Phoenix Education Partners, Inc.

You should carefully consider the risks and uncertainties described below, as well as the other information contained in this Annual Report on Form 10-K, including our audited consolidated financial statements and the related notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Additional risks not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial condition or results of operations could be materially and adversely affected. Further, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Risk Factor Summary

This summary briefly lists the principal risks and uncertainties facing our business, which are only a select portion of those risks:

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we operate in a highly regulated industry with extensive regulatory requirements, and the failure to comply with applicable regulations or regulatory requirements, standards, or policies could subject us to significant monetary liabilities, Title IV repayment obligations, fines, and penalties, including loss of or limitations upon access to U.S. federal student loans, grants, and military program benefits for our students, and otherwise have a material adverse impact on our business;

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the impact that recent amendments to the Higher Education Act by Congress may have on our business, including the recent amendments that will limit or reduce the amount of federal student aid funding and that condition the future eligibility of educational programs for federal student aid funding upon compliance with new metrics focused upon the earnings of our former students;

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risks associated with the impact that further legislative, political, and regulatory changes could have on our business;

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the impact that the loss of institutional accreditation, loss of, or failure to receive, certifications for participation in Title IV programs, or limitations imposed by the Department of Education or state regulatory authorities could have on our business;

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we derived 88.6% of our cash basis revenue from Title IV and other designated federal education assistance funds in our most recent fiscal year, and if the University becomes ineligible to participate in Title IV programs, including due to the “90/10 Rule,” or participation is materially limited, our business may not be sustainable;

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if our 90/10 Rule percentage is projected to exceed or exceeds 90% for a given fiscal year, we may be required to take measures to reduce the percentage of revenue that we derive from Title IV program funds, including by taking actions that reduce our revenue, increase our operating expenses, and/or increase our tuition, in each case perhaps significantly, or by making operational or programmatic changes, that could materially and adversely impact our business and financial condition;

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“Borrower Defense to Repayment” regulations and “closed school loan discharge” regulations may subject us to significant repayment liability or other regulatory sanctions for discharged federal student loans with respect to the borrower defense applications the University has received from the Department of Education and with respect to additional pending claims in the Department of Education’s possession of which the University has not been formally notified, and may require us to be provisionally certified or post a letter of credit or other security, or result in the limitation or termination of eligibility of the University to participate in Title IV programs, any of which consequences could materially and adversely impact our business and financial condition;

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if our institution fails to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institution may lose the ability to participate in Title IV programs, Department of Defense military tuition assistance programs, or Department of Veterans Affairs veterans’ education benefits programs, or have participation in these programs conditioned or limited, may face claims from third parties, may be required to repay Title IV and other federal program funds, or may face fines or other penalties;

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the potential impact on our business if we are unable to successfully compete against current and future competitors, including traditional public and private degree-granting institutionally accredited colleges and universities, other proprietary degree-granting institutionally accredited schools and other alternatives to higher education, each of whom may offer programs that are wholly online and geared towards the needs of working adults;

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a decline in the overall growth of enrollment in post-secondary institutions, or in the number of students seeking degrees online, could lead to lower enrollment, which could negatively impact our future growth and require us to maintain or increase market share in existing markets;

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our ability to develop and maintain favorable awareness of the University among, and enroll and retain, students as well as adapt to structural changes in the marketing landscape;

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our Tuition Price Guarantee and Locked-In Pricing Guarantee programs limit our ability to raise additional revenue from current students through tuition (or, in the case of the Locked-In Pricing Guarantee, resource fee) increases, and any changes to the Tuition Price Guarantee or Locked-In Pricing Guarantee programs could harm our reputation, enrollment numbers, retention rates and overall business and financial performance;

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if we are unable to maintain and develop B2B relationships with employers, our business may be impaired;

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a cyberattack, data breach, or other security incident suffered by us, our third-party vendors, our accreditors, or our regulators, or a disruption or failure of our IT systems or software, has in the past, and could in the future, expose us to liability and could adversely affect our financial condition and operating results;

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as a “controlled company” under NYSE rules and an “emerging growth company” under SEC rules, we rely on exemptions from certain corporate governance and disclosure requirements, and our stockholders will not have the same protections as stockholders of companies subject to such requirements, and the interests of our controlling stockholder may conflict with our interests and the interests of our other stockholders; and

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Risks Related to the Highly Regulated Industry in Which We Operate

Compliance with the extensive regulatory requirements applicable to our business can be costly and time consuming, and failure to comply could result in significant monetary liabilities, fines, and penalties, including loss of or limitations upon access to U.S. federal student loans, grants, and military program benefits for our students.

Our operations are subject to extensive U.S. federal and state regulation applicable to providers of post-secondary education. The principal federal regulatory regime was established under the Higher Education Act and the regulations promulgated under the Higher Education Act by the Department of Education. Among other matters, these regulations govern the participation by the University in federal student financial aid programs under Title IV, which is the principal source of funding for students at the University. Most of our annual consolidated net revenue is derived from the receipt of Title IV program funds disbursed to our students. We must also comply with statutes and regulations that govern the University’s administration of our students’ use of veterans’ education benefits or Department of Defense tuition assistance programs. See Item 1, “Business—Regulatory Environment.”

To participate in Title IV programs, we must be authorized by the appropriate post-secondary agency or agencies in each state that we operate, be accredited by an accrediting commission recognized by the Department of Education, be certified by the Department of Education as an eligible institution and offer at least one eligible program of education. Our operations and programs may also be regulated by other state education agencies and additional specialized programmatic accrediting commissions. As a result of these requirements, we are subject to extensive regulation by the Department of Education, the HLC, our institutional accreditor, the post-secondary agencies of the states in which we operate, and specialized programmatic accrediting commissions. The applicable regulatory requirements cover nearly every phase of our operations, including educational program offerings, branch campus and classroom locations, instructional and administrative staff relations, administrative procedures, marketing and recruiting, compensation for certain employees, financial operations (e.g., minimum financial responsibility calculations), detection of fraudulent activity pertaining to student application and enrollment and financial aid, eligibility of students and educational programs for federal student aid, the substantiation of student credit hours, the amount of federal loans, grants, and other student aid that may be awarded and the timing of disbursement, payment of refunds to students who withdraw within allowable timeframes and the return to the Department of Education of federal student aid for such students, restricted cash maintenance, acquisitions or openings of new schools, student accessibility, and changes in our corporate structure and ownership.

The applicable statutes, regulations, standards, and policies of the various regulatory agencies and accreditors frequently change and often are subject to interpretative uncertainty, particularly as they historically have been developed to govern the operations of traditional, academic term-based schools, which are prevalent in our industry, rather than schools like the University that follow a non-term academic delivery model. Changes in, or new interpretations of, applicable statutes, regulations, standards, or policies could have a material adverse effect on our ability to participate in and receive funds provided by federal student aid programs, as well as our accreditation, authorization to operate, or grant degrees or other credentials in various states, the scope of our permissible activities, the costs of doing business, and our ability to implement changes in our academic or business model. We cannot predict how the statutes, regulations, standards, and policies administered by these agencies will be applied or interpreted in the future, or whether we will be able to comply with any future changes in these requirements.

If we violate or fail to satisfactorily comply with applicable statutes, regulations, standards, or policies, we may be subject to any of the following sanctions, among others, imposed by one or more of the relevant regulatory agencies or accreditors, including: (i) monetary fines or penalties; (ii) limitations on, or termination of, our operations, including, but not limited to, our ability to offer new programs, change the length of our existing programs, increase enrollment levels, or grant degrees, diplomas and certificates; (iii) restrictions on, or revocations of, our accreditations, licenses, or other operating authority, including by the HLC or a programmatic accreditor; (iv) limitations on, or suspensions or termination of, the eligibility of our institution or of our education programs to participate in Title IV programs, military benefit programs, veteran education benefit programs or state financial aid programs; (v) imposition by the Department of Education of heightened cash monitoring, which could cause delays in the disbursement of Title IV program funds, or transfer from the Department of Education’s advance system of receiving Title IV program funds to its reimbursement system, under which a school must disburse its own funds to students and document the students’ eligibility for Title IV program funds before receiving such funds from the Department of Education; (vi) repayments of funds received under Title IV programs or state financial aid programs, including as a result of BDR claims (as defined below) or confirmed identity theft; (vii) requirements to post a letter of credit with the Department of Education; (viii) imposition of provisional certification by the Department of Education, which may include growth restrictions that prevent us from adding to or changing our locations and programs absent express approval from the Department of Education; (ix) other civil or criminal penalties; and (x) other forms of censure.

Any of the sanctions described above could have a material adverse effect on our business, financial condition, and results of operations. In particular, if we become ineligible to participate in Title IV programs, or our participation is materially limited, our sources of revenue will become significantly more restricted and our business may not be sustainable. In addition to potential financial implications, we may not be able to conduct our operations and our program offerings may be significantly reduced. Furthermore, if we are accused of legal or regulatory violations, which has occurred in the past, our reputation could be damaged, which could have a negative impact on our stock price, our enrollment, or the willingness of third parties to conduct business with us. We cannot predict how these regulatory or accrediting requirements will be applied, or whether we will be able to comply with the applicable requirements in the future.

If the University fails to obtain recertification by the Department of Education when required, our participation in Title IV programs could be restricted or terminated, our students could lose their access to Title IV program funds, or we could be required to accept significant limitations as a condition of our continued participation in Title IV programs.

An institution generally must seek recertification from the Department of Education at least every six years and possibly more frequently depending on various factors, such as whether it is provisionally certified. The Department of Education also reviews an institution’s eligibility and certification to participate in Title IV programs in the event the institution undergoes a change in ownership resulting in a “change of control,” as defined by Department of Education regulations. An institution that undergoes a change of control loses its eligibility to participate in Title IV programs and must apply to the Department of Education to reestablish such eligibility. The Department of Education may also review the scope of an institution’s eligibility and certification when it expands its activities in certain ways, such as the addition of certain types of new programs, or changes to the academic credentials that it offers. The Department of Education may withdraw the University’s certification if the Department of Education determines that it is not fulfilling material requirements for continued participation in Title IV programs. The Department of Education renewed the University’s Title IV PPA in August 2025 allowing the University to participate in Title IV programs under full certification through June 30, 2031. If the Department of Education withdraws the University’s certification to participate in Title IV programs, or in the future denies recertification, our students would no longer be able to receive Title IV program funds. Such a loss would have a material adverse effect on our business and results of operations.

In addition, federal regulations relating to certification and imposing additional requirements in PPAs may pose challenges to the University and increase the risk of regulatory noncompliance and a finding by the Department of Education that the University has not or cannot fully satisfy all required eligibility and certification standards. These regulations expand the grounds for placing an institution on provisional certification, identify new potential conditions on provisionally certified institutions, and add requirements to an institution’s PPA including, among other things, restrictions on student transcript withholding and a prohibition on institutional policies and procedures that induce students to limit their amount of federal student aid. For certification decisions to which these regulations are applicable, the regulations would have further required that (i) the PPA be signed by entities with direct or indirect ownership of the institution and the power to exercise control over the institution and (ii) such co-signatories assume liability for financial losses to the federal government related to the institution’s administration of Title IV programs, however, in January 2026 the Department of Education agreed not to enforce the owner-entity signature requirement in response to legal challenge. While the rules may be revised and the scope and manner of their implementation and enforcement may vary or change, in the event that the University were unable to comply with the Department of Education’s regulations governing PPAs, this could have a material adverse effect on our business and the Department of Education could impose letter of credit requirements or take other adverse actions against the University up to and including termination of the University’s Title IV program participation.

If the Department of Education finds that the University has not fully satisfied all required eligibility and certification standards, the Department of Education could take adverse actions against the University, up to and including termination of the Title IV program participation of the University or one or more of its educational programs. Similarly, the Department of Education could renew our certification in the future, but restrict or delay our students’ receipt of Title IV funds, limit the number of students to whom we could disburse such funds, require us to post a substantial letter of credit, or place other conditions or restrictions on us. Since we derived 88.6% of our cash basis revenue from Title IV and other designated federal education assistance funds in our most recent fiscal year, if the University becomes ineligible to participate in Title IV programs, or participation is materially limited, our sources of revenue will become significantly more restricted and our business may not be sustainable. We cannot predict the timing or outcome of the future recertification application process. See “—If an education regulatory agency that regulates us delays or denies approval of a transaction involving us that constitutes a “change in control,” our ability to operate or participate in Title IV programs may be materially impaired.” We also cannot predict what terms and conditions may be imposed on the University as part of any recertification, or how such terms and conditions may affect the University’s ongoing participation in Title IV programs.

Government agencies, regulatory agencies, and third parties may conduct compliance reviews, bring claims, or initiate litigation against us based on alleged violations of the extensive regulatory requirements applicable to us.

In conducting oversight of the administration of the federal student aid program by Title IV-participating institutions, the Department of Education relies on compliance reviews, including program reviews conducted by Department of Education staff, mandatory annual compliance audits by independent audit firms, and audits and investigations conducted by the OIG. For example, in connection with a Department of Education program review, we have appealed an Administrative Law Judge ruling that the University owes liabilities for CSLDs for certain former students in the amount of approximately $44,000. See“—“Closed School Loan Discharge” regulations may subject us to significant repayment liability for certain student loans pursuant to Title IV programs, require us to be provisionally certified or to post a letter of credit or other security, or result in the limitation or termination of the University’s eligibility to participate in Title IV programs.” We could also be subject to program reviews, audits, or other oversight actions by the Department of Education, the OIG, or other oversight agencies with respect to alleged or actual noncompliance with the array of statutory and regulatory requirements applicable to Title IV-participating institutions. For example, we could be subject to program reviews or other compliance reviews resulting from efforts by unqualified third parties to apply to and enroll in our programs and obtain Title IV program funds, and from attempts by outside parties to perpetrate fraud in connection with the award and disbursement of Title IV program funds, including as a result of identity theft. See “—If our institution fails to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institution may lose the ability to participate in Title IV programs, Department of Defense military tuition assistance programs, or Department of Veterans Affairs veterans’ education benefits programs, or have participation in these programs conditioned or limited, may face claims from third parties, may be required to repay Title IV and other federal program funds, or may face fines or other penalties.” We have experienced in the past, and are likely to experience in the future, program reviews or audits in addition to the annual compliance audit process.

