Legacy Education (LGCY) risk factors, 2026 10-K

Risks Related to the Highly Regulated Field in Which We Operate

1. 01Any failure to comply with state laws and regulatory requirements, including educational regulations, or new state legislative or regulatory initiatives affecting our institutions, could have a material adverse effect on our total student enrollment, results of operations, financial condition and cash flows27% rewritten
2. 02If one or more of our institutions fails to maintain institutional accreditation, or if certain of our programs cannot obtain or maintain programmatic accreditation, our student enrollments would diminish, and our business would suffer43% rewritten
3. 03Congress may revise the laws governing the Title IV Programs or reduce funding for those programs which could reduce our enrollment and revenue and increase costs of operations53% rewritten
4. 04Executive action could affect access to Title IV funding which could reduce our enrollment and revenue and increase costs of operations28% rewritten
5. 05Additional ED or other rulemaking could materially and adversely affect our operations, business, results of operations, financial condition and cash flows73% rewritten
6. 06On 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, 2024new
7. 07ED’s “borrower defense to repayment” regulations may subject us to significant repayment liability to ED for discharged federal student loans, posting of substantial letters of credit and other requirements that could have a material adverse effect on us
8. 08A failure to maintain compliance with ED’s “financial responsibility” requirements would have negative impacts on our operations
9. 09If, in the future, we are required to satisfy ED’s standards of financial responsibility on an alternative basis, including potentially by posting irrevocable letters of credit, we may not have the capacity to post these letters of credit which could result in sanctions including loss of Title IV Program eligibility21% rewritten
10. 10A failure to maintain compliance with ED’s “administrative capability” requirements would negatively impact our operations
11. 11Failure by us to satisfy any of these or other administrative capability criteria could cause our institutions to be subject to sanctions or other actions by ED or to lose eligibility to participate in the Title IV Programs, which would have a significant impact on our business and results of operations68% rewritten
12. 12Our institutions could be subject to liabilities and sanctions if they violate ED regulations and guidance limiting compensation to individuals and entities involved in certain recruiting, admissions or financial aid activities
13. 13Our institutions could lose their eligibility to participate in the Title IV programs if the percentage of their revenues derived from applicable federal educational assistance programs is too high25% rewritten
14. 14Our institutions could lose their eligibility to participate in the Title IV Programs or have other limitations placed upon them if their federal student loan cohort default rates are greater than the standards set forth in the HEA and implemented by ED
15. 15If ED denies, or significantly conditions, recertification of any of our institutions to participate in the Title IV Programs, that institution could not conduct its business as it is currently conducted and it could have an adverse effect on our business and results of operations72% rewritten
16. 16On June 29, 2026, ED confirmed Integrity remains an eligible institution that qualifies to participate in the Title IV Programs and issued a provisional program participation agreement to Integrity, which will remain in effect until March 31, 2029new
17. 17Our failure to comply with laws and regulations regarding prohibited misrepresentation could result in sanctions, liabilities or litigation that could have an adverse effect on our business and results of operations
18. 18If our institutions fail to comply with regulations regarding accurate and timely refunds and returns of Title IV Program funds in connection with students who withdraw from their programs, we could be subject to liabilities and sanctions
19. 19If our institutions open new campuses or add or change new educational programs, we may be required to obtain approvals from ED and state and accrediting agencies
20. 20If our students’ access to financial aid from state sources, from federal sources other than the Title IV Programs, or from alternative loan programs is lost or reduced, it could impact our results of operations
21. 21Government and regulatory agencies and third parties may conduct compliance reviews and audits or bring actions against us that could result in monetary liabilities, injunctions, loss of eligibility for the Title IV Programs or other adverse outcomes
22. 22The failure of any of our institutions to detect and prevent financial aid fraud could result in liabilities, loss of accreditation or Title IV eligibility, or third-party claims36% rewritten

Risks Related to Our Business

1. 23If we fail to comply with the rules under Sarbanes-Oxley related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult
2. 24Our financial performance depends on the level of student enrollment in our institutions
3. 25We compete with a variety of educational institutions and if we are unable to compete effectively, our total student enrollment and revenue could be adversely impacted
4. 26Our financial performance depends on our ability to develop awareness among, and enroll and retain, students in our institutions and programs in a cost effective manner
5. 27Our business is subject to fluctuations caused by seasonality or other factors beyond our control, which may cause our operating results to fluctuate from quarter to quarter
6. 28If we are unable to successfully resolve future litigation and regulatory and governmental inquiries involving us, or face regulatory actions or litigation, our financial condition and results of operations could be adversely affected
7. 29Our future financial condition and results of operations could be materially adversely affected if we are required to write down the carrying value of non-financial assets and non-financial liabilities, including long-lived assets, deferred tax assets and goodwill and intangible assets, such as our trade names
8. 30The loss of our key personnel could harm us
9. 31We may be compelled to terminate programs due to regulatory considerations or declining enrollments and may incur additional costs and expenses, or fail to achieve anticipated cost savings and business efficiencies, associated with past or future exit or restructuring activities
10. 32Our financial performance depends, in part, on our ability to keep pace with changing market needs and technology
11. 33Government regulations relating to the Internet could increase our cost of doing business or otherwise have a material adverse effect on our business
12. 34We are subject to privacy and information security laws and regulations due to our collection and use of personal information, and any violations of those laws or regulations, or any breach, theft or loss of that information, could adversely affect our reputation and operations
13. 35System disruptions and vulnerability from security risks to our online technology infrastructure could have a material adverse effect on our ability to attract and retain students
14. 36We may incur liability for the unauthorized duplication or distribution of class materials posted online for class discussions
15. 37We rely on proprietary rights and intellectual property in conducting our business, which may not be adequately protected under current laws, and we may encounter disputes from time to time relating to our use of intellectual property of third parties
16. 38We may acquire other companies or technologies which could divert our management’s attention, result in dilution to our shareholders and otherwise disrupt our operations and adversely affect our operating results

Risks Related to Our Common Stock

1. 39We are subject to the rules and regulations of the NYSE American and are required to comply with certain continued exchange listing standards and requirements or be subject to delisting
2. 40Our stock price may be volatile, and you could lose all or part of your investment
3. 41Future sales and issuances of our securities could result in additional dilution of the percentage ownership of our shareholders and could cause our share price to fall
4. 42We do not intend to pay cash dividends
5. 43Market and economic conditions may negatively impact our business, financial condition, and share price
6. 44Certain provisions of our Articles of Incorporation and Nevada law make it more difficult for a third party to acquire us and make a takeover more difficult to complete, even if such a transaction were in stockholders’ interest
7. 45If securities or industry analysts do not publish research or publish inaccurate or unfavorable research reports about our business, our stock price and trading volume could decline
8. 46We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors
9. 47Financial reporting obligations of being a public company in the U.S. are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters