nrdy-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 March 31, 2023


☐			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 1-39595

NERDY INC.

(Exact name of registrant as specified in its charter)


Delaware		98-1499860
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	101 S. Hanley Rd., Suite 300
	St. Louis, Missouri 63105
(Address of Principal Executive Offices) (Zip Code)

(314) 412-1227

(Registrant's telephone number, including area code)

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.0001 per share

NRDY

New York Stock Exchange

Warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share

NRDY-WT

New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 Act). Yes ☐ No ☒

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

Class A common stock, par value $0.0001 per share - 98,019,731 shares of common stock as of May 2, 2023

Class B common stock, par value $0.0001 per share - 69,241,655 shares of common stock as of May 2, 2023

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NERDY INC.

QUARTERLY REPORT ON FORM 10-Q

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		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	1

	Condensed Consolidated Statements of Operations (Unaudited).	1

	Condensed Consolidated Statements of Comprehensive Loss (Unaudited).	2

	Condensed Consolidated Balance Sheets (Unaudited).	3

	Condensed Consolidated Statements of Cash Flows (Unaudited).	4

	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited).	5

	Notes to Condensed Consolidated Financial Statements (Unaudited).	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	19

Item 4.	Controls and Procedures.	19

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings.	20

Item 1A.	Risk Factors.	20



Item 6.	Exhibits.	20

	SIGNATURES	21

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PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).

NERDY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)


	Three Months Ended March 31,
		2023		2022
Revenue		$	49,180	$	46,925
Cost of revenue		15,290		14,152
Gross Profit		33,890		32,773
Sales and marketing expenses		15,560		22,946
General and administrative expenses		29,700		30,509


Operating Loss		(11,370)		(20,682)
Unrealized loss on derivatives, net		21,682		11,042
Interest income		(833)		(7)
Other expense, net		11		17

Loss before Income Taxes		(32,230)		(31,734)
Income tax expense		23		13
Net Loss		(32,253)		(31,747)

Net loss attributable to noncontrolling interests		(13,322)		(14,902)
Net Loss Attributable to Class A Common Stockholders		$	(18,931)	$	(16,845)

Loss per share of Class A Common Stock:

Basic and Diluted		$	(0.21)	$	(0.21)

Weighted-Average Shares of Class A Common Stock Outstanding:

Basic and Diluted		91,776		79,619

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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NERDY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(in thousands)


	Three Months Ended March 31,
		2023		2022
Net Loss		$	(32,253)	$	(31,747)
Foreign currency translation adjustments		34		(73)
Total Comprehensive Loss		(32,219)		(31,820)

Comprehensive loss attributable to noncontrolling interests		(13,308)		(14,936)
Total Comprehensive Loss Attributable to Class A Common Stockholders		$	(18,911)	$	(16,884)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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NERDY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands)


	March 31, 2023		December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	96,520	$	90,715
Accounts receivable, net	6,333		11,596
Other current assets	4,182		5,345
Total Current Assets	107,035		107,656
Fixed assets, net	12,456		12,504
Goodwill	5,717		5,717
Intangible assets, net	3,465		3,574
Other assets	2,884		3,241
Total Assets	$	131,557	$	132,692

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	4,148	$	3,199
Deferred revenue	22,254		25,539


Other current liabilities	9,157		8,593
Total Current Liabilities	35,559		37,331
Other liabilities	35,594		14,311

Total Liabilities	71,153		51,642
Stockholders’ Equity
Class A common stock	10		9
Class B common stock	7		7
Additional paid-in capital	529,410		522,031
Accumulated deficit	(494,038)		(475,107)
Accumulated other comprehensive income (loss)	8		(12)
Total Stockholders’ Equity Excluding Noncontrolling Interests	35,397		46,928
Noncontrolling interests	25,007		34,122
Total Stockholders’ Equity	60,404		81,050
Total Liabilities and Stockholders’ Equity	$	131,557	$	132,692

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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NERDY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Cash Flows From Operating Activities
Net Loss	$	(32,253)	$	(31,747)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation & amortization	1,553		1,422
Amortization of intangibles	150		157
Unrealized loss on derivatives, net	21,682		11,042

Non-cash stock-based compensation expense	11,049		12,490




Other changes in operating assets and liabilities:
Decrease in accounts receivable, net	5,263		841
Decrease in other current assets	1,163		575
Decrease in other assets	357		344
Increase in accounts payable	949		2,503
(Decrease) increase in deferred revenue	(3,285)		804
Increase in other current liabilities	686		1,764
Decrease in other liabilities	(520)		(1,126)
Net Cash Provided By (Used In) Operating Activities	6,794		(931)
Cash Flows From Investing Activities
Capital expenditures	(982)		(1,264)
Net Cash Used In Investing Activities	(982)		(1,264)
Cash Flows From Financing Activities

Payments to legacy Nerdy holders	—		(767)







Other	—		(49)
Net Cash Used In Financing Activities	—		(816)
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash	(7)		(5)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	5,805		(3,016)
Cash, Cash equivalents, and Restricted Cash, Beginning of Year	91,547		145,879
Cash, Cash Equivalents, and Restricted Cash, End of Period	$	97,352	$	142,863

Supplemental Cash Flow Information
Non-cash stock-based compensation included in capitalized internal use software	$	524	$	606
Purchase of fixed assets included in accounts payable	—		88

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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NERDY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands)


	As Of and For The Three Months Ended March 31,
		2023		2022
Class A Common Stock
Beginning of period		$	9	$	8
Activity under stock compensation plans		1		—
End of period		10		8
Class B Common Stock


Beginning and end of period		7		7
Additional Paid-In Capital
Beginning of period		522,031		490,220
Non-cash stock-based compensation		11,247		12,697
Activity under stock compensation plans		(1)		(49)
Conversion of combined interests into Class A common stock		181		—
Rebalancing of ownership percentage between controlling and the noncontrolling interests		(4,048)		(5,598)
End of period		529,410		497,270
Accumulated Deficit
Beginning of period		(475,107)		(439,708)
Net loss		(18,931)		(16,845)
End of period		(494,038)		(456,553)
Accumulated Other Comprehensive Income (Loss)
Beginning of period		(12)		136
Foreign currency translation adjustments		20		(39)
End of period		8		97
Total Stockholders’ Equity Excluding Noncontrolling Interests		35,397		40,829
Noncontrolling Interests
Beginning of period		34,122		45,142
Net loss		(13,322)		(14,902)
Non-cash stock-based compensation		326		404
Foreign currency translation adjustments		14		(34)
Conversion of combined interests into Class A common stock		(181)		—
Rebalancing of ownership percentage between controlling and the noncontrolling interests		4,048		5,598
End of period		25,007		36,208
Total Stockholders’ Equity		$	60,404	$	77,037
Class A Common Stock - Shares
Beginning of period		95,296		83,913
Activity under stock compensation plans		2,130		764
Conversion of combined interests into Class A common stock		500		—
End of period		97,926		84,677
Class B Common Stock - Shares
Beginning of period		69,306		73,987
Activity under stock compensation plans		452		277
Conversion of combined interests into Class A common stock		(500)		—
End of period		69,258		74,264

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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NERDY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share information and where indicated otherwise)

NOTE 1 — BASIS OF PRESENTATION

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States (the “U.S.”) Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Nerdy Inc. (herein referred to as “Nerdy,” the “Company,” “us,” “our,” or “we,” and unless otherwise stated or context otherwise indicates, all such references herein mean Nerdy and its consolidated subsidiaries) as of and for the year ended December 31, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023.

These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations, comprehensive income (loss), financial condition, cash flows, and stockholders’ equity (deficit) for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire year.

Nerdy Inc. was formed on September 20, 2021 in connection with a business combination between TPG Pace Tech Opportunities (“TPG Pace”) and Live Learning Technologies LLC (along with its wholly-owned subsidiaries, “Nerdy LLC”). Nerdy LLC is a holding company that is the sole owner of multiple operating companies, including its flagship business Varsity Tutors LLC (“Varsity Tutors”). As a result of the business combination and related transactions (the “Reverse Recapitalization”), Nerdy LLC merged with a wholly-owned subsidiary of Nerdy Inc., with Nerdy LLC surviving such merger. Nerdy Inc. is a holding company that has no material assets other than its ownership interests in Nerdy LLC and its indirect interests in the subsidiaries of Nerdy LLC, and has no independent means of generating revenue or cash flow.

Nerdy Inc. has the following classes of securities issued and outstanding: (i) Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), (ii) Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), and (iii) warrants, each exercisable to purchase one share of Class A Common Stock at a price of $11.50 per share. The shares of Class B Common Stock are owned by the Legacy Nerdy Holders (as defined below), have voting rights only, and have no dividend or economic rights. The Company does not intend to list its Class B Common Stock on any stock exchange.

Nerdy Inc.’s warrants consist of TPG Pace’s previously outstanding private placement warrants and public warrants to purchase Class A ordinary shares that were converted into corresponding private placement warrants to purchase Class A Common Stock (the “Private Placement Warrant(s)”) and public warrants to purchase Class A Common Stock (the “Public Warrant(s)”). Each Private Placement Warrant and Public Warrant allows for the purchase of one share of Class A Common Stock at an exercise price of $11.50 per share. Additionally, Nerdy Inc. also issued warrants to purchase Class A Common Stock in connection with a forward purchase agreement (the “FPA Warrant(s)”). Each FPA Warrant allows for the purchase of one share of Class A Common Stock at an exercise price of $11.50 per share.

Nerdy LLC has the following securities issued and outstanding: (i) units (the “OpCo Units”) and (ii) warrants to purchase OpCo Units at an exercise price of $11.50 (the exercise of which would also result in the issuance of one corresponding share of Class B Common Stock) (the “OpCo Warrant(s)”). Members of Nerdy LLC are the legacy holders of Nerdy LLC historical common and preferred equity (the “Legacy Nerdy Holder(s)”) and Nerdy Inc.

The Private Placement Warrants, the Public Warrants, the FPA Warrants, and the OpCo Warrants are collectively referred to herein as the “Warrant(s).” At March 31, 2023 and December 31, 2022, the Company holds 22 of the total issued and outstanding Warrants.

Of the total shares and units issued and outstanding, there are 8,000 shares or units of (i) Class A Common Stock or (ii) OpCo Units (and a corresponding number of Class B Common Stock), as applicable, that will be subject to forfeiture if the achievement of certain stock price thresholds of the Class A Common Stock are not met within five years of the Reverse Recapitalization (assuming there is no change in control event) (the “Earnout(s)”). At March 31, 2023 and December 31, 2022, the Company holds 36 of the total issued and outstanding Earnouts.

Nerdy Inc. and Nerdy LLC will at all times maintain a one-to-one ratio between the number of shares of Class A and Class B Common Stock issued by Nerdy Inc. and the number of OpCo Units issued by Nerdy LLC.

The financial results of Nerdy LLC and its wholly-owned subsidiaries are consolidated with and into Nerdy Inc., and a portion of the consolidated net earnings (loss) of Nerdy LLC, which the Legacy Nerdy Holders are entitled to or are required to absorb, are allocated to the noncontrolling interests (the “NCI”). The Company has excluded Earnouts in the calculation of the

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ownership interests in Nerdy LLC as the Earnouts are subject to forfeiture, as discussed above. To the extent these price thresholds are met, the Earnouts will no longer be subject to forfeiture and the units will then be included in the calculation of the ownership interests in Nerdy LLC.

NOTE 2 — RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements (other than the ones described below) that had or will have an impact on the results of operations, comprehensive income (loss), financial condition, cash flows, and stockholders’ equity (deficit) based on current information.

Recently Issued

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. This ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it simplifies the diluted earnings (loss) per share calculation in certain areas. The Company is required to adopt this ASU on January 1, 2024. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU.

Recently Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new current expected credit losses (“CECL”) model generally calls for the immediate recognition of all expected credit losses and applies to loans, accounts and trade receivables, as well as other financial assets measured at amortized cost, loan commitments and off-balance sheet credit exposures, debt securities, and other financial assets measured at fair value through other comprehensive income and beneficial interests in securitized financial assets. This ASU replaces the current incurred loss model for measuring expected credit losses, requires expected losses on available for sale debt securities to be recognized through an allowance for credit losses rather than as a reduction in the amortized cost of the securities, and provides for additional disclosure requirements. The Company adopted this ASU on January 1, 2023 in accordance with the ASU. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

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NOTE 3 — NONCONTROLLING INTERESTS

As of March 31, 2023, Legacy Nerdy Holders owned 65,900 OpCo Units, excluding Earnouts, equal to 41.4% of the economic interest in Nerdy LLC, and 65,900 shares of Class B Common Stock, excluding Earnouts. As of December 31, 2022, Legacy Nerdy Holders owned 65,948 OpCo Units, excluding Earnouts, equal to 42.1% of the economic interest in Nerdy LLC, and 65,948 shares of Class B Common Stock, excluding Earnouts.

