PERDOCEO EDUCATION Corp: Form 10-Q for the period ended Mar 31, 2026

The discussion below and other items in this Quarterly Report on Form 10-Q contain “forward-looking statements,” as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “plan,” “may,” “should,” "will,” “continue to,” “focused on” and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors, including, but not limited to, those matters discussed in Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025 that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. Except as expressly required by the federal securities laws, we undertake no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances or for any other reason. Among the factors that could cause actual results to differ materially from those expressed in, or implied by, our forward-looking statements are the following:

• declines in enrollment or interest in our programs or our ability to attract or connect with prospective students;
• our continued compliance with and eligibility to participate in Title IV Programs under the Higher Education Act of 1965, as amended, and the regulations thereunder (including the new 90-10, earnings premium, financial responsibility and administrative capability standards prescribed by the U.S. Department of Education (the “Department”)), as well as applicable accreditation standards and state regulatory requirements;
• the impact of various versions of “borrower defense to repayment” regulations;
• the final outcome of various legal challenges to the Department's loan discharge and forgiveness efforts;
• rulemaking or changing interpretations of existing regulations, guidance or historical practices by the Department or any state or accreditor and increased focus by Congress and governmental agencies on, or increased negative publicity about, for-profit education institutions;
• the impact of any federal budget reconciliations or other legislative activities on the availability of adequate levels of federal student aid or the conditions associated with participating in such aid programs;
• the success of our initiatives to improve student experiences, retention and academic outcomes;
• our continued eligibility to participate in educational assistance programs for key employers, veterans and other military personnel;
• our ability to pay dividends on our common stock and execute our stock repurchase program;
• increased competition;
• the impact of management changes; and
• changes in the overall U.S. economy.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The MD&A is intended to help investors understand the results of operations, financial condition and present business environment. The MD&A is organized as follows:

• Overview
• Consolidated Results of Operations
• Segment Results of Operations
• Summary of Critical Accounting Policies and Estimates
• Liquidity, Financial Position and Capital Resources

OVERVIEW

Perdoceo’s accredited academic institutions offer a quality postsecondary education to a diverse student population, with fully online, campus-based and hybrid learning programs. The Company’s academic institutions – Colorado Technical University (“CTU”), the American InterContinental University System (“AIUS” or “AIU System”) and University of St. Augustine for Health Sciences ("USAHS") – provide degree programs from the associate through doctoral level as well as non-degree seeking and professional development programs. Our academic institutions offer students industry-relevant and career-focused academic programs that are designed to meet the educational needs of today’s busy adults. CTU and AIUS continue to show innovation in higher education, advancing personalized learning technologies like their intellipath® learning platform and using data analytics and technology to serve and educate students while enhancing overall learning and academic experiences. USAHS prepares medical professionals to provide quality medical care to communities across the country primarily through its graduate health sciences degree offerings in physical therapy, occupational therapy, speech language therapy and nursing, as well as continuing education programs. Perdoceo's academic institutions are committed to providing quality education that closes the gap between learners who seek to advance their careers and employers and communities needing a qualified workforce.

Our reporting segments are determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“*ASC”)*Topic 280 – Segment Reporting and are based upon how the Company analyzes performance and makes decisions. Each segment represents a postsecondary education provider that offers a variety of academic programs. We organize our business across three reporting segments: CTU, AIUS and USAHS.

Regulatory Environment and Political Uncertainty

As indicated in “Scrutiny of the For-Profit Postsecondary Education Sector” section within Item 1, "Business" in our Annual Report on Form 10-K for the year ended December 31, 2025, the for-profit education industry is scrutinized by various policymakers, regulatory agencies and interest groups. Congressional hearings and roundtable discussions were previously held regarding certain aspects of the education industry, including issues surrounding student debt, as well as publicly reported student outcomes that may be used as part of an institution’s recruiting and admissions practices, and reports were issued that are highly critical of for-profit colleges and universities. Many of the most highly criticized institutions have been closed now for several years.

Recently, in 2025, as part of a broad reconciliation bill, Congress adopted changes to the Title IV program that modified student loan repayment plans, reduced federal student loan availability for graduate programs, adopted a new universal program level earnings premium requirement for Title IV eligibility and modified the borrower defense to repayment framework, among other changes. Additionally, the current Administration has conducted numerous negotiated rulemaking sessions to adopt regulations associated with these changes and also proposes to make changes to the requirements for accreditors and accreditation. We expect to see continuous fluctuations in the types and focus of regulatory requirements imposed on our institutions and programs from state and federal regulators and our institutional and programmatic accreditors.

We encourage you to review Item 1, “Business,” and Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025 to learn more about our highly regulated industry and related risks and uncertainties.

Note Regarding Non-GAAP measures

We believe it is useful to present non-GAAP financial measures which exclude certain significant and non-cash items as a means to understand the performance of our core business. As a general matter, we use non-GAAP financial measures in conjunction with results presented in accordance with GAAP to help analyze the performance of our core business, assist with preparing the annual operating plan, and measure performance for some forms of compensation. In addition, we believe that non-GAAP financial information is used by analysts and others in the investment community to analyze our historical results and to provide estimates of future performance.

Adjusted operating income and adjusted earnings per diluted share have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for net income, operating income, earnings per diluted share, or any other performance measure derived in accordance with and reported under GAAP or as an alternative to cash flow from operating activities or as a measure of our liquidity.

Non-GAAP financial measures, when viewed in a reconciliation to respective GAAP financial measures, provide an additional way of viewing the Company's results of operations and the factors and trends affecting the Company's business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the respective financial results presented in accordance with GAAP.

2026 First Quarter Overview

During the quarter ended March 31, 2026 ("current quarter"), our academic institutions remained focused on enhancing student experiences and academic outcomes while aligning their academic programs with the current demands of the workforce. We continued to make purposeful investments in marketing and admissions to efficiently serve prospective student interest in our academic institutions.

Total student enrollments increased 1.9% at CTU as compared to the prior year quarter end, supported by strong levels of student retention and engagement, growth within the corporate student program and consistent levels of prospective student interest. Total student enrollments increased 3.1% at USAHS for the current quarter end as compared to the prior year quarter end, driven by growth in the nursing and speech language pathology programs and the introduction of new modalities for the occupational therapy program, as well as underlying student retention and engagement trends. Lastly, for AIUS, total student enrollments decreased 2.2% for the current quarter end as compared to the prior year quarter end, driven by a decrease in total student enrollments at Trident University.

Strategic investments in technology continue to improve student experiences across our academic institutions, while enhancing operating effectiveness within our functional areas. Ongoing artificial intelligence efforts focus on our students and classroom learning, as well as enhancing various operating and functional processes. Faculty, where feasible, are utilizing AI in their classrooms with the goal of enabling students to leverage AI both personally and professionally. We are also selectively leveraging generative artificial intelligence to identify and engage with prospective students who, we believe, are more likely to succeed at one of our academic institutions.

Through our corporate student programs, we provide accredited degree opportunities to employees of our partner organizations, supporting their career advancement while helping corporate partners strengthen employee development and retention. We continue to make strategic investments in technology and talent to expand these programs and enhance academic outcomes across our institutions.

We expect full year adjusted operating income to be higher for 2026 as compared to 2025, supported by revenue growth across all our academic institutions, combined with lower operating expenses due to our disciplined investment philosophy.

Financial Highlights

Revenue for the current quarter increased by 4.1% or $8.7 million as compared to the prior year quarter, driven by increased revenue at all three of our academic institutions. CTU’s revenue increased 4.0% or $4.7 million, and USAHS' revenue increased 9.8% or $3.8 million, for the current quarter as compared to the prior year quarter, driven by the increase in total student enrollments at both academic institutions.

Operating income for the current quarter increased by 22.0% to $63.1 million as compared to operating income of $51.7 million in the prior year quarter, driven by increased operating income within all three of our academic institutions. The increase in operating income for the current quarter was a result of revenue growth and continued disciplined management of operating expenses.

The Company believes it is useful to present non-GAAP financial measures, such as adjusted operating income, which exclude certain non-cash items, as a means to better understand the core performance of its operations. (See tables below for a GAAP to non-GAAP reconciliation.) Adjusted operating income was $72.5 million for the current quarter as compared to $63.5 million for the prior year quarter.

Adjusted operating income and adjusted earnings per diluted share for the quarters ended March 31, 2026 and 2025 is presented below (dollars in thousands, unless otherwise noted):

(1) The tax effect of adjustments was calculated by multiplying the pre-tax adjustments with a tax rate of 25%. This tax rate is intended to reflect federal and state taxable jurisdictions as well as the nature of the adjustments.

CONSOLIDATED RESULTS OF OPERATIONS

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the quarters ended March 31, 2026 and 2025 (dollars in thousands):

(1) Educational services and facilities expense includes costs attributable to the educational activities of our campuses, including: salaries and benefits of faculty, academic administrators and student support personnel, costs of educational supplies and other goods and services, including costs of textbooks and laptops, and rents on leased campus and administrative facilities.

(2) General and administrative expense includes operating expenses associated with corporate and campus administration, marketing, admissions, information technology, financial aid, accounting, human resources, legal and compliance. Other expenses within this expense category include costs of advertising and production of marketing materials and bad debt expense.

Revenue

Revenue for the first quarter of 2026 ("current quarter") increased by 4.1% or $8.7 million as compared to the prior year quarter. The increase was supported by underlying student enrollment growth at our academic institutions.

Educational Services and Facilities Expense (dollars in thousands)

The educational services and facilities expense for the current quarter decreased by 3.0% or $1.5 million, compared to the prior year quarter driven by lower academics and student related costs at AIUS, along with reduced occupancy costs as compared to the prior year period.

General and Administrative Expense (dollars in thousands)

The general and administrative expense for the current quarter increased by 1.3% or $1.3 million as compared to the prior year quarter primarily due to higher advertising and marketing and administrative costs, which was only partially offset with reduced bad debt.

Advertising and marketing expense for the current quarter increased by 1.3% or $0.4 million as compared to the prior year quarter. Increased advertising and marketing spending at CTU and AIUS was partially offset by reduced spending at USAHS as compared to the prior year quarter.

Admissions expense for the current quarter remained relatively flat as compared to the prior year quarter. Higher admissions expenses at CTU were fully offset by lower spending at USAHS as compared to the prior year quarter, while expenses at AIUS remained largely unchanged.

The administrative expense for the current quarter increased by 6.3% or $2.7 million as compared to the prior year quarter, driven by increased legal fees.

Bad debt expense incurred by each of our segments during the quarters ended March 31, 2026 and 2025 was as follows (dollars in thousands):

20

Bad debt expense for the current quarter decreased by 24.0% or $1.8 million as compared to the prior year quarter. The decrease in bad debt expense was primarily driven by reductions at both CTU and AIUS.

We regularly evaluate our reserve rates, which includes a quarterly update of our analysis of historical student receivable collectability based on the most recent data available and a review of current known factors which we believe could affect future collectability of our student receivables, such as the number of students that do not complete the financial aid process. We continue to expect quarterly fluctuations in bad debt expense.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased by 20.8% or $2.5 million as compared to the prior year quarter, primarily driven by decreases within USAHS for leased assets.

Operating Income

Operating income for the current quarter increased by 22.0% or $11.4 million as compared to the prior year quarter. The improvement was primarily driven by higher revenue at CTU and USAHS as well as decreased depreciation and amortization expense at USAHS and decreased bad debt expense at CTU and AIUS as compared to the prior year quarter.

Provision for Income Taxes

For the quarter ended March 31, 2026, we recorded a provision for income taxes of $14.2 million or 20.8% as compared to a provision for income taxes of $12.8 million or 22.7% for the prior year quarter. The effective tax rate for the current quarter was benefitted by the tax effect of stock-based compensation and the release of previously recorded tax reserves, which reduced the effective tax rate by 5.6% and 1.2%, respectively. The effective tax rate for the prior year quarter was impacted by the tax effect of stock-based compensation and the release of previously recorded tax reserves, which reduced the effective tax rate by 5.5% and 1.3%, respectively.

For the full year 2026, we expect our effective tax rate to be between 22.5% and 23.5%.

SEGMENT RESULTS OF OPERATIONS

The following tables present unaudited segment results for the reported periods (dollars in thousands):

Total student enrollments represent all students who are active as of the last day of the reporting period. Active students are defined as those students who are considered in attendance by participating in class related activities during the previous two weeks of the most recent academic term. Total student enrollments do not include learners participating in: a) non-degree seeking and professional development programs, and b) degree seeking, non-Title IV, self-paced programs at our universities.

CTU. Current quarter revenue increased by 4.0% or $4.7 million as compared to the prior year quarter. The increase was primarily driven by total student enrollment growth of 1.9% at March 31, 2026 as compared to the prior year quarter. CTU's total student enrollment growth was supported by strong levels of student retention and engagement, growth in the corporate student program and consistent levels of prospective student interest.