We are also subject to ongoing oversight actions by other regulatory agencies, including, but not limited to, those conducted by HLC, our institutional accreditor, other agencies that accredit programs that we offer, our state authorizing agencies, the FTC, the Department of Defense, the Department of Veterans Affairs, state agencies that approve programs for military program benefits, and state attorneys general. Actual or perceived non-compliance with ongoing or other obligations could prompt the FTC or a state attorney general to seek fines and penalties via an enforcement action against the University. The imposition of any such fines or penalties could have a material adverse effect on our business and operations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Federal Trade Commission Investigation” and “—Attorney General Investigations.”

In some circumstances of actual or alleged non-compliance, we may be subject toqui tamlawsuits under the Federal False Claims Act or similar state false claim statutes. In these actions, private plaintiffs seek to enforce remedies under the Federal False Claims Act on behalf of the federal government and, if successful, are entitled to recover their costs and to receive a portion of any amounts recovered by the federal government in the lawsuit, even if the Departments of Education and Justice do not agree with plaintiff’s theory of liability. We have been subject to, and settled, qui tam lawsuits in the past and while we cannot predict the size or frequency of similar claims that we may face in the future, any resulting liability may be material. The broad-based scrutiny and related investigations by state and federal regulators can also lead to follow-on consumer class actions filed by private attorneys on behalf of current and former students. Such actions often adopt similar theories of liability pursued by the regulators and seek additional relief under the premise that the student consumers were not made whole by the regulator’s settlement. In addition, investigations by and settlements with state and federal regulators can also lead to securities-related class actions that take a similar approach of adopting the regulators’ allegations and/or findings and seeking relief based on alleged losses to shareholders.

Claims and lawsuits brought against us, even if they are without merit, may also result in adverse publicity, damage our reputation, negatively affect our stock price, adversely affect our student enrollments, and discourage third parties from doing business with us. Even if we adequately address the issues raised by any such proceeding and successfully defend against it, we may have to devote significant financial and management resources to address these issues, which could materially harm our business.

“Borrower Defense to Repayment” regulations may subject us to significant repayment liability for certain discharged federal student loans, require us to be provisionally certified or post a letter of credit or other security, or result in the limitation or termination of the University’s eligibility to participate in Title IV programs.

Under the Higher Education Act, the Department of Education’s regulations specify acts or omissions of a school that a student loan borrower may assert as a defense to repayment (“BDR” or “BDR claim”) of a federal student loan and thereby seek to obtain a discharge and refund of such loan. Additionally, the Department of Education may initiate a recoupment proceeding against a school to collect loan amounts that are discharged or refunded as the result of a BDR claim. The BDR Rules have been significantly revised in recent years resulting in a complex framework of rules applying up to four iterations of loan relief and recoupment standards and procedures based upon the date of loan disbursement. The OBBB Act delayed the applicability of the most recent iteration of the BDR Rules and that iteration has also been enjoined by court order. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Borrower Defense to Repayment” for further discussion of the BDR Rules and relevant litigation, legal challenges, and recent amendments to the Higher Education Act regarding the BDR regulatory framework.

Between June 2020 and April 2024, the University received approximately 48,000 borrower defense applications from the Department of Education, which the University responded to and believes are subject to resolution under the Sweet class action settlement. Certain of these BDR claims could be subject to automatic discharge under the terms of the Sweet settlement, which could potentially prevent such claims from serving as the basis of a recoupment action by the Department of Education against us, while others were subject to automatic discharge if not adjudicated prior to the January 2026 deadline established in connection with that settlement. Further, the federal courts overseeing Sweet have referenced the Department of Education’s assurances that it will not rely on automatic discharges of BDR claims under the Sweet settlement as the basis upon which to recoup such discharged loans from institutions. Accordingly, while there remains significant uncertainty, any such automatic discharges would be potentially unable to serve as the basis of a recoupment action by the Department of Education against us. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Borrower Defense to Repayment.”

Additionally, the Department of Education announced in September 2023 that it approved more than 1,200 BDR claims and discharged nearly $37 million in federal student loans from borrowers who made claims regarding a 2012-2014 University ad campaign. The Department of Education further indicated its intent to commence a recoupment effort against the University for the amounts of the discharged loans, but no such action has been commenced. While the BDR claims that were discharged appear to have also been subject to automatic discharge under the terms of the Sweet settlement, and the settlement itself could not serve as the basis of a recoupment action by the Department of Education under its stated position, the Department of Education may still attempt to seek recoupment of such discharged payments in the future, and we cannot predict the timing or scale of such recoupment efforts if pursued.

In December 2025, the University began receiving additional borrower defense applications from the Department of Education, which are dated after November 15, 2022 and therefore not part of the Sweet settlement. The University has submitted responses or intends to submit a response to these BDR Claims. While the University believes it has both factual and procedural defenses to the claims made in the applications, we cannot predict how the Department of Education will evaluate the evidence and adjudicate each claim. Furthermore, based on information available to the University, we believe there are a substantial number of additional pending BDR claims with respect to the University that have not yet been provided to the University by the Department of Education. If such claims are adjudicated and the Department of Education seeks recoupment from the University, such recoupment could have a material adverse impact on our business. Additionally, the BDR Rules require the University to dedicate significant resources to navigating the various iterations of the BDR regulatory standards and processes. The University also maintains reporting procedures to comply with the financial responsibility provisions related to BDR, under which the Department of Education may require the University to post a letter of credit or other financial protection in the event of certain triggering events. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Borrower Defense to Repayment” and “Regulation of Student Financial Aid Programs—Standards of Financial Responsibility.”

The current BDR Rules and regulations could result in significant risks for our business and the application of the various BDR standards may be unclear or subject to interpretation in a manner that is adverse to us and unpredictable. If a significant amount of BDR claims are adjudicated by the Department of Education and the Department of Education seeks recoupment from the University for such claims, such recoupment could have a material adverse impact on our business. Furthermore, the potentially significant discretion vested in the Department of Education to administer the regulations, including whether to seek recoupment of discharged loan amounts or require letters of credit from institutions, and the subjective judgments regarding the triggers for debt relief may result in unexpected outcomes that materially and adversely affect our business and liquidity. In addition, how we respond to state or federal regulatory action or private lawsuits may be materially impacted because of the potentially significant consequences of an adverse judgment or finding in such matters on the subsequent adjudication of BDR claims. Further, individual BDR applications are submitted by student loan borrowers to the Department of Education, rather than to institutions directly, and the Department of Education has asserted that the BDR Rules provide for group claims without an underlying individual BDR application from a borrower in certain circumstances. It is unclear how many individual or group BDR claims have been approved, or denied by the Department of Education, or how many individual or group BDR claims will be asserted, approved or denied in the future. It is further unknown whether and to what extent the Department of Education may seek to recoup the amount of discharged or refunded loans or impose such liability against the University, whether our legal and factual defenses with respect to such BDR claims and recoupment proceedings or imposition of liability would succeed, or even which procedures will ultimately govern the BDR resolution process. Additionally, the University could receive negative coverage in the media regarding BDR claims that could impede the recruitment of students. While we cannot predict the outcome of any current, pending or potential future claims, they could have a material adverse effect on our business, financial performance, and operations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Borrower Defense to Repayment.”

If our institution fails to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institution may lose the ability to participate in Title IV programs, Department of Defense military tuition assistance programs, or Department of Veterans Affairs veterans’ education benefits programs, or have participation in these programs conditioned or limited, may face claims from third parties, may be required to repay Title IV and other federal program funds, or may face fines or other penalties.

Institutions must maintain systems and processes to identify and prevent fraudulent applications for enrollment and financial aid. We have been the target of fraudulent and abusive activity, including efforts by unqualified third parties to apply to and enroll in our programs and obtain Title IV program funds. We believe that we face heightened risk as a predominantly online education provider from third parties attempting to perpetrate fraud in connection with the award and disbursement of Title IV program funds, including because of identity theft. We, and other institutions like us, have experienced a measurable increase in these types of suspicious activities resulting in increases in fraudulent applications, and enrollments, including by persons receiving Title IV funds. Accordingly, we have enhanced our control environment to help ensure that only qualified students are able to enroll in our programs and receive Title IV program funds.

The Department of Education recently issued revised guidance regarding institutions’ responsibilities to prevent fraud and protect the integrity of the Title IV programs. Other recent Department of Education guidance provides for the return of Title IV program funds disbursed to students who are determined to be ineligible in certain circumstances, including in cases involving fraudulent students, even if the institution had no actual knowledge of the student’s ineligibility at the time of disbursement. If the systems and processes that our institution has established to detect and prevent fraud, or our administration of Title IV programs, military tuition assistance, or veterans’ education benefits are deemed inadequate or noncompliant in connection with preventing these activities, the Department of Education may find that our institution has failed to comply with Title IV requirements, including but not limited to the Department of Education’s administrative capability requirements. See “—If we do not comply with the Department of Education’s administrative capability standards, we could suffer financial penalties, be required to accept other limitations in order to continue participating in the Title IV programs, or lose our eligibility to participate in the Title IV programs.”

Moreover, a pending legislative proposal may increase regulatory oversight and consequences for institutions, like the University, that are the target of fraudulent activity, including identity theft cases and attempts to obtain federal student aid by means of fraudulent enrollments. This year, multiple bills have been introduced aiming to prevent federal student aid fraud, including the No Aid for Ghost Students Act of 2026, which, if enacted into law would require the Department of Education to prioritize program reviews of institutions identified as having demonstrated a pattern of disbursing Title IV aid to students whose applications presented a reasonable suspicion of identity fraud. Accordingly, any significant failure to adequately detect fraudulent activity related to student enrollment and financial aid could subject us to additional adverse consequences. Furthermore, accrediting agencies that evaluate institutions offering online programs require such institutions to have processes to establish that a student who registers for such a program is the same student who participates in and receives credit for such program. Our failure to meet the requirements of the Department of Education or our accreditors pertaining to the detection and prevention of fraudulent activity in student enrollment and financial aid could result in (i) audits, investigations, and adverse findings and recommendations by the OIG, (ii) program reviews or other oversight activities by the Department of Education, (iii) the assertion of liabilities by the Department of Education for the return of Title IV or other federal program funds disbursed to fraudulent students, (iv) accreditation oversight actions, (v) the loss of accreditation, which could result in the loss of our ability to participate in Title IV or other federal assistance programs, or (vi) enforcement actions or government initiated or private party litigation, including the assertion of findings or other penalties, against the University, each of which could have a material adverse effect on our business, financial condition, and results of operations.

“Closed School Loan Discharge” regulations may subject us to significant repayment liability for certain student loans pursuant to Title IV programs, require us to be provisionally certified or to post a letter of credit or other security, or result in the limitation or termination of the University’s eligibility to participate in Title IV programs.

The Higher Education Act and related Department of Education regulations provide that upon the closure of an institution participating in Title IV programs, including any campus location thereof, certain students who had attended that institution or location may be eligible to obtain a CSLD of their federal student loans if they withdraw from the closed school within a prescribed timeframe and do not complete their educational programs through transfer or teach-out with another post-secondary institution. If a loan is discharged on these grounds, the Department of Education may seek recoupment of the discharged amount from the responsible institution. Commencing in June 2021, the Department of Education conducted an off-site program review focused on possible liabilities for CSLDs related to the University’s closing of various locations. Following the Department of Education’s issuance of a final program review determination in September 2022 and a subsequent administrative appeal, an Administrative Law Judge ruled in December 2024 that the University owes liabilities for CSLDs for three student borrowers in the amount of approximately $44,000. The University has appealed this decision to the Secretary of Education, and the ultimate outcome of the proceedings is uncertain. Although this liability is de minimis, the outcome of the proceedings, together with the evolving regulations governing CSLDs, could have implications for student borrowers who attended the substantial number of our physical campuses and learning centers that have closed in recent years. In connection with those closures, we worked closely with regulatory oversight bodies and students to help ensure that each affected student had the opportunity to choose whether to complete their educational program at their location or to transition to online study. The University has not received data on the number of CSLDs that have been, or may be, approved by the Department of Education in regard to the University’s closed locations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Borrower Defense to Repayment,” “—Regulation of Student Financial Aid Programs—Closed School Loan Discharge” and “—Regulation of Student Financial Aid Programs—Branching and Classroom Locations.” We are not aware of any other CSLDs approved by the Department of Education for our closed locations. If, in the future, other CSLDs are approved and the number is substantial, the impact on the terms of our participation in Title IV programs or financial condition could be material and adverse.

Recent action by Congress that resulted in revisions to the laws governing federal student financial aid programs, including the level of federal student aid funding available and the earnings-based accountability requirements that programs must meet to qualify for such funding, could materially impact our enrollment, revenue, and costs of operation.

Congress must periodically reauthorize the Higher Education Act and annually determine the funding level for each Title IV program. The most recent reauthorization of the Higher Education Act expired in September 2013, but Title IV student financial aid programs remain authorized and functioning. The Department of Education has recently promulgated regulations implementing the OBBB’s amendments to the Higher Education Act revising certain federal student aid program provisions, including provisions that limit or reduce the amount of federal student aid funding that may be available to some higher education students and that impose new accountability standards on institutions. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Recent Department of Education Rulemaking Initiatives.”

These amendments and implementing federal regulations also create new accountability standards conditioning the Federal Direct Loan Program eligibility of educational programs upon compliance with benchmarks that compare former students’ median earnings after completion to the median earnings of working adults with lesser credentials. Certain individual educational programs will lose Federal Direct Loan Program eligibility if, in two out of three consecutive years, the median earnings (as determined by the Department of Education) of the program’s student cohort who received Title IV funds and graduated four years prior falls below the median earnings of working adults aged 25 to 34 who are not enrolled in an institution of higher education and who have only a high school diploma (for undergraduate programs) or only a bachelor’s degree (for graduate and professional programs). See Item 1, “Business—Financial Aid Programs.”

During fiscal year 2026, the Department of Education held OBBB-related negotiated rulemaking sessions, including:

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RISE, which reached consensus and final regulations were published on a package of federal student loan-related changes, including, among other things, amending annual and aggregate loan limits for graduate, professional, and parent loan borrowers, implementing two new student loan repayment plans for new borrowers, and codifying the authority granted in OBBB to institutions to set loan limits for programs of study below the statutory loan limits.

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AHEAD, which reached consensus and final regulations were published implementing changes pertaining to earnings-based accountability measures, institutional and programmatic accountability, the Pell Grant Program, and other changes to the Title IV programs.

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AIM, which reached consensus based on the following goals: (i) simplifying the accreditation recognition process, (ii) examining how accreditation contributes to higher education costs and credential inflation, (iii) safeguarding against undue influence from related private trade associations, (iv) eliminating standards or policies of discrimination, and (v) refocusing quality assurance and improvement on data-driven student outcomes. The Department published the NPRM with proposed regulations on August 20, 2026.

The impact of the recent amendments to the Higher Education Act and ongoing, pending, and future regulatory and policy changes resulting from those or future amendments, including with respect to the new earnings-based accountability requirements, cannot be predicted, and could have a material adverse effect on our business, financial condition and results of operations.

Failure to comply with the new earnings-based accountability measures or any related reporting of low-earning programs could limit the programs we can offer students and the Title IV eligibility of the impacted programs, which could materially impact our enrollment, revenue, or costs of operation.

The Department of Education effectuated new accountability standards and substantially revised the former gainful employment regulations to conform those rules to the new OBBB earnings-based measures, renaming the former gainful employment and financial value transparency regulations as Earnings Accountability and STATS, respectively. The new Earnings Accountability framework, which applies to all Title IV eligible undergraduate and graduate programs, including undergraduate certificate programs, at public, nonprofit, and proprietary institutions, condition the Federal Direct Loan Program eligibility of educational programs upon compliance with benchmarks that compare former students’ median earnings after completion to the median earnings of working adults with lesser credentials. The Earnings Accountability regulations use a single earnings premium measure to determine whether a program is a “low-earning outcome program,” eliminating the debt-to-earnings metric that was in place under the former gainful employment regulations. If a program fails the earnings premium measure in two of three consecutive years, that program is designated as a low-earning outcome program and loses eligibility to participate in the Direct Loan program for no less than two years.

The regulations also introduced a related administrative capability requirement that no more than half of an institution’s total Title IV funds come from low-earning outcome programs and no more than half of an institution’s Title IV recipients are from low-earning outcome programs and require that if an institution fails this administrative capability requirement in two out of any three consecutive award years, the institution will be placed on provisional status and the institution’s low-earning outcome programs shall not qualify for any Title IV funds, and would therefore lose eligibility for Pell Grants and the other Title IV programs in addition to Direct Loans.

Since the Earnings Accountability framework and STATS regulations were recently finalized, the Department of Education has stated that it will first calculate the earnings premium measure in 2027 using earnings data measured during the 2025 tax year, applying the result of the first earnings premium test to the 2027-28 award year. Accordingly, a program may be designated as a low-earning outcome program beginning in the 2028-29 award year if it fails the earnings premium test in the first two years of its application. As with the prior gainful employment regulations, our ability to satisfy the new earnings accountability framework and STATS regulations for certain of our programs is subject to some extent to factors outside of our control, including general economic conditions and changes in labor markets. Additionally, certain programs we offer that typically lead to lower-paying, service-oriented professions may be unable to satisfy the new earnings premium measure and would then need to be discontinued. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—New Earnings Accountability Framework and STATS Regulations.”

Even if we were able to correct any deficiency in the accountability measure in a timely manner so that the impacted program did not lose Title IV eligibility, potential disclosure requirements may adversely affect our reputation, which could materially impact our enrollments, revenue, and costs of operation. Each of these impacts could have a material adverse effect on our business, financial condition and results of operations.

These new regulations create uncertainty about the extent to which any particular educational programs offered by the University may fail to comply with the earnings-based accountability measures. Similarly, the new STATS regulations create uncertainty about the extent that the University’s required earnings outcomes disclosures may include low earnings outcomes for some of our educational programs. Any failure to comply with the new earnings-based accountability measures or any disclosures of low-earnings outcomes for any of our programs could limit the programs we can offer students and the Title IV eligibility of the impacted programs, which could materially impact our enrollments, revenue, or costs of operation, and in each instance could have a material adverse effect on our business, financial condition, and results of operations.

Further action by Congress to revise the laws governing federal student financial aid programs, including changes applicable only to proprietary educational institutions, could materially impact our enrollments, revenue, and costs of operation.

Congress continues to discuss Higher Education Act reauthorization; however, political and policy differences have prevented legislative progress and created opportunity for additional amendments to the Higher Education Act in the interim, which brings unpredictability to the timing and terms of an eventual full reauthorization. Since a significant majority of our revenue is derived from Title IV programs, any legislative changes to Title IV programs, whether in connection with reauthorization of the Higher Education Act or other amendments, including any changes impacting the funding level or eligibility of the University or its students to participate in Title IV programs or that require us to modify our practices in ways that could increase our administrative or operating costs, could have a material adverse effect on our enrollment, business, results of operations, and financial condition.

Shifts in higher education policy at the federal and state levels could materially impact our business or even render our current business impractical or unsustainable.

Shifts in higher education policy at the federal or state levels occur from time to time. Among other things, policy changes can increase the risk of new legislation and changes in, new interpretations of, and more aggressive enforcement of existing statutes, regulations, standards, or policies. Such shifts may also lead to the imposition of new terms and conditions of participation that could limit, perhaps materially, the eligibility of proprietary institutions, such as the University, to participate in Title IV student financial aid programs, as well as other aid programs that benefit our students. While some past proposals require congressional action, others could be taken via executive action. In addition, state governors, legislatures, and attorneys general could influence public policy initiatives, privacy and tax policy developments, investigative demands, and regulatory efforts against proprietary institutions. The passage of legislation, or executive or regulatory actions on higher education, at both the federal and state level, could have a material adverse effect on our business, financial condition, and results of operations, or even render our business impractical or unsustainable.

If we do not meet the Department of Education’s financial responsibility standards, we could be required to post a letter of credit or accept other limitations to continue participating in Title IV programs, or even lose our eligibility to participate in Title IV programs.

Department of Education regulations specify that we must satisfy specific measures of financial responsibility or post a letter of credit in favor of the Department of Education and accept other conditions to participate in Title IV programs. These financial responsibility tests, which may also be applied to a parent company or other related entity, are applied on an annual basis based on each institution’s audited financial statements, and may be applied at other times, such as if the institution undergoes a change in control. Certain operating restrictions may be placed on an institution that does not meet the financial responsibility standards, such as the “composite score” requirements, including being transferred from the advance payment method of receiving Title IV funds to either the reimbursement or the heightened cash monitoring system, which could result in a significant delay in the institution’s receipt of those funds. Each eligible institution must maintain a composite score, based on a weighted average of annual ratios that assess the financial condition of the institution, of at least 1.5 for the institution to be deemed financially responsible without the need for further Department of Education oversight. The Company’s composite scores for fiscal years 2026 and 2025 were 3.0 and 2.6, respectively. The financial responsibility requirements also include standards pertaining to the University’s audit reports, its timely return of Title IV program funds in respect of withdrawn students, and other criteria, including the content of its reports on compliance and internal controls and its standing with regulators and accreditors. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Standards of Financial Responsibility.”

Additionally, the Department of Education implemented financial responsibility regulations in July 2024 that revised the timing for submission of audit reports and identified events that constitute a failure of an institution to demonstrate its ability to meet its financial obligations, including certain mandatory triggering events upon which an institution is deemed automatically to lack financial responsibility. Mandatory triggering events include certain final monetary judgments or settlements in legal proceedings, certain borrower defense recoupment proceedings initiated by the Department of Education, receiving at least 50% of Title IV program funds in the prior year from programs that are failing the Department of Education’s earnings-based accountability metrics, certain actions by the SEC, certain creditor events, and failing to comply with certain other metrics related to the 90/10 Rule and an institution’s cohort default rates. Thus, if the University were to fail to meet the requirements of the 90/10 Rule for any fiscal year, such failure would be a mandatory trigger that would constitute an automatic failure of financial responsibility. Our 90/10 Rule percentage for fiscal year 2026 was 88.6%. The regulations also established discretionary triggering events, upon which the Department of Education may determine that the institution lacks financial responsibility, including, among other things, the occurrence of: specified defaults, delinquencies, creditor events, and judgments; significant fluctuations in volume of Title IV program funds from year to year; high annual dropout rates; the formation of a group process by the Department of Education with respect to recoupment of pending BDR claims; for an institution owned at least 50% by a publicly traded entity, a disclosure by the entity in a public filing that it is under investigation for possible violations of state, federal or foreign law; certain other state, federal, and accreditation regulatory actions; or any other event or condition that the Department of Education determines is likely to have a “significant adverse effect” on the financial condition of the institution. Thus, if the Department of Education pursued recoupment against us with respect to our pending BDR claims via a group process, it could use that as the basis for also declaring a discretionary triggering event and a determination that we lack financial responsibility. See “—”Borrower Defense to Repayment” regulations may subject us to significant repayment liability for certain discharged federal student loans, require us to be provisionally certified or post a letter of credit or other security, or result in the limitation or termination of the University’s eligibility to participate in Title IV programs.” An institution that suffers a triggering event and is thus determined by the Department of Education or otherwise deemed automatically to lack financial responsibility must (i) provide a letter of credit or other form of acceptable financial protection to the Department of Education and (ii) accept other conditions on its Title IV eligibility. Under these regulations, the Department of Education requires an institution to provide financial protection, including a letter of credit, if applicable, in an amount of not less than 10% of the institution’s total Title IV funding in the prior year for each individual triggering event, such that multiple triggering events could subject an institution to substantial cumulative financial protection obligations.

If, in the future, we fail to satisfy the Department of Education’s financial responsibility standards, including due to the existence of mandatory or discretionary triggering events, our access to Title IV program funding could be limited or even lost completely and we could be required to post a letter of credit in favor of the Department of Education, and/or accept provisional certification or other operating restrictions on our participation in Title IV programs, any of which could have a material adverse effect on our enrollments, financial condition, cash flows, or results of operations. Additionally, the University’s ability to offer distance education programs could be impacted if our composite score falls below 1.5, as that would affect our ability to participate in SARA. See “—If we fail to maintain our state authorization, we would lose our ability to participate in Title IV programs.”

If we do not comply with the Department of Education’s administrative capability standards, we could suffer financial penalties, be required to accept certain limitations to continue participating in Title IV programs, or even lose Title IV eligibility.

Department of Education regulations specify extensive criteria that an institution must satisfy to establish its administrative capability to participate in Title IV programs, including, among other things, that an institution complies with applicable federal student financial aid requirements, has an adequate system of internal controls over financial reporting, and has capable and sufficient personnel. See “—If our institution fails to maintain adequate systems and processes to detect and prevent fraudulent activity in student enrollment and financial aid, our institution may lose the ability to participate in Title IV programs, Department of Defense military tuition assistance programs, or Department of Veterans Affairs veterans’ education benefits programs, or have participation in these programs conditioned or limited, may face claims from third parties, may be required to repay Title IV and other federal program funds, or may face fines or other penalties” and“—Government agencies, regulatory agencies, and third parties may conduct compliance reviews, bring claims, or initiate litigation against us based on alleged violations of the extensive regulatory requirements applicable to us.”Additionally, among other requirements, an institution must maintain certain records and reporting, reasonable standards for measuring satisfactory academic progress, and systems for resolving certain financial aid discrepancies. Amendments to the administrative capability regulations became effective in July 2024 that impose additional requirements, including revised and new criteria regarding an institution’s validation of high school diplomas, financial aid counseling, career services, provision of clinical or externship opportunities, disbursement of Title IV funds, offering of gainful employment programs, substantial misrepresentations, and aggressive and deceptive recruitment tactics or conduct. These amendments also provide the Department of Education with increased and explicit authority to make an adverse administrative capability finding based on a broader set of issues than it has used historically. In addition, the Department of Education’s final regulations implementing the accountability framework under the OBBB also introduced a related administrative capability requirement that no more than half of an institution’s total Title IV funds come from low-earning outcome programs and no more than half of an institution’s Title IV recipients are from low-earning outcome programs. Those regulations require that if an institution fails this administrative capability requirement in two out of any three consecutive award years, the institution will be placed on provisional status and the institution’s low-earning outcome programs shall not qualify for any Title IV funds. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Administrative Capability.” If we fail to satisfy any of these criteria, the Department of Education may determine that we lack administrative capability and, therefore, subject us to fines, sanctions, and additional scrutiny, including the limitation, denial, or termination of eligibility for Title IV programs, which could significantly reduce enrollments and revenue, and materially and adversely affect our business and financial condition.

We may lose Title IV program eligibility if the percentage of our revenue derived from federal funding sources is too high.

