10-Q: Quarterly report [Sections 13 or 15(d)]
Published on May 14, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
For the transition period from ___ to ____
Commission
File Number:
(Exact name of registrant as specified in its charter)
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| incorporation or organization) | Identification No.) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the issuer’s common stock, $par value per share, outstanding as of May 1, 2026 was .
Table of Contents
| i |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
This Quarterly Report on Form 10-Q contains certain forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “believes,” “will,” “expects,” “anticipates,” “estimates,” “predicts,” “potential,” “continues” “intends,” “plans” and “would” or the negative of these terms or other comparable terminology. For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, and plans are all forward-looking statements. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:
| ● | compliance with the extensive existing regulatory framework applicable to our industry or our failure to timely obtain and maintain regulatory approvals and accreditation; | |
| ● | compliance with continuous changes in applicable federal laws and regulations including recently enacted federal legislation, executive orders and new and pending rulemaking by the U.S. Department of Education (“ED”); | |
| ● | the effect of current and future Title IV Program laws and regulations arising out of recent legislation, executive orders and negotiated rulemakings, including any recent and potential future reductions in funding or restrictions on the use of funds received through Title IV Programs; | |
| ● | successful updating and expansion of the content of existing programs and developing new programs in a cost-effective manner or on a timely basis; | |
| ● | uncertainties regarding our ability to comply with federal laws and regulations regarding the 90/10 revenue test, gainful employment and earnings metrics, and limits on cohort default rates; | |
| ● | successful implementation of our strategic plan; | |
| ● | our inability to maintain eligibility for or to process federal student financial assistance; | |
| ● | regulatory investigations of, or actions commenced against, us or other companies in our industry; | |
| ● | changes in the state regulatory environment or budgetary constraints; | |
| ● | enrollment declines or challenges in our students’ ability to find employment as a result of economic conditions; | |
| ● | maintenance and expansion of existing industry relationships and develop new industry relationships; | |
| ● | a loss of members of our senior management or other key employees; | |
| ● | uncertainties associated with opening of new campuses and closing existing campuses; | |
| ● | uncertainties associated with integration of acquired schools; | |
| ● | industry competition; | |
| ● | the effect of any cybersecurity incident; | |
| ● | general economic conditions; and | |
| ● | other factors discussed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” |
All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.
| ii |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Legacy Education Inc.
(dba High Desert Medical College)
(dba Central Coast College)
(dba Integrity College of Health)
(dba Contra Costa Medical Career College)
Condensed Consolidated Financial Statements
for the three and nine months
ended March 31, 2026 and 2025
Table of Contents
| F-1 |
Legacy Education Inc.
Consolidated Balance Sheets
| March 31, 2026 | June 30, 2025 | |||||||
| (Unaudited) | * | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of $ | ||||||||
| Prepaid expenses | ||||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Financing lease right-of-use asset | ||||||||
| Intangible assets | ||||||||
| Goodwill | ||||||||
| Accounts receivable, long-term | ||||||||
| Deferred income tax assets | ||||||||
| Security deposits | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued income tax payable | ||||||||
| Deferred, unearned tuition | ||||||||
| Other current liabilities | ||||||||
| Current portion of debt | ||||||||
| Debt owed, related party | ||||||||
| Current portion of financing lease | ||||||||
| Current portion of operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Debt, net of current portion | ||||||||
| Financing lease, net of current portion | ||||||||
| Other liabilities | ||||||||
| Operating lease liability, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock: $ par value, shares authorized; shares issued and outstanding | ||||||||
| Common stock: $par value, shares authorized, and shares issued and outstanding as of March 31, 2026, and June 30, 2025, respectively | ||||||||
| Additional paid in capital | ||||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-2 |
Legacy Education Inc.
Consolidated Income Statements
(Unaudited)
For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | ||||||||||||||||
| Tuition and related income, net | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Educational services | ||||||||||||||||
| General and administrative | ||||||||||||||||
| General and administrative – related party | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Loss on disposal of fixed assets | ( | ) | ( | ) | ||||||||||||
| Interest expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Total other income | ||||||||||||||||
| Income before income tax expenses | ||||||||||||||||
| Income tax expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Net income per share | ||||||||||||||||
| Basic net income per share | $ | $ | $ | $ | ||||||||||||
| Diluted net income per share | $ | $ | $ | $ | ||||||||||||
| Weighted average number of common stock outstanding | ||||||||||||||||
| Basic weighted average shares outstanding | ||||||||||||||||
| Diluted weighted average shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-3 |
Legacy Education Inc.
Consolidated Statements of Changes in Stockholders’ Equity
for the three months and nine months ended March 31, 2026 and 2025
(Unaudited)
| Preferred Stock | Common Stock | Additional paid in | Retained | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | Earnings | Total | ||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Exercise of options | - | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, September 30, 2025 | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Exercise of options | - | |||||||||||||||||||||||||||
| Cashless exercise of warrants | ( | ) | ||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Balance, December 31, 2025 | ||||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Exercise of options | - | |||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional paid in | Retained | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | Earnings | Total | ||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Exercise of option | - | |||||||||||||||||||||||||||
| Issuance of common stock, net of offering costs | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, September 30, 2024 | - | |||||||||||||||||||||||||||
| True up, reverse split | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common stock under acquisition agreement | - | |||||||||||||||||||||||||||
| Exercise of option | - | |||||||||||||||||||||||||||
| Issuance of common stock, net of offering costs | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||||||||||
| Paid offering cost | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Exercise of option | - | |||||||||||||||||||||||||||
| Stock-based compensation | - | - | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-4 |
Legacy Education Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the nine months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows provided by (used in) operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Non cash compensation | ||||||||
| Depreciation & amortization | ||||||||
| Provision for allowance for doubtful accounts for accounts receivable and contracts receivable | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Other receivable | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Income tax payable | ( | ) | ||||||
| Deferred unearned tuition | ||||||||
| Net cash provided by operating activities | ||||||||
| Cash flows used in investing activities: | ||||||||
| Cash paid under APA | ( | ) | ||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by (used in) financing activities: | ||||||||
| Proceeds from IPO, net of offering cost | ||||||||
| Proceeds from exercise of options | ||||||||
| Principal payment on finance lease | ( | ) | ( | ) | ||||
| Principal payments on debt | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net increase cash and cash equivalents and restricted cash | ||||||||
| Cash and cash equivalents and restricted cash, beginning of year | ||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid during the periods for interest | $ | $ | ||||||
| Cash paid during the periods for income taxes | $ | $ | ||||||
| Supplemental disclosure of noncash activities | ||||||||
| Non-cash purchase of equipment | $ | $ | ||||||
| Prepaid expense reclassifies to offering cost | $ | $ | ||||||
| Common stock issued as part of APA | $ | $ | ||||||
| Promissory note under APA | $ | $ | ||||||
| Net identifiable assets acquired under APA | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| F-5 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 1 - Nature of Business
For
purposes of these financial statements, “Legacy,” the “Company,” “we,” “our,” “us,”
or similar references refers to Legacy Education Inc. and its consolidated subsidiaries, unless the context requires otherwise. Legacy
Education, LLC was formed on October 19, 2009 in the state of California as a limited liability company. The Company operates as a career
institution that focuses on real-life training by utilizing educational practices in different job markets. The Company offers programs
in career paths such as healthcare, veterinary, medical information technology, business management, and green technology. The Company’s
institutions are accredited by the Accrediting Council for Continuing Education and Training (“ACCET”) or the Accrediting
Bureau of Health Education Schools (“ABHES”) and approved to operate in the state of California by the Bureau for Private
Postsecondary Education (“BPPE”). The consolidated financial statements include accounts of Legacy Education Inc. d/b/a High
Desert Medical College (“HDMC”) and its wholly-owned subsidiary, Legacy Education Monterey LLC (“Monterey”) d/b/a
Central Coast College (“CCC”), its wholly-owned subsidiary, Advanced Health Services, LLC d/b/a Integrity College of Health
(“Integrity”) and Legacy Education Antioch, LLC (“Antioch”) d/b/a Contra Costa Medical Career College (“CCMCC”).