Nerdy Inc. owned 58.6% and 57.9% of the outstanding OpCo Units as of March 31, 2023 and December 31, 2022, respectively. For the three months ended March 31, 2023 and 2022, the financial results of Nerdy LLC and its subsidiaries were consolidated with and into Nerdy Inc., and the portions of the consolidated net losses of Nerdy LLC, which the Legacy Nerdy Holders absorbed, were allocated to NCI. At the end of each reporting period, Nerdy LLC equity attributable to Nerdy Inc. and the Legacy Nerdy Holders was rebalanced to reflect Nerdy Inc.’s and the Legacy Nerdy Holders’ ownership in Nerdy LLC.

The following table summarizes the changes in ownership of OpCo Units in Nerdy LLC, excluding Earnouts, for the periods presented.


	As Of and For The Three Months Ended March 31,
		2023		2022
OpCo Units
Nerdy Inc.
Beginning of period		90,654		79,271
Vesting or exercise of equity awards		2,130		764
Conversion of Combined Interests into Class A Common Stock		500		—

End of period		93,284		80,035
Legacy Nerdy Holders
Beginning of period		65,948		70,629
Vesting or exercise of equity awards		452		277
Conversion of Combined Interests into Class A Common Stock		(500)		—

End of period		65,900		70,906
Total
Beginning of period		156,602		149,900
Vesting or exercise of equity awards		2,582		1,041


End of period		159,184		150,941
Ownership Percentage
Nerdy Inc.
Beginning of period		57.9	%	52.9	%
End of period		58.6	%	53.0	%
Legacy Nerdy Holders
Beginning of period		42.1	%	47.1	%
End of period		41.4	%	47.0	%

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NOTE 4 — REVENUE

The following table presents the Company’s revenue by business category for the periods presented.


	Three Months Ended March 31,
		2023		%		2022		%
Consumer		$	40,335	82	%	$	38,918	83	%
Institutional		8,540		17	%	6,475		14	%
Other (a)		305		1	%	1,532		3	%
Revenue		$	49,180	100	%	$	46,925	100	%

(a)Other consists of EduNation Limited, a company incorporated in England and Wales, and other services.

Contract liabilities are reported within “Deferred revenue” on the Company’s Condensed Consolidated Balance Sheets. Deferred revenue consists of advanced payments from customers for performance obligations that have not been satisfied. Deferred revenue is recognized when the performance obligations have been completed. The Company expects to recognize substantially all of the deferred revenue balance in the next twelve months. The following table presents the Company’s “Accounts receivable, net” and “Deferred revenue” reported on the Condensed Consolidated Balance Sheets for the periods presented.


	March 31, 2023		December 31, 2022
Accounts receivable, net	$	6,333	$	11,596
Deferred revenue	$	22,254	$	25,539

“Accounts receivable, net” is reported net of reserves of $665 and $858 as of March 31, 2023 and December 31, 2022, respectively.

NOTE 5 — INCOME TAXES

Nerdy Inc. holds an economic interest in Nerdy LLC (see Notes 1 and 3), which is treated as a partnership for U.S. federal income tax purposes. As a partnership, Nerdy LLC is generally not subject to U.S. federal income tax under current U.S. tax laws as its net taxable income (loss) and any related tax credits are passed through to its members and included in their tax returns, even though such net taxable income (loss) or tax credits may not have actually been distributed. Nerdy Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to its distributive share of the net taxable income (loss) and any related tax credits of Nerdy LLC. The Company continues to maintain a full valuation allowance against the deferred tax assets at Nerdy Inc. as of March 31, 2023.

