility

is critical to the operation of our business.

If our institutions become ineligible to participate in the Title IV Programs, or have

that participation significantly conditioned, we may be unable to conduct our business as it is currently conducted which would have

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

we acquire an institution, the acquisition generally constitutes a change in ownership and control that requires the institution to obtain

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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.

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

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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.

ED’s current proposed regulatory agenda 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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could be impacted by any conditions or restrictions imposed by ED or other agencies on the institution under our ownership.

December 31, 2019, we entered into a Membership Interest Purchase Agreement with the sole member of Integrity.

We purchased from the

sole member of Integrity on that date 24.5% of her interest and obtained an exclusive option to acquire her remaining membership interest

upon payment of $100, which was exercised on September 15, 2020.

For purposes of our financial statements, our acquisition of Integrity

is deemed to have been effective as of December 31, 2019.

We believe that a change in ownership and control of Integrity did not occur

until September 15, 2020 under the change in ownership and control standards of ED and the other educational agencies that regulate Integrity,

but these standards are subject to interpretation by the respective agencies.

The review by ED of the change in ownership and control

of Integrity in connection with our acquisition of Integrity remains ongoing.

Integrity currently holds a temporary provisional program

participation agreement with ED in connection with our acquisition of the institution, which has continued its Title IV Program participation

on a month-to-month basis pending ED’s approval of the change in ownership and control.

If ED concludes that a change in ownership

or control of Integrity occurred prior to September 15, 2020, we could be subject to liabilities or other sanctions by ED, which could

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.

June 29, 2026, ED confirmed Integrity remains an eligible institution that

qualifies to participate in the Title IV Programs and issued a provisional program participation agreement to Integrity, which will

remain in effect until March 31, 2029.

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

with the Company, Legacy Education, LLC, a wholly-owned subsidiary of the Company, CCMCC, CCMCC Online and, solely with respect to

certain portions of the APA, Stacey Orozco and Bulmaro Orozco, the sole owners of CCMCC and CCMCC Online.

The CCMCC Transaction was

consummated on December 18, 2024.

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

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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

like CCMCC, 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.

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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.

On April 28, 2025,

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

Accreditation

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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.

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

BVNPT verified it had received

notice of the change of ownership on July 17, 2025.

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

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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.

notified CDPH of the change and submitted the application on February 6, 2025.

CDPH approved the application, and the approval is

valid through January 2027.

CCMCC is in the process of submitting its next renewal application.

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

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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.

as an accredited institution in the states where the institution operates and may subject the institution to further conditions or restrictions

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

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

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

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

several hundred owners.

CCMCC may also encounter additional difficulty reporting ownership given ED has not yet approved the prior change

in control of CCMCC 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.

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

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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,

have verified that most of our education regulators and accreditors did not treat the Company’s initial public offering that occurred

in 2024 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

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 the future.

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

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

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

with the applicable accreditation standards.

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.

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

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 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.

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

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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.

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.

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

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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.

ED regulations provide that

a change of control of a publicly traded corporation 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.

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

On or about February 13, 2025, due to a failure to timely return unearned Title

IV Program funds to ED in the 2023 fiscal year (prior to the Company acquiring CCMCC), CCMCC was required to submit an acceptable form

of financial protection in the amount of $15,356.

Integrity and CCMCC have submitted the required financial protection to ED.

January through March 2024, ED conducted negotiated rulemaking to prepare proposed regulations on several topics including the rules

pertaining to returns of Title IV Program funds.

On July 24, 2024, ED promulgated proposed amended regulations related to return of Title

IV calculations.

On July 24, 2024, ED promulgated proposed amended regulations related to return of

Title IV calculations.

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

state and accrediting agencies.

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 change Return of Title IV calculations amended for programs

offered in modules.

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

and accrediting agencies.

educational institutions must be authorized by their state education agencies and be fully operational for two years before applying

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review and approval of new campuses.

Effective July 1, 2024, ED has discretion to condition the participation of provisionally certified

schools by restricting or limiting the addition of new programs or locations.

If ED chose to impose such a condition on one or more of

our institutions, that could negatively impact our expansion plans.

CCC plans to open a new additional location in Houston, Texas and is in the process of seeking requisite

educational agency approvals.

CCC submitted its application to ACCET for approval of the Houston location on September 17, 2026, and the application

is under review.

Effective July 1, 2024, ED has discretion to condition the participation of provisionally certified schools

by restricting or limiting the addition of new programs or locations.

If ED chose to impose such a condition on one or more of our institutions,

that could negatively impact our expansion plans.

student may use Title IV Program funds only to pay the costs associated with enrollment in an eligible educational program offered by

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our institutions to generate revenues from sources other than the Title IV Programs and other federal financial assistance.

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

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

aid available to our students.

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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.

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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the institution’s administration of Title IV Program funds.

Each of our institutions 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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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.

On July 17, 2026, ED published guidance regarding its

real-time FAFSA fraud detection process, which reminded institutions that they have a fiduciary responsibility for ensuring Title IV

funds are disbursed only to eligible students and are responsible for improper payments even in cases of fraud.

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 raising capital could be more difficult.

404 of Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), requires annual management assessments of the effectiveness

of our internal control over financial reporting.

If we fail to comply with the rules under Sarbanes-Oxley related to disclosure controls

and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures,

our stock price could decline significantly and raising capital could be more difficult.

If material weaknesses or significant deficiencies

are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure that

we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404

of Sarbanes-Oxley.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important

to helping prevent financial fraud.

If we cannot provide reliable financial reports or prevent fraud, our business and operating results

could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could

drop significantly.

404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”), requires annual management assessments of the

effectiveness of our internal control over financial reporting.

If we fail to comply with the rules under Sarbanes-Oxley related to

disclosure controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal

control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.

material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our

internal control, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls

over financial reporting in accordance with Section 404 of Sarbanes-Oxley.

Moreover, effective internal controls are necessary for

us to produce reliable financial reports and are important to helping prevent financial fraud.

If we cannot provide reliable

financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our

reported financial information, and the trading price of our common stock could drop significantly.

financial performance depends on the level of student enrollment in our institutions.

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In addition, federal and other regulatory limitations on the

use of pre-dispute resolution clauses and class action waivers in student enrollments agreements may result in increased litigation costs.

use of pre-dispute resolution clauses and class action waivers in student enrollment agreements may result in increased litigation costs.

cannot predict the ultimate outcome of these and future matters and may incur significant defense costs and other expenses in connection

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Under ED regulations effective July 1, 2024, a discontinuation of programs or locations that enroll

more than 25 percent of an institution’s enrolled students can constitute a discretionary triggering event if ED determines the

discontinuation is likely to have a significant adverse effect on the financial condition of the institution.

The benefits anticipated

from closing facilities, other exit activities or restructuring activities such as those involved in our transformation strategy may

be less than anticipated due to a number of factors including unanticipated expenses in teaching out campuses and higher than expected

Negative trends in the real estate market could impact the costs related to teaching out campuses and the success of our

initiatives to reduce our real estate obligations.

Finally, our transformation strategy may not achieve the anticipated cost savings

and business efficiencies.

more than 25 percent of an institution’s enrolled students who receive Title IV funds can constitute a discretionary triggering

event if ED determines the discontinuation is likely to have a significant adverse effect on the financial condition of the institution.

The benefits anticipated from closing facilities, other exit activities or restructuring activities such as those involved in our transformation

strategy may be less than anticipated due to a number of factors including unanticipated expenses in teaching out campuses and higher

than expected lease costs.

Negative trends in the real estate market could impact the costs related to teaching out campuses and the

success of our initiatives to reduce our real estate obligations.

Finally, our transformation strategy may not achieve the anticipated

cost savings and business efficiencies.

financial performance depends, in part, on our ability to keep pace with changing market needs and technology.

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whether or not they are consummated.

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

addition, we have limited experience in acquiring other businesses.

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

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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.

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

unanticipated

costs or liabilities associated with the acquisition;

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

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

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;

of management’s attention from other business concerns;

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

potential loss of key employees;

of resources that are needed in other parts of our business;

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

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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.

are subject to the rules and regulations 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

If we fail to meet

any of the NYSE American’s continued listing standards or we violate NYSE American listing requirements, our common stock may be

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 investment.

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

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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

we 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.

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

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.

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.

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

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our common stock would be negatively impacted.

If one or more of the analysts who covers us downgrades our common stock or publishes

If one or more of the analysts who cover us downgrades our common stock or publishes

incorrect or unfavorable research about our business, our stock price would likely decline.

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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 at least $1.235 billion, (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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors