Item 1B. Unresolved Staff Comments
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 1C.
CYBERSECURITY
We recognize the critical importance of maintaining the safety and security of our systems and data and we take a holistic approach to the oversight and management of cybersecurity and related risks. This approach is supported by our Board of Directors and management who are actively involved in the oversight of our risk management program.
Our cybersecurity team, which maintains our cybersecurity function, is comprised of technology and cybersecurity professionals in the information
technology department, and is led by our Chief Information Officer (“CIO”), who prior to joining the Company has held positions as CIO, Chief Technology Officer (“CTO”), and other key leadership positions in the travel, finance, internet,
engineering, and pharmaceutical industries. Our CIO is responsible for management of cybersecurity risk and the protection and defense of our networks and systems. The
cybersecurity team has broad experience and expertise, including cybersecurity threat assessment and detection, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance.
Like all companies that utilize technology, we face significant cybersecurity threats that include, among other things, attempts to gain unauthorized access to
sensitive student and employee information; attempts to compromise the integrity, confidentiality and/or availability of our systems, hardware and networks, and the information on them; insider threats; malware; ransomware; threats to the
safety of our directors, officers and employees; and threats to our facilities, infrastructure and service. As cybersecurity threats may arise, the cybersecurity team focuses on responding to and containing the threat and minimizing any
business impact, as appropriate. In the event of a perceived threat or possible cybersecurity incident, the cybersecurity team is trained to assess, among other factors, student safety impact, data and personal information impact, the
possibility of business operations disruption, projected cost, if any, and potential for reputational harm, with support from external technical, legal and law enforcement support, as appropriate.
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Our Board of Directors, in coordination with our Audit Committee, is responsible for overseeing our enterprise risk management.
In connection with such oversight, the Board of Directors receives periodic updates, as appropriate (and no less frequently than annually), from our CIO regarding the Company’s cybersecurity risk management processes and the risk trends related to cybersecurity. The Audit
Committee assists the Board in its oversight of risks, generally and risks related to cybersecurity.
Our approach to cybersecurity risk management includes the following key elements:
• Multi-Layered Defense Technology – We work to protect our computing environments and products from cybersecurity threats
through multi-layered defenses and apply lessons learned from our defense and monitoring efforts to help prevent future attacks. We utilize data analytics to detect anomalies and search for cybersecurity threats.
• Continuous Monitoring and Analysis – We utilize a third-party Security Operations Center which maintains a 24/7 monitoring system and provides comprehensive cyber threat detection and response capabilities which complements the Lincoln cybersecurity team and leverages the technology, processes and threat detection techniques used to monitor, manage, and mitigate cybersecurity threats. For additional visibility and perspective, we engage with a different third-party security firm for monthly reviews and analysis. From time to time, we engage additional third-party consultants or other advisors to assist in assessing, identifying and/or managing cybersecurity threats including formalized penetration and cybersecurity testing.
• Third Party Risk Assessments – We conduct information security assessments before sharing or allowing the hosting of sensitive data in computing environments managed by third parties, and our standard contracts contain terms and conditions requiring certain security protections.
• Training and Awareness – We provide monthly awareness training and testing to help our employees identify, avoid and mitigate
cybersecurity threats, including spear phishing and other awareness testing.
• Response Policy – We maintain a data breach response policy defining our incident analysis and response actions. This policy
describes our initial actions upon learning of an incident, confirmation steps, notification to affected parties if any, risk mitigation planning, and post incident procedures.
While we have experienced minor cybersecurity threats in the past, such as spear phishing or smishing (SMS phishing), to date no such threats have materially affected the Company or our financial position, results of operations and/or cash flows.
We continue to invest in the cybersecurity and resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our
systems and infrastructure, and the information contained therein.
We maintain cybersecurity insurance coverage in amounts that we believe are adequate to address any incidents such as data destruction, extortion, theft, hacking,
denial of service attacks and other such incidents.
For more information concerning the risks that we face from cybersecurity threats, please see Part I, Item 1A, “Risk Factors”.
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ITEM 2.
PROPERTIES
As of December 31, 2024, we lease all of our properties. We continue to reevaluate our facilities to maximize our facility utilization and efficiency and to allow us to introduce new programs and attract more
students. As of December 31, 2024, all of our existing leases expire between 2025 and 2045.
The following table provides information relating to our facilities as of December 31, 2024, including our corporate office:
Current Locations
Brand
Approximate Square Footage
Columbia, Maryland
Lincoln College of Technology
111,000
Denver, Colorado
Lincoln College of Technology
213,000
Grand Prairie, Texas
Lincoln College of Technology
158,000
Indianapolis, Indiana
Lincoln College of Technology
126,000
Marietta, Georgia
Lincoln College of Technology
30,000
Melrose Park, Illinois
Lincoln College of Technology
88,000
Allentown, Pennsylvania
Lincoln Technical Institute
25,000
East Windsor, Connecticut
Lincoln Technical Institute
289,000
Iselin, New Jersey
Lincoln Technical Institute
32,000
Lincoln, Rhode Island
Lincoln Technical Institute
66,000
Mahwah, New Jersey
Lincoln Technical Institute
79,000
Moorestown, New Jersey
Lincoln Technical Institute
49,000
New Britain, Connecticut
Lincoln Technical Institute
36,000
Paramus, New Jersey
Lincoln Technical Institute
30,000
Philadelphia, Pennsylvania
Lincoln Technical Institute
30,000
Queens, New York
Lincoln Technical Institute
50,000
Shelton, Connecticut
Lincoln Technical Institute
57,000
South Plainfield, New Jersey
Lincoln Technical Institute
60,000
Union, New Jersey
Lincoln Technical Institute
56,000
Nashville, Tennessee
Nashville Auto Diesel College
292,000
East Point, Georgia
Lincoln Technical Institute
56,000
Parsippany, New Jersey
Corporate Office
17,000
Future Locations
Brand
Approximate Square Footage
Hicksville, New York 1
Lincoln Technical Institute
65,000
Houston, Texas 2
Lincoln College of Technology
100,000
Nashville, Tennessee 3
Nashville Auto Diesel College
124,000
Levitttown, Pennsylania 4
Lincoln Technical Institute
91,000
We believe that our facilites are suitable for their intendedn puposes.
1
On December 12, 2024, the Company entered into a lease for approximately 65,000 square feet of space to serve as the Company’s new campus in Hicksville, New York. The
lease term is currently planned to commence on or about May 1, 2025, with an initial lease term of 15 years and 9 months. The lease contains a renewal option allowing for either a 10-year renewal or two five-year renewals.
2
On October 31, 2023, the Company entered into a lease for approximately 100,000 square feet of space to serve as the Company’s new campus in Houston, Texas. The lease
term commenced on January 2, 2024, with an initial lease term of 21-years and 6 months with three five-year renewal options.
3
On October 18, 2023, the Company entered into a lease for approximately 120,000 square feet of space. to serve as the Company’s new Nashville, Tennessee campus. The lease
term commenced on November 1, 2023, with an initial lease term of 15-years with two five-year renewal options.
4
On September 28, 2023, the Company purchased a 90,000 square foot property located at 311 Veterans Highway, Levittown, Pennsylvania for approximately $10.2 million and,
subsequently on January 30, 2024, entered into a sale-leaseback transaction for this property. As of December 31, 2023, this property was classified as held-for-sale on the Consolidated Balance Sheets.
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ITEM 3.
LEGAL PROCEEDINGS
On June 22, 2022, the DOE and the plaintiff student loan borrowers in a class action against the DOE initiated on June 25, 2019 in the U.S. District Court for the Northern District of California ( Sweet v. Cardona , No. 3:19-cv-3674 (N.D. Cal.)) announced a proposed settlement agreement to resolve claims that the DOE had failed to timely decide Borrower Defense to Repayment applications submitted to
the DOE. The proposed settlement included three categories of relief for student loan borrowers. First, the DOE would agree to discharge loans and refund prior loan payments to class members with loan debt associated with an institution on
the list included in the settlement (which includes Lincoln institutions). The class action plaintiffs and the DOE stated that the DOE had determined that attendance at one of the listed institutions justifies presumptive relief allegedly
based on strong indicia regarding substantial misconduct by the institutions, whether credibly alleged or in some instances proven, and the purportedly high rate of class members with applications related to the listed schools. Second, the
proposed settlement included new procedures for the DOE to resolve pending borrower defense claims associated with other schools not on the list. Third, for any student loan borrower who submitted a borrower defense application after June
22, 2022 and before the final approval of the settlement, the proposed settlement would require the DOE to review the applications under the DOE’s 2016 regulatory standards and issue decisions within 36 months, or else the applications would
be discharged in full. On November 16, 2022, the federal district court approved the settlement as proposed and the DOE began implementing the settlement relief while Lincoln and other parties appealed the settlement’s final approval to the
U.S. Court of Appeals for the Ninth Circuit. On November 5, 2024, the Ninth Circuit upheld the settlement on appeal. One or more schools are expected to continue to appeal the final approval of the settlement, but Lincoln does not intend to
continue participating in the appeal. As a result of this final approval, the DOE has estimated that approximately 196,000 student loan borrowers who attended one of the listed schools (including Lincoln institutions) will receive automatic
student loan discharges; that another approximately 100,000 student loan borrowers who attended other schools not on the list would receive decisions under new procedures; and that approximately 250,000 student loan borrowers who submitted
borrower defense applications between June 22, 2022 and November 16, 2022 would receive decisions under the DOE’s 2016 regulatory standards within 36 months or else receive automatic student loan discharges.
It is not possible at this time to predict whether the settlement will continue to be upheld on appeal, what additional actions the DOE might take as the settlement continues to be upheld on appeal, or whether the
DOE or other agencies might take actions against Lincoln institutions. Such actions could have a material adverse effect on our business and results of operations. We believe the DOE already may have discharged some or all of the pending
applications. See Part I, Item I. “Business – Regulatory Environment – Borrower Defense to Repayment Regulations.”
In addition to the foregoing, in the ordinary conduct of our business, we are subject to additional periodic lawsuits, investigations, regulatory proceedings and other claims, including, but not limited to, claims involving students or
graduates, routine employment matters and business disputes. We cannot predict the ultimate resolution of these lawsuits, investigations, regulatory proceedings and other claims asserted against us, but we do not believe that any of these
matters will have a material adverse effect on our business, financial condition, results of operations or cash flows.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART II.