TABLE_CONTENTS

 

 

 

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 June 30, 2020March 31, 2021 

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 001-37788

 

WAITR HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

26-3828008

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

214 Jefferson Street, Suite 200

Lafayette, Louisiana

 

70501

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: 1-337-534-6881

______________________

 

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. YESYes  NONo 

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). YESYes  NONo 

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 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 Exchange Act). YESYes  NONo  

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.0001 Per Share

 

WTRH

 

The Nasdaq Stock Market LLC

The number of shares of Registrant’s Common Stock outstanding as of AugustMay 4, 20202021 was 110,075,737.115,390,755.

 

 


TABLE_CONTENTS

 

Table of Contents

 

 

 

Page

PART I

Financial Information

1

Item 1.

Condensed Consolidated Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets as of June 30, 2020March 31, 2021 and December 31, 20192020

1

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30,March 31, 2021 and 2020 and 2019

2

 

Condensed Consolidated Statements of Cash Flows for the sixthree months ended June 30,March 31, 2021 and 2020 and 2019

3

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30,March 31, 2021 and 2020 and 2019

4

 

Notes to Condensed Consolidated Financial Statements

65

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2221

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

3329

Item 4.

Controls and Procedures

3329

 

 

 

PART II

Other Information

3430

Item 1.

Legal Proceedings

3430

Item 1A.

Risk Factors

3430

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

3531

Item 3.

Defaults Upon Senior Securities

3531

Item 4.

Mine Safety Disclosures

3531

Item 5.

Other Information

3531

Item 6.

Exhibits

3632

 

 

 

 

Signatures

3733

 

 

 

 


TABLE_CONTENTS

 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

June 30,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

 

Unaudited

 

 

 

 

 

 

Unaudited

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

66,702

 

 

$

29,317

 

 

$

67,863

 

 

$

84,706

 

Accounts receivable, net

 

 

6,121

 

 

 

3,272

 

 

 

4,907

 

 

 

2,954

 

Capitalized contract costs, current

 

 

546

 

 

 

199

 

 

 

868

 

 

 

737

 

Prepaid expenses and other current assets

 

 

5,506

 

 

 

8,329

 

 

 

4,955

 

 

 

6,657

 

TOTAL CURRENT ASSETS

 

 

78,875

 

 

 

41,117

 

 

 

78,593

 

 

 

95,054

 

Property and equipment, net

 

 

3,398

 

 

 

4,072

 

 

 

4,961

 

 

 

3,503

 

Capitalized contract costs, noncurrent

 

 

1,978

 

 

 

772

 

 

 

2,759

 

 

 

2,429

 

Goodwill

 

 

106,734

 

 

 

106,734

 

 

 

122,032

 

 

 

106,734

��

Intangible assets, net

 

 

23,941

 

 

 

25,761

 

 

 

31,514

 

 

 

23,924

 

Operating lease right-of-use assets

 

 

5,064

 

 

 

 

Other noncurrent assets

 

 

454

 

 

 

517

 

 

 

750

 

 

 

588

 

TOTAL ASSETS

 

$

215,380

 

 

$

178,973

 

 

$

245,673

 

 

$

232,232

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of Term Loans

 

$

12,500

 

 

$

 

Accounts payable

 

 

5,335

 

 

 

4,384

 

 

$

5,039

 

 

$

4,382

 

Restaurant food liability

 

 

5,528

 

 

 

5,612

 

 

 

5,890

 

 

 

4,301

 

Accrued payroll

 

 

5,020

 

 

 

5,285

 

 

 

6,460

 

 

 

4,851

 

Short-term loans

 

 

2,094

 

 

 

3,612

 

Short-term loans for insurance financing

 

 

1,143

 

 

 

2,726

 

Deferred revenue, current

 

 

47

 

 

 

414

 

 

 

290

 

 

 

141

 

Income tax payable

 

 

85

 

 

 

51

 

 

 

146

 

 

 

122

 

Operating lease liabilities

 

 

1,518

 

 

 

 

Other current liabilities

 

 

13,923

 

 

 

12,630

 

 

 

24,974

 

 

 

13,781

 

TOTAL CURRENT LIABILITIES

 

 

44,532

 

 

 

31,988

 

 

 

45,460

 

 

 

30,304

 

Long-term debt

 

 

103,311

 

 

 

123,244

 

Accrued workers’ compensation liability

 

 

346

 

 

 

463

 

Deferred revenue, noncurrent

 

 

 

 

 

45

 

Long term debt - related party

 

 

80,508

 

 

 

94,218

 

Accrued medical contingency

 

 

16,844

 

 

 

16,987

 

Operating lease liabilities

 

 

3,885

 

 

 

 

Other noncurrent liabilities

 

 

499

 

 

 

325

 

 

 

1,740

 

 

 

2,627

 

TOTAL LIABILITIES

 

 

148,688

 

 

 

156,065

 

 

 

148,437

 

 

 

144,136

 

Commitment and contingencies (Note 10)

 

 

 

 

 

 

 

 

Commitments and contingent liabilities (Note 10)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 249,000,000 shares authorized and 102,382,511

and 76,579,175 shares issued and outstanding at June 30, 2020 and

December 31, 2019, respectively

 

 

10

 

 

 

8

 

Common stock, $0.0001 par value; 249,000,000 shares authorized and 115,387,140

and 111,259,037 shares issued and outstanding at March 31, 2021 and

December 31, 2020, respectively

 

 

11

 

 

 

11

 

Additional paid in capital

 

 

420,368

 

 

 

385,137

 

 

 

464,843

 

 

 

451,991

 

Accumulated deficit

 

 

(353,686

)

 

 

(362,237

)

 

 

(367,618

)

 

 

(363,906

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

66,692

 

 

 

22,908

 

 

 

97,236

 

 

 

88,096

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

215,380

 

 

$

178,973

 

 

$

245,673

 

 

$

232,232

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

REVENUE

 

$

60,506

 

 

$

51,342

 

 

$

104,749

 

 

$

99,374

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

 

30,547

 

 

 

39,698

 

 

 

56,912

 

 

 

75,881

 

Sales and marketing

 

 

2,740

 

 

 

15,339

 

 

 

5,566

 

 

 

25,662

 

Research and development

 

 

1,167

 

 

 

2,149

 

 

 

2,637

 

 

 

4,089

 

General and administrative

 

 

10,094

 

 

 

12,380

 

 

 

20,872

 

 

 

31,298

 

Depreciation and amortization

 

 

2,075

 

 

 

4,824

 

 

 

4,139

 

 

 

8,940

 

Intangible and other asset impairments

 

 

29

 

 

 

 

 

 

29

 

 

 

18

 

Loss on disposal of assets

 

 

3

 

 

 

10

 

 

 

11

 

 

 

15

 

TOTAL COSTS AND EXPENSES

 

 

46,655

 

 

 

74,400

 

 

 

90,166

 

 

 

145,903

 

INCOME (LOSS) FROM OPERATIONS

 

 

13,851

 

 

 

(23,058

)

 

 

14,583

 

 

 

(46,529

)

OTHER EXPENSES (INCOME) AND LOSSES (GAINS), NET

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,490

 

 

 

2,190

 

 

 

5,404

 

 

 

3,795

 

Interest income

 

 

(21

)

 

 

(241

)

 

 

(81

)

 

 

(580

)

Other expense (income)

 

 

712

 

 

 

(123

)

 

 

675

 

 

 

(173

)

NET INCOME (LOSS) BEFORE INCOME TAXES

 

 

10,670

 

 

 

(24,884

)

 

 

8,585

 

 

 

(49,571

)

Income tax expense (benefit)

 

 

17

 

 

 

(32

)

 

 

34

 

 

 

30

 

NET INCOME (LOSS)

 

$

10,653

 

 

$

(24,852

)

 

$

8,551

 

 

$

(49,601

)

INCOME (LOSS) PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

(0.32

)

 

$

0.10

 

 

$

(0.70

)

Diluted

 

$

0.10

 

 

$

(0.32

)

 

$

0.09

 

 

$

(0.70

)

Weighted average shares used to compute net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

 

95,053,207

 

 

 

72,416,614

 

 

 

85,968,962

 

 

 

68,492,911

 

Weighted average common shares outstanding – diluted

 

 

105,951,232

 

 

 

72,416,614

 

 

 

91,769,460

 

 

 

68,492,911

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

REVENUE

 

$

50,930

 

 

$

44,243

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operations and support

 

 

30,338

 

 

 

26,365

 

Sales and marketing

 

 

4,016

 

 

 

2,826

 

Research and development

 

 

999

 

 

 

1,470

 

General and administrative

 

 

10,186

 

 

 

10,778

 

Depreciation and amortization

 

 

2,917

 

 

 

2,064

 

(Gain) loss on disposal of assets

 

 

(3

)

 

 

8

 

TOTAL COSTS AND EXPENSES

 

 

48,453

 

 

 

43,511

 

INCOME FROM OPERATIONS

 

 

2,477

 

 

 

732

 

OTHER EXPENSES (INCOME) AND LOSSES (GAINS), NET

 

 

 

 

 

 

 

 

Interest expense

 

 

1,901

 

 

 

2,914

 

Interest income

 

 

 

 

 

(60

)

Other expense

 

 

4,264

 

 

 

(37

)

NET LOSS BEFORE INCOME TAXES

 

 

(3,688

)

 

 

(2,085

)

Income tax expense

 

 

24

 

 

 

17

 

NET LOSS

 

$

(3,712

)

 

$

(2,102

)

LOSS PER SHARE:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.03

)

 

$

(0.03

)

Weighted average shares used to compute net loss per share:

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

 

112,334,094

 

 

 

76,884,717

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

8,551

 

 

$

(49,601

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(3,712

)

 

$

(2,102

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Non-cash interest expense

 

 

4,453

 

 

 

1,079

 

 

 

772

 

 

 

2,396

 

Non-cash advertising expense

 

 

 

 

 

310

 

Amortization of operating lease assets

 

 

323

 

 

 

0

 

Stock-based compensation

 

 

1,450

 

 

 

4,552

 

 

 

2,078

 

 

 

848

 

Equity issued in exchange for services

 

 

 

 

 

60

 

Loss on disposal of assets

 

 

11

 

 

 

15

 

(Gain) loss on disposal of assets

 

 

(3

)

 

 

8

 

Depreciation and amortization

 

 

4,139

 

 

 

8,940

 

 

 

2,917

 

 

 

2,064

 

Intangible and other asset impairments

 

 

29

 

 

 

18

 

Amortization of capitalized contract costs

 

 

183

 

 

 

1,250

 

 

 

194

 

 

 

68

 

Other non-cash income

 

 

(22

)

 

 

 

 

 

0

 

 

 

(12

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,849

)

 

 

(1,734

)

 

 

(1,624

)

 

 

(90

)

Capitalized contract costs

 

 

(1,736

)

 

 

(2,346

)

 

 

(655

)

 

 

(1,049

)

Prepaid expenses and other current assets

 

 

2,823

 

 

 

(3,932

)

 

 

1,899

 

 

 

3,246

 

Other noncurrent assets

 

 

27

 

 

 

0

 

Accounts payable

 

 

951

 

 

 

(592

)

 

 

20

 

 

 

698

 

Restaurant food liability

 

 

(84

)

 

 

6,399

 

 

 

1,589

 

 

 

(591

)

Deferred revenue

 

 

(414

)

 

 

(151

)

 

 

140

 

 

 

(378

)

Income tax payable

 

 

34

 

 

 

(25

)

 

 

24

 

 

 

17

 

Operating lease liabilities

 

 

(389

)

 

 

0

 

Accrued payroll

 

 

(265

)

 

 

4,113

 

 

 

1,479

 

 

 

2,129

 

Accrued medical contingency

 

 

(143

)

 

 

(69

)

Accrued workers’ compensation liability

 

 

(117

)

 

 

(305

)

 

 

0

 

 

 

2

 

Other current liabilities

 

 

1,650

 

 

 

(2,441

)

 

 

7,911

 

 

 

(157

)

Other noncurrent liabilities

 

 

174

 

 

 

40

 

 

 

(38

)

 

 

(1

)

Net cash provided by (used in) operating activities

 

 

18,961

 

 

 

(34,351

)

Net cash provided by operating activities

 

 

12,809

 

 

 

7,027

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(381

)

 

 

(990

)

 

 

(165

)

 

 

(70

)

Acquisition of Bite Squad, net of cash acquired

 

 

 

 

 

(192,568

)

Other acquisitions

 

 

(290

)

 

 

 

Internally developed software

 

 

(1,722

)

 

 

(671

)

Acquisitions

 

 

(10,927

)

 

 

(242

)

Collections on notes receivable

 

 

36

 

 

 

53

 

 

 

0

 

 

 

21

 

Internally developed software

 

 

(1,335

)

 

 

(155

)

Proceeds from sale of property and equipment

 

 

7

 

 

 

23

 

 

 

9

 

 

 

3

 

Net cash used in investing activities

 

 

(1,963

)

 

 

(193,637

)

 

 

(12,805

)

 

 

(959

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Waitr shares redeemed for cash

 

 

 

 

 

(10

)

Proceeds from issuance of stock

 

 

22,944

 

 

 

50,002

 

 

 

0

 

 

 

6,584

 

Equity issuance costs

 

 

(359

)

 

 

(4,175

)

 

 

0

 

 

 

(114

)

Proceeds from Additional Term Loans

 

 

 

 

 

42,080

 

Proceeds from short-term loans

 

 

1,906

 

 

 

5,032

 

Payments on short-term loans

 

 

(3,415

)

 

 

(658

)

Payments on long-term loan

 

 

(14,472

)

 

 

0

 

Payments on acquisition loans

 

 

(66

)

 

 

0

 

Payments on short-term loans for insurance financing

 

 

(1,583

)

 

 

(2,028

)

Proceeds from exercise of stock options

 

 

39

 

 

 

3

 

 

 

6

 

 

 

8

 

Taxes paid related to net settlement on stock-based compensation

 

 

(728

)

 

 

(799

)

 

 

(732

)

 

 

(459

)

Net cash provided by financing activities

 

 

20,387

 

 

 

91,475

 

Net cash (used in) provided by financing activities

 

 

(16,847

)

 

 

3,991

 

Net change in cash

 

 

37,385

 

 

 

(136,513

)

 

 

(16,843

)

 

 

10,059

 

Cash, beginning of period

 

 

29,317

 

 

 

209,340

 

 

 

84,706

 

 

 

29,317

 

Cash, end of period

 

$

66,702

 

 

$

72,827

 

 

$

67,863

 

 

$

39,376

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for state income taxes

 

$

 

 

$

30

 

Cash earned during the period for interest

 

 

43

 

 

 

 

Cash paid during the period for interest

 

 

951

 

 

 

2,715

 

 

$

1,129

 

 

$

518

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued as consideration in Bite Squad acquisition

 

 

 

 

 

126,574

 

Conversion of convertible notes to stock

 

 

11,888

 

 

 

 

Stock issued in connection with Additional Term Loans

 

 

 

 

 

3,884

 

Non-cash gain on debt extinguishment

 

 

 

 

 

1,897

 

Stock issued as consideration in acquisition

 

$

11,500

 

 

$

0

 

Noncash impact of operating lease assets

 

 

5,387

 

 

 

0

 

Noncash impact of operating lease liabilities

 

 

5,792

 

 

 

0

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THREE AND SIX MONTHS ENDED JUNE 30, 2020

(in thousands, except share data)

(unaudited)

 

Three Months Ended June 30, 2020

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2020

 

 

80,807,908

 

 

$

8

 

 

$

392,004

 

 

$

(364,339

)

 

$

27,673

 

Net income

 

 

 

 

 

 

 

 

 

 

 

10,653

 

 

 

10,653

 

Exercise of stock options and vesting of restricted

   stock units

 

 

433,303

 

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Taxes paid related to net settlement on stock-based

  compensation

 

 

 

 

 

 

 

 

(296

)

 

 

 

 

 

(296

)

Stock-based compensation

 

 

 

 

 

 

 

 

602

 

 

 

 

 

 

602

 

Stock issued for conversion of Notes

 

 

9,222,978

 

 

 

1

 

 

 

11,888

 

 

 

 

 

 

11,889

 

Issuance of common stock

 

 

11,918,322

 

 

 

1

 

 

 

16,113

 

 

 

 

 

 

16,114

 

Balances at June 30, 2020

 

 

102,382,511

 

 

$

10

 

 

$

420,368

 

 

$

(353,686

)

 

$

66,692

 

Three Months Ended March 31, 2021

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2020

 

 

111,259,037

 

 

$

11

 

 

$

451,991

 

 

$

(363,906

)

 

$

88,096

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,712

)

 

 

(3,712

)

Exercise of stock options and vesting of restricted stock units

 

 

537,436

 

 

 

 

 

 

6

 

 

 

 

 

 

6

 

Taxes paid related to net settlement on stock-based compensation

 

 

 

 

 

 

 

 

(732

)

 

 

 

 

 

(732

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,078

 

 

 

 

 

 

2,078

 

Equity issued for acquisitions

 

 

3,590,667

 

 

 

 

 

 

11,500

 

 

 

 

 

 

11,500

 

Balances at March 31, 2021

 

 

115,387,140

 

 

$

11

 

 

$

464,843

 

 

$

(367,618

)

 

$

97,236

 

 

 

Six Months Ended June 30, 2020

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2019

 

 

76,579,175

 

 

$

8

 

 

$

385,137

 

 

$

(362,237

)

 

$

22,908

 

Net income

 

 

 

 

 

 

 

 

 

 

 

8,551

 

 

 

8,551

 

Exercise of stock options and vesting of restricted

   stock units

 

 

469,293

 

 

 

 

 

 

65

 

 

 

 

 

 

65

 

Taxes paid related to net settlement on stock-based

  compensation

 

 

 

 

 

 

 

 

(755

)

 

 

 

 

 

(755

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,450

 

 

 

 

 

 

1,450

 

Stock issued for conversion of Notes

 

 

9,222,978

 

 

 

1

 

 

 

11,888

 

 

 

 

 

 

11,889

 

Issuance of common stock

 

 

16,111,065

 

 

 

1

 

 

 

22,583

 

 

 

 

 

 

22,584

 

Balances at June 30, 2020

 

 

102,382,511

 

 

$

10

 

 

$

420,368

 

 

$

(353,686

)

 

$

66,692

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2019

 

 

76,579,175

 

 

$

8

 

 

$

385,137

 

 

$

(379,742

)

 

$

5,403

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,102

)

 

 

(2,102

)

Exercise of stock options and vesting of restricted stock units

 

 

35,990

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Taxes paid related to net settlement on stock-based compensation

 

 

 

 

 

 

 

 

(459

)

 

 

 

 

 

(459

)

Stock-based compensation

 

 

 

 

 

 

 

 

848

 

 

 

 

 

 

848

 

Issuance of common stock

 

 

4,192,743

 

 

 

 

 

 

6,470

 

 

 

 

 

 

6,470

 

Balances at March 31, 2020

 

 

80,807,908

 

 

$

8

 

 

$

392,004

 

 

$

(381,844

)

 

$

10,168

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


TABLE_CONTENTS

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

THREE AND SIX MONTHS ENDED JUNE 30, 2019

(in thousands, except share data)

(unaudited)

Three Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2019

 

 

69,368,381

 

 

$

7

 

 

$

331,539

 

 

$

(95,680

)

 

$

235,866

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(24,852

)

 

 

(24,852

)

Gain on debt extinguishment

 

 

 

 

 

 

 

 

1,897

 

 

 

 

 

 

1,897

 

Exercise of stock options and vesting of restricted

   stock units

 

 

8,713

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,519

 

 

 

 

 

 

2,519

 

Equity issued in exchange for services

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Public Warrants exchanged for common stock

 

 

 

 

 

 

 

 

(10

)

 

 

 

 

 

(10

)

Issuance of common stock

 

 

6,757,000

 

 

 

1

 

 

 

46,425

 

 

 

 

 

 

46,426

 

Balances at June 30, 2019

 

 

76,134,094

 

 

$

8

 

 

$

382,402

 

 

$

(120,532

)

 

$

261,878

 

Six Months Ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

 

54,035,538

 

 

$

5

 

 

$

200,417

 

 

$

(70,931

)

 

$

129,491

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(49,601

)

 

 

(49,601

)

Gain on debt extinguishment

 

 

 

 

 

 

 

 

1,897

 

 

 

 

 

 

1,897

 

Exercise of stock options and vesting of restricted

   stock units

 

 

9,599

 

 

 

 

 

 

3

 

 

 

 

 

 

3

 

Taxes paid related to net settlement on stock-based

  compensation

 

 

(79,900

)

 

 

 

 

 

(799

)

 

 

 

 

 

(799

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,552

 

 

 

 

 

 

4,552

 

Equity issued in exchange for services

 

 

 

 

 

 

 

 

60

 

 

 

 

 

 

60

 

Issuance of common stock in connection with

   Additional Term Loans

 

 

325,000

 

 

 

 

 

 

3,884

 

 

 

 

 

 

3,884

 

Public Warrants exchanged for common stock

 

 

4,494,889

 

 

 

1

 

 

 

(610

)

 

 

 

 

 

(609

)

Stock issued as consideration in Bite Squad Merger

 

 

10,591,968

 

 

 

1

 

 

 

126,573

 

 

 

 

 

 

126,574

 

Issuance of common stock

 

 

6,757,000

 

 

 

1

 

 

 

46,425

 

 

 

 

 

 

46,426

 

Balances at June 30, 2019

 

 

76,134,094

 

 

$

8

 

 

$

382,402

 

 

$

(120,532

)

 

$

261,878

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

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TABLE_CONTENTS

 

WAITR HOLDINGS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

1.   Organization

Waitr Holdings Inc., a Delaware corporation, together with its wholly-ownedwholly owned subsidiaries (the “Company,” “Waitr,” “we,” “us” and “our”), operates an online food ordering technology platform, providing delivery, carryout and delivery platform,dine-in options, connecting restaurants, drivers and diners in cities across the United States. On January 17, 2019,The Company’s technology platform includes the Waitr acquired BiteSquad.com, LLC (“and Bite Squad”), which also operates an online food orderingSquad mobile applications, and delivery platform. The Company connects diners and restaurants via Waitr’s website andmore recently, the Delivery Dudes mobile application, (the “Waitr Platform”) and Bite Squad’s website and mobile application (the “Bite Squad Platform” and together withcollectively referred to as the Waitr Platform, the “Platforms”). The Company’s Platforms allow consumers to browse local restaurants and menus, track order and delivery status, and securely store previous orders for ease of use and convenience. Restaurants benefit from the online Platforms through increased exposure to consumers for expanded business in the delivery market and carryout sales.

