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Zovio

zvo · NASDAQ Consumer Defensive
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Industry Education & Training Services
Employees 1001-5000
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FY2021 Annual Report · Zovio
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Annual 
Report
2021

Helping Everyone  
Be in a Class  
of Their Own

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tem 15. Exhibits, Financial Statement Schedules PART IV (a) The following documents are included as part of this Annual Report on Form 10-K: (1) Financial Statements. Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 u Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Consolidated Statements of Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Notes to Annual Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 (2) Financial Statement Schedules. All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included. (3) Exhibits. Exhibit Description of Document Filed Herewith Incorporated by Reference Form Exhibit No. Date Filed Charter Documents and Instruments Defining Rights of Security Holders 3.1 Zovio Amended and Restated Certificate of Incorporation, as amended. X 10-Q 3.1 May 9, 2019 3.2 Third Amended and Restated Bylaws of Zovio Inc. X 8-K 3.2 April 2, 2019 3.3 Amendment No. 1 to the Third Amended and Restated Bylaws of Zovio Inc. X 8-K 3.1 January 28, 2021 4.1 Specimen of Stock Certificate. X S-1 4.1 March 30, 2009 4.2 Second Amended and Restated Registration Rights Agreement dated August 26, 2009 among the registrant and the other persons named therein. 4.3 Description of the registrants securities X Employee Benefit Plans 10.1 * Amended and Restated 2009 Stock Incentive Plan, dated May 10, 2017. 10.2 * First Amendment to Amended and Restated 2009 Stock Incentive Plan. 10.3 * Amended and Restated 2009 Stock Incentive Plan - Form of Nonstatutory Stock Option Agreement for Executives and Senior Management. 10.4 * Amended and Restated 2009 Stock Option Plan - Form of Nonstatutory Stock Option Agreement (effective March 2011). 10.5 * Amended and Restated 2009 Stock Incentive Plan - Form of Incentive Stock Option Agreement for Executives and Senior Management. 10.6 * 2009 Stock Incentive Plan - Form of Restricted Stock Unit Award Agreement (Defer f red Settlement). 10.7 * 2009 Stock Incentive Plan - Form of Restricted Stock Unit Award Agreement (General). 10.8 * Amended and Restated 2009 Stock Incentive Plan - Form of Performance Stock Unit Award Agreement. 10.9 * Amended and Restated 2009 Stock Incentive Plan - Amendment to Performance Stock Unit Award Agreement. 10.10 * Amended and Restated 2009 Stock Incentive Plan - Form of Performance Cash Award Agreement (with Performance Component) 10.11 * Amended and Restated 2009 Stock Incentive Plan - Form of Performance Cash Award Agreement (General) X S-1 4.4 September m 4, 2009 X 10-K 10.1 March 12, 2019 X S-8 99.2 January 17, 2017 X S-8 99.4 May 13, 2009 X 10-Q 10.3 May 3, 2011 X S-8 99.5 May 13, 2009 X 8-K 99.1 June 27, 2011 X 8-K 99.2 June 27, 2011 X 8-K 10.1 December 23, 2014 X 10-K 10.16 March 10, 2015 X 10-Q 10.1 August 2, 2016 X 10-Q 10.2 August 2, 2016 10.12 * Form of Non-Plan Stock Option Agreement. X S-8 99.6 May 13, 2009 10.13 * Form of Compensatory Warrant Agreement. X S-1 4.10 March 20, 2009 117 Exhibit Description of Document Filed Incorporated Form Exhibit No. Date Filed Herewith by Reference 10.14 * Amended and Restated Employee Stock Purchase Plan. X 8-K 99.1 March 22, 2010 10.15 * Bridgepoint Education Nonqualified Deferred d Compensation Plan X 10-Q 10.7 May 3, 2010 10.16 2009 Stock Incentive Plan - Form of 2018 MSU Agreement. X 10-K 10.16 March 12, 2019 10.17 Zovio Inc Executive Relocation Policy X 10-Q 10.1 August 7, 2019 10.18 Zovio Inc 2021 CEO Inducement Equity Incentive Plan X S-8 99.1 January 5, 2022 10.19 * Director Equity Deferral Program X Agreements with Executive Officers and Directors 10.20 * Amended and Restated Employment Agreement between Andrew S. Clark and the registrant. X 10-K 10.2 March 10, 2015 10.21 * Offer f Letter to Diane Thompson. X S-1 10.28 March 20, 2009 10.22 * Amended and Restated Executive Severance Plan. X 10-Q 10.1 August 4, 2015 10.23 * Amended and Restated Form of Severance Agreement under the Executive Severance Plan. X 10.24 * Form of Indemnification Agreement. X 10-K 10.33 March 8, 2016 10.25 * Stock Ownership Guidelines (effective f May 14, 2013). X 10-K 10.33 March 17, 2014 10.26 * Offer f Letter to Kevin Royal, dated April 13, 2018 X 10-Q 10.1 May 1, 2018 10.27 * Offer f Letter to John Semel, dated January 25, 2019 X 10-K 10.28 March 12, 2019 10.28 * Employment Agreement for Mr. Spohn dated April 2020 X 10-Q 10.1 April 29, 2020 10.29 * Offer f Letter to Randy Hendricks, dated November 3, 2021 X Material Real Estate Agreements 10.30 † Standard Form Modified Gross Office Lease dated October 22, 2008, and addendum, with Sunroad Centrum Offi f ce I, L.P. related to the premises located at 8620 Spectrum Center Lane, San Diego, California. X S-1 10.17 March 2, 2009 10.31 † First Amendment to Standard Form Modified Gross Office f Lease dated September 16, 2011, with Sunroad Centrum Offi f ce I, L.P., related to the premises located at 8620 Spectrum Center Lane, San Diego, California. X 10-Q 10.4 December 16, 2011 10.32 † Office Lease dated February 28, 2011 with WSC 1515 Arapahoe Investors V, L.L.C., related to the premises located at located at 1515 Arapahoe Street, Denver, Colorado. X 10-Q 10.1 May 3, 2011 10.33 † Commencement Date Memorandum and First Amendment to Offi f ce Lease dated November 18, 2011 with WSC 1515 Arapahoe Investors V, L.L.C., related to the premises located at located at 1515 Arapahoe Street, Denver, Colorado. X 10-K 10.55 March 7, 2012 10.34 † Lease dated August 8, 2011, with CCP/MS SSIII Denver Tabor Center I Property Owner LLC, related to the premises located at 1200 17th Street and 1201 16th Street, Denver, Colorado. X 10-Q 10.3 November 1, 2011 10.35 † First Amendment dated June 28, 2012, with CCP/MS SSIII Denver Tabor Center I Property Owner LLC, related to the premises located at 1200 17th Street and 1201 16th Street, Denver, Colorado. X 10-Q 10.2 August 7, 2012 10.36 Office Lease dated August 15, 2018 with Ascend Northrup, LLC, related to the premises at 1811 E. Northrup Boulevard, Chandler, Arizona X 10-Q 10.1 November 8, 2018 Material Strategic Agreements 10.37 † Services Order Form, dated September 20, 2016, with Instructure, Inc. X 10-Q 10.1 November 8, 2016 10.38 Agreement and Plan of Reorganization by and among Bridgepoint Education, Inc., FS Merger Sub, Inc., FS Merger Sub, LLC, Fullstack Academy, Inc., and Fortis Advisors, LLC, as Representative. X 10-Q 10.1 May 9, 2019 10.39 Agreement and Plan of Reorganization, dated April 3, 2019, by and among Zovio Inc, Toucan Merger Sub, Inc., TM Merger Sub, LLC, TutorMe.com, Inc., and Jonathan Sciama, as the Shareholder Representative. X 10-Q 10.2 May 9, 2019 10.40 Letter Agreement, dated as of February 4, 2020, among Zovio Inc, SevenSaoi Capital, LLC, SevenSaoi Capital Partners II, LLC, SevenSaoi Capital Pa a rtners IIA, LLC and Michael P. Cole. X 8-K 10.1 February 5, 2020 10.41 † Strategic Services Agreement, dated December 1, m 2020, by and between Zovio Inc and University of Arizona Global Campus X 8-K 10.1 December 1, 2020 10.42 † Asset Purchase and Sale Agreement, dated December 1, 2020, X 8-K 2.1 September 3, 2020 by and among Zovio Inc, Ashford University, LLC, The University of Arizona and The University of Arizona Global Campus 118 Exhibit Description of Document Filed Incorporated Form Exhibit No. Date Filed Herewith by Reference 10.43 † Amendment No. 1 to Asset Purchase and Sale Agreement, dated December 1, 2020, by m and among Zovio Inc, Ashford University, LLC, The University of Arizona and The University of Arizona Global Campus X 8-K 10.2 December 1, 2020 Code of Ethics 14.1 Amended and Restated Code of Ethics X 8-K 14.1 December 1, 2009 Subsidiaries 21.1 List of subsidiaries of the registrant. X Consent and Power of Attorney 23.1 Consent of independent registered public accounting firm, Deloitte & Touche LLP X 24.1 Power of Attorney (included on signature page). X Certifications Required by Sarbanes-Oxley Act of 2002 31.1 Certification of Randy J. Hendricks, Chief Executive Offi f cer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X 31.2 Certification of Kevin Royal, Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. X 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Randy J. Hendricks, Chief Executive Officer, and Kevin Royal, Chief Financial Offic f er X Inline Interactive Data 101 The following financial information from our Annual Report on Form 10-K for the fiscal year ended December m 31, 2021, filed with the SEC on April 15, 2022, formatted in Extensible Business Reporting Language (“XBRL”): (i) the Consolidated Balance Sheets as of December 31, 2021 and 2020; (ii) the Consolidated Statements of Income (Loss) for the years ended December m 31, 2021 and 2020; (iii) the Consolidated Statements of Stockholder's Equity for the two years ended December 31, 2021; (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020; and (v) the Notes to Annual Consolidated Financial Statements. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and X contained in Exhibit 101) * Indicates management contract or compensatory plan or arrangement. † Portions of this exhibit have been omitted pursuant to a request for confidential treatment and the non-public information has been filed separately with the SEC. Item 16. Form 10-K Summary None. +!&,-*+ *LIJL8EK KF K?< I< :K F=  K?< I<>@JKI8EK ?8J ;LCP :8LJ<; K?@J IE<; FE @KJ 9E<; K?E8KLI< 8GG<8IJ 9E 8EP 8D< FDD@JJ@FE ? 8E; :FE=@ID@E> 8CC K?8K <8:? F= J8@; 8KKFIE< :K F=  K?@J IE<; 9 G@JKI8EK 8E; @E K?< :8G8:@K@IA: 6I: J ,(3 $ "(,#%- ?@<= O<:LK@M< )==@: )==@: )==@: J '#"&  "),( @I<:KFI GI@C   '@:?8< * *