10-K 2005

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PiJmG2f64YZnh3YZX2an4k6zeDewDVsFTeH1v9PpJj2g4KG+hcwn4rNY7aHwj5wY 4PZw3BUTjtspiKT8946rFQ== 0000832483-06-000006.txt : 20060313 0000832483-06-000006.hdr.sgml : 20060313 20060310173840 ACCESSION NUMBER: 0000832483-06-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20060310 FILED AS OF DATE: 20060313 DATE AS OF CHANGE: 20060310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONCORDE CAREER COLLEGES INC CENTRAL INDEX KEY: 0000832483 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EDUCATIONAL SERVICES [8200] IRS NUMBER: 431440321 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16992 FILM NUMBER: 06680398 BUSINESS ADDRESS: STREET 1: 5800 FOXRIDGE DRIVE STREET 2: STE 500 CITY: MISSION STATE: KS ZIP: 66202 BUSINESS PHONE: 9138319977 MAIL ADDRESS: STREET 1: 5800 FOXRIDGE DRIVE STREET 2: STE 500 CITY: MISSION STATE: KS ZIP: 66202 10-K 1 body.htm 10-K 2005 10-K 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ___________________

Commission file number 0-16992

CONCORDE CAREER COLLEGES, INC.

(Exact name of registrant as specified in its charter)

Delaware		43-1440321
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5800 Foxridge Drive, Suite 500, Mission, Kansas		66202
(Address of principle executive offices)		(Zip Code)

(913) 831-9977
(Registrant’s telephone number, including area code)

(None)
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, $ .10 par value per share		NASDAQ

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.10 par value per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

& #160; Yes [ ] No [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

& #160; Yes [ ] No [ X ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

&# 160; Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ X ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

& #160; Yes [ ] No [ X ]

As of June 30, 3005, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $43,065,286 based on the closing sale price of $13.65 per share as reported on the National Association of Securities Dealers Automated Quotation System National Market System.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at February 28, 2006
Common Stock, $ .10 par value per share		5,463,796 shares

DOCUMENTS INCORPORATED BY REFERENCE

Document		Parts Into Which Incorporated
Proxy Statement for the Annual Meeting of Shareholders to be held May 25, 2006		Part III

CONCORDE CAREER COLLEGES, INC.

FORM 10-K

YEAR ENDED DECEMBER 31, 2005

Index

Item ; Page

Introduction and Note on Forward Looking Statements.......................................................................................................... I-1

PART I

1.	Business........................................................................................................................................................................................... I-1

1A.	Risk Factors...................................................................................................................................................................................... I-7

1B.	Unresolved Staff Comments.......................................................................................................................................................... I-11

2.	Properties.......................................................................................................................................................................................... I-12

3.	Legal Proceedings........................................................................................................................................................................... I-12

4.	Submission of Matters to a Vote of Security Holders............................................................................................................... I-12

PART II

5.	Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases

of Equity Securities......................................................................................................................................................................... II-1

6.	Selected Financial Data.................................................................................................................................................................. II-2

7.	Management's Discussion and Analysis of Financial Condition and Results of Operations............................................. II-3

7A.	Quantitative and Qualitative Disclosures about Market Risk................................................................................................... II-15

8.	Financial Statements and Supplementary Data............................................................................................................................ II-16

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............................................. II-33

9A.	Controls and Procedures.................................................................................................................................................................. II-33

9B.	Other Information............................................................................................................................................................................... II-34

PART III

10.	Directors and Executive Officers of the Registrant....................................................................................................................... III-1

11.	Executive Compensation................................................................................................................................................................... III-1

12.	Security Ownership of Certain Beneficial Owners and Management......................................................................................... III-1

13.	Certain Relationships and Related Transactions............................................................................................................................ III-1

14.	Principal Accountant Fees and Services.......................................................................................................................................... III-1

PART IV

15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................................................................................. IV-1

Signatures IV-3

Exhibit 10(b)(vi) Summary of Director Compensation and Executive Cash Compensation........................................................ IV-4

Exhibit 11 Computation of Earnings Per Share.................................................................................................................................. IV-5

Exhibit 31-1 CEO Certification.............................................................................................................................................................. IV-6

Exhibit 31-2 CFO Certification.............................................................................................................................................................. IV-7

Exhibit 32-1 CEO Certification.............................................................................................................................................................. IV-8

Exhibit 32-2 CFO Certification...................................................................................................................................................................... IV-9

Introduction and Note on Forward Looking Statements

The discussion set forth below, as well as other portions of this Form 10-K, may contain forward-looking comments. Such comments are based upon information currently available to management and management’s perception thereof as of the date of this Form 10-K and may relate to: (i) the ability of the Company to realize increased enrollments from investments in infrastructure made over the past year; (ii) the U.S. Department of Education’s (“ED’s”) enforcement or interpretation of existing statutes and regulations affecting the Company’s operations; and (iii) the sufficiency of the Company’s working capital, financing and cash flow from operating activities for the Company’s future operating and capital requirements. Actual results of the Company’s operations could materially differ from those forward-looking comments. The differences could be caused by a number of factors or combination of factors including, but not limited to, potential adverse effects of regulations; impairment of federal funding; adverse legislative action; student loan defaults; changes in federal or state authorization or accreditation; changes in market needs and technology; changes in competition and the effects of such changes; changes in the economic, political or regulatory environments; litigation involving the Company; changes in the availability of a stable labor force; or changes in management strategies. Readers should take these factors into account in evaluating any such forward-looking comments. The following should be read in conjunction with Part II, Item 7 - Safe Harbor Statement.

The forward-looking statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following: (i) the Company’s plans, strategies, objectives, expectations and intentions are subject to change at anytime at the discretion of the Company; (ii) the effect of economic conditions in the postsecondary education industry and in the nation as a whole; (iii) the effect of the competitive pressures from other educational institutions; (iv) the Company’s ability to reduce staff turnover and the attendant operating inefficiencies; (v) the effect of government statutes and regulations regarding education and accreditation standards, or the interpretation or application thereof, including the level of government funding for, and the Company’s eligibility to participate in, student financial aid programs; and (vi) the role of ED and Congress, and the public’s perception of for-profit education as it relates to changes in education regulations in connection with the reauthorization or the interpretation or enforcement of existing regulations.

Also see Part II Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Current Trends and Recent Events, and Liquidity and Capital Resources.”

Documents Incorporated By Reference

Portions of the Company’s definitive Proxy Statement for the 2006 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2005, are incorporated by reference into Part III of this report.

PART I

Item 1. Business

Overview

The Company owns and operates proprietary, postsecondary institutions that offer career vocational training programs in the allied health field. The Company serves the segment of population seeking to acquire a career-oriented education. The Campuses generally enjoy long operating histories and strong franchise value in their local markets. As of December 31, 2005, the Company operated Campuses at 12 locations in seven states (the “Campuses”).

The Company was formed in 1988 as a Delaware corporation. Prior to March 31, 1988, the Company was the career college division of CenCor, Inc. (“CenCor”). The Company’s principal office is located at 5800 Foxridge Drive, Suite 500, Mission, Kansas 66202 (telephone: (913) 831-9977). Unless otherwise indicated, the term “Company” refers to Concorde Career Colleges, Inc. and its direct wholly owned subsidiaries.

Available Information on Website

The Company’s website address is http://www.concorde.edu. The Company’s public filings are placed on the Company’s website within a reasonable time after the filing is completed with the SEC.

The Campuses

The Company has designated campuses that offer degree granting programs “Concorde Career College”. The remaining Campuses are designated as “Concorde Career Institute.” The Company’s twelve Campuses are located in the following cities:

Part I- Page 1

Concorde Career College	Concorde Career Institute
North Hollywood, California	Lauderdale Lakes, Florida
Garden Grove, California	Jacksonville, Florida
San Bernardino, California	Tampa, Florida
San Diego, California	Portland, Oregon
Aurora, Colorado	Arlington, Texas
Kansas City, Missouri
Memphis, Tennessee

Programs of Study

The Company's programs of study are intended to provide students with the requisite knowledge and job skills for the positions in their chosen career. The Company classifies programs in three general categories clinical, core and other. Clinical programs (Surgical Technology, Respiratory Therapy, Radiologic Technology, and Practical/Vocational Nurse) are generally 12 to 15 months in length. The weekend Vocational Nursing program and Radiological Technician are longer, 18 and 24 months respectively. Clinical programs utilize clinical training that occurs in a hospital or medical facility. Core programs (Medical Assistant, Dental Assistant, Massage Therapy, Medical Office Professional, and Insurance Coding and Billing Specialist) are generally 9 to 12 months in length and utilize an externship immediately prior to graduation. Externships occur in medical offices, dental offices, medical and dental clinics, medical facilities, and hospitals. The remaining programs are similar in nature to the core programs but are not currently offered in as many campuses as the core programs.

The Company’s current programs include the following:

Clinical Programs	Core and Other Programs
Vocational / Practical Nursing	Medical Administrative Assistant
Respiratory Therapy	Medical Office Professional
Advanced Respiratory Therapy	Medical Assistant
Surgical Technology	Insurance Coding and Billing Specialist
Radiologic Technology	Dental Assistant
Pharmacy Technician	Patient Care Technology
	Health Unit Coordinator
	Massage Therapy

Program offerings vary by Campus. The seven campuses designated Concorde Career College (above) offer selected associate degree programs. Campuses utilize different program titles pursuant to state regulations. In addition, certain Campuses offer selected short term courses/programs, including Limited X-Ray, Expanded Duties for Dental Assistants, Patient Care Assistant, and various certification test preparations in allied health occupations.

The Company’s six largest programs represented approximately 87% of the student population at December 31, 2005 compared to 89% at December 31, 2004. The programs and their percentage of the student population at December 31, 2005 and 2004 were:

Program	2005	2004
Medical Assistant	29%	31%
Vocational Nursing/Practical Nursing	17	18
Dental Assistant	16	16
Insurance Coding and Billing Specialist	12	13
Respiratory Therapy	7	5
Surgical Technology/Technologist	6	4
	87%	89%

The Campuses utilize a non-traditional academic calendar with program start dates varying by location and type of program. Campuses generally have one or more programs commencing every month. Campuses do not offer all programs at all times. A limited number of programs are offered during weekends at some Campuses. Programs of study range from five to eighteen months and include from 400 to 2,985 hours of instruction. Programs are generally taught in a classroom atmosphere, with hands-on clinical and/or laboratory experience as an integral part of the curriculum. Programs designated as core and others generally include an externship immediately prior to graduation, varying in duration from four to twelve weeks, depending on the program.

Program advisory committees provide ideas, evaluate and recommend improvements to the curriculum for each program. Advisory committees meet twice a year and are comprised of local industry and business professionals. Advisory committee members provide valuable input regarding changes in the program and suggest new technologies and other factors that may enhance curriculum.

Part I - Page 2

Recruitment and Admissions

A typical student is either: (i) unemployed and enrolls to learn new skills and obtain employment or (ii) underemployed and enrolls to acquire new skills or to update existing skills to increase his/her earning capacity. Students are recruited through advertising in various media, including Internet, television, newspaper, and direct mail. Management estimates that approximately 36% of all enrollments during 2005 were the result of referrals from students and graduates. Referrals accounted for approximately 38% of enrollment during 2004.

Each Campus maintains an Admissions Department that is responsible for conducting admissions interviews with potential applicants to provide information regarding the programs and to assist with the application process. In addition, each applicant for enrollment must take and pass an entrance examination administered by persons other than admissions representatives. The entrance examination and interview are designed to determine the student's level of aptitude in language usage, reading skills, and math skills.

The admissions criteria vary according to the program of study. Generally, each applicant for enrollment must have a high school diploma or the equivalent of a high school diploma. Some Campuses accept students without a high school diploma or equivalent; however, the student must demonstrate the ability to benefit from the program by meeting United States Department of Education (“ED”) requirements before admission is granted. Students without a high school diploma or equivalent may only enroll in a limited number of programs. All students must be beyond the age of compulsory high school attendance. The Company utilizes a database maintained by ED to identify applicants who may be in default on a prior student loan.

The Company had 5,741 students in attendance at December 31, 2005 compared to 5,148 at December 31, 2004.

Student Retention

The Company strives to help students complete their program of study through admissions screening, financial planning and student services. Each Campus has at least one staff member whose function is to provide student services concerning academic and personal problems that might disrupt or result in a premature end to a student’s studies. Programs of study are offered in the morning, afternoon, and evening to meet the students’ scheduling needs. Campuses do not offer all programs at all times. A limited number of programs are offered during weekends at some Campuses.

If a student terminates enrollment prior to completing a program, federal and state regulations permit the Company to retain only a certain percentage of the total tuition, which varies with, but generally equals or exceeds, the percentage of the program completed. Amounts received by the Company in excess of such set percentage of tuition are refunded to the student or the appropriate funding source. See “Financing Student Education,” and “Regulation” below.

Organizational Structure

The President and Chief Executive Officer (the “CEO”) is responsible for the overall performance of the Campuses. Reporting to him are the following Vice Presidents: Chief Financial Officer, Human Resources; Campus Operations; Marketing and Strategic Development; and Academic Affairs.

The Company changed its organizational structure during the fourth quarter of 2004 and created a regional structure designed to provide focused support to campuses. Four new positions were created: Vice President of Campus Operations, Regional Director of Operations - Eastern Region, Regional Director of Operations - Western Region and Regional Admissions Director.

The Company maintains a strict focus on compliance in all areas of campus management. Campuses are divided into two divisions, East and West reporting to their respective Regional Director of Operations. In addition, the Company utilizes a variety of staff to review, train and support Campus programs and personnel. These include all areas of Campus Operations, Admissions, Graduates Services, Financial Aid, Compliance and Education. In addition, the Company has National Program Managers for most of its clinical programs.

Student Placement

The Company, through placement personnel at each Campus, provides job placement assistance for graduates. The placement personnel establish and maintain contact with local employers and other sources of information on positions available in the local area. Additionally, the Director of Graduate Services works with students on preparing resumes and interviewing techniques. Postgraduate placement assistance is also provided, including referral to other cities in which Campuses are located. Frequently, the externship programs result in placement of students with the practitioners participating in the externship.

Part I - Page 3

Accreditation and Licensing

The Company and its campuses are subject to numerous regulations including oversight, approvals and licensing by the Department of Education, accrediting agencies, state education bodies and program specific agencies. ED authorizes legislation regarding student loans, grants and other funding. In addition, ED approves accrediting agencies and conducts periodic compliance reviews of institutions. Accrediting agencies verify that institutions meet specific standards established by the respective agency including completion and placement rates. State education bodies approve institutions eligibility to operate in their state, process student complaints and provide oversight concerning state education regulations. Program specific agencies provide oversight and approval for certain programs such as Vocational / Practical Nursing, Respiratory Therapy, Radiologic Technology, and Surgical Technologist.

The Campuses are accredited through national accreditation associations recognized by ED. These associations are the Accrediting Commission of Career Schools and Colleges of Technology (“ACCSCT”), the Council on Occupational Education (“COE”) and the Accrediting Bureau of Health Education Schools (“ABHES”). The Memphis, Tennessee Campus is accredited by COE. The Arlington, Texas Campus is accredited by ABHES. The remaining Campuses are accredited by ACCSCT. Accreditation by an accrediting body recognized by ED is necessary for a Campus to be eligible to participate in federally sponsored financial aid programs. See “Financing Student Education.”

Certain Campuses have received accreditation or approval for specific programs from the following agencies: The American Society of Health Systems Pharmacists, Commission on Accreditation of Allied Health Education Programs, Joint Review Committee on Education in Radiologic Technology, Committee on Accreditation for Respiratory Care, the Commission on Dental Accreditation, the Committee on Dental Auxiliaries-California Board of Dental Examiners, Accreditation Review Committee on Education in Surgical Technology, the California Board of Vocational Nurse and Psychiatric Technician Examiners, Colorado Board of Nursing, Texas Board of Nursing, Florida Board of Nursing, and the Missouri Board of Nursing. Program specific accreditation/approvals are not necessary for participation in federally sponsored financial aid programs; however, they are required for certification and/or licensure of graduates from some programs, such as the Vocational or Practical Nurse and Respiratory Therapy programs offered by some of the Campuses. These accreditations or approvals have been obtained because management believes they enhance the students’ employment opportunities in those states that recognize the accrediting agencies.

The qualifications of faculty members are regulated by applicable accreditation associations and / or agencies. Faculty members teaching certain curriculum must meet standards set by applicable state licensing laws.

Each Campus is licensed as an educational institution under applicable state and local laws, and is subject to a variety of state and local regulations. These regulations may include approval of the curriculum, faculty and general operations.

Financing Student Education

Tuition and other ancillary fees vary from program to program, depending on the subject matter and length of the program. The total cost per program ranges from approximately $7,000 to $33,000.

Most students attending the Campuses utilize federal funding programs including government grants and the Federal Family Education Loan programs available under the Higher Education Act of 1965 (“HEA”) to finance their tuition.

Each Campus has financial aid staff to assist students in preparing applications for federal grants and federal loans. Management estimates that during 2005, 80% of cash receipts were derived from funds obtained by students through these programs, compared to the 79% during 2004.

Currently, each Campus is an eligible institution for some or all of the following federally funded programs: Federal Pell Grant (Pell), Federal Supplemental Education Opportunity Grant (SEOG), Federal Perkins Loan (“Perkins”), Federal Parent Loan for Undergraduate Students (PLUS), Federal Subsidized Stafford Loan, Federal Unsubsidized Stafford Loan, and Veterans benefits. Also, some students are eligible for assistance under the Department of Labor's Workforce Investment Act (“WIA”).

The states of California, Colorado, Tennessee, Florida, Oregon, and Texas each offer state grants to students enrolled in educational programs of the type offered by the Campuses. Typically, many restrictions apply in qualifying and maintaining eligibility for participation in these state programs.

Students principally rely on a combination of two Federal programs: Federal Pell Grants and Federal Family Education Loans (FFELs) also referred to as Federal Subsidized Stafford, Unsubsidized Stafford, and PLUS loans. Federal Subsidized Stafford Loans are need based and awarded annually to students studying at least half time at an approved postsecondary educational institution. The maximum Pell Grant a student may receive for the 2005-2006 award year is $4,050. The amount a student actually receives is based on a federal regulatory formula devised by ED. The Company received 25.0% or $20,736,000 of its cash receipts from Pell Grants in 2005 compared to 26.9% or $21,076,000 in 2004.

