What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-09-24 compared with 2025-09-25 · 196 added, 182 removed, 233 unchanged (62% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

should read the following discussion and analysis of our financial condition and plan of operations together with and our accompanying

should read the following discussion and analysis of our financial condition and plan of operations together with our accompanying

consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K.

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College of Health.

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

We purchased from the sole member of Integrity on that date 24.5% of her interest and obtained an exclusive option to acquire her remaining

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

For purposes of our financial statements, the acquisition

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HDMC offers UT, VN, VN Associate

of Applied Science degree program, Associate Degree of Nursing, nursing assistant, MRI Associate of Applied Science, cardiac sonography,

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

veterinary assistant, phlebotomy technician avocational, nursing assistant avocational, UT Associate of Applied Science degree programs,

and an EMT program.

HDMC also has obtained approval ACCET to offer a surgical technology Associate of Applied Science program and sterile

processing technician program and plans to begin doing so in October 2025, pending receipt of approval from the BPPE and ED.

30, 2025, HDMC had 1,956 students enrolled in its programs.

of Applied Science degree program, Associate Degree of Nursing, Nursing Assistant, MRI Associate of Applied Science, Cardiac Sonography, Pharmacy Technician, Dental Assisting, Clinical

Medical Assisting, Medical Administrative Assisting, Medical Billing and Coding, Veterinary Assistant, Phlebotomy Technician avocational,

UT Associate of Applied Science degree programs, EMT, Surgical Technology Associate of Applied Science, and Sterile Processing Technician

As of June 30, 2026, HDMC had 2,097 students enrolled in its programs.

Coast College

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growing enrollment numbers and the addition of new training programs.

In September 2026, CCC entered into a lease for a new, additional location

in Houston, Texas, which CCC currently projects to open in November 2026, subject to receipt of the required regulatory

and accreditation approvals.

offers the following certificate or degree programs:

business administrative specialist, computer specialist:

accounting, medical administrative

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

of Applied Science, VN, surgical technology (Associate of Applied Science), dental assisting, sterile processing technician and pharmacy

Computer Specialist:

Accounting, Medical Administrative Assistant, Medical Assisting, Nursing Assistant, UT, UT Associate

of Applied Science, Veterinary Assistant, Veterinary Technology Associate of Applied Science, VN, Surgical Technology (Associate of Applied

Science), Dental Assisting, Sterile Processing Technician, Pharmacy Technician, MRI Associate of Applied Science, and Cardiac Sonography

Associate of Applied Science.

CCC also offers an avocational Phlebotomy Technician program.

CCC also has obtained approval from ACCET to offer an MRI Associate

of Applied Science Program and cardiac sonography Associate of Applied Science programs and plans to begin doing so in October 2025,

pending receipt of additional approvals.

As of June 30, 2026, CCC had 576 students enrolled in its programs.

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Integrity offers VN,

VN Associate of Applied Science, RN to BSN, medical assisting, medical billing and coding, veterinary assistant, and Diagnostic Medical

Sonography programs.

Integrity also plans to offer an EMT program beginning in early 2026 and is in the process of obtaining approvals

for the program (for which Integrity is not planning for ED approval to make Title IV funds available for students who enroll in the

For purposes of our financial statements, Legacy Education, L.L.C.

RN to BSN, Medical Assisting, Medical Billing and Coding, Veterinary Assistant, Sterile Processing Technician, and

Diagnostic Medical Sonography programs.

Integrity also plans to offer an EMT program (for which Integrity is not planning to seek ED approval

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

Integrity has filed its application

for the program with BPPE, is awaiting final approval and expects to begin offering the program in late 2026.

Integrity earned initial

accreditation from NLN CNEA for its Bachelor of Science in Nursing RN to BSN Track in June 2025.

For purposes of our

financial statements, Legacy Education, L.L.C.

is deemed to have acquired Integrity in December 2019.

of June 30, 2025, Integrity had 202 students enrolled in its programs.

As of June 30, 2026, Integrity

had 196 students enrolled in its programs.

Costa Medical Career College

offers the following certificate and degree programs:

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

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

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

was established in the State of California in 2007.

CCMCC’s campus is located in Antioch, California.

