Company: LGCY
Filing Date: 2025-02-13
Form Type: 10-Q
Source: 0001493152-25-006418
Chunk: 173

Company: Legacy Education Inc.
Filing Date: 2025-02-13
Form: 10-Q
Item: Part I, Item 2
Chunk 173
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 the future. Any such actions by legislative or regulatory bodies that affect our programs and operations
could have a material adverse effect on us and our student population and our institutions, including the need to cease offering a number
of programs.

90/10
Rule

Under
the HEA, a proprietary institution that derives more than 90% of its total revenue from the Title IV Programs or, for fiscal years beginning
on or after January 1, 2023, from all federal educational assistance funds, for two consecutive fiscal years becomes immediately ineligible
to participate in the Title IV Programs and may not reapply for eligibility until the end of at least two fiscal years (“90/10
Rule”). An institution whose receipts of applicable funds exceeds 90% of revenue for a single fiscal year will be placed on provisional
certification, be required to notify ED and its students of the possibility of a loss of Title IV Program eligibility, and may be subject
to other enforcement measures, including a requirement to submit a letter of credit. See Annual Report at Form 10-K at “90/10.”
We have calculated the 90/10 Rule percentages for the 2024 fiscal year as follows for HDMC, CCC and Integrity: HDMC 87.55%; CCC 79.51%;
and Integrity 84.19%, respectively.

Key
Financial Metrics

Revenue

Tuition
revenue is primarily derived from postsecondary education services provided to students. Generally, tuition and other fees are paid upfront
and recorded in contract liabilities in advance of the date when education services are provided to the student. A tuition receivable
is recorded for the portion of tuition not paid in advance. In some instances, installment billing is available to students which reduces
the amount of cash consideration received in advance of performing the service. The contractual terms and conditions associated with
installment billing indicate that the student is liable for the total contract price, therefore mitigating the Company’s exposure
to losses associated with nonpayment. Tuition revenue is recognized ratably over the instruction period. The Company generally uses the
time elapsed method, an input measure, as it best depicts the simultaneous consumption and delivery of tuition services. Revenue associated
with distinct course materials is recognized at the point of time when control transfers to the student, generally when the materials
are delivered to the student. Revenue associated with lab services is recognized over the period of time when the service is performed.

Enrollments

Enrollments
are a function of the number of