The University, and all other proprietary higher education institutions, is subject to the 90/10 Rule under the Higher Education Act, under which we will be ineligible to participate in Title IV programs for at least two fiscal years if, for any two consecutive fiscal years, we derive more than 90% of our cash basis revenue, as defined in the rule, from Title IV programs or other qualifying federal funding sources, including tuition assistance programs offered by the Department of Defense (military tuition assistance) and Department of Veterans Affairs (veterans education benefits). If we derive more than 90% of our cash basis revenue from Title IV programs or other qualifying federal funding sources for any single fiscal year, we would be automatically placed on provisional certification for two fiscal years, would be subject to possible additional sanctions or requirements determined to be appropriate under the circumstances by the Department of Education, and would also be required to provide notice to existing students about the potential loss of Title IV funding. If we lose eligibility, disbursements of Title IV program funds made after the end of our second fiscal year in the measuring period must be repaid to the Department of Education, and while the Department of Education has broad discretion to impose additional sanctions or requirements, there is limited precedent available for us to predict what those sanctions could include. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—90/10 Rule.”

For fiscal years 2026 and 2025, our 90/10 Rule percentage was 88.6%. If our 90/10 Rule percentage is projected to exceed or exceeds 90% for a certain fiscal year, we may be required to take measures to reduce the percentage of revenue that we derive from Title IV program funds or other qualifying federal funds we receive, including actions that reduce our revenue, increase our operating expenses, and/or increase our tuition in order to capture more revenue from sources other than Title IV programs and other qualifying federal funds (thus rendering us less competitive), in each case perhaps significantly. In addition, we may be required to make operational or programmatic changes in the future to remain in compliance with the 90/10 Rule, and such changes may materially and adversely impact our business and financial condition. Furthermore, these changes could make it more difficult to comply with other regulatory requirements, including the financial responsibility rules and regulations. As a result, failure to comply with the 90/10 Rule could have a material adverse effect on our enrollment, revenue, business, financial condition, and results of operations.

Additionally, some state legislatures have proposed legislation to prohibit institutions, such as the University, from enrolling residents based on funding thresholds more restrictive than the federal 90/10 Rule. If such proposals were enacted and we were to fail to comply, we could face monetary fines, penalties, limitations on offering programs, or the loss of operating or degree granting authority in states where the University maintains physical operations or, potentially, where our distance education students reside, particularly to the extent that the SARA requirements would be amended to allow such individual state requirements. We expect that certain states that have a particular focus on the higher education industry will continue to pose significant risks in this area.

If we fail to maintain our institutional accreditation, or our institutional accrediting body loses recognition by the Department of Education, we will lose our ability to participate in Title IV programs.

We must be accredited by an accrediting commission recognized by the Department of Education to participate in Title IV programs. The HLC has institutionally accredited the University since 1978 and reaffirmed the accreditation in January 2023 through 2032-33. To remain accredited, we must continuously meet accreditation standards relating to, among other things, performance, governance, institutional integrity, educational quality, faculty, administrative capability, resources, and financial stability. If we fail to satisfy any of the HLC’s standards, we could be subject to additional oversight and reporting requirements, accreditation proceedings (e.g., show-cause directive), action to defer or deny an application for a new grant of accreditation, action to suspend our accreditation or program approval, or other negative actions. Future inquiries or actions by state or federal agencies could negatively impact our accreditation status. If our institutions or programs are subject to accreditation actions or are placed on probationary or other negative accreditation status, we may experience adverse publicity, impaired ability to attract and retain students, and substantial expense to obtain unqualified accreditation status. The inability to obtain reaccreditation following periodic reviews or any final loss of accreditation by the HLC would cause us to lose our eligibility to participate in Title IV programs, cause a significant decline in our total student enrollments, and have a material adverse effect on our business, financial condition, and results of operations. See Item 1, “Business—Regulatory Environment” and “Business—Regulatory Environment—Accreditation.”

If the HLC were to lose recognition by the Department of Education for any reason, we would lose eligibility to participate in Title IV programs beginning 18 months after the date such recognition ceased unless HLC’s recognition was restored, or we attained accreditation from another accreditor recognized by the Department of Education. If we fail to timely obtain replacement institutional accreditation within the required timeframe, we would lose eligibility to participate in Title IV programs, which would have a material and adverse effect on our business, financial condition, and results of operations.

If we fail to satisfy the various accreditation standards of our programmatic accreditors or state licensure and certification requirements applicable to our professional licensing programs, we could face restrictions on, or the loss of accreditation for or the ability to offer, certain programs.

Since we offer various professional licensing programs in nursing, education, counseling, and social work that are accredited by specialized accrediting agencies, we are subject to the oversight of these programmatic accreditors and must satisfactorily prove that our programs, or any new programs we want to offer, meet the standards of accreditation for that profession. We are also required to participate in ongoing accreditation reviews and be responsive to any accreditation standards concerns. Additionally, and in accordance with state and federal requirements, our professional licensing programs must meet specific state requirements for licensure and certification in any state where the program is offered and, to that end, we must maintain and continually monitor the licensing and certification requirements in every state where we offer professional licensing programs and must meet student notification requirements in the event a student moves to a different state or a program fails to meet state licensing requirements. If we fail to satisfy the standards of any of those specialized accrediting commissions or state agencies, we could lose the specialized accreditation or the state approval for the affected programs, which could prevent our students from seeking and obtaining licensure or employment, result in materially reduced student enrollments in those programs, and have a material adverse effect on our business, financial condition, and results of operations. See “—If an education regulatory agency that regulates us delays or denies approval of a transaction involving us that constitutes a “change in control,” our ability to operate or participate in Title IV programs may be materially impaired.” In addition, if we are denied accreditation for a new program, we must report the denial to the HLC and potentially other regulators, which could result in regulatory consequences, reputational damage, and materially impact our enrollment, business, and financial condition. See Item 1, “Business—Accreditation and Jurisdictional Authorizations.”

If we fail to maintain our state authorization, we would lose our ability to participate in Title IV programs.

To offer post-secondary programs and be certified to participate in Title IV programs, we must be authorized to operate by the appropriate post-secondary regulatory authority in each state where we have a physical presence. We are domiciled in Arizona and are authorized to operate there by the Arizona State Board for Private Postsecondary Education. To maintain our state authorization, we must continuously meet standards relating to, among other things, educational programs, facilities, instructional and administrative staff, marketing and recruitment, financial operations, addition of new locations and educational programs, and various operational and administrative procedures. If we fail to satisfy any of these standards, we could lose our state authorization, which would also cause the loss of our eligibility to participate in Title IV programs and have a material adverse effect on our business, financial condition, and results of operations.

Since substantially all our students attend our programs online, to participate in the Title IV programs, we must be authorized to offer our distance education programs in any jurisdiction where we enroll students in online programs. For all states other than California, we accomplish this as a participating member in SARA, which authorizes us to offer approved distance education programs to residents of other member states under the structure and oversight of SARA. SARA is recognized by the Department of Education as a method of state authorization for distance education programs. We are also registered as an out-of-state institution with the California BPPE to offer distance education programs to California students. Whether through direct authorization from states, or through participation in the SARA compact, we are authorized to offer approved educational programs at our only physical location and online and must continue to maintain such authorization to effectively operate our business.

If we fail to maintain authorized status in our home state, Arizona, or otherwise fail to comply with the requirements to participate in SARA or state regulatory requirements to provide distance education in a non-SARA state, we could lose our ability to participate in SARA or may be subject to the loss of state licensure in Arizona or authorization to provide distance education in such non-SARA state, which could have a material adverse effect on our business, financial condition, or results of operations. Pursuant to SARA policy, a change in ownership or control for a SARA participating institution is determined by the institution’s home state, so if the Arizona State Board were to determine that an offering or transaction constitutes a change of ownership or control, we would be required to complete reauthorizations for approval both in Arizona and under SARA. During the pendency of any such change of control process with Arizona, we would be placed on provisional status with SARA and would be required to meet any conditions or requirements deemed appropriate by Arizona. See “—If an education regulatory agency that regulates us delays or denies approval of a transaction involving us that constitutes a “change in control,” our ability to operate or participate in Title IV programs may be materially impaired.” Participation in SARA requires that we comply with the Department of Education’s financial responsibility rules, among numerous other requirements. Furthermore, the Department of Education has recently proposed regulations that would allow individual states to impose their own new and diverse requirements (in conjunction with the ongoing application of SARA policies) on institutions offering programs in such individual states. See Item 1, “Business—Regulatory Environment—State Regulation.” While these regulations have not yet been adopted, if the Department of Education regulations that recognize reciprocity agreements for state authorization purposes were modified in a way that reduces or eliminates the regulatory and operational efficiency under the current SARA process, our business, financial condition, or results of operations could be materially impacted. Furthermore, we cannot predict the extent to which states will retain membership in SARA, the manner in which SARA’s policies may be modified, interpreted, and enforced, our ability to comply with SARA’s requirements and retain eligibility, or the impact that failure to meet the SARA requirements may have on our business.

If our graduates are unable to obtain professional licenses or certifications required for employment in their chosen fields of study, our reputation may suffer and we may face declining enrollments and revenue or be subject to student litigation.

Certain of our students require or desire professional licenses or certifications after graduation to obtain employment in their chosen fields and their success depends on several factors, including the individual merits of the student, whether the institution and the program were approved by the relevant state government or regulatory authorities, whether the student’s program meets professional licensure requirements, and whether the program is accredited in accordance with state requirements. If state professional licensing authorities refuse to recognize our graduates for professional licensure in the future based on factors relating to us or our programs, the potential growth of our programs would be negatively affected and we could also be exposed to litigation resulting in potential legal or other expenses, which could have a material adverse effect on our business, financial condition, and results of operations.

We may lose our eligibility to participate in Title IV programs if our student loan default rates are too high.

To remain eligible to participate in Title IV programs, our student loan cohort default rates must remain below specified levels, where each cohort includes the students first entering student loan repayment during a federal fiscal year (ending September 30) and the default rate is the percentage of that cohort defaulting on payments by the end of the second full year after such repayment start date. Cohort default rates are published by the Department of Education about a year after the end of the applicable measuring period, so cohort default rates for the 2023 cohort were published in September 2026. We would lose eligibility to participate in Title IV programs if our cohort default rate equals or exceeds 40% for any given year or 30% for three consecutive years, and if our cohort default rate equals or exceeds 30% for any given year, we must establish a default prevention task force and develop a default prevention plan with measurable objectives for improving the cohort default rate. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Student Loan Cohort Default Rates.” Based on information published by the Department of Education, the University’s cohort default rate for fiscal year 2023 was 0.7% following a rate of zero for the prior two fiscal years, principally due to the Department’s federal loan payment pause initiated following the COVID-19 pandemic. The restarting of payment obligations following the multi-year COVID-19 interruption is expected to over time result in an increase in reported rates. While our cohort default rates, even prior to the COVID-19 pause, have historically been significantly below the mandated levels, any increase in interest rates or declines in income or job losses for our students could result in higher cohort default rates. While we anticipate that there will be substantial increases in cohort default rates among institutions generally and that our rates will also continue to increase, we cannot predict the extent of any such increases in our cohort default rates or how our future rates will compare to our historical pre-pandemic levels and to the Department of Education’s student loan default rate thresholds. Exceeding the student loan default rate thresholds and losing our eligibility to participate in Title IV programs would have a material adverse effect on our enrollment, business, financial condition, and results of operations. Any future changes in the formula for calculating student loan default rates, economic conditions, or other factors that negatively impact our default rates could threaten our Title IV program eligibility and have a material adverse effect on our business, financial condition, and results of operations. In addition, default rates for our former students could be negatively impacted by potentially enacted restrictions on the permitted types of default prevention assistance.

Failure to comply with the Department of Education’s incentive compensation rule could subject us to sanctions and other liabilities.

Our PPA with the Department of Education, the Higher Education Act, and Title IV regulations prohibit the payment of incentive compensation to certain employees. This broad prohibition, which also extends to any third-party companies that we contract with for student recruitment, admissions, or financial aid awarding services, prohibits us from offering or providing any bonus or incentive-based compensation based on the successful recruitment, admission, or enrollment of students or the award of Title IV financial aid to any of our employees involved with or responsible for such activities. The lack of interpretive guidance regarding the rule, however, has caused uncertainty about what constitutes incentive compensation and which employees are covered by the regulation and has made the development of effective and compliant performance metrics for certain categories of employees or service providers more difficult to establish. If we pay a bonus, commission, or other incentive payment in violation of these rules or if the Department of Education or other third parties interpret our compensation practices as noncompliant, we could be subject to sanctions, litigation, or other liability, which could have a material adverse effect on our business, financial condition, and results of operations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Restrictions on Incentive Compensation.”

Failure to comply with the Department of Education’s misrepresentation rules or its rules prohibiting aggressive and deceptive recruitment tactics could subject us to sanctions and other liabilities.

The Higher Education Act prohibits us and other institutions that participate in Title IV programs from engaging in “substantial misrepresentation” of the nature of its educational programs, its financial charges, or the employability of its graduates. In recent years, the Department of Education has increased its efforts to hold institutions accountable for substantial misrepresentations. In addition, Department of Education regulations prohibit us and other institutions that participate in Title IV programs, any representatives thereof, or certain ineligible institutions, organizations, or persons with whom the eligible institution has an agreement to provide certain educational programs or services from engaging in activities that constitute aggressive and deceptive recruitment tactics or conduct. If the Department of Education were to interpret statements made by us or on our behalf to be in violation of these misrepresentation or aggressive and deceptive recruitment rules, it could terminate, limit, or suspend our participation in Title IV programs, deny our applications to add new programs or locations, or initiate other proceedings or sanctions, any of which could have a material adverse effect on our business, financial condition, and results of operations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Substantial Misrepresentation” and“—Aggressive and Deceptive Recruitment Tactics.”

