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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20222023
OR
oTRANSITION 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)

Delaware26-3828008
(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
______________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.0001 Per ShareWTRHThe Nasdaq Stock Market LLC
None
______________________
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES x NO o
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 fileroAccelerated filerxo
Non-accelerated fileroxSmaller reporting companyox
Emerging growth companyo
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. o


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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO x

The number of shares of Registrant’s Common Stockcommon stock outstanding as of August 8, 20229, 2023 was 190,780,722.13,524,841.


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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,
2022
December 31,
2021
June 30,
2023
December 31,
2022
UnauditedUnaudited
ASSETSASSETSASSETS
CURRENT ASSETSCURRENT ASSETSCURRENT ASSETS
CashCash$28,203 $60,111 Cash$5,066 $12,066 
Accounts receivable, netAccounts receivable, net3,319 3,027 Accounts receivable, net2,859 3,982 
Capitalized contract costs, currentCapitalized contract costs, current1,377 1,170 Capitalized contract costs, current1,574 1,559 
Prepaid expenses and other current assetsPrepaid expenses and other current assets5,126 8,706 Prepaid expenses and other current assets3,085 5,997 
TOTAL CURRENT ASSETSTOTAL CURRENT ASSETS38,025 73,014 TOTAL CURRENT ASSETS12,584 23,604 
Property and equipment, netProperty and equipment, net2,599 3,763 Property and equipment, net415 808 
Capitalized contract costs, noncurrentCapitalized contract costs, noncurrent3,395 3,183 Capitalized contract costs, noncurrent2,672 3,403 
GoodwillGoodwill63,434 130,624 Goodwill— 9,536 
Intangible assets, netIntangible assets, net42,506 43,126 Intangible assets, net6,574 7,065 
Operating lease right-of-use assetsOperating lease right-of-use assets3,620 4,327 Operating lease right-of-use assets2,387 2,917 
Other noncurrent assetsOther noncurrent assets929 1,070 Other noncurrent assets742 812 
TOTAL ASSETSTOTAL ASSETS$154,508 $259,107 TOTAL ASSETS$25,374 $48,145 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES:LIABILITIES:LIABILITIES:
CURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIES
Short term debt - related partyShort term debt - related party$55,572 $— 
Short-term loans for insurance financingShort-term loans for insurance financing614 1,892 
Accounts payableAccounts payable$5,422 $7,018 Accounts payable3,880 5,689 
Restaurant food liabilityRestaurant food liability2,219 3,327 Restaurant food liability714 1,282 
Accrued payrollAccrued payroll2,330 2,988 Accrued payroll887 1,672 
Short-term loans for insurance financing2,351 3,142 
Income tax payableIncome tax payable107 74 Income tax payable87 74 
Operating lease liabilitiesOperating lease liabilities1,315 1,581 Operating lease liabilities852 1,023 
Other current liabilitiesOther current liabilities18,768 19,309 Other current liabilities16,032 17,596 
TOTAL CURRENT LIABILITIESTOTAL CURRENT LIABILITIES32,512 37,439 TOTAL CURRENT LIABILITIES78,638 29,228 
Long term debt - related partyLong term debt - related party61,805 81,977 Long term debt - related party— 53,901 
Accrued medical contingency— 53 
Operating lease liabilities, net of current portionOperating lease liabilities, net of current portion2,537 3,034 Operating lease liabilities, net of current portion1,685 2,079 
Other noncurrent liabilitiesOther noncurrent liabilities36 2,115 Other noncurrent liabilities15 28 
TOTAL LIABILITIESTOTAL LIABILITIES96,890 124,618 TOTAL LIABILITIES80,338 85,236 
Commitments and contingent liabilities (Note 10)Commitments and contingent liabilities (Note 10)00Commitments and contingent liabilities (Note 10)
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value; 249,000,000 shares authorized and 163,448,742 and 146,094,300 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively16 15 