Pursuant to an Agreement and Plan of Merger and Reorganization (the “Reorganization Merger”), dated September 1, 2021, effective
as of September 3, 2021 (the “Effective Date”), Legacy Education Merger Sub, LLC, a wholly-owned subsidiary of Legacy Education
Inc. formed solely for the purpose of implementing the Reorganization Merger, merged with and into Legacy Education, LLC, with Legacy
Education, LLC surviving the merger and becoming a wholly-owned subsidiary of Legacy Education Inc., a corporation formed on March 18,
2020 in the State of Nevada for the sole purpose of restructuring the Company from a member-owned Limited Liability Corporation to a
shareholder-owned C-Corporation.
HDMC offers instruction in several programs including, but not limited to, ultrasound technician, ultrasound technician associate of applied science degree, medical billing and coding, vocational nursing, clinical medical assisting, pharmacy technician, dental assisting, medical administrative vocational nursing associate of applied science degree and registered nursing.
CCC, a wholly-owned subsidiary of HDMC, offers instruction in healthcare career training programs, veterinary career training, and additional fields such as accounting.
Integrity, a wholly-owned subsidiary of HDMC, is an accredited college offering instruction in medical assisting, vocational nursing, medical insurance coding and billing, diagnostic medical sonography (ultrasound technician) Bachelors of Science in nursing (RN to BSN), and veterinary assistant.
CCMCC, a wholly owned subsidiary of HDMC effective as of December 18, 2024, is accredited by ACCET and has been granted temporary approval to participate in the Financial Student Aid programs by the Department of Education (“ED”) following the consummation of the transaction discussed below in Note 3. CCMCC offers vocational nursing, surgical technology, sterile processing technician, pharmacy technician, dental assisting, medical assisting, diagnostic medical sonography, EKG/ECG technician, and medical administrative assistant/billing and coding specialist programs.
The accompanying consolidated financial statements, and all per share information contained herein, have been retroactively adjusted to reflect the reverse stock split described in Note 13.
| F-6 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of HDMC and its wholly owned subsidiaries, CCC, Integrity and CCMCC. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all the normal recurring adjustments necessary to present fairly the financial position and results of operations as of and for the periods presented. The interim results are not necessarily indicative of the results to be expected for the full year or any future period.
Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Report on Form 10-K filed on September 25, 2025, for the year ended June 30, 2025.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the assumptions used in the evaluation of the Company’s distinct performance obligations, the valuation of equity instruments and allowance for credit losses related to accounts receivable.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported consolidated net income.
Cash and Cash Equivalents
The
Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. As of March
31, 2026 and June 30, 2025 approximately $
Property and Equipment
Property
and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Normal repairs
and maintenance are expensed as incurred. Expenditures that materially extend the useful life of an asset are capitalized. Depreciation
is provided using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures, machinery, computer
equipment, and vehicles generally have estimated useful lives of ten,
seven,
four,
and
| F-7 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
Leases
The Company accounts for leases in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842 Leases, which requires the recognition of assets and liabilities by lessees for those leases classified as operating leases under GAAP. The Company determines if an arrangement is a lease at inception and evaluates the lease agreement to determine whether the lease is a finance or operating lease. The guidance requires that a lessee should recognize on the balance sheet a liability to make lease payments and a right-to-use asset representing the Company’s right to use the underlying assets for the term of the lease. The guidance allows a lessee who enters into a lease with a term of 12 months or less to make an accounting policy election by class of underlying assets not to recognize assets and liabilities. Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement date based on the present value of lease payment over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of lease payments over the lease term. See Note 12 for more information about the Company’s lease-related obligations.
Goodwill and Intangibles
The Company has implemented the Business Combinations Topic FASB ASC 350, Intangibles - Goodwill and Other. Goodwill represents the excess of the purchase price over the fair market value of the net assets (including intangibles) acquired on December 31, 2019, January 15, 2019 and on December 18, 2024.
Goodwill,
tradename, and accreditation are deemed to have an indefinite life, and course curriculum has a definite life of approximately
The
Company reviews intangible assets (with a definite life), excluding goodwill, accreditation and tradenames, for impairment when events
or changes in circumstances indicate the carrying amount may not be recoverable. The Company measures the recoverability of these assets
by comparing the carrying amounts to the future undiscounted cash flows that the assets are expected to generate. If the carrying value
of the assets are not recoverable, the impairment recognized is measured as the amount by which the carrying value of the asset exceeds
its fair value. There were
The
Company tests goodwill, accreditation and trade names for impairment at least annually, or more frequently if events or changes in circumstances
indicate that the asset may be impaired. There were
The Company amortizes intangible assets with definite lives on a straight-line basis.
Long-Lived Assets
The
Company evaluates the recoverability of its long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such
assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future
cash flows. The Company had
Revenue Recognition
Revenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount of consideration to which the Company expects to be entitled to in exchange for those goods or services. The Company follows the five steps approach for revenue recognition under FASB ASC 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
| F-8 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
Revenue Recognition (Cont’d)
The Company identifies a contract for revenue recognition when there is approval and commitment from both parties, the rights of the parties and payment terms are identified, the contract has commercial substance and the collectability of consideration is probable. The Company evaluates each contract to determine the number of distinct performance obligations in the contract, which requires the use of judgment. The Company’s contracts include promises for educational services and course materials which are distinct performance obligations.
Tuition revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable is recorded for the portion of tuition not paid in advance. In some instances, installment billing is available to students which reduces the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with installment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed.
The Company’s refund policy may permit students who do not complete a course to be eligible for a refund for the portion of the course they did not attend. Refunds generally result in a reduction of deferred revenue during the period that the student drops or withdraws from a class.
The transaction price is stated in the contract and known at the time of contract inception, as such there is variable consideration for situations when a student drops from a program based on the Company’s refund policy and additional charges if a student requires additional hours to complete the program beyond the contracted end date. The Company believes that its experience with these situations is of little predictive value because the future performance of students is dependent on each individual and the amount of variable consideration is highly susceptible to factors outside of the Company’s influence. Accordingly, no variable consideration has been included in the transaction price or recognized as income until the constraint has been eliminated. Revenue is allocated to each performance obligation based on its standalone selling price. Any discounts within the contract are allocated across all performance obligations unless observable evidence exists that the discount relates to a specific performance obligation or obligations in the contract. The Company generally determines standalone selling prices based on prices charged to students.
The Company excludes from revenue taxes assessed by a governmental authority as these are agency transactions collected on their behalf from the customer. Significant judgments include the allocation of the contract price across performance obligations, the methodology for earning tuition ratably over the instruction period, estimates for the amount of variable consideration included in the transaction price as well as the determination of the impact of the constraints preventing the variable consideration from being recognized in revenue.
Disaggregation of Revenue
The tuition and related revenue consist of the following during the three and nine months ended March 31, 2026 and 2025:
For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Tuition and lab fees (recognized over time) | $ | $ | $ | $ | ||||||||||||
| Books, registration and other fees (recognized at a point in time) | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| F-9 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
Segment Reporting
The Company operates one reportable business segment offering career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through its accredited academic institutions. The Company’s primary revenue source is derived from educational programs and services provided at its colleges through tuition and lab fees as well as fees for supporting educational programs such as books and registration costs.
Operating as a cohesive educational services company, the Company offers its products and services in the State of California at a series of institutions, using a centralized management approach for all educational services and support functions.
The Chief Executive Officer (“CEO”) serves as the Chief Operating Decision Maker (“CODM”). The CODM evaluates the Company’s performance based on consolidated net income. This measure aligns with the Company’s consolidated financial statements and serves as the basis for resource allocation and performance assessment. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM monitors profitability and strategic growth initiatives on a consolidated basis, without disaggregating profit or loss into separate operating segments. The Company determined there are no significant segment expenses that require a separate disclosure. The consolidated net income is used to assess overall company performance, benchmark against industry standards, and identify profitability trends, which guides resource allocation and investment in expansion and program upgrades. The CODM also evaluates company performance using operating income. Operating income provides the CODM with a focused view of the Company’s profitability excluding the effects of financing activities, tax strategies, and other non-operating items. This measure enables the CODM to assess operational efficiency, monitor performance trends, and evaluate the effectiveness of strategies aimed at revenue generation and cost management.
Allowance for Credit Losses
The Company records an allowance for credit losses for estimated losses resulting from the inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. The Company determines the adequacy of its allowance for doubtful accounts based on an analysis of its historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. The Company applies reserves to its receivables based upon an estimate of the risk presented by the age of the receivables and student status. The Company writes off account receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. Bad debt expense is recorded as a general and administrative expense in the accompanying statements of operations. The Company performs an analysis quarterly to determine which accounts are uncollectable and then writes them off.
Refunds
The
Company pays or credits refunds within 45 days of a student’s cancellation or withdrawal for students who have completed
Advertising
The
Company expenses advertising cost as incurred. Advertising costs amounted to $
| F-10 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
The Company utilizes FASB ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. The Company’s estimate of expected volatility was based on the volatility of peers. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. The Company accounts for forfeitures upon occurrence.
Fair Value of Financial Instruments
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, deferred, unearned tuition, debt and finance lease obligations. The carrying values of the Company’s financial instruments approximate fair value.
FASB ASC 820, Fair Value Measurements (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 requires that assets and liabilities measured at fair value are classified and disclosed in one of the following three categories:
Level 1—Quoted market prices for identical assets or liabilities in active markets or observable inputs;
Level 2—Significant other observable inputs that can be corroborated by observable market data; and
Level 3—Significant unobservable inputs that cannot be corroborated by observable market data.
Concentration of Credit Risk
A substantial portion of revenues and ending accounts receivable at March 31, 2026 and June 30, 2025 are a direct result of the Company’s participation in Financial Student Aid (“FSA”) programs, which represents a primary source of student tuition. The FSA programs are subject to political budgetary considerations. There is no assurance that funding will be maintained at current levels. The FSA programs are subject to significant regulatory requirements. Any regulatory violation could have a material effect on the Company.
The
Company maintains its cash and cash equivalents in various financial institutions. Accounts at these institutions are insured by the
Federal Deposit Insurance Corporation up to $
As
of March 31, 2026 and June 30, 2025, $
| F-11 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
Commitments and Contingencies
The Company accrues for a contingent obligation when it is probable that a liability has been incurred and the amount is reasonably estimable. When the Company becomes aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss will result and the amount of the loss is estimable, the Company records a liability for the estimated loss. If the loss is not probable or the amount of the potential loss is not estimable, the Company will disclose the claim if the likelihood of a potential loss is reasonably possible and the amount of the potential loss could be material. Estimates that are particularly sensitive to future changes include tax, legal, and other regulatory matters, which are subject to change as events evolve, and as additional information becomes available during the administrative and litigation process. The Company expenses legal fees as incurred.
Income Taxes
GAAP requires management to evaluate tax positions taken by the Company and recognize a tax liability if the Company has taken an uncertain position that is more likely than not would be sustained upon examination by the Internal Revenue Service. Management has analyzed the Company’s tax positions and believes there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statement.
The Company accounts for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized.
The
Company expenses penalties and interest related to federal and state income taxes as incurred. Penalties, if any, are included in general
and administrative expenses on the income statement. The estimated federal and state effective tax rates are
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, the Company is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find the securities less attractive as a result, there may be a less active trading market for securities and the prices of securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards (that is, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies). The Company intends to take advantage of the benefits of this extended transition period.
Additionally,
the Company is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements.
| F-12 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 2 – Summary of Significant Accounting Principles (Continued)
FASB ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS is calculated using the treasury stock method, and reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator | ||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||
| Denominator | ||||||||||||||||
| Weighted-average shares outstanding, basic | ||||||||||||||||
| Common stock warrants | ||||||||||||||||
| Dilutive impact of share-based instruments | ||||||||||||||||
| Weighted-average shares outstanding, diluted | ||||||||||||||||
| Net income per share | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2025. The adoption of ASU 2023-07 is reflected in Note 2, “Summary of Significant Accounting Policies - Segment Reporting.”.
Note 3 – Acquisition
On
December 18, 2024, Antioch completed its acquisition of CCMCC for a base purchase price of $
| F-13 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 3 – Acquisition (Continued)
The
acquisition was accounted for in accordance with the acquisition method of accounting. Under this method, the cost of the target is allocated
to the identifiable assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess
estimated fair values of the identifiable net assets over the amount paid was $
The following is a summary of the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition:
| Current and other assets | $ | |||
| Property and equipment | ||||
| Total assets acquired | ||||
| Liabilities assumed (excluding debt - see Note 9) | ( | ) | ||
| Net assets acquired | $ | ( | ) | |
| Purchase price | $ | |||
| Trade name | $ | |||
| Accreditation | ||||
| Course Curriculum | ||||
| Goodwill | ||||
| Total excess purchase price | $ |
The amounts recorded above related to the acquisition are subject to adjustment as the Company has not yet completed the final allocation of the purchase price. The Company has one year from the date of acquisition to complete its valuation of assets and liabilities assumed.
Following are the supplemental consolidated financial results of the Company and CCMCC on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2024 (i.e., July 1, 2023).
| For the Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Net income | $ | $ | ||||||
The pro forma financial information presented above has been prepared by combining the Company’s historical results and the historical results of CCMCC and adjusting those results to reflect the effects of the acquisition as if it occurred on July 1, 2023. These results do not purport to be indicative of the results of operations had the acquisition occurred on the date indicated above, or that may result in the future, and do not reflect potential synergies or additional costs following the acquisition.