If an education regulatory agency that regulates us delays or denies approval of a transaction involving us that constitutes a “change in control,” our ability to operate or participate in Title IV programs may be materially impaired.

If we engage in a transaction that involves a change in control of the Company or the University, as such term is defined under the differing standards of the Department of Education, the HLC, or any other applicable state education agency or accrediting commission, we must notify or seek the approval of each such agency. Transactions or events that typically constitute a change in control, some of which may be beyond our control, include significant acquisitions or dispositions of the voting stock and/or assets of an institution or its parent company or significant changes in the corporate form, governance structure, or composition of the board of directors of an institution or its parent company. Failure, or any delay, in obtaining approval of any change in control from the Department of Education, the HLC, or any applicable state education agency or accrediting commission, including with respect to a future offering of our common stock, could impair our ability to operate or participate in Title IV programs, which could have a material adverse effect on our business, financial condition, and results of operations. Further, failure, or any delay in obtaining approval of any change in control from a state education agency or accrediting commission or any specialized accrediting commission could require us to suspend our impacted activities or the applicable programs until we receive the required approval, or could otherwise impair our operations. The potential adverse effects of a change in control could influence future decisions by us and our stockholders regarding the sale, purchase, transfer, issuance, or redemption of our stock, which could impact the liquidity or market price of our stock.

Under the Department of Education’s regulations, an institution that undergoes a change in control loses its eligibility to participate in Title IV programs and must apply to the Department of Education to reestablish such eligibility. If the Department were to determine that future offerings or transactions constitute a change in control under their standards for an institution owned by a publicly-traded company, we would be subject to a recertification approval requirement that would include extensive documentary submission requirements, reviews by the Department of Education of our financial and administrative capability, and extensive prior review and approval procedures by the HLC. The Department of Education may continue an institution’s participation in Title IV programs on an interim provisional basis pending completion of the change in control approval process provided that the Department of Education’s application and submission requirements have been timely met. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Change in Ownership or Control.”

While the HLC confirmed that the IPO did not require prior review and approval by the HLC, future offerings or transactions may constitute a change in ownership or control of the University under the HLC standards and may therefore require approval of the HLC Board of Trustees, in which case the HLC may undertake an evaluation of the effect of the change on the continuing operations of the University for purposes of determining if continued accreditation is appropriate, which evaluation may include a comprehensive review. Approval requested from the HLC may be granted by the HLC without conditions, with conditions that could limit our operations, or could be denied, which would effectively block the offering.

In addition, we must notify or receive approval from the Arizona State Board for certain changes of ownership or control. We must submit written notification within seven days of the effective date of a change of control and, for certain transactions, must submit a license application within 60 days after the date of written notice demonstrating that the University meets the applicable statutory and licensure requirements of the Arizona State Board, including the submission of information and documentation with respect to our accreditation, corporate ownership, educational programs, financial responsibility, and other matters as may be deemed relevant to determining the University’s compliance with all licensing requirements, as well as potentially an inspection of the University’s place of business. A required Arizona State Board approval that is delayed or denied could have a material adverse effect on our business, financial condition, or results of operations. Moreover, a change of ownership or control for a SARA participating institution is determined by the institution’s home state. Accordingly, if the Arizona State Board were to determine that a subsequent offering or transaction constitutes a change of ownership or control requiring its approval, the University would be placed on provisional status under such additional oversight measures considered necessary to ensure SARA requirements are met regarding program quality, financial stability, and consumer protection during the pendency of the change of control. If we fail to meet requirements set by the Arizona State Board, SARA, or other state regulatory requirements, including the Department of Education’s state authorization requirements, or to complete the change of control procedures and subsequent reauthorizations with Arizona and SARA, we could lose Arizona and SARA authorization and no longer be able to enroll distance education students unless and until we are reauthorized in Arizona and SARA or obtain individual authorizations in each state. This could have a material adverse effect on our ability to compete in the distance education market and our enrollment, financial condition, and results of operations. We would also become vulnerable to additional challenges in obtaining authorization in individual states.

Since California is not a member of the SARA compact and because we enroll students in California, we must register as an out-of-state institution with the California BPPE to offer distance education programs to our California students. Unless California decides to join SARA as a member state in the future, we must continue to maintain state authorization from the California BPPE through registration as an out-of-state institution. If California’s regulations or statutes were to change, we would need to comply with the revised regulations and statutes to maintain authorization to offer distance education to California students. Failure to meet California’s state authorization requirements in the future could have a material adverse effect on our business, financial condition, and results of operations.

We also are required to maintain certain specialized programmatic accreditation. Changes to the rules and regulations underlying these accreditations could trigger additional accreditor and specialized state board or agency evaluation of our educational programs and of our compliance with the applicable standards and requirements of those agencies. Delay or denial of approval of such required programmatic, specialized accreditor, or specialized state board or agency could have a material adverse effect on our business, financial condition, and results of operations.

Failure to accurately calculate and make timely payment of refunds of Title IV program funds for students who withdraw from the University could result in sanctions.

We are required to calculate refunds of unearned Title IV program funds awarded or disbursed to students who withdraw from their educational program before completing the payment period or period of enrollment for which those funds were awarded or disbursed and to return those unearned funds to the Department of Education within 45 days of the date that we determine that a student has withdrawn. If refunds are not properly calculated or timely returned for a sufficient percentage of students, we may be required to post a letter of credit with the Department of Education or be subject to sanctions, liabilities, or other adverse actions by the Department of Education, which could have a material adverse effect on our business, financial condition, and results of operations. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Return of Title IV Funds.”

Our business operations and financial performance may be materially impacted by the U.S. political and economic environment.

Higher education, and more specifically proprietary higher education, has faced an uncertain political and economic environment as legal, regulatory, and policy approaches have changed from administration to administration and because of changes in Congressional control. Changes in federal policy by the executive branch and regulatory agencies may occur through executive orders, policy and personnel changes, or changes in legislative priorities, each of which can lead to increased oversight of education providers, additional regulations, new interpretations of existing regulations, or uncertainty as to the impact of enforcement approaches or new regulations on regulations implemented by prior administrations. Changes from administration to administration have and may continue to result in regulatory and compliance cost increases over time, which could have a material adverse effect on our business, financial condition, and results of operations.

Executive actions, executive orders, and regulatory changes implemented by presidential administrations and its appointees may require significant management attention and resources to understand, assure compliance, and implement changes in our business operations or programs. While some positively impact our industry, others could have material and adverse impacts on us or our industry, including administrative changes relating to government staffing or budgets, some of which could result in slower processing of Title IV matters, program approvals, or other applicable functions that directly or indirectly impact our operations and business. Potential reductions in the Department of Education workforce, plans for closure of the Department of Education, or other future changes in federal laws and regulations and the interpretation and implementation of such laws and regulations, could affect us in substantial and unpredictable ways, as we cannot predict what actions the current or future presidential administrations will take regarding Department of Education operations or the response of the staff of the Department of Education to any such actions; the extent to which the administration or Congress, now or in the future, will act to change, eliminate, or implement new statutes, regulations, standards, policies, and practices; the form that new statutes, regulations, standards, policies, or practices may take or the extent to which those statutes, regulations, practices, or policies may impact us or federal funds disbursed to schools through federal financial aid programs; or whether any challenges to actions taken by the administration will be successful. Significant changes to the Department of Education or to federal regulation of higher education could have a material adverse impact on our enrollment, revenue, results of operations, and financial condition. In addition, we expect our regulatory and compliance costs may continue to increase for the foreseeable future, which would adversely affect our financial performance.

Additionally, levels of federal government spending are difficult to predict. Considerable uncertainty exists regarding the spending priorities of presidential administrations and Congress and how future budget and program decisions will unfold, including the extent to which future spending reductions may impact us and our industry generally. The federal government experienced a shutdown in October 2025 due to a failure by Congress to timely enact funding bills needed for the new fiscal year. The shutdown modestly impacted military benefit programs for some of our students. Although that shutdown ended in November 2025, the federal government experienced additional partial shutdowns during fiscal year 2026, and additional shutdowns may occur in the future. Future shutdowns may have a pronounced and substantial effect on access to federal student aid for our students and for us, including but not limited to, military benefits programs. Future and prolonged government shutdowns, and other suspensions, interruptions, delays, or cessations of governmental funding or changes to the federal government’s budget and budgetary priorities, especially if related to the Department of Education or appropriations for Title IV programs, could adversely affect the funding of federal programs providing financial assistance to our students, which could in turn adversely affect our business, financial condition and operating results.

Failure to secure or unauthorized release of confidential information could subject us to civil penalties or cause us to lose our eligibility to participate in Title IV programs.

As an educational institution participating in federal student assistance programs, we collect and retain certain confidential and personal information, including financial information regarding enrollees or their sponsors. Such information may be subject to federal and state privacy and data security rules, including, but not limited to, the Family Educational Rights and Privacy Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach-Bliley Act (the “GLBA”), and the Fair and Accurate Credit Transactions Act. The Department of Education, which is one of many government agencies with oversight authority over confidential and personal information, has indicated that it will exercise heightened scrutiny over the protection of confidential and personal information by Title IV participating institutions. Our failure to secure or unauthorized release of confidential information or other non-compliance with these rules would likely constitute non-compliance by the Department of Education, including with our PPA obligations and under federal and state privacy and data security rules, and could subject us to fines, loss of our capacity to conduct electronic commerce, and loss of eligibility to participate in Title IV programs, which could have a material adverse effect on our business, financial condition, and results of operations.

The actions of other post-secondary educational institutions could negatively affect our reputation and stock price.

In recent years, the Department of Education, the Department of Justice, the SEC, the FTC, state attorneys general, and state governmental agencies, among others, have initiated regulatory proceedings and litigation against various post-secondary educational institutions, including the University, relating to, among other allegations, deceptive trade practices, false claims against the government, and non-compliance with Department of Education requirements, state education laws, and state consumer protection laws. These actions have attracted adverse media coverage and have been the subject of legislative hearings and regulatory actions at both the federal and state levels, focusing not only on the individual schools but in some cases on the entire proprietary post-secondary education sector. Adverse media coverage regarding other educational institutions, including proprietary institutions, could damage our reputation, result in lower enrollments, revenue, and operating profit, and have a negative impact on our stock price, and could also result in increased scrutiny and regulation by the Department of Education, Congress, accrediting commissions, state legislatures, state attorneys general, or other governmental authorities of all educational institutions, including us. See Item 1, “Business—Regulatory Environment—Regulation of Student Financial Aid Programs—Federal Trade Commission Investigation” and “—Attorney General Investigations.”

Risks Related to Our Business

We face intense and increasing competition in the post-secondary education market, which could decrease our market share and create pricing pressure.

In the highly competitive post-secondary education market, we compete for students with traditional public and private degree-granting institutionally accredited colleges and universities, other proprietary degree-granting institutionally accredited schools, and other alternatives to higher education. We also compete with various emerging non-traditional, credit-bearing, and noncredit-bearing education programs offered by both proprietary and not-for-profit providers. Some of our competitors have greater resources, both financial and otherwise, and, as a result, are able to offer similar programs at lower tuition for various reasons, including the availability of government subsidies, government and foundation grants, endowments, tax-deductible contributions, other financial resources not available to proprietary institutions, or by providing fewer student services or larger class sizes. In addition, a significant and increasing number of traditional four-year and community colleges, which are subject to fewer regulatory constraints, offer distance learning and other online education programs, including online programs geared towards the needs of working adults. As the proportion of traditional colleges and universities providing alternative learning modalities increases, we will face increased competition from these institutions, including those with highly regarded reputations providing degrees perceived as more valuable in the workplace. We may limit tuition increases or increase spending in response to competition to retain or attract students or pursue new market opportunities.

We also face competition in maintaining and developing relationships with employers, particularly as employers become more selective of which online universities they encourage, or offer scholarships to, employees to attend or from which they hire prospective employees. We currently have relationships with large employers to provide their employees with the opportunity to obtain degrees and professional development certificates through us while continuing their employment. These relationships are an important part of our strategy, as they provide us with potential working adult students and increase our reputation among high-profile employers. In addition, degree-granting programs in which employers directly pay tuition have a beneficial impact on our 90/10 Rule percentage by reducing the proportion of our cash basis revenue attributable to Title IV program funds. If, for whatever reason, we are unable to further grow our existing relationships or develop new relationships, if our existing relationships deteriorate or end, or if we fail to offer programs that teach skills demanded by employers, our efforts to attract potential working adult students may be impaired, which could materially and adversely affect our business and financial condition and our compliance with applicable regulations. Failure to effectively respond to competitors could have a material impact on our enrollment, revenue, and results of operations. We cannot predict whether we will compete successfully against current or future competitors or that competitive pressures will not adversely affect our market share, revenue, and operating margin.

A decline in the overall growth of enrollment in post-secondary institutions or of students seeking online degrees could negatively impact our enrollment, revenue, or future growth.

Recent studies have shown negative trends in both enrollment growth and the number of high school graduates eligible to enroll in degree-granting, post-secondary institutions. To maintain current growth rates, we aim to maintain or increase market share in existing markets. Student enrollment at the University, however, is impacted by many factors, including macroeconomic conditions that are beyond our control such as prospective students choosing to work rather than to pursue post-secondary education during periods of stable or declining unemployment. Enrollment may also be impacted by affordability concerns or negative perceptions of the value of a college degree, which may discourage a prospective student from investing in his or her educational advancement, including during periods of higher unemployment, and make it more challenging for us to attract and retain students. Education providers are also introducing new education and operating models focused on reducing costs and time to completion, including competency-based and adaptive learning models, intensive and immersive skills-focused bootcamps, other non-degree programs, and career-focused educational pathways, tools, and services. Increasing employer acceptance of these types of programs and pathways to fulfill demand for IT and business career upskilling could have an adverse impact on our degree programs in these fields. In addition, our student enrollment may be negatively affected by reputational concerns and negative publicity. While we continue to make investments in our business that are designed to improve student experiences, retention, and academic outcomes and support the sustainable and responsible growth of the University and our reputation, we cannot predict the success of these initiatives. Our failure to attract new students, or the decisions by prospective students to seek degrees in disciplines that we do not offer or to pursue alternative non-degree competency-based credentials rather than our degree programs, could negatively impact our enrollment, revenue, or future growth.

