zvo-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐			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: 001-34272

___________________________________________________________________________

ZOVIO INC

(Exact name of registrant as specified in its charter)

___________________________________________________________________________


			Delaware			59-3551629
			(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

1811 E. Northrop Blvd, Chandler, AZ 85286

(Address, including zip code, of principal executive offices)

(858) 668-2586

(Registrant’s telephone number, including area code)

____________________________________________________________________________

None

(Former name, former address and former fiscal year, if changed since last report)

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. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ZVO	The Nasdaq Stock Market LLC

The total number of shares of common stock outstanding as of November 15, 2022, was 34,221,081.

ZOVIO INC

FORM 10-Q

INDEX



PART I—FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
	Condensed Consolidated Balance Sheets (Unaudited)	3
	Condensed Consolidated Statements of Income (Loss) (Unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures About Market Risk		33
Item 4. Controls and Procedures		34

PART II—OTHER INFORMATION		35
Item 1. Legal Proceedings		35
Item 1A. Risk Factors		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		39
Item 3. Defaults Upon Senior Securities		39
Item 4. Mine Safety Disclosures		39
Item 5. Other Information		39
Item 6. Exhibits		40
SIGNATURES		41

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

ZOVIO INC

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value)


	As of September 30, 2022		As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,092	$	28,265
Restricted cash	2,935		9,288
Investments	216		974
Accounts receivable, net of allowance for credit losses of $1.4 million and $0.9 million at September 30, 2022 and December 31, 2021, respectively	5,360		9,631


Prepaid expenses and other current assets	3,303		13,423

Total current assets	14,906		61,581
Property and equipment, net	1,042		26,382
Operating lease assets	17,091		28,881


Goodwill and intangibles, net	23,461		29,499

Other long-term assets	2,056		2,691
Total assets	$	58,556	$	149,034
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	26,516	$	74,769
Deferred revenue and student deposits	8,039		14,939

Total current liabilities	34,555		89,708
Rent liability	18,081		34,205

Other long-term liabilities	2,910		5,115
Total liabilities	55,546		129,028
Commitments and contingencies (see Note 14)
Stockholders' equity:
Preferred stock, $0.01 par value:
20,000 shares authorized; zero shares issued and outstanding at both September 30, 2022, and December 31, 2021	—		—
Common stock, $0.01 par value:
300,000 shares authorized; 67,930 and 67,255 issued, and 34,221 and 33,546 outstanding, at September 30, 2022 and December 31, 2021, respectively	682		676
Additional paid-in capital	170,623		172,060
Retained earnings	268,405		283,970

Treasury stock, 33,709 shares at cost at both September 30, 2022, and December 31, 2021, respectively	(436,700)		(436,700)
Total stockholders' equity	3,010		20,006
Total liabilities and stockholders' equity	$	58,556	$	149,034

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

ZOVIO INC

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	22,038	$	59,808	$	131,320	$	200,585

Other revenue	507		2,418		4,238		7,686
Revenue and other revenue	$	22,545	$	62,226	$	135,558	$	208,271
Costs and expenses:
Technology and academic services	$	10,077	$	16,498	$	45,865	$	53,698
Counseling services and support	6,481		20,438		45,517		68,936
Marketing and communication	7,771		21,068		47,957		68,628
General and administrative	5,535		9,013		20,493		33,285

Legal expense	—		—		920		—
Restructuring and impairment expense	—		300		35,887		2,641
Gain on transactions, net	(3,599)		—		(49,288)		—
Total costs and expenses	26,265		67,317		147,351		227,188
Operating loss	(3,720)		(5,091)		(11,793)		(18,917)

Other income (expense), net	295		(69)		(3,656)		90

Loss before income taxes	(3,425)		(5,160)		(15,449)		(18,827)
Income tax expense (benefit)	30		59		116		(82)
Net loss	$	(3,455)	$	(5,219)	$	(15,565)	$	(18,745)
Loss per share:
Basic	$	(0.10)	$	(0.16)	$	(0.46)	$	(0.56)
Diluted	$	(0.10)	$	<

SEC Form 10-Q filed by Zovio Inc.