Note 4 - Intangible Assets
The Company’s intangible assets consisted of the following as of March 31, 2026 and June 30, 2025:
| March 31, 2026 | June 30, 2025 | |||||||
| Goodwill | $ | $ | ||||||
| Trade name | ||||||||
| Accreditation | ||||||||
| Course curriculum | ||||||||
| Total cost of intangibles | $ | $ | ||||||
| Less accumulated amortization | ( | ) | ( | ) | ||||
| Intangibles net | $ | $ | ||||||
| F-14 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 4 - Intangible Assets (Continued)
As
of March 31, 2026 and June 30, 2025,
Note 5 - Property and Equipment
Property and equipment consist of the following:
| March 31, 2026 | June 30, 2025 | |||||||
| Leasehold improvements | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Computer equipment | ||||||||
| Software | ||||||||
| Furniture, fixtures and other equipment | ||||||||
| Total | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
and amortization expense associated with property and equipment totaled $
Depreciation
and amortization expense associated with property and equipment totaled $
Note 6 – Accounts Receivable, Long-Term
TuitionFlex
The
TuitionFlex Program is designed to create a flexible tuition credit program for students and families to help bridge the financial gap,
all in accordance with applicable federal Truth-In-Lending regulations. Through this program, we offer payment plans to all students,
regardless of financial need, for up to 7 years. The long-term portion of student receivables utilizing the TuitionFlex program was $
Note 7 – Prepaid Expenses
The prepaid expenses consist of the following as of March 31, 2026 and June 30, 2025:
| March 31, 2026 | June 30, 2025 | |||||||
| Books | $ | $ | ||||||
| Supplies and other prepaid expenses | ||||||||
| Total prepaid expenses | $ | $ | ||||||
| F-15 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 8 – Other Receivables
The other receivables consist of the following as of March 31, 2026 and June 30, 2025:
| March 31, 2026 | June 30, 2025 | |||||||
| Other advance | ||||||||
| Receivable from CCMCC Seller | ||||||||
| Employee retention credit | ||||||||
| Total other receivables | $ | $ | ||||||
The
Company paid $
During
the fiscal year ended June 30, 2021, the Company applied for certain Employee Retention Credits (“ERTC”) under the CARES
Act in the approximate amount of $
Note 9 – Accounts Payable and Accrued Liabilities
Accounts payable and accrued expenses as of March 31, 2026 and June 30, 2025 consist of the following:
| March 31, 2026 | June 30, 2025 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll and payroll taxes | ||||||||
| Accrued vacation | ||||||||
| Accrued bonuses | ||||||||
| Accrued other expenses | ||||||||
| Total | $ | $ | ||||||
Note 10 - Debts and Other Liabilities
| (1) | Promissory Notes and Related Parties Debt |
The
Company received $
| March 31, 2026 | June 30, 2025 | |||||||
| Promissory note issued on November 12, 2019 | $ | $ | ||||||
| Promissory note issued on December 30, 2019, related party | ||||||||
| Total other debt | $ | $ | ||||||
| F-16 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 10 - Debts and Other Liabilities (Continued)
| (2) | Equipment Loan |
In
January 2023, the Company entered into an equipment loan for $
In
August 2023, the Company entered into an equipment loan for $
In
November 2023, the Company entered into an equipment loan for $
In
December 2023, the Company entered into an equipment loan for $
In
February 2024, the Company entered into an equipment loan for $
In
June 2024, the Company entered into an equipment loan for $
In
July 2024, the Company entered into an equipment loan for $
In
June 2025, the Company entered into an equipment loan for $
| (3) | CCMCC acquisition Seller Loan |
As
part of the acquisition described in Note 3, Antioch issued the seller of CCMCC a promissory note in the principal amount of $
Future maturities over the remaining term of total debt for (1) to (3) are as follows:
| 2026 (1) | $ | |||
| 2027 | ||||
| 2028 | ||||
| Less: current portion (1) | ( | ) | ||
| Long-term portion of debt | $ |
| (1) |
| F-17 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 11 - Related Party Transactions
A shareholder of the Company was paid $ and $ as consulting fees in each of the three and nine months ended March 31, 2026 and 2025, respectively.
A
director of the Company was paid $
A
company controlled by a director of the Company was paid $
In
December 2019, the Company received $
Note 12 – Lease Commitments
Finance Leases
In
July 2023, the Company entered into an equipment lease for $
The present value of future minimum lease payments due at March 31, 2026, was as follows:
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total minimum payments | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of minimum payments | $ | |||
| Less: current portion | ( | ) | ||
| Long term portion | $ |
The
Company has determined to amortize the lease over the useful life of the equipment or
Operating Leases
The Company leases its instructional facilities under non-cancelable operating leases expiring at various dates through 2034. In most cases, the facility leases require the Company to pay various operating expenses of the facilities in addition to base monthly lease payments. In certain cases, the Company has options available under its leases to renew, and certain leases contain contractual rental escalation clauses. Lease expense for operating leases is recognized on a straight-line basis over the lease term in accordance with ASC 842. The related operating lease right-of-use assets and operating lease liabilities are recorded on the accompanying balance sheets.
| F-18 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 12 – Lease Commitments (Continued)
Operating Leases (Cont’d)
The
Company uses its incremental borrowing rate based on the information available at the commencement to determine the present value of
lease payments over the lease term. As of March 31, 2026, the weighted average incremental borrowing rate used by the Company was approximately
The present value of future minimum lease payments due at March 31, 2026 was as follows:
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| After 2030 | ||||
| Total future minimum operating lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Total | ||||
| Current portion of operating lease | ||||
| Long term portion of operating lease | $ |
Total
rent expense and related taxes and operating expenses under operating leases for the three and nine months ended March 31, 2026 were
$
Total
rent expense and related taxes and operating expenses under operating leases for the three and nine months ended March 31, 2025 were
$
Supplemental balance sheet information related to leases was as follows:
| March 31, 2026 | June 30, 2025 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liability - current | $ | $ | ||||||
| Operating lease liability – non-current | ||||||||
| Total operating lease liability | $ | $ | ||||||
Other supplemental information:
| For the nine months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for operating lease | $ | $ | ||||||
Note 13 – Stockholders’ Equity
Reverse Stock Split
On
September 9, 2024, the Company’s stockholders approved an amendment to the Company’s articles of incorporation to effectuate
a
As
of March 31, 2026 and June 30, 2025, the Company had
| F-19 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 13 – Stockholders’ Equity (Continued)
Equity Transactions
During the nine months ended March 31, 2026, stock options were exercised at $ per share of common stock.
During the nine months ended March 31, 2026, stock options were exercised at $ per share of common stock.
During
the nine months ended March 31, 2026, the Company issued shares of common stock upon receipt of notice of the cashless exercise
of a total of
In August 2024, stock options were exercised at $ per share of common stock.
On
September 27, 2024, the Company completed its initial public offering of shares of common stock, priced at $ per share.
Concurrently, the Company issued shares as true up shares as a result of the
During the three months ended December 31, 2024, in connection with the initial public offering, the Company issued common shares in respect to the underwriters’ option to purchase up to an additional shares of common stock to cover allotments.
On December 18, 2024, the Company issued common shares pursuant to the terms of the APA.
A total of stock options were exercised during the nine months ended March 31, 2025 at $ per share.
As of March 31, 2026 and June 30, 2025 the Company had and shares of common stock outstanding, respectively, and shares of preferred stock issued and outstanding.
Note 14 - Warrants
Equity Classified Warrants
September 2024 Common Stock Warrants
In
September 2024, the Company issued warrants to certain underwriters to purchase shares of the Company’s common stock in
connection with the Company’s initial public offering for services provided. The warrants were immediately exercisable at a price
of $
The Company valued the warrants, based on a Black-Scholes Option Pricing Method, which included the following inputs:
| Expected term | ||||
| Expected volatility | % | |||
| Risk-free interest rate | % | |||
| Expected dividend yield | % |
During
the nine months ended March 31, 2026, the Company issued shares of common stock in respective to
| F-20 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Stock Options
The Company utilizes ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Black Scholes option pricing model was used to estimate the fair value of the options granted. This option pricing model requires a number of assumptions, of which the most significant are: expected stock price volatility, the expected pre-vesting forfeiture rate, and the expected option term (the amount of time from the grant date until the options are exercised or expire). The Company estimated a volatility factor utilizing a weighted average of comparable published volatilities of its peers. The Company applied the simplified method to determine the expected term of stock-based compensation grants.
In prior years, the Company had granted time vested options to purchase shares of common stock with exercise prices ranging from $ - $ on the date of grant by the Board. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes Merton model.
On September 27, 2024, the Company granted stock options to purchase an aggregate of shares of its common stock at an exercise price of $ per share to employees, directors, consultants and non-employee service providers pursuant to its 2021 Equity Incentive Plan. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes-Merton model.
On October 16, 2025, the Company granted stock options to purchase an aggregate of shares of its common stock at an exercise price of $ per share to employees and directors pursuant to its 2021 Equity Incentive Plan. These options vest ratably over a period of three years and expire ten years from the date of grant and the fair value of these options were calculated using the Black-Scholes-Merton model.
| Summary of Stock Options Outstanding | ||||||||||||
| Total Options | Weighted Average per Option | Weighted Average Remaining Term (Years) | ||||||||||
| Outstanding as of June 30, 2025 | ||||||||||||
| Exercisable as of June 30, 2025 | ||||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | - | |||||||||
| Forfeited, canceled, or expired | ( | ) | - | |||||||||
| Outstanding as of March 31, 2026 | ||||||||||||
| Exercisable as of March 31, 2026 | ||||||||||||
| F-21 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 15 - Share-Based Compensation Plans (Continued)
Stock Options (Cont’d)
| Options Outstanding | Weighted Average Exercise | Weighted Average | Average Remaining Contractual Life (Years) | |||||||||||||
| Balance – June 30, 2025, unvested | $ | $ | ||||||||||||||
| Options issued | ||||||||||||||||
| Options vested | ( | ) | ||||||||||||||
| Forfeited, canceled, or expired | ( | ) | ||||||||||||||
| Balance – March 31, 2026, unvested | $ | $ | ||||||||||||||
The Company valued options issued in September 2024 using the Black Scholes model utilizing volatility %, and a risk-free rate of%. The fair value of the options was $ per option.