Part I - Page 4

FFELs are low interest federal student loans provided by banks and other lending institutions, the repayment of which is fully guaranteed as to principal and interest by the federal government through a guarantee agency. The student pays no interest on a Subsidized Stafford Loan while in school and for a grace period (up to six months); on unsubsidized loans, interest accrues but is capitalized and added to the principal. Parents of dependent students can receive PLUS loans. There is no interest subsidy for PLUS loans. The parent borrower is responsible for all interest that accrues on the loan while the student is in school. For both subsidized and unsubsidized loans, students do not need to begin payment until expiration of a six-month grace period following last day of attendance. After such time, repayment is required in monthly installments, with a variable interest rate. Lenders making subsidized FFELs receive interest subsidies during the term of the loan from the federal government, which also pays all interest on these FFELs while the student attends school and during the grace period. In the event of default, all FFELs are fully guaranteed as to principal and interest by state or private guarantee agencies which, in turn, are reimbursed by the federal government according to the guarantee agency reinsurance provisions contained in the HEA. The Company received 52.8% or $43,762,000 of its cash receipts from FFELs in 2005 compared to 50.1% or $39,202,000 in 2004.

All of the Company’s Campuses participate in the SEOG Program and nine of the Campuses participate in the Perkins Program. These two programs are campus based programs and each Campus is responsible for the administration of these programs. Both SEOG and Perkins are awarded based on students need. SEOG is a federal grant issued to a student and the Company is required to contribute a 25% non federal share. Perkins is a low interest loan made with government funds in which the Company must contribute 25% of the federal contribution. The Company received 1.7% or $1,402,000 from SEOG in 2005 compared to 1.7% or $1,342,000 in 2004. The Company received .7% or $577,000 from Perkins in 2005 compared to .5% or $407,000 in 2004.

Other financial assistance is available to some of our students. Students participate in state grant programs in California, Colorado and Tennessee. In addition, certain students at some of our campuses participate in programs provided by the U.S. Department of Veterans Affairs and the Rehabilitative Services Administration of the U.S. Department of Education (vocational rehabilitation funding). Private loan programs also are available to students. Private loans are based upon the student’s credit worthiness and are made without recourse to the Company.

The Company offers an internal program that allows students to repay a portion of their program cost directly to the Company. The Company began financing students over longer periods of time beginning in the first quarter of 2005 under this program. This has resulted in additional receivables due directly from students to the Company and has resulted in an increase in the provision for uncollectible accounts during 2005.

State and federal student financial aid programs are subject to the effects of state and federal budgetary processes. There can be no assurance that government funding for the financial aid programs in which the Company’s students participate will continue to be available or maintained at current levels. The loss or reduction in funding levels for state and federal student financial aid programs could have a material adverse effect on the Company.

Regulation

Both federal and state financial aid programs contain numerous and complex regulations which require compliance not only by the recipient student but also by the institution which the student attends. The Company monitors compliance through periodic visits to the individual Campuses by Corporate staff. Failure to materially comply with such regulations at any of the Campuses could have serious consequences, including limitation, suspension, or termination of the eligibility of that Campus to participate in the funding programs. Independent certified public accountants audit the Campus’ administration of federal funds as mandated by federal regulations. Additionally, these aid programs require accreditation by the Campuses. See “Accreditation and Licensing” and “Financing Student Education.”

One of ED’s principal criteria for assessing a Campus’s eligibility to participate in student loan programs is the cohort default rate threshold percentage requirements (the “Cohort Default Rate”) enacted in the Student Loan Default Prevention Initiative Act of 1990. The regulations apply to the FFEL and Federal Perkins Loan Program loans. Cohort Default Rates are calculated by the Secretary of Education and are designed to reflect the percentage of former students entering repayment in the cohort year, the fiscal year of the federal government - October 1 to September 30, who default on their loans during that year or the following cohort year. This calculation includes only those defaulted loans on which federal guaranty claims have been paid. A Campus may request that a defaulted loan be removed from the calculation if the Campus can demonstrate that the loan was improperly serviced and collected under guidelines established in ED’s regulations. A loan that is included in the default rate calculation may be subsequently paid by the student, but is not removed from the cohort calculation.

After January 1, 1991, the Secretary of Education was authorized to initiate proceedings to limit, suspend or terminate the eligibility of an institution to participate in the FFEL program if the Cohort Default Rate for three consecutive years exceeds the prescribed threshold. Beginning with the release of 1992 Cohort Default Rates in the summer of 1994, a Cohort Default Rate equal to or exceeding 25% for three consecutive fiscal years may be used as grounds for terminating FFEL eligibility.

Part I - Page 5

The following table sets forth the 2004, 2003, and 2002 cohort default rates for each of the Campuses.

	Cohort Default Rates				Cohort Default Rates
Campus	2004⁽¹⁾	2003	2002		2004⁽¹⁾	2003	2002
Garden Grove, CA	4.3	6.1	9.7	North Hollywood, CA	2.9	6.1	7.5
Denver, CO	3.5	6.0	4.6	Portland, OR	3.5	2.4	4.7
Jacksonville, FL	6.9	5.9	7.8	San Bernardino, CA	6.7	7.3	16.2
Kansas City, MO	5.9	7.1	5.8	San Diego, CA	4.3	7.8	8.2
Lauderdale Lakes, FL	7.0	4.9	8.8	Tampa, FL	8.0	6.6	9.4
Memphis TN	6.6	5.0	6.0	Arlington, TX	1.7	0.0	7.1

(1)	Preliminary rates received February 14, 2006. These rates are subject to change and may not be reflective of the final rates for 2004.

All of the Company’s Campuses have at least one of their three most recent rates below 25% and are, therefore, eligible to participate in the FFEL program. The Company maintains aggressive default management plans for each Campus and monitors activity frequently. Staff at each Campus and Corporate Office assist and educate student borrowers in understanding their rights and responsibilities as borrowers under these student loan programs.

In 1994, ED established a policy of recertifying all institutions participating in Title IV programs every five years. Provisional certification limits the Campus’ ability to add programs and change the level of educational award. In addition, the Campus is required to accept certain restrictions on due process procedures under ED guidelines. Eleven of the Company’s Campuses have full certification. The Kansas City Campus received provisional certification due to high Federal Perkins Loan default rates. The Company does not believe provisional certification will have a material impact on its liquidity, results of future operations or financial position. There has been no material impact due to provisional certification in prior years.

The Company is subject to extensive regulation by federal and state governmental agencies and accreditation bodies. In particular, the Higher Education Act of 1965 (“HEA”), and the regulations promulgated thereunder by ED subject the Campuses to significant regulatory scrutiny on the basis of numerous standards that Campuses must satisfy to participate in the various federal student financial assistance programs under Title IV of the HEA.

To participate in Title IV Programs, an institution must be accredited by an association recognized by ED. ED will certify an institution to participate in the Title IV Programs only after an institution has demonstrated compliance with the HEA and the ED’s extensive regulations regarding institutional eligibility. Under the HEA, accreditation associations are required to include the monitoring of certain aspects of Title IV Program compliance as part of their accreditation evaluations.

The Company had four programs that were placed on Outcomes Reporting by their respective accreditation association. The programs are being monitored for completion rates, placement rates, or both. The Campuses are addressing the issues associated with the Outcomes issues. The Company believes that these issues will be corrected and will not result in any material impact to the Company.

Congress must reauthorize the HEA approximately every six years. The most recent reauthorization in October 1998 reauthorized the HEA until September 30, 2004. Congress has delayed the reauthorization scheduled for October 1, 2004. The Company does not believe the reauthorization will have a material financial impact on the Company when it is completed. However, recent negative publicity regarding for profit postsecondary schools may impact reauthorization. The 1998 reauthorization has been extended until the 2004 reauthorization is completed.

An institution in the zone may need to provide to ED timely information regarding certain accrediting agency actions and certain financial events that may cause or lead to a deterioration of the institution’s financial condition. In addition, financial and compliance audits may have to be submitted soon after the end of the institution’s fiscal year. Title IV HEA funds may be subject to cash monitoring for institutions in the zone.

The Company’s composite score was 2.7, 2.8, and 2.8 in 2003, 2004, and 2005, respectively.

Part I - Page 6

An additional HEA standard prohibits an institution from providing any commission, bonus or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any person or entity engaged in any student recruitment, admission or financial aid awarding activity. The Company believes that its method of compensating persons engaged in student recruitment, admission or financial aid awarding activity complies with the requirements of the HEA. The regulations do not, however, establish clear standards for compliance, and the Company cannot assure you that ED will not find any deficiencies in our present or former methods of compensation.

Congress temporarily extended the HEA reauthorization which was set to expire September 30, 2004. The reauthorization is currently being discussed and the Company is not aware of any changes that may be made during reauthorization that will have a material financial impact on the Company. However, there can be no assurance of the impact of new regulations or requirements from reauthorization. A change was implemented by ED in December 2004 reducing certain students Pell Grant eligibility. The Company does not believe this change will have a material impact on its student’s ability to fund their education.

Competition

The Campuses are subject to competition from public educational institutions in addition to a large number of other public and private companies providing postsecondary education, many of which are older, larger and have greater financial resources than the Company.

Management believes that the educational programs offered, the Company’s health care focus, the Campus' reputation and marketing efforts are the principal factors in a student's choice to enroll at a Campus. Additionally, the cost of tuition and availability of financing, the location and quality of the Campus' facilities, and job placement assistance offered are important. The specific nature and extent of competition varies from Campus to Campus, depending on the location and type of curriculum offered. The Company competes principally through advertising and other forms of marketing, coupled with specialized curricula offered at competitive prices.

Employees

As of December 31, 2005, the Company employed approximately 983 full and part-time employees, of which approximately 512 were faculty members. The Company had 343 management and administrative staff members employed at the Campuses and 56 employed at corporate headquarters. The remaining 72 employees are admissions personnel.

Management and supervisory members of both the administrative staff and administrative faculty are salaried. All other faculty and employees are paid on an hourly basis. The Company employs full-time, part-time, and on a substitute or on-call basis. The Company does not have an agreement with any labor union representing its employees and has not been the subject of any union organization efforts.

Item 1A. Risk Factors

Any of the following risks could materially adversely affect the Company’s business, results of operations or financial condition.

Failure to Comply with Extensive Regulations Could Have a Material Adverse Effect on the Company’s Business. Failure of the Company’s Campuses to comply with extensive regulations could result in financial penalties, loss or suspension of federal funding.

The Company’s revenue is derived almost entirely from tuition, textbook sales, fees and charges paid by, or on behalf of, the Company’s students. A large number of the Company’s students paid a substantial portion of tuition and other fees with funds received through student assistance financial aid programs under Title IV of the HEA. The Company received approximately 80% of cash receipts from such funds for the year ended December 31, 2005. To participate in such programs, an institution must obtain and maintain authorization by the appropriate state agencies, accreditation by an accrediting agency recognized by the ED, and certification by the ED. As a result, the Company’s Campuses are subject to extensive regulation by these agencies that, among other things, requires the Company to:

¨	undertake steps to assure that the students at each of our Campuses do not default on federally guaranteed or funded student loans at a rate of 25% or more for three consecutive years;

¨	limit the percentage of revenues derived at each Campus from federal student financial aid programs to less than 90%;

¨	adhere to financial responsibility and administrative capability standards;

¨	prohibit the payment of incentives to personnel engaged in student recruiting, admissions activities or awarding financial aid; and

Part I- Page 7

¨	achieve stringent completion and placement outcomes for short-term programs.

These regulations cover virtually all phases of the Company’s operations, including the Company’s educational programs, facilities, instructional and administrative staff, administrative procedures, financial operations and financial strength. They also affect the Company’s ability to acquire or open additional Campuses or change the Company’s corporate structure. These regulatory agencies periodically revise their requirements and modify their interpretations of existing requirements.

If one of the Company’s Campuses were to violate any of these regulatory requirements, the Company could suffer a financial penalty. The regulatory agencies could also place limitations on or terminate the Company’s Campuses’ receipt of federal student financial aid funds, which could have a material adverse effect on the Company’s business, results of operations or financial condition. The Company believes that the Campuses substantially comply with the requirements of these regulatory agencies, but the Company cannot predict with certainty how all of these requirements will be applied, or whether the Company will be able to comply with all of the requirements in the future. Some of the most significant regulatory requirements and risks that apply to the Company’s Campuses are described in the following paragraphs.

The U.S. Congress may change the law or reduce funding for federal student financial aid programs, which could harm the Company’s business.

The U.S. Congress regularly reviews and revises the laws governing the federal student financial aid programs and annually determines the funding level for each of these programs. Congress must reauthorize HEA approximately every six years. The most recent reauthorization occurred in 1998 and reauthorized the HEA until September 30, 2004 which was temporarily extended. Any action by Congress that significantly reduces funding for the federal student financial aid programs or the ability of the Company’s Campuses or students to participate in these programs could have a material adverse effect on the Company’s business, results of operations or financial condition. Legislative action may also increase the Company’s administrative costs and burden and require the Company to modify the Company’s practices in order for the Company’s Campuses to comply fully with applicable requirements, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

The Company is not aware of any changes that may be made during reauthorization that will have a material financial impact on the Company. However, there has been recent negative publicity regarding for profit post secondary schools that may impact reauthorization and there can be no assurance of the impact of the new regulations or requirements from reauthorization.

If the Company does not meet financial responsibility standards, the Company’s Campuses may lose eligibility to participate in federal student financial aid programs.

To participate in the federal student financial aid programs, an institution must either satisfy numeric standards of financial responsibility, or post a letter of credit in favor of the ED and possibly accept other conditions on its participation in the federal student financial aid programs. Currently, none of the Campuses are required to post a letter of credit in favor of the ED or accept other conditions on its participation in the federal student financial aid programs due to failure to satisfy the numeric standards of financial responsibility. The Company cannot assure you that the Company or the Company’s Campuses will satisfy the numeric standards in the future.

The Campuses may lose eligibility to participate in federal student financial aid programs if their student loan default rates are too high.

An institution may lose its eligibility to participate in some or all of the federal student financial aid programs if defaults by its students on their federal student loans exceed specified rates. If any of the Company’s Campuses, depending on its size, loses eligibility to participate in federal student financial aid programs because of high student loan default rates, it could have a material adverse effect on the Company’s business, results of operations or financial condition.

Campuses may lose eligibility to participate in federal student financial paid programs if the percentage of their revenue derived from those programs is too high.

A proprietary institution loses its eligibility to participate in the federal student financial aid programs if it derives more than 90% of its revenue from these programs in any fiscal year (the “90/10” Regulation). If any of the Company’s Campuses, depending on its size, loses eligibility to participate in federal student financial aid programs, it could have a material adverse effect on the Company’s business, results of operations or financial condition. The Company received approximately $66,495,000 from federal student financial aid programs during 2005, representing 80.2% of the total cash received on FFEL eligible programs. Individual campuses 90/10 rates ranged from a low of 69.9% to a high of 87.4 % in 2005.

Part I - Page 8

If the Company fails to demonstrate “administrative capability” to the ED, the Company’s business could suffer.

ED regulations specify extensive criteria an institution must satisfy to establish that it has the requisite “administrative capability” to participate in federal student financial aid programs. These criteria require, among other things, that the institution:

¨	comply with all applicable federal student financial aid regulations;

¨	have capable and sufficient personnel to administer the federal student financial aid programs;

¨	provide financial aid counseling to its students; and

¨	submit all reports and financial statements required by the regulations.

If an institution fails to satisfy any of these criteria, the ED may:

¨	require the repayment of federal student financial aid funds;

¨	transfer the institution from the “advance” system of payment of federal student financial aid funds to the “reimbursement” system of payment or cash monitoring;

¨	place the institution on provisional certification status; or

¨	commence a proceeding to impose a fine or to limit, suspend or terminate the participation of the institution in federal student financial aid programs.

Should one or more of the Company’s Campuses be limited in their access to, or lose, federal student financial aid funds due to their failure to demonstrate administrative capability, the Company’s business could be materially adversely affected.

If the company fails to meet programmatic accreditation regulations, the Company could lose its eligibility to enroll students in these programs.

The company has several programs that require additional regulation by specific state boards or national organizations. The Vocational Nursing, Respiratory Therapy, Surgical Technologist and Radiography programs must follow rules and guidelines of the State Boards of Nursing, Commission on Accreditation of Allied Health Education Programs, Joint Review Committee on Education in Radiologic Technology and the Committee on Accreditation for Respiratory Care. If these programs do not adhere to these more stringent rules the programs could lose their eligibility to enroll students.

Regulatory agencies or third parties may commence investigation, bring claims or institute litigation against the Company.

Because the Company operates in a highly regulated industry, the Company may be subject from time to time to investigations, claims of non-compliance, or law suits by governmental agencies, or third parties, which may allege statutory violation, regulatory infractions, or common law causes of action. If the results of the investigations are unfavorable to the Company or if the Company were unable to successfully defend against third-party lawsuits, the Company may be required to pay monetary damages or be subject to fines, penalties, injunctions or other censure that could have a material adverse effect on the Company’s business. Even if the Company adequately addresses the issues raised by an agency investigation or successfully defend a third-party lawsuit, the Company may have to devote significant money and management resources to address these issues, which could harm the Company’s business.

If regulators do not approve the Company’s acquisitions, the ability of the acquired institution to participate in federal student financial aid programs would be limited.

When the Company acquires an institution, ED and most applicable state agencies and accrediting agencies consider that a change of ownership or control of the institution has occurred. A change of ownership or control of an institution under the standards of ED may result in the temporary suspension of the institution's participation in the federal student financial aid programs until the ED issues a temporary certification document. If the Company were unable to reestablish the state authorization, accreditation or ED certification of an institution the Company acquired, depending on the size of that acquisition, could have a material adverse effect on the Company’s business, results of operations or financial condition. If regulators do not approve transactions involving a change of control, the institutions acquired may lose their ability to participate in federal student financial aid programs. If the Company or any of the Company’s Campuses experience a change of control under the standards of applicable state agencies or accrediting agencies or the ED, the Company or the affected Campuses must seek the approval of the relevant agencies. The failure of any of the Company’s Campuses to reestablish its state authorization, accreditation or ED certification would result in a suspension or loss of federal student financial aid funding, which could have a material adverse effect on the Company’s business, results of operations or financial condition.