CCMCC offers the

following certificate and degree programs:

VN, Surgical Technology (Associate of Applied Science), Sterile Processing Technician, Pharmacy Technician, Diagnostic

Medical Sonography, Medical Assisting with Phlebotomy, Dental Assisting, Clinical Medical Assisting, EKG/ECG Technician, Medical Administrative

Assistant/Billing and Coding Specialist, and Phlebotomy (avocational) programs.

CCMCC also has obtained approval from ACCET and BPPE to

offer programs in Cardiac Sonography Associate of Applied Science, Veterinary Assistant, and MRI Associate of Applied Science, and plans to begin offering the programs in the second quarter of fiscal 2027.

As of June 30, 2026, CCMCC had 508 students enrolled in its programs.

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believe that we have sufficient capital to withstand a potential downturn in our business.

Regulatory agencies have also provided regulatory

capital relief to institutions as a result of the crisis as discussed below.

Impact from COVID-19 Pandemic

March 27, 2020, Congress enacted the CARES Act, which included a $2 trillion federal economic relief package providing financial assistance

and other relief to individuals and business impacted by the spread of COVID-19.

The spread of COVID-19 has had an unprecedented impact

on higher educational institutions across the country, including our schools, and has led to the closure of campuses and the transition

of academic programs from on-ground to online delivery.

The CARES Act includes provisions for financial assistance and other regulatory

relief benefitting students and their postsecondary institutions.

other things, the CARES Act included a $14 billion Higher Education Emergency Relief Fund (“HEERF”) for ED to distribute

directly to institutions of higher education.

Institutions were required to use at least half of the HEERF funds for emergency grants

to students for expenses related to disruptions in campus operations (e.g., food, housing, etc.).

Institutions were permitted to use

the remainder of the funds for additional emergency grants to students or to cover institutional costs associated with significant changes

to the delivery of instruction due to the COVID-19 emergency, provided that those costs do not include payment to contractors for the

provision of pre-enrollment recruitment activities, endowments, or capital outlays associated with facilities related to athletics, sectarian

instruction, or religious worship.

The law required institutions receiving funds to continue to the greatest extent practicable to pay

its employees and contractors during the period of any disruptions or closures related to the COVID-19 emergency.

subsequently allocated funds to each institution of higher education based on a formula contained in the CARES Act.

The formula was heavily

weighted toward institutions with large numbers of Pell Grant recipients.

ED collectively allocated approximately $3.1 million to our

As of June 30, 2022, we had used approximately $2.1 million on student grants and approximately $1.0 million of the allocated

funds were reimbursements for qualified expenses.

These qualified expenses were reflected on the statement of operations as reductions

to general and administrative expenses.

The failure to comply with requirements for the usage and reporting of these funds could result

in requirements to repay some or all of the allocated funds and in other sanctions.

the fiscal year ended June 30, 2021, we applied for certain Employee Retention Credits (“ERTC”) under the CARES Act in the

approximate $2.9 million, which was reflected within the statement of operations as a reduction to educational services expense.

remaining balance of the ERTC receivable as of December 31, 2023 was $47,000.

the fiscal year ended June 30, 2020, pursuant to the Payroll Protection Program (“PPP”) established under the CARES Act,

we had obtained a loan in the amount of $1.4 million (“PPP Loan”).

Upon our request, the PPP Loan was subject to forgiveness,

to the extent that the proceeds were used to pay expenses permitted by the PPP, including payroll costs, covered rent, mortgage obligations

and covered utility payments.

We submitted a request for full forgiveness to the lender, with the expectation that the PPP Loan would

be forgiven in full.

As a result, during the period ended June 30, 2020, we recorded the full amount of the PPP Loan received as other

We received forgiveness in full of the PPP Loan during the fiscal year ended June 30, 2021.

CARES Act also contained separate educational provisions that relieved both institutions and students from complying with the requirement

to return certain Title IV Program funds following a student’s withdrawal as a result of the COVID-19 emergency.

Ordinarily, when

a student withdraws, the institution (and, in some cases, the student) may be required to return unearned portions of the Title IV Program

funds awarded for the period.

Institutions are required to report to ED the total amount of grant and loan funds the institution has

not returned due to the waiver.

For federal loan borrowers, the CARES Act also directed ED to cancel the borrower’s obligation

to repay any direct loan associated with the relevant period.

The law also expanded the options to avoid student withdrawals due to a

cessation of attendance by placing students on an approved leave of absence and waives certain requirements normally applicable to a

leave of absence.

