8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549 

FORM 8-K/A

CURRENT REPORT

 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 Date of report (Date of earliest event reported): July 31, 2022

 ZOVIO INC

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-34272	59-3551629
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1811 E. Northrop Blvd, Chandler, AZ 85286

(Address of Principal Executive Offices, including zip code)

 (858) 668-2586

(Registrant’s telephone number, including area code)

 None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 ☐         Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 ☐         Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 ☐         Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 ☐         Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.         ☐

Explanatory Note

On August 1, 2022, Zovio Inc (the “Company”) filed a Current Report on Form 8-K (the “Original Filing”) in connection with the completion of the a new asset purchase agreement (the “New Asset Purchase Agreement”), effective July 31, 2022, pursuant to which Zovio sold to UAGC all of the remaining assets of Zovio related to the UAGC Services Business (the “Transaction”). This Current Report on Form 8-K/A (Amendment No. 1) amends and supplements the Original Filing to provide the required Item 9.01(b) Pro Forma Financial Information for the Transaction.

This Current Report on Form 8-K/A should be read in connection with the Original Filing, which provides a more complete description of the transaction with UAGC, as well as the previous disposition of TutorMe (see also Current Report on Form 8-K filed on May 23, 2022). Except as indicated above, all other information in the Original Filing remains unchanged.

Item 9.01.     Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The following unaudited pro forma condensed consolidated financial information is attached as Exhibit 99.1 and incorporated herein by reference.

•Unaudited pro forma condensed consolidated balance sheet of the Company as of June 30, 2022.

•Unaudited pro forma condensed consolidated income statements of the Company for the six months ended June 30, 2022 and for the fiscal year ended December 31, 2021.

(d)    Exhibits

Exhibit	Description
99.1	Unaudited Pro Forma Financial Information
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ZOVIO INC
	By:	/s/ Kevin Royal
		Name: Kevin Royal
Date: August 4, 2022		Title: Chief Financial Officer

EX-99.1

Exhibit 99.1

ZOVIO INC REPORTS UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On July 31, 2022, Zovio Inc, a Delaware corporation (“Zovio” or the “Company”), entered into and simultaneously closed 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 UAGC/Zovio Agreements. In addition, UAGC (and, where applicable, UofA) (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 occupied by the UAGC Services Business 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 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 UofA a general release of all claims.

The Company’s accounting and financial reporting in these unaudited pro forma financial statements is based on its preliminary assessment of the appropriate application of Generally Accepted Accounting Principles (“GAAP”). The final application of GAAP to the New Asset Purchase Agreement may differ from what is presented in these unaudited pro forma financial statements.

The unaudited pro forma condensed consolidated financial statements of the Company presented in this Exhibit 99.1 were derived from the Company’s historical consolidated financial statements and are being presented to give effect to the Transaction. The presentation of the unaudited pro forma financial information is prepared in conformity with Article 11 of Regulation S-X rules effective January 1, 2021.

The unaudited pro forma condensed consolidated balance sheet assumes that the Transaction had occurred on June 30, 2022. The unaudited pro forma condensed consolidated income statements are presented as if the Transaction had occurred on January 1, 2021. The unaudited combined consolidated pro forma financial statements presented in this Form 8-K should be read in conjunction with the accompanying notes. The following unaudited pro forma condensed consolidated financial statements were based on and should be read in conjunction with the Company’s historical consolidated financial statements:

•Zovio audited consolidated financial statements and related notes thereto as of December 31, 2021 and for the year ended December 31, 2021 as reported on Form 10-K;

•Zovio unaudited condensed consolidated financial statements and related notes thereto as of June 30, 2022 and for the six months ended June 30, 2022 as reported on Form 10-Q.

The pro forma adjustments are based on the best information available and assumptions that management believes are (a) directly attributable to the New Asset Purchase Agreement, (b) directly attributable to the previous disposition of TutorMe on May 23, 2022 and (c) are factually supportable. See Current Report on Form 8-K filed on May 23, 2022 for further information on the TutorMe disposition. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial information.

The Company has determined that the Transaction does not meet the definition of discontinued operations in accordance with Financial Accounting Standards Board Accounting Standards Codification 205, Presentation of Financial Statements (“ASC 205”). Therefore, pro forma adjustments included within the unaudited pro forma consolidated statements of operations for the years ended December 31, 2021 and period ended June 30, 2022 are reflected in Zovio’s pro forma income (loss) from continuing operations.

The unaudited pro forma condensed consolidated financial information is provided herein for illustrative purposes only and is not necessarily indicative of the results of operations that would have occurred had the Transaction occurred on January 1, 2021. The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the Transaction.

Exhibit 99.1

ZOVIO INC

Unaudited Pro Forma Condensed Consolidated Balance Sheet

(Unaudited)

(In thousands)

	As of June 30, 2022
	Historical		Transaction Accounting Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	20,812	$	(10,500)	[A]	$	10,312
Restricted cash	6,079		(2,680)		[A]	3,399
Investments	227		—			227
Accounts receivable, net	4,951		—			4,951
Prepaid expenses and other current assets	8,633		(4,409)		[A]	4,224
Total current assets	40,702		(17,589)			23,113
Property and equipment, net	1,100		—			1,100
Operating lease assets	17,358		—			17,358
Goodwill and intangibles, net	23,915		—			23,915
Other long-term assets	2,358		(265)		[A]	2,093
Total assets	$	85,433	$	(17,854)		$	67,579
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	35,523	$	(5,046)	[B]	$	30,477
Deferred revenue and student deposits	7,405		—			7,405
Total current liabilities	42,928		(5,046)			37,882
Rent liability	32,864		(14,375)		[B]	18,489
Other long-term liabilities	3,036		(165)		[B]	2,871
Total liabilities	78,828		(19,586)			59,242
Total stockholders’ equity	6,605		1,732			8,337
Total liabilities and stockholders’ equity	$	85,433	$	(17,854)		$	67,579