Current quarter operating income for CTU increased by 8.1% or $3.8 million as compared to the prior year quarter driven by the increase in revenue discussed above as well as decreased bad debt expense, which partially offset increases within other operating expenses.

AIUS. Current quarter revenue increased slightly by 0.4% or $0.3 million as compared to the prior year quarter. Total student enrollments decreased by 2.2% at March 31, 2026 as compared to March 31, 2025, driven by a decrease in total student enrollments at Trident University.

Current quarter operating income for AIUS increased by 12.0% or $1.3 million as compared to the prior year quarter, primarily driven by decreased bad debt expense as well as reduced academics and student related costs.

USAHS. Current quarter revenue increased by 9.8% or $3.8 million as compared to the prior year quarter. The increase was primarily driven by total student enrollment growth of 3.1% at March 31, 2026 as compared to the prior year quarter.

Current quarter operating income for USAHS increased by $6.6 million as compared to the prior year quarter driven by the increase in revenue discussed above, as well as reduced depreciation and amortization on leased assets as compared to the prior-year quarter.

Corporate and Other. This category includes unallocated costs that are incurred on behalf of the entire company. Total Corporate and Other operating loss for the current quarter increased by 6.2% or $0.4 million as compared to the prior year quarter primarily driven by increased administrative costs for the current quarter.

SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A detailed discussion of the accounting policies and estimates that we believe are most critical to our financial condition and results of operations that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties is included under the caption “Summary of Critical Accounting Policies and Estimates” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025. Note 2 “Summary of Significant Accounting Policies” of our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2025 also includes a discussion of these and other significant accounting policies.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of March 31, 2026, cash, cash equivalents, restricted cash and available-for-sale short-term investments (“cash balances”) totaled $680.0 million. Restricted cash as of March 31, 2026 was $0.8 million and primarily related to escrow balances for Hippo Education and required letters of credit for USAHS. Our cash flows from operating activities have historically been adequate to fulfill our liquidity requirements. We have historically financed our operating activities, organic growth and acquisitions primarily through cash generated from operations and existing cash balances. We expect to continue to generate cash during the remainder of 2026. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, our working capital needs, capital expenditures, lease commitments, share repurchases and quarterly dividends payments through at least the next 12 months primarily with cash generated by operations and existing cash balances.

We maintain a balanced capital allocation strategy that focuses on maintaining a strong balance sheet and adequate liquidity, while (i) investing in organic projects at our universities, in particular technology-related initiatives which are designed to benefit our students, as well as real estate updates, and (ii) evaluating diverse strategies to enhance stockholder value, including acquisitions, quarterly dividend payments and share repurchases. Ultimately, our goal is to deploy resources in a way that drives long term stockholder value while supporting and strengthening the academic value of our institutions.

On January 2, 2026, the Board of Directors of the Company approved a common stock repurchase program, authorizing the Company to repurchase up to $100.0 million of its outstanding common stock on the open market and expires on June 30, 2027. The stock repurchase program may be modified, suspended or discontinued at any time in the Company's discretion without prior notice, and does not commit the Company to repurchase shares of its common stock. The timing of purchases and the number of shares repurchased under the program is determined by the Company’s management and will depend on a variety of factors including stock price, trading volume and other general market and economic conditions, its assessment of alternative uses of capital, regulatory requirements and other factors.

The Board of Directors approved the aforementioned stock repurchase programs believing it advantageous to the Company and its stockholders to repurchase shares of the Company’s common stock from time to time at prices below what the Board of Directors believed to be the intrinsic value of the Company’s common stock.

The discussion above reflects management’s expectations regarding liquidity; however, as a result of the significance of the Title IV Program funds received by our students, we are highly dependent on these funds to operate our business. Any reduction in the level of Title IV funds that our students are eligible to receive or any impact on timing or our ability to receive Title IV Program funds, or any requirement to post a significant letter of credit to the Department, may have a significant impact on our operations and our financial condition. In addition, our financial performance is dependent on the level of student enrollments which could be impacted by external factors. See Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Sources and Uses of Cash

Operating Cash Flows

During the quarters ended March 31, 2026 and 2025, net cash flows provided by operating activities totaled $69.4 million and $65.1 million, respectively. The increase in net cash flows from operating activities for the current quarter was driven by increased operating income.