Part I - Page 9

If there is a change in ownership, the Company may lose its ability to participate in federal student financial aid programs.

The ED, applicable state education agencies or applicable accrediting agencies may consider other transactions or events to constitute a change of control of the Company. Some of these transactions or events, such as a significant acquisition or disposition of the Company’s common stock, may be beyond the Company’s control and the Company could lose its ability to participate in federal student financial aid and programs.

If the Company’s Campuses do not maintain their state authorizations and accreditations, they may not operate or participate in federal student financial aid programs.

An institution that grants degrees, diplomas or certificates must be authorized by the relevant agencies of the state in which it is located and, in some cases, other states. Requirements for authorization vary substantially among the states. State authorization and accreditation by an accrediting agency recognized by the ED are also required for an institution to participate in the federal student financial aid programs. Loss of state authorization or accreditation by any of the Company’s Campuses, depending on the size of the Campus, could have a material adverse effect on the Company’s business, results of operations or financial condition.

Failure to effectively manage the Company’s growth could harm the Company’s business.

The Company expects to acquire new Campuses as a component of its strategy for growth. The Company regularly engages in evaluations of possible acquisition candidates, including evaluations relating to acquisitions that may be material in size and/or scope. There can be no assurance that the Company will continue to be able to identify educational institutions that provide suitable acquisition opportunities or to acquire any such institutions on favorable terms. Furthermore, there can be no assurance that any acquired institutions can be successfully integrated into the Company's operations or be operated profitably. Acquisitions involve a number of special risks and challenges, including the diversion of management's attention, assimilation of the operations and personnel of acquired companies, adverse short-term effects on reported operating results, possible loss of key employees and difficulty of presenting a unified corporate image. Continued growth through acquisition may also subject the Company to unanticipated business or regulatory uncertainties or liabilities.

Opening new Campuses and adding new services could be difficult for the Company.

The Company expects to develop, open and operate new Campuses, most likely as additional locations of existing Campuses. Establishing additional locations would pose unique challenges and require the Company to make investments in management, capital expenditures, marketing expenses and other resources. Because the Company has not yet established any new additional locations, there can be no certainty as to the Company's ability to be successful in any such endeavor. Any failure of the Company to effectively manage the operations of newly established Campuses could have a material adverse effect on the Company's business, results of operations and financial condition.

Failure to keep pace with changing market needs and technology could harm the Company’s business.

Prospective employers of the Company’s graduates increasingly demand that their entry-level employees possess appropriate technological skills. Educational programs at the Company’s Campuses must keep pace with these evolving requirements. If the Company cannot respond to changes in industry requirements, it could have a material adverse effect on the Company’s business, results of operations or financial condition. Competitors with greater resources could harm the Company’s business. The postsecondary education market is highly competitive. The Company’s Campuses compete with traditional public and private two-year and four-year colleges and universities and other proprietary schools, including those that offer distance learning programs. Some public and private colleges and universities, as well as other private career-oriented schools, may offer programs similar to those of the Company’s Campuses. Although tuition at private nonprofit institutions is, on average, higher than tuition at the Company’s Campuses, some public institutions are able to charge lower tuition than the Company’s Campuses, due in part to government subsidies, government and foundation grants, tax-deductible contributions and other financial sources not available to proprietary schools. Some of the Company’s competitors in both the public and private sectors have substantially greater financial and other resources than the Company.

Competitors with greater resources could harm our business.

The post-secondary education market is highly fragmented and competitive. The Company’s campuses compete for students with traditional public and private two-year and four-year colleges and universities and other proprietary schools. Public institutions often receive government subsidies, government and foundation grants, tax-deductible contributions and other financial resources generally not available to proprietary schools. Public institutions can offer lower tuition prices. The Company’s competitors in both the public and private sectors may have greater financial and other resources.

Part I - Page 10

Our success depends upon our ability to recruit and retain key personnel.

The Company’s success depends upon our ability to attract and retain highly qualified faculty, campus administrators and corporate management. The Company may have difficulty locating, hiring and retaining qualified personnel. The loss of services of key personnel, or failure to attract and retain other qualified and experienced personnel could cause our business to suffer.

We may be unable to operate one or more of our Campuses due to a natural disaster.

The Company has three campuses in Florida. All three are located in coastal areas. The Company has four campuses located in southern California. One or more of these campuses may be unable to operate for an extended period of time in the event of a hurricane, earthquake or other natural disaster that does substantial damage to the area in which the campus is located. The failure of one or more of our campuses to operate for a substantial period of time could have a material adverse effect on our results of operations.

Failure to obtain additional capital in the future could reduce the Company’s ability to grow.

No assurance can be given that the Company will be able to obtain adequate funding to complete any potential acquisition or new Campus opening or that such an acquisition or opening will succeed in enhancing the Company's business and will not ultimately have a material adverse effect on the Company's business, results of operations and financial condition.

A number of the Company’s shares of common stock will be eligible for future sale, which may cause the Company’s stock price to decline.

The exercise of substantial amounts of options or registration of common stock or the perception that such sales might occur could cause the market price of the Company’s Common Stock to decline. On December 31, 2005, the Company had 5,462,084 shares of the Company’s Common Stock outstanding. As of December 31, 2005, options to purchase 608,968 shares of the Company’s Common Stock were outstanding and were exercisable as of such date at an average exercise price of $11.30. This concentration of stock options, relative to the amount of Common Stock outstanding, if exercised, will have a dilutive effect on the Company’s earnings per share which could adversely affect the market price of the Company’s Common Stock. From time to time, the Company may issue additional options to the Company’s employees under the Company’s existing stock option plan and under any new plans the Company may adopt.

A number of the Company’s shares of common stock have been registered and are eligible for future sale which could impact the Company’s stock price.

The Company filed a Registration Statement on Form S-3 to register 1,286,765 shares of common stock. The Registration Statement was effective March 26, 2004. The Company received no funds as a result of the registration. The Company registered the 1,286,765 shares of Common Stock that were issued to Cahill-Warnock pursuant to the exercise of the warrants and new debentures that were cancelled, effective February 19, 2003. This concentration of stock relative to the amount of Common Stock outstanding, if sold could have a material impact on the market price of the Company’s Common Stock.

If the Company fails to maintain an effective system of internal controls, the Company may not be able to accurately report financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in the Company’s financial reporting, which would harm the Company’s business and the trading price of the Company’s stock.

Effective internal controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, the Company’s operating results could be harmed. Inferior internal controls could also cause investors to lose confidence in the Company’s reported financial information, which could have a negative effect on the trading price of the Company’s stock.

Item 1B. Unresolved Staff Comments - None

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Part I - Page 11

Item 2. Properties

The Company’s corporate office is located in Mission, Kansas. All Company buildings and facilities are leased.

The Company purchased a parcel of land to construct a parking lot for the Tampa Campus in December 2002. The land and improvements are recorded on the balance sheet at its purchase price of $391,000.

The following table sets forth the location, approximate square footage and expiration of lease terms for each of the Campuses as of December 31, 2005:

Square

Locations 60; Footage Expiration ⁽¹⁾

Garden Grove, CA.................................................................................. 25,931 09-30-14

North Hollywood, CA........................................................................... 35,155 07-31-11

San Bernardino, CA............................................................................... 32,192 04-26-13

San Diego, CA....................................................................................... 25,160 12-31-18

Denver, CO............................................................................................. 33,591 11-14-13

Lauderdale Lakes, FL............................................................................ 25,838 05-31-07

Jacksonville, FL...................................................................................... 25,049 07-31-09

Tampa, FL................................................................................................ 23,750 01-31-17

Kansas City, MO.................................................................................... 26,194 02-28-07

Portland, OR............................................................................................ 30,530 08-31-19

Mission, KS (Corporate Office)........................................................... 14,384 07-31-09

Memphis, TN.......................................................................................... 43,299 08-31-14

Arlington, Texas..................................................................................... 26,639 06-30-13

(1)	Several of the leases provide renewal options, although renewals may be at increased rental rates.

Item 3. Legal Proceedings

The Company is sued from time to time by a student or students who claim to be dissatisfied with the results of their program of study. Typically, the claims allege a breach of contract; deceptive advertising and misrepresentation and the student or students seek reimbursement of tuition. Punitive damages sometimes are also sought. In addition, ED may allege regulatory violations found during routine program reviews. The Company has, and will continue to dispute these findings as appropriate in the normal course of business. In the opinion of the Company’s management, resolution of such pending litigation and disputed findings will not have a material effect on the Company’s financial condition or its results of operation.

The Company is not aware of any material violation by the Company of applicable local, state and federal laws.

Item 4. Submission of Matters to a Vote of Security Holders. - None

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Part I - Page 12

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company’s common stock (“Common Stock”) is currently traded under the symbol “CCDC” on the NASDAQ SmallCap Market. The following table sets forth the high and low closing price reported at the end of the trading day, for the periods indicated as reported by NASDAQ.

2005	High	Low
First Quarter......................................................................................................................................................	$19.84	$16.95
Second Quarter.................................................................................................................................................	$16.99	$13.65
Third Quarter.....................................................................................................................................................	$17.06	$14.10
Fourth Quarter...................................................................................................................................................	$16.67	$13.45

2004	High	Low
First Quarter.......................................................................................................................................................	$27.75	$21.75
Second Quarter..................................................................................................................................................	$25.70	$14.60
Third Quarter......................................................................................................................................................	$17.39	$13.42
Fourth Quarter....................................................................................................................................................	$20.27	$14.87

There were 184 shareholders of record of Common Stock at December 31, 2005.

On February 9, 2006, the high and low price of the Company’s Common Stock on the NASDAQ SmallCap Market was $14.70 and $14.70 per share, respectively.

The Company has never paid cash dividends on its common stock. Management currently anticipates retaining future earnings to finance internal growth and potential acquisitions. Payment of common stock dividends in the future will depend upon the Company’s earnings and financial condition and various other factors the Company’s Board of Directors (“Board”) may deem appropriate at the time.

The following table lists the Company’s treasury stock purchases in the fourth quarter of 2005 and the remaining shares that may be purchased.

Issuer Purchases of Equity Securities:

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program ⁽¹⁾	Maximum Number of Shares That May Yet Be Purchased Under this Program
October 1, 2005 - October 31, 2005	600,000	15.11	600,000	664,265
November 1, 2005- November 30, 2005	----	----	----	664,265
December 1, 2005 - December 31, 2005	----	----	----	664,265
Total	600,000		600,000

(1)

On August 22, 2000, the Company announced that the Board of Directors approved a stock repurchase of up to 500,000 shares of the Company’s stock. On November 2, 2004, the Company announced that the Board of Director’s increased the stock repurchase authorization by an additional 500,000 shares which increased the plan to a total of 1,000,000 shares. As of December 31, 2005, the Company had acquired 335,735 shares at an average price of $5.73. The Company purchased 600,000 shares in a private transaction on October 21, 2005 at $15.11 per share. This transaction did not affect the Share Repurchase Program authorized by the Board.

In 2001 and 2002, the Company awarded its Board Members options to purchase shares of the Company’s stock. The granting of these options was not submitted to the Company’s Shareholders for approval. These options were issued under a non-qualified stock option agreement and the market value on the date of the grant equaled the exercise price. The Company issued 12,500 options in 2001 at an exercise price of $4.50, 15,000 options in 2002 at an exercise price of $8.60, and 5,000 options in 2002 at an exercise price of $11.00.

Part II - Page 1

Equity Compensation Plan Information for the year ended December 31, 2005

The following table is information related to the Employee Stock Option Plan. Equity Compensation Plans not approved by security holders are options given to the Board.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights	Weighted average exercise price of outstanding options, warrants, and rights	Number of securities remaining available for future issuance
Equity compensation plans not approved by security holders.................................................	31,668	$5.93	----
Equity compensation plans approved by security holders.................................................	577,300	11.59	267,067
Total	608,968	$ 11.30	267,067

The following securities have been sold by the Company within the past three years and were not registered under the Securities Act:

Pursuant to the exercise of options under the 1988, 1998, 2000, and 2002 Long Term Executive Compensation Plans, the Company sold the following: on September 9, 2003, 12,000 shares of its common stock to an employee at a price of $1.00 per share and for a total aggregate consideration of $12,000; on September 11, 2003, 6,000 shares of its common stock to an employee at a price of $1.00 per share and for a total aggregate consideration of $6,000 and 5,000 shares of its common stock to an employee at a price of $1.02 per share and for a total aggregate consideration of $5,100; on October 10, 2003, 7,500 shares of its common stock to an employee at a price of $1.26 per share and for a total aggregate consideration of $9,450; on November 3, 2003, 7,500 shares of its common stock to an employee at a price of $1.02 per share and for a total aggregate consideration of $7,650; on December 23, 2003, 400 shares of its common stock to an employee at the price of $11.45 per share and for a total aggregate consideration of $4,580; on January 9, 2004, 20,000 shares of its common stock to an employee at a price of $1.10 per share and for a total aggregate consideration of $22,000; on February 9, 2004, 500 shares of its common stock to an employee at a price of $5.14 per share and for a total aggregate consideration of $2,570; on February 17, 2004, 400 shares of its common stock to an employee at a price of $11.45 per share and for a total aggregate consideration of $4,580; on February 17, 2004, 850 shares of its common stock to an employee at a price of $2.26 per share and for a total aggregate consideration of $1,921; on March 24, 2004, 400 shares of its common stock to an employee at a price of $11.45 per share and for a total aggregate consideration of $4,580; on March 24, 2004, 500 shares of its common stock to an employee at a price of $2.26 per share and for a total aggregate consideration of $1,130; on March 24, 2004, 600 shares of its common stock to an employee at a price of $8.65 per share and for a total aggregate consideration of $5,190; on March 30, 2004, 250 shares of its common stock to an employee at a price of $2.26 per share and for a total aggregate consideration of $565; on March 30, 3004, 300 shares of its common stock to an employee at a price of $11.45 per share and for a total aggregate consideration of $3,435; and on March 31, 2004, 300 shares of its common stock to an employee at a price of $1.00 per share and for a total aggregate consideration of $300.

Pursuant to the exercise of options under certain Non-Qualified Stock Option Agreements, the Company sold the following: on December 12, 2003, 5,000 shares of its common stock to a director at the price of $8.60 per share and for a total aggregate consideration of $43,000.

All of the transactions listed above were exempt under Section 4(2) of the Securities Act. The Company used the proceeds from these sales for general corporate purposes.

Item 6. Selected Financial Data

The following data should be read in conjunction with Part II Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and Part II Item 8, “Financial Statements and Supplementary Data.”

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Part II - Page 2

Supplemental Information

The following selected data has been derived from the Company’s audited financial statements for 2001 through 2005. All share and per share amounts have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

	Years Ended December 31,
	2005	2004	2003	2002	2001
Income Statement Data:	(Dollars in thousands, except for per share data)
Revenues	$ 87,552	$ 81,507	$ 74,714	$ 61,112	$ 49,049
Operating expenses	82,218	75,228	64,798	54,412	46,562
Operating income	5,334	6,279	9,916	6,700	2,487
Interest and other non-operating income	658	207	179	231	442
Interest expense			24	176	182

Net income	$ 3,726	$ 3,922	$ 6,163	$ 4,234	$ 1,633
Basic earnings per share (1)	$ .63	$ .66	$ 1.05	$ .85	$ .36
Diluted earnings per share (1)	$ .61	$ .62	$ .99	$ .68	$ .28

Balance Sheet Data:
Total assets	$ 34,834	$ 39,833	$ 27,699	$ 23,506	$ 17,589
Subordinated debt due to related party	---	---	---	3,500	3,500
Stockholders' equity	$ 19,544	$ 24,164	$ 20,663	$ 9,990	$ 6,186

Other Data:
Number of locations (2)	12	12	12	12	11
Net enrollments (3)	9,667	9,323	9,454	8,510	7,080
Average Student Population	6,034	5,991	5,859	5,069	4,257
Ending Student Population	5,741	5,148	5,732	5,056	4,269

(1)	See Note 10 of Notes to Consolidated Financial Statements for the basis of presentation of earnings per share.

(2) Includes only Campuses open at December 31.

(3) “Net enrollments” are students who begin a program of study, net of cancellations.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read with the Selected Financial Data and the Consolidated Financial Statements and Notes to Consolidated Financial Statements included elsewhere in this report.

Executive Summary

The Company began 2005 with a lower student population, 5,148 compared to 5,732 in 2004. This contributed to lower net income in the first and second quarter. The Company was able to improve enrollments during 2005 and increased the ending population to 5,741 at December 31, 2005. Student inquiries increased approximately 16% during 2005 compared to 2004. Enrollments as a percentage of leads decreased 1.2% during 2005. The Company generated more leads but the percentage of those students enrolling has decreased with more advertising dollars being spent on Internet advertising. Leads from Internet advertising have a lower conversion rate than other forms of advertising. Internet leads were 43.2% of all leads in 2005 compared to 33.7% in 2004. Payroll increased as ten new programs were added in 2005. Management believes it has the framework in place to provide training and oversight to the campuses and pursue future growth opportunities.

Overview

The Company owns and operates proprietary, postsecondary institutions that offer career vocational training programs in the allied health field. As of December 31, 2005, the Company operated Campuses at 12 locations in seven states (the “Campuses”). The Company’s revenue is derived almost entirely from tuition, textbook sales, fees and charges paid by, or on behalf of, our students. A large number of the Company’s students paid a substantial portion of tuition and other fees with funds received through student assistance financial aid programs under Title IV of the Higher Education Act of 1965, as amended (the "HEA"). The Company received approximately 80% of cash revenue from such funds for the year ended December 31, 2005.

The Company’s strategy over the next two years is to grow revenue primarily by increasing the number of programs offered at each of its twelve campuses and to open an additional location. Programs that are currently being offered by the Company will be transplanted to other campuses. Campuses currently offer an average of seven of the Company’s twelve primary programs. The Company has experience teaching each of the programs targeted for transplant, however due to regulatory requirements each transplanted program must receive its own regulatory approvals before being offered at a campus. The Company achieved its goal of transplanting ten new programs in 2005. The Company is generally required to hire staff, purchase equipment and have classroom space available prior to submitting new programs to accreditation bodies for approval. As a result the Company has incurred expenses for ten new program transplants (occupancy, depreciation and faculty) in advance of student enrollments.