Exhibit 99.1

ZOVIO INC

Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss)

(Unaudited)

(In thousands, except per share amounts)

	Six Months Ended June 30, 2022
	Historical		UAGC Transaction Adjustments		TutorMe Sale Adjustments			Pro Forma
Revenue	$	109,282	$	(91,386)	$	(4,548)	[C]	$	13,348
Other revenue	3,731		(3,731)		—		[C]	—
Revenue and other revenue	$	113,013	$	(95,117)	$	(4,548)		$	13,348
Costs and expenses:
Technology and academic services	35,788		(22,368)		(2,495)		[D]	10,925
Counseling services and support	39,036		(37,493)		—		[D]	1,543
Marketing and communication	40,186		(33,840)		(1,109)		[D]	5,237
General and administrative	14,958		(4,628)		(1,335)		[D]	8,995
Legal expense	920		—		—			920
Restructuring and impairment expense	35,887		(35,887)		—		[E]	—
Gain on transactions, net	(45,689)		(5,814)		51,503		[F]	—
Total costs and expenses	121,086		(140,030)		46,564			27,620
Operating loss	(8,073)		44,913		(51,112)			(14,272)
Other expense, net	(3,951)		—		—			(3,951)
Loss before income taxes	(12,024)		44,913		(51,112)			(18,223)
Income tax expense	86		—		—			86
Net loss	$	(12,110)	$	44,913	$	(51,112)		$	(18,309)
Loss per share:
Basic	$	(0.36)						$	(0.54)
Diluted	$	(0.36)						$	(0.54)
Weighted average number of common shares outstanding used in computing loss per share:
Basic	33,844		—		—			33,844
Diluted	33,844		—		—			33,844

Exhibit 99.1

ZOVIO INC

Unaudited Pro Forma Condensed Consolidated Statement of Income (Loss)

(Unaudited)

(In thousands, except per share amounts)

	Year Ended December 31, 2021
	Historical		UAGC Transaction Adjustments		TutorMe Sale Adjustments			Pro Forma
Revenue	$	253,099	$	(222,859)	$	(7,827)	[C]	$	22,413
Other revenue	9,934		(9,934)		—		[C]	—
Revenue and other revenue	$	263,033	$	(232,793)	$	(7,827)		$	22,413
Costs and expenses:
Technology and academic services	70,663		(47,727)		(3,652)		[D]	19,284
Counseling services and support	89,514		(87,220)		—		[D]	2,294
Marketing and communication	85,328		(76,768)		(2,159)		[D]	6,401
General and administrative	43,160		(10,085)		(3,280)		[D]	29,795
Legal expense	14,335		—		—			14,335
Restructuring and impairment expense	2,641		33,246		—		[E]	35,887
Gain on transactions, net	—		7,814		(51,503)		[F]	(43,689)
Total costs and expenses	305,641		(180,740)		(60,594)			64,307
Operating loss	(42,608)		(52,053)		52,767			(41,894)
Other income, net	130		—		—			130
Loss before income taxes	(42,478)		(52,053)		52,767			(41,764)
Income tax benefit	(129)		—		—			(129)
Net loss	$	(42,349)	$	(52,053)	$	52,767		$	(41,635)
Loss per share:
Basic	$	(1.27)						$	(1.25)
Diluted	$	(1.27)						$	(1.25)
Weighted average number of common shares outstanding used in computing loss per share:
Basic	33,256		—		—			33,256
Diluted	33,256		—		—			33,256

Exhibit 99.1

ZOVIO INC

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

The following estimated pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and or the unaudited pro forma consolidated income statements:

A.Reflects the estimated assets transferred in accordance with the transaction with UAGC, dated as of July 31, 2022. Zovio 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, as well as other cash in the amount of $5.0 million. Zovio also 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.

B.Reflects the estimated liabilities transferred in accordance with the transaction with UAGC, dated as of July 31, 2022. UAGC 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 approximately $20.0 million in rent obligations (both current and long-term).

C.Reflects the elimination of historical UAGC revenues or the TutorMe revenues from operations for each period noted.

D.Reflects the elimination of historical UAGC operational expenses or the TutorMe operation expenses for each period noted.

E.Reflects the impairment expenses relating to the long-lived assets impaired due to the transfer of assets in relation to the transaction with UAGC, dated as of July 31, 2022.

F.Represents the gain on the sale of TutorMe, dated May 23, 2022, partially offset by the loss on transaction with UAGC, dated as of July 31, 2022, including the write-off of the net asset adjustment

XML

Cover Page	Jul. 31, 2022
Cover [Abstract]
Document Type	8-K/A
Document Period End Date	Jul. 31, 2022
Entity Registrant Name	ZOVIO INC
Entity Incorporation, State or Country Code	DE
Entity File Number	001-34272
Entity Tax Identification Number	59-3551629
Entity Address, Address Line One	1811 E. Northrop Blvd
Entity Address, City or Town	Chandler,
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85286
City Area Code	858
Local Phone Number	668-2586
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	ZVO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001305323
Amendment Flag	true