Our primary source of cash flows from operating activities is tuition collected from our students. Our students derive the ability to pay tuition costs through the use of a variety of funding sources, including, among others, federal loan and grant programs, state grant programs, private loans and grants, institutional payment plans, private and institutional scholarships and cash payments.

For further discussion of Title IV Program funding and other funding sources for our students, see Item 1, “Business - Student Financial Aid and Related Federal Regulation,” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Our primary uses of cash to support our operating activities include, among other things, cash paid and benefits provided to our employees for services, to vendors for products and services, to lessors for rents and operating costs related to leased facilities, to suppliers for textbooks and other institution supplies, and to federal, state and local governments for income and other taxes.

Investing Cash Flows

During the quarter ended March 31, 2026, net cash flows used in investing activities totaled $7.1 million compared to net cash flows provided by investing activities of $1.2 million for the prior year quarter.

Purchases and Sales of Available-for-Sale Investments. Purchases and sales of available-for-sale investments resulted in a net cash outflow of $5.3 million for the current quarter as compared to a net cash inflow of $2.9 million for the prior year quarter.

Capital Expenditures. Capital expenditures were $1.7 million for each of the quarters ended March 31, 2026 and 2025. For the full year 2026, capital expenditures are expected to be approximately 1.5% of revenue.

Financing Cash Flows

During the quarters ended March 31, 2026 and 2025, net cash flows used in financing activities totaled $29.5 million and $44.4 million, respectively. Payments to repurchase shares of our common stock were $8.1 million for the quarter ended March 31, 2026 and $25.2 million for the quarter ended March 31, 2025.

Payments of employee tax associated with stock compensation. Payments of employee tax associated with stock compensation were $10.3 million and $7.5 million for the quarters ended March 31, 2026 and 2025, respectively.

Payments of cash dividends and dividend equivalents. During the quarters ended March 31, 2026 and 2025, the Company made dividend and dividend equivalent payments of $10.3 million and $9.2 million, respectively.

Principal payments for finance leases and failed sale leaseback. During the quarter ended March 31, 2026, the Company made principal payments of $1.3 million for finance leases, and during the quarter ended March 31, 2025, principal payments of $1.7 million were made for finance leases and failed sale-leaseback transactions, both related to USAHS.

Changes in Financial Position

Selected condensed consolidated balance sheet account changes from December 31, 2025 to March 31, 2026 were as follows (dollars in thousands):

Restricted cash: The decrease is driven by the release of a letter of credit related to USAHS with the Department.

Student receivables, net: The increase is driven by timing of student billings for academic terms and respective cash receipts.

Accrued expenses - payroll and related benefits: The decrease is driven by the payment of annual incentive compensation and other benefits during the first quarter.

Accrued expenses - income taxes: The increase primarily relates to amounts owed with respect to estimated payments of federal and state income taxes for 2026.

Deferred revenue: The increase in deferred revenue is driven by timing of academic terms and related student billings.

We are exposed to financial market risks, primarily changes in interest rates. We use various techniques to manage our interest rate risk. We have no derivative financial instruments or derivative commodity instruments, and believe the risk related to cash equivalents and available-for-sale investments is limited due to the adherence to our investment policy, which focuses on capital preservation and liquidity. In addition, we use asset managers who conduct initial and ongoing credit analyses on our investment portfolio and monitor that investments are in compliance with our investment policy. Despite the investment risk mitigation strategies we employ, we may incur investment losses as a result of unusual and unpredictable market developments and may experience reduced investment earnings if the yields on investments deemed to be low risk remain low or decline.

Interest Rate Exposure

Our future investment income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell investments that have declined in market value due to changes in interest rates. At March 31, 2026, a 100 basis point increase or decrease in average interest rates applicable to our investments would not have had a material impact on our future earnings, fair values or cash flows.

Our financial instruments are recorded at their fair values as of March 31, 2026 and December 31, 2025. We believe that the exposure of our consolidated financial position and results of operations and cash flows to adverse changes in interest rates applicable to our investments is not significant.

Evaluation of Disclosure Controls and Procedures

We completed an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q (“Report”) under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the rules and forms provided by the U.S. Securities and Exchange Commission (“SEC”), and (ii)

information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

In addition to the information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, Item 1A “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission on February 19, 2026.