The Company valued options issued in October 2025 using the Black Scholes model utilizing volatility %, and a risk-free rate of %. The fair value of the options was $ per option.
The Company recorded share-based compensation expense of $ and $ during the three and nine months ended March 31, 2026 respectively, which is included in educational services in the consolidated income statements. The Company recorded share-based compensation expense of $ and $ during the three and nine months ended March 31, 2025 respectively, which is included in educational services in the consolidated income statements.
Note 16 - Other Commitments and Contingency
Regulatory
In order for students to participate in Title IV federal financial aid programs, the Company is required to maintain certain standards of financial responsibility and administrative capability. In addition, the Company’s institutions are accredited by ACCET or ABHES and approved by other agencies and must comply with the applicable rules and regulations of the accrediting body and other agencies. As a result, the Company may be subject from time to time to audits, investigations, claims of noncompliance or lawsuits by governmental agencies, regulatory bodies, or third parties. While there can be no assurance that such matters will not occur and if they do occur will not have a material adverse effect on these financial statements, management believes that the Company has complied in all material respects with all applicable regulatory requirements as of the date of the financial statements.
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the “Higher Education Act”), and the regulations promulgated thereunder by ED, subject the Company to significant regulatory scrutiny on the basis of numerous standards that schools must satisfy in order to participate in the various federal student financial assistance programs under Title IV of the Higher Education Act.
Composite Score
As described above, ED requires institutions to meet standards of financial responsibility. ED deems an institution financially responsible when the composite score is at least 1.5. The Company’s composite score was 3.0 for the fiscal year ended June 30, 2025.
| F-22 |
Legacy Education Inc.
Notes to Condensed Consolidated Financial Statements
For the nine months ended March 31, 2026 and 2025
(Unaudited)
Note 16 - Other Commitments and Contingency (Continued)
90/10 Disclosure
The Company derives a substantial portion of its revenues from student financial aid received by its students under the Title IV programs administered by ED pursuant to the Higher Education Act. To continue to participate in the student financial aid programs, the Company must comply with the regulations promulgated under the Higher Education Act. The regulations restrict the proportion of cash receipts for tuition and fees from eligible programs to not more than 90% from Title IV programs and other federal educational assistance funds (the “90/10 revenue test”). If an institution fails to satisfy the test for one year, its participation status becomes provisional for two consecutive fiscal years. If the test is not satisfied for two consecutive years, eligibility to participate in Title IV programs is lost for at least two fiscal years. Using ED’s cash-basis, regulatory formula under the 90/10 revenue test, as in effect for its 2025 fiscal year, HDMC, CCC, ICH and CCMCC derived 86.82%, 80.35%, 84.71% and 59.80% for its 90/10 revenue from the Title IV programs and other federal educational assistance funds, respectively, for the fiscal year ended June 30, 2025.
Litigation
The Company is unaware of any other pending or threatened litigation arising from services currently or formerly performed by the Company. The Company is unaware of any possible claiming that could have a material adverse effect on the Company’s business, results of operations or financial condition.
Note 17 – Subsequent Events
On
April 1, 2026, the Company, through its subsidiary Legacy Education, LLC, entered into a multi-tenant industrial/commercial net lease
agreement with Krupali Investments, LLC for premises located in Wildomar, California. The lease provides for occupancy of approximately
The
lease has an initial term extending up to twelve years from the primary commencement date and includes escalating base rent beginning
at approximately $
The agreement includes customary tenant improvement allowances, rent abatement provisions, and standard commercial lease terms, including use restrictions, assignment limitations, and insurance requirements.
The Company is currently evaluating the accounting impact of this lease under ASC 842, including recognition of right-of-use assets and lease liabilities, which is expected to be recorded in subsequent reporting periods.
The Company has evaluated subsequent events and transactions that occurred up to the date the consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.
Throughout this Quarterly Report on Form 10-Q references to “we,” “our,” “us,” the “Company,” or “Legacy,” refer to Legacy Education Inc.
Overview
We provide career-focused, post-secondary education services to students at all stages of adult life, from recent high school graduates to working parents, through our accredited academic institutions: High Desert Medical College, which we acquired in July 2010, Central Coast College, which we acquired in January 2019, Contra Costa Medical Career College, which we acquired in December 2024, and Integrity 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 of Integrity is deemed to have been effective as of December 31, 2019.
High Desert Medical College
HDMC was established in the State of California in 2002 and began offering classes in 2003. It started with campuses in Lancaster, California, and added its first branch in 2008 in Bakersfield, California. Due to enrollment growth and high demand for its services, HDMC expanded to add a branch campus in Temecula, California campus in order to accommodate 250 to 400 additional students. HDMC offers UT, VN, VN Associate of Applied Science degree program, Associate Degree of Nursing, nursing assistant, MRI Associate of Applied Science, cardiac sonography, Associate of Applied Science, pharmacy technician, dental assisting, clinical medical assisting, medical administrative assisting programs, medical billing and coding, veterinary assistant, phlebotomy technician avocational, UT Associate of Applied Science degree programs, EMT, surgical technology and sterile processing technician programs. As of March 31, 2026, HDMC had 2,244 students enrolled in its programs.
Central Coast College
CCC was established in the State of California in 1983. In 1991, CCC moved to its current location in Salinas, California to accommodate growing enrollment numbers and the addition of new training programs.
CCC offers the following certificate or degree programs: 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, and MRI Associate of Applied Science. CCC also offers an avocational phlebotomy technician program. CCC also has obtained approval from ACCET, BPPE and ED to offer a Cardiac Sonography Associate of Applied Science. As of March 31, 2026, CCC had 600 students enrolled in its programs.
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Integrity College of Health
Integrity was established in the State of California in 2007. Integrity’s campus is located in Pasadena, California. Integrity offers VN, Registered Nurse to Bachelor of Science in Nursing (“RN to BSN”), medical assisting, medical billing and coding, veterinary assistant, and Diagnostic Medical Sonography programs. Integrity also plans to offer an emergency medical technician (EMT) program 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 program). Integrity also has obtained approval from ABHES and BPPE to offer a sterile processing technician program and will offer this program pending additional approval. For purposes of our financial statements, Legacy Education, L.L.C. is deemed to have acquired Integrity in December 2019. As of March 31, 2026, Integrity had 209 students enrolled in its programs.
Contra Costa Medical Career College
Contra Costa was established in the state of California in 2007. Contra Costa’s campus is located in Antioch, California. Contra Costa offers VN, surgical technology, sterile processing technician, pharmacy technician, medical assisting with phlebotomy, clinical medical assisting dental assisting, diagnostic medical sonography, EKG/ECG technician, medical administrative assistant/billing and coding specialist, phlebotomy (avocational) programs. As of March 31, 2026, Contra Costa had 497 students enrolled in its programs.
Recent Developments
Regulatory Updates
Negotiated Rulemaking
ED has promulgated a substantial number of new regulations in recent years that impact our business on a broad range of topics that have had significant impacts on our business, requiring a large number of reporting and operational changes and resulting in changes to and elimination of certain educational programs. 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. See Annual Report at Form 10-K at “Education Regulations – Negotiated Rulemaking.”
On July 24, 2025, ED announced it intended to establish two negotiated rulemaking committees: one that would consider changes to the federal student loan programs and one that would consider programmatic accountability metrics, changes to the Pell Grant Program and other matters. The rulemaking is intended to implement recent changes to the Title IV HEA programs included in the One Big Beautiful Bill Act (“OBBBA”). See Annual Report at Form 10-K “Education Regulations – Congressional Action.”
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 child. They also limit 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. See Annual Report at Form 10-K “Education Regulations – Congressional Action.” The new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We are currently evaluating the potential impact of the final rule on our institutions, but the implementation of the final rule could impact our enrollments and the extent to which alternative sources of funding such as third-party loans may be needed for some of our students.
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The 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 proposed regulations clarify which educational programs are eligible for the Workforce Pell program introduced by the OBBBA. Under the OBBBA and the proposed 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 proposed 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 proposed regulations) of working students who received a Pell Grant for enrollment in the program and completed the program within the applicable cohort period. 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 will consider these comments before it makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. We are evaluating potential opportunities under the proposed regulations.
On 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 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. Under the 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 the median annual earnings of program completers fall below the earnings threshold, the Secretary informs the institution that the program is failing under the earnings premium measure and that the program could become ineligible for the Direct Loan programs based on its earnings premium measure for the next award year. 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. Under the consensus language, 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. The consensus language also, among other things, describes the process and formulas for calculating earnings accountability measures, revise the requirements for institutional reporting to ED, specify the period of ineligibility for programs that fail the earnings premium measure, allow for limited retention of eligibility during orderly program closure, and modify 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). See Annual Report at Form 10-K “Education Regulations – Administrative Capability.”
The consensus language was incorporated into a notice of proposed rulemaking published April 20, 2026 and will undergo a period of public notice and comment (with such comments due by May 20) before ED makes any amendments and publishes the final regulations. It is expected that the new regulations will go into effect on July 1, 2026 along with the relevant changes in the OBBBA which become effective on that date. It is expected that the first accountability measure calculations will take place in 2027 and “failures” can be determined beginning in July 2027, although programs would not lose eligibility until July 1, 2028. These dates are subject to change. We cannot predict the content of the final regulations, but we are currently evaluating the potential impact of the proposed regulations on the Company and are continuing to monitor the ongoing rulemaking process. If one or more of our programs fail to comply with the new requirement, those programs could lose access to Title IV Direct Loans, and potentially Pell Grant 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.
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We expect the new regulations that are expected to emerge from the RISE and AHEAD Committees will impact our institutions and operations, but we cannot predict the ultimate scope, content, and impact of the future ED 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 and proposed requirements on us and our institutions and to monitor the ongoing negotiated rulemaking process.
A negotiated rulemaking committee met in April and will meet again in 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. ED’s stated goals for developing these regulations include simplification of the accreditor recognition process, consideration of the effect of accreditation on higher education costs and “credential inflation,” protecting against undue influence from private trade associations, eliminating discriminatory standards, and focusing on data-driven student outcomes. The topics under consideration could change, but include institutions switching from one accreditor to another, the recognition criteria for accrediting agencies, and accrediting agencies’ standards and requirements regarding acceptance of transfer credit, institutional outcomes, academic freedom, and violations of federal and state law. Each of our institutions are currently accredited by an accrediting agency recognized by ED, and our participation in the Title IV Programs is dependent on ED continuing to recognize the accrediting agencies that accredit our institutions. See Annual Report at Form 10-K “Education Regulations – ED Recognition of Accrediting Agencies.” 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.
We also cannot predict with certainty the ultimate combined impact of the regulatory changes which have occurred in recent years, nor can we predict the effect of future legislative or regulatory action by federal, state or other agencies regulating our educational programs or other aspects of our operations, how any resulting regulations will be interpreted or whether we and our institutions will be able to comply with these requirements in the future. Any such actions by legislative or regulatory bodies that affect our programs and operations could have a material adverse effect on our student population and our institutions, including the need to cease offering a number of programs.
Financial Value Transparency and Gainful Employment Regulations and Proposed Accountability Regulations
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 in the U.S. District Court for the Northern District of Texas. See Annual Report at Form 10-K “Education Regulations – Financial Value Transparency and Gainful Employment Regulations.” 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.
ED has published new proposed regulations that would replace the debt-to-earnings rate measure and the earnings premium measure in the existing financial value transparency and gainful employment regulations with a new earnings premium accountability framework based in part on the accountability measure introduced in the OBBBA. See “Regulatory Updates – Negotiated Rulemaking;” see also Annual Report at Form 10-K “Education Regulations – Congressional Action.”
Borrower Defense to Repayment
ED’s “borrower defense to repayment” (“BDR”) regulations generally allow federal student loan borrowers to assert a defense to repaying their federal loans based on the conduct of the institution they attended. The amount of loans discharged by ED pursuant to an adjudicated BDR claim may be assessed by ED as a Title IV Program liability against the institution. See Annual Report at Form 10-K “Education Regulations – Borrower Defense to Repayment Regulations.”
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On June 22, 2022, ED reached a settlement with plaintiffs in the case titled Sweet v. Cardona, which was filed by student loan borrowers to challenge ED’s adjudication of BDR claims. The settlement resulted in automatic relief of claims pending as of June 22, 2022 that were filed against institutions on a list of about 150 institutions named in the settlement agreement, which did not include any of our institutions. 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 should have been decided by January 2026, although ED has filed an appeal of a court ruling denying an extension of this adjudication deadline. HDMC received and timely responded to seven BDR applications from Post-Class Applicants.
In March 2026, CCC received five BDR applications from ED. CCC timely responded to these BDR applications in May 2026 disputing the validity of the claims. HDMC, Integrity and CCMCC have 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 additional 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 2019 version of the BDR regulations. 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.
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. See “Education Regulations - Financial Responsibility Standards.”
In recent years, ED has been more active in processing BDR applications and it may, on its own or in response to other constituencies, allocate additional resources to reviewing and adjudicating BDR applications from federal student loan borrowers. We cannot predict how many BDR applications in total have been filed by our former students, but if we receive additional claims from ED, we may incur significant costs in responding to the borrower allegations and, if adjudicated as valid by ED, defending our institutions in a recoupment action brought by ED or repaying the federal government for the amount of loans discharged pursuant to such claims.
Return of Title IV Program Funds
An institution participating in the Title IV Programs must calculate the amount of unearned Title IV Program funds that have been disbursed to students who withdraw from their educational programs before completing them, and must return those unearned funds to ED in a timely manner, which is generally within 45 days from the date the institution determines that the student has withdrawn. The failure to timely return funds can result in liabilities or sanctions. See Annual Report at Form 10-K “Education Regulations – Return of Title IV Program Funds.”
If an institution is cited in an audit or program review for late returns of Title IV Program funds for 5% or more of the pertinent students within the audit or program review sample, or if an audit identifies a material weakness in the institution’s report on internal controls relating to the return of unearned Title IV Program funds, the institution may be required to submit an acceptable form of financial protection with ED in an amount equal to 25% of the total amount of Title IV Program funds that should have been returned for students who withdrew in the institution’s prior fiscal year. Neither HDMC nor CCC has received such a finding in either of the two most recently completed annual Title IV Program compliance audits submitted to ED. On January 30, 2024, due to a failure to timely return unearned Title IV Program 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 $15,356. Integrity and CCMCC have submitted the required financial protection to ED.
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In 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. 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 for programs offered in modules. We are continuing to evaluate whether and the extent to which the new regulations may negatively impact our performance of Return of Title IV.
Key Financial Metrics
Revenue
Tuition revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable is recorded for the portion of tuition not paid in advance. In some instances, installment billing is available to students which reduces the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with installment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed.
Enrollments
Enrollments are a function of the number of continuing students at the beginning of each period and new enrollments during the period, offset by students who either graduated or withdrew during the period.
Costs and expenses
Educational service. This expense consists primarily of costs related to the administration and delivery of educational programs by our academic institutions. This expense category includes salaries, benefits, share-based compensation, student books, student supplies and occupancy costs.
General and administrative. 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.
Depreciation and amortization. This expense reflects depreciation and amortization of property and equipment, amortization of assets under capital leases and amortization of intangible assets.
Interest expense
This expense reflects interest paid under notes issued to our investors, IRS interest, non-cash interest related to unit option grants, interest related to notes associated with CCMCC, and other debt related interest.
Interest income
This income relates to interest received from investments.
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Factors Affecting Comparability
We believe the following factors have had, or can be expected to have, a significant effect on the comparability of recent or future results of operations:
Seasonality
Our operations are generally subject to seasonal trends. We generally experience a seasonal increase in new enrollments during the first quarter of our fiscal year, as well as during the third quarter each year, when most other colleges and universities begin their fall semesters and subsequent to holiday break. While we enroll students throughout the year, our second quarter revenue generally is lower than other quarters due to the holiday season.
Critical Accounting Policies and Use of Estimates
The preparation of the financial statements included elsewhere in this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the evaluation of the Company’s distinct performance obligations, the valuation of equity instruments and valuation allowances for credit losses related to accounts receivable.
Allowance for credit losses
We record an allowance for doubtful credit losses for estimated losses resulting from the inability, failure or refusal of our students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student’s cost of tuition and related fees. We determine the adequacy of our allowance for doubtful accounts based on an analysis of our historical bad debt experience, current economic trends, and the aging of the accounts receivable and student status. We apply reserves to our receivables based upon an estimate of the risk presented by the age of the receivables and student status. We write off account receivable balances of inactive students at the earlier of the time the balances were deemed uncollectible, or one year after the revenue is generated. Bad debt expense is recorded as a general and administrative expense in the income statement. The Company performs an analysis annually to determine which accounts are uncollectable and write them off.
Impairment of long-lived assets
We evaluate the recoverability of our long-lived assets for impairment, other than goodwill, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value estimates are based on assumptions concerning the amount and timing of estimated future cash flows. We had no long-lived asset impairments as of March 31, 2026 and March 31, 2025, respectively.
Income taxes
GAAP 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.
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Corporate 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.
Corporations 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.
We account for income taxes payable or refundable for the current year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be realized.
Share Based Compensation
The Company utilizes ASC 718, Stock Compensation, related to accounting for share-based payments and, accordingly, records compensation expense for share-based awards based upon an assessment of the grant date fair value for stock options and restricted stock awards. The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. The Company’s estimate of expected volatility was based on the volatility of peers. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. The Company accounts for forfeitures upon occurrence.
Goodwill and Other Indefinite-lived Assets
We test goodwill and other indefinite-lived assets for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. There were no goodwill 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 failing.
Results of Operations
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following table sets forth our consolidated statements of income data as a percentage of revenue for the three months ended March 31, 2026 and 2025:
Three months ended March 31, | Percentage Change | |||||||||||
| 2026 | 2025 | |||||||||||
| Revenue | 100 | % | 100 | % | ||||||||
| Costs and expenses: | ||||||||||||
| Educational services | 51.7 | % | 54.4 | % | -2.7 | % | ||||||
| General and administrative | 28.8 | % | 24.9 | % | 3.9 | % | ||||||
| General and administrative – related party | 0.3 | % | 0.3 | % | 0.0 | % | ||||||
| Depreciation and amortization | 0.7 | % | 0.7 | % | 0.0 | % | ||||||
| Total costs and expenses | 81.5 | % | 80.3 | % | 1.2 | % | ||||||
| Operating income | 18.5 | % | 19.7 | % | -1.2 | % | ||||||
| Loss on disposal of fixed assets | -0.0 | % | - | % | 0.0 | % | ||||||
| Interest expense | -0.0 | % | -0.1 | % | 0.1 | % | ||||||
| Interest income | 1.4 | % | 1.6 | % | -0.2 | % | ||||||
| Income before income taxes | 19.9 | % | 21.2 | % | -1.3 | % | ||||||
| Income tax expense | -5.7 | % | -6.0 | % | 0.3 | % | ||||||
| Net income | 14.2 | % | 15.2 | % | -1.0 | % | ||||||
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Revenue. Tuition and related revenue for the three months ended March 31, 2026, increased by approximately $2.8 million, or 15%, to $21.4 million, compared to $18.6 million for the same period in 2025 driven by new student starts of 1,078 resulting in a 9.4% increase in student enrollment to 3,550.
Educational services. Educational services expense for the three months ended March 31, 2026 increased by approximately $0.9 million, or 9%, to $11.0 million, compared to $10.1 million in the prior year period. The increase was primarily driven by increased instructional and staffing costs associated with increased student enrollment, including externship fees and non cash compensation charge. As a percentage of revenue, educational expenses declined from 54.4% to 51.7% primarily due to operating efficiencies in employee compensation and facility costs offset by increases in externship fees and non cash compensation.
General and administrative expense. Our general and administrative expense was approximately $6.2 million for the three months ended March 31, 2026 compared to approximately $4.6 million for the three months ended March 31, 2025, an increase of approximately $1.5 million, or approximately 33.5%. The increase was primarily attributable to an increase in marketing expense, bad debt and professional fees. Of the total general and administrative expense, approximately $1.5 million and $1.2 million related to advertising expense for the three months ended March 31, 2026 and 2025, respectively.
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.2 million for the three months ended March 31, 2026 compared to approximately $0.1 million for the three months ended March 31, 2025. The increase was primarily attributable to capital expenditures associated with campus expansion and equipment purchases to support program growth.
Interest expense. Interest expense. Our interest expense was approximately $0.0 for the three months ended March 31, 2026 compared to approximately $0.0 for the three months ended March 31, 2025. The decrease was primarily attributable to repayments of outstanding debt balances.
Income tax expense. Our income tax expense was approximately $1.2 million for the three months ended March 31, 2026 compared to approximately $1.1 million for the three months ended March 31, 2025.
Net Income. Our net income was approximately $3.0 million for the three months ended March 31, 2026 compared to approximately $2.8 million for the three months ended March 31, 2025, an increase of approximately $0.2 million, or approximately 7.5%, due to the reasons mentioned above.
Nine Months Ended March 31, 2026 Compared to Nine Months Ended March 31, 2025
The following table sets forth our consolidated statements of income data as a percentage of revenue for the nine months ended March 31, 2026 and 2025:
Nine months ended March 31, | Percentage Change | |||||||||||
| 2026 | 2025 | (decrease) | ||||||||||
| Revenue | 100 | % | 100 | % | ||||||||
| Costs and expenses: | ||||||||||||
| Educational services | 52.8 | % | 53.6 | % | -0.8 | % | ||||||
| General and administrative | 30.7 | % | 28.0 | % | 2.7 | % | ||||||
| General and administrative – related party | 0.4 | % | 0.4 | % | 0.0 | % | ||||||
| Depreciation and amortization | 0.8 | % | 0.7 | % | 0.1 | % | ||||||
| Total costs and expenses | 84.7 | % | 82.7 | % | 2.0 | % | ||||||
| Operating income | 15.3 | % | 17.3 | % | -2.0 | % | ||||||
| Loss on disposal of fixed assets | -0.0 | % | - | % | 0.0 | % | ||||||
| Interest expense | -0.1 | % | -0.2 | % | 0.1 | % | ||||||
| Interest income | 1.6 | % | 1.9 | % | -0.3 | % | ||||||
| Income before income taxes | 16.8 | % | 19.0 | % | -2.2 | % | ||||||
| Income tax expense | -4.7 | % | -5.3 | % | 0.6 | % | ||||||
| Net income | 12.1 | % | 13.7 | % | -1.6 | % | ||||||
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Revenue. Tuition and related revenue for the nine months ended March 31, 2026 increased by approximately $13.7 million, or 29.7%, to $60.0 million, compared to $46.2 million for the same period in 2025 driven by a 12.7% increase in new student starts to 2,788 from 2,473 last year resulting in a 9.4% increase in student enrollment.
Educational services. Educational services expense for the nine months ended March 31, 2026, increased by approximately $6.9 million, or 28%, to $31.7 million compared to $24.8 million for the same period in 2025. The increase was primarily driven by increased instructional and staffing costs required to support increased student enrollment, as well as rent, externship fee and non cash compensation charge. As a percentage of revenue, educational expenses declined from 53.6% to 52.8% primarily due to operating efficiencies in employee compensation and facility costs offset by increases in externship fees and non cash compensation.
General and administrative expense. Our general and administrative expense was approximately $18.4 million for the nine months ended March 31, 2026 compared to approximately $12.9 million for the nine months ended March 31, 2025, an increase of approximately $5.4 million, or approximately 42.1%. The increase was primarily attributable to increased marketing expense, bad debt expense and professional fees. Of the total general and administrative expense, approximately $4.8 million and $3.5 million related to advertising expense for the nine months ended March 31, 2026 and 2025, respectively.
Depreciation and amortization. Our depreciation and amortization expense was approximately $0.5 million for the three months ended March 31, 2026 compared to approximately $0.3 million for the three months ended March 31, 2025. The increase was primarily attributable to capital expenditures associated with campus expansion and equipment purchases to support program growth.
Interest expense. Our interest expense was approximately $0.1 for the nine months ended March 31, 2026 compared to approximately $0.1 for the nine months ended March 31, 2025. The decrease was primarily attributable to repayments of outstanding debt balances.
Income tax expense. Our income tax expense was approximately $2.8 million for the nine months ended March 31, 2026 compared to approximately $2.5 million for the nine months ended March 31, 2025, an increase of approximately $0.4 million, or approximately 15.0%. The increase is primarily attributable to an increase in overall revenue period over period.
Net Income. Our net income was approximately $7.3 million for the nine months ended March 31, 2026 compared to approximately $6.3 million for the nine months ended March 31, 2025, an increase of approximately $1.0 million, or approximately 15.1%, due to the reasons mentioned above.
Liquidity and Capital Resources
Our cash and cash equivalents were approximately $21.7 million and $20.3 million as of March 31, 2026, and June 30, 2025, respectively.
We are not party to a revolving line of credit or other debt facility.
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Based on our current level of operations and anticipated growth, we believe that our cash flow from operations, the proceeds from our initial public offering and other sources of liquidity, including cash and cash equivalents, will provide adequate funds for ongoing operations, planned capital expenditures and working capital requirements for at least the next 12 months.
Capital expenditures were approximately $1.0 million and $0.8 million for the nine months ended March 31, 2026, and 2025, respectively.
Title IV and other government funding
A significant portion of our revenue is derived from student tuition payments funded by the Title IV Programs. As such, the timing of disbursements under the Title IV Programs is based on federal regulations and our ability to successfully and timely arrange financial aid for our students. Title IV Program funds are generally provided in multiple disbursements before we earn a significant portion of tuition and fees and incur related expenses over the period of instruction. Students must apply for new Title IV Program loans and grants each academic year. These factors, together with the timing of our students beginning their programs, affect our operating cash flow.
Financial responsibility
Based on the most recent fiscal year-end financial statements, we satisfied the composite score requirement of the financial responsibility test which institutions must satisfy in order to participate in the Title IV Programs.
Cash Flow Activities for the Nine Months Ended March 31, 2026 and 2025
Operating activities
Net cash provided by operating activities was approximately $2.9 million and $4.8 million for the nine months ended March 31, 2026, and 2025, respectively. The decrease of approximately $1.9 million was primarily attributable to increases in accounts receivable, prepaid expenses and other receivables, partially offset by increases in deferred unearned tuition and income taxes payable.
Accounts receivable increased to approximately $19.2 million as of March 31, 2026 from approximately $15.1 million as of June 30, 2025, primarily due to increased enrollment and tuition billings. The allowance for doubtful accounts increased to approximately $2.7 million from approximately $1.6 million, reflecting increased receivable balances and updated estimates of collectability based on historical experience and current economic conditions.
Investing activities
Net cash used in investing activities was approximately $1.0 million for the nine months ended March 31, 2026, compared to approximately $6.9 million for the nine months ending March 31, 2025. Cash used in investing activities during both periods primarily related to purchases of property and equipment, while the prior year period also included cash paid in connection with the acquisition of Contra Costa Medical Career College.
Financing activities
Net cash used in financing activities was approximately $0.5 million for the nine months ended March 31, 2026, compared to net cash provided by financing activities of approximately $9.1 million for the nine months ended March 31, 2025. The prior year increase was primarily attributable to net proceeds received from the Company’s initial public offering completed during the prior fiscal year.
Financings
| ● | From July 2024 to September 2024, the Company issued 2,500,000 shares of common stock as part of its IPO at a price of $4.00 per share for gross proceeds of $10,000,000 |
| ● | From October 2024 to December 2024, the Company issued 375,000 shares of common stock pursuant to the exercise of the over-allotment option by the underwriters to the IPO, at a price of $4.00 per share for gross proceeds of $1,500,000. |
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Impact of Inflation
We believe that inflation has not had a material impact on our results of operations for the three or nine months ended March 31, 2026, and 2025. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.
Segment Information
We operate in one reportable segment as a single educational delivery operation using a core infrastructure that serves the curriculum and educational delivery needs of our institution’s students regardless of geography. Our chief operating decision maker, our CEO and President, manages our operations as a whole, and our chief operating decision maker does not evaluate expenses or operating income information on a component level.
Recent Accounting Pronouncements
In November 2023, the FASB issued ASU2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. There are aspects of ASU 2023-07 that apply to entities with one reportable segment. The Company adopted this guidance in the fiscal fourth quarter of 2025. The adoption of ASU 2023-07 is reflected in Note 2, “Summary of Significant Accounting Policies – Segment Reporting.”
JOBS Act
On April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting standards.
We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, as such amount is indexed for inflation every five years by the Securities and Exchange Commission to reflect the change in the Consumer Price Index for All Urban Consumers during its most recently completed fiscal year; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our principal executive officer and principal financial officer evaluated the effectiveness of our “disclosure controls and procedures” as of March 31, 2026, the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is accumulated and communicated to a company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and recognizes that any control and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of March 31, 2026, our Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control
There have been no significant changes in our internal control over financial reporting during the three and nine months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition.
ITEM 1A. RISK FACTORS
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended June 30, 2025 as filed with the SEC on September 25, 2025 (“Annual Report”). Other than the information set forth in this Form 10-Q, including the section titled “Regulatory Updates,” there have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Sales of Unregistered Securities.
None.
(b) Use of IPO Proceeds.
On September 27, 2024, we completed our IPO pursuant to which we issued and sold 2,500,000 shares of common stock at a price of $4.00 per share. We also issued 375,000 shares of common stock pursuant to the exercise by the underwriters of their over-allotment option, at a price to the public of $4.00 per share in the second quarter of fiscal 2025. The securities were sold pursuant to our Registration Statement on Form S-1 (File No. 333-281586) which was declared effective by the SEC on September 25, 2024.
We received net proceeds of approximately $7.9 million from the sale of the 2,500,000 shares of common stock after deducting underwriting discounts and commissions and offering expenses We also received net proceeds of approximately $1.4 million, which includes 375,000 shares of common stock issued pursuant to the exercise by the underwriters of their over-allotment option, after deducting underwriting discounts and commissions and offering expenses.
The offering commenced on September 25, 2024, and did not terminate before all securities registered in the registration statement were sold.
None of the expenses incurred by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10% or more of our common stock, or (iii) our affiliates. Northland Securities, Inc., acted as book-running manager and representative of the underwriters for the IPO.
There has been no material change in the planned use of proceeds from our IPO from that described in the final prospectus related to the offering, dated September 25, 2024, as filed with the SEC on September 27, 2024.
(c) Issuer Purchases of Equity Securities.
None.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Rule 10b5-1 Trading Plans
ITEM 6. EXHIBITS
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LEGACY EDUCATION INC. | ||
| Date: May 14, 2026 | By: | /s/ LeeAnn Rohmann |
| LeeAnn Rohmann | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: May 14, 2026 | By: | /s/ Brandon Pope |
| Brandon Pope | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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