STOCKHOLDERS’ EQUITY (DEFICIT):STOCKHOLDERS’ EQUITY (DEFICIT):
Common stock, $0.0001 par value; 249,000,000 shares authorized and 13,506,812 and 12,955,299 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.0001 par value; 249,000,000 shares authorized and 13,506,812 and 12,955,299 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively21 21 
Additional paid in capitalAdditional paid in capital515,624 503,609 Additional paid in capital541,359 538,812 
Accumulated deficitAccumulated deficit(458,022)(369,135)Accumulated deficit(596,344)(575,924)
TOTAL STOCKHOLDERS’ EQUITY57,618 134,489 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$154,508 $259,107 
TOTAL STOCKHOLDERS’ DEFICITTOTAL STOCKHOLDERS’ DEFICIT(54,964)(37,091)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICITTOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$25,374 $48,145 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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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,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
REVENUEREVENUE$31,171 $49,167 $66,211 $100,097 REVENUE$13,951 $31,171 $30,655 $66,211 
COSTS AND EXPENSES:COSTS AND EXPENSES:COSTS AND EXPENSES:
Operations and supportOperations and support15,983 31,273 36,262 61,611 Operations and support6,012 15,983 14,223 36,262 
Sales and marketingSales and marketing6,973 4,500 13,226 8,516 Sales and marketing3,629 6,973 8,197 13,226 
Research and developmentResearch and development1,242 854 2,553 1,853 Research and development783 1,242 1,943 2,553 
General and administrativeGeneral and administrative12,213 12,505 23,758 22,691 General and administrative5,697 12,213 14,416 23,758 
Depreciation and amortizationDepreciation and amortization3,000 2,965 6,065 5,882 Depreciation and amortization421 3,000 878 6,065 
Goodwill impairmentGoodwill impairment— — 67,190 — Goodwill impairment9,536 — 9,536 67,190 
(Gain) loss on disposal of assets(71)162 (88)159 
Gain on disposal of assetsGain on disposal of assets(11)(71)(22)(88)
TOTAL COSTS AND EXPENSESTOTAL COSTS AND EXPENSES39,340 52,259 148,966 100,712 TOTAL COSTS AND EXPENSES26,067 39,340 49,171 148,966 
LOSS FROM OPERATIONSLOSS FROM OPERATIONS(8,169)(3,092)(82,755)(615)LOSS FROM OPERATIONS(12,116)(8,169)(18,516)(82,755)
OTHER EXPENSES AND LOSSES, NET
OTHER EXPENSES (INCOME) AND LOSSES (GAINS), NETOTHER EXPENSES (INCOME) AND LOSSES (GAINS), NET
Interest expenseInterest expense1,461 1,681 3,165 3,582 Interest expense940 1,461 1,875 3,165 
Other expense2,024 835 2,934 5,099 
Other (income) expenseOther (income) expense(110)2,024 16 2,934 
NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXESNET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES(11,654)(5,608)(88,854)(9,296)NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES(12,946)(11,654)(20,407)(88,854)
Income tax expenseIncome tax expense17 33 33 57 Income tax expense17 13 33 
NET LOSS FROM CONTINUING OPERATIONSNET LOSS FROM CONTINUING OPERATIONS$(11,671)$(5,641)$(88,887)$(9,353)NET LOSS FROM CONTINUING OPERATIONS$(12,952)$(11,671)$(20,420)$(88,887)
LOSS PER SHARE:LOSS PER SHARE:LOSS PER SHARE:
Basic$(0.07)$(0.05)$(0.57)$(0.08)
Diluted$(0.07)$(0.05)$(0.57)$(0.08)
Basic and dilutedBasic and diluted$(0.96)$(1.45)$(1.52)$(11.32)
Weighted average shares used to compute net loss per share:Weighted average shares used to compute net loss per share:Weighted average shares used to compute net loss per share:
Weighted average common shares outstanding – basic160,531,778 115,644,790 157,099,938 113,998,589 
Weighted average common shares outstanding – diluted160,531,778 115,644,790 157,099,938 113,998,589 
Weighted average common shares outstanding – basic and dilutedWeighted average common shares outstanding – basic and diluted13,496,985 8,026,589 13,461,325 7,854,998 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,Six Months Ended June 30,
2022202120232022
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net lossNet loss$(88,887)$(9,353)Net loss$(20,420)$(88,887)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expenseNon-cash interest expense577 1,485 Non-cash interest expense1,835 577 
Induced conversion expense related to NotesInduced conversion expense related to Notes930 — Induced conversion expense related to Notes— 930 
Stock-based compensationStock-based compensation3,250 4,465 Stock-based compensation2,407 3,250 
(Gain) loss on disposal of assets(88)159 
Gain on disposal of assetsGain on disposal of assets(22)(88)
Depreciation and amortizationDepreciation and amortization6,065 5,882 Depreciation and amortization878 6,065 
Goodwill impairmentGoodwill impairment67,190 — Goodwill impairment9,536 67,190 
Amortization of capitalized contract costsAmortization of capitalized contract costs629 423 Amortization of capitalized contract costs783 629 
Change in fair value of contingent consideration liabilityChange in fair value of contingent consideration liability104 — Change in fair value of contingent consideration liability— 104 
OtherOther(58)(84)Other(35)(58)
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
Accounts receivableAccounts receivable(292)(614)Accounts receivable1,123 (292)
Capitalized contract costsCapitalized contract costs(1,048)(1,389)Capitalized contract costs(67)(1,048)
Prepaid expenses and other current assetsPrepaid expenses and other current assets3,580 (1,008)Prepaid expenses and other current assets2,912 3,580 
Other noncurrent assetsOther noncurrent assets161 (386)Other noncurrent assets66 161 
Accounts payableAccounts payable(1,596)1,623 Accounts payable(1,809)(1,596)
Restaurant food liabilityRestaurant food liability(1,108)(86)Restaurant food liability(568)(1,108)
Income tax payableIncome tax payable33 57 Income tax payable13 33 
Accrued payrollAccrued payroll(658)(1,368)Accrued payroll(785)(658)
Accrued medical contingencyAccrued medical contingency(53)(258)Accrued medical contingency— (53)
Other current liabilitiesOther current liabilities(2,224)6,452 Other current liabilities(1,571)(2,224)
Other noncurrent liabilitiesOther noncurrent liabilities(336)(64)Other noncurrent liabilities(3)(336)
Net cash (used in) provided by operating activities(13,829)5,936 
Net cash used in operating activitiesNet cash used in operating activities(5,727)(13,829)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchases of property and equipmentPurchases of property and equipment(81)(589)Purchases of property and equipment— (81)
Internally developed softwareInternally developed software(4,318)(4,137)Internally developed software— (4,318)
Purchase of domain namesPurchase of domain names(12)— Purchase of domain names— (12)
Acquisitions, net of cash acquired— (12,706)
Proceeds from sale of property and equipmentProceeds from sale of property and equipment32 13 Proceeds from sale of property and equipment33 32 
Net cash used in investing activities(4,379)(17,419)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities33 (4,379)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from issuance of stockProceeds from issuance of stock7,120 — Proceeds from issuance of stock155 7,120 
Payments on long-term loanPayments on long-term loan(20,000)(14,472)Payments on long-term loan(164)(20,000)
Borrowings under short-term loans for insurance financingBorrowings under short-term loans for insurance financing2,811 5,209 Borrowings under short-term loans for insurance financing246 2,811 
Payments on short-term loans for insurance financingPayments on short-term loans for insurance financing(3,602)(2,471)Payments on short-term loans for insurance financing(1,525)(3,602)
Payments on acquisition loans— (132)
Payments on finance lease obligationPayments on finance lease obligation(2)— Payments on finance lease obligation(3)(2)
Proceeds from exercise of stock options— 
Taxes paid related to net settlement on stock-based compensationTaxes paid related to net settlement on stock-based compensation(27)(817)Taxes paid related to net settlement on stock-based compensation(15)(27)
Net cash used in financing activitiesNet cash used in financing activities(13,700)(12,675)Net cash used in financing activities(1,306)(13,700)
Net change in cashNet change in cash(31,908)(24,158)Net change in cash(7,000)(31,908)