Our financial performance depends on our ability to develop and maintain favorable awareness of the University among, and enroll and retain, students.

We expend significant resources on public engagement and marketing to build favorable awareness of the University and the programs we offer. Creating this awareness is critical to our ability to attract prospective students, to convert prospective students to enrolled students in a cost-effective manner, and to retain these enrolled students throughout their programs. Some of the factors that could prevent us from successfully enrolling and retaining students in our programs include: (i) structural changes in the marketing landscape that could result in less efficient student acquisition, including fundamental changes to internet search due to AI (both organic and sponsored) and the transformation of television; (ii) changes in the cost or efficacy of our advertising; (iii) laws or other regulatory limits on advertising spend; (iv) increased competition from schools offering distance learning and other online educational programs; (v) a decrease in the perceived or actual economic benefits that students derive from our programs or education in general; (vi) a decrease in or perceived low student pass rates for professional licenses and other examinations necessary for students to work in their chosen fields; (vii) regulatory investigations or enforcement proceedings that may damage our or the industry’s reputation; (viii) increased regulation of online education, including in states in which we do not have a physical presence; (ix) litigation that may damage our or the industry’s reputation; (x) inability to continue to recruit, train, and retain quality employees, management, and faculty; (xi) student or employer dissatisfaction with the quality of our services and programs; (xii) the impact of tuition rate increases for newly enrolling students, our Tuition Price Guarantee and Locked-In Pricing Guarantee, or tuition reductions by competitors that we are unwilling or unable to match; (xiii) a decline in the acceptance of online education by students or employees; (xiv) disruptions to our information technology systems; and (xv) negative social media sentiment. Any negative impact on program demand, enrollment acquisition costs or enrollment could have a material adverse impact on our revenue, business, financial condition, and results of operations.

Failure to adapt to changing market needs, including relating to AI or other new technology, could adversely affect our business.

The nature of the skills required by employers evolves rapidly in today’s changing economic, AI, and technological environment and our educational programs must evolve in response to these changes. While we have invested significant resources to develop and implement features to incorporate AI and enhance the online classroom experience, such as incorporating AI tools, delivering course content through streaming video, simulations, and other interactive enhancements, our program offerings may not meet the needs of current or prospective students or the employers of our graduates. Even if we can adapt existing programs or develop new programs to meet current market demands, we may not be able to offer those new programs as quickly as required by prospective employers or as quickly as our competitors. In addition, we may be unable to timely obtain specialized accreditations or licenses to make certain programs desirable to students. If we are unable to adequately respond to changes in market requirements due to regulatory or financial constraints, unusually rapid technological changes, or other factors, our ability to attract and retain students could be impaired, the rates at which our graduates obtain jobs involving their fields of study could suffer, and our business and financial condition could be adversely affected. Establishing new academic programs or modifying existing programs requires us to make investments, incur marketing expenses and reallocate other resources. We may have limited experience with the courses in new areas and may need to modify our systems and strategy or enter arrangements with other educational institutions to provide new programs effectively and profitably. If we are unable to offer new programs in a cost-effective manner or are otherwise unable to effectively manage the operations of newly established academic programs, our business, financial condition, and results of operations could be adversely affected.

Our strategy is to focus on positive student outcomes and the long-term success of students rather than short-term interests of our stockholders, which may negatively influence financial performance.

We may take actions we believe will have a positive impact on student outcomes and the long-term success of students, even if these actions may not maximize our short- or medium-term financial results for investors. While we believe this focus on student outcomes and success will benefit us over the long-term, the anticipated long-term benefits may be slow to materialize or may not materialize at all. As a result, our student-centric approach may have an adverse impact on our operational and financial performance and negatively impact our stock price.

Failure to attract or retain qualified employees, senior management, and faculty could materially impact our business.

Our current and future success depends on the skills, efforts, and motivation of our employees, senior management, and faculty, who generally have significant experience with our business and industry, as well as our ability to attract and retain qualified personnel. The loss of the services of any of our key personnel, including through workforce reduction, or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could adversely affect our business results. Additionally, to effectively educate our students, we must retain a large number of faculty on an ongoing basis, with the majority being adjunct, part-time faculty, and must keep our faculty engaged and focused on the mission of delivering quality education. Failure to attract and retain sufficient numbers of qualified faculty, adequately train new faculty, or maintain faculty relations could impair our ability to serve our students, which could result in the need to reduce the scope or number of the classes available to our students and have a material adverse impact on our enrollment, business, and results of operations.

Failure to successfully conclude pending litigation and governmental inquiries could adversely affect our business and financial condition.

We are periodically subject to lawsuits, demands in arbitrations, investigations, regulatory proceedings or other claims in the ordinary course of business, including, but not limited to, claims involving current and former students, routine employment matters, business disputes, and regulatory demands. These matters may cause us to incur substantial damages or settlement costs in excess of our insurance coverage related to these matters or to pay substantial fines or penalties, and they also may require significant time and attention from our management or cause reputational harm, all of which may cause our business to suffer. In addition, an adverse outcome in any of these matters could also materially and adversely affect our licenses, accreditations, and eligibility to participate in Title IV programs, which could have a material adverse effect on our business and financial condition. See Item 3, “Legal Proceedings.”

Failure to adequately establish, maintain, protect and enforce our intellectual property and proprietary rights, prevent third parties from making unauthorized use of such rights, or becoming subject to litigation brought by third parties claiming infringement, misappropriation, or other violation by us of their intellectual property rights could have a material adverse effect on our business.

Failure to adequately protect our intellectual property and proprietary rights, essential assets of our business, could impact our competitive advantages and permit our competitors to offer similar educational programs and services, which could adversely affect enrollments, revenue, business, financial condition, and results of operations. We rely on a combination of copyrights, trademarks, trade secrets (including know-how), patents, and domain names, as well as employee and third-party confidentiality agreements, intellectual property licenses, and other contractual rights, to establish, maintain, protect and enforce our rights in our curricula and other course materials, technology, proprietary information, processes, and other assets. Failure to protect our trademarks could prevent us from building and maintaining name recognition in our markets of interest. We cannot be sure that the agreements under which we contract to own or license rights to use intellectual property developed by our faculty members, content experts, or other third parties are adequate, that we have or will be able to secure permissions or protections for the intellectual property rights we use or claim rights to, or that third parties will not terminate our license rights. There is no certainty that we will receive patents in connection with any patent applications or that our existing or future patents will adequately protect our technology. Even if we obtain intellectual property rights, we cannot be sure that such rights will permit us to take advantage of current market trends or otherwise provide competitive advantages.

Unauthorized third parties may attempt to use, duplicate, or copy our intellectual property rights, including proprietary aspects of our student recruitment and engagement strategies, educational delivery methods and systems, curricula, and online resource material. Our efforts to protect these rights may be insufficient or ineffective, or our rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There is no assurance that our rights will be sufficient to protect against others offering educational programs, services, or technologies that are substantially similar or superior to ours and that compete with our business. Further, our intellectual property rights and the enforcement or defense of such rights may be limited or affected by developments or uncertainty in relevant laws, rules, and regulations, which could result in our rights being challenged, invalidated, circumvented, infringed or misappropriated. Additionally, some foreign and/or developing countries may not favor the enforcement of certain intellectual property rights, which could make it difficult for us to prevent or stop the infringement, misappropriation, or other violation of our intellectual property or the marketing of competing products in violation of our rights.

Our efforts to protect our intellectual property may require litigation to seek to protect our rights against any infringement, misappropriation, or other violation, which could have a material adverse effect on our costs of operation, business, and financial condition. If we take legal action to protect, defend, or enforce our rights, our efforts may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Any suit or proceeding initiated by us could result in substantial costs, diversion of our resources and management attention, and a negative result, such as the invalidation of our rights, which could have a material adverse effect on our financial condition and results of operations. Our various liability insurance coverages, if any, may not adequately, or at all, cover potential claims of this type. Furthermore, an adverse outcome of a dispute may result in an injunction and could require us to pay substantial monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property rights. Any settlement or adverse judgment resulting from such a claim could (i) require us to enter into a licensing agreement to continue using the technology, content or other intellectual property that is the subject of the claim; (ii) restrict or prohibit our use of such technology, content or other intellectual property; (iii) require us to expend significant resources to alter the design and operation of our systems and technology or the content of our courses; and/or (iv) require us to indemnify third parties. We may also be required to develop alternative non-infringing technology, content or other intellectual property, which could require significant time and expense. There also can be no assurance that we would be able to develop or license suitable alternative technology, content or other intellectual property to permit us to continue offering the affected technology, content, products or services to our partners. If we cannot develop or license technology, content, or other intellectual property for any allegedly infringing aspect of our business, we would be forced to limit our educational programs and/or other products and services and may be unable to compete effectively. Any of these events could have a material adverse effect on our business and financial condition.

We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. However, the costs associated with enforcing patents, confidentiality agreements or other intellectual property rights may make aggressive enforcement impracticable. We may be unable or unwilling to incur the costs and resources necessary to determine whether third parties are using our intellectual property rights without our authorization. Additionally, our commercial success depends in part on avoiding infringement, misappropriation or other violations of the intellectual property and proprietary rights of third parties. However, we have in the past been, and may in the future, become party to disputes from time to time over rights and obligations concerning intellectual property held by third parties, and we may not prevail in any such future disputes. Some third-party intellectual property rights may prove to be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid violating those intellectual property rights.

System disruptions to our technology systems or platforms could have a material adverse effect on our business and our primarily remote work environment may exacerbate this risk.

The performance and reliability of our internal and third-party hosted technology systems and platforms, including our computer networks, phone systems, and digital platforms and infrastructure, is critical to our operations, reputation, and ability to attract and retain students. As with any complex technology ecosystem, we experience intermittent outages of the IT systems used by our students and by our employees, including system-wide outages. While our critical systems are covered by validated disaster recovery service, protected by a disaster recovery plan, and backed up with robust systems, we may still experience business interruptions and outages resulting from a variety of sources, such as natural disasters, inclement weather, political disruptions, or other events in the geographic areas in which our systems are located. If we fail to effectively assess and identify cybersecurity risks associated with the use of technology in our business operations, we may become increasingly vulnerable to such risks. We previously experienced a cybersecurity incident with a third-party service provider platform and cannot guarantee that our third-party service provider systems and platforms will not be compromised in the future or that errors by our third-party service providers will not cause disruptions or outages to our operations. We also cannot predict whether the IT systems and infrastructure on which we depend, including those of third parties, will continue to meet our business needs or adequately safeguard our operations. Any disruption in our technology systems or platforms could significantly impact our operations and reputation, reduce student and prospective student confidence in our educational institution, adversely affect our compliance with applicable regulations and accrediting body standards, and have a material adverse effect on our business and financial condition. Although we evaluate supplier capabilities and maintain insurance for some types of disruptions, there is no guarantee that insurance proceeds would be adequate or available to compensate us for damages sustained.

A significant portion of our employees work remotely, as do employees of a number of our third-party service vendors. These remote work environments may exacerbate certain risks to our business, including increasing the stress on, and our vulnerability to disruptions of, our technological infrastructure and systems and the risks of phishing and other cybersecurity attacks, unauthorized dissemination of confidential information and social engineering attempts. If a natural disaster, power outage, connectivity issue or other event occurs that impacts the ability of employees to work remotely, it may be difficult or, in certain cases, impossible for us to continue our business for a period of time, which could materially harm our growth prospects, results of operations, financial condition and reputation. Our collection, use, retention, and processing of personal information makes us a target for security incidents, increasing the risks of personal data breaches, which can impact our business and result in reporting, notice and regulatory obligations.

A cyberattack, data breach, or other security incident suffered by us, our third-party vendors, our accreditors, or our regulators, or a disruption or failure of our IT systems or software, has in the past, and could in the future, expose us to liability and could adversely affect our financial condition and operating results.

We routinely collect, process, use, and store sensitive data and certain personal information from our students and employees. We also utilize third-party vendors and provide information about our students and employees to our accreditors and regulators to satisfy legal and regulatory requirements and use electronic payment methods to process and store some of this information, including credit card information. Our business relies on IT networks and systems to store this data, process financial and personal information, manage a variety of business processes, and comply with regulatory, legal, and tax requirements. Additionally, we maintain other confidential, proprietary, or otherwise sensitive information relating to our business.

