NASDAQ: LINC

Also, Congress,
or the President, can take action to downsize or eliminate the DOE or transfer
some or all of the DOE’s authority or responsibilities to another agency. See
“Regulatory Environment – Congressional and Presidential Action.” We cannot
predict whether, when, and to what extent the DOE may be downsized, eliminated
or replaced and whether Congressional action and/or judicial action in response
to lawsuits could impede efforts by the President and DOE to make such changes.
However, recent and future changes at the DOE could result in delays and
disruptions to Title IV Program funding at our schools or to other actions by
the DOE related to our participation in Title IV Programs such as, but not
limited to, granting approvals for school acquisitions, adding new programs to
existing schools, or adding new school locations.

The DOE continues to engage in a process to establish new regulations that have increased, and may continue to increase, the number and scope of regulatory requirements applicable to our schools. See Part I, Item 1. “Business – Regulatory Environment – Negotiated Rulemaking.” We cannot predict the scope, timing or likelihood of future actions and changes by Congress, the President or the DOE with respect to the operations and existence of the DOE or the laws and regulations applicable to and the funding for Title IV Programs. Moreover, we cannot predict the duration of any future government shutdowns or whether they could lead to disruptions in Title IV Programs or other federal student aid programs that could adversely impact us, our schools, and our students. If we cannot comply with the provisions of the HEA and the regulations of the DOE, as they may be revised, or with the terms of an executive order or other executive action, or if the cost of such compliance is excessive, or if funding is materially reduced, or if funding is materially reduced or disrupted by changes to Title IV Programs, our revenues or profit margin could be materially adversely affected.

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We could be subject to liabilities, letter of credit requirements, and other sanctions under the DOE’s Borrower Defense to Repayment regulations.

The DOE’s
Borrower Defense to Repayment regulations establish processes for borrowers to
receive from the DOE a discharge of the obligation to repay certain Title IV
Program loans based on certain acts or omissions by the institution or a
covered party for which a loan was obtained. The regulations also establish
processes for the DOE to seek recovery from the institution of the amount of
discharged loans. The regulations regarding Borrower Defense to Repayment and
regarding closed school loan discharges are extensive and generally make it
easier for borrowers to obtain discharges of student loans and for the DOE to
assess liabilities and other sanctions on institutions based on the loan
discharges. The implementation and enforcement of these Borrower Defense to
Repayment and closed school loan discharge regulations could have a material
adverse effect on our business and results of operations. See Part I, Item 1.
“Business - Regulatory Environment – Borrower Defense to Repayment Regulations”
and “Business – Regulatory Environment – Closed School Loan Discharges.” As a
result of class action litigation in the U.S. District Court for the Northern
District of California (Sweet v. Cardona, No. 3:19-cv-3674 (N.D. Cal.)) which
has been settled, the DOE estimated that approximately 196,000 student loan
borrowers who attended one of the schools identified in the litigation
(including our institutions) would receive automatic loan discharges and that
approximately 250,000 additional student loan borrowers who submitted borrower
defense applications after the litigation commenced (which may include our
institutions) would receive decisions within 36 months or else receive
automatic student loan discharges. It is not possible at this time to predict
whether the settlement will continue to be upheld, what additional actions the
DOE might take as the settlement continues to be upheld, or whether the DOE or
other agencies might take actions against the Company's institutions. It is
possible that all claims by our students might be forgiven either affirmatively
by the DOE or automatically under the settlement agreement. Such actions could
have a material adverse effect on our business and results of operations. We
believe that the DOE already may have discharged some or all of the pending
applications. See Part I, Item I. “Business – Regulatory Environment – Borrower
Defense to Repayment Regulations.”

Our failure to comply with the DOE’s gainful employment and accountability regulations could result in additional disclosure requirements and possible loss of Title IV Program eligibility.

The DOE
published final gainful employment and financial value transparency regulations
which established rules for annually evaluating each of our educational
programs based on the calculation of debt-to-earnings rates (an annual
debt-to-earnings ratio that compares the median annual earnings and median
discretionary earnings of graduates who received federal financial aid to the
median annual payment on loan debt borrowed for the program) and an earnings
premium test that compares the median annual earnings of graduates from a
program that received federal financial aid to an “earnings threshold” based on
a typical high school graduate in their state (or in some cases nationally) and
within a certain age range in the labor force under complex regulatory formulas
outlined in the regulations. See Part I, Item 1. “Business - Regulatory
Environment – Gainful Employment and Accountability Metrics.” Earlier this
year, proposed regulations were published intended to implement the
accountability metric imposed by the OBBB Act, which conditions Direct Loan
eligibility on whether program completers earn more than working adults with
only a high school diploma or GED. The proposed regulations would amend the
gainful employment and financial value transparency regulations. If one or more
of our educational programs were to yield debt-to-earnings ratios or an
earnings premium measure that do not comply with regulatory benchmarks for two
of three consecutive years, we would lose Title IV Program eligibility for each
of the impacted educational programs. The regulations will also require us to
provide warnings to current and prospective students for programs in danger of
losing Title IV Program eligibility (which could deter prospective students
from enrolling and current students from continuing their respective programs)
and to provide to the DOE certifications and reporting data and to provide to
students certain required disclosures related to gainful employment.

The implementation of the gainful employment and new accountability metric regulations may substantially increase our administrative burdens and could impact our program offerings, student enrollment, and retention as it could result in the loss of our students’ access to Title IV Program funds for the affected programs, which would have a significant impact on the rate at which students enroll in our programs and on our business and results of operations.

The DOE periodically amends its
regulations and issues new regulations in a manner which could require us to
incur additional costs in connection with our administration of Title IV
Programs, affect our ability to remain eligible to participate in Title IV
Programs, impose restrictions on our participation in Title IV Programs, affect
the rate at which students enroll in our programs, or otherwise have a
significant impact on our business and results of operations.

The DOE periodically issues new
regulations and guidance. We cannot predict the timing and content of any new
regulations or guidance that the DOE may seek to impose or whether and to what
extent the DOE may issue new regulations and guidance that could adversely
impact for-profit postsecondary schools including our institutions. The DOE
recently published new regulations on a variety of topics. It also recently engaged in two negotiated
rulemaking processes that resulted in a consensus among the rulemaking
committees on proposed regulations. See Part I, Item 1. “Business – Regulatory
Environment – Negotiated Rulemaking.”

If we cannot comply with the provisions of these or other regulations, as they currently exist or may be revised, or if the cost of such compliance is excessive, or if funding is materially reduced, our revenues or profit margin could be materially adversely affected.

We cannot predict how the DOE will
interpret and enforce current or future regulations or how these regulations, , may impact our schools’ participation in Title IV Programs; however, failure to
comply with current or future regulations could have a material adverse effect
on our schools’ business and results of operations, and the broad sweep of the
recent rules and the rules that the DOE is currently developing may, in the
future, require our schools to submit a letter of credit based on expanded standards
of financial responsibility.

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We are subject to fines and other sanctions if we make incentive payments to individuals involved in certain recruiting, admissions or financial aid activities, which could increase our cost of regulatory compliance and adversely affect our results of operations.

An institution participating in Title IV Programs may not provide any commission, bonus or other incentive payment based directly or indirectly on success in enrolling students or securing financial aid to any person involved in any student recruiting or admission activities or in making decisions regarding the awarding of Title IV Program funds. See Part I, Item 1. “Business - Regulatory Environment -- Restrictions on Payment of Commissions, Bonuses and Other Incentive Payments.” We cannot predict how the DOE will interpret and enforce the incentive compensation rule and the limited published guidance that the DOE has provided, nor how it will apply the rule and guidance to our past, present, and future compensation practices. These regulations have had and may continue to have a significant impact on the rate at which students enroll in our programs and on our business and results of operations. If we are found to have violated this law, we could be fined or otherwise sanctioned by the DOE or we could face litigation filed under the qui tam provisions of the Federal False Claims Act.

If our schools do not maintain their state licensure and accreditation, they may not participate in Title IV Programs, which could adversely affect our student population and revenues.

An institution must be accredited by an accrediting commission recognized by the DOE and by applicable state educational agencies in order to participate in Title IV Programs. See Part I, Item 1. “Business - Regulatory Environment – State Authorization” and “Business – Regulatory Environment – Accreditation.” If any of our schools fail to comply with accrediting or state requirements, the institution and its main and/or branch campuses are subject to the loss of accreditation or state authorization or may be placed on probation or a special monitoring or reporting status which, if the noncompliance with accrediting commission requirements is not resolved, could result in loss of accreditation. If the DOE declines to continue its recognition of ACCSC in the future and if the subsequent period for obtaining accreditation from another DOE-recognized accrediting agency lapses before we obtain accreditation from another DOE-recognized accrediting agency (or if the DOE does not provide such a period for institutions to obtain other accreditation), our schools could lose their Title IV eligibility. Loss of accreditation by any of our main campuses would result in the termination of that school’s eligibility and all of its branch campuses to participate in Title IV Programs and could cause us to close the school and its branches, which could have a significant adverse impact on our business and operations.

Program accreditation is the process through which specific programs are reviewed and approved by industry- and program-specific accrediting entities. Although program accreditation is not generally necessary for Title IV Program eligibility, such accreditation may be required to allow students to sit for certain licensure exams or to work in a particular profession or career or to meet other requirements. Failure to obtain or maintain such program accreditation may lead to a decline in enrollments in such programs.

Under the DOE’s 90/10 Rule, our
institutions would lose their eligibility to participate in Title IV Programs
if the percentage of their revenues derived from those programs exceeds 90%,
which could reduce our student population and revenues.

An institution
that derives more than 90% of its total revenue from Title IV Programs and
other “federal funds that are disbursed or delivered to or on behalf of a
student to be used attend the institution” (its “90/10 Rule percentage”) for
two consecutive fiscal years becomes immediately ineligible to participate in
Title IV Programs and may not reapply for eligibility until the end of at least
two fiscal years. An institution with such revenues that exceed 90% of total
revenue for a single fiscal year will be placed in provisional certification
status and may be subject to other enforcement measures. If an institution
violated the 90/10 Rule and became ineligible to participate in Title IV
Programs but continued to disburse Title IV Program funds, the DOE would
require the institution to repay all Title IV Program funds received by the
institution after the effective date of the loss of eligibility. A loss of
eligibility to participate in Title IV Programs for any of our institutions
would have a significant impact on the rate at which our students enroll in our
programs and on our business and results of operations. The 90/10 Rule
previously considered whether an institution derived more than 90% of its total
revenue only from Title IV Programs rather than in combination with certain
other federal funding. Under the current 90/10 Rule, our institutions are now
required to limit the combined amount of Title IV Program funds and applicable
“federal funds” revenue (as defined by the DOE) in a fiscal year to no more
than 90% in a fiscal year as calculated under the rule. Consequently, the
current 90/10 Rule has increased and may continue to increase the 90/10 Rule
calculations at our institutions.

The 90/10 Rule regulations could have a material adverse effect on us and other schools like ours. See Part I, Item 1. “Business – Regulatory Environment – 90/10 Rule”. We cannot be certain that the changes we make to our operations in the future to address the new 90/10 Rule regulations will succeed in maintaining our institutions’ 90/10 Rule percentages below required levels or that the changes will not materially impact our business operations, revenues, and operating costs. It also is possible that Congress or the DOE could amend the 90/10 Rule in the future to lower the 90% threshold, change the calculation methodology, or make other changes to the 90/10 Rule that could make it more difficult for our institutions to comply with the 90/10 Rule. If any of our institutions loses eligibility to participate in Title IV Programs, that loss would also adversely affect our students’ access to various government-sponsored student financial aid programs, and would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations.

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Our
institutions would lose their eligibility to participate in Title IV Programs
if former students default on repayment of federal student loans in excess of
specified levels, which could reduce our student population and revenues.

An institution may lose its eligibility to participate in some or all Title IV Programs if the rates at which the institution's current and former students default on their federal student loans exceed specified percentages. We expect borrower defaults to increase substantially during periods after the expiration of a temporary suspension of repayment obligations and interest accruals on federal student loans during the COVID-19 pandemic, which we expect will result in higher cohort default rates in the future particularly if borrowers do not successfully resume timely repayment of their federal student loans. We cannot predict how high our cohort default rates will increase in the future as a result of the expiration of the temporary suspension or whether our efforts to assist students and prevent student defaults will be successful. See Part I, Item 1. “Business - Regulatory Environment – Student Loan Defaults.” If former students default on repayment of their federal student loans in excess of specified levels, our institutions would lose eligibility to participate in Title IV Programs. This would also adversely affect our students’ access to various government-sponsored student financial aid programs which would have a significant impact on the rate at which our students enroll in our programs and on our business and results of operations.

Our business could be adversely impacted by additional legislation, regulations, or investigations regarding private student lending because students attending our schools rely on private student loans to pay tuition and other institutional charges.

Our private education loans are subject to regulation and oversight by federal and state regulatory agencies. The CFPB has exercised supervisory authority over private education loan providers. The CFPB has initiated investigations into the lending practices of institutions in the for-profit education sector. Any adverse legislation, regulations, or investigations regarding private student lending could limit the availability of private student loans to our students or lead to sanctions or liabilities, which could have a significant impact on our business and operations.

A substantial decrease in student financing options, or a significant increase in financing costs for our students, could have a significant impact on our student population, revenues and financial results.

The consumer credit markets in the United States have recently suffered from increases in default rates and foreclosures on mortgages. Adverse market conditions for consumer and federally guaranteed student loans could result in providers of alternative loans reducing the attractiveness and/or decreasing the availability of alternative loans to postsecondary students, including students with low credit scores who would not otherwise be eligible for credit-based alternative loans. Prospective students may find that these increased financing costs make borrowing prohibitively expensive and abandon or delay enrollment in postsecondary education programs. Private lenders could also require that we pay them new or increased fees in order to provide alternative loans to prospective students. If any of these scenarios were to occur, our students’ ability to finance their education could be adversely affected and our student population could decrease, which could have a significant impact on our financial condition, results of operations and cash flows.

In addition, any actions by Congress or by states that significantly reduce funding for Title IV Programs or other student financial assistance programs, or the ability of our students to participate in these programs, or establish different or more stringent requirements for our schools to participate in those programs, could have a significant impact on our student population, results of operations and cash flows.

We are subject to sanctions if we fail to correctly calculate and timely return Title IV Program funds for students who withdraw before completing their educational programs, which could increase our cost of regulatory compliance and decrease our profit margin.

An institution participating in Title IV Programs must correctly calculate the amount of unearned Title IV Program funds that have been credited to students who withdraw from their educational programs before completing them and must return those unearned funds in a timely manner, generally within 45 days of such student’s withdrawal. If the unearned funds are not properly calculated and timely returned, we may have to post a letter of credit in favor of the DOE or may be otherwise sanctioned by the DOE, which could increase our cost of regulatory compliance and adversely affect our results of operations. See Part I, Item 1. “Business - Regulatory Environment – Return of Title IV Program Funds.”

We are subject to sanctions if we fail to comply with the DOE’s regulations regarding prohibitions against substantial misrepresentations, which could increase our cost of regulatory compliance and decrease our profit margin.

The DOE’s regulations prohibit an institution that participates in the Title IV Programs from engaging in substantial misrepresentation of the nature of its educational programs, financial charges, graduate employability or its relationship with the DOE, which is broadly defined, and provide for prohibitions on certain types of recruiting tactics and conduct that the DOE deems to be aggressive or deceptive. See Part I, Item 1. “Business - Regulatory Environment – Substantial Misrepresentation.” If the DOE determines that one of our institutions has engaged in substantial misrepresentation or other prohibited conduct, the DOE may impose sanctions or other conditions upon the institution including, but not limited to, initiating an action to fine the institution or limit, suspend, or terminate its eligibility to participate in Title IV Programs and may seek to discharge students’ loans and impose liabilities upon the institution. The regulations also could result in further scrutiny of marketing and recruiting practices by institutions like our schools and could increase the chances of the DOE finding practices to be noncompliant and imposing sanctions based on the alleged noncompliance.

While none of
our institutions are currently provisionally certified, the DOE could
provisionally certify one or more of our institutions in the future, which
would make them more vulnerable to unfavorable DOE action and place additional
regulatory burdens on their operations.

The DOE typically places an institution
on provisional certification status following a change in ownership resulting
in a change of control, and may provisionally certify an institution for other
reasons including, but not limited to, failure to comply with certain standards
of administrative capability or financial responsibility. During the time when
an institution is provisionally certified, it may be subject to adverse action
with fewer due process rights than those afforded to other institutions. In addition,
an institution that is provisionally certified must apply for and receive
approval from the DOE for certain substantive changes including, but not
limited to, the establishment of an additional location, an increase in the
level of academic offerings or the addition of new programs. Our institutions
were provisionally certified by the DOE in the past, but the DOE does not
provisionally certify our institutions in their current program participation
agreements. See Part I, Item 1. “Business - Regulatory Environment – Regulation
of Federal Student Financial Aid Programs.” The DOE’s current regulations
establish rules that, among other things, authorize additional conditions and
restrictions on provisionally certified institutions and expand existing
regulations regarding administrative capability and financial responsibility.
See Part I, Item 1. “Business – Regulatory Environment – Regulation of Federal
Student Financial Aid Programs.” Any adverse action by the DOE or increased
regulatory burdens as a result of the DOE placing one or more of our
institutions on provisional certification status in the future could have a
material adverse effect on enrollments and our revenues, financial condition,
cash flows and results of operations.

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Regulatory agencies or third parties may conduct compliance reviews, bring claims or initiate litigation against us. If the results of these reviews or claims are unfavorable to us, our results of operations and financial condition could be adversely affected.

Because we operate in a highly regulated industry, we are subject to compliance reviews and claims of noncompliance and lawsuits by government agencies and third parties. We may be subject to further reviews related to, among other things, issues of noncompliance identified in recent audits and reviews related to our institutions’ compliance with Title IV Program requirements or related to liabilities for the discharge of loans to certain students who attended campuses of our institutions that are now closed. See Part I, Item 1. “Business - Regulatory Environment – Compliance with Regulatory Standards and Effect of Regulatory Violations.” If the results of these reviews or proceedings are unfavorable to us, or if we are unable to defend successfully against third-party lawsuits or claims, we may be required to pay money damages or be subject to fines, limitations on the operations of our business, loss of federal and state funding, injunctions or other penalties. Even if we adequately address issues raised by an agency review or successfully defend a third-party lawsuit or claim, we may have to divert significant financial and management resources from our ongoing business operations to address issues raised by those reviews or defend those lawsuits or claims. Certain of our institutions are subject to ongoing reviews and proceedings. See Part I, Item 1. “Business – Regulatory Environment – Accreditation,” “Regulatory Environment – Other Financial Assistance Programs,” “Regulatory Environment – Borrower Defense to Repayment,” “Regulatory Environment - Compliance with Regulatory Standards and Effect of Regulatory Violations,” and “Regulatory Environment – Consumer Protection Laws and Scrutiny of the For-Profit Post-secondary Education Sector.”

Adverse publicity arising from scrutiny of us or other for-profit post-secondary schools may negatively affect us or our schools.

In recent years, Congress, the DOE, state legislatures, accrediting agencies, the CFPB, the FTC, state agencies and attorneys general and the media have scrutinized the for-profit post-secondary education sector. See Part I, Item 1. “Business – Regulatory Environment – Consumer Protection Laws and Scrutiny of the For-Profit Post-Secondary Education Sector.” Adverse publicity regarding any past, pending, or future investigations, claims, settlements, and/or actions against us or other for-profit post-secondary schools could negatively affect our reputation, student enrollment levels, revenue, profit, and/or the market price of our Common Stock. Unresolved investigations, claims, and actions, or adverse resolutions or settlements thereof, could also result in additional inquiries, administrative actions or lawsuits, increased scrutiny, the loss or withholding of accreditation, state licensure, or eligibility to participate in the Title IV Programs or other financial assistance programs, and/or the imposition of other sanctions by federal, state, or accrediting agencies which, individually or in the aggregate, 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.

If regulators deny, delay, or condition their approval of transactions involving a change of ownership or control of us or of institutions that we own or acquire, it could have a significant impact on our business and results of operations.

When a company acquires a school that is eligible to participate in Title IV Programs, that school undergoes a change of ownership and control that generally requires approval of the DOE and applicable accrediting and state authorizing agencies to continue to operate and participate in Title IV Programs. See Part I, Item 1. “Business - Regulatory Environment - School Acquisitions/Change of Control.” Thus, any plans to expand our business through acquisition of additional schools and have them certified by the DOE to participate in Title IV Programs must take into account the approval requirements of the DOE and the relevant state education agencies and accrediting commissions.

In addition, a change of control could occur as a result of future transactions in which the Company or our schools are involved and require our schools to obtain approval of the DOE, ACCSC, and the applicable state authorizing agencies to continue operating and participating in Title IV Programs. The DOE, most state education agencies and our accrediting commissions have standards pertaining to the change of control of schools, but these standards are not uniform. DOE regulations describe some transactions that constitute a change of control, including the transfer of a controlling interest in the voting stock of an institution or the institution's parent corporation. Examples of such transactions include but are not limited to a significant purchase or disposition of stock, some corporate reorganizations, and some changes in the Board of Directors of the Company. See Part I, Item 1. “Business - Regulatory Environment - School Acquisitions/Change of Control.” The potential adverse effects of a change of control could influence future decisions by us and our shareholders regarding the sale, purchase, transfer, issuance or redemption of our stock. In addition, the adverse regulatory effect of a change of control also could discourage bids for shares of our Common Stock and could have an adverse effect on the market price of our shares. The failure to obtain applicable approvals from the DOE and other applicable regulators without delay or material condition in connection with the acquisition of a school or with a change of ownership or control of us or our schools could have a significant impact on our business and results of operations.

If regulators deny, delay, or condition their approval of new locations and educational programs at our schools, it could have a significant impact on our business and results of operations.

Our strategic
plans for future expansion are based, in part, on our ability to open new
schools as additional locations of our existing institutions, add new
educational programs at our existing schools, and take into account the
applicable approval requirements of the DOE and our other regulatory agencies
for adding new locations and educational programs. See Part I, Item 1.
“Business - Regulatory Environment - Opening Additional Schools and Adding
Educational Programs”. If an institution erroneously determines
that a new location or an educational program is eligible for purposes of Title
IV Programs, the institution would likely be liable for repayment of Title IV
Program funds provided to students in that educational program. The failure to
obtain applicable approvals from the DOE and other applicable regulators
without delay or material condition in connection with the addition of a new
location or educational program could have a significant impact on our business
and results of operations.

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Public health pandemics, epidemics or outbreaks, such as the COVID-19 pandemic, could have a material adverse effect on our business and operations.

Public health pandemics, epidemics or outbreaks, such as the COVID-19 pandemic, and the resulting containment measures taken in response to such events have caused and may in the future cause economic and financial disruptions globally. The extent to which any rapidly spreading contagious illness may impact our business and operations will depend on a variety of factors beyond our control, including the actions of governments, businesses and other enterprises in response thereto, the effectiveness of those actions, and vaccine availability, distribution and adoption, all of which cannot be predicted with any level of certainty. We believe that the spread of such illnesses could adversely impact our business and operations, including as a result of workforce limitations and travel restrictions and related government actions. If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our operations and enrollment may be negatively impacted. Finally, state and federal regulators, including the DOE, are augmenting existing regulatory processes, waiving others, and overseeing various emergency relief and aid programs. It is highly uncertain how long such regulatory accommodations will continue, or how long and in what amount emergency relief and aid funds will continue to be available. We also cannot predict the types of conditions that may be attached to participation in emergency relief and aid programs, and whether and to what extent compliance with such conditions will be monitored and enforced. If further outbreaks occur and students elect to take a leave of absence, withdraw, or do not make up the required in person labs on a timely basis, our future revenues could be impacted.

RISKS RELATED TO OUR BUSINESS

Our success depends in part on our ability to update and expand the content of existing programs and develop new programs in a cost-effective manner and on a timely basis.

Prospective employers of our graduates increasingly demand that their entry-level employees possess appropriate technological skills. These skills are becoming more sophisticated in line with technological advancements in the automotive, diesel, information technology, and skilled trades. Accordingly, educational programs at our schools must keep pace with those technological advancements. The expansion of our existing programs and the development of new programs may not be accepted by our students, prospective employers or the technical education market. Even if we are able to develop acceptable new programs, we may not be able to introduce these new programs as quickly as our students require or as competitors or employers demand. If we are unable to adequately respond to changes in market requirements due to financial or regulatory constraints, unusually rapid technological changes or other factors, our ability to attract and retain students could be impaired, our placement rates could suffer and our revenues could be adversely affected. In addition, if we are unable to adequately anticipate the requirements of the employers we serve, we may offer programs that do not teach skills useful to prospective employers, which could affect our placement rates and our ability to attract and retain students, causing our revenues to be adversely affected.

Competition could decrease our market share and cause us to lower our tuition rates.

The post-secondary education market is highly competitive. We compete for students and faculty with traditional public and private two-year and four-year colleges and universities and other proprietary schools, many of which have greater financial resources than we do. Some traditional public and private colleges and universities, as well as other private career-oriented schools, offer programs that may be perceived by students to be similar to ours. Most public institutions are able to charge lower tuition than our schools, due in part to government subsidies and other financial resources not available to for-profit schools. Some of our competitors also have substantially greater financial and other resources than we have which may, among other things, allow our competitors to secure strategic relationships with some or all of the companies with which we have existing relationships or develop other high profile strategic relationships, or devote more resources to expanding their programs and their school network, or provide greater financing alternatives to their students, all of which could affect the success of our marketing programs. In addition, some of our competitors have a larger network of schools and campuses than we do, enabling them to recruit students more effectively from a wider geographic area. This strong competition could adversely affect our business.

We may be required to reduce tuition or increase spending in response to competition in order to retain or attract students or pursue new market opportunities. As a result, our market share, revenues and operating margin may be decreased. We cannot be certain of our ability to compete successfully against current or future competitors or that the competitive pressures we face will not adversely affect our revenues and profitability.

Our financial performance depends in part on our effectiveness at developing awareness and acceptance of our programs among high school graduates and working adults looking to return to school.

The awareness of our programs among high school graduates and working adults looking to return to school is critical to the continued acceptance and growth of our programs. Ineffectiveness at developing such awareness could reduce our enrollments and impair our ability to increase our revenues or maintain profitability. The following are some of the factors that could prevent us from successfully marketing our programs:

●

student dissatisfaction with our programs and services;

●

diminished access to high school student populations;

●

our failure to maintain or expand our brand or other factors related to our marketing or advertising practices; and

●

our inability to maintain relationships with employers in the automotive, diesel, skilled trades and IT services industries.

An increase in interest rates could adversely affect our ability to attract and retain students.

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Our students and
their families have benefitted from historic lows on student loan interest
rates in prior years. Much of the financing that our students receive is tied
to floating interest rates. More recently, student loan interest rates have
been higher, making borrowing for education more expensive. Increases in
interest rates result in a corresponding increase in the cost to our existing
and prospective students of financing their education, which could result in a
reduction in the number of students attending our schools and could adversely
affect our results of operations and revenues. Higher interest rates could also
contribute to higher default rates with respect to our students' repayment of
their educational loans. Higher default rates may in turn adversely impact our
eligibility for Title IV Program participation or the willingness of private
lenders to make private loan programs available to students who attend our
schools, which could result in a reduction in our student population.

We cannot predict our future capital needs, and if we are unable to secure additional financing when needed, our operations and revenues would be adversely affected.

We may need to raise additional capital in the future to fund acquisitions and working capital requirements, expand our markets and program offerings or respond to competitive pressures or perceived opportunities. We cannot be certain that additional financing will be available to us on favorable terms, or at all. If adequate funds are unavailable when required or on acceptable terms, we may be forced to forego attractive acquisition opportunities or modify our operations. Even if we are able to continue our operations, our ability to increase student enrollment and revenues would be adversely affected.

We may not be able to retain our key personnel or hire and retain the personnel we need to sustain and grow our business.

Our success has depended, and will continue to depend, largely on the skills, efforts and motivation of our executive officers who generally have significant experience within the postsecondary education industry. Our success also depends in large part upon our ability to attract and retain highly qualified faculty, school directors, administrators and corporate management. Due to the nature of our business, we face significant competition in the attraction and retention of personnel who possess the skill sets that we seek. In addition, key personnel may leave us and subsequently compete against us. Furthermore, we do not currently carry "key man" life insurance on any of our employees. The loss of the services of any of our key personnel, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could have an adverse effect on our ability to operate our business efficiently and to execute our growth strategy.

Our total assets include goodwill. In the event that our schools do not achieve satisfactory operating results, we may be required to write-off a significant portion of the goodwill which would negatively affect our results of operations.

Our total assets
reflect amounts for goodwill. At December 31, 2025, goodwill associated with
our acquisitions was approximately 2.2% of total assets, compared to 2.5% at
December 31, 2024. On at least an annual basis, we assess whether there has
been an impairment in the value of goodwill. If the carrying value of the
tested asset exceeds its estimated fair value, impairment is deemed to have
occurred. In this event, the amount is written down to fair value. Under
current accounting rules, this would result in a charge to operating earnings.
Any determination requiring the write-off of goodwill would negatively affect
our results of operations and total capitalization, which could be material. See