The CARES Act also allowed institutions to exclude from the calculation of a student’s satisfactory academic

progress any attempted credits not completed due to the COVID-19 emergency.

December 27, 2020, Congress enacted the Consolidated Appropriations Act, 2021.

This annual appropriations bill contained the Coronavirus

Response and Relief Supplemental Appropriations Act, 2021 (“CRRSAA”).

CRRSAA provided an additional $81.9 billion to the

Education Stabilization Fund including $22.7 billion for HEERF, which were originally created by the CARES Act in March 2020.

education provisions of the CRRSAA were intended in part to provide additional financial assistance benefitting students and their postsecondary

institutions in the wake of the spread of COVID-19 across the country and its impact on higher educational institutions.

the CARES Act, the CRRSAA directed the majority of HEERF funds to a general program providing direct grants to institutions.

generally were required to designate “at least the same amount” of the funds for direct grants to students as was required

under the CARES Act.

However, for-profit institutions could only use the additional HEERF funds under the CRRSAA for grants to students.

The student grants had to prioritize students with exceptional need and could be used for any component of the student’s cost of

attendance or for emergency costs that arose due to coronavirus, such as tuition, food, housing, health care (including mental health

care), or childcare.

Public and nonprofit institutions could use the remaining HEERF funds to (1) defray expenses associated with coronavirus

(including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education,

faculty and staff trainings, and payroll);

(2) carry out student support activities authorized by the HEA that address needs related

to coronavirus;

or (3) for additional financial aid grants to students.

ED collectively allocated approximately $1.15 million in CRRSAA

funds to our schools.

As of June 30, 2023, our schools had expended all of these funds on grants to our students.

March 2021, Congress enacted the $1.9 trillion ARPA.

ARPA provided nearly $40 billion in relief funds that go directly to colleges and

universities with $395.8 million going to for-profit institutions.

Institutions are required to spend at least half of their allocations

on emergency financial aid grants to students.

did not incur any benefits related to federal funds directly resulting from COVID-19 programs in each of the fiscal years ended June

30, 2025 or 2024.

Financial Metrics

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and administrative.

This expense includes bad debt expense, share-based compensation, legal and professional fees, insurance, accreditation

fees, and travel of employees engaged in corporate management, finance, human resources, compliance and other corporate functions.

expense also includes marketing and advertising costs, which are expensed in the fiscal year incurred.

This expense includes bad debt expense, legal and professional fees, insurance, accreditation fees, and travel

of employees engaged in corporate management, finance, human resources, compliance and other corporate functions.

This expense also includes

marketing and advertising costs, which are expensed in the fiscal year incurred.

and amortization .

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leases and amortization of intangible assets.

expense reflects interest paid under notes issued to our investors, Internal Revenue Service interest, non-cash interest related to unit

option grants, interest related to notes associated with CCC, and other debt related interest.

income relates to interest received from investments.

expense reflects interest paid under notes issued to our investors, Internal Revenue Service interest, and other debt related interest.

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

Affecting Comparability

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of equity instruments and valuation allowances for credit losses related to accounts receivable.

Revenue Recognition

Tuition revenue is recognized ratably

over the instruction period.

The transaction price is stated in the contract and known at the time of contract inception;

however, variable

consideration arises when a student drops from a program under the Company’s refund policy and when a student requires additional

hours to complete the program beyond the contracted end date.

The Company believes that its experience with these situations is of little

predictive value because the future performance of students is dependent on each individual and the amount of variable consideration

is highly susceptible to factors outside of the Company’s influence.

Accordingly, no variable consideration has been included in

the transaction price or recognized as income until the constraint has been eliminated.

Refunds generally result in a reduction of deferred

revenue during the period that the student drops or withdraws from a class.

for Credit Losses

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applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status.

Company writes off account receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible,

Company writes off accounts receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible,

or one year after the revenue is generated.

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statements of operations.

The Company performs an analysis annually to determine which accounts are uncollectable and then writes them

The Company evaluates expected credit losses on a periodic basis utilizing historical collection experience,

aging of receivables, student status, current economic conditions, and other relevant collectability factors.

Because a substantial portion of our revenue is derived

from Title IV Programs, any legislative or regulatory action that significantly reduces the funding available under Title IV Programs,

or the ability of our students or institutions to participate in Title IV Programs, could have a material effect on the collectability

of our receivables.