The IT networks and systems owned, operated, controlled, or used by us, our third-party vendors, or other external agencies may be vulnerable to damage, disruptions, shutdowns, software or hardware vulnerabilities (e.g., “zero-day” vulnerabilities), attacks by cyber threat actors (e.g., hackers, phishers, or other digital bad actors), security incidents, failures during the process of upgrading or replacing software or databases or components thereof, power outages, natural disasters, hardware or telecommunication failures, user errors or malfeasance, and other real or perceived cyberattacks or catastrophic events, all of which may not be prevented by our efforts to secure our networks and systems. Security incidents can also occur because of non-technical issues, including intentional or inadvertent actions by our employees, our third-party vendors, external agencies or their personnel, or other parties. Security incidents are becoming increasingly prevalent and severe, as well as increasingly difficult to detect. Any of these incidents could lead to interruptions or shutdowns of our platforms, disruptions in our ability to process service requests and record or analyze the use of our services, the loss or corruption of data or unauthorized access to, or acquisition of, personal or other sensitive information. We maintain policies, practices, operational safeguards, measures and controls aimed at reducing our cyber risk, protecting, and recovering our data and ensuring business continuity, which include reasonable efforts aiming to ensure that our third-party vendors maintain reasonable security, including encryption and authentication technology, and will notify us promptly if a security incident occurs. However, none of these security measures can provide absolute security. Advances in computer capabilities, increasingly sophisticated tools and methods used by threat actors, new discoveries in the field of cryptography, or other developments may result in our failure or inability, or the failure or inability of our vendors or external agencies, to adequately protect personal or other sensitive information, and there can be no assurance that we, our vendors, or external agencies will not suffer a cyberattack, that hackers or other unauthorized parties will not gain access to or exfiltrate personal information or other sensitive data or that any such data compromise or unauthorized access will be discovered in a timely fashion.

Like many businesses, we, our third-party vendors, and external agencies have in the past, including the Oracle E-Business Suite (“Oracle EBS”) cybersecurity incident detected in November 2025 (see Note 15. Commitments and Contingenciesfor additional information), and will in the future continue to be subject to cyberattacks, cybersecurity threats, and attempts to compromise and penetrate our data security and systems and disrupt our services. Regular patching of each of our respective computer systems and frequent updates to our virus detection and prevention software with the latest virus and malware signatures may not catch newly introduced malware, ransomware, viruses, or “zero-day” vulnerabilities prior to infecting the computer systems or networks that we rely on. Future cyberattacks against us, our third-party vendors, or external agencies could lead to operational disruptions that could have an adverse effect on our ability to provide services to students and on our financial condition and results of operations. Any general decline in internet use for any reason, including security or privacy concerns, increased cost of internet service, or changes in government regulation, could result in less demand for online educational services, which could have a material impact on our enrollment, revenue, and results of operations.

Failure of our systems to operate effectively or a compromise in the system security of us, our third-party vendors, or our external agencies that results in unauthorized persons or entities obtaining personal or other sensitive information could materially and adversely affect our reputation, enrollment, revenue, financial condition, and results of operations. Actual or anticipated cyberattacks may cause us to incur costs, including costs to deploy additional personnel and protection technologies, train employees, pay higher insurance premiums, and engage third-party specialists for additional services. Breaches in our data security or that of our third-party vendors, or external agencies could expose us to various risks, including data loss, inappropriate confidential or proprietary information disclosure, potential claims, investigations, regulatory proceedings, or litigation penalties. In addition, we may incur substantial costs in connection with remediating and otherwise responding to any data security incident, including potential liability for stolen client, student, or employee data, repairing system damage, or providing credit monitoring or other benefits to clients, students, or employees affected by the incident. Additionally, prospects may become unwilling to provide us the information necessary to enroll if we, our third-party service providers, or external agencies experience security incidents that result in a performance decline in necessary services, availability problems, or the loss, corruption of, unauthorized access to, or disclosure of personal data or confidential information, which could harm our reputation and market position relative to competitors. Existing students may also decrease their use of our services or cease using our services altogether. The impact of security threats, incidents, and other disruptions are difficult to predict. Our insurance coverage for such security threats, incidents, and other disruptions may not be adequate to cover all related costs, and we may not otherwise be fully indemnified for such costs, which could impact the cost or availability of insurance coverage, or could result in denied coverage for future claims. Any of these results could materially harm our reputation, business, and financial condition.

Personal information that we collect may be vulnerable to breach, theft, or loss, which could adversely affect our retention, enrollment, and reputation.

We maintain information that is confidential, proprietary, personal (such as student information), or otherwise sensitive in nature on our network systems and the network systems of our third-party providers. Since this information can be accessed globally, it is vulnerable to inadvertent access or display and unauthorized access or other action by employees or cyber threat actors, including theft or misuse, ransomware, malware, and other computer viruses, and attacks of this nature have become more prevalent and sophisticated. Due to the sophistication of cyber threat actors, unauthorized access and action, including, but not limited to, ransomware, malware, or viruses, may evade the intrusion detection and prevention measures of us or our third-party providers and external agencies without alerting us to the breach or loss for some period or ever. A threat actor that circumvents security measures could misappropriate confidential or proprietary information or personal information about our students or employees, cause interruptions or malfunctions in our operations, or commit fraud. The Safeguards Rule under the GLBA passed by the FTC updated data security requirements for financial institutions, including all Title IV institutions, and the Department of Education has required auditors to verify Safeguards Rule compliance. Failure to comply with the applicable GLBA requirements may result in FTC enforcement and potentially include the imposition of restrictions on operations, penalties, monitoring, and oversight, which could materially impact our financial condition and results of operations. In addition to being subject to privacy and information security laws and regulations in the U.S. because our services can be accessed globally, we may also be subject to privacy and information security laws in countries outside the U.S. from which students access our services, which laws may constrain the way we market and provide our services. Any breach of student or employee privacy or errors in storing, using, or transmitting personal information could violate privacy laws and regulations resulting in fines or other penalties. The adoption of new or modified state or federal data or cybersecurity legislation could increase our costs and require changes in our operating procedures or systems.

Increased use of AI may present operational, reputational, legal, regulatory, and competitive risks and could result in additional costs, each of which could materially and adversely affect our business, financial condition, and results of operations.

We are investing in the use of AI across our business, with plans to increase our use of systems and tools that incorporate AI-based technologies for students, employees, faculty, and staff. We are implementing AI governance structures, policies, and safety controls to promote security and responsible use, but these measures may not fully mitigate the risks associated with rapid adoption of AI. As an emerging technology, the use of AI presents the following inherent risks: (i) other post-secondary institutions may integrate AI more efficiently as a means to facilitate business growth, reduce operating expenses, and improve the student experience, which may impact our retention and enrollments; (ii) we may be unable to implement AI technologies in a cost-effective manner or in a manner that appeals or is satisfactory to current or prospective students; (iii) AI may hallucinate or be error-prone, demonstrate biases or discriminatory practices and responses, and its use may result in other perceived or actual legal, compliance, privacy, security, and ethical risks; (iv) due to evolving regulatory conditions and related compliance obligations and otherwise, we may be unable to develop or maintain effective policies and provide adequate training regarding proper use of AI, which could lead to misuse by employees, faculty, and students; (v) AI use could result in increased plagiarism, cheating, and other academic integrity issues; (vi) AI use may make us more susceptible to cybersecurity incidents, including those affecting personal or confidential information, which could be more complicated to discover due to the nature of AI; (vii) compliance with new or changing AI-related laws, regulations, and industry standards may impose significant operational costs or limit our ability to develop, deploy, or use AI; (viii) external communication regarding AI-related initiatives could subject us to the risk of allegations of inaccurate or misleading statements regarding our ability to avail ourselves of the potential benefits of AI; and (ix) any disruption or failure of our AI systems, tools, or supporting infrastructure could adversely impact our operations. Any of these risks could result in additional costs, subject us to regulatory action or increased regulatory scrutiny, litigation, reputational harm, or other liability, and could materially and adversely affect our reputation, business, financial condition, and results of operations.

We rely on third-party vendors whose service may be of lower quality than ours, whose responsiveness may be less timely than ours, and whose compliance practices may increase our operational and compliance risk.

We rely on third-party vendors to provide technology-related services to our students, including for student software systems and services related to the Title IV and financial aid program administration. If the quality and timeliness of any of these services fails to meet our expectations or those of our students, our retention and new enrollment may be negatively affected. Additionally, failure of such vendors to comply with applicable regulations could result in fines, restrictions on our operations, or our loss of eligibility to participate in Title IV programs, which could have a material adverse effect on our retention, enrollment, revenue, and results of operations. If we determine that we need to replace a vendor or a vendor discontinues providing its services to us, we may not be able to find a suitable alternative internally or externally in a timely, cost-efficient, or effective manner, or at all, and we could lose our ability to comply with collection, lending, and Title IV requirements, which could result in fines, restrictions and have a material adverse effect on our enrollment, revenue, and results of operations.

We may incur liability for the unauthorized duplication, distribution, or other use of online materials.

While we have policies to prevent the unauthorized duplication, distribution, or other use of online materials, we cannot guarantee that our employees, faculty, or students comply with such policies by not streaming, file sharing, downloading, or otherwise using of third-party content in an unauthorized manner using our computer networks or posting third-party content in class discussion boards or in other venues, including social networks. The laws governing obligations about third-party materials are often fact-specific and must be evaluated on a case-by-case basis, which makes it challenging to adopt, implement, or apply a single approach with our policies covering these practices. As a result, we could incur liability to third parties for the unauthorized duplication, distribution or other use of these materials. Any such claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether the claims have merit. Insurance policies may not adequately cover potential claims of this type, and we may be required to pay monetary damages or alter or cease our use of such material, which may include changing or removing content from our courses, which could have a material adverse effect on our business and financial condition.

The occurrence of natural or man-made catastrophes could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Natural events, acts of God, epidemics, pandemics or other public health emergencies, terrorist attacks and other acts of violence, cyber-terrorism, or other catastrophes could result in significant worker absenteeism, increased student attrition rates, voluntary or mandatory closure of facilities, our inability to meet dynamic employee health and safety requirements, and other disruptions to our business. In addition, these events could adversely affect global economies, market conditions, and business operations across industries worldwide, including higher education. Any of these events, their consequences, or the costs related to mitigation or remediation could have a material adverse effect on our enrollment, business, financial condition, and results of operations.

We may have unanticipated tax liabilities that could adversely impact our results of operations and financial condition.

We are subject to multiple types of taxes in the United States, and the associated laws are complex and subject to different interpretations. The determination of our provision for income taxes and other tax accruals involves various judgments, and therefore the ultimate tax determination is subject to uncertainty. Our future effective tax rates could be subject to volatility or be adversely affected by several factors, including changes in the valuation of our deferred taxes, changes in tax laws or regulations, and revised interpretations of existing laws or accounting principles. Such changes may adversely affect our future reported financial results, may impact the way in which we conduct our business, or may increase the risk of audit by the Internal Revenue Service (“IRS”) or other tax authorities.

Our U.S. federal income tax return for fiscal year 2023 is currently under review by the Internal Revenue Service, and the scope of the review includes our worthless stock deduction claimed in fiscal year 2019 that generated a net operating loss, which was partially carried forward and utilized in fiscal year 2023. If the deduction were disallowed in whole or in part, we could be required to record additional income tax expense and related liabilities, which could be material. In addition, our U.S. federal income tax returns for fiscal years 2024 and 2025 are currently open for review and tax years as early as fiscal year 2022 remain subject to examination by state or local tax authorities. Although we believe our tax positions are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from our historical income tax provisions and accruals.

The acquisition, integration, and growth of acquired businesses may present challenges that could harm our business.

Our future success depends, in part, on our ability to successfully integrate into our operations any institutions or businesses we have acquired, or may acquire in the future, into our operations. The successful integration and profitable operation of acquired businesses, including the realization of anticipated cost savings and additional revenue opportunities, can present challenges, and the failure to overcome these challenges can have an adverse effect on our business, financial condition, cash flows and results of operations. Such challenges, while ultimately dependent on the particular acquisition at hand, may include, among other things, the inability to maintain uniform standards, controls, policies and procedures; the acquired business not performing as expected; distraction of management’s attention from normal business operations during the integration process; the inability to attract and/or retain key management personnel to operate the acquired entity; the inability to obtain, or delays in obtaining, regulatory or other approvals necessary to operate the business, including approvals from the Department of Education, the HLC, state education agencies and other accrediting commissions; the risk that disruptions from the integration will harm our or the acquired entity’s businesses; potential adverse reactions or changes to business relationships resulting from an acquisition; the inability to correctly estimate the size of a target market or accurately assess market dynamics; expenses associated with the integration efforts; and our assumption of unexpected risks, liabilities and obligations of the acquired business, including issues not discovered in the due diligence process.

An acquisition related to an institution or other educational business may require various regulatory approvals and, in the case of a Title IV eligible institution, may require growth restrictions, reporting obligations and temporary conditions on operations that limit changes to the institution after its acquisition. If we are unable to obtain such approvals, or obtain them on unfavorable terms, our ability to consummate a future transaction may be impaired or we may be unable to operate the acquired entity in a manner that is favorable to us. If we fail to properly evaluate an acquisition, we may be required to incur costs in excess of what we anticipated, and we may not achieve the anticipated benefits of such acquisition.

Our stock price may fluctuate significantly.

The market price of our common stock could vary significantly because of several factors, some of which are beyond our control, including, but not limited to: (i) our operating and financial performance and prospects; (ii) quarterly variation in our financial or operational growth indicators, such as earnings per share, net income, net income attributable to Phoenix Education Partners, Inc., net income margin, net revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income attributable to Phoenix Education Partners, Inc., and Average Total Degreed Enrollment; (iii) public reaction to our press releases, our other public announcements, and our SEC filings; (iv) results of operations that vary from those of our competitors or other strategic actions by our competitors; (v) changes in operating performance and market valuations of other companies; (vi) announcements related to litigation and governmental inquiries or investigations, and reputational harm related thereto; (vii) changes in the political, legislative, regulatory, and public policy outlook or associated enactments adverse to the University or the eligibility of proprietary schools to participate in federal student aid programs; (viii) failure to meet revenue or earnings estimates made by research analysts or other investors; (ix) changes in revenue, earnings estimates, or equity research analyst recommendations or withdrawal of research coverage; (x) press or investment community speculation; (xi) sales of our common stock by us or our stockholders, or the perception that such sales may occur; (xii) changes in accounting principles, policies, guidance, interpretations, or standards; (xiii) additions or departures of key management personnel; (xiv) actions by our stockholders; (xv) general economic and market conditions or trends in our industry or the economy as a whole; (xvi) domestic and international economic, legal and regulatory factors unrelated to our performance; (xvii) material weakness in our internal control over financial reporting; and (xviii) realization of any risks described herein or other risks that materialize in the future. In addition, market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance, and we could potentially experience greater price volatility due to our public float and trading volume. Securities class action litigation has often been instituted against companies following periods of market and stock price volatility and such litigation, if instituted against us, could result in substantial costs, divert our management’s attention and resources, and harm our business, financial condition, and results of operations.

