Edkey Inc., the statewide charter school group behind Sequoia Pathway Academy in Maricopa, told bondholders this morning that it is righting the ship.

The school network has reached an agreement with its lenders to pause payments on the main portion of its debt for six months, settled all its expensive short-term loans and is now projecting a modest operating surplus.  

The news signals what leaders called “a turning point” after two years of financial crisis and state intervention. Current student attendance across the network stands at 4,452, down more than 1,000 students from last year following school closures and restructuring. 

“We are building this back the right way,” said new CEO Nicholas Strange during the call with bondholders. “We’re not here to make excuses for the past, we’re here to show you we’re executing now, and we’ll be transparent every step of the way.”  

‘Predatory’ debt cleanup, new lawsuit 

The debt amendment, approved yesterday, allows Edkey to continue making interest payments while putting off principal until March. Strange said the organization expects to resume full principal and interest payments in April. 

“We have no reason to believe we won’t continue paying in full after that,” another executive added. “We do not anticipate seeking any further forbearances.” 

Edkey said it has now settled all five merchant cash advance agreements totaling $1.75 million, obligations incurred under the previous leadership. Those short-term financing deals, often considered predatory, strained the charter school system’s cash flow in early 2024. 

“We have cleaned up everything predatory that was attached to this organization,” said Strange. “Is it perfect today? No, but we’re back in control of our obligations.” 

Edkey also disclosed a $642,896 settlement with former online partner Downtown Academy and confirmed it was served Friday with a $3.2 million lawsuit from StrongMind over a terminated online program contract. 

“We believe we have a strong defense,” Strange said. “We are not writing checks just because someone files a lawsuit.” 

Corporate board chair: ‘We are not for sale’ 

During a Q&A session on today’s call, an investor asked whether Edkey had explored merging with a larger charter operator amid financial stress. 

The response from the board was immediate and unequivocal. 

“We are not in conversations about any merger,” said Board Chair Mary Gifford. “We are not for sale. Our schools are unique to the communities they serve, and we intend to stay independent … The board’s commitment is to restore and grow this business, not hand it over.” 

Edkey presented a new budget projecting $58.8 million in revenue and $57.5 million in operating expenses. It will have a $1.3 million surplus. 

Leaders warned liquidity remains fragile, with just 14 days of cash on hand, far below the state’s requirement. 

Expanding online school 

A central part of Edkey’s recovery plan is aggressive online expansion. The organization plans to more than double enrollment at Arizona Distance Learning, its digital school. 

“There’s incredible upside in online enrollment,” said Strange. “We’re going to double AZDL before this is over.” 

To achieve that, Edkey has centralized recruiting and budgeting. 

“We are driving enrollment accountability at the school level,” offered one executive on the call. “We will not fund activities that do not deliver against enrollment and retention.” 

Edkey also confirmed it has eight properties listed for sale with a combined $30.1 million asking price, part of a plan to consolidate campuses and reduce debt. 

“We’re not in a fire sale,” said the board member. “Every asset decision we make has a strategic purpose.” 

Despite months of uncertainty, some bondholders expressed cautious optimism. 

“You’re not in the best place right now,” one investor said on the call, “but you’ve done a lot in a short amount of time.” 

Responded Strange: “We appreciate the support of our bondholders, and we’re serious about rebuilding trust. We will continue quarterly reporting so nobody has to guess where we stand.” 

Edkey remains under Financial Intervention by the Arizona State Board for Charter Schools after earlier audits found deficit spending and compliance violations. That oversight will continue through at least 2026. 

Edkey said it is current on all state reporting. 

“We are committed to transparency,” said Strange. “You’re going to see us meeting commitments in real time.”