The allowance for credit losses was

$1,994,492 and $1,641,052 as of June 30, 2026 and 2025, respectively.

Our provision for credit losses as a percentage of revenue for

the fiscal years ended June 30, 2026 and 2025 was 5.0% and 5.3%, respectively.

A one percentage point increase in our provision for credit

losses as a percentage of revenue for the fiscal years ended June 30, 2026 and 2025 would have resulted in an increase in the provision

for credit losses of approximately $0.8 million and $0.6 million, respectively.

Company evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances

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The Company had no long-lived asset impairments as of June 30, 2026 and June 30, 2025.

requires management to evaluate tax positions taken by us and recognize a tax liability if we have taken an uncertain position that is

more likely than not would be sustained upon examination by the Internal Revenue Service.

Management has analyzed our tax positions and

believes there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in

the financial statement.

tax applies to corporations and limited liability companies that elect to be treated as corporations.

The federal income tax rate for

c-corporations is 21% and the state tax rate is 8.84%, and it applies to net taxable income from business activity in California.

are not subject to the state’s franchise tax, but they are subject to the alternative minimum tax (“AMT”) of 6.65%,

which limits the effectiveness of a business writing off expenses against income to lower its corporate tax rate.

C-corporations pay

the state corporate tax of 8.84% or AMT of 6.65%, depending on whether they claim net taxable income.

requires management to evaluate tax positions taken by us and recognize a tax liability if we have taken an uncertain position that

more likely than not would not be sustained upon examination by the Internal Revenue Service.

Management has analyzed our tax

positions and believes there are no uncertain positions taken or expected to be taken that would require recognition of a liability

or disclosure in the financial statements.

Deferred tax assets are subject to

periodic recoverability assessments.

Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent

upon achievement of projected future taxable income.

Based upon the level of historical taxable income and projections for future taxable

income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company

will realize the benefits of these deductible differences.

The Company had no valuation allowance as of June 30, 2026 and 2025.

account for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences

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Based Compensation

Company utilizes ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation

Company utilizes Accounting Standards Codification (“ASC”) 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation

expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards.

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There were no goodwill or other indefinite-lived intangible asset impairments for the periods

presented, and based on current qualitative impairment tests, goodwill and other indefinite-lived intangible assets are not as risk of

presented, and based on current qualitative impairment tests, goodwill and other indefinite-lived intangible assets are not at risk of

failing the quantitative impairment test.

of Operations

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Operating income

Interest expense, net

Loss on debt settlement

Interest expense

Interest income

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Income tax expense

Our revenue was approximately $64.2 million in fiscal 2025 compared to approximately $46.0 million in fiscal 2024, an increase of approximately

$18.2 million, or approximately 39.5%.

The increase was primarily due to increased student enrollment and the increase in pricing of

certain programs.

Our revenue was approximately $80.1

million in fiscal 2026 compared to approximately $64.2 million in fiscal 2025, an increase of approximately $15.9 million, or approximately

24.8%, driven by new student starts of 3,483 resulting in a 9% increase in student enrollment to 3,377.

The increase was also impacted

by the timing of the CCMCC acquisition in December 2024 in which a full year of revenue was reported in the current year while only half

in the prior year.

Our educational service expense was approximately $42.9 million in fiscal 2026 compared to approximately $34.2 million

in fiscal 2025, an increase of approximately $8.7 million, or approximately 25.3%.

The increase was primarily attributable to the increased

instructional and staffing required to support the increase in enrollments as well as increased rent and externship fees and our investments

in our RN program offset by a decrease in non-cash compensation charge of $1.3 million.

General and administrative expense .

and administrative expense was approximately $19.3 million in fiscal 2025, compared to approximately $13.0 million in fiscal 2024, an

increase of approximately $6.3 million, or approximately 48.2%.

The increase was primarily attributable to an increase in marketing expense,

professional fees and bad debt expense.

Of the total general and administrative expense, $4.7 million and $4.1 million relate to marketing

expenses for fiscal 2025 and 2024, respectively.

The increase was primarily attributable to the

increased instructional and staffing costs required to support the increase in enrollments as well as increased rent and books,

supplies, externship fees and an increase in non-cash compensation charge of approximately $0.6 million.

As a percentage of revenue,

educational services expense increased from 53.4% to 53.6% primarily due to increased non-cash compensation as well as books,

supplies and externship fees.

and administrative expense .

Our general and administrative expense was approximately $24.2 million in fiscal 2026, compared to

approximately $19.1 million in fiscal 2025, an increase of approximately $5.1 million, or approximately 26.7%.

administrative expense increased primarily due to higher marketing expense, professional fees, and increased bad debt expense

associated with higher student enrollment, growth in accounts receivable balances, and the Company’s periodic reassessment of

expected credit losses and write-offs associated with inactive student accounts.

As a percentage of revenue, general and

administrative expense increased from 29.8% to 30.2% primarily due to increases in office supplies and other general and

administrative expenses offset by a reduction in bad debt as a percentage of revenue.

Of the total general and

administrative expense, $5.9 million and $4.7 million relate to marketing expenses for fiscal 2026 and 2025, respectively.

expense was approximately $4.0 million, or 5% of revenue in fiscal 2026 compared to approximately $3.4 million, or 5.3% of revenue in fiscal 2025.

and administrative – related party expense.

Our general and administrative – related party expense was approximately

$0.5 million in fiscal 2026, compared to approximately $0.4 million in fiscal 2025.

The increase was primarily attributable to increased

investment in corporate advisors.

and amortization.

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$0.4 million in fiscal 2025.

on debt settlement.

We recorded a non-cash loss on debt settlement of approximately $0.3 million in fiscal 2026, representing the

excess of the fair value of the 75,000 shares of common stock issued over the $500,000

principal amount of the unsecured promissory note extinguished in the exchange.

There was no comparable charge in fiscal 2025.

Our interest expense was approximately $0.07 million in fiscal 2026 as compared to approximately $0.11 million in fiscal

Our income tax expense was approximately $3.5 million in fiscal 2025 compared to an approximately $1.9 million expense

in fiscal 2024.

The increase is primarily due to the increase in income.

We had net income of approximately

$7.5 million in fiscal 2025 compared to approximately $5.1 million in fiscal 2024, an increase of approximately $2.4 million, due to reasons

mentioned above.

2025, a decrease of approximately $0.04 million, primarily attributable to lower average debt outstanding following the repayment of

equipment loans and the CCMCC seller note during fiscal 2026.

Our interest income was approximately $1.3 million in fiscal 2026 as compared to approximately $1.1 million in fiscal 2025,

an increase of approximately $0.1 million, primarily attributable to higher average cash and cash equivalent balances, including amounts

Treasury bills and U.S.

Treasury money market funds with a weighted average yield of approximately 3.5% per annum as of June 30, 2026.

Income tax expense .

income tax expense was approximately $3.5 million in fiscal 2026 compared to an approximately $3.5 million expense in fiscal 2025.

Our effective tax rate decreased to approximately 27.9% in fiscal 2026 from approximately 31.6% in fiscal 2025, which was primarily

attributable to increased tax benefit associated with stock option exercises and the income tax treatment of incentive stock options and non-qualified

stock options.

We had net income

of approximately $9.1 million in fiscal 2026 compared to approximately $7.5 million in fiscal 2025, an increase of approximately $1.6 million, due to reasons mentioned above.

and Capital Resources

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expenditures were approximately $1.3 million and $0.8 million for fiscal year 2026 and fiscal year 2025, respectively.

In September 2026, CCC entered into a lease for its

planned new campus in Houston, Texas with an initial term of 130 months and total base rent of approximately $6.9 million, with base rent

abated for the first ten months of the lease term.

CCC will also pay its pro rata share of the building’s operating expenses, rent

on any portion of the premises it occupies before the commencement date defined in the lease, and any tenant improvement costs in excess

of the landlord’s allowance.

See Note 18 – Subsequent Events to our consolidated financial statements.

IV and other government funding

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Flow Activities for the Years Ended June 30, 2026 and 2025

Net cash provided by operating activities was approximately

$7.8 million in fiscal year 2025, and net cash provided in operating activities was approximately $1.6 million in fiscal 2024 primarily

due to an increase to net income of $2.4 million and the increase in collections related to accounts receivable in fiscal 2025.

Net cash provided by operating activities was approximately $4.0 million

in fiscal year 2026, compared to approximately $7.8 million in fiscal 2025, a decrease of approximately $3.7 million.