2.   Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) as they apply to interim financial information. Accordingly, the interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete annual financial statements, although the Company believes that the disclosures made are adequate to make information not misleading. References to the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) included hereafter refer to the ASC and ASUs established by the Financial Accounting Standards Board (the “FASB”) as the source of authoritative GAAP.

The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended December 31, 20192020 (the “2019“2020 Form 10-K”). The interim condensed consolidated financial statements are unaudited, but in the Company’s opinion, include all adjustments that are necessary for a fair presentation of the results for the periods presented. The interim results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

During the third quarter of 2020, the Company identified and corrected an immaterial error related to the understatement of an accrued medical contingency that affected previously issued consolidated financial statements. In order to present the impact of the updated estimated liability for the claim, previously issued financial statements have been revised. See Note 9 – Correction of Prior Period Error for additional details, including a summary of the revisions to certain previously reported financial information presented herein for comparative purposes.

Reclassifications

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all wholly-ownedwholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements affect the following items:

 

determination of the nature and timing of satisfaction of revenue-generating performance obligations and the standalone selling price of performance obligations;

variable consideration;

other obligations such as product returns and refunds;

allowance for doubtful accounts and chargebacks;

incurred loss estimates under our insurance policies with large deductibles or retention levels;

 

loss exposure related to claims such as the Medical Contingency (see Note 9 – Correction of Prior Period Error);

income taxes;

 

useful lives of tangible and intangible assets;

5


TABLE_CONTENTS

 

depreciation and amortization;

equity compensation;

 

contingencies;

 

goodwill and other intangible assets, including the recoverability of intangible assets with finite lives and other long-lived assets;

impairments; and

 

fair value of assets acquired and liabilities assumed as part of a business combination.

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TABLE_CONTENTS

The Company regularly assesses these estimates and records changes to estimates in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions believed to be reasonable under the circumstances. Changes in the economic environment, financial markets, and any other parameters used in determining these estimates could cause actual results to differ from those estimates.

Liquidity and Capital Resources

The Company sustained losses from its inception through the first quarter of 2020 and experienced declines in working capital through 2019, resulting from changes in market conditions in the online food ordering and delivery industry, particularly increased competition from other national delivery service providers. In addition, the Company invested heavily in sales and marketing efforts in 2019, further reducing its working capital and liquidity, until the suspension of such efforts in the fourth quarter of 2019.

Management implemented several initiatives in late fiscal 2019, into 2020, with a focus on improving revenue per order, cash flow, profitability and liquidity. These initiatives, which included reductions of staff in November 2019 and January 2020, modifications to the Company’s fee structure in August 2019 and February 2020, the closures of approximately 60 unprofitable, non-core markets in December 2019 and January 2020, and the switch to an independent contractor model for delivery drivers, have resulted in the positive results for the six months ended June 30, 2020. Additionally, in March and May 2020, the Company entered into open market sale agreements with respect to at-the-market offering programs, pursuant to which the Company sold 16,111,065 shares of common stock during the six months ended June 30, 2020 for net proceeds of approximately $22,584 (see Note 12 – Stockholders’ Equity). As of June 30, 2020, cash on hand was $66,702.

The Company’s working capital and liquid asset (cash on hand) positions as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Working capital

 

$

34,343

 

 

$

9,129

 

Liquid assets

 

 

66,702

 

 

 

29,317

 

We currently expect that our cash on hand and estimated cash flow from operations will be sufficient to meet our working capital needs beyond twelve months, however, there can be no assurance that we will generate cash flow at the levels we anticipate. We continually evaluate additional opportunities to strengthen our liquidity position, fund growth initiatives and/or combine with other businesses by issuing equity or equity-linked securities (in public or private offerings) and/or incurring additional debt.  

Impact of COVID-19 on our Business

In December 2019, an outbreak of a new strain of coronavirus (“COVID-19”) began in Wuhan, Hubei Province, China. In March 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. Waitr has thus far been able to operate effectively during the COVID-19 pandemic. However,pandemic caused by the potential impacts and durationoutbreak of the COVID-19 pandemic on the global economy and on the Company’s business, in particular, are uncertain and may be difficult to assess or predict. The pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce the Company’s ability to access capital and continue to operate effectively. The COVID-19 pandemic could also reduce the demand for the Company’s services. In addition, a recession or further financial market correction resulting from the spread of COVID-19 could adversely affect demand for the Company’s services. To the extent that the COVID-19 pandemic adversely impacts the Company’s business, results of operations, liquidity or financial condition, it may also have the effect of heightening many of the other risks described in the risk factors in the Company’s 2019 Form 10-K.

SARS-CoV-2 (“COVID-19”). We have taken several steps to help protect and support our restaurant partners, diners, independent contractor drivers and our employees during the COVID-19 outbreak, including offering no-contact delivery for all restaurant delivery orders;in select markets, offering no-contact grocery delivery in select markets;markets, working with certain restaurant partners to waive diner delivery fees;fees, deploying free marketing programs for restaurants;certain restaurants and providing masks, gloves and hand sanitizer to drivers. We are closely monitoringcontinue to monitor the impact of the COVID-19 global outbreak, and lifting of any restrictions, although there remains significant uncertainty related to the public health situation globally.impact and the global economic situation.

Critical Accounting Policies and Estimates

Except as set forthSee “Recent Accounting Pronouncements below there hasfor a description of accounting principle changes adopted during the three months ended March 31, 2021 related to leases. There have been no other material changechanges to our critical accounting policies and estimates described in the 20192020 Form 10-K.

7


See “TABLE_CONTENTSRevenue

” below for a description of our revenue recognition policy.

Revenue

The Company generates revenue (“transaction fees”Transaction Fees”) primarily when diners place an order on one of the Platforms. In the case of diner subscription fees for our unlimited delivery subscription program, revenue is recognized when payment for the receipt of the monthly subscription is received.fee in the applicable month for which the delivery service applies to. Revenue consists of the following for the periods indicated (in thousands):

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Transaction fees

 

$

60,422

 

 

$

50,227

 

 

$

104,233

 

 

$

97,195

 

Transaction Fees

 

$

50,476

 

 

$

43,811

 

Setup and integration fees

 

 

36

 

 

 

1,081

 

 

 

414

 

 

 

2,103

 

 

 

7

 

 

 

378

 

Other

 

 

48

 

 

 

34

 

 

 

102

 

 

 

76

 

 

 

447

 

 

 

54

 

Total Revenue

 

$

60,506

 

 

$

51,342

 

 

$

104,749

 

 

$

99,374

 

 

$

50,930

 

 

$

44,243

 

 

Transaction feesFees represent the revenue recognized from the Company’s obligation to process orders on the Platforms. The performance obligation is satisfied when the Company successfully processes an order placed on one of the Platforms and the restaurant receives the order at their location. The obligation to process orders on the Platforms represents a series of distinct performance obligations satisfied over time that the Company combines into a single performance obligation. Consistent with the recognition objective in Accounting Standards Codification (“ASC”)ASC Topic 606, Revenue from Contracts with Customers, the variable consideration due to the Company for processing orders is recognized on a daily basis. As an agent of the restaurant in the transaction, the Company recognizes transaction feesTransaction Fees earned from the restaurant on the Platform on a net basis. Transaction feesFees also include a fee charged to the end user customer when they request the order be delivered to their location. Revenue is recognized for diner fees once the delivery service is completed. The contract period for substantially all restaurant contracts is one month as both the Company and the restaurant have the ability to unilaterally terminate the contract by providing notice of termination.

During the sixthree months ended June 30, 2019,March 31, 2021 and 2020, the Company receivedrecognized revenue for non-refundable upfront setup and integration fees for onboarding certain restaurants. Setup and integration activities primarily represented administrative activities that allowed the Company to fulfill future performance obligations for these restaurants and did not represent services transferred to the restaurant. However, the non-refundable upfront setup and integration fees charged to restaurants resulted in a performance obligation in the form of a material right related to the restaurant’s option to renew the contract each day rather than provide a notice of termination. Revenue related to setup and integration fees was historically recognized ratably over a two-year period. In connection with modifications to the Company’s fee structure in July 2019, the Company discontinued offering fee arrangements with the upfront, one-time setup and integration fee.

The Company sells gift cards on the Bite Squad Platform and recognizes revenue upon gift card redemption. Gift cards that have not yet been utilized amounted to $754 as of June 30, 2020 and are included on the unaudited condensed consolidated balance sheet in other current liabilities.

Significant Judgment

Most of the Company’s contracts with restaurants contain multiple performance obligations as described above. For these contracts, the Company accounts for individual performance obligations separately if they are both capable of being distinct, and distinct in the context of the contract. Determining whether products and services are considered distinct performance obligations that should be accounted for separately may require significant judgment.

Judgment is also required to determine the standalone selling price for each distinct performance obligation. The Company used the alternative approach in ASC 606 to allocate the upfront fee between the material right obligation and the transaction fee obligation, which resulted in all of the upfront non-refundable payment at inception of the contract being allocated to the material right obligation. When contracts with customers include other performance obligations, such as ancillary equipment, the Company establishes a single amount to estimate the standalone selling price for the goods or services. In instances where the standalone selling price is not directly observable, it is determined using observable inputs.

Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to restaurants. The Company records a receivable when it has an unconditional right to the consideration. Setup and integration fees were due at inception of the contract; in certain cases, extended payment terms may have been provided for up to six months and are included in accounts receivable. The opening balance of accounts receivable, net was $3,272$4,907 and $3,687$2,954 as of January 1,March 31, 2021 and December 31, 2020, and 2019, respectively. At January 1, 2020, accounts receivable wasrespectively, comprised primarily of credit card receivables due from the credit card processor. Accounts receivable, net at June 30, 2020 totaled $6,121 and was also comprised primarily of receivables from the credit card processor.

Payment terms and conditions on setup and integration fees varied by contract type, although terms typically included a requirement of payment within six months. The Company recorded a contract liability in deferred revenue for the unearned portion of

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the upfront non-refundable fee. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component.

Costs to Obtain a Contract with a Customer

The Company recognizes an asset for the incremental costs of obtaining a contract with a restaurant and recognizes the expense over the course of the period when the Company expects to recover those costs. The Company has determined that certain internal sales incentives earned at the time when an initial contract is executed meet these requirements. Capitalized sales incentives are amortized to sales and marketing expense on a straight-line basis over the period of benefit, which the Company has determined to be five years. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less.

Deferred costs related to obtaining contracts with restaurants were $2,051$2,734 and $701$2,424 as of June 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, out of which $443$659 and $143,$567, respectively, was classified as current. Amortization of expense for the costs to obtain a contract were $94$149 and $242$53 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $147 and $451 for the six months ended June 30, 2020 and 2019, respectively.

Costs to Fulfill a Contract with a Customer

The Company also recognizes an asset for the costs to fulfill a contract with a restaurant when they are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. The Company has determined that certain costs related to setup and integration activities meet the capitalization criteria under ASC Topic 340-40, Other Assets and Deferred Costs. Costs related to these implementation activities are deferred and then amortized to operations and support expense on a straight-line basis over the period of benefit, which the Company has determined to be five years.

Deferred costs related to fulfilling contracts with restaurants were $473$893 and $270$742 as of June 30, 2020March 31, 2021 and December 31, 2019,2020, respectively, out of which $103$209 and $56,$170, respectively, was classified as current. Amortization of expense for the costs to fulfill a contract were $20$45 and $425$15 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $35 and $799 for the six months ended June 30, 2020 and 2019, respectively.

Stock-Based Compensation

The Company records stock-based compensation expense for stock-based compensation awards based on the fair value on the date of grant. The stock-based compensation expense is recognized in our statement of operations ratably over the course of the requisite service period and is recorded in either operations and support, sales and marketing, research and development, or general and administrative expense, depending on the department of the recipient. In the case of an award pursuant to which a performance condition must be met for the award to vest, no stock-based compensation cost is recognized until such time as the performance condition is considered probable of being met, if at all. If the assessment of probability of the performance condition changes, the impact of the change in estimate would be recognized in the period of change. Because of the non-cash nature of share-based compensation, it is added back to net income in arriving at net cash provided by operating activities in our statement of cash flows.

Earnings Per Share

Under GAAP, certain instruments granted in stock-based payment transactions are considered participating securities prior to vesting and are therefore required to be included in the earnings allocation in calculating earnings per share under the two-class method. Companies are required to treat unvested stock-based payment awards with a right to receive non-forfeitable dividends as a separate class of securities in calculating earnings per share, except in cases where the effect of the inclusion of the participating securities would be antidilutive.

Fair Value Measurements

Certain financial instruments are required to be recorded at fair value. Other financial instruments, including cash, are recorded at cost, which approximates fair value. Additionally, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. As of June 30, 2020 and December 31, 2019, the Company held no financial instruments required to be measured at fair value on a recurring basis.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a non-recurring basis. The Company generally applies fair value concepts in recording assets and liabilities acquired in acquisitions (see Note 3 – Business Combinations).

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Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (the “FASB”), in the form of Accounting Standards Updates (“ASUs”), to the FASB’s ASCs.

The Company considered the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on these unaudited condensed consolidated financial statements. Throughout fiscal year 2020, the Company qualified as an “emerging growth company” pursuant to the provisions of the JOBS Act. As an emerging growth company, the Company has elected to use the extended transition period for complying with certain new or revised financial accounting standards provided pursuant to Section 13 (a)13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Effective January 1, 2021, the Company is no longer an emerging growth company.

Recently Adopted Accounting Standards

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The principal objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing “right-of-use” lease assets and lease liabilities on the consolidated balance sheet. ASU 2016-02 continues to retain a distinction between finance and operating leases but requires lessees to recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability on the balance sheet for all leases with terms greater than twelve months. ASU 2016-02 was effective for and adopted by the Company on January 1, 2021. The Company applied the modified retrospective transition approach, with no adjustment to prior comparative periods. Accordingly, financial information is not adjusted and the disclosures required under ASU 2016-02 are not provided for periods prior to January 1, 2021.

The Company determines if an arrangement is a lease at inception of a contract. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company elected the optional practical expedient package, which includes retaining the current classification of leases, and is utilizing the practical expedient which allows the use of hindsight in determining the lease term and in assessing impairment of its operating lease right-of-use assets. Additionally, the Company has elected to treat lease and non-lease components as a single lease component for all assets. The Company has elected to apply the short-term scope exception for leases with original terms of twelve months or less, and accordingly, recognizes the lease payments for such leases in the statement of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

Under ASU 2016-02, the Company recorded in the unaudited condensed consolidated balance sheet as of January 1, 2021, lease liabilities for operating leases entered into prior to December 31, 2020 of $4,993, representing the present value of its future operating lease payments, and corresponding right-of-use assets of $4,681, based upon the operating lease liabilities adjusted for deferred rent. As most of the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date,

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which is estimated to be 5.0%. The adoption of ASU 2016-02 did not result in a cumulative-effect adjustment on retained earnings. See Note 10 – Commitments and Contingencies for additional details.

Other

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes and also improves consistent application by clarifying and amending existing guidance. ASU 2019-12 iswas effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2020. For all other entities,adopted by the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Company is currently evaluating the impact that adopting this ASU will have on the unaudited condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)– Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which removes, modifies or adds disclosure requirements regarding fair value measurements. The amendments in this ASU are effective for all entities beginning after December 15, 2019, with amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and narrative description of measurement uncertainty requiring prospective adoption and all other amendments requiring retrospective adoption. The Company adopted ASU 2018-13 on January 1, 2020.2021. The adoption of ASU 2018-132019-12 did not have a material impact on the Company’s disclosures or the unaudited condensed consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718), to simplify the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the new standard, equity-classified non-employee awards will be initially measured on the grant date and re-measured only upon modification, rather than at each reporting period. Measurement will be based on an estimate of the fair value of the equity instruments to be issued. ASU 2018-07 is effective for public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the standard is effective in fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including in an interim period for which financial statements have not been issued or made available for issuance but not before an entity adopts ASC 606. As an emerging growth company, the Company will not be subject to the requirements of ASU 2018-07 until December 31, 2020. The Company’s adoption of this ASU will not have a material impact on the unaudited condensedCompany’s disclosures or consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of ASU 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of ASU 2017-11 addresses the difficulty of navigating ASC Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in ASC 480. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. Part II of ASU 2017-11 does not have an accounting effect. ASU 2017-11 iswas effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2019 and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. As an emerging growth company,adopted by the Company will not be subject to the requirementson January 1, 2021. The adoption of ASU 2017-11 until December 31, 2020. The Company is currently evaluating thedid not have a material impact that adopting this ASU will have on the unaudited condensedCompany’s disclosures or consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to useASU 2016-13 uses a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. instruments and expands disclosure requirements. ASU 2016-13 was effective for and adopted by the Company on January 1, 2021. The adoption of ASU 2016-13 did not have a material impact on the Company’s disclosures or consolidated financial statements

Pending Accounting Standards

In August 2020, the FASB issued ASU 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), which simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt, resulting in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. ASU 2020-06 is effective for public business entities for fiscal years beginning after December 15, 2019,2021, including interim periods within those fiscal years, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impacts of the provisions of ASU 2020-06 on its consolidated financial statements and related disclosures.

103.   Business Combinations

2021 Acquisition

On March 11, 2021, the Company completed the acquisition of certain assets and properties from Dude Holdings LLC (“Delivery Dudes”), a third-party delivery business primarily serving the South Florida market, for $11,500 in cash, subject to certain purchase price adjustments, and 3,562,577 shares of the Company’s common stock (the “Delivery Dudes Acquisition”). The share consideration was valued at $3.23 per share, representing the average volume weighted average price of the Company’s common stock for the five consecutive trading days prior to March 9, 2021. The acquisition expands the Company’s market presence in the on-demand delivery service sector. The following represents the preliminary estimated purchase consideration:

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including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company will no longer qualify as an emerging growth company on December 31, 2021 and will be subject to the requirements of ASU 2016-13 on January 1, 2021. The Company is currently evaluating the impact that adopting this ASU will have on the unaudited condensed consolidated financial statements. 

(in thousands, except per share amount)

 

 

 

 

Shares transferred at closing

 

 

3,562

 

Value per share

 

$

3.23

 

Total share consideration

 

 

11,500

 

Plus: cash transferred to Delivery Dudes members

 

 

10,927

 

Plus: net working capital deficit assumed

 

 

573

 

Total estimated consideration

 

$

23,000

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The principal objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the consolidated balance sheet. ASU 2016-02 continues to retain a distinction between finance and operating leases but requires lessees to recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability on the balance sheet for all leases with terms greater than twelve months. In June 2020, the FASB issued ASU No. 2020-05, which amends the effective date of ASU No. 2016-02 to give immediate relief to certain entities as a result of the widespread adverse economic effects and business disruptions caused by the COVID-19 pandemic. The Company will no longer qualify as an emerging growth company on December 31, 2021, and as a result, the relief granted under ASU 2020-05 will not apply and ASU No. 2016-02 is now effective for the Company on January 1, 2021. The Company has not yet completed the process of evaluating the effects that will result from adopting ASU 2016-02.

3.   Business Combinations

On January 17, 2019, the Company completed the acquisition of Bite Squad (the “Bite Squad Merger”). Founded in 2012 and based in Minneapolis, Bite Squad operates an online food ordering and delivery platform, similar to Waitr’s Platform, through the Bite Squad Platform. Total merger consideration was $335,858, consisting of $197,404 paid in cash, the pay down of $11,880 of indebtedness of Bite Squad and an aggregate of 10,591,968 shares of the Company’s common stock, par value $0.0001 per share, valued at $11.95 per share.

The Bite Squad MergerDelivery Dudes Acquisition was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. Under the acquisition method of accounting, total merger consideration, acquired assets and assumed liabilities are recorded based on their estimatedrespective fair values on the acquisition date, with the excess of the fair value of merger consideration transferred in the acquisition over the fair value of the assets lessand liabilities acquired recorded as goodwill. The preliminary estimated fair value of assets acquired and liabilities assumed consists of the following (in thousands):

Cash and cash equivalents

 

$

573

 

Accounts receivable

 

 

330

 

Prepaid expenses and other current assets

 

 

130

 

Intangible assets

 

 

7,700

 

Other noncurrent assets

 

 

33

 

Accrued expenses and other current liabilities

 

 

(1,035

)

Other noncurrent liabilities

 

 

(29

)

Total assets acquired, net of liabilities assumed

 

 

7,702

 

Goodwill

 

 

15,298

 

Total estimated consideration

 

$

23,000

 

The Company engaged a third-party specialist to assist management in estimating the fair value of the assets and liabilities. Goodwill is attributable to the future anticipated economic benefits from combining operations of the Company and Delivery Dudes, including future growth into new markets, future customer relationships and the workforce in place. All of the goodwill is expected to be deductible for U.S. federal income tax purposes. While the Company has substantially completed the determination of the fair values of the assets acquired and liabilities assumed, the Company is still finalizing the calculation of the purchase price adjustments pursuant to the asset purchase agreement for the Delivery Dudes Acquisition, which could affect the final fair value analysis. The Company anticipates finalizing the determination of the fair values by the second quarter of 2021.

The following table sets forth the components of estimated identifiable intangible assets acquired from Delivery Dudes (in thousands) and their estimated useful lives as of the acquisition date:

 

 

Amortizable

Life (in years)

 

 

Value

 

Customer relationships

 

 

7.5

 

 

$

4,700

 

Franchise relationships

 

 

1.0

 

 

 

250

 

Trade name

 

 

3.0

 

 

 

800

 

Developed technology

 

 

2.0

 

 

 

1,900

 

In-process research and development

 

 

2.0

 

 

 

50

 

Total

 

 

 

 

 

$

7,700

 

The acquired identifiable intangible assets are amortized on a straight-line basis to reflect the pattern in which the economic benefits of the intangible assets are consumed. The acquired customer relationships were valued using the income approach, specifically, the multi-period excess earnings method, which measures the after-tax cash flows attributable to the existing customer relationships after deducting the operating costs and contributory asset charges associated with economic rents associated with supporting the existing customer relationships. The franchise relationships were also valued using the multi-period excess earnings method. The acquired trade name was valued using the income approach, specifically, the relief from royalty rate method,which measures the cash flow streams attributable to the trade name in the form of royalty payments that would be paid to the owner of the trade name in return for the rights to use the trade name. Developed technology was valued based on the cost approach, specifically the “with & without” methodology which considers the direct replacement and opportunity costs associated with the underlying technology, and in-process research and development assets were valued using the replacement cost method. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. These inputs required significant judgments and estimates at the time of the valuation.

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The results of operations of Bite SquadDelivery Dudes are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, January 17, 2019.March 11, 2021. Revenue and net loss attributable to Bite Squad forof Delivery Dudes included in the unaudited condensed consolidated statement of operations in the three months ended June 30, 2019March 31, 2021 totaled approximately $26,147$831 and $7,368, respectively, and for the six months ended June 30, 2019 totaled approximately $49,062 and $11,951,$21, respectively.

In connection with the Bite Squad Merger,Delivery Dudes Acquisition, the Company incurred direct and incremental costs of $6,956, including debt modification expense of $375,$606 consisting of legal and professional fees, which are included in general and administrative expenses in the unaudited condensed consolidated statement of operations in the sixthree months ended June 30, 2019.March 31, 2021.

Pro-Forma Financial Information (Unaudited)

The supplemental condensed consolidated results of the Company on an unaudited pro forma basis as if the Bite Squad MergerDelivery Dudes Acquisitions had been consummated on January 1, 20192020 are as follows (in thousands):

 

 

Six Months Ended

 

 

 

June 30, 2019

 

Net Revenue

 

$

103,660

 

Net Loss

 

 

51,262

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Net revenue

 

$

53,406

 

 

$

46,450

 

Net income (loss)

 

$

652

 

 

$

(1,993

)

 

These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a consolidated company during the periods presented and are not indicative of consolidated results of operations in future periods. The pro forma results include adjustments primarily related to acquisition accounting adjustments and interest expense associated with the related Additional Term Loans (see Note 7 Debt) in connection with the Bite Squad Merger. Acquisition costs and other non-recurring charges incurred are included in the period presented.

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4.   Accounts Receivable, Net

 

Accounts receivable consist of the following (in thousands):

 

 

June 30,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Credit card receivables

 

$

6,277

 

 

$

2,803

 

 

$

4,807

 

 

$

3,013

 

Receivables from restaurants and customers

 

 

345

 

 

 

950

 

 

 

592

 

 

 

334

 

Accounts receivable

 

$

6,622

 

 

$

3,753

 

 

$

5,399

 

 

$

3,347

 

Less: allowance for doubtful accounts and chargebacks

 

 

(501

)

 

 

(481

)

 

 

(492

)

 

 

(393

)

Accounts receivable, net

 

$

6,121

 

 

$

3,272

 

 

$

4,907

 

 

$

2,954

 

 

5.   Intangibles Assets and Goodwill

Intangible Assets

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and include internally developed software, as well as software to be otherwise marketed, and trademarks/trade name/patents, customer relationships and customerfranchise relationships. The Company has determined that the Waitr trademark intangible asset is an indefinite-lived asset and therefore is not subject to amortization but is evaluated annually for impairment. The Bite Squad and Delivery Dudes trade name intangible asset,assets, however, isare being amortized over itstheir estimated useful life.lives.

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Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consist of the following (in thousands):

 

As of June 30, 2020

 

 

As of March 31, 2021

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Intangible

Assets, Net

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Intangible

Assets, Net

 

Software

 

$

22,556

 

 

$

(5,065

)

 

$

(11,823

)

 

$

5,668

 

 

$

28,876

 

 

$

(6,744

)

 

$

(11,825

)

 

$

10,307

 

Trademarks/Trade name/Patents

 

 

5,405

 

 

 

(2,627

)

 

 

 

 

 

2,778

 

 

 

6,205

 

 

 

(3,998

)

 

 

 

 

 

2,207

 

Customer Relationships

 

 

82,320

 

 

 

(9,447

)

 

 

(57,378

)

 

 

15,495

 

 

 

87,545

 

 

 

(11,396

)

 

 

(57,378

)

 

 

18,771

 

Franchise Relationships

 

 

250

 

 

 

(21

)

 

 

 

 

 

229

 

Total

 

$

110,281

 

 

$

(17,139

)

 

$

(69,201

)

 

$

23,941

 

 

$

122,876

 

 

$

(22,159

)

 

$

(69,203

)

 

$

31,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

 

As of December 31, 2020

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Intangible

Assets, Net

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Accumulated

Impairment

 

 

Intangible

Assets, Net

 

Software

 

$

21,223

 

 

$

(4,113

)

 

$

(11,795

)

 

$

5,315

 

 

$

25,204

 

 

$

(6,099

)

 

$

(11,825

)

 

$

7,280

 

Trademarks/Trade name/Patents

 

 

5,405

 

 

 

(1,725

)

 

 

 

 

 

3,680

 

 

 

5,405

 

 

 

(3,526

)

 

 

 

 

 

1,879

 

Customer Relationships

 

 

82,343

 

 

 

(8,199

)

 

 

(57,378

)

 

 

16,766

 

 

 

82,845

 

 

 

(10,702

)

 

 

(57,378

)

 

 

14,765

 

Franchise Relationships

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

108,971

 

 

$

(14,037

)

 

$

(69,173

)

 

$

25,761

 

 

$

113,454

 

 

$

(20,327

)

 

$

(69,203

)

 

$

23,924

 

During the sixthree months ended June 30, 2020,March 31, 2021, the Company acquired intangible assets in connection with the Delivery Dudes Acquisition (see Note 3 – Business Combinations). Additionally, during the three months ended March 31, 2021, the Company capitalized approximately $1,335$1,722 of software costs related to the development of the Platforms. ThePlatforms, with an estimated useful life of the Company’s capitalized software costs is three years.

The Company recorded amortization expense of $1,562$1,832 and $4,310$1,540 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $3,102 and $7,945 for the six months ended June 30, 2020 and 2019, respectively. Estimated future amortization expense of intangible assets is as follows (in thousands):

 

Amortization

 

 

Amortization

 

The remainder of 2020

 

$

3,794

 

2021

 

 

6,663

 

The remainder of 2021

 

$

7,582

 

2022

 

 

4,371

 

 

 

8,264

 

2023

 

 

2,834

 

 

 

5,641

 

2024

 

 

2,635

 

 

 

3,743

 

2025

 

 

3,332

 

Thereafter

 

 

3,639

 

 

 

2,947

 

Total future amortization

 

$

23,936

 

 

$

31,509

 

 

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Goodwill

The change in the Company’s goodwill balance is as follows as of June 30, 2020for the three months ended March 31, 2021 and the year ended December 31, 20192020 (in thousands):

 

 

June 30,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Balance, beginning of period

 

$

106,734

 

 

$

1,408

 

 

$

106,734

 

 

$

106,734

 

Acquisitions during the period

 

 

 

 

 

224,538

 

 

 

15,298

 

 

 

0

 

Impairments during the period

 

 

 

 

 

(119,212

)

 

 

 

 

 

 

Balance, end of period

 

$

106,734

 

 

$

106,734

 

 

$

122,032

 

 

$

106,734

 

The Company recorded $15,298 of goodwill during the three months ended March 31, 2021 as a result of the allocation of the purchase price over assets acquired and liabilities assumed in the Delivery Dudes Acquisition (see Note 3 – Business Combinations). 

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6.   Other Current Liabilities

Other current liabilities consist of the following (in thousands):

 

June 30,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Accrued advertising expenses

 

$

82

 

 

$

451

 

Accrued insurance expenses

 

 

2,049

 

 

 

949

 

 

$

4,062

 

 

$

3,392

 

Accrued estimated workers' compensation expenses

 

 

2,016

 

 

 

2,355

 

 

 

1,397

 

 

 

1,725

 

Accrued medical contingency

 

 

456

 

 

 

448

 

Accrued sales tax payable

 

 

623

 

 

 

418

 

Accrued legal contingency

 

 

2,000

 

 

 

2,000

 

 

 

4,000

 

 

 

 

Accrued sales tax payable

 

 

622

 

 

 

681

 

Accrued incentive compensation

 

 

746

 

 

 

 

Other accrued expenses

 

 

3,592

 

 

 

3,469

 

 

 

8,883

 

 

 

4,061

 

Unclaimed property

 

 

1,789

 

 

 

1,679

 

Other current liabilities

 

 

2,816

 

 

 

2,725

 

 

 

3,764

 

 

 

2,058

 

Total other current liabilities

 

$

13,923

 

 

$

12,630

 

 

$

24,974

 

 

$

13,781

 

 

7.   Debt

The Company’s outstanding debt obligations are as follows (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Term Loans

 

$

59,573

 

 

$

69,545

 

Notes

 

 

49,645

 

 

 

61,132

 

Promissory notes

 

 

288

 

 

 

284

 

 

 

$

109,506

 

 

$

130,961

 

Less: unamortized debt issuance costs on Term Loans

 

 

(4,434

)

 

 

(5,115

)

Less: unamortized debt issuance costs on Notes

 

 

(1,761

)

 

 

(2,602

)

Total long-term debt

 

$

103,311

 

 

$

123,244

 

 

 

 

 

 

 

 

 

 

Current portion of Term Loans

 

 

12,500

 

 

 

 

Short-term loans

 

 

2,094

 

 

 

3,612

 

Total outstanding debt

 

$

117,905

 

 

$

126,856

 

 

 

Coupon Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Range in 2020

 

Effective

 

 

 

 

March 31,

 

 

December 31,

 

 

 

through 1Q21

 

Interest Rate

 

 

Maturity

 

2021

 

 

2020

 

Term Loan

 

5.125% - 7.125%

 

10.62%

 

 

November 2023

 

$

35,007

 

 

$

49,479

 

Notes

 

4.0% - 6.0%

 

6.49%

 

 

November 2023

 

 

49,504

 

 

 

49,504

 

 

 

 

 

 

 

 

 

 

 

$

84,511

 

 

$

98,983

 

Less: unamortized debt issuance costs on Term Loan

 

 

 

 

 

 

 

 

 

 

(3,069

)

 

 

(3,541

)

Less: unamortized debt issuance costs on Notes

 

 

 

 

 

 

 

 

 

 

(934

)

 

 

(1,224

)

Long term debt - related party

 

 

 

 

 

 

 

 

 

$

80,508

 

 

$

94,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term loans for insurance financing

 

3.49% - 3.99%

 

n/a

 

 

August 2021

 

 

1,143

 

 

 

2,726

 

Total outstanding debt

 

 

 

 

 

 

 

 

 

$

81,651

 

 

$

96,944

 

 

The following discussion includes a description of the Company’s outstanding debt at June 30, 2020 and December 31, 2019. Interest expense related to the Company’s outstanding debt totaled $2,490$1,901 and $2,190$2,914 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $5,404 and $3,795 for the six months ended June 30, 2020 and 2019, respectively. Interest expense includes interest on outstanding borrowings and amortization of debt issuance costs. See Note 15 – Related Party Transactions for additional information regarding the Company’s long-term debt.

Limited Waiver and Conversion AgreementAmendments to Loan Agreements

On May 1, 2020,March 9, 2021, the Company Waitr Inc., Intermediate Holdings, the lenders party thereto and Luxor Capital entered into a Limited Waiver and Conversion Agreement (the “Waiver and Conversion Agreement”), pursuantan amendment to which the lenders under the Credit Agreement agreedand an amendment to waive the requirement to prepayConvertible Notes Agreement (together, the Term Loans arising as a result of the May 2020 ATM Offering (as defined in Note 12 – Stockholders’ Equity“Amended Loan Agreements”). In consideration ofThe Amended Loan Agreements provide, among other things, for the prepayment waiver, the Company agreed that, regardless of whether any shares of the Company’s common stock were actually soldDelivery Dudes Acquisition being included in the May 2020 ATM Offering, (i) the Company would prepay a portiondefinition of the Term Loans in the amount of $12,500 on the date that issixty days after the Effective DatePermitted Acquisition (as defined in the WaiverCredit Agreement and Conversion

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Agreement) and (ii) the lenders under theConvertible Notes would be permitted to convert a portion of the outstanding principal amount of the Notes in the amount of $12,500 into shares of the Company’s common stock at a conversion rate of 746.269 shares of the Company’s common stock per 1 thousand principal amount of the Notes (calculated based on the closing price of $1.34 per share of the Company’s common stock on Nasdaq on April 30, 2020, the date immediately preceding the date of the Waiver and Conversion Agreement), notwithstanding the conversion rate then in effect. Additionally, pursuant to the terms ofamendment to the Notes.Credit Agreement, the Company made a $15,000 payment on the Term Loan on March 16, 2021. See Term LoanDebt Facility and Notes below for definitions of certain capitalized terms included above and details on the prepayment of the Term Loans and conversion of Notes.above.

The Company evaluated the amendments in the Waiver and Conversion AgreementAmended Loan Agreements under ASC 470-50, “Debt Modification and Extinguishment”, and concluded that the amendments did not meet the characteristics of debt extinguishments under ASC 470-50. Accordingly, the amendments were treated as a debt modification, and thus, no gain or loss was recorded. A new effective interest rate for the Term Loan that equates the revised cash flows to the carrying amount of the original debt is computed and applied prospectively.

Debt FacilityTerm Loan

On November 15, 2018, Waitr Inc., a Delaware corporation and wholly-owned indirect subsidiary of theThe Company as borrower, entered into the Credit and Guaranty Agreement, dated as of November 15, 2018maintains an agreement with Luxor Capital Group, LP (“Luxor Capital”) (as amended or otherwise modified from time to time, the “Credit Agreement”) with Luxor Capital Group, LP (“Luxor Capital”), as administrative agent and collateral agent, the various lenders party thereto, Waitr Intermediate Holdings, LLC, a Delaware limited liability company (“Intermediate Holdings”) and wholly-owned direct subsidiary of the Company, and certain subsidiaries of Waitr Inc. as guarantors.. The Credit Agreement providedprovides for a senior secured first priority term loan facility (the “Debt Facility”“Term Loan”) to Waitr Inc. in the aggregate principal amount of $25,000(the “Original Term Loans”). An amendment to the Credit Agreement on January 17, 2019 provided an additional $42,080 under the Debt Facility (the “Additional Term Loans” and together with the Original Term Loans, the “Term Loans”), the proceeds of which were used to consummate the Bite Squad Merger. isThe Term Loans are guaranteed by certain subsidiaries of the Company. In connection with the Term Loan, the Company issued to Luxor Capital warrants which are currently exercisable for 478,458 shares of the Company’s common stock (see Note 12 – Stockholders’ Equity).

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Interest on borrowings under the Debt Facility accrues at a rate of 7.125% per annum,Term Loan is payable quarterly, in cash or, at the election of the borrower,Company, as a payment-in-kind. Thepayment-in-kind, with interest payments due since September 30, 2019 have been paid in-kind andbeing added to the aggregate principal balance. The aggregate principal amount of the Term Loans at June 30, 2020 totaled $72,073. Of this amount, $12,500 associated with the payment pursuant to the Waiver and Conversion Agreement was classified as current in the unaudited condensed consolidated balance sheet at June 30, 2020. The effective interest rate for borrowings on the Debt Facility, after considering the allocated discount, is approximately 10.59%.

See Note 15 – Subsequent Events for additional details on the $12,500 Term Loan payment and on an additional payment on the Term Loans in connection with an amendment to the Credit Agreement on July 15, 2020, pursuant to which adjustments were made to the interest rate and maturity date of the Term Loans.

The Credit Agreement includes a number of customary covenants that, among other things, limit or restrict the ability of each of Intermediate Holdings, Waitr Inc.the Company and its subsidiaries to incur additional debt, incur liens on assets, engage in mergers or consolidations, dispose of assets, pay dividends or repurchase capital stock and repay certain junior indebtedness. The aforementioned restrictions are subject to certain exceptions including the ability to incur additional indebtedness, liens, dividends, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and/or certain other conditions and a number of other traditional exceptions that grant Waitr Inc. continued flexibility to operate and develop its business. The Credit Agreement also includes customary affirmative covenants, representations and warranties and events of default. We believe that we were in compliance with all covenants under the Credit Agreement as of June 30, 2020.

In connection with the Debt Facility, the Company issued to Luxor Capital warrants which are currently exercisable for 399,726 shares of the Company’s common stock. See Note 12 – Stockholders’ Equity for additional details.March 31, 2021.

Notes

On November 15, 2018, the Company entered into the Credit Agreement, dated as of November 15, 2018 (as amended or otherwise modified from time to time, the “Convertible Notes Agreement”), pursuant to whichAdditionally, the Company issued unsecured convertible promissory notes (the “Notes”) to Luxor Capital Partners, LP, Luxor Capital Partners Offshore Master Fund, LP, Luxor Wavefront, LP and Lugard Road Capital Master Fund, LP (the “Luxor Entities”) pursuant to an agreement, herein referred to as the “Convertible Notes Agreement”.

Interest on the Notes is payable quarterly, in cash or, at the aggregate principalCompany’s election, up to one-half of the dollar amount of $60,000 (the “Notes”).

The Notes originally had an interest rate of 1.0% per annum, paid quarterly in cash. Pursuant to an amendment to the Convertible Notes Agreement on May 21, 2019, the interest rate of the Notes was revised to 6.0% (half payable in cash and half as payment-in-kind). A portion of the interest paymentspayment due since June 30, 2019 have been paid in-kind andcan be paid-in-kind. Interest paid-in-kind is added to the aggregate principal balance. During the three months ended June 30, 2020, in connection with the Waiver and Conversion Agreement, Luxor converted $12,359The Notes include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of the Notes into 9,222,978additional shares of the Company’s common stock. The aggregate principal amount of the Notes, after considering the impact of interest paid-in-kind and the conversions, totaled $49,645 as of June 30, 2020. The effective interest rate for borrowings on the Notes, after considering the allocated discount, is approximately 7.62%(down-round features).

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See Note 15 – Subsequent Events for details on an additional conversion of the Notes and revisions to the interest rate and maturity date of the Notes in connection with an amendment to the Convertible Notes Agreement on July 15, 2020. Upon maturity, the outstanding Notes (and any accrued but unpaid interest) will be repaid in cash or converted into shares of common stock, at the holder’s election.

The Notes include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of additional shares (down-round features). The Notes are currently convertible at the holder’s election into shares of the Company’s common stock at a rate of $12.51$10.45 per share.

The Company’s payment obligations on the Notes are not guaranteed. The Convertible Notes Agreement contains negative covenants, affirmative covenants, representations and warranties and events of default that are substantially similar to those that are set forth in the Credit Agreement and applicable to Waitr Inc. and Intermediate Holdings (except those that relate to collateral and related security interests, which are not contained in the Convertible Notes Agreement or otherwise applicable to the Notes). We believe that we were in compliance with all covenants under the Convertible Notes Agreement as of June 30, 2020.

Promissory Notes

On September 27, 2019, the Company entered into an interest-free promissory note to fund a portion of an acquisition. The principal amount of the promissory note was initially $500, payable in 24 monthly installments, with payments expected to begin shortly after integration of the acquired assets onto the Company’s platform. The Company recorded the promissory note at its fair value of $452 and will impute interest over the life of the note using an interest rate of 10%, representing the estimated effective interest rate at which the Company could obtain financing. On February 13, 2020, the Company entered into an amendment to the asset purchase agreement, whereby the promissory note was amended to $600, payable in 30 monthly installments, commencing on March 1, 2020. The current portion of the promissory note of $186 is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2020.

On October 1, 2019, the Company entered into an interest-free promissory note to fund a portion of an additional acquisition. The principal amount of the promissory note is $100, payable in 24 monthly installments. Payments commenced on January 15, 2020. The Company recorded the promissory note at its fair value of $90 and will impute interest over the life of the note using an interest rate of 10%, representing the estimated effective interest rate at which the Company could obtain financing. The current portion of the promissory note of $45 is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2020.31, 2021.

Short-Term Loans

On June 26, 2019, the Company entered into a loan agreement with First Insurance FundingThe Company’s short-term loans include loans to finance a portionportions of itscertain annual insurance premium obligation.obligations. The principal amount of the loan was $5,032,loans are payable in monthly installments until maturity. The loan matured on April 1, 2020 and carried an annual interest rate of 4.08%. On May 16, 2020, the Company entered into an additional loan agreement with First Insurance Funding for $362 in principal amount, payable in 10 monthly installments until maturity on February 28, 2021. The loan carries an annual interest rate of 3.49% and had an outstanding principal balance at June 30, 2020 of $291.  

On November 15, 2019, the Company entered into a loan agreement with BankDirect Capital Finance to finance a portion of its annual directors and officers insurance premium obligation. The principal amount of the loan is $1,993, payable in monthly installments, until maturity. The loan matures on August 15, 2020 and carries an annual interest rate of 4.15%. As of June 30, 2020, $449 was outstanding under such loan.