As a “controlled company” under NYSE rules and an “emerging growth company” under SEC rules and regulations, we rely on exemptions from certain corporate governance and disclosure requirements, and our stockholders will not have the same protections as stockholders of companies subject to such requirements.

As of October 27, 2026, the Apollo Stockholder beneficially owns approximately 68% of the voting power of our outstanding common stock and, as a result, we are a controlled company within the meaning of NYSE corporate governance standards and the Apollo Stockholder currently has effective control over the outcome of votes on all matters requiring approval by our stockholders, including the election of directors, the amendment of our governing documents and the entry into significant corporate transactions. Under NYSE rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a controlled company and may elect not to comply with certain stock exchange corporate governance requirements, including: (i) the board of directors consist of a majority of “independent directors” as defined by the NYSE; (ii) the compensation and nominating and corporate governance committees consist entirely of independent directors; and (iii) there be an annual performance evaluation of the compensation and nominating and corporate governance committees. We intend to utilize some of these exemptions while we remain a controlled company. As a result, our Board of Directors (the “Board”) may not consist of a majority of independent directors and our compensation and nominating and corporate governance committee responsibilities may not be determined solely by independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to the NYSE corporate governance requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and rely on exemptions from certain disclosure requirements applicable to other public companies, including, but not limited to: (i) auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act (“SOX”), (ii) exclusion of critical audit matters in the auditor’s report, (iii) presentation of two years of audited financial statements and related“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in periodic reports and registration statements (including this Annual Report on Form 10-K), (iv) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (v) exemptions from the requirements of holding a nonbinding stockholder advisory vote on executive compensation (e.g., “say-on-pay” and “say-on-frequency”) and any golden parachute payments not previously approved. In addition, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. While we have elected to avail ourselves of this exemption, we are permitted and may elect to early adopt certain new or revised accounting standards for which the respective standard allows for early adoption. For as long as we take advantage of the reduced reporting obligations, the information that we provide stockholders may be different from information provided by other similarly situated public companies. We cannot predict if investors will find our common stock less attractive as a result of our relying on these exemptions. If they do, there may be a less active trading market for our common stock, our stock price may decline or become more volatile, and it may be difficult for us to raise additional capital if and when we need it.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements or prevent fraud could be impaired.

We are subject to the reporting requirements of the Exchange Act, SOX, and the NYSE, including that we maintain effective disclosure controls and procedures and internal control over financial reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environment, and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our results of operations.

Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act, which at the latest would be August 31, 2031. At such time, our internal control over financial reporting may be insufficiently documented, designed or operating, which may cause our independent registered public accounting firm to issue a report that is adverse. Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation, which could have a negative effect on the trading price of our stock.

Furthermore, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our consolidated financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the NYSE, regulatory investigations, civil or criminal sanctions and litigation, any of which would have a material adverse effect on our business, results of operations and financial condition.

The interests of our controlling stockholder, Apollo, may conflict with our interests and the interests of other stockholders.

As a controlled company, Apollo has the ability to control matters requiring stockholder approval, including the election of directors, amendments to our certificate of incorporation, amendments to our equity and employee benefit plans, and major corporate transactions, such as mergers, tender offers, the issuance of additional equity or debt, and the sale of all or substantially all of our assets. The interests of Apollo and its affiliates could differ from our interests or the interests of our other stockholders. Further, the concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock. Apollo and its affiliates may also have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their investment, even though such transactions might involve risks to you. Additionally, Apollo and its affiliates are in the business of making investments in companies and may, from time to time, acquire and hold interest in or provide advice to businesses that compete directly or indirectly with us, or are suppliers or customers of ours. Apollo and its affiliates may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. So long as the Apollo Stockholder continues to directly or indirectly beneficially own a significant amount of our equity, even if such amount is less than 50%, the Apollo Stockholder will continue to be able to substantially influence or effectively control our decisions, including our ability to enter corporate transactions.

The Apollo Stockholder also has a right to nominate directors comprising a percentage of our Board in accordance with its ownership of our outstanding common stock. While these directors have a fiduciary duty to the Company, they also may have similar fiduciary duties to Apollo. As a result, these directors may face real or apparent conflicts of interest with respect to matters affecting both us and Apollo, whose interests may be adverse to ours in some circumstances.

As a holding company that does not conduct business operations, we are dependent upon cash dividends, distributions, and other transfers from our subsidiaries, including the University, to meet our obligations. Agreements governing future indebtedness, for the Company or our subsidiaries, or Delaware law may impose restrictions on our subsidiaries’ ability to pay dividends or other distributions to us. Since each of our subsidiaries is a distinct legal entity, legal and contractual restrictions may limit our ability to obtain cash from them. We may also be limited in our ability to cause future subsidiaries or joint ventures to distribute earnings to us. The deterioration of earnings or other available assets of our subsidiaries for any reason could impair their ability to pay dividends or other distributions to us, which could materially impact our business or financial condition. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Item 1A, “Risk Factors—We cannot guarantee the payment of dividends on our common stock, or the timing or amount of any such dividends, and in the event we do not pay cash dividends on our common stock in the future, stockholders may not receive any return on investment.”

Future sales of our common stock in the public market, or the perception in the public market that such sales may occur, could reduce our stock price.

As of October 27, 2026, we had 36,676,644 shares of common stock outstanding and 1,263,058 shares of common stock potentially issuable in respect of the Company’s outstanding share-based awards and 3,408,253 shares of common stock potentially issuable in respect of the University’s outstanding share-based awards. In addition, the Apollo Stockholder, the Vistria Stockholder and certain of our existing stockholders have certain rights to require us to register the sale of common stock held by them including in connection with underwritten offerings. We have also filed registration statements for common stock that we may issue under our Phoenix Education Partners, Inc. 2025 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), our Phoenix Education Partners, Inc. Employee Stock Purchase Plan (the “ESPP”), and the University of Phoenix, Inc. Management Equity Plan (the “UOPX Plan”), which permits shares to be freely sold in the public market upon issuance. Sales of significant amounts of stock in the public market by employees or former employees, the exercise by existing stockholders of their registration rights, or the perception that such sales may occur could adversely affect prevailing market prices of our common stock or make it more difficult to sell shares of common stock.

The exercise of outstanding stock options may result in additional dilution to our stockholders or require us to use available cash if we choose to repurchase such options, and we cannot predict the timing, extent, or impact of future option exercises.

As of August 31, 2026, there were outstanding stock options that, if settled in shares, could result in the issuance of approximately 3.4 million shares of our common stock. In connection with the expiration of the IPO lock-up periods on April 6, 2026 for our pre-IPO holders, other than our Section 16 officers, and on October 8, 2026 for our Section 16 officers, shares of our common stock issuable upon the exercise of stock options by such holders became eligible for sale. Upon exercise of such stock options, we may, at our election, either repurchase such options for cash, in which case no shares of our common stock would be issued, or issue shares of our common stock on a one-for-one basis in exchange for the shares of University common stock otherwise issuable upon exercise. Option exercises may also be settled through net share settlement, cash exercises, or broker-assisted sell-to-cover transactions. If we elect to settle option exercises through the issuance of shares, such issuances could result in dilution to our existing stockholders and could cause the trading price of our common stock to decline, particularly if a significant number of options are exercised and the resulting shares are sold in the public market in a short period of time. If we elect to repurchase options for cash, such repurchases could require the use of a significant amount of our available cash, which could reduce cash available for dividends, share repurchases, capital expenditures, acquisitions, and other general corporate purposes. We cannot reasonably estimate the extent or timing of future option exercises, the timing or extent of any related sales of shares, or the settlement methods that may be utilized and, accordingly, the potential impact of future option exercises and related sales of shares on our outstanding share count, liquidity and stock price remains uncertain.

We cannot guarantee the payment of dividends on our common stock, or the timing or amount of any such dividends, and in the event we do not pay cash dividends on our common stock in the future, stockholders may not receive any return on investment.

While we intend to continue paying quarterly cash dividends to our common stockholders, the declaration and payment of cash dividends in the future, if any, will be at the discretion of our Board and will depend upon a variety of factors, such as earnings, cash flows, capital requirements, indebtedness, receipt of cash dividends from our operating subsidiaries, our financial condition, other factors deemed relevant by the Board, and restrictions imposed by applicable law, our senior secured revolving credit facility (the “Revolving Facility”), or other debt agreements that we or our subsidiaries may enter into in the future. As a holding company, our operations are conducted through our operating subsidiaries, so in the event that we pay a dividend, we anticipate receiving distributions from our operating subsidiaries in an amount sufficient to cover such dividend. Further, the occurrence of any of the risks described herein could adversely affect our ability to pay dividends in the future. We cannot guarantee that we will pay our anticipated dividend in the same amount or frequency, or at all, in the future, and if we do not pay future dividends, our stockholders may not receive any return on their investment in our common stock. See Item 5, “Dividend Policy.”

Our organizational documents may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium on their shares.

Provisions of our certificate of incorporation and bylaws may make it more difficult for, or prevent a third party from, acquiring control of us without the approval of our Board. These provisions include:

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providing that our Board will be divided into three classes, with each class of directors serving staggered three-year terms;

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providing for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if less than 50.1% of the voting power of our outstanding common stock is beneficially owned by Apollo and its affiliates, including the Apollo Stockholder;

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empowering only the Board to fill any vacancy on our Board (other than in respect of an Apollo Board Nominee (as defined in the Stockholders’ Agreement (as defined below)) or a Vistria Board Nominee (as defined in the Stockholders’ Agreement (as defined below))), whether such vacancy occurs as a result of an increase in the number of directors or otherwise;

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prohibiting stockholders from acting by written consent if less than 50.1% of the voting power of our outstanding common stock is beneficially owned by Apollo and its affiliates, including the Apollo Stockholder;

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to the extent permitted by law, prohibiting stockholders from calling a special meeting of stockholders if less than 50.1% of the voting power of our outstanding common stock is beneficially owned by Apollo and its affiliates, including the Apollo Stockholder; and

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establishing advance notice requirements for nominations for election to our board of directors (other than in respect of an Apollo Board Nominee or a Vistria Board Nominee) or for proposing matters that can be acted on by stockholders at stockholder meetings.

Additionally, our certificate of incorporation provides that we are not governed by Section 203 of the Delaware General Corporation Law (the “DGCL”), which, in the absence of such provisions, would have imposed additional requirements regarding mergers and other business combinations. However, our certificate of incorporation includes a provision that restricts us from engaging in any business combination with an interested stockholder for three years following the date that person becomes an interested stockholder, but such restrictions shall not apply to any business combination between Apollo and any affiliate thereof, Vistria and any affiliate thereof or their direct and indirect transferees, on the one hand, and us, on the other, or certain other situations.

Furthermore, any issuance by us of preferred stock could delay or prevent a change in control of us. Our Board has the authority to cause us to issue, without any further vote or action by the stockholders, shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges, and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices, and liquidation preferences of such series. The issuance of shares of our preferred stock may have the effect of delaying, deferring, or preventing a change in control without further action by the stockholders, even where stockholders are offered a premium for their shares.

In addition, as long as the Apollo Stockholder beneficially owns a majority of the voting power of our outstanding common stock, the Apollo Stockholder will be able to control all matters requiring stockholder approval, including the election of directors, amendment of our certificate of incorporation and certain corporate transactions. Our Stockholders Agreement, by and among the Company, TVG-I-E-AEG Holdings, LP and AP VIII Socrates Holdings, L.P. (the “Stockholders’ Agreement”), requires the approval of Apollo and its affiliates, including the Apollo Stockholder, for certain important matters, including certain acquisitions and dispositions outside the ordinary course of business, certain issuances of equity securities and incurrence of debt, and mergers, consolidations and transfers of all or substantially all of our assets, until the first time that Apollo and its affiliates, including the Apollo Stockholder, cease to beneficially own at least 33% of our common stock.

Together, the provisions in our certificate of incorporation, bylaws and the Stockholders Agreement and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock. Furthermore, the existence of the foregoing provisions, as well as the significant common stock beneficially owned by the Apollo Stockholder and its right to nominate a specified number of directors in certain circumstances, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum (or if such court does not have jurisdiction, another state or the federal court (as appropriate) located within the State of Delaware) for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders; (iii) any action asserting a claim arising pursuant to any provision of the DGCL or of our certificate of incorporation or our bylaws; or (iv) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine. However, the exclusive forum provisions do not apply to suits brought to enforce any liability or duty created by the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, or to any claim for which the federal district courts of the United States have exclusive jurisdiction.

Our certificate of incorporation further provides that the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any action, suit or proceeding asserting a cause of action arising under the Securities Act. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or the rules.

We recognize that the forum selection clause in our certificate of incorporation may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Additionally, the forum selection clause in our certificate of incorporation may limit our stockholders’ ability to bring a claim in a forum that they find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders. The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and, to the fullest extent permitted by law, to have consented to the provisions of our certificate of incorporation described above.

The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. However, the enforceability of similar exclusive forum provisions (including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provisions in our certificate of incorporation. Additionally, our stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. If a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations.