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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 June 30, 2022
or
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)
___________________________________________________________________________

Delaware59-3551629
(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)

(858668-2586
(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 filerAccelerated filer
Non-accelerated filerSmaller 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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareZVOThe Nasdaq Stock Market LLC
The total number of shares of common stock outstanding as of July 29, 2022, was 34,206,052.




ZOVIO INC
FORM 10-Q
INDEX

2


PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements
ZOVIO INC
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except par value)
As of June 30, 2022As of
December 31, 2021
ASSETS  
Current assets:  
Cash and cash equivalents$20,812 $28,265 
Restricted cash6,079 9,288 
Investments227 974 
Accounts receivable, net of allowance for credit losses of $1.2 million and $0.9 million at June 30, 2022 and December 31, 2021, respectively
4,951 9,631 
Prepaid expenses and other current assets8,633 13,423 
Total current assets40,702 61,581 
Property and equipment, net1,100 26,382 
Operating lease assets17,358 28,881 
Goodwill and intangibles, net23,915 29,499 
Other long-term assets2,358 2,691 
Total assets$85,433 $149,034 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable and accrued liabilities$35,523 $74,769 
Deferred revenue and student deposits7,405 14,939 
Total current liabilities42,928 89,708 
Rent liability32,864 34,205 
Other long-term liabilities3,036 5,115 
Total liabilities78,828 129,028 
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 June 30, 2022, and December 31, 2021
  
Common stock, $0.01 par value:
  
300,000 shares authorized; 67,915 and 67,255 issued, and 34,206 and 33,546 outstanding, at June 30, 2022 and December 31, 2021, respectively
682 676 
Additional paid-in capital170,763 172,060 
Retained earnings271,860 283,970 
Treasury stock, 33,709 shares at cost at both June 30, 2022, and December 31, 2021, respectively
(436,700)(436,700)
Total stockholders' equity6,605 20,006 
Total liabilities and stockholders' equity$85,433 $149,034 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


ZOVIO INC
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
(In thousands, except per share amounts)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Revenue$49,658 $66,670 $109,282 $140,777 
Other revenue1,722 2,516 3,731 5,268 
Revenue and other revenue$51,380 $69,186 $113,013 $146,045 
Costs and expenses: 
Technology and academic services$17,290 $18,056 $35,788 $37,200 
Counseling services and support17,705 23,173 39,036 48,498 
Marketing and communication18,272 21,729 40,186 47,560 
General and administrative7,836 8,376 14,958 24,272 
Legal expense920  920  
Restructuring and impairment expense35,887 2,341 35,887 2,341 
Gain on transactions, net(45,689) (45,689) 
Total costs and expenses52,221 73,675 121,086 159,871 
Operating loss(841)(4,489)(8,073)(13,826)
Other income (expense), net(3,824)232 (3,951)159 
Loss before income taxes(4,665)(4,257)(12,024)(13,667)
Income tax expense (benefit)8 (224)86 (141)
Net loss$(4,673)$(4,033)$(12,110)$(13,526)
Loss per share:  
Basic$(0.14)$(0.12)$(0.36)$(0.41)
Diluted$(0.14)$(0.12)$(0.36)$(0.41)
Weighted average number of common shares outstanding used in computing loss per share:  
Basic34,122 33,343 33,844 33,058 
Diluted34,122 33,343 33,844 33,058 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


ZOVIO INC
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands)

 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 SharesPar ValueTotal
Balance at December 31, 202066,454 $668 $179,489 $326,319 $(447,259)$59,217 
Stock-based compensation— — 2,382 — — 2,382 
Stock issued under stock incentive plan, net of shares held for taxes563 5 (1,083)— — (1,078)
Contingent consideration— — (122)— — (122)
Stock issued for acquisition— — (10,559)— 10,559  
Net loss— — — (9,493)— (9,493)
Balance at March 31, 202167,017 $673 $170,107 $316,826 $(436,700)$50,906 
Stock-based compensation— — 247 — — 247 
Stock issued under employee stock purchase plan31  76 — — 76 
Stock issued under stock incentive plan, net of shares held for taxes79 1 (89)— — (88)
Net loss— — — (4,033)— (4,033)
Balance at June 30, 202167,127 $674 $170,341 $312,793 $(436,700)$47,108 



 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
 
 SharesPar ValueTotal
Balance at December 31, 202167,255 $676 $172,060 $283,970 $(436,700)$20,006 
Stock-based compensation— — (1,169)— — (1,169)
Stock issued under stock incentive plan, net of shares held for taxes509 5 (138)— — (133)
Net loss— — — (7,437)— (7,437)
Balance at March 31, 202267,764 $681 $170,753 $276,533 $(436,700)$11,267 
Stock-based compensation— — (13)— — (13)
Stock issued under employee stock purchase plan38  35 — — 35 
Stock issued under stock incentive plan, net of shares held for taxes113 1 (12)— — (11)
Net loss— — — (4,673)— (4,673)
Balance at June 30, 202267,915 $682 $170,763 $271,860 $(436,700)$6,605 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5


ZOVIO INC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
 20222021
Cash flows from operating activities:  
Net loss$(12,110)$(13,526)
Adjustments to reconcile net loss to net cash used in operating activities:  
Provision for bad debts257 911 
Depreciation and amortization3,911 4,262 
Stock-based compensation(1,182)2,629 
Noncash lease expense2,849 4,367 
Net loss (gain) on marketable securities140 (144)
Loss on disposal or impairment of fixed assets35,887 61 
Gain on transactions, net(45,689) 
Changes in operating assets and liabilities:  
Accounts receivable3,108 (1,628)
Prepaid expenses and other current assets(1,643)(614)
Other long-term assets(1,611)(1,568)
Accounts payable and accrued liabilities(38,771)(9,198)
Deferred revenue and student deposits198 2,491 
Operating lease liabilities(3,456)(5,243)
Other liabilities925 940 
   Net cash used in operating activities(57,187)(16,260)
Cash flows from investing activities:  
Capital expenditures(24)(733)
Purchases of investments(46)(64)
Capitalized costs for intangible assets(495)(333)
Net proceeds from sale of assets48,921  
Sale of investments652 247 
   Net cash provided by (used in) investing activities49,008 (883)
Cash flows from financing activities:  
Proceeds from the issuance of stock under employee stock purchase plan35 76 
Proceeds from long-term borrowings, net of fees29,627  
Tax withholdings on issuance of stock awards(144)(1,166)
Repayments on long-term borrowing(32,001) 
   Net cash used in financing activities(2,483)(1,090)
Net decrease in cash, cash equivalents and restricted cash(10,662)(18,233)
Cash, cash equivalents and restricted cash at beginning of period37,553 55,497 
Cash, cash equivalents and restricted cash at end of period$26,891 $37,264 
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents$20,812 $23,981 
Restricted cash6,079 13,283 
Total cash, cash equivalents and restricted cash$26,891 $37,264 
Supplemental disclosure of non-cash transactions:
Purchase of equipment included in accounts payable and accrued liabilities$ $14 
Issuance of common stock for vested restricted stock units$654 $3,774 
Debt extinguishment$ $3,095 
Issuance of notes payable$ $2,809 
The accompanying notes are an integral part of these condensed consolidated financial statements.
6



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of Business
Zovio Inc (the “Company”) is a Delaware corporation, and is an education technology services company that partners with higher education institutions and employers to deliver innovative, personalized solutions to help learners and leaders achieve their aspirations. In April 2019, the Company acquired both Fullstack Academy, Inc. (“Fullstack”) and TutorMe.com, Inc. (“TutorMe”), each of which became wholly-owned subsidiaries of the Company at that time. Fullstack is an innovative web development school offering immersive technology bootcamps, and TutorMe is an online education platform that provides 24/7 on-demand tutoring and online courses.
On May 23, 2022, the Company completed the sale of TutorMe through an Asset Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company and TutorMe sold substantially all of the assets of TutorMe’s business in consideration of $55.0 million in cash and the assumption of certain liabilities of TutorMe’s business. The consideration payable pursuant to the Purchase Agreement is subject to a customary post-closing working capital adjustment. The gain on sale of TutorMe is comprised as follows:
TutorMe sale consideration$55,000 
Less: Disposed net assets:
  Accounts receivable, net1,314 
  Prepaid and other assets619 
  Goodwill3,472 
  Intangibles376 
  Deferred revenue(7,732)
  Other liabilities(631)
Less: Transaction fees and adjustments6,079 
Gain on sale of TutorMe
$51,503 
As previously disclosed, on December 1, 2020, the Company finalized a definitive Asset Purchase and Sale Agreement (the “Purchase Agreement”), by and among the Company, AU LLC (the “University”), the Arizona Board of Regents, a body corporate, for and on behalf of the University of Arizona (the “University of Arizona”), and the University of Arizona Global Campus (“Global Campus or “UAGC”). Upon the closing of the Purchase Agreement, Global Campus owns and operates the University in affiliation with the University of Arizona and with a focus on expanding access to education for non-traditional adult learners, and the Company provides services to Global Campus under a long-term Strategic Services Agreement (the “Services Agreement”). The services that the Company provides to Global Campus under the Services Agreement include recruiting, admissions, marketing, student financial aid processing, and financial aid advising, program advising, student retention advising, support services for academics, information technology and institutional support services in exchange for the service fees described in the UAGC Services Agreement (collectively, the “UAGC Services Business”).
On July 31, 2022, the Company entered into a new asset purchase agreement (the “New Asset Purchase Agreement”), pursuant to which Zovio sold to UAGC all of the remaining assets of Zovio related to the UAGC Services Business (the “Transaction”). In connection with the Transaction, the parties terminated the previous agreements. In addition, UAGC (a) paid to Zovio cash in the amount of $1.00, (b) assumed all obligations under Zovio’s business contracts associated with the UAGC Services Businesses, including the lease for the facilities located in Chandler, Arizona, which has a remaining term of eight years and approximately $20.0 million in rent obligations, (c) released Zovio from all remaining obligations under the UAGC/Zovio Agreements, including from all indemnification obligations under the Original Asset Purchase Agreement and all minimum payment guarantees under the UAGC Services Agreement, and (d) granted Zovio a general release of all claims. In addition, UAGC hired substantially all of the UAGC Services Business employees (as determined by UAGC). In turn, Zovio (i) paid to UAGC cash in the amount of $5.5 million, reflecting the allocated minimum payment owed by Zovio to UAGC for the month of July 2022, (ii) paid to UAGC cash in the amount of $5.0 million, and assigned to UAGC the right to a security deposit in the amount of $2.7 million, for assumption of Zovio’s obligations under the Chandler lease, (iii) granted UAGC the right to any refund achieved by Zovio after the closing of the Transaction from the State of California as a result of its appeal of that
7



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
certain judgment set forth in the Statement of Decision issued by the Superior Court of the State of California, County of San Diego on March 3, 2022, (iv) released UAGC from all remaining obligations under the UAGC/Zovio Agreements, and (v) granted UAGC and University of Arizona a general release of all claims.
The gain on the sale of TutorMe noted above was partially offset by a $5.8 million loss on transaction recognized for the net asset adjustment from Global Campus in connection with the Transaction on July 31, 2022.
Following the consummation of the Transaction on July 31, 2022, Zovio and UAGC have no contractual or other relationship with one another, other than an agreement to reasonably cooperate to effect the Transaction. As of the date hereof, UAGC operates the University as an integrated, online university. Zovio will continue to support the continued growth and expansion of its Fullstack Academy subsidiary and simultaneously explore strategic alternatives for that business. For additional information, see Note 16, “Subsequent Events.”
Prior to the Transaction, the majority of the Company's cash came from the Services Agreement with Global Campus. The service fees in the Services Agreement were subject to certain minimum residual liability adjustments, including performance-based adjustments, minimum profit level adjustments, and excess direct cost adjustments. These adjustments are all variable in nature in that they depend upon the Company’s performance during each service period, and to a certain extent the performance and forecast of Global Campus.

2. Summary of Significant Accounting Policies
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete annual financial statements and should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (“SEC”) on April 15, 2022. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary to present a fair statement of the Company’s condensed consolidated financial position, results of operations and cash flows as of and for the periods presented.
Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements but does not include all disclosures required by GAAP for complete annual consolidated financial statements.
Going Concern and Liquidity
As of June 30, 2022, the Company had combined cash and cash equivalents of $20.8 million, compared with combined cash and cash equivalents of $28.3 million as of December 31, 2021. During the three months ended June 30, 2022, the Company sold TutorMe for $55.0 million as described in Note 1, “Nature of Business,” and used the proceeds to pay down its debt of $31.5 million as described in Note 8, “Credit Facilities,” and pay the $22.4 million in statutory penalties for the California Attorney General matter as described in Note 14, “Commitments and Contingencies.” The Company had negative cash flows from operations of $15.4 million for the fiscal year 2021, and negative cash flows from operations of $57.2 million for the six months ended June 30, 2022.
The Company’s Services Agreement with Global Campus was subject to certain adjustments that impacted the amount and timing of cash flows, which payment terms were modified in April 2022 for the months of July, August and September
8



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
2022. Further, Global Campus incurred higher costs in their fourth quarter (the Company's second quarter) than the Company previously budgeted. On or about June 15, 2022, Global Campus advised the Company that Global Campus received a notice from the Department of Defense that they were placed on probation which would preclude them from enrolling new military students, pending completion of a comprehensive review. Additionally, there were communications from the Department of Defense to current Global Campus students cautioning them to consider leaving the University. We were advised by Global Campus that this matter should be resolved in a timely manner, however, it became apparent over the following weeks that these prolonged actions were having a negative impact on the University's revenue and therefore a negative impact on the Company's financial outlook. As a result, the Company entered into a new agreement with Global Campus, effective on July 31, 2022, which allowed Global Campus to acquire the business previously used to provide services to Global Campus. For additional information, see Note 16, “Subsequent Events.”
The Company will continue to support the continued growth and expansion of its Fullstack subsidiary and simultaneously explore strategic alternatives for that business. The ability of the Company to continue as a going concern is dependent on the Company generating cash from its operations and availability to other funding sources. Due to the Company’s negative cash flows from operations and projected future negative cash flows from operations resulting from the Transaction with Global Campus and reduction of availability of debt financing, substantial doubt exists about the Company’s ability to continue as a going concern for the twelve months following the issuance of these condensed consolidated financial statements. Management plans to cover any shortfall from operations by selling its Fullstack subsidiary or obtaining debt financing. However, there can be no assurance the Company will be successful in these efforts.
The condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.
Impairment of Long-Lived Assets
The Company assesses potential impairment to its long-lived assets under ASC 360, Property and Equipment. The Company makes this assessment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recorded if the carrying amount of the long-lived asset is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Any required impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds fair value and is recorded as a reduction in the carrying value of the related asset and an expense to operating results. Due to the Transaction with Global Campus on July 31, 2022, the Company’s qualitative assessment indicated that an impairment in the Company’s long-lived assets occurred as of June 30, 2022. For additional information, see Note 16, “Subsequent Events.”
The Company recorded an impairment of its long-lived assets during the six-months ended June 30, 2022 in the consolidated statements of income (loss) of $35.9 million as follows:
Property and equipment, net$22,596 
Operating lease assets10,370 
Intangibles, net976 
Other long-term assets1,945 
Impairment of long-lived assets$35,887 
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements. Actual results could differ from those estimates. As noted above, these condensed consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities in the normal course of business.
9



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Comprehensive Loss
The Company has no components of other comprehensive income (loss), and therefore, comprehensive loss equals net loss.
Recent Accounting Pronouncements
None noted as applicable.

3. Revenue, Other Revenue and Deferred Revenue
The following table presents the Company’s net revenue disaggregated based on the revenue source (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Strategic services revenue$41,022 $59,688 $91,310 $126,614 
Transition services income1,722 2,516 3,731 5,268 
Tuition revenue, net8,576 6,866 17,822 13,956 
Other revenue, net (1)
60 116 150 207 
Total revenue, net$51,380 $69,186 $113,013 $146,045 
(1) Represents revenue generated from various services and other miscellaneous fees.

The following table presents the Company’s net revenue disaggregated based on the timing of revenue recognition (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Over time, over period of instruction$51,340 $69,135 $112,932 $145,903 
Point in time (1)
40 51 81 142 
Total revenue, net$51,380 $69,186 $113,013 $146,045 
(1) Represents revenue generated from digital textbooks and other miscellaneous fees.
The Company operates under two reportable segments and has no significant foreign operations or assets located outside of the United States. For additional information on segmentation, see Note 15, “Segment Information.”
10



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Deferred Revenue and Student Deposits
Current deferred revenue and student deposits consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Deferred revenue, current$6,901 $14,469 
Student deposits504 470 
Total current deferred revenue and student deposits$7,405 $14,939 
Below are the opening and closing balances of current deferred revenue from the Company’s contracts with customers (in thousands):
June 30, 2022June 30, 2021
Current deferred revenue opening balance, January 1$14,469 $7,477 
Current deferred revenue closing balance, June 306,901 9,981 
Increase (decrease)$(7,568)$2,504 
For further information on receivables, refer to Note 6, “Accounts Receivable, Net” within the condensed consolidated financial statements.
Deferred revenue consists of cash payments that are received or due in advance of the Company’s performance. As of June 30, 2022 the deferred revenue balance relates entirely to the Zovio Growth segment. For the majority of the Company’s customers, payment for services is due prior to services being provided and is included in current deferred revenue. However, there were previously contracts which included deferred revenue that was deemed to be long-term. For additional information, refer to Note 7, “Other Significant Balance Sheet Accounts - Other Long-Term Liabilities” within the condensed consolidated financial statements.
The difference between the opening and closing balances of deferred revenue primarily results from the timing difference between the Company’s performance and the customer’s payment. For the six months ended June 30, 2022, the Company recognized $8.0 million of revenue that was included in the deferred revenue balance as of January 1, 2022. For the six months ended June 30, 2021, the Company recognized $6.1 million of revenue that was included in the deferred revenue balance as of January 1, 2021. Amounts reported in the closing balance of deferred revenue are expected to be recognized as revenue within the next 12 months.
4. Restructuring and Impairment Expense
During the three and six months ended June 30, 2022, the Company recognized $35.9 million of asset impairment charges in the restructuring and impairment expense line item on the Company’s condensed consolidated statements of income (loss).
During the three and six months ended June 30, 2021, the Company recognized $2.3 million of severance costs in the restructuring and impairment expense line item on the Company’s condensed consolidated statements of income (loss).
The following table summarizes the amounts recorded in the restructuring and impairment expense line item on the Company’s condensed consolidated statements of income (loss) for each of the periods presented (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Asset impairment$35,887 $ $35,887 $ 
Severance costs$ $2,341 $ $2,341 
Total restructuring and impairment expense$35,887 $2,341 $35,887 $2,341 
11



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
The Company previously vacated or consolidated properties and subsequently reassessed its non-cancelable leases. Additionally, the Company previously implemented restructuring plans to reduce operating expenses, implement cost reductions and conserve cash resources. The severance costs and lease costs are expected to substantially all be paid out over the next 12 months.
The following table summarizes the changes in the Company's restructuring and impairment liability by type during the six months ended June 30, 2022 (in thousands):
Asset ImpairmentStudent Transfer CostsSeverance CostsLease Exit and Other CostsTotal
Balance at December 31, 2021$ $1,282 $520 $398 $2,200 
Restructuring and impairment expense35,887    35,887 
Payments and adjustments  (520)(140)(660)
Non-cash transaction(35,887)   (35,887)
Balance at June 30, 2022$ $1,282 $ $258 $1,540 
The restructuring liability amounts are recorded within either the (i) accounts payable and accrued liabilities account or (ii) rent liability account on the condensed consolidated balance sheets.

5. Fair Value Measurements
The following tables summarize fair value information as of June 30, 2022 and December 31, 2021, respectively (in thousands):
As of June 30, 2022
Level 1Level 2Level 3Total
Mutual funds$227 $ $ $227 
As of
December 31, 2021
Level 1Level 2Level 3Total
Mutual funds$974 $ $ $974 
The mutual funds in the tables above, represent deferred compensation asset balances, which are considered to be trading securities. The Company’s deferred compensation asset balances are recorded in the investments line item on the Company’s condensed consolidated balance sheets, and are classified as Level 1 securities. There were no transfers between any level categories for investments during the periods presented.
There were no differences between amortized cost and fair value of investments as of June 30, 2022 or December 31, 2021, and no reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2022 or 2021.
6. Accounts Receivable, Net
Accounts receivable, net, consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Accounts receivable$6,113 $10,562 
Less allowance for credit losses1,162 931 
Accounts receivable, net$4,951 $9,631 
12



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table presents the changes in the allowance for credit losses for the six months ended June 30, 2022 (in thousands):
Beginning
Balance
Charged to
Expense
Write-offsRecoveries of amountsEnding
Balance
$931 $257 $(43)$17 $1,162 
The following table presents the changes in the allowance for credit losses for the six months ended June 30, 2021 (in thousands):
Beginning
Balance
Charged to
Expense
Write-offsRecoveries of amountsEnding
Balance
$1,216 $911 $(299)$ $1,828 

7. Other Significant Balance Sheet Accounts
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Prepaid expenses$2,565 $2,664 
Prepaid licenses2,652 1,233 
Prepaid insurance2,500 2,254 
Insurance recoverable377 496 
Other current assets (1)
539 6,776 
Total prepaid expenses and other current assets$8,633 $13,423 
(1) Decrease in balances is primarily due to the $5.8 million loss on transaction recognized for the net asset adjustment from Global Campus in connection with the Transaction on July 31, 2022. See Note 16, “Subsequent Events.”
Property and Equipment, Net
Property and equipment, net, consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Furniture and office equipment$1,383 $22,032 
Software 4,493 
Leasehold improvements 15,921 
Vehicles 22 
Total property and equipment (1)
1,383 42,468 
Less accumulated depreciation and amortization(283)(16,086)
Total property and equipment, net$1,100 $26,382 
(1) Decrease in balances are partially due to the asset impairment recognized in connection with the transaction with Global Campus. See Note 16, “Subsequent Events.”
For the three months ended June 30, 2022 and 2021, depreciation and amortization expense related to property and equipment was $1.3 million and $1.3 million, respectively. For the six months ended June 30, 2022 and 2021, depreciation and amortization expense related to property and equipment was $2.7 million and $2.6 million, respectively.
13



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Goodwill and Intangibles, Net
Goodwill and intangibles, net, consisted of the following (in thousands):
June 30, 2022
Definite-lived intangible assets:Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Capitalized curriculum costs (1)
$570 $(114)$456 
Purchased intangible assets12,455 (8,700)3,755 
   Total definite-lived intangible assets$13,025 $(8,814)$4,211 
Goodwill19,704 
Total goodwill and intangibles, net$23,915 
December 31, 2021
Definite-lived intangible assets:Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Capitalized curriculum costs$13,982 $(12,796)$1,186 
Purchased intangible assets14,185 (9,048)5,137 
   Total definite-lived intangible assets$28,167 $(21,844)$6,323 
Goodwill23,176 
Total goodwill and intangibles, net$29,499 
(1) Decrease in balances are partially due to the asset impairment recognized in connection with the Transaction with Global Campus. See Note 16, “Subsequent Events.”
For the three months ended June 30, 2022 and 2021, amortization expense was $0.6 million and $0.7 million, respectively. For the six months ended June 30, 2022 and 2021, amortization expense was $1.3 million and $1.7 million, respectively.
The following table summarizes the estimated remaining amortization expense as of each fiscal year ended below (in thousands):
Year Ended December 31,
Remainder of 2022$960 
20231,919 
2024584 
2025129 
2026122 
Thereafter497 
Total future amortization expense$4,211 
14



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Accounts payable$7,791 $5,967 
Accrued salaries and wages4,364 5,434 
Accrued bonus1,360 3,625 
Accrued vacation2,915 3,037 
Accrued litigation and fees 22,376 
Minimum residual liability68 14,987 
Accrued expenses14,025 13,400 
Current leases payable4,071 4,492 
Accrued insurance liability929 1,404 
Accrued income taxes payable 47 
Total accounts payable and accrued liabilities$35,523 $74,769 
Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
As of June 30, 2022As of
December 31, 2021
Notes payable$2,797 $2,723 
Deferred revenue 807 
Other long-term liabilities239 1,585 
Total other long-term liabilities$3,036 $5,115 

8. Credit Facilities
The Company has issued letters of credit that are collateralized with cash, in the aggregate amount of $6.0 million as of June 30, 2022. The letters of credit relate primarily to the Company's leased facilities and insurance requirements. The collateralized cash is held in restricted cash on the Company's condensed consolidated balance sheets.
The Company is required to provide surety bonds in certain states in which it does business. As a result, the Company previously entered into a surety bond facility with an insurance company to provide such bonds when required. Although there are no remaining issued bonds on the Company’s behalf under this facility as of June 30, 2022, the Company still holds certain liability associated with any required collateral.
On April 14, 2022, the Company entered into a Financing Agreement (the “Credit Facility”) among the Company, as borrower, each of its wholly-owned subsidiaries as subsidiary guarantors (the “Guarantors”), the lenders party thereto from time to time (the “Lenders”) and Blue Torch Finance LLC, as administrative agent and collateral agent for the Lenders (the “Agent”). The Credit Facility provided for a term loan in the aggregate principal amount of $31.5 million (the “Term Loan”). The proceeds of the Term Loan were used (i) to satisfy the judgement in the CA Attorney General lawsuit, and (ii) to fund the working capital of the Company and the Guarantors.
Subject to the terms of Credit Facility, the Term Loan had an interest rate per annum equal to LIBOR plus 9.0%, payable monthly. The principal amount of the Term Loan was to be repaid in equal quarterly installments of $393,750 beginning June 30, 2023 and through March 31, 2025, with the remaining unpaid principal amount of the Term Loan, and all accrued and unpaid interest thereon, due and payable on the maturity date of April 14, 2025. The Credit Facility contained customary
15



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
representations, warranties, affirmative and negative covenants (including financial covenants), and indemnification provisions in favor of the Agent and the Lenders.
Concurrent with the sale of TutorMe on May 23, 2022, the Company repaid in full all outstanding obligations of the Company owed to Blue Torch Finance, LLC and the Lenders pursuant to the Credit Facility. In connection with the Company’s repayment of the outstanding obligations under the Credit Facility, Blue Torch terminated the Credit Facility and released all of its security interests in and liens on all of the assets of the Company and its subsidiaries.
There was an extinguishment of debt and an early termination of the loan during the period ended June 30, 2022. All fees associated with the term loan, including a termination fee of $0.5 million, and the write-off of the unamortized financing fees of $3.0 million. These along with normal interest expense of $0.3 million and amortization of issuance costs of $0.1 million, were included as part of “Other income (expense), net” in the condensed consolidated statements of income (loss).
9. Lease Obligations
Operating Leases
The Company leases various office and classroom facilities with terms that expire at various dates through 2033. These facilities are used for academic operations, corporate functions, enrollment services and student support services. The Company does not have any leases other than its office facilities and classrooms. All of the leases were classified as operating leases for the period ended June 30, 2022, and the Company does not have any finance leases. All of the leases, other than those that may qualify for the short-term scope exception of 12 months or less, are recorded on the Company’s condensed consolidated balance sheets.
In 2021, the Company entered into a new lease in New York for classrooms and office space and recorded a right-of-use asset of $14.6 million in exchange for lease obligations. However, in the fourth quarter of 2021, the Company began to market this space for sublease. There is no impairment indicator at this time, but there is no guarantee that the Company will be able to sublease the space at rates materially similar to that of the current lease.
The Company's one active sublease as of June 30, 2022 relates to office space of approximately 21,000 square feet in Denver, Colorado with a remaining commitment to lease of 8 months and net lease payments of $0.4 million. Sublease income for the six months ended June 30, 2022 and 2021 was $0.3 million and $1.3 million, respectively. The Company’s sublease does not include any options to extend or for early termination and do not contain any residual value guarantees or restrictive covenants. The sublease was classified as an operating lease for the period ended June 30, 2022.
10. Loss Per Share
Basic loss per share is calculated by dividing net loss available to common stockholders for the period by the weighted average number of common shares outstanding for the period.
Diluted loss per share is calculated by dividing net loss available to common stockholders for the period by the sum of (i) the weighted average number of common shares outstanding for the period, plus (ii) potentially dilutive securities outstanding during the period, if the effect is dilutive. Potentially dilutive securities for the periods presented include stock options, unvested restricted stock units (“RSUs”) and unvested performance stock units (“PSUs”).
16



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table sets forth the computation of basic and diluted loss per share for the periods indicated (in thousands, except per share data):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Numerator:  
Net loss$(4,673)$(4,033)$(12,110)$(13,526)
Denominator:  
Weighted average number of common shares outstanding34,122 33,343 33,844 33,058 
Effect of dilutive options and stock units    
Diluted weighted average number of common shares outstanding34,122 33,343 33,844 33,058 
Loss per share:  
Basic$(0.14)$(0.12)$(0.36)$(0.41)
Diluted$(0.14)$(0.12)$(0.36)$(0.41)
The following table sets forth the number of stock options and stock units excluded from the computation of diluted loss per share for the periods indicated below because their effect was anti-dilutive (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Stock options800 1,308 949 1,445 
Stock units3,187 1,269 3,077 1,094 
11. Stock-Based Compensation
The Company recorded a reversal of $13.0 thousand of stock-based compensation expense for the three months ended June 30, 2022, primarily relating to the forfeitures of certain performance-based PSUs not meeting their targets. The Company recorded $0.2 million of stock-based compensation expense for the three months ended June 30, 2021. The related income tax expense was $3.0 thousand for the three months ended June 30, 2022, and the related income tax benefit was $0.1 million for the three months ended June 30, 2021.
The Company recorded a reversal of $1.2 million for the six months ended June 30, 2022, primarily relating to the forfeitures of certain performance-based PSUs not meeting their targets. The Company recorded an expense of $2.6 million of stock-based compensation expense for the six months ended June 30, 2021. The related income tax expense was $0.3 million for the six months ended June 30, 2022, and the related income tax benefit was $0.7 million for the six months ended June 30, 2021.
During the six months ended June 30, 2022, the Company granted 1.0 million RSUs at a weighted average grant date fair value of $0.84 and 0.6 million RSUs vested. During the six months ended June 30, 2021, the Company granted 1.0 million RSUs at a weighted average grant date fair value of $3.39, and 0.9 million RSUs vested.
During the six months ended June 30, 2022, the Company granted 0.4 million performance-based PSUs at a weighted average grant date fair value of $0.90, and 0.2 million performance-based or market-based PSUs vested. During the six months ended June 30, 2021, the Company granted 0.8 million performance-based PSUs at a weighted average grant date fair value of 2.73, and no performance-based or market-based PSUs vested.
During each of the six months ended June 30, 2022, and 2021, the Company did not grant any stock options and no stock options were exercised.
17



ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
As of June 30, 2022, unrecognized compensation cost was $4.3 million related to unvested stock options, RSUs and PSUs.
12. Income Taxes
The Company uses the asset-liability method to account for taxes. Under this method, deferred income tax assets and liabilities result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the condensed consolidated financial statements that will result in income and deductions in future years.
The Company recognizes deferred tax assets if realization of such assets is more-likely-than-not. In order to make this determination, the Company evaluates a number of factors including the ability to generate future taxable income from reversing taxable temporary differences, forecasts of financial and taxable income or loss, and the ability to carryback certain operating losses to refund taxes paid in prior years. The cumulative loss incurred over the three-year period ended June 30, 2022 constituted significant negative objective evidence against the Company’s ability to realize a benefit from its federal deferred tax assets. Such objective evidence limited the ability of the Company to consider in its evaluation certain subjective evidence such as the Company’s projections for future growth. On the basis of its evaluation, the Company determined that its deferred tax assets were not more-likely-than-not to be realized and that a valuation allowance against its deferred tax assets should continue to be maintained as of June 30, 2022.
The Company’s current effective income tax rate that has been applied to normal, recurring operations for the six months ended June 30, 2022, after discrete items, was (0.7)%.
As of both June 30, 2022, and December 31, 2021, the Company did not have any gross unrecognized tax benefits. Although the Company believes the tax accruals provided are reasonable, the final determination of tax returns under review or returns that may be reviewed in the future and any related litigation could result in tax liabilities that materially differ from the Company’s historical income tax provisions and accruals.
The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The 2017 tax year and forward are open to examination for federal income tax purposes, and the 2015 tax year and forward are open to examination for state income tax purposes.

13. Regulatory
The Company is subject to extensive regulation by federal and state governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (“Higher Education Act”), and the regulations promulgated thereunder by the U.S. Department of Education (“Department”) subject the Company and its university partners to significant regulatory scrutiny on the basis of numerous standards that institutions of higher education must satisfy in order to participate in the various federal student financial aid programs under Title IV of the Higher Education Act (“Title IV programs”).
Following the July 31, 2022 Transaction with Global Campus, the Company was released from all remaining obligations under the UAGC/Zovio Agreements, including from all indemnification obligations under the Original Asset Purchase Agreement. For additional information, see Note 16, “Subsequent Events.”
Department of Education On-Site Program Review of former Ashford University
In December 2016, the Department informed the University that it intended to continue the on-site program review, which commenced in January 2017 and initially covered the 2015-2016 and 2016-2017 award years, but may be expanded if the Department deems such expansion appropriate. To date, the Company has not received a draft report from the Department.
Department of Education Close Out Audit of University of the Rockies
During the fiscal year 2018, the Company recorded an expense of $1.5 million, in relation to the close out audit of University of the Rockies resulting from its merger with the University in October 2018. The expense was recorded in relation to borrower defense to repayment regulations. On September 26, 2019, the Department sent the University a Final Audit
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ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Determination letter for the University of the Rockies. This letter confirmed that with the exception of the borrower defense to repayment regulations, none of the other audit findings resulted in financial liability. The Department also stated that additional liabilities could accrue in the future. On December 19, 2019, the Company filed an administrative appeal with the Department appealing the alleged liability on the basis that the University of Rockies did not close but rather merged with the University. The briefing on the appeal is complete and the Company is awaiting a decision by the administrative law judge.
WSCUC Accreditation of Global Campus (formerly Ashford University)
Global Campus is regionally accredited by WASC Senior College and University Commission (“WSCUC”). In June 2019, WSCUC acted to reaffirm accreditation through Spring 2025.
In November 2020, WSCUC approved the change of control application filed to complete the Original Asset Purchase Agreement, subject to certain conditions. WSCUC notified Global Campus that the provisions of the Notice of Concern issued as part of the reaffirmation of the University in July 2019 also remain in effect.
Department of Education
On December 1, 2020, the parties to the Purchase Agreement entered into Amendment No. 1 to the Purchase Agreement (“Amendment”) pursuant to which, among other things, the University of Arizona and Global Campus waived the closing condition regarding issuance of a pre-acquisition review notice by the Department of Education. Under the terms of the Purchase Agreement, as amended, the Closing was subject to customary closing conditions for transactions in this sector. The Department was expected to conduct a post-closing review of Global Campus, consistent with the Department’s procedures during which the Department makes a determination on the institution’s request for recertification from the Department following the change of control, including whether to impose or place other conditions or restrictions. To be eligible to participate in Title IV programs, an institution must comply with the Higher Education Act and the regulations thereunder that are administered by the Department.
On July 1, 2022, the Department notified the Company that as a result of the Statement of Decisions issued in the California Attorney General matter as described below in Note 14, “Commitments and Contingencies,” the Department was conducting a preliminary review of the Company’s participation in Title IV Higher Education Act programs and requested various documents and information from the Company. The Company is evaluating the request and cooperating with the Department.
Borrowers Defense to Repayment
On October 28, 2016, the Department published borrower defense to repayment regulations to change processes that assist students in gaining relief under certain provisions of the Direct Loan Program regulations. These defense to repayment regulations allow a borrower to assert a defense to repayment on the basis of a substantial misrepresentation, any other misrepresentation in cases where certain other factors are present, a breach of contract or a favorable nondefault contested judgment against a school for its act or omission relating to the making of the borrower’s loan or the provision of educational services for which the loan was provided. In addition, the financial responsibility standards contained in the new regulations establish the conditions or events that trigger the requirement for an institution to provide the Department with financial protection in the form of a letter of credit or other security against potential institutional liabilities. Triggering conditions or events include, among others, certain state, federal or accrediting agency actions or investigations, and in the case of publicly traded companies, receipt of certain warnings from the SEC or the applicable stock exchange, or the failure to timely file a required annual or quarterly report with the SEC. The new regulations also prohibit schools from requiring that students agree to settle future disputes through arbitration.
On March 15, 2019, the Department issued guidance for the implementation of parts of the regulations. The guidance covers an institution’s responsibility in regard to reporting mandatory and discretionary triggers as part of the financial responsibility standards, class action bans and pre-dispute arbitration agreements, submission of arbitral and judicial records, and repayment rates.
On August 30, 2019, the Department finalized the regulations derived from the 2017-2018 negotiated rulemaking process and subsequent public comments. This version of the borrower defense regulations applies to all federal student loans made on
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ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
or after July 1, 2020, and, among other things: grants borrowers the right to assert borrower defense to repayment claims against institutions, regardless of whether the loan is in default or in collection proceedings; allows borrowers to file defense to repayment claims three years from either the student’s date of graduation or withdrawal from the institution; and gives students the ability to allege a specific amount of financial harm and to obtain relief in an amount determined by the Department, which may be greater or lesser than their original claim amount. It also includes financial triggers and other factors for recalculating an institution’s financial responsibility composite score that differ from those in the 2016 regulations.
On March 18, 2021, the Department announced it would adopt a streamlined approach for granting full debt relief to borrowers reversing the methodology first announced in December 2019 that allowed for partial student loan cancellation for borrowers. The Department determined that the previous methodology did not result in an appropriate relief determination.
In July 2020, the Department notified the Company that they would be initiating a preliminary review of borrower defense applications from borrowers who made claims regarding the University. As part of the initial fact-finding process, the Department will send individual student claims to the University and allow the institution the opportunity to submit a response to the borrower’s allegations. In 2020, the Company received and timely responded to the submitted claims and cannot predict the outcome of the Department’s review at this time. In 2022, Global Campus also received additional borrower defense applications from borrowers. Global Campus is responding to these additional submitted claims and we cannot predict the outcome of the Department's review at this time.
14. Commitments and Contingencies
Litigation
From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with GAAP, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated, the best estimate within that range should be accrued. If no estimate is better than another, the Company records the minimum estimated liability in the range. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved could be material. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Below is a list of material legal proceedings to which the Company or its subsidiaries is a party.
California Attorney General Investigation of For-Profit Educational Institutions
In January 2013, the Company received from the Attorney General of the State of California (“CA Attorney General”) an Investigative Subpoena relating to the CA Attorney General’s investigation of for-profit educational institutions. Pursuant to the Investigative Subpoena, the CA Attorney General requested documents and detailed information for the time period March 1, 2009 to the date of the Investigative Subpoena. On January 13, 2014 and June 19, 2014, the Company received additional Investigative Subpoenas from the CA Attorney General, each requesting additional documents and information for the time period March 1, 2009 through each such date.
Representatives from the Company met with representatives from the CA Attorney General’s office on several occasions to discuss the status of the investigation, additional information requests, and specific concerns related to possible unfair business practices in connection with the Company’s recruitment of students and debt collection practices. The parties also discussed a potential resolution involving injunctive relief, other non-monetary remedies and a payment to the CA Attorney General and in the third quarter of 2016, the Company recorded an expense of $8.0 million related to the cost of resolving this matter.
The parties did not reach a resolution and on November 29, 2017, the CA Attorney General filed suit against the Company. The Company vigorously defended this case and emphatically denies the allegations made by the CA Attorney General that it ever deliberately misled its students, falsely advertised its programs, or in any way were not fully accurate in its statements to investors. A trial took place from November 2021 through December 2021.
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ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
On March 7, 2022, the Superior Court of the State of California, County of San Diego (the “Court”), issued a Statement of Decision regarding the Lawsuit in favor of the CA Attorney General. In the Statement of Decision, the Court ordered the Company to pay $22.4 million in statutory penalties. As a result, the Company accrued an additional $14.3 million in the fourth quarter of 2021, for a total of $22.4 million accrued as of December 31, 2021. The Court denied the CA Attorney General’s demands for restitution and injunctive relief finding no evidence postdating 2017 that would necessitate an injunction. The Company is disappointed by the Court’s decision and believes that its practices were at all times in compliance with California law. On June 10, 2022, the Company filed a notice of appeal on the Statement of Decision. During the second quarter of 2022, the Company paid $23.3 million, which included the full amount of the judgment as well as applicable costs and accrued interest. This payment does not waive the Company’s right to appeal the judgment.
In connection with the Transaction closed on July 31, 2022, the Company granted UAGC the right to any refund achieved from the State of California as a result of the appeal. For additional information, see Note 16, “Subsequent Events.”

15. Segment Information
The Company operates in two reportable segments: University Partners and Zovio Growth. The Company reports segment information based upon the management approach, and how the chief operating decision maker views the operations.
Until the sale of TutorMe, the Company had three operating segments: Fullstack, TutorMe, and Zovio, and two reportable segments: University Partners and Zovio Growth. On May 23, 2022, the Company completed the sale of TutorMe by which the Company sold substantially all of the assets of TutorMe’s business in consideration of cash and the assumption of certain liabilities of TutorMe’s business. For additional information, see Note 1, “Nature of Business.”
The Company’s operating segments are determined based on (i) financial information reviewed by the CEO, who is the chief operating decision maker, (ii) internal management and related reporting structure, and (iii) the basis upon which the chief operating decision maker makes resource allocation decisions.
Fullstack and TutorMe, through sale date, are aggregated into a single reportable segment, called Zovio Growth. The aggregation of the Fullstack and TutorMe operating segments was based on their uniform customer bases and methods of services provided as required by ASC 280-10-50-12. Based on these same quantitative tests, the Zovio operating segment is a separate reportable segment, called University Partners. The segment reporting did not have any impact on the determination of reporting units used to assess impairment under ASC 350, Intangibles - Goodwill and Other.
The University Partners segment includes the technology and services provided to colleges and universities to enable the online delivery of degree programs and related goods and services.
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ZOVIO INC
Notes to Condensed Consolidated Financial Statements (Unaudited)
Segment Performance
The following table summarizes financial information regarding each reportable segment’s results of operations for the periods presented (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022