11. Subsequent Events

As is described in Footnote 1, on July 1, 2018, the Company entered into the Master Services Agreement with GCU.   Under the terms of the Master Services Agreement, the Company provides identified technological, counseling, marketing, financial aid processing and other support services to GCU in return for service fees equal to 60% of GCU’s revenue derived from tuition and academic-related fees, ancillary fees related to student housing, food service, athletic ticket sales, and arena, hotel, golf course, and apparel operations. The Master Services Agreement had an initial term of fifteen (15) years running through June 30, 2033, subject to renewal options, although GCU has the right to terminate the MSA at any time after July 1, 2025 for convenience upon payment of a termination fee equal to one-hundred (100%) of the fees paid to the Company in the trailing twelve (12) month period. If GCU chose not to renew the Master Services Agreement after the initial fifteen (15) year term or any subsequent five-year automatic renewal term, GCU would be required to pay the Company a non-renewal fee equal to fifty percent (50%) of the fees paid in the trailing twelve (12) month period.

On July 29, 2026, we entered into an Amended and Restated Master Services Agreement with GCU (the “Amended MSA”).   The Amended MSA is effective as of July 1, 2026, has an initial term of fifteen (15) years running through June 30, 2041, and, unless notice of non-renewal is given at least eighteen (18) months in advance of the end of the initial term or any renewal term, will automatically renew up to three additional five (5) year renewal terms.    The Amended MSA eliminates GCU’s ability to terminate for convenience (while also eliminating any related early termination fees owed by GCU) prior to the end of the term, restructures the service fees such that going forward (i) service fees are calculated as 60% of tuition and academic-related fees only, (ii) ancillary fees and other revenue are for the sole benefit of GCU, and (iii)  a reimbursement payment that the Company had been making to GCU in respect of certain academic related costs is eliminated, and (iv) in lieu of the prior non-renewal fee that was due if GCU did not renew the MSA at the end of the term, the Company would continue to provide services to, and receive services fees from, GCU for an eighteen (18) month period following termination.  As previously disclosed, the Company estimates that, under the Amended MSA, its service revenue will be reduced by approximately $20 million annually but that its operating income will decline by an immaterial amount due to the elimination of the academic reimbursement payment.