The effective income tax rate was (0.07)% and (0.04)% for the three months ended March 31, 2023 and 2022, respectively. The effective income tax rates differed significantly from the statutory rates in both periods, primarily as a result of changes in the valuation allowance and income tax benefit attributable to the NCI. Income tax expense reported for both the three months ended March 31, 2023 and 2022 represents amounts owed to state authorities.

NOTE 6 — LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share of Class A Common Stock.


	Three Months Ended March 31,
		2023		2022
Net Loss Attributable to Class A Common Stockholders		$	(18,931)	$	(16,845)
Less: Undistributed net earnings attributable to participating securities		—		—
Net loss attributable to Class A Common Stockholders for basic and diluted loss per share		$	(18,931)	$	(16,845)
















Weighted-average shares of Class A Common Stock for basic and diluted loss per share		91,776		79,619


Basic and Diluted loss per share of Class A Common Stock		$	(0.21)	$	(0.21)

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The following table details the securities that have been excluded from the calculation of weighted-average shares for diluted loss per share of Class A Common Stock for the periods presented as they were anti-dilutive.


	Three Months Ended March 31,
		2023	2022
Stock options		974	3,297
Stock appreciation rights		6,417	7,092
Restricted stock awards		311	2,238
Restricted stock units		11,389	9,585
Restricted stock units - founder’s award		9,258	9,258
Warrants		19,311	19,311
Earnouts		7,964	7,964
Combined Interests that can be converted into shares of Class A Common Stock		65,900	70,906

NOTE 7 — CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows for the periods presented.


	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
Cash and cash equivalents	$	96,520	$	90,715	$	141,715	$	143,964
Restricted cash included in Other current assets	516		516		316		1,083
Restricted cash included in Other assets	316		316		832		832
Total Cash, Cash Equivalents, and Restricted Cash shown in the Condensed Consolidated Statements of Cash Flows	$	97,352	$	91,547	$	142,863	$	145,879

The Company includes amounts in restricted cash required to be set aside by contractual agreement. Restricted cash consists of cash collateralized letters of credit in support of its corporate office leases.

NOTE 8 — FIXED ASSETS, NET

The following table presents fixed assets and accumulated depreciation reported on the Condensed Consolidated Balance Sheets for the periods presented.


	March 31, 2023		December 31, 2022
Fixed assets	$	37,439	$	36,164
Accumulated depreciation	(24,983)		(23,660)
	$	12,456	$	12,504

The following table presents amortization expense related to capitalized internal use software and depreciation expense reported in the Condensed Consolidated Statements of Operations for the periods presented.


		Three Months Ended March 31,
	Statement of Operations Location		2023		2022
Amortization expense related to capitalized internal use software	Cost of revenue		$	1,297	$	1,164
Depreciation expense	General and administrative expenses		256		258

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NOTE 9 — INTANGIBLE ASSETS, NET

The Company’s intangibles assets consist entirely of trade names. The following table presents the carrying amount and accumulated amortization related to trade names reported on the Condensed Consolidated Balance Sheets for the periods presented.


	March 31, 2023		December 31, 2022
Carrying amount	$	6,026	$	5,956
Accumulated amortization	(2,561)		(2,382)
	$	3,465	$	3,574

The following table presents amortization expense related to intangible assets reported in the Condensed Consolidated Statements of Operations for the periods presented.


		Three Months Ended March 31,
	Statement of Operations Location		2023		2022
Amortization expense related to intangible assets	General and administrative expenses		$	150	$	157

NOTE 10 — DERIVATIVE FINANCIAL INSTRUMENTS

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company does not hold or issue financial instruments for speculative or trading purposes.

The Company has issued and outstanding Warrants and Earnouts to non-employees. The Warrants and Earnouts held by non-employees are not in the scope of ASC Topic 718, “Compensation—Stock Compensation” and are classified as derivative liabilities under ASC Topic 480, “Distinguishing Liabilities from Equity” or ASC Topic 815, “Derivatives and Hedging.” Derivative Warrant and Earnout liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.

At both March 31, 2023 and December 31, 2022, the number of Warrants and Earnouts contracts issued and outstanding to non-employees was 19,122 and 7,655, respectively.

The following table presents the balance sheet location and fair value of the Company’s derivative liability instruments on a gross basis, none of which are designated as hedging instruments under ASC Topic 815.

SEC Form 10-Q filed by Nerdy Inc.