Part II - Page 3

In 2003 and 2004, the Company invested heavily in capital expenditures to improve and expand facilities. Five Campuses were moved to larger facilities in 2003 and 2004, San Bernardino, California in February 2003, Arlington, Texas in June 2003, San Diego, California in January 2004, Denver, Colorado in March 2004, and Portland, Oregon in September 2004. In 2005, the capital expenditures spending decreased as a result of all scheduled Campus moves being completed. Capital expenditures were $3,731,000 in 2003, $6,147,000 in 2004, and $1,148,000 in 2005. The Company currently does not have any Campus moves scheduled for 2006.

The addition of classrooms and upgraded facilities has, and will provide the Company the space to expand program offerings at its Campuses. Three programs were added in 2003, eleven programs in 2004, and ten programs in 2005.

The Company has traditionally relied primarily on television and newspaper advertising to generate leads from prospective students. The Company increased the portion of its advertising expense dedicated to the Internet beginning in the fourth quarter of 2003. The investment in Internet advertising has resulted in a dramatic increase in the amount of Internet leads compared to total leads. Internet leads now represent over 43% of the Company’s total leads. The Company believes it must continue to improve the effectiveness of converting Internet leads into enrollments to effectively grow existing Campuses.

The Company’s revenue varies based on student enrollment and population. The number of students that attend our Campuses, the number of new enrollments during a fiscal period, student retention rates and general economic conditions impact student population. The introduction of new programs at certain campuses, improved advertising effectiveness and student retention have been significant factors of increased student population in prior years.

The Company and each of its campuses are subject to extensive regulation. These regulations cover virtually all phases of the Company’s operations, including the Company’s educational programs, facilities, instructional and administrative staff, administrative procedures, financial operations and financial strength. They also affect the Company’s ability to acquire or open additional Campuses or change the Company’s corporate structure. These regulatory agencies periodically revise their requirements and modify their interpretations of existing requirements. Each of the Company’s Campuses must be authorized by the state in which it operates, accredited by an accrediting commission that the U.S. Department of Education ("ED") recognizes, and certified by the ED to participate in Title IV Programs. Any substantial restrictions on the Campuses ability to participate in Title IV Programs would adversely affect our ability to enroll students, expand programs and student population.

The Company had a reduction in enrollments in the Vocational Nursing program at its North Hollywood, California Campus due to state board programmatic provisional accreditation extension beginning with the second quarter of 2004. The Company received notification in May 2004 that the program would not be allowed to enroll additional students until annual average minimum pass rates on the state licensure examination for graduates were within acceptable levels as required by the state board. As a result, the campus can not enroll students in the program without obtaining state board approval. The Campus was granted limited enrollments in July 2004 and June 2005. The Company believes that it has made appropriate changes to increase pass rates to an acceptable level. However, there can be no assurance that the state board will approve additional enrollments in the future and the board may require the Company to terminate the program. Enrollments for this program were 281 in 2003, 137 in 2004 and 25 in 2005. The Company has received state board approval for a start of 30 students that will occur in the first or second quarter of 2006.

The Company classifies programs in three general categories clinical, core and other. Clinical programs (Surgical Technology, Respiratory Therapy, Radiologic Technology, and Practical/Vocational Nurse) are generally 12 to 15 months in length. The weekend Vocational Nursing program and Radiological Technician are longer, 18 and 24 months respectively. Clinical programs utilize clinical training that occurs in a hospital or medical facility. Core programs (Medical Assistant, Dental Assistant, Massage Therapy, Medical Office Professional, and Insurance Coding and Billing Specialist) are generally 9 to 12 months in length and utilize an externship immediately prior to graduation. Externships occur in medical offices, dental offices, medical and dental clinics, medical facilities, and hospitals. The remaining programs are similar in nature to the core programs but are not currently offered in as many campuses as the core programs.

Revenues fluctuate as a result of seasonal variations in our business and due to capacity and scheduling limitations. These factors impact student population which varies as a result of new student enrollments and student attrition. Historically, the Campuses have had lower student enrollments in the fourth quarter of the year compared to the remainder of the year. This is due to fewer scheduled enrollments during the holiday periods of November and December. In addition, the Campuses utilize a non-traditional academic calendar with program start dates varying by location and type of program. Programs vary in length generally from 6 to 24 months. Program length impacts the scheduling of new starts in some programs. Expenses, however, do not vary as significantly as student population and revenues. The Company expects quarterly fluctuations in operating results to continue as a result of enrollment patterns, capacity and scheduling limitations. Such patterns may change, however, as a result of acquisitions, new school openings, increased capacity and new program introductions. The operating results for any quarter are not necessarily indicative of the results for any future period.

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The Company’s Campuses must be authorized by the state in which it operates, accredited by an accrediting commission that the U.S. Department of Education ("ED") recognizes, and certified by the ED to participate in Title IV Programs. Any substantial restrictions on the Campuses ability to participate in Title IV Programs would adversely affect our ability to enroll students.

Accounts receivable are due from students and are primarily expected to be paid through the use of federal and state sources of funds. Students are responsible for amounts not available through federal and state sources and unpaid amounts due when the student withdraws. The Company realized a higher level of uncollectible accounts receivable from students since October 2000. This was a result of the Higher Education Act of 1965 (“HEA”) refund provision that became effective October 7, 2000. Under the HEA requirements, students are obligated to the Company for education costs that the student can no longer pay with HEA Title IV funds. The Company began financing some students over longer periods in the first quarter of 2005 which has increased receivables due from students and the related provision for uncollectible accounts. The Company expects that non-Title IV accounts and notes receivable due from students may increase in the future as student enrollment increases and that the related provision for uncollectible accounts may also increase.

The following table presents the revenue for the periods indicated.

	Years Ended December 31,
	(In Thousands)
	2005	2004	2003
Revenue...........................................................................................................	$87,552	$81,507	$74,714

The following table presents the relative percentage of revenues derived and certain consolidated statement of operations items as a percentage of total revenues for the periods indicated.

	Years Ended December 31,
	2005	2004	2003
Revenue............................................................................................................	100.0%	100.0%	100.0%

Operating expenses:
Instruction costs and services..............................................................	31.2	32.2	30.1
Selling and promotional.........................................................................	16.3	14.0	13.2
General and administrative....................................................................	41.2	41.8	39.6
Provision for uncollectible accounts...................................................	5.2	4.3	3.9
Total operating expense.........................................................................	93.9	92.3	86.8
Operating income............................................................................................	6.1	7.7	13.2
Interest and other non-operating income...................................................	0.8	0.2	0.2
Income before income taxes.........................................................................	6.9	7.9	13.4
Provision for income taxes...........................................................................	2.6	3.1	5.2
Net Income.....................................................................................................	4.3%	4.8%	8.2%

Safe Harbor Statement

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. Statements in this Form 10-K containing the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” and similar expressions may be deemed to create forward-looking statements which, if so deemed, speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This Form 10-K may contain forward-looking comments. Such comments are based upon information currently available to management and management’s perception thereof as of the date of this Form 10-K and may relate to: (i) the ability of the company to realize increased enrollments from investments in infrastructure made over the past year; (ii) ED’s enforcement or interpretation of existing statutes and regulations affecting the Company’s operations; and (iii) the sufficiency of the Company’s working capital, financings and cash flow from operating activities for the Company’s future operating and capital requirements. Actual results of the Company’s operations could materially differ from those forward-looking comments. The differences could be caused by a number of factors or combination of factors including, but not limited to, potential adverse effects of regulations; impairment of federal funding; adverse legislative action; student loan defaults; changes in federal or state authorization or accreditation; changes in market needs and technology; changes in competition and the effects of such changes; changes in the economic, political or regulatory environments; litigation involving the Company; changes in the availability of a stable labor force; or changes in management strategies. Readers should take these factors into account in evaluating any such forward-looking comments.

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Current Trends and Recent Events

The Company has three campuses in Florida; Tampa, Lauderdale Lakes, and Jacksonville, that were impacted in some manner by the threat and effects of hurricanes in the third quarter of 2005. The Company’s Florida campuses are near coastal areas. While none of the Campuses experienced any material building damage, the Lauderdale Lakes Campus closed for approximately two weeks due to power outages. All three campuses experienced power outages, phone outages and intermittent closures due to the threat of storms at some point during the hurricane season.

The Company repurchased 600,000 shares of its common stock from the Robert F. Brozman Trust in a private transaction which closed in November 2005. The total aggregate purchase price was $9,066,000 or $15.11 per share. The price was determined using 95% of the average closing price of Company’s stock on the NASDAQ market over a 30 day period. The 30 day period began August 19, 2005 and ended September 30, 2005. The repurchase reduced the Company's outstanding shares approximately 10% from 6,055,333 before the transaction to 5,455,333 after the close of the transaction. Concorde purchased the shares with existing cash. The repurchase will be accretive to the Company's future earnings per share. The transaction was negotiated and approved by a special committee of Concorde’s board of directors consisting of all of its outside directors. The special committee retained a financial advisor, Legg Mason Wood Walker Incorporated (“Legg Mason”) to assist in the evaluation and negotiation of the transaction. Legg Mason, the independent financial advisor to the special committee, evaluated the fairness of the agreement from a financial point of view. The Company received all required regulatory approvals for the transaction.

The Company’s Board of Directors unanimously approved the accelerated vesting of all currently outstanding unvested stock options at a regularly scheduled board meeting in December 2005. The Options were previously awarded to executive officers and employees. The acceleration of vesting was effective with the closing of the market on December 19, 2005.

Concorde accelerated the vesting of 304,730 options of which 122,000 had a grant price greater than the market price on the date of acceleration. The weighted average exercise price of the accelerated options was $14.78. The decision to accelerate vesting of the Options and eliminate future non-cash compensation expense was based primarily on a review of the Company’s long-term incentive programs giving consideration for the effect on future financial statements upon the Company’s adoption of Financial Accounting Standards Board Statement No. 123 (R) (Share-Based Payment) in January 2006. Since the Company currently accounts for its stock options in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), it will report compensation expense related to the affected options for disclosure purposes only.

The Company appointed Harry T. Wilkins, CPA to the Board of Directors in July 2005. Mr. Wilkins is a founding partner in the firm Wilkins, Little & Matthews, LLP a Baltimore based C.P.A. firm specializing in consulting for postsecondary education clients. Mr. Wilkins was formerly the chief financial officer at Strayer Education, Inc from 1991 to 2001.

The student population was 5,741 at December 31, 2005 compared to 5,148 at December 31, 2004. The student population increase was primarily due to increased enrollment in the second, third and fourth quarters of 2005. Student enrollments increased 3.7% to 9,667 for the year ended December 31, 2005 compared to 9,323 in 2004.

The Company has experienced an increase in its provision for uncollectible accounts during 2005. The provision for uncollectible accounts was approximately 5.2% of revenue for the twelve months ended December 31, 2005 and 8.3% for the fourth quarter of 2005. The Company began financing some students over longer periods in the first quarter of 2005 which has increased receivables due from students and the related provision for uncollectible accounts. The Company is seeking alternative private sources of funding for students however; the Company’s provision for uncollectible accounts may continue to increase in the future.

Part II- Page 6

Operating Results

2005 compared to 2004

Student enrollments increased 344 or 3.7 % to 9,667 for the year ended December 31, 2005 compared to 9,323 in 2004. Ten new programs were added in 2005 and accounted for 241 additional enrollments. The remaining increase of 103 was a result of increased enrollments in existing programs. The Company changed its advertising mix, which increased leads from the Internet while reducing reliance on television and newspaper leads. Enrollments in clinical programs were 2,235 in 2005 compared to 1,994 in 2004. Enrollments in core and other programs were 7,432 in 2005 compared to 7,329 in 2004. The Company had 43 additional full time equivalent (“FTE”) employees for the year ended December 31, 2005 compared to year ended December 31, 2004.

Student population increased 11.5% to 5,741 at December 31, 2005 compared to 5,148 at December 31, 2004. Average student population for the year ended December 31, 2005 increased 0.7% to 6,034 compared to 5,991 for the same period in 2004.

Net income was $3,726,000 for the year ended December 31, 2005 compared to $3,922,000 in 2004. Profit decreased 5.0% as revenue increased $6,045,000 and was offset by increased expenses. In 2005, there were two less payroll days than in 2004.

Revenue increased 7.4% or $6,045,000 to $87,552,000 for the year ended December 31, 2005 compared to $81,507,000 for the same period in 2004. The revenue increased due to additional average student population and an approximate 7% tuition increase compared to 2004.

Instruction Costs and Services - increased 4.1% or $1,087,000 to $27,313,000 compared to $26,226,000 in 2004. The increase was a result of increased salary expense compared to 2004. Salaries increased $1,576,000 due to higher wages and an increase in the number of staff compared to 2004. Instructional FTE’s increased 2.3% or 9 to 392 in 2005 compared to 383 in 2004. The Company added additional instructional staff as the average population increased and in anticipation of new programs. Textbooks and classroom supplies accounted for the offsetting decrease.

Selling and Promotional -increased 24.5% or $2,798,000 to $14,233,000 compared to $11,435,000 in 2004. The increase is primarily a result of additional newspaper and Internet advertising compared to 2004. Television increased $534,000 to $4,063,000 compared to $3,529,000 in 2004. Newspaper increased $695,000 to $3,094,000 compared to $2,399,000 in 2004. Internet advertising increased $762,000 to $1,792,000 compared to $1,030,000 in 2004. Salaries increased $456,000 or 11.2% compared to 2004. The increase is a result of increased salaries and approximately eight additional FTE employees compared to 2004.

General and Administrative - increased 6.0% or $2,053,000 to $36,097,000 compared to $34,044,000 in 2004. Payroll increased $1,269,000 compared to 2004. Additional employees were added to support the Campuses with the new corporate structure and higher wages were factors in the increase. Health insurance increased $1,169,000 to $2,674,000 from $1,505,000 in 2004. Health insurance increased due to health insurance costs increasing and additional employees participating in the plan. Professional fees decreased $329,000 due to a decrease in legal fees. Employee procurement decreased $674,000 as expenses decreased for the cost of new hires. The Company also experienced increased and decreased expenses in several other categories.

Provision for Uncollectible Accounts - increased 29.9% or $1,052,000 to $4,575,000 compared to $3,523,000 in 2004. Accounts receivable due from dropped and graduated students increased $1,228,000 to $4,999,000 at December 31, 2005 compared to $3,771,000 at December 31, 2004. The Company began financing some students over longer periods in the first quarter of 2005 which has increased the provision for uncollectible accounts. The provision for uncollectible accounts may continue to increase in the future.

Interest Income - increased $451,000 to $658,000 for the year ended December 31, 2005 compared to $207,000 in 2004. This is a result of higher interest rates on the Company’s money invested and higher interest income generated from student notes. The Company maintains its cash and temporary investments in short-term highly liquid accounts including CD’s and money markets.

Interest Expense - No interest expense was recorded for 2005 or 2004.

Provision for Income Taxes - a tax provision of $2,266,000 or 37.8% of pretax income was recorded for the year ended December 31, 2005 compared to $2,564,000 or 39.5% in 2004.

EPS and Weighted Average Common Shares - Basic weighted average common shares decreased to 5,894,000 in 2005 from 5,980,000 in 2004. Common shares decreased due to the Company purchasing 600,000 shares from the Robert F. Brozman Trust in a private transaction. Basic income per share was $.63 in 2005 compared to $.66 in 2004. Diluted weighted average common shares outstanding decreased to 6,107,000 in 2005 from 6,322,000 in 2004. The average common shares decreased due to the Company purchasing 600,000 shares from the Robert F. Brozman Trust in a private transaction. Diluted income per share was $.61 for the year ended December 31, 2005 compared with $.62 in 2004.

Part II - Page 7

2004 compared to 2003

Student enrollments decreased 131 or 1.4 % to 9,323 for the year ended December 31, 2004 compared to 9,454 in 2003. Eleven new programs were added in 2004 and accounted for 346 additional enrollments. Enrollments decreased 144 at one campus due to a state board programmatic provisional accreditation extension (see Overview). The remaining decrease of 202 was a result of reduced enrollments in programs that have been active for at least twelve months. The decline in enrollments in this category is due to increased competition in health care programs and the Company’s inability to convert new student inquiries into enrollments. The Company has changed its advertising mix and has increased leads from the internet while reducing reliance on television and newspaper leads. Admission Representatives require additional training to properly convert Internet leads into enrollments. The Company changed its management structure in the fourth quarter and is focusing on this issue. Enrollments in clinical programs were 1,994 in 2004 compared to 1,892 in 2003. Enrollments in core and other programs were 7,329 in 2004 compared to 7,562 in 2003.

Student population decreased 10.2% to 5,148 at December 31, 2004 compared to 5,732 at December 31, 2003. Average student population for the year ended December 31, 2004 increased 2.3% to 5,991 compared to 5,859 for the same period in 2003.

Net income was $3,922,000 for the year ended December 31, 2004 compared to $6,163,000 in 2003. Profit decreased as expenses accelerated faster than revenue. The year ended December 31, 2004 included $131,000 of payroll expense related to one additional day of accrued payroll as compared to the same period in 2003. This occurred in the first quarter of 2004. The remaining quarters of 2004 had the same number of payroll days as the corresponding periods in 2003.

The Company was generally required to hire staff, purchase equipment and have classroom space available prior to submitting new programs to accreditation bodies for approval. As a result the Company has incurred expenses for new program transplants (occupancy, depreciation and faculty) in advance of student enrollments.

Revenue increased 9.1% or $6,793,000 to $81,507,000 for the year ended December 31, 2004 compared to $74,714,000 for the same period in 2003. The revenue increased due to additional average student population and an approximate 6% tuition increase compared to 2003.

Instruction Costs and Services - increased 16.7% or $3,744,000 to $26,226,000 compared to $22,482,000 in 2003. The increase was primarily a result of increased salary expense compared to 2003. Salaries increased $3,215,000 due to higher wages and an increase in the number of staff compared to 2003. The Company had 43 additional full time equivalent (“FTE”) employees for the year ended December 31, 2004 compared to year ended December 31, 2003. Instructional FTE’s increased 12.6% or 43 to 383 in 2004 compared to 340 in 2003. The Company added additional instructional staff as the average population increased and in anticipation of new programs. Textbooks and classroom supplies accounted for the remaining increase.

Selling and Promotional -increased 16.2% or $1,596,000 to $11,435,000 compared to $9,839,000 in 2003. The increase is primarily a result of additional newspaper and Internet advertising compared to 2003. Internet advertising increased $659,000 to $1,030,000 compared to $371,000 in 2003. Salaries increased $370,000 or 10.0% compared to 2003. The increase is a result of increased salaries and approximately three additional FTE employees compared to 2003.

General and Administrative - increased 15.1% or $4,460,000 to $34,044,000 compared to $29,584,000 in 2003. Rent expense increased $721,000. The increase was primarily the result of campus expansions and acceleration of the rent for the old locations. Five campuses were moved to new locations in 2003 and 2004 and additional space was leased at several campuses. The Company leased approximately 354,000 square feet of space at December 31, 2004 compared to 330,000 square feet at December 31, 2003. The square footage increased approximately 24,000 feet at December 31, 2004 compared to December 31, 2003. The Denver, Colorado Campus was moved to a new location during March 2004. The lease on the previous location expired July 31, 2004. The Company expensed the remaining lease liability of $103,000 for the old location in the first quarter of 2004. The Portland, Oregon campus moved to a new location in September 2004. The lease on the old location expired October 31, 2004. The Company paid rent for both the old and new location in September and expensed the remaining lease liability of $21,000 for the old location in September. Payroll increased $889,000 compared to 2003. Additional employees added support to the campuses, higher wages, and one additional day of payroll were factors in the increase. Depreciation expense increased $617,000 as capital expenditures increased during 2004. Capital expenditures were primarily related to leasehold improvements and new equipment for campus moves and transplanted programs. The Company has increased capital expenditures in the last two years in preparation of transplanting programs and moving campuses to new expanded facilities. Professional fees increased $486,000 due to regulatory filings and legal costs. Health insurance expense increased $319,000 due to increased claims, administrative expenses, and additional employees participating in the health plan. Employee procurement increased $371,000 as expenses increased for the cost of new hires. Outside services increased $333,000 compared to 2003. The primary factor related to this increase is approximately $257,000 related to Sarbanes-Oxley Section 404 compliance. This includes fees paid to Grant Thornton, L.L.P., who were contracted to assist the company with this compliance as well as BKD, LLP who audited the Company’s internal controls. The Company also experienced increased expenses in several other categories as average student population increased 2.3%.

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Provision for Uncollectible Accounts - increased $630,000 to $3,523,000 compared to $2,893,000 in 2003. Students that dropped from their program of study as a percentage of population increased to 6.2% in 2004 from 5.5% at December 31, 2003. Accounts receivable due from dropped students are generally less collectible than balances due from graduates. Therefore, an increase in the drop percentage in future quarters may lead to an increase in the provision for uncollectible accounts as a percentage of revenue in future periods. Accounts receivable due from dropped students increased $835,000 to $2,658,000 at December 31, 2004 compared to $1,823,000 at December 31, 2003.

Interest Income - increased to $207,000 for the year ended December 31, 2004 compared to $179,000 in 2003. The Company maintains its cash and temporary investments in short-term highly liquid accounts including CD’s and money markets.

Interest Expense - was $24,000 for the year ended December 31, 2003. The Company’s subordinated debt was eliminated in February 2003 and the Company was no longer required to make interest payments after that date. See discussion under Liquidity and Capital Resources.

Provision for Income Taxes - a tax provision of $2,564,000 or 39.5% of pretax income was recorded for the year ended December 31, 2004 compared to $3,908,000 or 38.8% in 2003.

EPS and Weighted Average Common Shares - Basic weighted average common shares increased to 5,980,000 in 2004 from 5,880,000 in 2003. Common shares increased due to the Company’s employee stock purchase plan and stock options exercised. Basic income per share was $.66 in 2004 compared with $1.05 in 2003. Diluted weighted average common shares outstanding increased to 6,322,000 in 2004 from 6,250,000 in 2003. The average common shares increased due to stock options not yet exercised. Diluted income per share was $.62 for the year ended December 31, 2004 compared with $.99 for 2003.

2003 compared to 2002

Student population was 5,732 at December 31, 2003 compared to 5,056 at December 31, 2002. The student population increase was primarily due to increased demand for courses. Student enrollments increased 11.1% to 9,454 for the year ended December 31, 2003 compared to 8,510 in 2002. Three new courses added 211 enrollments to the Campuses during 2003. The Arlington, Texas campus purchased in August 2002 contributed 155 additional enrollments compared to 2002 excluding one new course mentioned above. The remaining enrollment increase of 578 or 6.8% was from existing programs at established Campuses.

Net income of $6,163,000 was recorded for the year ended December 31, 2003 compared to $4,234,000 for the year ended December 31, 2002. The increase in net income was attributable to increased student enrollment and related revenues exceeding increased costs. Total operating expense as a percentage of revenue decreased to 86.8% in 2003 from 89.0% in 2002.

Revenue increased 22.3% or $13,602,000 to $74,714,000 for the year ended December 31, 2003 compared to $61,112,000 in 2002. Revenue increased due to higher student enrollments, increased average student population and an approximate 5.4% price increase. Approximately $416,000 of the revenue increase was due to the elimination of an estimate for refunds of tuition. Average student population increased 15.6% to 5,859 in 2003 compared with 5,069 in 2002.

Instruction Costs and Services - increased $3,773,000 or 20.2% to $22,482,000 compared to $18,709,000 in 2002. The increase from 2002 was primarily a result of increased salaries, textbooks, and uniform expense due to additional enrollments. Salaries increased $2,846,000 and textbook and uniform expense increased $927,000 compared to 2002. The average per hour wage for the instructional staff increased approximately 5%. There was an approximate 15% increase in full time equivalent (“FTE”) employees compared to 2002. This was a result of the enrollment growth the Company had in 2003. Textbook and uniform expense increased as a result of the enrollment growth.

Selling and Promotional - increased $1,449,000 or 17.3% to $9,839,000 compared to $8,390,000 in 2002. The increase was due to additional advertising expense and salaries compared to 2002. Advertising expense increased $1,238,000 to generate more leads. The Company’s two major advertising sources, television and newspaper, increased a combined $1,019,000 or 26.8% compared to 2002. The Company also increased Internet advertising $188,000 and anticipates increased spending in this area in 2004. Salaries increased 6.0% or $211,000 due to regular salary increases and an approximate 7% increase in FTE employees.

General and Administrative - increased 23.9% or $5,713,000 to $29,584,000 compared to $23,871,000 in 2002. The increase was primarily the result of additional payroll, rent, insurance expense, depreciation, and employee procurement. Administrative payroll increased $1,500,000 as the Company added staff at Campuses to provide services for the increased enrollments. Administrative FTE employees increased approximately 10% in 2003 compared to 2002. As the Company grows, additional staff will be required to effectively service students. Rent increased $851,000 due to annual rent increases, additional leased space at current locations, and higher rent due to two Campus moves. The Company moved two Campuses to larger facilities in 2003 due to capacity and parking constraints. The Arlington, Texas Campus moved in June 2003 and the San Bernardino, California Campus moved in February 2003. The Arlington Campus, purchased in August 2002, added rent expense with the facility move in 2003. In addition, the Company did not have a full year of rent expense for Arlington in 2002. The Company added space at several locations during 2003 in anticipation of adding new programs. Insurance expense increased $332,000 compared to 2002 from increased insurance premiums. All categories of insurance expense increased compared to the prior year. However, Worker’s Compensation insurance accounted for the largest increase. The Company has improved management of Worker’s Compensation insurance in the past three years. This has offset increased rates mandated by individual states. Depreciation expense increased $451,000 to $1,408,000 compared to $957,000 in 2002. Depreciation has increased as capital expenditures increased for 2003 to $3,264,000. Capital expenditures related to the two Campus moves were $1,640,000 for leasehold improvements and equipment. Employee procurement increased $536,000 to $1,297,000 compared to $761,000 in 2002. The Company has seen a significant increase in this expense due to enrollment growth and increased competition to hire qualified instructors and staff. The Company experienced increased expenses in most other general and administrative expense categories as enrollment increased 11.1% compared to 2002. In 2002, the Company received an insurance settlement of $306,000 for damages at the Lauderdale Lakes, Florida Campus in 2000. The settlement was recorded as a reduction of expense in the fourth quarter of 2002

Part II - Page 9

Provision for Uncollectible Accounts - decreased $549,000 during 2003. The Company improved student retention and increased efforts in the collections area. The number of student drops as a percentage of population decreased to 5.5% in 2003 from 6.3% in 2002. A higher percentage of students completing their programs generally results in lower write-offs. The Company also improved its’ collections of student receivables for students out of school. However, the provision as a percentage of revenue has increased each quarter in 2003. The Company anticipates that the provision for uncollectible accounts may increase in future periods as enrollments increase.

Interest Income - decreased $52,000 to $179,000 compared to $231,000 in 2002. Interest income continued to decrease due to falling interest rates in 2003. The Company had larger cash balances in 2003 but the interest rate decreases accounted for the decreased interest income.

Interest Expense - decreased $152,000 to $24,000 compared to $176,000 in 2002 due to conversion of the subordinated debt to equity. The Company anticipates it will not have any interest expense in 2004.

Provision for Income Taxes - a tax provision of $3,908,000 or 38.8% of pretax income was recorded in 2003 compared to $2,521,000 or 37.3% of pretax income in 2002.

EPS and Weighted Average Common Shares - Basic weighted average common shares increased to 5,880,000 in 2003 from 4,533,000 in 2002. Basic income per share was $1.05 in 2003 compared to $.85 in 2002. Basic income per share is shown after a reduction for preferred stock dividend accretion of $214,000 in 2002. In addition, basic income per share is shown after the special dividend payment of $174,000 for the early payment of the 2003 dividends; see discussion of Cahill, Warnock transaction under Liquidity and Capital Resources. Diluted weighted average common shares outstanding increased to 6,250,000 in 2003 from 6,142,000 in 2002. Diluted income per share was $.99 for the year ended December 31, 2003 compared to $.68 in 2002. Diluted income per share is shown after interest on convertible debt, net of tax of $108,000 in 2002. In addition, diluted income per share is shown after the special dividend payment of $174,000 for the early payment of the 2003 dividends; see discussion of Cahill, Warnock transaction under Liquidity and Capital Resources.

Liquidity and Capital Resources

The Company’s students paid a substantial portion of tuition and other fees with funds received through student assistance financial aid programs under Title IV of the Higher Education Act of 1965, as amended (the "HEA"). The Company received approximately 80% of cash revenue from such funds for the year ended December 31, 2005 compared to 79% for 2004. Nearly 100% of the Company’s students qualify for some type of federal financial assistance.

Cahill, Warnock Transactions

The Company entered into agreements on February 25, 1997 with Cahill, Warnock Strategic Partners Fund, LP and Strategic Associates, LP, affiliated Baltimore-based venture capital funds (“Cahill-Warnock”), for the issuance by the Company and purchase by Cahill-Warnock of 55,147 shares of the Company’s new Class B Voting Convertible Preferred Stock (“Voting Preferred Stock”) for $1.5 million, and 5% Debentures due 2003 (“New Debentures”) for $3.5 million (collectively, the “Cahill Transaction”). Cahill-Warnock subsequently assigned (with the Company’s consent) its rights and obligations to acquire 1,838 shares of Voting Preferred Stock to James Seward, who was a Director of the Company at that time. Mr. Seward purchased such shares for their purchase price of approximately $50,000. On September 30, 2001, Mr. Seward converted his 1,838 shares of Voting Preferred Stock into 18,380 shares of Common Stock. The New Debentures had nondetachable warrants (“Warrants”) for approximately 1,286,765 shares of Common Stock, exercisable at $2.72 per share of Common Stock. The following transactions have occurred with respect to the Voting Preferred Stock and New Debentures since December 31, 2001:

Part II - Page 10

(1)	The Company entered into a Conversion and Exchange Agreement with Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Association, L.P. (collectively “Cahill-Warnock”) on November 25, 2002. The purpose of the agreement was to convert the Voting Preferred Stock into Common Stock.

(2)

The Company filed a Registration Statement on Form S-3 to register 1,133,090 shares of common stock. The Registration Statement was effective February 5, 2003. The Company received no funds as a result of the registration or subsequent distribution of common stock. Six hundred thousand (600,000) shares of the common stock were issued and outstanding as of the date of the Registration Statement. The Robert F. Brozman Trust held 350,000 shares, Cahill, Warnock Strategic Partners Fund, L.P. held 237,000 shares, and Strategic Associates, L.P. held 13,000 shares. The remaining 533,090 shares related to common shares issued upon conversion of the preferred stock to common stock.

(3)	The Securities and Exchange Commission declared the Registration Statement effective February 5, 2003.

(4)	Cahill-Warnock exchanged their 53,309 shares of Class B Voting Convertible Preferred Stock for 533,090 shares of Common Stock on February 7, 2003. The Company has no remaining Preferred Stock outstanding.

(5)

The Company paid to Cahill-Warnock a dividend equal to $4.08 per share of the Class B Voting Convertible Preferred Stock on February 7, 2003. This constituted all dividend payments owed to Cahill-Warnock including the fourth quarter 2002 dividend of $43,500 and a special dividend to encourage the conversion of $174,000.

(6)	Cahill-Warnock exercised the non-detachable Warrants on February 19, 2003, at which time they were cancelled.

(7)	The Company issued 1,286,765 shares of Common Stock to Cahill-Warnock pursuant to the exercise of the Warrants and the New Debentures were cancelled, effective February 19, 2003.

(8)	The Company filed a Registration Statement on Form S-3 to register 1,286,765 shares of common stock. The Registration Statement was effective March 26, 2004. The Company received no funds as a result of the registration.

Credit Facility

The Company secured a $3,000,000 revolving credit facility with Security Bank of Kansas City in 1997. This facility expired on April 30, 2005. The Company had adequate cash and temporary investments to meet current and expected funding requirements as a result, the Company did not renew the facility.

Other

The Company entered into a $371,000 letter of credit with Commerce Bank in March 2005. The letter of credit is used to secure workers compensation claims for the Company’s worker’s compensation insurance from April 1, 2004 through March 31, 2006. The letter of credit is secured by a certificate of deposit in the same amount that matures on March 31, 2006.

The Company changed its worker’s compensation insurance plan from a guaranteed cost plan to a high deductible plan effective April 1, 2004. The high deductible plan requires the Company to pay all workers’ compensation claims for the plan year as they are incurred up to certain limits in addition to a premium paid to the insurance carrier for claims processing and administrative costs. The Company will pay individual claims up to $250,000 with an annual aggregate deductible of $1,250,000. The previous plan required the Company to pay premiums to its insurance carrier for all estimated costs of the worker’s compensation claims with the carrier assuming all risk for individual claims with no deductible. The Company believes that by assuming the risk associated with the plan that it will reduce the overall cost associated with worker’s compensation insurance for current and future periods. The Company’s worker’s compensation claims for any of the prior four years have not exceeded $371,000 and in most years have been significantly below this amount.

In 2005, the Company increased individual stop loss reinsurance for its employee health insurance plan to $100,000 from $75,000. The Company also eliminated the aggregate stop loss insurance coverage of approximately $3,000,000 because the health insurance claims have been significantly below the aggregate amount. The changes to reinsurance should reduce the health care expense as compared to the prior plan.

Cash Flows and Other

Cash provided by operating activities was $4,788,000 for the year ended December 31, 2005 compared with $6,416,000 in 2004. Cash flows from operating activities primarily decreased due to an increase in accounts and notes receivable, net of prepaid tuition and the provision for uncollectible accounts of $682,000; off-set by a change in income taxes payable/recoverable of $642,000 and a decrease of $1,817,000 for leasehold improvement reimbursements.

Cash provided by investing activities was $2,050,000 for the year ended December 31, 2005 compared to cash used in 2004 of $10,569,000. Capital expenditures decreased $4,999,000 in 2005 compared to 2004. Capital expenditures decreased as the Company’s major Campus moves were completed in 2003 and 2004. The Company had a net decrease of $3,211,000 in short term investments in 2005 compared with a net increase of $4,374,000 in 2004.

Part II - Page 11

Cash used by financing activities was $8,346,000 for the year ended December 31, 2005 compared $421,000 in 2004. The primary difference was the result of the Company purchasing 600,000 shares of stock from the Robert F. Brozman Trust for $9,066,000 in a private transaction.

The Board approved a 500,000 shares repurchase program in August 2000. The Board approved a 500,000 share increase to its repurchase program in November 2004. The authorization increased the total repurchase program to 1,000,000 shares. As of December 31, 2005, the Company had purchased a total of 335,735 shares at an average price of $5.73 pursuant to the plan. The Company purchased 19,900 shares during 2002 at an average price of $11.18, 2,800 shares during 2003 at an average price of $12.52, and 56,800 shares at an average price of $14.57 in 2004. The share repurchase plan remains in effect.

The Company repurchased 600,000 shares of its common stock from the Robert F. Brozman Trust in a private transaction. The total aggregate purchase price was $9,066,000 or $15.11 per share. The price was determined using 95% of the average closing price of Company’s stock on the NASDAQ market over a 30 day period. The 30 day period began August 19, 2005 and ended September 30, 2005. The repurchase reduced the Company's outstanding shares approximately 10% from 6,055,333 before the transaction to 5,455,333 after the close of the transaction. Concorde purchased the shares with existing cash. The repurchase will be the accretive to the Company's future earnings per share.

The transaction was negotiated and approved by a special committee of Concorde’s board of directors consisting of all of its outside directors. The special committee retained a financial advisor, Legg Mason Wood Walker Incorporated (“Legg Mason”) to assist in the evaluation and negotiation of the transaction. Legg Mason, the independent financial advisor to the special committee, evaluated the fairness of the agreement from a financial point of view. The Company received all required regulatory approvals for the transaction.

The Company has incentive stock option plans (the “2002 Option Plan,” “2000 Option Plan” and the “1998 Option Plan”) which authorize the Company to issue 300,000, 125,000 and 250,000 shares, respectively, of its common stock to certain officers and employees of the Company. Options for all plans, including the 2003 Compensation Plan, are granted at fair market value or greater on the date of grant for a term of not more than ten years unless options are canceled due to employee termination. As of December 31, 2005, 267,067 shares remain available to be granted with all of the option plans.

On February 27, 2003 the Board unanimously adopted the Concorde Career Colleges, Inc. Restated Employee Stock Purchase Plan (“Employee Plan”). The Plan was approved by the Company’s shareholders at its Annual Meeting held on May 22, 2003. An aggregate of 75,000 shares of Common Stock of the Company are subject to the Employee Plan and are reserved for issuance under such Plan. Options to purchase 15,000 shares of Common Stock of the Company are to be offered to participants for purchase in the first year (commencing October 1, 2003 and ending September 30, 2004) and each of the four succeeding plan years. The option price of Common Stock purchased with payroll deductions made during such annual, semi-annual or calendar-quarterly offering for participant therein shall be the lower of:

(a)

95% of the closing price of the Common Stock on the Offering Commencement Date or the nearest prior business day on which trading occurred on the NASDAQ Stock Market; or

(b)

95% of the closing price of the Common Stock on the Offering Termination Date or the nearest prior business day on which trading occurred on the NASDAQ Stock Market.

The Company meets its working capital, capital equipment purchases and cash requirements with funds generated internally. Management currently expects its cash on hand, funds from operations and borrowings available under existing credit facilities to be sufficient to cover both short-term and long-term operating requirements. However, cash flows are dependent on the Company’s ability to maintain Title IV eligibility, maintain demand for programs and to minimize uncollectible accounts receivable through effective collections and improved retention.

The Company has no off balance sheet financing arrangements.

Part II- Page 12

Contractual Obligations and Commercial Commitments

The Company’s contractual obligations and other commercial commitments are summarized below as of December 31, 2005:

Year Ending December 31,	Facility Operating Leases	Other Operating Lease	Capital Asset Obligations	Purchase Obligations
2006	$ 5,359,000	$ 16,000	$ 352,000	$ 409,000
2007	5,179,000	16,000	---	141,000
2008	5,150,000	6,000	---	36,000
2009	4,899,000	---	---	---
2010	4,630,000	---	---	---
Thereafter	20,458,000	---	---	---
Total	$ 45,675,000	$ 38,000	$ 352,0000	$ 586,000

Facility operating leases consist of the Company rental agreements for its building and office space rentals.

The other operating lease is for the Chief Executive Officer’s automobile.

Capital asset obligations consist of contracts for leasehold improvements and classroom equipment at several campuses.

Purchase obligations consist of outstanding purchase orders and commitments for telecommunications and copier contracts.

Critical Accounting Policies and Estimates

The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles. The preparation of the financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities, revenues and expenses and contingent assets and liabilities. Actual results may differ from those estimates and judgments under different assumptions or conditions. The Company evaluates on a continuing basis, our estimates, including those related to allowance for uncollectible accounts and intangible assets. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The Company believes the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

Allowance for Uncollectible Accounts

Accounts and notes receivable are due from students and are expected to be paid primarily through the use of federal and state sources of funds. Students are responsible for amounts not available through federal and state sources and unpaid amounts due when the student withdraws. The Company offers a variety of payment plans to students for payment of the portion of their education expense not covered by financial aid programs. These balances are unsecured and not guaranteed. The Company began financing some students over longer periods in the first quarter of 2005 which has increased receivables due from students and the related provision for uncollectible accounts. The Company maintains an allowance for uncollectible accounts for estimated losses resulting from the inability or failure of our students to make required payments. The Company bases its allowance for uncollectible accounts on the aging of student payments. Historical experience of the collection of student payments is analyzed to assign each aging category a percentage that the Company believes will be uncollectible. The allowance percentages range from 4.0% to 100% based on the aging category of the student balances. The Company continually tests its allowance and has found that it is reasonable. The Company realized a higher level of uncollectible accounts receivable from students during 2005 compared to 2004. The provision for uncollectible accounts as a percentage of revenue was 5.2% in 2005 compared to 4.3% in 2004. Depending on the effectiveness of the Company’s internal and external collection efforts, the provision for uncollectible accounts may vary as a percentage of revenue in future periods. The Company expects that non-Title IV accounts and notes receivable due from students may increase in the future as student enrollment increases and that the related provision for uncollectible accounts may also increase. Based on the Company’s analysis, the Company believes its’ allowance for uncollectible accounts is reasonable. However, losses may exceed the allowance if students pay at different rates than they did historically.

Intangible Assets

The Company has intangible assets, including goodwill and non-compete agreements. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments. The Company reviews intangible assets whenever certain events occur or there are changes in circumstances for impairment by comparing the carrying value to future undiscounted cash flows. To the extent that there is impairment, analysis is performed based on several criteria, including but not limited to, revenue trends, discounted operating cash flows and other operating factors to determine the impairment amount. In addition, a determination is made by management to ascertain whether goodwill has been impaired. Analysis is performed on an operating business unit basis under the fair value method. If the review indicates that goodwill is not recoverable, the Company would recognize an impairment loss.

Part II - Page 13

Revenue Recognition

The Company historically established an account receivable and corresponding deferred revenue liability for each student upon commencement of a program of study. The Company changed its method of recording receivables on a prospective basis effective with the quarter that began July 1, 2005.

The Company now records, at the completion of each financial period, an entry to reflect the appropriate receivable due for that financial period. Payments are recorded as received and applied to the student account reducing the related receivable. Payments received for a student account in excess of the receivable due is reflected as Prepaid Tuition, a liability due to the student.

The effect of the reclassification was to reduce the account receivable balance, eliminate the deferred revenue liability and record any balance of cash received in excess of tuition earned as prepaid tuition. Prior periods have been changed for comparative purposes. There was no change to revenue or the allowance or provision for uncollectible accounts as a result of this reclassification. In addition, this reclassification did not change the Company’s cash flow from operations.

The following table identifies the reclassification of balance sheet accounts.

December 31, 2004	As Previously Presented	Reclassification	As Presented Herein
Net current receivables	$ 22,220,000	$ (19,076,000)	$ 3,144,000
Net long-term notes receivable	1,123,000	---	1,123,000
Deferred revenues	(24,582,000)	24,582,000	---
Prepaid tuition	----	(5,506,000)	(5,506,000)

Deferred revenues/prepaid tuition in excess of net accounts and notes receivable	$ (1,239,000)	$ ---	$ (1,239,000)

Tuition and non-refundable registration fees are recognized into income ratably over the length of the program including externship if applicable. If a student withdraws from a program, the unearned portion of the tuition for which the student has paid is refunded on a pro-rata basis. Textbook and uniform sales are recognized when they occur.

Most students enrolled at the Campuses utilize state and federal government grants and/or guaranteed student loan programs to finance their tuition. During 2005, 80 percent of its cash receipts were derived from funds obtained by students through federal Title IV student aid programs and 20 percent were derived from state sponsored student education and training programs and cash received from students and other sources.

Contingencies

The Company assessed each Campus’ compliance with the regulatory provisions contained in 34 CFR 600.5(d) - (e) for the year ended December 31, 2005. These provisions state that the percentage of cash revenue derived by federal Title IV student assistance program funds cannot exceed 90% of total cash revenues. This is commonly referred to as the 90/10 Rule which was modified as part of legislation extending the Higher Education Act of 1965, as amended. During 2005, the Campus’ percentages of Title IV Funds ranged from 66.9% to 87.4%.

New Accounting Pronouncements

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (revised), "Share-Based Payment" ("SFAS 123(R)" or the “standard”). The standard requires expensing of stock options and other share-based payments beginning in 2005, and supersedes FASB's earlier rule (the original SFAS 123) that had allowed companies to choose between expensing stock options or showing pro forma disclosure only. Public companies will be required to measure the cost of employee services received in exchange for an award of equity instruments based on a grant-date fair value of the award (with limited exceptions), and that cost must generally be recognized over the vesting period. The FASB does not specify a preference for using a closed form valuation method (such as Black Scholes Merton) or a lattice method (such as a binomial model). The Company is required to implement the standard as of January 1, 2006. Transition provisions set forth by SFAS 123(R) include the “modified prospective” method and “modified retrospective” method.

Part II - Page 14

In December 2005, the Company’s Board of Directors unanimously approved the accelerated vesting of all currently outstanding unvested stock options. The Options were previously awarded to executive officers and employees. The acceleration of vesting was effective with the closing of the market on December 19, 2005.

The decision to accelerate vesting of the Options and eliminate future non-cash compensation expense was based primarily on a review of the Company’s long-term incentive programs giving consideration for the effect on future financial statements upon the Company’s adoption of Financial Accounting Standards Board Statement No. 123 (R) (Share-Based Payment) in January 2006. Since the Company currently accounts for its stock options in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"), it will report compensation expense related to the affected options for disclosure purposes only in its 2005 Form 10K.

SFAS 153, Exchanges of Non-monetary Assets - Issued December 16, 2004, SFAS 153 represents an amendment of APB No. 29, Accounting for Non-monetary Transactions. SFAS 153 is effective for the Company on January 1, 2006. The Company does not expect this pronouncement will have a material impact on its financial condition, results of operations or cash flows.

SFAS 151, Inventory Costs - Issued November 24, 2004, SFAS 151 represents an amendment of ARB No. 43, Chapter 4. FASB announced it believes SFAS 151 will improve financial reporting by clarifying that abnormal amount of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and by requiring the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. SFAS 151 is effective for the Company on January 1, 2006. The Company does not expect this pronouncement will have a material impact on its financial condition, results of operations or cash flows.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

The Company’s exposure to market risk for changes in interest rates relate to the increase or decrease in the amount of interest income the Company can earn on short-term investments in certificate of deposits and cash balances. Because the Company’s investments are in short-term, investment-grade, interest-bearing securities, the Company is exposed to minimum risk on the principal of those investments. The Company ensures the safety and preservation of its invested principal funds by limiting default risks, market risk and investment risk. The Company does not use derivative financial instruments.

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Part II- Page 15

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Concorde Career Colleges, Inc. and Subsidiaries:

Report of Management on Concorde Career Colleges, Inc.’s Internal Control over Financial Reporting......................................... II-16

Report of Independent Registered Public Accounting Firm..................................................................................................................... II-17

Report of Independent Registered Public Accounting Firm..................................................................................................................... II-18

Consolidated Balance Sheets-December 31, 2005 and 2004...................................................................................................................... II-19

Consolidated Statements of Operations-Years Ended December 31, 2005, 2004 and 2003................................................................... II-21

Consolidated Statements of Cash Flows-Years Ended December 31, 2005, 2004 and 2003................................................................... II-22

Consolidated Statements of Changes In Stockholders' Equity-

Years Ended December 31, 2005, 2004 and 2003 ........................................................................................................................................... II-23

Notes to Consolidated Financial Statements-Years Ended December 31, 2005, 2004 and 2003............................................................. II-24

Report of Management on Concorde Career Colleges, Inc.’s Internal Control over Financial Reporting

February 16, 2006

We, as members of management of Concorde Career Colleges, Inc., are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

We, under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, assessed the Company's internal control over financial reporting as of December 31, 2005, based on criteria for effective internal control over financial reporting described in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, we concluded that we maintained effective internal control over financial reporting as of December 31, 2005, based on the specified criteria.

Management's assessment of the effectiveness of our internal control over financial reporting has been audited by BKD, LLP, an independent registered public accounting firm, as stated in their report which is included herein.

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Part II- Page 16

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee, Board of Directors and Stockholders

Concorde Career Colleges, Inc.

Mission, Kansas

We have audited the accompanying consolidated balance sheets of Concorde Career Colleges, Inc. and subsidiaries as of December 31, 2005 and 2004 and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Concorde Career Colleges, Inc. and subsidiaries as of December 31, 2005 and 2004 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Concorde Career Colleges, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 17, 2006 expressed unqualified opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting.

BKD, LLP

Kansas City, Missouri

February 17, 2006

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Part II- Page 17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Audit Committee, Board of Directors and Stockholders

Concorde Career Colleges, Inc.

Mission, Kansas

We have audited management’s assessment, included in the accompanying Report of Management on Concorde Career Colleges, Inc. Internal Control over Financial Reporting, that Concorde Career Colleges, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Concorde Career Colleges, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, Concorde Career Colleges, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of Concorde Career Colleges, Inc. and Subsidiaries and our report dated February 17, 2006 expressed an unqualified opinion thereon.

BKD, LLP

Kansas City, Missouri

February 17, 2006

Part II - Page 18

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

	December 31,
	2005	2004
Current Assets:
Cash and cash equivalents............................................................................	$ 11,168,000	$ 12,676,000
Short-term investments..................................................................................	3,355,000	6,570,000
Receivables
Accounts and notes receivable...............................................................	6,494,000	5,183,000
Allowance for uncollectible accounts and notes.................................	(2,313,000)	(2,039,000)
Net receivables..................................................................................	4,181,000	3,144,000
Recoverable income taxes...........................................................................	647,000	1,197,000
Deferred income taxes...................................................................................	1,131,000	992,000
Supplies and prepaid expenses...................................................................	2,207,000	2,803,000
Total current assets...........................................................................	22,689,000	27,382,000

Fixed Assets, Net.............................................................................................	8,836,000	9,896,000

Other Assets.....................................................................................................
Notes receivable.......................................................................................	3,068,000	1,709,000
Allowance for uncollectible notes...........................................................	(1,115,000)	(586,000)
Net long-term notes receivable.........................................................	1,953,000	1,123,000
Goodwill......................................................................................................	954,000	954,000
Intangible, net............................................................................................	31,000	111,000
Restricted short-term investments.........................................................	371,000	367,000
Total other assets...............................................................................	3,309,000	2,555,000
	$ 34,834,000	$ 39,833,000

The accompanying notes are an integral part of these consolidated statements.

Part II- Page 19

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

	December 31,
	2005	2004
Current Liabilities:
Prepaid tuition...............................................................................................	$ 5,677,000	$ 5,506,000
Accrued salaries and wages.........................................................................	1,736,000	1,830,000
Accounts payable..........................................................................................	3,427,000	3,638,000
Accrued liabilities...........................................................................................	2,078,000	1,780,000
Total current liabilities...............................................................................	12,918,000	12,754,000
Long Term Liabilities:
Deferred rent...................................................................................................	1,847,000	1,874,000
Deferred income taxes...................................................................................	525,000	1,041,000
Total long term liabilities...........................................................................	2,372,000	2,915,000
Stockholders’ Equity:
Common stock, ($.10 par value, 19,400,000 shares authorized) 6,409,644 shares issued and 5,462,084 shares outstanding in 2005 and 6,318,573 shares issued and 5,970,755 shares outstanding in 2004..............................................	641,000	632,000
Capital in excess of par..................................................................................	15,346,000	14,636,000
Retained Earnings..........................................................................................	14,602,000	10,876,000
Less treasury stock, 947,560 shares in 2005 and 347,818 in 2004, at cost.........................................................................................	(11,045,000)	(1,980,000)
Total stockholders’ equity............................................................................	19,544,000	24,164,000
	$ 34,834,000	$ 39,833,000

The accompanying notes are an integral part of these consolidated statements.

Part II- Page 20

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2005	2004	2003
Net Revenues.................................................................................	$ 87,552,000	$ 81,507,000	$ 74,714,000
Operating Expenses:
Instruction costs and services.................................................	27,313,000	26,226,000	22,482,000
Selling and promotional............................................................	14,233,000	11,435,000	9,839,000
General and administrative.......................................................	36,097,000	34,044,000	29,584,000
Provision for uncollectible accounts......................................	4,575,000	3,523,000	2,893,000
Total Costs and Expenses	82,218,000	75,228,000	64,798,000
Operating Income...........................................................................	5,334,000	6,279,000	9,916,000
Interest Income...............................................................................	658,000	207,000	179,000
Interest Expense.............................................................................			24,000
Income before Provision for Income Taxes...............................	5,992,000	6,486,000	10,071,000
Provision for Income Taxes.........................................................	2,266,000	2,564,000	3,908,000
Net Income Available to Common Shareholders.....................	$ 3,726,000	$ 3,922,000	$ 6,163,000
Weighted Average Shares Outstanding:
Basic...........................................................................................	5,894,000	5,980,000	5,880,000
Diluted........................................................................................	6,107,000	6,322,000	6,250,000
Net Income Per Share:
Basic...........................................................................................	$ .63	$ .66	$ 1.05
Diluted.......................................................................................	$ .61	$ .62	$ .99

The accompanying notes are an integral part of these consolidated statements.

Part II- Page 21

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended December 31,
	2005	2004	2003
Cash Flows Operating Activities:
Net income...............................................................................................	$ 3,726,000	$ 3,922,000	$ 6,163,000
Adjustments to reconcile net income to net cash provided by operating activities - -
Depreciation and amortization..........................................................	2,116,000	2,146,000	1,513,000
Provision for uncollectible accounts...............................................	4,575,000	3,523,000	2,893,000
Provision for deferred income taxes.................................................	(655,000)	454,000	390,000
Leasehold improvement incentives..................................................	266,000	2,083,000	27,000
Change in assets and liabilities - -
Accounts and notes receivables, net...............................................	(6,532,000)	(3,669,000)	(6,193,000)
Prepaid tuition......................................................................................	171,000	(958,000)	4,544,000
Income taxes payable/receivable.......................................................	550,000	(1,201,000)	231,000
Accounts payable, accrued expenses and other.............................	571,000	116,000	886,000
Total adjustments.................................................................................	1,062,000	2,494,000	4,291,000
Net operating activities........................................................................	4,788,000	6,416,000	10,454,000
Cash Flows Investing Activities:
Maturity (purchase) of short-term investments..................................	3,211,000	(4,374,000)	(42,000)
Acquisition of intangible assets............................................................	(13,000)	(48,000)
Capital expenditures.................................................................................	(1,148,000)	(6,147,000)	(3,731,000)
Net investing activities..........................................................................	2,050,000	(10,569,000)	(3,773,000)
Cash Flows Financing Activities:
Treasury stock...........................................................................................	(9,065,000)	(828,000)	(35,000)
Dividends paid..........................................................................................			(218,000)
Stock options exercised, including tax benefit.....................................	619,000	287,000	930,000
Stock purchase plan..................................................................................	100,000	120,000	115,000
Net financing activities.........................................................................	(8,346,000)	(421,000)	792,000
Net Increase (Decrease) in Cash and Cash Equivalents.........................	(1,508,000)	(4,574,000)	7,473,000
Cash and Cash Equivalents at Beginning of Year...................................	12,676,000	17,250,000	9,777,000
Cash and Cash Equivalents at End of Year..............................................	$ 11,168,000	$ 12,676,000	$ 17,250,000
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year For:
Interest.......................................................................................................	$	$	$ 39,000
Income taxes.............................................................................................	2,566,000	3,158,000	2,526,000

The accompanying notes are an integral part of these consolidated statements.

Part II- Page 22

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock	Capital in Excess of Par	Retained Earnings	Treasury Stock	Total
BALANCE, December 31, 2002........	$ 485,000	$ 9,831,000	$ 791,000	$ (1,117,000)	$ 9,990,000
Net Income.......................................			6,163,000		6,163,000
Stock Options Exercised, including tax benefit....................................	10,000	920,000			930,000
Warrants Exercised..........................	129,000	3,371,000			3,500,000
Employee Stock Purchase Plan......	1,000	114,000			115,000
Treasury Stock Purchased..............	_________	___________	___________	(35,000)	(35,000)
BALANCE, December 31, 2003........	625,000	14,236,000	6,954,000	(1,152,000)	20,663,000

Net Income........................................			3,922,000		3,922,000
Stock Options Exercised, including tax benefit....................................	6,000	281,000			287,000
Employee Stock Purchase Plan......	1,000	119,000			120,000
Treasury Stock Purchased.............	_________	___________	___________	(828,000)	(828,000)
BALANCE, December 31, 2004........	632,000	14,636,000	10,876,000	(1,980,000)	24,164,000

Net Income.......................................			3,726,000		3,726,000
Stock Options Exercised, including tax benefit...................................	8,000	611,000			619,000
Employee Stock Purchase Plan....	1,000	99,000			100,000
Treasury Stock Distributed...........				1,000	1,000
Treasury Stock Purchased.............	_________	___________	___________	(9,066,000)	(9,066,000)
BALANCE, December 31, 2005........	$ 641,000	$ 15,346,000	$ 14,602,000	$ (11,045,000)	$ 19,544,000

The accompanying notes are an integral part of these consolidated statements.

(The remainder of this page left intentionally blank.)

Part II- Page 23

CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2005, 2004, and 2003

1. Business and Summary of Significant Accounting Policies:

Background

The Company owns and operates proprietary, postsecondary institutions that offer career vocational training programs primarily in the allied health field. The Company serves the segment of population seeking to acquire a career-oriented education. As of December 31, 2005, the Company operated Campuses at 12 locations in seven states.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Concorde and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The following table identifies the reclassification of balance sheet accounts.

December 31, 2004	As Previously Presented	Reclassification	As Presented Herein
Net current receivables	$ 22,220,000	$ (19,076,000)	$ 3,144,000
Net long-term notes receivable	1,123,000	---	1,123,000
Deferred revenues	(24,582,000)	24,582,000	---
Prepaid tuition	----	(5,506,000)	(5,506,000)

Deferred revenues/prepaid tuition in excess of net accounts and notes receivable	$ (1,239,000)	$ ---	$ (1,239,000)

Tuition and non-refundable registration fees, is recognized into income ratably over the length of the program including externship. If a student withdraws from a program, the unearned portion of the tuition for which the student has paid is refunded on a pro-rata basis. Textbook and uniform sales are recognized when they occur.

Part II- Page 24

Most students enrolled at the Company’s Campuses utilize state and federal government grants and/or guaranteed student loan programs to finance their tuition. During 2005, 80 percent of its cash receipts were derived from funds obtained by students through federal Title IV student aid programs and 20 percent were derived from state sponsored student education and training programs and cash received from students and other sources.

Cash and Cash Equivalents

Cash and cash equivalents are made up of cash and those items with maturity at the date of purchase of three months or less. Cash equivalents include money market funds, certificates of deposit and treasury bills that are carried at cost, which approximates fair value. Income on cash equivalents is included in interest and other non-operating income in the statement of operations.

Short-Term Investments

Short-term investments are those items with maturity of three months to one year. Short-term investments are carried at cost, which approximates fair value. At December 31, 2005, short-term investments consisted of certificates of deposit with a six-month maturity. Income related to short-term investments is included in interest and other non-operating income in the statement of operations.

Accounts Receivable and Notes Receivable

Accounts receivable are amounts due from students and are primarily expected to be paid through the use of federal and state sources of funds. Under the Higher Education Act of 1965 (“HEA”) refund provisions, students are obligated to the Company for education costs that the student can no longer pay with Title IV funds. Notes receivable are promissory notes due the Company from current and former students. The notes are not secured by collateral and have differing interest rates.

The Company maintains an allowance for uncollectible accounts and notes receivable. A provision is charged to earnings for the amount of estimated uncollectible accounts based upon collection trends, aging of accounts and other current factors. However, unpaid balances are usually written-off within 180 days after the student withdraws or graduates and/or ceases to make payments. Internal collection efforts, as well as outside professional services, are used to pursue collection of delinquent accounts. The amount of actual uncollectible accounts could differ materially from the estimates reflected in the financial statements.

Fixed Assets

Fixed assets are recorded at cost. Furniture and equipment is depreciated over the estimated useful lives of the assets (three to five years) using the straight-line method. Leasehold improvements are amortized over the shorter of their estimated useful life or terms of the related leases using the straight-line method.

Leasehold improvements that are funded by landlord incentives or allowances under operating leases are recorded as leasehold improvements and deferred rents. The leasehold improvements are depreciated over the shorter of their economic life or the lease term. Deferred rents are amortized as a reduction of rent expense so that rent expense is recognized on a straight-line basis over the lease term.

Maintenance and repairs are charged to expense as incurred. The costs of additions and improvements are capitalized and depreciated over the remaining useful lives of the assets. The costs and accumulated depreciation of assets sold or retired are removed from the accounts and any gain or loss is recognized in the year of disposal. Depreciation expense was $2,208,000 in 2005, $2,025,000 in 2004, and $1,408,000 in 2003.

Income Taxes

The Company accounts for income taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when the differences reverse. Deferred tax expense (benefit) is generally the result of changes in the deferred tax assets and liabilities.

Part II- Page 25

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of the asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value less costs to sell. The Company has not reported any provision for impairment of long-lived assets.

Goodwill

Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements.

Advertising Costs

The Company expenses advertising costs as they occur. Advertising expense, which is included in selling and promotional expenses, was $9,705,000 in 2005, $7,364,000 in 2004, and $6,137,000 in 2003.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts and notes receivable, accounts payable, and accrued liabilities approximate fair value because of immediate or relatively short-term maturity of these financial instruments. Short-term investments are recorded at their cost.

Reclassifications

Certain amounts in the prior years’ consolidated financial statements have been reclassified to conform to the current year presentation.

Stock-Based Compensation

The Company has stock-based employee compensation plans, which are described more fully in Note 8. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in the results of operations, as all options granted under those plans had an exercise price equal to or exceeding the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and income per share if the Company had applied the fair value provisions of Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	Year Ended December 31,
	2005	2004	2003
Net income as reported..............................................................	$ 3,726,000	$ 3,922,000	$ 6,163,000
Total stock-based employee compensation cost determined under the fair value based method, net of income taxes.................	(2,088,000)	(891,000)	(551,000)
Pro forma net income..................................................................	$ 1,638,000	$ 3,031,000	$ 5,612,000

Income per share.........................................................................
Basic - as reported...............................................................	$.63	$.66	$ 1.05
Basic - pro forma..................................................................	$.28	$.51	$.95
Diluted - as reported............................................................	$.61	$.62	$.99
Diluted - pro forma...............................................................	$.27	$.48	$.90

Part II - Page 26

2. Intangible Assets:

The carrying basis and accumulated amortization of recognized intangible assets as December 31, 2005 and 2004 were:

	Gross Carrying Amount	Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
	2005		2004
Amortizable intangible assets
Non compete agreement.......................	$ 250,000	$ 250,000	$ 250,000	$ 196,000
Course curriculum..................................	135,000	104,000	122,000	65,000
Gross intangible assets.........................	$ 385,000	$ 354,000	$ 372,000	$ 261,000

Amortization expense relative to acquired intangibles was $93,000 in 2005. Amortization of purchased intangibles with estimable useful lives is estimated as follows: 2006 - $23,000, 2007 - $7,000, and 2008 - $1,000. These intangible assets are amortized over three years.

There were no changes in the carrying amount of goodwill during the years ended December 31, 2005 and 2004.

3. Receivables:
Changes in the allowance for uncollectible accounts and notes receivable were as follows for the years ended December 31:	2005	2004	2003
Balance-beginning of year.......................................................	$ 2,625,000	$ 2,000,000	$ 1,928,000
Provision for uncollectible accounts.....................................	4,575,000	3,523,000	2,893,000
Charge-offs, net of recoveries................................................	(3,772,000)	(2,898,000)	(2,821,000)
Balance - end of year................................................................	$ 3,428,000	$2 ,625,000	$ 2,000,000

4. Fixed Assets and Leases:
Fixed assets consist of the following at December 31:	2005	2004
Furniture and equipment	$ 8,451,000	$ 9,642,000
Leasehold improvements	7,578,000	7,642,000
Land	391,000	391,000
Gross fixed assets	16,420,000	17,675,000
Less accumulated depreciation and amortization	(7,584,000)	7,779,000
Net fixed assets	$ 8,836,000	$ 9,896,000

Part II- Page 27

The Company rents office space and buildings under operating leases generally ranging in terms from 5 to 15 years. The leases provide renewal options and require the Company to pay utilities, maintenance, insurance and property taxes. The Company also has a lease obligation for the Chief Executive Officer’s automobile. The Company rents various equipment under operating leases that are generally cancelable within 30 days. Rental expense for operating leases was $5,749,000 in 2005, $5,507,000 in 2004 and $4,696,000 in 2003. Aggregate minimum future rentals payable under the operating leases at December 31, 2005, were:

2006.........................................................................................$ 5,359,000

2007......................................................................................... 5,179,000

2008......................................................................................... 5,150,000

2009......................................................................................... 4,899,000

2010......................................................................................... 4,630,000

2011 and thereafter............................................................... 20,458,000

5. Accrued Liabilities:
Accrued Liabilities consist of the following at December 31:	2005	2004
Vacation..................................................................................................................	$ 1,274,000	$ 1,129,000
Health insurance claims........................................................................................	296,000	203,000
Worker’s compensation........................................................................................	155,000	200,000
Deferred rent - current............................................................................................	189,000	170,000
Other liabilities.........................................................................................................	156,000	55,000
Other taxes................................................................................................................	8,000	23,000
Total accrued liabilities........................................................................................	$ 2,078,000	$ 1,780,000

6. Credit Facilities:

The Company entered into a $371,000 letter of credit with Commerce Bank in March 2005. The letter of credit is used to secure worker’s compensation claims for the Company’s worker’s compensation insurance from April 1, 2004 through March 31, 2006. The letter of credit is secured by certificates of deposit in the same amount that mature on March 31, 2006.

Part II- Page 28

7. Income Taxes:

The income tax expense for the years ended December 31, consists of the following:

	2005	2004	2003
Current tax expense
Federal................................................................................................	$ 2,485,000	$ 1,848,000	$ 3,146,000
State...................................................................................................	436,000	262,000	372,000
	2,921,000	2,110,000	3,518,000
Deferred tax expense	655,000	454,000	390,000
Tax provision.........................................................................................	$ 2,266,000	$ 2,564,000	$ 3,908,000

The Company’s effective income tax expense rate differs from the federal statutory rate of 34% for the years ended December 31, as follows:

	2005	2004	2003

Expense at federal statutory rate....................................................................	$ 2,037,000	$ 2,205,000	$ 3,424,000
State expense, net.............................................................................................	287,000	324,000	344,000
Other, net...........................................................................................................	(58,000)	35,000	140,000
	$ 2,266,000	$ 2,564,000	$ 3,908,000

Deferred tax assets and liabilities consisted of the following at December 31:

	2005	2004

Credit losses...................................................................................................................	$ 1,303,000	$ 1,024,000
Deferred student tuition...............................................................................................	115,000	130,000
Depreciation and amortization.....................................................................................	89,000	60,000
Operating loss carryforwards......................................................................................	4,000	4,000
Other expenses currently deductible for financial reporting purposes but not for tax....................................................................................	475,000	332,000
Net assets.....................................................................................................	1,986,000	1,550,000
Depreciation and amortization.....................................................................................	(1,095,000)	(1,334,000)
Other expenses currently deductible for tax purposes but not for financial reporting..............................................................................................	(285,000)	(265,000)
Net.................................................................................................................	$ 606,000	$ (49,000)

At December 31, 2005 and 2004, deferred tax assets included $1,131,000 and $992,000 current assets and $525,000 and $1,041,000 non-current liabilities, respectively.

The Company has not recorded a valuation allowance relating to the deferred tax assets, as taxable temporary differences are expected to be offset by deductible temporary differences and future taxable income.

The tax benefit associated with the exercise of non-statutory stock options and disqualifying dispositions by employees of shares issued in the Company’s Stock Purchase Plan reduced taxes payable by $311,000 in 2005 and $174,000 in 2004. The benefit is reflected as additional capital in excess of par.

8. Stockholder’s Equity:

Treasury Stock

In August 2000, the Board authorized the repurchase of up to 500,000 shares of Concorde’s common stock in the open market, subject to normal trading restrictions. In November 2004, the Board increased the authorization to purchase an additional 500,000 shares which increased the plan total to 1,000,000 shares. The Company purchased 56,800 shares at a cost of $827,000 during 2004, 2,800 shares at a cost of $35,000 during 2003, 19,900 shares at a cost of $222,000 during 2002 and 196,485 shares at a cost of $724,000 during 2001. The Company’s last purchase was during November 2004. The Company currently uses treasury stock for general corporate purposes.

Part II - Page 29

The Company repurchased 600,000 shares of its common stock from the Robert F. Brozman Trust in a private transaction. The Company’s CEO is the Executor of this Trust. The total aggregate purchase price was $9,066,000 or $15.11 per share. The price was determined using 95% of the average closing price of Company’s stock on the NASDAQ market over a 30 day period. The 30 day period began August 19, 2005 and ended September 30, 2005. The repurchase reduced the Company's outstanding shares approximately 10% from 6,055,333 before the transaction to 5,455,333 after the close of the transaction. Concorde purchased the shares with existing cash. .

Stock Purchase Plan

The Company’s shareholders approved an employee stock purchase plan (the “Purchase Plan”) during 1998, which expired in 2003. A restated plan was approved by the Company’s shareholders during 2003. The 1998 Purchase Plan allowed employees of the Company to purchase shares of the Company’s common stock at periodic intervals, generally quarterly, through payroll deductions. The maximum numbers of shares that could be purchased under the Plan were 125,000 with no more than 25,000 in any year. The purchase price per share was the lower of 95% of the closing price on the offering commencement date or termination date. A total of 77,967 shares were issued under the original plan. In 2001, 15,348 shares of stock were issued at prices between $1.58 and $2.15. In 2002, 9,927 shares of stock were issued at prices between $4.75 and $8.22. In 2003, 8,786 shares of stock were issued at prices between $9.83 and $19.36. The restated Plan became effective October 1, 2003. In 2004, 6,583 shares of stock were issued at prices between $14.60 and $22.37. In 2005, 6,891 shares of stock were issued at prices between $12.97 and $16.14.

On February 27, 2003, the Board unanimously adopted the Concorde Career Colleges, Inc. Restated Employee Stock Purchase Plan (“Employee Plan”). The Plan was approved by the Company’s shareholders at its Annual Meeting held on May 22, 2003. The Plan is similar to the original Plan which expired September 30, 2003. An aggregate of 75,000 shares of Common Stock of the Company are subject to the Employee Plan and are reserved for issuance under such Plan. Options to purchase 15,000 shares of Common Stock of the Company are to be offered to participants for purchase in the first year (commencing October 1, 2003 and ending September 30, 2004) and each of the four succeeding plan years. The option price of Common Stock purchased with payroll deductions made during such annual, semi-annual or calendar-quarterly offering for participant therein shall be the lower of 95% of the closing price on the offering commencement or termination date.

Stock Option Plans

The Company has Long Term Executive Compensation plans (the “2003 Plan”, the “2002 Plan,” the “2000 Plan,” and the “1998 Plan”) which authorized the Company to issue 200,000, 300,000, 125,000 and 250,000 shares, respectively, of its common stock to certain officers and employees of the Company. The options were primarily Incentive Stock Options granted at fair market value or greater on the date of grant for a term of not more than ten years unless options are canceled due to employee termination. As of December 31, 2005, 267,067 shares remain available to be granted with the 1998, 2000, 2002 and 2003 Plans combined.

During 2001, the Company awarded the three non-officer Directors the option to purchase 4,167 shares each pursuant to a non-qualified stock option agreement. Under the agreement three Directors’ were granted the right to immediately exercise 4,167 shares each at an exercise price of $4.50. The market value on the date of the grant equaled the exercise price.

During 2002, the Company awarded the three non-officer Directors the option to purchase 5,000 shares each pursuant to a non-qualified stock option agreement. Under the agreement three Directors’ were granted the right to immediately exercise 5,000 shares each at an exercise price of $8.60. In addition, a fourth non-officer Director was awarded the option to purchase 5,000 shares pursuant to a non-qualified stock option agreement and was granted the right to immediately exercise 5,000 shares at an exercise price of $11.00. The market value on the date of each grant equaled the exercise price. The fourth Director was appointed to the Board in December 2002.

In 2005, the Company’s Board of Directors unanimously approved the accelerated vesting of all currently outstanding unvested stock options. The Options were previously awarded to executive officers and employees. The acceleration of vesting was effective with the closing of the market on December 19, 2005. Vesting was accelerated for 304,730 options of which 122,000 had a grant price greater than the market price on the date of acceleration. The weighted average exercise price of the accelerated options was $14.78.

Part II - Page 30

The following table reflects activity in options for 2005, 2004, and 2003.

		1988 Plan⁽¹⁾	NQSO	1998 Plan	2000 Plan	2002 Plan	2003 Plan	Total Number of Shares	Weighted-Average Exercise Price	Option Price Per Share

Outstanding	12/31/02	22,600	36,668	201,700	118,000	265,500		644,468	$5.02	$0.20 to $12.60
Exercised		(11,100)	(5,000)	(57,400)	(38,000)	(400)		(111,900)	1.49	0.20 to 11.45
Cancelled				(2,250)	(3,000)	(5,000)		(10,250)	6.79	1.35 to 11.45
Issued						10,000		10,000	20.81	19.90 to 21.71

Outstanding	12/31/03	11,500	31,668	142,050	77,000	270,100		532,318	$6.10	$0.56 to $21.71
Exercised				(40,150)	(15,500)	(2,200)		(57,850)	1.95	0.92 to 11.45
Cancelled		(750)		(1,700)		(1,600)		(4,050)	5.95	2.26 to 11.45
Issued				5,000	3,000	24,000	200,000	232,000	18.11	13.61 to 26.63

Outstanding	12/31/04	10,750	31,668	105,200	64,500	290,300	200,000	702,418	$10.41	$0.56 to $26.63
Exercised		(4,250)		(33,433)	(18,500)	(28,000)		(84,183)	3.63	0.00 to 11.45
Cancelled				(2,000)	(6,400)	(18,000)	(37,000)	(63,400)	13.75	1.02 to 24.21
Issued				133			54,000	54,133	13.72	0.00 to 13.75
Outstanding	12/31/05	6,500	31,668	69,9000	39,600	244,300	217,000	608,968	$11.30	$0.92 to $26.63

(1)	The 1988 Plan expired in 1998; however options issued under the Plan remain active until exercised, canceled, or expiration. These options expire ten years from date of issuance.

The following table reflects information for exercisable options at December 31:

	Range of Exercise Prices	Shares Exercisable	Weighted Average Exercise Price
2003	$0.56 - $12.60	236,658	$3.92
2004	0.56 - 21.71	266,504	5.01
2005	0.92 - 26.63	608,968	11.30

The following table reflects option information as of December 31, 2005.

Range of Exercise Prices	Shares Outstanding at 12/31/05	Average Remaining Contractual Life	Weighted Average Exercise Price	Shares Exercisable at 12/31/05	Weighted Average Exercise Price
		(Years)
$ 0.92 -$ 1.90	97,984	4.1	$ 1.22	97,984	$ 1.22
2.06 - 8.65	158,984	4.6	7.45	158,984	7.45
11.00 - 13.75	196,000	7.9	12.64	196,000	12.64
14.87 - 26.63	156,000	8.3	19.85	156,000	19.85
	608,968			608,968	11.30

The Company applies Accounting Principles Board Opinion 25 and related interpretations in accounting for its stock option plans and employee stock purchase plan. Accordingly, no compensation expense has been recognized for the Option Plans as the exercise price equals the stock price on the date of grant. Also, no compensation expense has been recognized for the employee stock purchase plan because the purchase plan qualifies as a non-compensatory plan. Information about compensation expense determined based on the fair value at grant dates consistent with SFAS No. 123 Accounting for Stock-Based Compensation, the Company’s pro forma net income and basic and diluted earnings per share are presented in Note 1.

The pro forma amounts set forth in Note 1 were estimated for common stock options using the Blank-Scholes option-pricing model with the following assumptions:

Part II - Page 31

Stock Options	2005	2004	2003
Weighted average expected life (years)	.55	7	7
Expected volatility	25%	79%	85%
Annual dividend per share	0	0	0
Risk free interest rate	3.91%	3.97%	3.74%
Weighted average fair value of options granted	$1.14	$13.44	$16.07

Stock Purchase Plan	2005	2004	2003
Weighted average expected life (years)	.25	.25	.25
Expected volatility	25%	52%	42%
Annual dividend per share	0	0	0
Risk free interest rate	3.91%	2.47%	.85%
Weighted average fair value of options granted	$1.25	$2.53	$1.52

9. Employee Benefit Plan

The Company has a 401(k) retirement savings plan covering all employees that meet certain eligibility requirements. Eligible participating employees may elect to contribute up to a maximum amount of tax deferred contribution allowed by the Internal Revenue Code. In 2003, the Company matched 50% of an employee’s contribution up to 3% of an employee’s salary that was contributed to the plan. In 2004 and 2005, the Company matched 50% of an employee’s contribution up to 4% of an employee’s salary that was contributed to the plan. In 2006, the Company will match 50% of an employee’s contribution up to 5% of an employee’s salary that is contributed to the Plan. The Company contributed $217,000, $236,000, and $149,000 to the plan in 2005, 2004, and 2003 respectively.

10. Earnings Per Share (EPS)

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed giving effect to all dilutive potential common shares that were outstanding during the period (i.e., the denominator used in the basic calculation is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued). A summary of the calculations of basic and diluted earnings per share is presented in Exhibit 11.

11. Contingencies and Litigation:

Legal Proceedings

The Company is sued from time to time by a student or students who claim to be dissatisfied with the results of their program of study. Typically, the claims allege a breach of contract; deceptive advertising and misrepresentation and the student or students seek reimbursement of tuition. Punitive damages sometimes are also sought. In addition, the Department of Education (“ED”) may allege regulatory violations found during routine program reviews. The Company has, and will continue to dispute these findings as appropriate in the normal course of business. In the opinion of the Company’s management, resolution of such pending litigation and disputed findings will not have a material effect on the Company’s financial condition or its results of operations.

12. Department of Education Matters

The Company assessed each Campus’ compliance with the 90/10 regulatory provisions for the year ended December 31, 2005. These provisions state that the percentage of cash revenue derived by federal Title IV student assistance program funds cannot exceed 90% of total cash revenues. This is commonly referred to as the 90/10 Rule that was modified as part of legislation extending the Higher Education Act of 1965, as amended. The Campus’ 90/10 percentages ranged between 69.9% and 87.4% for the year ended December 31, 2005.

Part II - Page 32

ED issued a financial responsibility regulation that became effective July 1, 1998. Institutions are required to meet this regulation to maintain eligibility to participate in Title IV programs. This regulation uses a composite score based upon three financial ratios. An institution demonstrates that it is financially responsible by achieving a composite score of at least 1.5, or by achieving a composite score in the zone from 1.0 to 1.4 and meeting certain provisions. An institution in the zone may need to provide to ED timely information regarding certain accrediting agency actions and certain financial events that may cause or lead to a deterioration of the institution’s financial condition. In addition, financial and compliance audits may have to be submitted soon after the end of the institution’s fiscal year. Title IV HEA funds may be subject to cash monitoring for institutions in the zone.

The Company’s composite score was 2.7, 2.8, and 2.8 in 2003, 2004, and 2005, respectively.

13. Quarterly Financial Information (unaudited):

2005 March 31 June 30 September 30 December 31

Operating revenue $20,301,000 $21,305,000 $23,342,000 $22,604,000

Income before income taxes $665,000 $1,414,000 $2,286,000 $1,627,000

Net income. $406,000 $876,000 $1,417,000 $1,027,000

Basic earnings per share $.07 $.15 $.24 $.18

Diluted earnings per share $.06 $.14 $.23 $.18

2004 March 31 June 30 September 30 December 31

Operating revenue $20,375,000 $20,627,000 $21,082,000 $19,423,000

Income before income taxes $2,138,000 $1,963,000 $1,884,000 $501,000

Net income. $1,304,000 $1,197,000 $1,150,000 $271,000

Basic earnings per share $.22 $.20 $.19 $.05

Diluted earnings per share $.20 $.19 $.18 $.04

2003 March 31 June 30 September 30 December 31

Operating revenue $17,359,000 $17,891,000 $19,888,000 $19,576,000

Income before income taxes $2,500,000 $2,419,000 $2,893,000 $2,259,000

Net income $1,535,000 $1,485,000 $1,765,000 $1,378,000

Basic earnings per share $.26 $.25 $.30 $.23

Diluted earnings per share $.25 $.24 $.28 $.22

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There were no disagreements with the Company’s accountants which require disclosure pursuant to this rule.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures; as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective at December 31, 2005, and during the period prior to and including the date of this report. There have been no material changes in our internal controls or in other factors that could materially affect internal controls subsequent to December 31, 2005. The Report of Management on Internal Controls can be found under Item 8.

Part II - Page 33

Because of its inherent limitations, our disclosure controls and procedures may not prevent or detect misstatements. 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Item 9B. Other Information -- None

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Part II- Page 34

PART III

Item 10. Directors and Executive Officers of the Registrant

Information regarding Directors and Executive Officers is incorporated herein by reference from the Company’s definitive proxy statement. This information can be found in the proxy statement under the headings: DIRECTORS and EXECUTIVE OFFICERS.

Item 11. Executive Compensation

Information regarding Executive Compensation is incorporated herein by reference from the Company’s definitive proxy statement. This information can be found in the proxy statement under the heading: EXECUTIVE COMPENSATION AND OTHER INFORMATION (specifically excluding disclosures in such section relating to Item 402(I), (k), and (l) of Regulation S-K.)

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information regarding Security Ownership of Certain Beneficial Owners and Management is incorporated herein by reference from the Company’s definitive proxy statement. This information can be found in the proxy statement under the headings: PROXY STATEMENT and STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Item 13. Certain Relationships and Related Transactions

Information regarding Certain Relationships and Related Transactions is incorporated herein by reference from the Company’s definitive proxy statement. This information can be found in the proxy statement under the headings: EXECUTIVE COMPENSATION AND OTHER INFORMATION and OTHER TRANSACTIONS.

Item 14. Principal Accountant Fees and Services

Information regarding Principal Accountant Fees and Services is incorporated herein by reference from the Company’s definitive proxy statement. This information can be found in the proxy statement under the headings: PRINCIPAL ACCOUNTANT FEES AND SERVICES.

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Part III- Page 1

PART IV

Ite Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

a. a. List of documents filed as part of this report.

Description 0; Page

1. Financial Statements:

Concorde Career Colleges, Inc. and Subsidiaries

Report of Independent Registered Public Accounting Firm................................................................................................ II-17

Report of Independent Registered Public Accounting Firm................................................................................................ II-18

Consolidated Balance Sheets.................................................................................................................................................... II-19

Consolidated Statements of Operations.................................................................................................................................. II-21

Consolidated Statements of Cash Flows................................................................................................................................. II-22

Consolidated Statements of Changes In Stockholders' Equity............................................................................................ II-23

Notes to Consolidated Financial Statements.......................................................................................................................... II-24

2. Financial Statement Schedules:

Schedules have been omitted as not applicable or not required under the instructions contained in Regulations S-X or the information is included elsewhere in the financial statements or notes thereto.

3.Exhibits:

Exhibit Number Description

3(a)--Restated Certificate of Incorporation of the Registrant, as amended (Incorporated by reference to Exhibit 3(a) of the Annual Report on Form 10-K for the year ended December 31, 1994).**

3(b)--Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibit 3(b) of the Annual Report on Form 10-K for the year ended December 31, 1991).**

4(a)--Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4(a) to Registration Statement on Form S-1 [SEC File No. 33-21654]). **

4(b)--Amended and Restated Registration Rights Agreement dated January 10, 2003 by and among the Corporation, Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Associates, L.P. (Incorporated by reference to Exhibit 4(d) of the Annual Report on Form 10-K for the year ended December 31, 2000). **

9(a)--Amended and Restated Shareholders’ Agreement dated November 25, 2002 by and among the Corporation, Cahill, Warnock Strategic Partners Fund, L.P., Strategic Associates, L.P., Jack L. Brozman and the Robert F. Brozman Trust under Agreement dated December 28, 1989.**

10(a) -- Second Amended and Restated Concorde Career Colleges, Inc. 1988 Incentive Stock Option Plan, dated May 4, 1989 (Incorporated by reference to Exhibit 10 (a) to Pre-effective Amendment No. 1 to Registration Statement on Form S-1 [SEC File No. 33-30002]).**

10(b)(i) --Concorde Career Colleges, Inc. 1998 Incentive Stock Option Plan, dated May 29, 1998 (Incorporated by reference to Exhibit 10(b) of the Annual Report on Form 10-K for the year ended December 31, 1998).**

10(b)(ii)--Concorde Career Colleges, Inc 2000 Long Term Executive Compensation Plan, dated May 25, 2000 (Incorporated by reference to Exhibit 10(b) of the Annual Report on Form 10-K for the year ended December 31, 2000).**

Part IV - Page 1

Exhibit Number Description

10(b)(iii)--Concorde Career Colleges, Inc. 2002 Long Term Executive Compensation Plan (Incorporated by reference to Exhibit B of the Definitive Information Statement on Form DEF 14C filed with the SEC on April 1, 2002).**

10(b)(iv)--Concorde Career Colleges, Inc. 2003 Long Term Executive Compensation Plan (Incorporated by reference to Exhibit B of the Definitive Proxy Statement on Form DEF 14A filed with the SEC on April 9, 2003).**

10(b)(v)--Concorde Career Colleges, Inc. Restated Employee Stock Purchase Plan (Incorporated by reference to Exhibit A of the Definitive Proxy Statement on Form DEF 14A filed with the SEC on April 9, 2003).**

10(b)(vi) --Summary of Director Compensation and Executive Cash Compensation.*

11 --Computation of Per Share Earnings.*

14(a)--Code of Ethics for Officers and Senior Financial Staff of Concorde Career Colleges, Inc. (Incorporated by reference to Exhibit 14(a) of the Annual Report on Form 10-K for the year ended December 31, 2003).**

2 1--Subsidiaries of Registrant. (Incorporated by reference to Exhibit 21 of the Annual Report on Form 10-K for the year ended December 31, 1996.)**

31-1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31-2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32-1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32-2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed Herewith.

** Previously filed.

Part IV - Page 2

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CONCORDE CAREER COLLEGES, INC.

By / s/ JACK L. BROZMAN

Jack L. Brozman

Chairman of the Board

& #160; Date: March 10, 2006

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities and on the dates indicated.

Signature Date

By /s/ JACK L. BROZMAN March 10, 2006

Jack L. Brozman

(Chairman of the Board, Chief Executive Officer,

President, Treasurer and Director)

By /s/ PAUL R. GARDNER March 10, 2006

Paul R. Gardner

(Vice President, Chief Financial Officer, and

Principal Accounting Officer)

By /s/ THOMAS K. SIGHT March 10, 2006

Thomas K. Sight

(Director)

By /s/ JANET M. STALLMEYER March 10, 2006

Janet M. Stallmeyer

(Director)

By /s/ DAVID L. WARNOCK March 10, 2006

David L. Warnock

(Director)

By /s/ HARRY T. WILKINS March 10, 2006

Harry T. Wilkins

(Director)

EX-10.0 2 ex10bvi.htm EX 10(B)(VI) SUMMARY OF DIRECTOR COMPENSATION AND EXECUTIVE CASH COMPENSATION Ex 10(b)(vi) Summary of Director Compensation and Executive Cash Compensation

EXHIBIT 10(b)(vi)

CONCORDE CAREER COLLEGES, INC.

SUMMARY OF DIRECTOR COMPENSATION

AND EXECUTIVE CASH COMPENSATION

DIRECTOR COMPENSATION

The following table sets forth current rates of cash compensation for non-employee directors. Director compensation rates

were last adjusted December 2005. Employee directors do not receive Board Compensation.

	2005	2006
Annual Retainer	$ 2,000	$ 10,000
Board Meeting Attendance Fees	250	500

Committee Chair Annual Retainer (paid quarterly)
Audit Committee	$ 4,000	$ 4,000
Compensation Committee	-0-	-0-
Nominating & Corporate Governance Committee	-0-	-0-

EXECUTIVE COMPENSATION

The following table sets forth the current base salaries provided to the Company’s CEO and four most highly compensated executive officers. Salary increases are determined annually.

Executive Officer		Current Salary
Jack L. Brozman		$292,500
Patrick J. Debold		$185,000
Paul R. Gardner		$155,000
Diana D. Hawkins-Jenks		$155,000
Asa E. Johnson		$140,000

Executive officers are also eligible to receive a bonus each year under a bonus plan approved by the Compensation Committee. The award formula for bonuses is based upon the Company’s operating income performance for the award period. The Company did not achieve the minimum level of operating profit set by the Compensation Committee during 2005. The Company did not pay any bonus to an Executive Officer for 2005.

Part IV - Page 4

EX-11.0 3 ex11.htm EX 11 COMPUTATION OF EARNINGS PER SHARE (EPS) EX 11 Computation of Earnings Per Share (EPS)

EXHIBIT 11

CONCORDE CAREER COLLEGES, INC.

COMPUTATION OF EARNINGS PER SHARE (EPS)

	Basic EPS Year Ended December 31,			Diluted EPS Year Ended December 31,
	2005	2004	2003	2005	2004	2003
Weighted Average Shares Outstanding	5,894,000	5,980,000	5,880,000	5,894,000	5,980,000	5,880,000
Options..............................................................				213,000	342,000	370,000
Adjusted Weighted Average Shares............	5,894,000	5,980,000	5,880,000	6,107,000	6,322,000	6,250,000
Net Income Available to Common Shareholders.....................................................	$3,726,000	$3,922,000	$ 6,163,000	$3,726,000	$ 3,922,000	$ 6,163,000
Net Income per Share.......................................	$.63.	$.66	$1.05	$.61	$.62	$.99

(The remainder of this page left intentionally blank.)

Part IV - Page 5

EX-31.1 4 ex31-1.htm EX 31-1 EX 31-1

Exhibit 31-1

I, Jack L. Brozman, certify that:

1.	I have reviewed this annual report on Form 10-K of Concorde Career Colleges, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for the external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 10, 2006

/s/ Jack L. Brozman

Jack L. Brozman, Chief Executive Officer

Part IV - Page 6

EX-31.2 5 ex31-2.htm EX 31-2 EX 31-2

Exhibit 31-2

I, Paul R. Gardner, certify that:

1.	I have reviewed this annual report on Form 10-K of Concorde Career Colleges, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 10, 2006

/s/ Paul R. Gardner

Paul R. Gardner, Vice President, Chief Financial Officer

Part IV - Page 7

EX-32.1 6 ex32-1.htm EX 32-1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 EX 32-1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32-1

CONCORDE CAREER COLLEGES, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Concorde Career Colleges, Inc. (the “Company”) on Form 10-K for the year ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack L. Brozman, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jack L. Brozman

Jack L. Brozman, Chief Executive Officer

Concorde Career Colleges, Inc.

March 10, 2006

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Concorde Career Colleges, Inc. and will be retained by Concorde Career Colleges, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Part IV - Page 8

EX-32.2 7 ex32-2.htm EX-32-2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PUSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 EX-32-2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pusuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32-2

CONCORDE CAREER COLLEGES, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(1)	The Report fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Paul R. Gardner

Paul R. Gardner, Chief Financial Officer

Concorde Career Colleges, Inc.

March 10, 2006

Part IV - Page 9

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