On June 1, 2020, the Company entered into a loan agreement with IPFS Corporation to finance a portion of its annual general liability insurance premium obligation. The principal amount of the loan is $1,354, payable in monthly installments beginning July 1, 2020, until maturity. The loan matures on May 31, 2021 and carries an annual interest rate of 3.99%.

8.   Deferred Revenue

Deferred revenue is comprised of unearned setup and integration fees. The Company’s opening deferred revenue balance was $459 and $4,670 as of January 1, 2020 and January 1, 2019, respectively. The Company recognized $36 and $1,081 of setup and integration revenue during the three months ended June 30, 2020 and 2019, respectively, and $414 and $2,103 during the six months ended June 30, 2020 and 2019, respectively, which was included in the deferred revenue balances at the beginning of the respective periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of June 30, 2020, $47 of revenue is expected to be recognized from remaining performance obligations for setup and integration feesover the next 12 months.

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9.8.   Income Taxes

The Company provides for income taxes using an asset and liability approach under which deferred income taxes are provided for based upon enacted tax laws and rates applicable to periods in which the taxes become payable. The Company recorded income tax expense (benefit) of $17$24 and $(32)$17 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $34 and $30 for the six months ended June 30, 2020 and 2019, respectively. The Company’s income tax expense is entirely related to state taxes required on gross margins in Texas.various jurisdictions. A partial valuation allowance has been recorded as of June 30, 2020March 31, 2021 and December 31, 20192020 as the Company has historically generated net operating losses prior to the second quarter of 2020, and the Company did not consider future book income as a source of taxable income when assessing if a portion of the deferred tax assets is more likely than not to be realized.

OnAs of March 27, 2020,31, 2021, the Company recognized $1,334 in employer payroll tax deferrals under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law and GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date. The CARES Act includes changes to the tax provisions that benefit business entities and makes certain technical corrections to the Tax Cuts and Jobs Act of 2017. The tax relief measures for businesses include a five-year net operating loss carryback, suspension of annual deduction limitation of 80% of taxable income from net operating losses generated in a tax year beginning after December 31, 2017, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property. The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic. The Company evaluated the impact of the CARES Act and determined that there was no significant impact to the income tax provision for the quarter.

As of June 30, 2020, the Company recognized $187 in employer payroll tax deferrals under the CARES(CARES) Act, of which 50% will be paid in 2021 and 50% will be paid in 2022. These amounts are reflected in other current and non-current liabilities in the accompanying unaudited condensed consolidated balance sheet.

9.    Correction of Prior Period Error

During the third quarter of 2020, the Company identified and corrected an immaterial error related to the understatement of an accrued medical contingency (the “Medical Contingency”) that affected previously issued consolidated financial statements. The Company became liable for a claim due to the insolvency of a previous workers compensation insurer. The Company assessed the materiality of the error, both quantitatively and qualitatively, in accordance with the SEC’s Staff Accounting Bulletin No. 99, and concluded that the error was not material to any of its previously reported financial statements based upon qualitative aspects of the error. However, as the error was large quantitatively, previously issued financial statements have been revised and are presented for comparative purposes. The Company engaged a third-party actuary to assist in the calculation of the estimated loss exposure and determined that the accrued liability recorded at December 31, 2018 for the claim was understated by approximately $17,505, which resulted in additional expense for the year ended December 31, 2018 of $17,505.

The cumulative impact of the error correction on the Company’s retained earnings and stockholders’ equity as of January 1, 2020 was $17,505. As shown in the table below, there was no impact to net cash provided by operating activities for the three months ended March 31, 2020. Net income (loss) for the three months ended March 31, 2020 was not impacted by the revision. Line items affected by the revision are included in the tables below.

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Revised Consolidated Cash Flow Statement (unaudited) (in thousands)

 

 

Three Months Ended March 31, 2020

 

 

 

As Reported

 

 

Adjustment

 

 

As Revised

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Changes in liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accrued medical contingency

 

$

 

 

$

(69

)

 

$

(69

)

Accrued workers' compensation liability

 

 

(69

)

 

 

71

 

 

 

2

 

Other current liabilities

 

 

(155

)

 

 

(2

)

 

 

(157

)

Net cash provided by operating activities

 

 

7,027

 

 

 

 

 

 

7,027

 

Revised Consolidated Balance Sheet (unaudited) (in thousands)

 

 

March 31, 2020

 

 

 

As Reported

 

 

Adjustment

 

 

As Revised

 

Other current liabilities

 

$

12,125

 

 

$

661

 

 

$

12,786

 

Total current liabilities

 

 

31,368

 

 

 

661

 

 

 

32,029

 

Accrued medical contingency - long term

 

 

 

 

 

17,134

 

 

 

17,134

 

Accrued workers' compensation liability - long term

 

 

394

 

 

 

(290

)

 

 

104

 

Total liabilities

 

 

157,795

 

 

 

17,505

 

 

 

175,300

 

Accumulated deficit

 

 

(364,339

)

 

 

(17,505

)

 

 

(381,844

)

Total stockholders' equity

 

 

27,673

 

 

 

(17,505

)

 

 

10,168

 

10.   Commitments and Contingencies

Sales Tax Contingent LiabilityLeases

As of March 31, 2021, the Company had operating lease agreements for office facilities in various locations in the United States, which expire on various dates through August 2026. The terms of the lease agreements provide for rental payments that generally increase on an annual basis. The Company does not have any material finance leases. The Company recognizes expense for leases on a straight-line basis over the lease term, which the Company generally expects to be the non-cancellable period of the lease. As of March 31, 2021, the Company recognized on its unaudited condensed consolidated balance sheet operating right-of-use assets of $5,064 and current and noncurrent operating lease liabilities of $1,518 and $3,885, respectively. Operating lease costs recognized in the unaudited condensed consolidated statement of operations for the three months ended March 31, 2021 totaled $401.  

The Company received an assessment fromfollowing table presents supplemental cash flow information and the State of Mississippi Department of Revenue (the “MDR”), in connection with their audit of Waitrweighted-average lease term and discount rate for the period from April 2017 through January 2019, claiming additional sales taxes due. The assessment relates toCompany’s operating leases for the MDR’s assertion that sales taxes are due onthree months ended March 31, 2021:

 

 

Three Months Ended March 31, 2021

 

Cash paid for operating lease liabilities (in thousands)

 

$

389

 

Weighted-average remaining lease term (years)

 

 

3.8

 

Weighted-average discount rate

 

 

5.0

%

As of March 31, 2021, the delivery fees charged to end user customers when an orderfuture minimum lease payments required under non-cancelable operating leases were as follows (in thousands):

 

 

Amount

 

The remainder of 2021

 

$

1,323

 

2022

 

 

1,567

 

2023

 

 

993

 

2024

 

 

816

 

2025

 

 

803

 

Thereafter

 

 

535

 

Total future lease payments

 

$

6,037

 

Less: imputed interest

 

 

(634

)

Present value of operating lease liabilities

 

$

5,403

 

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Medical Contingency Claim

As of March 31, 2021 and December 31, 2020, the long-term portion of the estimated Medical Contingency claim totaled $16,844 and $16,987, respectively, and is placed on the Waitr Platform. The total asserted claim, plus estimated accrued interest and penalties, amounts to approximately $339 at June 30, 2020. We disagree with the MDR’s assertion that our delivery fees are subject to sales tax and that we are liable for such sales taxes. We areincluded in the processunaudited condensed consolidated balance sheet as accrued medical contingency. The current portion of appealing the MDR’s assessment.Medical Contingency totaled $456 and $448 as of March 31, 2021 and December 31, 2020, respectively, and is included in other current liabilities. See Note 9 – Correction of Prior Period Error for additional information.  

Workers’Workers Compensation Claimand Auto Policy Claims

On November 27, 2017, Guarantee Insurance Company (“GIC”), the Company’s formerWe establish a liability under our workers’ compensation insurer, was ordered into receivershipand auto insurance policies for purposesclaims incurred and an estimate for claims incurred but not yet reported. As of liquidation by the Second Judicial Circuit CourtMarch 31, 2021 and December 31, 2020, $4,569 and $4,697, respectively, in Leon County, Florida. At the time of the court order, GIC was administering the Company’s outstanding workers’ compensation claims. Upon entering receivership,and auto policy claims are included in the guaranty associationsunaudited condensed consolidated balance sheet. The short-term portions of the states where GIC operated began reviewing outstanding claims administered by GICliability for continued claim coverage eligibility based on guaranty associations’ eligibility criteria. The Company’s net worth exceeded the threshold of $25,000 established by the Louisiana Insurance Guaranty Association (“LIGA”) when determining eligibility for claims coverage. As such, LIGA assessed the Company’s outstanding claim as ineligible for coverage. As of June 30, 2020 and December 31, 2019, the Company had $362 and $641, respectively, inour workers’ compensation liabilities associated with the GIC claims. The Company recorded 0 general and administrative expense related to these liabilities during the three or six months ended June 30, 2020 or 2019.auto insurance claims are included in other current liabilities.

Legal Matters

OnIn July 14, 2016, Waiter.com, Inc. filed a lawsuit against Waitr Incorporated, the Company’s wholly-owned subsidiary,Inc. in the United States District Court for the Western District of Louisiana, alleging trademark infringement based on Waitr’s use of the “Waitr” trademark and logo, Civil Action No.: 2:16-CV-01041. Plaintiff seeks injunctive relief and damages relating to Waitr’s use of the “Waitr” name and logo. TheDuring the third quarter of 2020, the trial date has been postponed indefinitely duewas rescheduled to June 2021, and in September 2020, the COVID-19 pandemic.court ruled on various motions, certain of which ruled against defenses the Company had advanced. Waitr believes that thisthe damages case lacks merit and that it has strong defensesa defense to all of the infringement claims alleged. Waitr intendscontinues to vigorously defend the suit. The Company accrued a $4,000 reserve in connection with this lawsuit during the first quarter of 2021. The accrued legal contingency is included in other current liabilities in the unaudited condensed consolidated balance sheet at March 31, 2021 and in other expenses in the unaudited condensed consolidated statement of operations for the three months ended March 31, 2021. 

In FebruaryApril 2019, the Company was named as a defendant in a lawsuit titledclass action complaint filed by certain current and former restaurant partners, captioned Halley,Bobby’s Country Cookin’, et al vs.v. Waitr, Holdings Inc. filed which is currently pending in the United States District Court for the EasternWestern District of Louisiana on behalfLouisiana. Plaintiffs allege, among other things, claims for breach of plaintiff and similarly situated drivers alleging violationscontract, violation of the Fair Labor Standards Act (“FLSA”),duty of good faith and in March 2019, the Company was named a defendant in a lawsuit titled Montgomery v. Waitr Holdings Inc. filed in the United States District Court for the Eastern District of Louisiana on behalf of plaintifffair dealing, and similarly situated drivers, alleging violations of FLSAunjust enrichment, and Louisiana Wage Payment Act. The parties to the Halley and Montgomery matters jointly filed with the court a motion for preliminary approval of a settlement agreement (the “Motion”) whereby the Halley and Montgomery

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plaintiffs,seek recovery on behalf of themselves and similarly situated drivers, will dismisstwo separate classes. Based on the lawsuits againstcurrent class definitions, as many as 10,000 restaurant partners could be members of the Company in considerationtwo separate classes that the representative plaintiffs are attempting to certify. Plaintiff’s deadline to file a motion for class certification is October 2021. Waitr maintains that the Company issuing upunderlying allegations and claims lack merit, and that the classes, as pled, are incapable of certification. Waitr continues to 1,556,420 shares of Waitr common stock to be allocated to participating class members pursuant to a formula set forth invigorously defend the settlement agreement. On April 28, 2020, the court granted the Motion and scheduled a fairness hearing for August 19, 2020.suit.

OnIn September 26, 2019, Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC were named as defendants in a putative class action lawsuit entitled Walter Welch, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC.  The case was filed in the Western District of Louisiana, Lake Charles Division. In the lawsuit, the plaintiff asserts putative class action claims alleging, inter alia, that various defendants made false and misleading statements in securities filings, engaged in fraud, and violated accounting and securities rules. A similar putative class action lawsuit, entitled Kelly Bates, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC, was filed in that same court onin November 4, 2019. Waitr expects the court will determine a lead plaintiff and theThese two cases will be consolidated.were recently consolidated, and an amended complaint was filed in October 2020. The Company filed a motion to dismiss in February 2021. Waitr believes that these cases lackthis lawsuit lacks merit and that it has strong defenses to all of the claims alleged. Waitr intendscontinues to vigorously defend both lawsuits.the suit.

In addition to the lawsuits described above, Waitr is involved in other litigation arising from the normal course of business activities, including, without limitation, labor and employment claims, allegations of infringement, misappropriation and other violations of intellectual property or other rights, lawsuits involvingand claims forinvolving personal injuries, physical damage and workers’ compensation benefits suffered as a result of alleged Waitrconduct involving its employees, independent contractor drivers, independent contractors, and third-party negligence. Although Waitr believes that it maintains insurance with standard deductibles that generally covers its liability for potential damages if any,in many of these matters where coverage is available on acceptable terms (it is not maintained for claims involving intellectual property), insurance coverage is not guaranteed, often these claims are met with denial of coverage positions by the carriers, and Waitrthere are limits to insurance coverage; accordingly, we could suffer material losses as a result of these claims or the denial of coverage for such claims.

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11.   Stock-Based Awards and Cash-Based Awards

Stock-Based Awards

OnIn June 16, 2020, the Company’s stockholders approved the Waitr Holdings Inc. Amended and Restated 2018 Omnibus Incentive Plan (the “Amended 2018“2018 Incentive Plan”), which is an amendment and restatement of the Waitr Holdings Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”). The Amended 2018 Plan permits the granting of awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock-based or cash-based awards. The Amended 2018 Plan was adopted principally to serve as a successor plan to the 2018 Incentive Plan, and to increase the number of shares of common stock reserved for issuance of equity-based awards by 13,500,000 shares, which is in addition to the share reserve amount that remained available under the 2018 Incentive Plan prior to the adoption of the Amended 2018 Plan. Additionally, the Amended 2018 Plan extended the provision for automatic increases in shares reserved for issuance on January 1st of each year to January 1, 2030. The automatic increases each year are equal to 5% of the total number of outstanding shares of the Company’s common stock on December 31st of the preceding calendar year. As of June 30, 2020,March 31, 2021, there were 7,675,68611,642,846 shares of common stock available for future grants pursuant to the Amended 2018 Incentive Plan. The Company also has outstanding equity awards under the 2014 Stock Plan (as amended in 2017, the “Amended 2014 Plan”).

Total compensation expense related to awards under the Company’s incentive plans was $602$2,078 and $2,519$848 for the three months ended June 30,March 31, 2021 and 2020, and 2019, respectively, and $1,450 and $4,552 for the six months ended June 30, 2020 and 2019, respectively.

Stock-Based Awards

Stock Options

During the three months ended March 31, 2021, 500,000 stock options were granted under the 2018 Incentive Plan, with an aggregate grant date fair value of $1,095. The weighted average exercise price of the options is $2.78, and the options will vest in twelve quarterly installments during the period from October 1, 2021 through July 1, 2024. The options have an approximate 5 year exercise term. On January 3, 2020, 9,572,397 stock options were granted under the 2018 Incentive Plan to the Company’s chief executive officer (the “Grimstad Option”), with an aggregate grant date fair value of $2,297. The exercise price of the options is $0.37, and the options will vest 50% on each of the first two anniversaries of the grant date. The options have a five-year exercise term.

The fair value of each stock option grant during the Grimstad Optionthree months ended March 31, 2021 and 2020 was estimated as of the grant date using an option-pricing model with the following assumptions:assumptions included in the table below. Expected volatility for stock options is estimated based on a combination of the historical volatility of the Company’s stock price and the historical and implied volatility of comparable publicly traded companies.

 

 

Three Months Ended June 30,

 

 

2020

 

 

2021

 

 

2020

 

Weighted-average fair value at grant

 

$

0.24

 

 

$

2.19

 

 

$

0.24

 

Risk free interest rate

 

1.54%

 

 

0.46%

 

 

1.54%

 

Expected volatility

 

100.6%

 

 

131.4%

 

 

100.6%

 

Expected option life (years)

 

 

3.25

 

 

 

3.59

 

 

 

3.25

 

 

The Grimstad Option was not exercisable upon vesting unless the stockholders of the Company approved an amendment to the 2018 Incentive Plan to increase the number of shares of common stock availablerecognized compensation expense for award under such plan by an amount at least equal to the number of shares of common stock underlying the Grimstad Option, subject to certain provisions. On June 16, 2020, as discussed

17


TABLE_CONTENTS

above, the Company’s stockholders approved the Amended 2018 Plan, which included a 13,500,000 increase in common shares reserved for issuance of equity-based awards under such plan.

As of June 30, 2020, there were 9,789,600 stock options outstanding underof $334 and $373 for the Company’s incentive plans.three months ended March 31, 2021 and 2020, respectively. Unrecognized compensation cost related to unvested stock options as of June 30, 2020March 31, 2021 totaled $2,135,$2,086, with a weighted average remaining vesting period of approximately 1.511.1 years.

Performance-Based

The stock option activity under the Company’s incentive plans during the three months ended March 31, 2021 and 2020 is as follows:

 

 

Three Months Ended March 31, 2021

 

 

Three Months Ended March 31, 2020

 

 

 

Number of

Shares

 

 

Weighted

Average

Exercise Price

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Number of

Shares

 

 

Weighted

Average

Exercise Price

 

 

Weighted

Average

Grant Date

Fair Value

 

Balance, beginning of period

 

 

9,753,257

 

 

$

0.43

 

 

$

0.33

 

 

 

445,721

 

 

$

3.66

 

 

$

5.04

 

Granted

 

 

500,000

 

 

 

2.78

 

 

 

2.19

 

 

 

9,572,397

 

 

 

0.37

 

 

 

0.24

 

Exercised

 

 

(6,779

)

 

 

0.88

 

 

 

4.73

 

 

 

(24,309

)

 

 

0.34

 

 

 

1.91

 

Forfeited

 

 

(13,995

)

 

 

4.58

 

 

 

4.38

 

 

 

(62,608

)

 

 

3.38

 

 

 

5.68

 

Expired

 

 

(6,536

)

 

 

4.83

 

 

 

3.26

 

 

 

(37,409

)

 

 

1.12

 

 

 

5.09

 

Balance, end of period

 

 

10,225,947

 

 

$

0.54

 

 

$

0.41

 

 

 

9,893,792

 

 

$

0.50

 

 

$

0.40

 

Outstanding stock options, which were fully vested and expected to vest and exercisable are as follows as of March 31, 2021 and December 31, 2020:

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TABLE_CONTENTS

 

 

As of March 31, 2021

 

 

As of December 31, 2020

 

 

 

Options Fully

Vested and

Expected to Vest

 

 

Options

Exercisable

 

 

Options Fully

Vested and

Expected to Vest

 

 

Options

Exercisable

 

Number of Options

 

 

10,225,947

 

 

 

4,914,911

 

 

 

9,753,257

 

 

 

132,846

 

Weighted-average remaining contractual term (years)

 

 

3.88

 

 

 

3.84

 

 

 

4.07

 

 

 

6.82

 

Weighted-average exercise price

 

$

0.54

 

 

$

0.45

 

 

$

0.43

 

 

$

3.20

 

Aggregate Intrinsic Value (in thousands)

 

$

24,788

 

 

$

12,440

 

 

$

23,285

 

 

$

178

 

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the fair value of the common stock and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on each date. This amount will change in future periods based on the fair value of the Company’s stock and the number of options outstanding. The aggregate intrinsic value of awards exercised during the three months ended March 31, 2021 and 2020 was $15 and $12, respectively. Upon exercise, the Company issued new common stock.

Restricted Stock Units (“RSUs”)

OnThe Company’s restricted stock grants include performance-based and time-based vesting awards. The fair value of restricted shares is typically determined based on the closing price of the Company’s common stock on the date of grant.

Performance-Based Awards

As of March 31, 2021, there were 3,159,325 performance-based RSUs outstanding under the Company’s 2018 Incentive Plan, including 3,134,325 RSUs granted to the Company’s chief executive officer in April 23, 2020 3,134,325 performance based RSUs were granted (the “Grimstad RSU Grant”) under the 2018 Incentive Plan to Mr.. The Grimstad withRSU Grant has an aggregate grant date fair value of $3,542. The Grimstad RSU Grant$3,542 and vests in full in the event of a Corporate Change,change of control, as defined in Mr. Grimstad’s employment agreement with the Company (the “Employment Agreement”), subject to his continuous employment with the Company through the date of a Corporate Change;change of control; provided, however, that the Grimstad RSU Grant shall fully vest in the event that Mr. Grimstad terminates his employment for Good Reason (as defined therein)good reason or he is terminated by the Company for reason other than Misconduct (as defined therein) prior to a Corporate Change.misconduct. NaN stock-based compensation expense will be recognized for the Grimstad RSU Grant until such time that is probable that the performance goal will be achieved, or at the time that Mr. Grimstad terminates his employment for Good Reasongood reason or he is terminated by the Company for reason other than Misconduct,misconduct, should either occur.

Restricted Stock UnitsAwards with Time-Based Vesting

During the sixthree months ended June 30, 2020, 2,754,501March 31, 2021, 195,000 RSUs with time-based vesting were granted to certain employees and certain members of the board of directors of the Company pursuant to the Company’s 2018 Incentive Plan and the Amended 2018 Plan, with(with an aggregate grant date fair value of $5,376.value of $714). The RSU grantsRSUs generally vest in various manners in accordance with the terms specified in the applicable RSU award agreements, with 1,400,000 RSUs granted to certain non-employee directors vesting upon the earlier of June 30, 2021 and the date of the 2021 annual meeting of the Company’s stockholders and 1,354,501 RSUs granted to employees vesting generally between one to three years, from the date of grant, all of whichand accelerate and fully vest upon a change of control.

A totalThe Company recognized compensation expense for restricted stock of 545,319 RSUs vested$1,744 and $475 during the sixthree months ended June 30,March 31, 2021 and 2020, and 1,459,580 RSUs were forfeited prior to vesting. As of June 30, 2020, there were 3,932,241 unvested time-based RSUs outstanding under the Company’s incentive plans.respectively. Unrecognized compensation cost related to unvested time-based RSUs as of June 30, 2020March 31, 2021 totaled $6,466,$5,705, with a weighted average remaining vesting period of approximately 1.411.77 years. During the three months ended March 31, 2021 and 2020, the total fair value of restricted shares that vested during such periods was $2,493 and $6, respectively.

The activity for restricted stock with time-based vesting under the Company’s incentive plans is as follows for the three months ended March 31, 2021 and 2020:

 

 

Three Months Ended March 31, 2021

 

 

Three Months Ended March 31, 2020

 

 

 

Number of

Shares

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Weighted

Average Remaining

Contractual

Term (years)

 

 

Number of

Shares

 

 

Weighted

Average

Grant Date

Fair Value

 

 

Weighted

Average Remaining

Contractual

Term (years)

 

Nonvested, beginning of period

 

 

4,558,603

 

 

$

2.23

 

 

 

1.71

 

 

 

3,182,639

 

 

$

1.42

 

 

 

2.16

 

Granted

 

 

195,000

 

 

 

3.66

 

 

 

 

 

 

 

562,207

 

 

 

0.39

 

 

 

 

 

Shares vested

 

 

(749,870

)

 

 

0.97

 

 

 

 

 

 

 

(17,344

)

 

 

11.53

 

 

 

 

 

Forfeitures

 

 

(126,084

)

 

 

1.05

 

 

 

 

 

 

 

(679,287

)

 

 

0.52

 

 

 

 

 

Nonvested, end of period

 

 

3,877,649

 

 

$

2.58

 

 

 

1.77

 

 

 

3,048,215

 

 

$

1.38

 

 

 

2.06

 

Cash-Based Awards

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TABLE_CONTENTS

Performance Bonus Agreement

On April 23, 2020, the Company entered into a performance bonus agreement with Mr. Grimstad (the “Bonus Agreement”).Grimstad. Pursuant to the Bonus Agreement,bonus agreement, upon the occurrence of a Corporate Change (as defined in the Employment Agreement)change of control in which the holders of the Company’s common stock receive per share consideration that is equal to or greater than $2.00, subject to adjustment in accordance with the 2018 Incentive Plan, the Company shall pay Mr. Grimstad an amount equal to $5,000 (the “Bonus”). In order to receive the Bonus, Mr. Grimstad must remain continuously employed with the Company through the date of the Corporate Change;change of control; provided, however, that in the event Mr. Grimstad terminates his employment for Good Reason (as defined in the Employment Agreement)good reason or the Company terminates his employment other than for Misconduct (as defined in the Employment Agreement),misconduct, Mr. Grimstad will be entitled to receive the Bonus provided the Corporate Changechange of control occurs on or before January 3, 2022. Expenseduring his employment term. Compensation expense related to the Bonus Agreementbonus agreement will not be recognized until such time that is probable that the performance goal will be achieved.

12.   Stockholders’ Equity

Common Stock

At June 30, 2020March 31, 2021 and December 31, 2019,2020, there were 249,000,000 shares of common stock authorized and 102,382,511115,387,140 and 76,579,175111,259,037 shares of common stock issued and outstanding, respectively, with a par value of $0.0001. The Company did not hold any shares as treasury shares as of June 30, 2020March 31, 2021 or December 31, 2019.2020. The Company’s common stockholders are entitled to one vote per share.

Preferred Stock

At June 30, 2020March 31, 2021 and December 31, 2019,2020, the Company was authorized to issue 1,000,000 shares of preferred stock ($0.0001 par value per share). There were 0 issued or outstanding preferred shares as of June 30, 2020March 31, 2021 or December 31, 2019.

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TABLE_CONTENTS

At-the-Market Offerings

On March 20, 2020, the Company entered into an open market sale agreement with respect to an at-the-market offering program (the “ATM Program”) under which the Company could offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $25,000 through Jefferies LLC as its sales agent. The issuance and sale of shares by the Company under the agreement were made pursuant to the Company’s effective registration statement on Form S-3 which was filed on April 4, 2019. From March 20, 2020 through June 30, 2020, the Company sold 14,262,305 shares of common stock under the ATM Program at an average price of $1.28 per share, for gross proceeds of $18,314. Net proceeds, after deducting sales commissions, totaled $18,024. The ATM Program was terminated on May 1, 2020 when the Company entered into the May 2020 ATM Program (defined below), with approximately $6,686 out of the aggregate $25,000 remaining unsold.

On May 1, 2020, the Company entered into an amendment and restatement of the open market sale agreement associated with its March 20, 2020 ATM Program, with respect to an at-the-market offering program (the “May 2020 ATM Program”), under which the Company could offer and sell, from time to time at its sole discretion, shares of its common stock, having an aggregate offering price of up to $30,000 through Jefferies LLC as its sales agent. The issuance and sale of shares by the Company under the amended and restated agreement were made pursuant to the Company’s registration statement on Form S-3 described above. From May 1, 2020 through June 30, 2020, the Company sold 1,848,760 shares of common stock under the May 2020 ATM Program at an average price of $2.50 per share, for gross proceeds of $4,630. Net proceeds, after deducting sales commissions, totaled $4,560. The remaining $25,370 under the May 2020 ATM Program was sold in early July 2020 (see Note 15 – Subsequent Events).  

Conversion of Notes

During the three months ended June 30, 2020, in connection with the Waiver and Conversion Agreement, Luxor converted $12,359 of the Notes into 9,222,978 shares of the Company’s common stock (see Note 7 – Debt). Luxor converted additional Notes in July 2020 (see Note 15 – Subsequent Events).2020.

Warrants

In connection with the Debt Facility,November 2018, the Company issued to Luxor Capital warrants (the “Debt Warrants”) which are currently exercisable for 399,726478,458 shares of the Company’s common stock with ana current exercise price of $12.51$10.45 per share.share (the “Debt Warrants”). The Debt Warrants expire on November 15, 2022 and include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of additional shares (down-round features). Additionally, holders of the Debt Warrants have customary registration rights with respect to the shares underlying the Debt Warrants.

13.   Earnings (Loss)Fair Value Measurements

At March 31, 2021 and December 31, 2020, the Company had an outstanding medical contingency claim which is measured at fair value on a recurring basis (see Note 10 – Commitments and Contingencies). The long-term portion of the liability for such claim is included in the unaudited condensed consolidated balance sheets under accrued medical contingency, with the short-term portion included within other current liabilities. The medical contingency claim is measured at fair value using a method that incorporates life-expectancy assumptions, along with projected annual medical costs for each future year, adjusted for inflation. An average annual inflation rate of 3.5% was used in the development of the actuarial estimate for medical costs, based on historical medical cost inflation trends as published by the U.S. Bureau of Labor Statistics. Additionally, the measurement includes factors to derive a probability-weighted average of future payments in order to reflect variations from the life-expectancy assumptions, using CDC National Vital Statistics Reports as a tool in the analysis. Projected cash flows are discounted using an interest rate consistent with the U.S. 30-year treasury yield curve rates.

The medical contingency claim analysis represents a Level 3 measurement as it was based on unobservable inputs reflecting the Company’s assumptions used in developing the fair value estimate. The inputs used in the measurement, particularly life expectancy and projected medical costs, are sensitive inputs to the measurement and changes to either could result in significantly higher or lower fair value measurements. The Company utilized historical transactional data regarding the claim, along with projections for future comprehensive medical care costs. These inputs required significant judgments and estimates at the time of the valuation.

The following table presents the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 (in thousands):

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TABLE_CONTENTS

 

 

As of March 31, 2021

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued medical contingency

 

$

 

 

$

 

 

$

17,300

 

 

$

17,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2020

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accrued medical contingency

 

$

 

 

$

 

 

$

17,435

 

 

$

17,435

 

The Company had 0 assets required to be measured at fair value on a recurring basis at March 31, 2021 or December 31, 2020. Adjustments to the accrued medical contingency are recognized in other expense on the condensed consolidated statement of operations. There have been 0 transfers between levels during the periods presented in the accompanying condensed consolidated financial statements. The following table presents a reconciliation of liabilities classified as Level 3 financial instruments for the periods indicated (in thousands):

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

Balance, beginning of the period

 

$

17,435

 

 

$

17,883

 

Increases/additions

 

 

43

 

 

 

 

Reductions/settlements

 

 

(178

)

 

 

(71

)

Balance, end of the period

 

$

17,300

 

 

$

17,812

 

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record certain assets and liabilities at fair value on a non-recurring basis. The Company generally applies fair value concepts in recording assets and liabilities acquired in business combinations and asset acquisitions (see Note 3 – Business Combinations).

14.   Loss Per Share Attributable to Common Stockholders

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common stock outstanding during the period, without consideration for common stock equivalents. Diluted earnings (loss) per share attributable to common stockholders is computed by dividing net income (loss) by the weighted-average number of common stock outstanding during the period and potentially dilutive common stock equivalents, including stock options, restricted stock awards, restricted stock units and warrants, except in cases where the effect of the common stock equivalent would be antidilutive.

During 2019, the Company calculated basic and diluted earnings per share using the two-class method. Participating securities during 2019 consisted of restricted stock awards which contained rights to receive non-forfeitable dividends. The Company had net losses during the three and six months ended June 30 2019, and accordingly, pursuant to the guidance under ASC 260, a portion of the net losses was not allocated to such securities under the two-class method. During 2020, there were 0 remaining outstanding restricted stock awards and no other securities classified as participating securities.

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The calculation of basic and diluted earnings (loss)loss per share attributable to common stockholders for the three and six months ended June 30,March 31, 2021 and 2020 and 2019 is as follows (in thousands, except share and per share data):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Basic Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

10,653

 

 

$

(24,852

)

 

$

8,551

 

 

$

(49,601

)

Gain on debt extinguishment recorded as a capital

   contribution

 

 

 

 

 

1,897

 

 

 

 

 

 

1,897

 

Net income (loss) attributable to common stockholders - basic

 

$

10,653

 

 

$

(22,955

)

 

$

8,551

 

 

$

(47,704

)

Weighted average number of shares outstanding - basic

 

 

95,053,207

 

 

 

72,416,614

 

 

 

85,968,962

 

 

 

68,492,911

 

Basic earnings (loss) per common share

 

$

0.11

 

 

$

(0.32

)

 

$

0.10

 

 

$

(0.70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share:

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

10,653

 

 

$

(24,852

)

 

$

8,551

 

 

$

(49,601

)

Gain on debt extinguishment recorded as a capital

   contribution

 

 

 

 

 

1,897

 

 

 

 

 

 

1,897

 

Net income (loss) attributable to common stockholders - diluted

 

$

10,653

 

 

$

(22,955

)

 

$

8,551

 

 

$

(47,704

)

Weighted average number of shares outstanding – diluted

 

 

105,951,232

 

 

 

72,416,614

 

 

 

91,769,460

 

 

 

68,492,911

 

Diluted earnings (loss) per common share

 

$

0.10

 

 

$

(0.32

)

 

$

0.09

 

 

$

(0.70

)

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Basic and diluted loss per share:

 

 

 

 

 

 

Net loss attributable to common stockholders - basic and diluted

 

$

(3,712

)

 

$

(2,102

)

Weighted average number of shares outstanding

 

 

112,334,094

 

 

 

76,884,717

 

Basic and diluted loss per common share

 

$

(0.03

)

 

$

(0.03

)

During the three and six months ended June 30, 2019, the Company recorded a gain on debt extinguishment of $1,897 as a capital contribution in accordance with the guidance in ASC 470-50.

The Company has outstanding Notes which are convertible into shares of the Company’s common stock. See Note 7 – Debt for additional details on the Notes.

The following table includes potentially dilutive common stock equivalents as of June 30, 2020 and 2019. The Company generated a net loss attributable to the Company’s common stockholders for the three and six months ended June 30, 2019. Accordingly, the effect of dilutive securities is not considered in the loss per share for such periods because their effect would be antidilutive Based on the net loss. Forconversion price in effect at the three and six months ended June 30, 2020, 86,747 stock options were considered anti-dilutive because the exercise priceend of the options exceededrespective periods, the average market priceNotes were convertible into 4,737,237 and 4,923,661 shares, respectively, of the Company’s common stock for such periods,at March 31, 2021 and as a result, the effect of these options in not considered in the diluted earnings per share for such periods. At June 30, 2020, antidilutive restricted stock units of 1,917,0912020. Such shares were excluded from the computationfully diluted calculation because the effect on net loss per common share would have been anti-dilutive.   

Additionally, the following table includes securities outstanding at the end of the respective periods, which have been excluded from the fully diluted earningscalculations because the effect on net loss per common share based on the treasury stock method.

would have been antidilutive:

 

 

As of June 30,

 

 

 

2020

 

 

2019

 

Potentially dilutive securities:

 

 

 

 

 

 

Stock Options

 

 

9,789,600

 

 

 

846,919

 

Restricted Stock Units

 

 

7,066,566

 

 

 

580,991

 

Warrants (1)

 

 

399,726

 

 

 

399,726

 

Potentially dilutive securities at period end

 

 

17,255,892

 

 

 

1,827,636

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Antidilutive shares underlying stock-based awards:

 

 

 

 

 

 

   Stock options

 

 

10,225,947

 

 

 

9,893,792

 

   Restricted stock units

 

 

7,036,974

 

 

 

3,048,215

 

   Warrants (1)

 

 

478,458

 

 

 

399,726

 

 

 

(1)

Includes the Debt Warrants as of June 30, 2020March 31, 2021 and 2019.2020. See Note 12 – Stockholders’ Equity for additional details.  

 

14.15.   Related-Party Transactions

On19


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In November 15, 2018, the Company entered into the Credit Agreement, and onin January 17, 2019, in connection with the Bite Squad Merger, the Company entered into an amendment to the Credit Agreement, with Luxor Capital and an amendment to the Convertible Notes Agreement with the Luxor Entities. In addition, Luxor Capital has warrants which are convertible into shares of the Company’s common stock (see Note 12 – Stockholders’ Equity). On each of May 21, 2019, in connection with the Offering,July 15, 2020 and March 9, 2021, the Company entered into a second amendmentamendments to the Credit Agreement with Luxor Capital and a second amendmentamendments to the Convertible Notes Agreement with the Luxor Entities. Additionally, on May 1, 2020, the Company entered into thea Limited Waiver and Conversion Agreement with respect to the Credit Agreement and Convertible Notes Agreement. See Note 7 – Debt for additional details regarding these transactions. Jonathan Green, a board member of the Company, is a partner at Luxor Capital.

During the period from January 1, 2020 through July 31, 2020, the Company reimbursed C Grimstad and Associates, a company owned by our chief executive officer (“CGA”), $247 for certain of its consultants that provided consulting services to the Company

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during this period. As of July 1, 2020, CGA is no longer providing consulting services and CGA did not mark-up or profit from these reimbursement transactions.

15.16.   Subsequent Events

 At-the-Market Offering

During the period from July 1, 2020 through July 10, 2020, the Company sold 7,587,655 shares of common stockOn April 23, 2021, 3,500,000 RSUs were granted (the “Grimstad 2021 RSU Grant”) under the May 2020 ATM Program at an average price of $3.34 per share, for gross proceeds of $25,370. Net proceeds, after deducting sales commissions, totaled $24,990. This marked the completion of the May 2020 ATM Program.

Limited Waiver and Conversion Agreement

In connection with the Waiver and Conversion Agreement (see Note 7 – Debt), the $12,500 payment on the Term Loans, classified as a current liability in the accompanying unaudited condensed consolidated balance sheet at June 30, 2020, was made on July 2, 2020.

Additionally, on July 16, 2020, $141 of Notes were converted into 105,384 shares of the Company’s common stock, representing the final conversion of Notes pursuant2018 Incentive Plan to the Waiver and Conversion Agreement.

Amended Loan Agreements

On July 15, 2020, the Company entered into an amendment to the Credit Agreement and an amendment to the Convertible Notes Agreement (together, the “Amended Loan Agreements”), pursuant to which each of the Loan Agreements was amended to provide that, upon the prepayment of $10,500 of the Term Loans under the Credit Agreement, the interest rate under such Loan Agreements will be reduced by 200 basis points for a one-year period, so that the interest rate under the Credit Agreement will be 5.125% per annum and the interest rate under the Convertible Notes Agreement will be 4.0% per annum during such period, and the maturity date under such Loan Agreements will be extended by one year to November 15, 2023. The $10,500 payment on the Term Loans was made on August 3, 2020.

Issuances of Restricted Stock Units

During the period from July 1, 2020 through August 6, 2020, the Company granted 1,240,000 restricted stock units pursuant to the Amended 2018 Plan,Mr. Grimstad, with an aggregate grant date fair value of approximately $3,267.$8,960, in connection with his employment agreement extension through January 2025. The majorityGrimstad 2021 RSU Grant will vest in three equal installments on the first, second and third anniversaries of January 3, 2022, subject to Mr. Grimstad’s continued employment through the applicable vesting date, and shall fully vest upon the consummation of a change of control, subject to Mr.Grimstad’s continued employment through the closing of such restricted stock units are scheduledchange of control or in the event that Mr. Grimstad terminates his employment for good reason or he is terminated by the Company for reason other than misconduct. Additionally, on April 23, 2021, the Board authorized the payment of a $1,000 discretionary cash bonus to Mr. Grimstad.

On April 23, 2021, 85,000 RSUs were granted (the “Bogdanov 2021 Award”) under the 2018 Incentive Plan to Leo Bogdanov, the Company’s Chief Financial Officer, with an aggregate grant date fair value of $218.  The Bogdanov 2021 Award will vest over a three-year period, with acceleratedin three equal installments on the first, second and third anniversaries of the grant date, subject to Mr. Bogdanov’s continued employment through the applicable vesting date, and will vest in full upon a change of control, subject to Mr. Bogdanov’s continued employment through the closing of such change of control.

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”) and with the audited consolidated financial statements included in the Company’s 20192020 Form 10-K filed with the SEC on March 16, 2020.8, 2021. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are set forth in the section titled “Cautionary Statement Regarding Forward-Looking Statements”. Dollar amounts in this discussion are expressed in thousands, except as otherwise noted.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements, other than statements of historical or current facts, that reflect future plans, estimates, beliefs and expected performance are forward-looking statements. In some cases, you can identify forward-looking statements because they are preceded by, followed by or include words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions. These forward-looking statements are based on information available as of the date of this Form 10-Q and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties, including the following factors, in addition to the factors discussed elsewhere in this Form 10-Q, and the factors discussed in our 2019 Form10-K (Part I, Item 1A, Risk Factors), and in our subsequent quarterly reports (Part II, Item 1A. Risk Factors):

general economic and business risks affecting our industry that are largely beyond our control;

our limited operational history and development risks associated with the development of any new business;

failure to retain existing diners or add new diners or our diners decreasing their number of orders or order sizes on the Platforms;

loss of restaurants on the Platforms, including due to changes in our fee structure;

declines in our delivery service levels or lack of increases in business for restaurants;

inability to maintain and enhance our brands or occurrence of events that damage our reputation and brands, including unfavorable media coverage;

failure of restaurants in our networks to maintain their service levels;

seasonality and the impact of inclement weather;

inability to grow at historical growth rates or achieve profitability;

inability to manage growth and meet demand;

economic downturns or other events (such as the scope, scale and duration of the impact of COVID-19, or similar widespread health/pandemic outbreaks);

prioritization of experience of restaurants and diners over short-term profitability;

slower than anticipated growth in the use of the Internet via websites, mobile devices and other platforms;

changes in our products or to operating systems, hardware, networks or standards that our operations depend on;

potential liability and expenses for legal claims;

dependence of our business on our ability to maintain and scale our technical infrastructure;

personal data, internet security breaches or loss of data provided by our diners, drivers or restaurants on our Platforms;

inability to comply with applicable law or standards if we become a payment processor at some point in the future;

risks related to the credit card and debit card payments we accept;

reliance on third-party vendors to provide products and services;

the highly competitive and fragmented nature of our industry;

substantial competition in technology innovation and distribution and inability to continue to innovate and provide technology desirable to diners and restaurants;

dependence on search engines, display advertising, social media, email, content-based online advertising and other online sources to attract diners to the Platforms;

inability to attract diners and convert them into Active Diners (as defined under Key Business Metrics below) making orders in a cost-effective manner;

loss of senior management or key operating personnel and dependence on skilled personnel to grow and operate our business;

driver shortages and increases in driver compensation;

major hurricanes, tropical cyclones, and other instances of severe weather and other natural phenomena;

increases in food, labor, fuel and other costs;

plans to make acquisitions;

federal, state, and foreign laws and regulations regarding privacy, data protection, and other matters;

failure to protect our intellectual property;

patent lawsuits and other intellectual property rights claims;

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our use of open source software;

insufficient capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances;

unionization of our employees;

failure of our independent contract drivers to meet our contractual obligations or otherwise perform in a manner consistent with our requirements;

determination by regulators or judicial process that our independent contractors are our employees;

requirements of being a public company;

changes to the Fair Labor Standards Act of 1938 and state minimum wage laws raising minimum wages or eliminating tip credit in calculating wages;

risks related to the Bite Squad Merger; and

the impact of the COVID-19 pandemic, including the potential recession or further financial market corrections resulting from the spread of COVID-19.

These risks and uncertainties may be outside of our control. Forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Our actual results could differ materially from those discussed in these forward-looking statements.

Overview

Waitr operates an online food ordering technology platform, providing delivery, carryout and delivery platform,dine-in options, connecting local restaurants, drivers and diners in cities across the United States. Our strategy is to bring delivery, carryout and carryoutdine-in infrastructure to underserved populations of restaurants, grocery stores and diners and establish strong market presence or leadership positions in the markets in which we operate. On January 17, 2019, we completed the acquisition of Bite Squad, an online food ordering and delivery platform with operations similar to those of Waitr. Our business has been built with a restaurant-first philosophy by providing differentiated and brand additive services to the restaurants on the Platforms. Our Platforms allow consumers to browse local restaurants and menus, track order and delivery status, and securely store previous orders for ease of use and convenience. Restaurants benefit from the online Platforms through increased exposure to consumers for expanded business in the delivery market and carryout sales.

On March 11, 2021, we completed the acquisition of Delivery Dudes, a third-party delivery business primarily serving the South Florida market (see “Liquidity and Capital Resources” for additional details). The acquisition strengthens the Company’s market presence in the on-demand delivery service sector. At June 30, 2020,March 31, 2021, we had approximately 18,000over 23,000 restaurants, in over 700800 cities, on the Platforms. Average Daily Orders for the three months ended June 30,March 31, 2021 and 2020 and 2019 were approximately 44,24137,627 and 55,728,37,576, respectively, and revenue was $60,506$50,930 and $51,342, respectively. For the six months ended June 30, 2020 and 2019, Average Daily Orders were 40,909 and 54,269, respectively, and revenue was $104,749 and $99,374,$44,243, respectively.

During the secondWe continued to build on our success from 2020, growing our revenue and generating positive operating cash flow in first quarter of 2020,2021. The acquisition of Delivery Dudes and organic expansion into new markets during the first quarter of 2021 strengthened our market presence in both existing and new markets. In a continued effort to support our restaurants partners, we continued implementing various initiatives,partnered with a focus on improving revenue per order, costs per order, cash flow, profitabilitycertain ordering integration systems, providing improved operational efficiency that benefits restaurants and liquidity. Onecustomers. Additionally, during the first quarter of the major initiatives2021, we successfully completed was switching to an independent contractor model foradded several national brands and delivery drivers. Additionally, we continued to focus efforts on operational improvements through the streamlining of operations, support and sales and marketing functions and offered new and enhanced service offeringsonly “virtual” restaurant concepts to our restaurant partners. The implementation of these initiatives resulted in revenue growth and profitable results for the three and six months ended June 30, 2020.

Sales of our common stock pursuant to at-the-market offerings launched in March and May 2020, along with the implementation of the initiatives discussed above, resulted in increases in our working capital and liquid assets as of June 30, 2020. At the completion of our at-the-market offering programs on July 10, 2020, we had sold a total of 23,698,720 shares of common stock for net proceeds of approximately $47,575. We continue to evaluate additional opportunities toPlatforms, further strengthen our liquidity position, fund growth initiatives and/or combine with other businesses to complement our operating cash flows as we pursue our long-term growth plans.

Management Appointments

On May 22, 2020, the board appointed Leonid (Leo) Bogdanov to the position of Chief Financial Officer. Mr. Bogdanov previously had been serving as Director of Financial Planning & Analysis of the Company. Additional management appointments made during the second quarter of 2020 through the filing of this Form 10-Q included the appointment on May 22, 2020 of Mark D’Ambrosio to the position of Chief Sales Officer and the appointments on July 1, 2020 of Thomas C. Pritchard to the position of General Counsel and David Cronin to the position of Chief Engagement Officer.

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COVID-19 Update

In March 2020, as the COVID-19 pandemic became more widespread in the U.S., we launched several initiatives to help protect and supportbolstering our restaurant partners, diners, driversbase and employees during these unprecedented times, including offering no-contact deliveryexpanding selection for all restaurant delivery orders; offering no-contact grocery delivery in select markets; working with restaurant partners to waive diner delivery fees; deploying free marketing programs for restaurants; and providing masks, gloves and hand sanitizer to drivers. Additionally, in early April 2020, we expanded our delivery areas to further supportdiners.

Impact of COVID-19 on our restaurant partners and diners. We have experienced a significant increase in the number of new independent contractor driver applications, providing us the capacity to satisfy additional delivery and carryout demand from restaurant partners and diners.Business

We have thus far been able to operate effectively during the COVID-19 pandemic. In early March 2020,In response to economic hardships experienced during the COVID-19 pandemic, the U.S. federal government has rolled out stimulus payments in the first quarter of 2021 which we initially experienced declines in order volumes over an approximate three-week period, as restaurant and diner routines were disrupted by state-mandated stay-at-home orders and business closures. In mid-to-late-March, however, we began to experience steady improvements inbelieve had a positive impact on our order volumes. Average Daily OrdersWe continue to implement measures to help protect and support our restaurant partners, diners, independent contractor drivers and our employees during these unprecedented times, including offering no-contact delivery for the second quarter of 2020 exceeded first quarter 2020 volumes by approximately 18%.certain restaurant delivery orders and providing masks, gloves and hand sanitizer to drivers.

The potential short and long-term impacts and duration of the COVID-19 pandemic on the global economy and on the Company’s business, in particular, areremain uncertain and may be difficult to assess or predict.predict at this time. The pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which may reduce the Company’s ability to access capital and continue to operate effectively. The COVID-19 pandemic could also reduce the demand for the Company’s services. In addition, aA prolonged recession or furtheradditional financial market correctioncorrections resulting from the spread of COVID-19, including an increase in the number of COVID-19 cases, could adversely affect demand for the Company’s services. To the extent that the COVID-19 pandemic adversely impacts the Company’s business, results of operations, liquidity or financial condition, it may also have the effect of heightening many of the other risks described in the risk factors in the Company’s 20192020 Form 10-K. Management continues to monitor the impact of the COVID-19 outbreak closely.and the possible effects on its financial position, liquidity, operations, industry and workforce.

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Significant Accounting Policies and Critical Accounting Estimates

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, along with related disclosures. We regularly assess these estimates and record changes to estimates in the period in which they become known. We base our estimates on historical experience and various other assumptions believed to be reasonable under the circumstances. Changes in the economic environment, financial markets, and any other parameters used in determining these estimates could cause actual results to differ from estimates. Significant estimates and judgements relied upon in preparing these condensed consolidated financial statements affect the following items:

 

determination of the nature and timing of satisfaction of revenue-generating performance obligations and the standalone selling price of performance obligations;

variable consideration;

other obligations such as product returns and refunds;

allowance for doubtful accounts and chargebacks;

incurred loss estimates under our insurance policies with large deductibles or retention levels;

 

loss exposure related to claims such as the Medical Contingency (see Part I, Item 1, Note 9 – Correction of Prior Period Error);

income taxes;

 

useful lives of tangible and intangible assets;

 

depreciation and amortization;

equity compensation;

 

contingencies;

 

goodwill and other intangible assets, including the recoverability of intangible assets with finite lives and other long-lived assets;

impairments; and

 

fair value of assets acquired and liabilities assumed as part of a business combination.

Other than the changes disclosed in Part I, Item 1, Note 2Basis of Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements in this Form 10-Q, there have been no material changes to our significant accounting policies and estimates described in the 20192020 Form 10-K.

New Accounting Pronouncements and Pending Accounting Standards

See Part I, Item 1, Note 2Basis of Presentation and Summary of Significant Accounting Policies for a description of accounting standards adopted during the sixthree months ended June 30, 2020.March 31, 2021. Also described in Note 2 are pending standards and their estimated effect on our unaudited condensed consolidated financial statements.

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We currently qualifyThrough year-end 2020, we qualified as an “emerging growth company” pursuant to the provisions of the JOBS Act. For as long asAs an emerging growth company, we are an “emerging growth company,” we maywere able to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,”companies”, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, reduced disclosure obligations relating to the presentation of financial statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and stockholder advisory votes on golden parachute compensation. In addition,Act. Effective January 1, 2021, we are no longer an emerging growth company can delay its adoptioncompany. Accordingly, for fiscal year 2021, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of certain accounting standards until those standards would otherwise apply to private companies. Although we have the ability to “opt out” of this extended transition period, we are choosing not to do so. Section 107 of the JOBS Act provides that a decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.our internal controls over financial reporting.

Factors Affecting the Comparability of Our Results of Operations

Bite Squad Merger.Delivery Dudes Acquisition.   The Bite Squad MergerDelivery Dudes Acquisition was considered a business combination in accordance with ASC 805, and has been accounted for using the acquisition method. Under the acquisition method of accounting, total mergerpurchase consideration, acquired assets and assumed liabilities are recorded based on their estimated fair values on the acquisition date. The excess of the fair value of mergerpurchase consideration over the fair value of the assets less liabilities acquired has been recorded as goodwill.goodwill on our unaudited condensed consolidated balance sheet as of March 31, 2021. The results of operations of Bite SquadDelivery Dudes are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, January 17, 2019.March 11, 2021.

In connection with the Bite Squad Merger,Delivery Dudes Acquisition, we incurred direct and incremental costs during the sixthree months ended June 30, 2019March 31, 2021 of approximately $6,956,$606, consisting of legal and professional fees, which are included in general and administrative expenses in the unaudited condensed consolidated statement of operations in such period. During the six months ended June 30, 2020, we have eliminated certain duplicative costs and achieved synergies associated with the Bite Squad Merger, however, we may not continue to achieve this result at levels anticipated, resulting in higher general and administrative expenses in future periods.

Changes in Fee Structure.   Since 2017, ourOur fee structure evolved gradually from a per transaction fee plus a percentage of the food sale amount to one based exclusively on a percentage of the food sale amount. In early 2018, we also established a multi-tier fee structure, allowing restaurants to elect to pay a higher fee rate in lieu of paying a one-time set-up and integration fee. Additionally, we initiated modifications tohas changed at various times since our fee structure in July 2019 with a majority of restaurants on the Waitr Platform, which became effective in August 2019, and in January 2020, with the majority of our remaining restaurants, which became effective throughout February 2020.inception. We continue to review and update our current rate structure, as necessary, as we look to offer new and enhanced value-adding services to our restaurant partners. Any changes to our fee structure could affect the comparability of our results of operations from period to period.

Seasonality and Holidays.   Our business tends to follow restaurant closure and diner behavior patterns. In many of our markets, we generally experience a relative increasehave historically experienced variations in order frequency from September to March and a relative decrease in diner activity from April to August primarily as a result of weather patterns, university summer breaks and other vacation periods. In addition, a significant number of restaurants tend to close on certain major holidays, including Thanksgiving, Christmas Eve and Christmas Eve-Day, in our key markets.Day. Further, diner activity may be impacted by unusually cold, rainy, or warm weather. Cold weather and rain typically drive increases in order volume, while unusually warm or sunny weather typically drives decreases in orders. Furthermore, snowstorms, ice storms, hurricanes and tropical storms have adverse effects on order volume. Consequently,volume, particularly if they cause

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property damage or utility interruptions to our results between quarters, or between periods may vary as a result of prolonged periods of unusually cold, warm, inclement, or otherwise unexpected weatherrestaurant partners. The COVID-19 pandemic has had an impact on our typical seasonality trends and the timing of certain holidays.could impact future periods.

Acquisition Pipeline.   We activelycontinue to maintain and evaluate aan active pipeline of potential acquisitionsacquisition targets and may be acquisitivepursue acquisitions in the future. Potentially significant futureThese potential business acquisitions may impact the comparability of our results in future periods with those forrelative to prior periods.

Key Factors Affecting Our Performance

Efficient Market Expansion and Penetration.   Our continued revenueRevenue growth and path toany corresponding improved cash flow and profitability is dependent on successful restaurant, diner and driver penetration of our markets and achieving our targeted scale in current and future markets. Delay or failureFailure in achieving positive market-level operating margins (exclusive of indirect and corporate overhead costs)this scale could adversely affect our working capital, which in turn, could slow our growth plans.

We typically target markets that we estimatebelieve could achieve sustainable positive market-level operating margins that support market operating cash flows and profits, improve efficiency, and appropriately leverage the scale of our advertising, marketing, research and development, and other corporate resources. Our financial condition, cash flows, and results of operations depend, in significant part, on our ability to achieve and sustain our target profitability thresholds in our markets.

Waitr’s Restaurant, Diner and DinerDriver Network.   A significant part of our growthstrategy is our ability to successfully expand our network of restaurants, diners and dinersdrivers using the Platforms. If we fail to retain existing restaurants and diners using the Platforms, or to add new restaurants, diners and diners to the Platforms,drivers, our revenue and overall financial results and business may be adversely affected.

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Key Business Metrics

Defined below are the key business metrics that we use to analyze our business performance, determine financial forecasts, and help develop long-term strategic plans:

Active Diners.   We count Active Diners as the number of diner accounts from which an order has been placed through the Platforms during the past twelve months (as of the end of the relevant period) and consider Active Diners an important metric because the number of diners using our Platforms is a key revenue driver and a valuable measure of the size of our engaged diner base.

Average Daily Orders.  We calculate Average Daily Orders as the number of orders during the period divided by the number of days in that period.period, including holidays. Average Daily Orders is an important metric for us because the number of orders processed on our Platforms is a key revenue driver and, in conjunction with the number of Active Diners, a valuable measure of diner activity on our Platforms for a given period.

Gross Food Sales.   We calculate Gross Food Sales as the total food and beverage sales, sales taxes, prepaid gratuities, and diner fees processed through the Platforms during a given period. Gross Food Sales are different than the order value upon which we charge our fee to restaurants, which excludes sales taxes, gratuities and diner fees. Prepaid gratuities, which are not included in our revenue, are determined by diners and may differvary from order to order. Gratuities other than prepaid gratuities, such as cash tips, are not included in Gross Food Sales. Gross Food Sales is an important metric for us because the total volume of food sales transacted through our Platforms is a key revenue driver.

Average Order Size.  We calculate Average Order Size as Gross Food Sales for a given period divided by the number of orders during the same period. Average Order Size is an important metric for us because the average value of gross food sales on our Platforms is a key revenue driver.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

Three Months Ended March 31,

 

Key Business Metrics (1)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Key Business Metrics(1)

 

2021

 

 

2020

 

Active Diners (as of period end)

 

 

2,109,353

 

 

 

2,362,290

 

 

 

2,109,353

 

 

 

2,362,290

 

 

 

1,966,815

 

 

 

2,186,640

 

Average Daily Orders

 

 

44,241

 

 

 

55,728

 

 

 

40,909

 

 

 

54,269

 

 

 

37,627

 

 

 

37,576

 

Gross Food Sales (dollars in thousands)

 

$

175,044

 

 

$

183,042

 

 

$

308,557

 

 

$

353,445

 

 

$

150,281

 

 

$

133,513

 

Average Order Size (in dollars)

 

$

43.48

 

 

$

36.09

 

 

$

41.44

 

 

$

35.98

 

 

$

44.38

 

 

$

39.05

 

 

(1)

The key business metrics include the operations of Bite SquadDelivery Dudes beginning on the acquisition date, January 17, 2019.March 11, 2021.

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Basis of Presentation

Revenue

We generate revenue primarily when diners place an order on one of the Platforms. We recognize revenue from diner orders when orders are delivered. Our revenue consists primarily of transaction fees, comprised of fees received from restaurants (determined as a percentage of the total food sales, net of any diner promotions or refunds to diners) and diner fees. During a portion of the periods presented in this Form 10-Q, we also generated revenue from setup and integration fees collected from certain restaurants to onboard them onto the Platforms (these are recognized on a straight-line basis over the anticipated period of benefit) and subscription fees from restaurants that opt to pay a monthly fee in lieu of a lump sum setup and integration fee. Additionally, we sell gift cards and recognize revenue upon gift card redemption. Revenue also includes fees for restaurant marketing and data services.Transaction Fees.

Cost and Expenses:

Operations and Support.   Operations and support expense consists primarily of salaries, benefits, stock-based compensation, and bonuses for employees and contractors engaged in operations and customer service, including drivers, as well as city/market managers, restaurant onboarding, photography, and driver logistics personnel, and payments to independent contractor drivers for delivery services. Operations and support expense also includes payment processing costs incurred on customer orders and the cost of software and related services providing support for customer orders.diners, restaurants and drivers.

Sales and Marketing.  Sales and marketing expense consists primarily of salaries, commissions, benefits, stock-based compensation and bonuses for personnel supporting sales and sales support personnel,marketing efforts, including restaurant business development managers, marketing employees and contractors, and third-party marketing expenses such as social media and search engine marketing, online display, team sponsorships (the costs of which are recognized on a straight line basis over the useful period of the contract) and print marketing.

Research and Development.  Research and development expense consists primarily of salaries, benefits, stock-based compensation and bonuses for employees and contractors engaged in the design, development, maintenance and testing of the Platforms. This expense also includes such items as software subscriptions that are necessary for the upkeep and maintenance of the Platforms.

General and Administrative.  General and administrative expense consists primarily of salaries, benefits, stock-based compensation and bonuses for executive, finance and accounting, human resources and other administrative employees as well as third-party legal,

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accounting, and other professional services, insurance (including workers’ compensation, auto liability and general liability), travel, facilities rent, and other corporate overhead costs.

Depreciation and Amortization.  Depreciation and amortization expense consists primarily of amortization of capitalized costs for software development, trademarks and customer relationships and depreciation of leasehold improvements, furniture, and equipment, primarily tablets deployed in restaurants. We do not allocate depreciation and amortization expense to other line items.

Intangible and Other Asset Impairments.   Intangible and other asset impairments include write-downs of intangible assets and minor impairments related to the replacement of internally developed software code.

Other Expenses (Income) and Losses (Gains), Net.  Other expenses (income) and losses (gains), net, primarily includes interest expense on outstanding debt, and interest income on cash and money market deposits.as well as any other items not considered to be incurred in the normal operations of the business.

Results of Operations

The following table sets forth our results of operations for the periods indicated, with line items presented in thousands of dollars and as a percentage of our revenue:

 

 

Three Months Ended March 31,

 

(in thousands, except percentages(1))

 

2021

 

 

% of

Revenue

 

 

2020

 

 

% of

Revenue

 

Revenue

 

$

50,930

 

 

 

100

%

 

$

44,243

 

 

 

100

%

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

 

30,338

 

 

 

60

%

 

 

26,365

 

 

 

60

%

Sales and marketing

 

 

4,016

 

 

 

8

%

 

 

2,826

 

 

 

6

%

Research and development

 

 

999

 

 

 

2

%

 

 

1,470

 

 

 

3

%

General and administrative

 

 

10,186

 

 

 

20

%

 

 

10,778

 

 

 

24

%

Depreciation and amortization

 

 

2,917

 

 

 

6

%

 

 

2,064

 

 

 

5

%

(Gain) loss on disposal of assets

 

 

(3

)

 

 

0

%

 

 

8

 

 

 

0

%

Total costs and expenses

 

 

48,453

 

 

 

95

%

 

 

43,511

 

 

 

98

%

Income from operations

 

 

2,477

 

 

 

5

%

 

 

732

 

 

 

2

%

Other expenses (income) and losses (gains), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

1,901

 

 

 

4

%

 

 

2,914

 

 

 

7

%

Interest income

 

 

 

 

 

0

%

 

 

(60

)

 

 

0

%

Other expense

 

 

4,264

 

 

 

8

%

 

 

(37

)

 

 

0

%

Net loss before income taxes

 

 

(3,688

)

 

 

(7

%)

 

 

(2,085

)

 

 

(5

%)

Income tax expense

 

 

24

 

 

 

0

%

 

 

17

 

 

 

0

%

Net loss

 

$

(3,712

)

 

 

(7

%)

 

$

(2,102

)

 

 

(5

%)

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Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands, except percentages (1))

 

2020

 

 

% of

Revenue

 

 

2019

 

 

% of

Revenue

 

 

2020

 

 

% of

Revenue

 

 

2019

 

 

% of

Revenue

 

Revenue

 

$

60,506

 

 

 

100

%

 

$

51,342

 

 

 

100

%

 

$

104,749

 

 

 

100

%

 

$

99,374

 

 

 

100

%

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

 

30,547

 

 

 

50

%

 

 

39,698

 

 

 

77

%

 

 

56,912

 

 

 

54

%

 

 

75,881

 

 

 

76

%

Sales and marketing

 

 

2,740

 

 

 

5

%

 

 

15,339

 

 

 

30

%

 

 

5,566

 

 

 

5

%

 

 

25,662

 

 

 

26

%

Research and development

 

 

1,167

 

 

 

2

%

 

 

2,149

 

 

 

4

%

 

 

2,637

 

 

 

3

%

 

 

4,089

 

 

 

4

%

General and administrative

 

 

10,094

 

 

 

17

%

 

 

12,380

 

 

 

24

%

 

 

20,872

 

 

 

20

%

 

 

31,298

 

 

 

31

%

Depreciation and amortization

 

 

2,075

 

 

 

3

%

 

 

4,824

 

 

 

9

%

 

 

4,139

 

 

 

4

%

 

 

8,940

 

 

 

9

%

Intangible and other asset impairments

 

 

29

 

 

 

0

%

 

 

 

 

 

0

%

 

 

29

 

 

 

0

%

 

 

18

 

 

 

0

%

Loss on disposal of assets

 

 

3

 

 

 

0

%

 

 

10

 

 

 

0

%

 

 

11

 

 

 

0

%

 

 

15

 

 

 

0

%

Total costs and expenses

 

 

46,655

 

 

 

77

%

 

 

74,400

 

 

 

145

%

 

 

90,166

 

 

 

86

%

 

 

145,903

 

 

 

147

%

Income (loss) from operations

 

 

13,851

 

 

 

23

%

 

 

(23,058

)

 

 

(45

%)

 

 

14,583

 

 

 

14

%

 

 

(46,529

)

 

 

(47

%)

Other expenses (income) and losses (gains), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,490

 

 

 

4

%

 

 

2,190

 

 

 

4

%

 

 

5,404

 

 

 

5

%

 

 

3,795

 

 

 

4

%

Interest income

 

 

(21

)

 

 

0

%

 

 

(241

)

 

 

0

%

 

 

(81

)

 

 

0

%

 

 

(580

)

 

 

(1

%)

Other expense (income)

 

 

712

 

 

 

1

%

 

 

(123

)

 

 

0

%

 

 

675

 

 

 

1

%

 

 

(173

)

 

 

0

%

Net income (loss) before income taxes

 

 

10,670

 

 

 

18

%

 

 

(24,884

)

 

 

(48

%)

 

 

8,585

 

 

 

8

%

 

 

(49,571

)

 

 

(50

%)

Income tax expense (benefit)

 

 

17

 

 

 

0

%

 

 

(32

)

 

 

0

%

 

 

34

 

 

 

0

%

 

 

30

 

 

 

0

%

Net income (loss)

 

$

10,653

 

 

 

18

%

 

$

(24,852

)

 

 

(48

%)

 

$

8,551

 

 

 

8

%

 

$

(49,601

)

 

 

(50

%)

 

________________

 

(1)

Percentages may not foot due to roundingrounding.

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

Revenue

Revenue increased by $9,164, or 18%, to $60,506 inThe following section includes a discussion of our results of operations for the three months ended June 30, 2020 from $51,342March 31, 2021 and 2020. The results of operations of Delivery Dudes are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, March 11, 2021 (see Part I, Item 1, Note 3 – Business Combinations).

Revenue

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Revenue

 

$

50,930

 

 

$

44,243

 

 

 

15

%

Revenue increased for the three months ended June 30, 2019,March 31, 2021 compared to March 31, 2020, primarily as a result of improved revenue per order.

unit economics. The Average Order Size increased to $44.38 from $39.05, an improvement of 14%, while Average Daily Orders and Gross Food Sales decreasedremained relatively flat in the three months ended June 30,March 31, 2021 compared to March 31, 2020. Average Daily Orders were positively impacted during the three months ended March 31, 2021 by the rollout of federal stimulus payments, partially offset by the impact of extreme weather-related events.

Operations and Support

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Operations and support

 

$

30,338

 

 

$

26,365

 

 

 

15

%

As a percentage of revenue

 

 

60

%

 

 

60

%

 

 

 

 

Operations and support expenses increased in dollar terms for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to 44,241 and $175,044, respectively, from 55,728 and $183,042, respectively,the Company serving more markets in the three months ended June 30, 2019. Average Order Size increased inMarch 31, 2021 compared to the three months ended June 30,March 31, 2020, to $43.48 from $36.09 in the three months ended June 30, 2019, an uplift of 20%.

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TABLE_CONTENTS

Operations and Support

Operationsincluding costs for operations and support expense decreased by $9,151, or 23%,personnel and software related to $30,547 in the three months ended June 30, 2020 from $39,698 in the three months ended June 30, 2019.supporting those markets. As a percentage of revenue, operations and support expenses remained flat for the three months ended March 31, 2021 compared to March 31, 2020.  

Sales and Marketing

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Sales and marketing

 

$

4,016

 

 

$

2,826

 

 

 

42

%

As a percentage of revenue

 

 

8

%

 

 

6

%

 

 

 

 

Sales and marketing expense decreased to 50%increased in dollar terms and as a percentage of revenue in the three months ended June 30,March 31, 2021 compared to March 31, 2020, from 77% in the same period in 2019. The decreases are primarily the result of the implementation of initiativesattributable to realize synergies from the Bite Squad Merger, including staff reductionsincreased digital advertising.

Research and the consolidation of operationsDevelopment

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Research and development

 

$

999

 

 

$

1,470

 

 

 

(32

%)

As a percentage of revenue

 

 

2

%

 

 

3

%

 

 

 

 

Research and support functions.

Sales and Marketing

Sales and marketingdevelopment expense decreased by $12,599, or 82%, to $2,740in dollar terms and as a percentage of revenue in the three months ended June 30,March 31, 2021 compared to March 31, 2020, from $15,339 in the three months ended June 30, 2019, primarily as a result of decreased advertising spend of approximately $8,699. As a percentage of revenue, sales and marketing expense decreased to 5% in the three months ended June 30, 2020 from 30% in the three months ended June 30, 2019, reflecting the lower advertising spend in the second quarter of 2020.

Research and Development

Research and development expense decreased by $982, or 46%, to $1,167 in the three months ended June 30, 2020 from $2,149 in the three months ended June 30, 2019, primarily due to the capitalization of increased software development activitiescosts during the secondfirst quarter of 2020,2021 as further features and functionality were incorporated into the costs for which were capitalized. As a percentage of revenue, research and development expense was 2% and 4%, respectively, in the three months ended June 30, 2020 and 2019.Platforms.

General and Administrative

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

General and administrative

 

$

10,186

 

 

$

10,778

 

 

 

(5

%)

As a percentage of revenue

 

 

20

%

 

 

24

%

 

 

 

 

25


TABLE_CONTENTS

General and administrative expense decreased by $2,286, or 18%, to $10,094in dollar terms and as a percentage of revenue in the three months ended June 30,March 31, 2021 compared to March 31, 2020, from $12,380primarily as a result of a decrease in workers’ compensation insurance expenses, partially offset by increased stock-based compensation expense and $606 of business combination-related professional and other costs associated with the Delivery Dudes Acquisition.

Depreciation and Amortization

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Depreciation and amortization

 

$

2,917

 

 

$

2,064

 

 

 

41

%

As a percentage of revenue

 

 

6

%

 

 

5

%

 

 

 

 

Depreciation and amortization expense increased in dollar terms and as a percentage of revenue in the three months ended June 30, 2019, primarily due to decreased stock-based compensation expenses. As a percentage of revenue, general and administrative expense decreased to 17% in the three months ended June 30, 2020March 31, 2021 compared to 24%March 31, 2020, driven by an increase in depreciation expense related to computer tablets for restaurants on the three months ended June 30, 2019, primarily due to decreased stock-based compensation expenses as well as corporate synergies associated with the Bite Squad Merger.

Depreciation and Amortization

DepreciationPlatforms and amortization expense decreased by $2,749, or 57%, to $2,075on intangible assets acquired in the three months ended June 30, 2020 compared to $4,824 in the three months ended June 30, 2019, primarily as a result of the write-down of the carrying value of intangible assets to their implied fair values in September 2019 in connection with the Company’s goodwill impairment analysis. As a percentage of revenue, depreciation and amortization expense decreased to 3% in the three months ended June 30, 2020 from 9% in the three months ended June 30, 2019.Delivery Dudes Acquisition.

Other Expenses (Income) and Losses (Gains), Net

 

 

Three Months Ended March 31,

 

 

Percentage

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

(dollars in thousands)

 

 

 

 

 

Other expenses (income) and losses (gains), net

 

$

6,165

 

 

$

2,817

 

 

 

119

%

As a percentage of revenue

 

 

12

%

 

 

6

%

 

 

 

 

Other expenses (income) and losses (gains), net totaled $3,181 infor the three months ended June 30, 2020,March 31, 2021 primarily reflecting $2,465consisted of a $4,000 accrual for a legal contingency and $1,860 of interest expense associated with the Term LoansLoan and Notes, $712 ofNotes. For the three months ended March 31, 2020, other expense and $21 of interest income. Other expenses (income) and losses (gains), net totaled $1,826 in the three months ended June 30, 2019, primarily reflecting $2,188consisted of $2,860 of interest expense associated with the Term LoansLoan and Notes and $241 of interest income.Notes.

Income Tax Expense

Income tax expense (benefit) was $17 and $(32) infor the three months ended June 30,March 31, 2021 and 2020 was $24 and 2019,$17, respectively, entirely related to state taxes required on gross margins in Texas.various jurisdictions. We have historically generated net operating losses; therefore, a valuation allowance has been recorded on our net deferred tax assets.

Net Income (Loss)

Net income for the three months ended June 30, 2020 was $10,653 compared to a net loss for the three months ended June 30, 2019 of $24,852. See the revenue and expense variance analyses above for the components of net income and net loss for the respective periods.

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TABLE_CONTENTS

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Revenue

Revenue increased by $5,375, or 5%, to $104,749 in the six months ended June 30, 2020 from $99,374 in the six months ended June 30, 2019, as a result of improved revenue per order. The results of operations of Bite Squad are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, January 17, 2019 (see Part I, Item 1, Note 3 – Business Combinations).

Average Daily Orders and Gross Food Sales decreased in the six months ended June 30, 2020 to 40,909 and $308,557, respectively, from 54,269 and $353,445, respectively, in the six months ended June 30, 2019. Average Order Size increased in the six months ended June 30, 2020 to $41.44 from $35.98 in the six months ended June 30, 2019, an uplift of 15%.

Operations and Support

Operations and support expense decreased by $18,969, or 25%, to $56,912 in the six months ended June 30, 2020 from $75,881 in the six months ended June 30, 2019. As a percentage of revenue, operations and support expense decreased to 54% in the six months ended June 30, 2020 from 76% in the same period of 2019. The decreases are primarily the result of the implementation of initiatives to realize synergies from the Bite Squad Merger, including staff reductions and the consolidation of operations and support functions, as well as the closures of approximately 60 unprofitable, non-core markets in December 2019 and January 2020.

Sales and Marketing

Sales and marketing expense decreased by $20,096, or 78%, to $5,566 in the six months ended June 30, 2020 from $25,662 in the six months ended June 30, 2019, primarily as a result of decreased advertising spend of approximately $13,458 as well as staff reductions and the consolidation of sales and marketing functions in the second half of 2019 and early 2020. As a percentage of revenue, sales and marketing expense decreased to 5% in the six months ended June 30, 2020 from 26% in the six months ended June 30, 2019, reflecting the lower advertising spend in the first half of 2020.

Research and Development

Research and development expense decreased by $1,452, or 36%, to $2,637 in the six months ended June 30, 2020 from $4,089 in the six months ended June 30, 2019, primarily due to increased software development activities during the first half of 2020, the costs for which were capitalized. As a percentage of revenue, research and development expense was 3% for the six months ended June 30, 2020 and 4% for the six months ended June 30, 2019.

General and Administrative

General and administrative expense decreased by $10,426, or 33%, to $20,872 in the six months ended June 30, 2020 from $31,298 in the six months ended June 30, 2019. General and administrative expense in the six months ended June 30, 2019 included $6,956 of business combination-related professional and other costs associated with the Bite Squad Merger. The decrease in general and administrative expenses during the six months ended June 30, 2020 was also due to decreased stock-based compensation expenses. As a percentage of revenue, general and administrative expense decreased to 20% in the six months ended June 30, 2020 compared to 31% in the six months ended June 30, 2019, primarily due to the above mentioned business combination expenses in the first half of 2019 as well as corporate synergies associated with the Bite Squad Merger.

Depreciation and Amortization

Depreciation and amortization expense decreased by $4,801, or 54%, to $4,139 in the six months ended June 30, 2020 compared to $8,940 in the six months ended June 30, 2019, primarily as a result of the write-down of the carrying value of intangible assets to their implied fair values in September 2019 in connection with the Company’s goodwill impairment analysis. As a percentage of revenue, depreciation and amortization expense decreased to 4% in the six months ended June 30, 2020 from 9% in the six months ended June 30, 2019.

Other Expenses (Income) and Losses (Gains), Net

Other expenses (income) and losses (gains), net totaled $5,998 in the six months ended June 30, 2020, primarily reflecting $5,325 of interest expense associated with the Term Loans and Notes and $81 of interest income. Other expenses (income) and losses (gains), net, totaled $3,042 in the six months ended June 30, 2019, reflecting $3,782 of interest expense associated with the Term Loans and Notes and $580 of interest income.

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TABLE_CONTENTS

Income Tax Expense

Income tax expense was $34 and $30 in the six months ended June 30, 2020 and 2019, respectively, entirely related to taxes required on gross margins in Texas. We have historically generated net operating losses; therefore, a valuation allowance has been recorded on our net deferred tax assets.

Net Income (Loss)

Net income for the six months ended June 30, 2020 was $8,551 compared to a net loss of $49,601 in the six months ended June 30, 2019. See the revenue and expense variance analyses above for the components of net income and net loss for the respective periods.

Liquidity and Capital Resources

Overview

As of June 30, 2020,March 31, 2021, we had cash on hand of approximately $66,702, consisting primarily of cash and money market deposits, and approximately $3,191 of our cash balance was reserved under a compensating balance arrangement with our bank, pertaining to an outstanding letter of credit.$67,863. Our primary sources of liquidity to date have recently been cash flow from operations and proceeds from the issuance of stock, long-term convertible debt, term loans andstock.

In March 2021, the cash assumed in connection with the business combination with Landcadia Holdings, Inc. in November 2018. We had total outstanding long-term debt of $109,506 as of June 30, 2020, consisting of $59,573 of Term Loans, $49,645 of Notes and $288 of promissory notes. Short-term debt as of June 30, 2020 included the current portion of the Term Loans of $12,500 and $2,094 of short-term loans for insurance financing.

During the second quarter of 2020, we continued implementing various initiatives, with a focus on improving revenue per order, costs per order, cash flow, profitability and liquidity. Additionally, on May 1, 2020, weCompany entered into an amendment and restatement of the open market sale agreement associated with our original ATM Program, pursuant to which the Company could offer and sell shares of our common stock having an aggregate offering price of $30,000 (see Part I, Item 1, Note 12 – Stockholders’ Equity). Upon entering into the May 2020 ATM Program, we terminated the prior ATM Program.

We sold a total of 11,918,322 shares of our common stock pursuant to the original ATM Program and May 2020 ATM Program during the second quarter of 2020 for net proceeds of approximately $16,114. In July 2020, we sold an additional 7,587,655 shares of common stock pursuant to the May 2020 ATM Program for net proceeds of approximately $24,990, resulting in the completion of the May 2020 ATM Program. As discussed below, we used a portion of the proceeds from the at-the-market offering programs to repay debt and intend to use the remaining proceeds for working capital and general corporate purposes, and to further enhance our ability to resume execution of our operational and growth initiatives.

We made payments on the Term Loans of $12,500 on July 2, 2020 pursuant to the Waiver and Conversion Agreement and $10,500 on August 3, 2020 pursuant to an amendmentamendments to the Credit Agreement. AtAgreement and Convertible Notes Agreement to provide, among other things, for the timeDelivery Dudes Acquisition being included in the definition of Permitted Acquisition and for other acquisitions consummated after March 9, 2021 and on or prior to December 31, 2021, with aggregate purchase price consideration not to exceed $20,000, being included in the definition of Permitted Acquisitions. Total consideration for the Delivery Dudes Acquisition included $11,500 in cash, subject to certain purchase price adjustments, and 3,562,577 shares of the payment in connection withCompany’s common stock. Additionally, pursuant to the amendment to the Credit Agreement, the interest rates underCompany made a $15,000 prepayment on the Term Loans and Notes were reduced by 200 basis pointsLoan on March 16, 2021.

The aggregate principal amount of outstanding long-term debt totaled $84,511 as of March 31, 2021, consisting of $35,007 for a one-year period, and the maturity dates of the Term LoansLoan and Notes were extended by one year. See “Indebtedness” below$49,504 of Notes. As of March 31, 2021, the Company had $1,143 of outstanding short-term loans for additional details of the Waiver and Conversion Agreement, Term Loans, Notes and promissory notes.insurance financing.

We currently expect that our cash on hand and estimated cash flow from operations will be sufficient to meet our working capital needs beyondfor at least the next twelve months,months; however, there can be no assurance that we will generate cash flow at the levels we anticipate. We expect to continue to utilize proceeds from our at-the-market offering programs to support our ongoing working capital requirements. We may also use a portion of the net proceedscash on hand to repay additional debt or to acquire or invest in complementary businesses, products and technologies that are complementary to our own, although we have no current commitments or agreements with respect to any acquisitions as of the date of this filing.technologies. We continually evaluate additional opportunities to strengthen our liquidity position, fund growth initiatives and/or combine with other businesses by issuing equity or equity-linked securities (in public or private offerings) and/or incurring additional debt. However, market conditions, our future financial performance or other factors may make it difficult or impossible for us to access sources of capital, on favorable terms or at all, should we determine in the future to raise additional funds.

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TABLE_CONTENTS

We are continuously reviewing our liquidity and anticipated working capital needs, particularly in light of the uncertainty created by the COVID-19 pandemic. Thus far, Waitr haswe have been able to operate effectively during the pandemic, however, the potential impacts and duration of the COVID-19 pandemic on the economy and on Waitr’sour business, in particular, may be difficult to assess or predict.

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TABLE_CONTENTS

Indebtedness

Limited Waiver and Conversion Agreement

On May 1, 2020, we, Waitr Inc., Intermediate Holdings, the lenders party thereto and Luxor Capital entered into the Waiver and Conversion Agreement, pursuant to which the lenders under the Credit Agreement agreed to waive the requirement to prepay the Term Loans arising as a result of the May 2020 ATM Offering. In consideration of the prepayment waiver, we agreed that, regardless of whether any shares of our common stock were actually sold in the May 2020 ATM Offering, (i) we would prepay a portion of the Term Loans in the amount of $12,500 on the date that is 60 days after the Effective Date (as defined in the Waiver and Conversion Agreement) and (ii) the lenders under the Notes would be permitted to convert a portion of the outstanding principal amount of the Notes in the amount of $12,500 into shares of our common stock at a conversion rate of 746.269 shares of common stock per one thousand principal amount of the Notes (calculated based on the closing price of $1.34 per share of the Company’s common stock on Nasdaq on April 30, 2020, the date immediately preceding the date of the Waiver and Conversion Agreement), notwithstanding the conversion rate then in effect pursuant to the terms of the Notes. The converted shares will be subject to a customary lock-up for a period of 45 days.

The Company evaluated the amendments in the Waiver and Conversion Agreement and concluded that the amendments did not meet the characteristics of debt extinguishments under ASC 470-50. Accordingly, the amendments were treated as a debt modification, and thus, no gain or loss was recorded. See Term Loans under the Debt Facility and Notes below for a discussion of the prepayment made on the Term Loans and the conversion of Notes.

Term Loans under the Debt Facility

On November 15, 2018, Waitr Inc. entered into the Credit Agreement, which provides for a senior secured first priority term loan in the aggregate principal amount of $67,080. The quarterly interest payments due since September 30, 2019 have been paid-in-kind, resulting in an aggregate principal amount of outstanding Term Loans at June 30, 2020 of $72,073. On July 2, 2020, the Company repaid $12,500 of the Term Loans pursuant to the Waiver and Conversion Agreement. Pursuant to the amendment of the Credit Agreement on July 15, 2020, the Company repaid $10,500 of the Term Loans on August 3, 2020. On such date, the interest rate under the Credit Agreement was reduced by 200 basis points to 5.125% for a one-year period and the maturity date was extended by one year to November 15, 2023. The aggregate principal amount of outstanding Term Loans totaled $49,073 at August 6, 2020. For additional details, see Part I, Item 1, Note 7 – Debt and Note 15 – Subsequent Events, to our unaudited condensed consolidated financial statements in this Form 10-Q. We believe that we were in compliance with all covenants under the Credit Agreement as of June 30, 2020.

Notes

On November 15, 2018, the Company entered into the Convertible Notes Agreement, pursuant to which the Company issued unsecured convertible promissory notes in the aggregate principal amount of $60,000. A portion of the quarterly interest payments due since June 30, 2019 have been paid in-kind and added to the aggregate principal amount of the Notes. During the second quarter of 2020, $12,359 of the Notes were converted into 9,222,978 shares of the Company’s common stock pursuant to the Waiver and Conversion Agreement. The outstanding aggregate principal amount of the Notes at June 30, 2020 totaled $49,645.

On July 16, 2020, $141 of the Notes were converted into 105,384 shares of the Company’s common stock. Additionally, on August 3, 2020, in connection with the $10,500 Term Loan payment discussed above, the interest rate under the Convertible Notes Agreement was reduced by 200 basis points to 4.0% for a one-year period and the maturity date was extended by one year to November 15, 2023. The outstanding aggregate principal amount of the Notes totaled $49,504 at August 6, 2020. For additional details on the Notes, see Part I, Item 1, Note 7 – Debt and Note 15 – Subsequent Events, to our unaudited condensed consolidated financial statements in this Form 10-Q. We believe that we were in compliance with all covenants under the Convertible Notes Agreement as of June 30, 2020.

Promissory Notes

On September 27, 2019, the Company entered into an interest-free promissory note to fund a portion of an acquisition. The principal amount of the promissory note was initially $500, payable in 24 monthly installments, with payments expected to begin shortly after integration of the acquired assets onto the Company’s platform. The Company recorded the promissory note at its fair value of $452 and will impute interest over the life of the note using an interest rate of 10%, representing the estimated effective interest rate at which the Company could obtain financing. On February 13, 2020, the Company entered into an amendment to the asset purchase agreement, whereby the promissory note was amended to $600, payable in 30 monthly installments, commencing on March 1, 2020. The current portion of the promissory note of $186 is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2020.

On October 1, 2019, the Company entered into an interest-free promissory note to fund a portion of an additional acquisition. The principal amount of the promissory note is $100, payable in 24 monthly installments. Payments commenced on January 15, 2020. The

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TABLE_CONTENTS

Company recorded the promissory note at its fair value of $90 and will impute interest over the life of the note using an interest rate of 10%, representing the estimated effective interest rate at which the Company could obtain financing. The current portion of the promissory note of $45 is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2020.

Short-Term Loans

On May 16, 2020, the Company entered into a loan agreement with First Insurance Funding to finance a portion of its annual insurance premium obligation. The principal amount of the loan is $362, payable in ten monthly installments until maturity on February 28, 2021. The loan carries an annual interest rate of 3.49% and had an outstanding principal balance at June 30, 2020 of $291.

On November 15, 2019, the Company entered into a loan agreement with BankDirect Capital Finance to finance a portion of its annual directors and officers insurance premium obligation. The principal amount of the loan is $1,993, payable in monthly installments, until maturity. The loan matures on August 15, 2020 and carries an annual interest rate of 4.15%. As of June 30, 2020, $449 was outstanding under such loan.

On June 1, 2020, the Company entered into a loan agreement with IPFS Corporation to finance a portion of its annual general liability insurance premium obligation. The principal amount of the loan is $1,354, payable in monthly installments beginning July 1, 2020, until maturity. The loan matures on May 31, 2021 and carries an annual interest rate of 3.99%.

Capital Expenditures

Our main capital expenditures relate to the purchase of tablets for restaurants on the Platforms and investments in the development of the Platforms, which are expected to increase as we continue to grow our business. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” in our 20192020 Form 10-K, as such factors may be updated in our quarterly reports on Form 10-Q. If we are unable to obtain needed additional funds, we will have to reduce our operating costs, which would impair our growth prospects and could otherwise negatively impact our business.10-K.

Cash Flow

The following table sets forth our summary cash flow information for the periods indicated:

 

 

Six Months Ended June 30,

 

 

Three Months Ended March 31,

 

(in thousands)

 

2020

 

 

2019

 

 

2021

 

 

2020

 

Net cash provided by (used in) operating activities

 

$

18,961

 

 

$

(34,351

)

Net cash provided by operating activities

 

$

12,809

 

 

$

7,027

 

Net cash used in investing activities

 

 

(1,963

)

 

 

(193,637

)

 

 

(12,805

)

 

 

(959

)

Net cash provided by financing activities

 

 

20,387

 

 

 

91,475

 

Net cash (used in) provided by financing activities

 

 

(16,847

)

 

 

3,991

 

 

Cash Flows Provided By (Used In)by Operating Activities

For the sixthree months ended June 30,March 31, 2021 and 2020, net cash provided by operating activities was $18,961, compared to$12,809 and $7,027, respectively. The increase in cash flows from operating activities was driven by an increase in net cash usedincome, excluding non-cash expenses, as well as changes in operating activities of $34,351 forassets and liabilities. During the sixthree months ended June 30, 2019,March 31, 2021, the increase in the net change in operating assets and liabilities primarily reflectingconsisted of an increase in other current liabilities of $7,911 related to accrued expenses at the effectsend of the implementationreporting period and an increase in the restaurant food liability of various initiatives aimed$1,589 due to the timing of payments to our restaurant partners at improving coststhe end of the reporting period. The net change in operating assets and profitability. Additionally, operating activitiesliabilities during the sixthree months ended June 30, 2019 includedMarch 31, 2020 primarily consisted of a decrease in prepaid expenses and other current assets of $3,246 and an increase in accrued payroll of $2,129 due to the paymenttiming of business combination-related expenses of $6,956.payroll payments.

Cash Flows Used Inin Investing Activities

For the sixthree months ended June 30, 2020 and 2019,March 31, 2021, net cash used in investing activities was $1,963 and $193,637, respectively. Investing activities included the purchaseconsisted primarily of property and equipment of $381 and $990 for the six months ended June 30, 2020 and 2019, respectively, and costs associated with internally developed software of $1,335 and $155 for the six months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2019, investing activities also included of $192,568$10,927 for the acquisition of Bite Squad.

Propertya business and equipment is comprisedrelated intangible assets and $1,722 of costs for internally developed software. For the three months ended March 31, 2020, net cash used in investing activities consisted primarily of computer tablets$671 of costs for restaurants on the Platforms. The tablets remain our property. We control software applications and updates on the tablets, and the tablets are devoted exclusively to the Platforms. We also periodically purchase office furniture, equipment, computers and software and leasehold improvements.internally developed software.

Cash Flows (Used in) Provided by Financing Activities

For the sixthree months ended June 30,March 31, 2021, net cash used in financing activities included a $14,472 principal payment on the Term Loan and $1,583 of payments on short-term loans for insurance financing. For the three months ended March 31, 2020, net cash provided by financing activities was $20,387, primarily reflecting $22,944 of proceeds from the sales of common stock under the company’s at-the-market offering programs, $1,906 of proceeds from short-term

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loans and $3,415 of payments on short-term loans. For the six months ended June 30, 2019,included net cash provided by financing activities was $91,475, primarily reflecting gross proceeds from the issuance of common stock of $50,002, proceeds from the issuance of the Additional Term Loans of $42,080 and $5,032 of proceeds from a short-term loan for the Company’s annual insurance premium financing,$6,470, less $4,175 of equity issuance costs and $658$2,028 of payments on short-term loans.

Contractual Obligations and Other Commitments

During the six months ended June 30, 2020, the Company’s outstanding debt obligations were reduced by approximately $12,359 in connection with the conversion of Notes pursuant to the Waiver and Conversion Agreement. Additionally, in July 2020, the Company paid $12,500 of the Term Loans and converted $141 of the Notes in connection with the Waiver and Conversion Agreement. On August 3, 2020, the Company paid $10,500 of the Term Loans pursuant to the Amended Loan Agreements, resulting in a reduction of the interest rates under the Term Loans and Notes by 200 basis pointsloans for a one-year period, to 5.125% and 4.0%, respectively, and the extension of the maturity dates under such Loan Agreements by one year to November 15, 2023.

As of the date of the filing of this Form 10-Q, other than the aforementioned Term Loan payments, Notes conversions and interest rate and maturity date revisions, there have been no significant changes to the Company’s total contractual obligations disclosed in the 2019 Form 10-K.insurance financing.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2020.March 31, 2021.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. All statements, other than statements of historical or current facts, that reflect future plans, estimates, beliefs or expected performance are forward-looking statements. In some cases, you can identify forward-looking statements because they are preceded by, followed by or include words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions. These forward-looking statements are based on information available as of the date of this Form 10-Q and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties, including the following factors, in addition to the factors discussed elsewhere in this Form 10-Q, and the factors discussed in our 2020 Form 10-K (Part I, Item 1A, Risk Factors):

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Operational Risks

failure to retain existing diners or add new diners or our diners decreasing their number of orders or order sizes on the Platforms;

declines in our delivery service levels or lack of increases in business for restaurants;

loss of restaurants on the Platforms, including due to changes in our fee structure;

inability to sustain profitability in the future;

risks related to our relationships with the independent contractor drivers, including shortages of available drivers, loss of independent contractor drivers, adverse conditions impacting independent contractor drivers, and possible increases in driver compensation;

inability to maintain and enhance our brands or occurrence of events that damage our reputation and brands, including unfavorable media coverage;

seasonality and the impact of inclement weather, including major hurricanes, tropical cyclones, major snow and/or ice storms in areas not accustomed to them and other instances of severe weather and other natural phenomena;

inability to manage growth and meet demand;

inability to successfully improve the experience of restaurants and diners in a cost-effective manner;

changes in our products or to operating systems, hardware, networks or standards that our operations depend on;

dependence of our business on our ability to maintain and scale our technical infrastructure;

personal data, internet security breaches or loss of data provided by diners or restaurants on our Platforms;

inability to comply with applicable law or standards if we become a payment processor at some point in the future;

risks related to the credit card and debit card payments we accept;

reliance on third-party vendors to provide products and services;

substantial competition in technology innovation and distribution and inability to continue to innovate and provide technology desirable to diners and restaurants;

failure to pursue and successfully make additional acquisitions;

failure to comply with covenants in the agreements governing our debt;

additional impairments of the carrying amounts of goodwill or other indefinite-lived assets;

dependence on search engines, display advertising, social media, email, content-based online advertising and other online sources to attract diners to the Platforms;

loss of senior management or key operating personnel and dependence on skilled personnel to grow and operate our business;

inability to successfully integrate and maintain acquired businesses;

failure to protect our intellectual property;

patent lawsuits and other intellectual property rights claims;

potential liability and expenses for existing and future legal claims, including claims that may exceed insurance coverage or are not insured against;

our use of open source software;

insufficient capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances;

unionization of our employees, the magnitude of which increases if our independent contractor drivers were ever reclassified as employees; and

failure to maintain an effective system of disclosure controls and internal control over financial reporting.

Industry Risks

the highly competitive and fragmented nature of our industry;

dependence on discretionary spending patterns in the areas in which the restaurants on our Platforms operate and in the economy at large;

general economic and business risks affecting our industry that are largely beyond our control;

risks related to health pandemics and other outbreaks, including the impact of the COVID-19 pandemic, including a prolonged recession or additional financial market corrections resulting from the spread of COVID-19;

implementation of fee caps by jurisdictions in areas where we operate;

failure of restaurants in our networks to maintain their service levels;

slower than anticipated growth in the use of the Internet via websites, mobile devices and other platforms; and

federal and state laws and regulations regarding privacy, data protection, and other matters affecting our business.

These risks and uncertainties may be outside of our control. Forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be

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TABLE_CONTENTS

required under applicable securities laws. Our actual results could differ materially from those discussed in these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest rate risk and certain other market risks in the ordinary course of our business.

Interest Rate Risk

As of August 6, 2020,March 31, 2021, we had outstanding interest-bearing long-term debt totaling $98,577,$84,511, consisting of $49,073the Term Loan in the amount of Term Loans$35,007 and $49,504the Notes of Notes.$49,504. The interest rates under the Term LoansLoan and Notes were reduced by 200 basis points for a one-year period, effective August 3, 2020, in connection with amendments to the amendments discussed under “Liquidityloan agreements governing the Term Loan and Capital Resources”.Notes and a payment on the Term Loan. Although the interest rates decreased on August 3, 2020, we are not currently exposed to interest rate risk on our outstanding debt, as the new rates are fixed and set to revert back to the fixed rates in effect prior to the amendments. If we enter into variable-rate debt in the future, we may be subject to increased sensitivity to interest rate movements.

We invest excess cash primarily in bank accounts and money market accounts, on which we earn interest. Our current investment strategy is to preserve principal and provide liquidity for our operating and market expansion needs. Since our investments have been and are expected to remain mainly short-term in nature, we do not believe that changes in interest rates would have a material effect on the fair market value of our investments or our operating results.

Inflation Risk

We do not believe that inflation has had a material effect on our business, results of operations or financial condition.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level as of June 30, 2020.March 31, 2021.

Changes in Internal Controls Over Financial Reporting

There has not been any change in our internal control over financial reporting that occurred during the quarter ended June 30, 2020March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

33Effective January 1, 2021, we are no longer an emerging growth company. Accordingly, for fiscal year 2021, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting.

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PART II. OTHER INFORMATION

OnIn July 14, 2016, Waiter.com, Inc. filed a lawsuit against Waitr Incorporated, the Company’s wholly-owned subsidiary,Inc. in the United States District Court for the Western District of Louisiana, alleging trademark infringement based on Waitr’s use of the “Waitr” trademark and logo, Civil Action No.: 2:16-CV-01041. Plaintiff seeks injunctive relief and damages relating to Waitr’s use of the “Waitr” name and logo. TheDuring the third quarter of 2020, the trial date has been postponed indefinitely duewas rescheduled to June 2021, and in September 2020, the COVID-19 pandemic.court ruled on various motions, certain of which ruled against defenses the Company had advanced. Waitr believes that thisthe damages case lacks merit and that it has strong defensesa defense to all of the infringement claims alleged. Waitr intendscontinues to vigorously defend the suit. The Company accrued a $4 million reserve in connection with this lawsuit during the first quarter of 2021. The accrued legal contingency is included in other current liabilities in the unaudited condensed consolidated balance sheet at March 31, 2021 and in other expenses in the unaudited condensed consolidated statement of operations for the three months ended March 31, 2021

In FebruaryApril 2019, the Company was named as a defendant in a lawsuit titledclass action complaint filed by certain current and former restaurant partners, captioned Halley,Bobby’s Country Cookin’, et al vs.v. Waitr, Holdings Inc. filed which is currently pending in the United States District Court for the EasternWestern District of Louisiana on behalfLouisiana. Plaintiffs allege, among other things, claims for breach of plaintiff and similarly situated drivers alleging violationscontract, violation of the Fair Labor Standards Act (“FLSA”),duty of good faith and in March 2019, the Company was named a defendant in a lawsuit titled Montgomery v. Waitr Holdings Inc. filed in the United States District Court for the Eastern District of Louisiana on behalf of plaintifffair dealing, and similarly situated drivers, alleging violations of FLSAunjust enrichment, and Louisiana Wage Payment Act. The parties to the Halley and Montgomery matters jointly filed with the court a motion for preliminary approval of a settlement agreement (the “Motion”) whereby the Halley and Montgomery plaintiffs,seek recovery on behalf of themselves and similarly situated drivers, will dismisstwo separate classes. Based on the lawsuits againstcurrent class definitions, as many as 10,000 restaurant partners could be members of the Company in considerationtwo separate classes that the representative plaintiffs are attempting to certify.  Plaintiff’s deadline to file a motion for class certification is October 2021. Waitr maintains that the Company issuing upunderlying allegations and claims lack merit, and that the classes, as pled, are incapable of certification. Waitr continues to 1,556,420 shares of Waitr common stock to be allocated to participating class members pursuant to a formula set forth invigorously defend the settlement agreement. On April 28, 2020, the court granted the Motion and scheduled a fairness hearing for August 19, 2020.suit.

OnIn September 26, 2019, Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC were named as defendants in a putative class action lawsuit entitled Walter Welch, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC.  The case was filed in the Western District of Louisiana, Lake Charles Division. In the lawsuit, the plaintiff asserts putative class action claims alleging, inter alia, that various defendants made false and misleading statements in securities filings, engaged in fraud, and violated accounting and securities rules. A similar putative class action lawsuit, entitled Kelly Bates, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC, was filed in that same court onin November 4, 2019. Waitr expects the court will determine a lead plaintiff and theThese two cases will be consolidated.were recently consolidated, and an amended complaint was filed in October 2020. The Company filed a motion to dismiss in February 2021. Waitr believes that these cases lackthis lawsuit lacks merit and that it has strong defenses to all of the claims alleged. Waitr intendscontinues to vigorously defend both lawsuits.the suit.

In addition to the lawsuits described above, Waitr is involved in other litigation arising from the normal course of business activities, including, without limitation, labor and employment claims, allegations of infringement, misappropriation and other violations of intellectual property or other rights, lawsuits involvingand claims forinvolving personal injuries, physical damage and workers’ compensation benefits suffered as a result of alleged Waitrconduct involving its employees, independent contractor drivers, independent contractors, and third-party negligence. Although Waitr believes that it maintains insurance with standard deductibles that generally covers its liability for potential damages if any,in many of these matters where coverage is available on acceptable terms (it is not maintained for claims involving intellectual property), insurance coverage is not guaranteed, often these claims are met with denial of coverage positions by the carriers, and Waitrthere are limits to insurance coverage; accordingly, we could suffer material losses as a result of these claims or the denial of coverage for such claims.

Item 1A. Risk Factors

The following updates the Risk Factors included in the 2019 Form 10-K. Except as set forth below, ttherehere have been no material changes with respect to Waitr’s risk factors previously reported in Part I, Item 1A, of the 20192020 Form 10-K.

We face risks related to health epidemics and other outbreaks, whichThe change in presidential administration could significantly disrupt our operations.result in increased misclassification claims against the Company.

In December 2019, an outbreakDuring the Trump administration, the U.S. Department of Labor (“DOL”) relaxed enforcement of misclassification claims under the Fair Labor Standards Act (“FLSA”). Additionally, just before President Trump left office, the DOL issued a new, strain of coronavirus, COVID-19, begancompany-friendly independent contractor standard via regulation that was set to go into effect in Wuhan, Hubei Province, China. In March 2020,2021. However, after President Biden took office, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chainsDOL paused and created significant volatility and disruption of financial markets. Waitr has thus far been able to operate effectively during the COVID-19 pandemic. However, the potential impacts and durationultimately rescinded implementation of the COVID-19 pandemic onregulation in May 2021. The DOL has not yet proposed a substitute regulation, meaning that previous, more worker-friendly standard is still in effect. Some legal experts expect the global economy and onDOL to issue additional regulations or guidance proposing an even more worker-friendly standard, such as the Company’s business,“ABC” test that was implemented in particular, are uncertain and may be difficultCalifornia. Legal experts also expect the DOL under President Biden to assess or predict. The pandemic has resultedbecome more aggressive in and may continue to result in, significant disruption of global financial markets, which may reduce the Company’s ability to access capital and continue to operate effectively. The COVID-19 pandemic could also reduce the demand for the Company’s services. In addition, a recession or further financial market correction resulting from the spread of COVID-19 could adversely affect demand for the Company’s services. To the extent that the COVID-19 pandemic adversely impacts the Company’s business, results of operations, liquidity or financial condition, it may also have the effect of heightening many of the other risks described in the risk factors in the Company’s 2019 Form 10-K.enforcing misclassification claims against

We have taken several steps to help protect and support our restaurant partners, diners, drivers and employees during the COVID-19 outbreak, including offering no-contact delivery for all restaurant delivery orders; offering no-contact grocery delivery in select markets; working with restaurant partners to waive diner delivery fees; deploying free marketing programs for restaurants; and

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providing masks, glovescompanies, particularly in the gig economy space. The issuance of such additional regulations or guidance, or the increase in such DOL enforcement activity, could adversely affect our operations and hand sanitizer to drivers. We are closely monitoring the impact of the COVID-19 global outbreak and lifting of any restrictions, although there remains significant uncertainty related to the public health situation globally.profitability.          

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicableOn March 11, 2021, the Company closed the acquisition of Delivery Dudes, a Florida-based third-party delivery business. Purchase consideration included the issuance of 3,562,577 shares of the Company’s common stock to the prior owners of Delivery Dudes. These shares were issued in reliance upon an exemption from registration afforded by Section 4(a)(2) of the Securities Act. No commissions were paid in connection therewith.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None.None

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Item 6. Exhibits

 

Exhibit No.

 

Description

 

 

 

10.1

 

AmendedAmendment No. 4 to Credit and Restated Open Market SaleGuaranty Agreement, dated May 1, 2020,as of March 9, 2021, by and betweenamong Waitr Inc., as Borrower, Waitr Intermediate Holdings, Inc.LLC, the various lenders and Jefferies LLC (incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K (File No. 001-37788) filed by the Company on May 1, 2020)Luxor Capital Group, LP, as Administrative Agent and Collateral Agent.(1).

 

 

 

10.2

 

Limited Waiver and ConversionAmendment No. 4 to Credit Agreement, dated as of May 1, 2020,March 9, 2021, by and among the Company, as Borrower, the lenders party thereto and Luxor Capital Group, LP, as Administrative Agent. (1)

10.3

Asset Purchase Agreement, dated as of March 9, 2021, by and among Waitr Holdings, Inc., Dude Delivery, LLC, and Dude Holdings LLC. (1)

10.4

Amended and Restated Employment Agreement, dated April 23, 2021, by and between Waitr Inc., Waitr Intermediate Holdings LLC, the Lenders party theretoInc. and Luxor Capital Group, LPCarl A. Grimstad (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-37788) filed by the Company on May 7, 2020)April 29, 2021).

10.3

Waitr Holdings Inc. Amended and Restated 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-37788) filed by the Company on June 17, 2020).

10.4

Performance Bonus Agreement, dated April 23, 2020, by and between Waitr Holdings Inc. and Carl A. Grimstad (incorporated by referenced to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-37788) filed by the Company on April 28, 2020.

 

 

 

10.5

 

Restricted Stock Unit AwardExecutive Employment Agreement, dated April 23, 2020,2021, by and between Waitr Holdings Inc. and Carl A. GrimstadLeo Bogdanov (incorporated by referencedreference to Exhibit 10.2 of the Current Report on Form 8-K (File No. 001-37788) filed by the Company on April 28, 202029, 2021)..

 

 

 

10.6

 

Amendment No. 3 to CreditExecutive Employment Agreement, dated as of July 15,1, 2020, by and amongbetween Waitr Holdings Inc., Waitr Intermediate Holdings, LLC, Luxor Capital, LLC, Luxor Capital Group, LP, and the lenders party theretoThomas Pritchard. (1).

 

 

 

10.7

 

Amendment No. 3 to Credit and GuarantyExecutive Employment Agreement, dated as of July 15,1, 2020, by and amongbetween Waitr Holdings Inc., and David J. Cronin. (1)

10.8

Executive Employment Agreement, dated May 28, 2020, by and between Waitr Intermediate Holdings LLC, Luxor Capital, LLC, Luxor Capital Group, LP,Inc. and the lenders party theretoMark D’Ambrosio. (1).

21.1

Subsidiaries of the Registrant. (1)

 

 

 

31.1

 

Certification of the Principal Executive Officer required by Rule 13a-14(b) or Rule15d-14(a). (1)

 

 

 

31.2

 

Certification of the Principal Financial Officer required by Rule 13a-14(b) or Rule15d-14(a). (1)

 

 

 

32.1

 

Certification of the Principal Executive Officer required by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350. (1)

 

 

 

32.2

 

Certification of the Principal Financial Officer required by Rule 13a-14(b) or Rule15d-14(b) and 18 U.S.C. Section 1350. (1)

 

 

 

  101.INS

 

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

 

 

 

  101.SCH

 

Inline XBRL Taxonomy Extension Schema Document

 

 

 

  101.CAL

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

  101.DEF

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

  101.LAB

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

  101.PRE

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

36(1)Filedherewith

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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 thereunto duly authorized.

 

Dated: AugustMay 6, 20202021

 

By:

 

/s/ Leo Bogdanov

 

 

 

 

Leo Bogdanov

 

 

 

 

Chief Financial Officer

 

 

 

 

(Principal Financial Officer and Duly Authorized Officer)

 

 

 

 

 

 

3733