The decrease was

primarily attributable to the $9.0 million increase in accounts receivable in fiscal 2026, compared to a $3.9 million increase in fiscal

2025, partially offset by the $1.6 million increase in net income and the $0.6 million increase in the provision for credit losses.

cash used in investing activities was approximately $1.3 million in fiscal year 2026 and approximately $7.0 million in fiscal year 2025,

an increase of approximately $6.6 million due primarily to cash paid for the acquisition of CCMCC.

cash used provided by financing activities was approximately $9.1 million in fiscal year 2025 primarily due to proceeds from the Company’s

Net cash used in financing activities was approximately $0.2 million in fiscal year 2024 due to repayments of debt.

a decrease of approximately $5.6 million due primarily to the cash paid for the acquisition of CCMCC in fiscal year 2025, with no comparable

acquisition in fiscal year 2026.

cash used in financing activities was approximately $0.3 million in fiscal year 2026, primarily due to $0.8 million of principal payments

on debt, partially offset by $0.6 million of proceeds from the exercise of stock options.

Net cash provided by financing activities was

approximately $9.1 million in fiscal year 2025, primarily due to the net proceeds from the Company’s initial public offering.

July 2024 to September 2024, the Company issued 2,500,000 shares of common stock in its initial public offering at a price of $4.00

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Accounting Pronouncements

June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 provides guidance for recognizing

credit losses on financial instruments based on an estimate of current expected credit losses model.

The amendments are effective for

fiscal years beginning after December 15, 2019.

Subsequently, the FASB issued the final ASU to delay adoption for smaller reporting companies

for fiscal years beginning after December 15, 2022.

The Company adopted ASU 2016-13 on July 1, 2023 and it did not have a material impact

on its consolidated financial statements and related disclosures.

August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts

in an Entity’s Own Equity.

This ASU amends the guidance on convertible instruments and the derivatives scope exception for

contracts in an entity’s own equity and also improves and amends the related EPS guidance for both Subtopics.

adopted ASU 2020-06 on July 1, 2024 and it did not have a material impact on its consolidated financial statements and related

November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU

2023-07”), which requires incremental disclosures related to a public entity’s reportable segments.

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statements included herein, “Summary of Significant Accounting Policies - Segment Reporting.”

March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements,

which removes references to various FASB Concepts Statements from the Codification.

The Company adopted this guidance on July 1, 2025.

The adoption did not have a material effect on the Company’s consolidated financial statements.

Company is an emerging growth company and has elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities

Act for complying with new or revised accounting standards.

As a result, the Company adopts new or revised accounting standards on the

dates applicable to entities that are not public business entities.

The following accounting pronouncements have been issued but not

yet adopted by the Company:

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disaggregated

information about the effective tax rate reconciliation by specified category and disaggregation of income taxes paid by federal, state

and foreign jurisdiction.

The standard is effective for the Company for the fiscal year ending June 30, 2027, and is to be applied prospectively,

with retrospective application permitted.

The Company is evaluating the effect of adoption, which is expected to result in expanded income

tax disclosures with no change to the amounts recognized in the consolidated financial statements.

July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts

Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses on current accounts receivable

and current contract assets arising from transactions accounted for under Topic 606.

The standard is effective for the Company for the

fiscal year ending June 30, 2027, with early adoption permitted.

The Company is evaluating whether it will elect the practical expedient

and the effect adoption would have on its consolidated financial statements.

November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses, as amended in January 2025 by ASU 2025-01, which requires disaggregated

disclosure of specified categories of expense included within relevant income statement expense captions.

The standard is effective for

the Company for the fiscal year ending June 30, 2028, and for interim periods thereafter.

The Company is evaluating the effect of adoption,

which is expected to result in expanded expense disclosures with no change to the amounts recognized in the consolidated financial statements.

December 2025, the FASB issued ASU 2025-12, Codification Improvements, which includes amendments to Topic 260, Earnings Per Share.

standard is effective for the Company for the fiscal year ending June 30, 2028, and interim periods within that fiscal year, and is to

be applied retrospectively to each prior period presented.

The Company is evaluating the effect of adoption.

2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which revises the disclosure requirements

for interim reporting periods.

The standard is effective for the Company for interim reporting periods within the fiscal year ending

June 30, 2029.

The Company is evaluating the effect of adoption on its interim financial statements.

April 5, 2012, the JOBS Act was enacted.

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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 7. Management’s Discussion and Analysis