Cash, beginning of periodCash, beginning of period60,111 84,706 Cash, beginning of period12,066 60,111 
Cash, end of periodCash, end of period$28,203 $60,548 Cash, end of period$5,066 $28,203 
Supplemental disclosures of cash flow information:Supplemental disclosures of cash flow information:Supplemental disclosures of cash flow information:
Cash paid during the period for interestCash paid during the period for interest$2,588 $2,097 Cash paid during the period for interest$40 $2,588 
Supplemental disclosures of non-cash investing and financing activities:Supplemental disclosures of non-cash investing and financing activities:Supplemental disclosures of non-cash investing and financing activities:
Conversion of convertible notes to stockConversion of convertible notes to stock$1,673 $— Conversion of convertible notes to stock$— $1,673 
Stock issued as consideration in acquisition— 10,545 
Noncash impact of operating lease assets upon adoption— 5,600 
Noncash impact of operating lease liabilities upon adoption— 6,005 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
THREE AND SIX MONTHS ENDED JUNE 30, 2023
(in thousands, except share data)
(unaudited)
Three Months Ended June 30, 2023
 Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
deficit
 SharesAmount
Balances at March 31, 202313,444,759 $21 $540,022 $(583,392)$(43,349)
Net loss— — — (12,952)(12,952)
Vesting of restricted stock units62,053 — — — — 
Taxes paid related to net settlement on stock-based compensation— — (5)— (5)
Stock-based compensation— — 1,342 — 1,342 
Balances at June 30, 202313,506,812 $21 $541,359 $(596,344)$(54,964)


Six Months Ended June 30, 2023
 Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
deficit
 SharesAmount
Balances at December 31, 202212,955,299 $21 $538,812 $(575,924)$(37,091)
Net loss— — — (20,420)(20,420)
Vesting of restricted stock units120,084 — — — — 
Taxes paid related to net settlement on stock-based compensation— — (15)— (15)
Stock-based compensation— — 2,407 — 2,407 
Issuance of common stock431,429 — 155 — 155 
Balances at June 30, 202313,506,812 $21 $541,359 $(596,344)$(54,964)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED JUNEJune 30, 2022
(in thousands, except share data)
(unaudited)
Three Months Ended June 30, 2022Three Months Ended June 30, 2022Three Months Ended June 30, 2022
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmountSharesAmount
Balances at March 31, 2022Balances at March 31, 2022155,705,647 $15 $511,515 $(446,351)$65,179 Balances at March 31, 20227,785,282 $15 $511,515 $(446,351)$65,179 
Net lossNet loss— — — (11,671)(11,671)Net loss— — — (11,671)(11,671)
Vesting of restricted stock unitsVesting of restricted stock units715,260 — — — — Vesting of restricted stock units35,761 — — — — 
Taxes paid related to net settlement on stock-based compensationTaxes paid related to net settlement on stock-based compensation— — (27)— (27)Taxes paid related to net settlement on stock-based compensation— — (27)— (27)
Stock-based compensationStock-based compensation— — 1,579 — 1,579 Stock-based compensation— — 1,579 — 1,579 
Stock issued for conversion of NotesStock issued for conversion of Notes4,411,500 — 1,673 — 1,673 Stock issued for conversion of Notes220,575 — 1,673 — 1,673 
Issuance of common stock, net2,616,335 884 — 885 
Issuance of common stockIssuance of common stock130,817 884 — 885 
Balances at June 30, 2022Balances at June 30, 2022163,448,742 $16 $515,624 $(458,022)$57,618 Balances at June 30, 20228,172,435 $16 $515,624 $(458,022)$57,618 
Six Months Ended June 30, 2022
 Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
 SharesAmount
Balances at December 31, 2021146,094,300 $15 $503,609 $(369,135)$134,489 
Net loss— — — (88,887)(88,887)
Vesting of restricted stock units867,952 — — — — 
Taxes paid related to net settlement on stock-based compensation— — (27)— (27)
Stock-based compensation— — 3,250 — 3,250 
Stock issued for conversion of Notes4,411,500 — 1,673 — 1,673 
Issuance of common stock, net12,074,990 7,119 — 7,120 
Balances at June 30, 2022163,448,742 $16 $515,624 $(458,022)$57,618 

Six Months Ended June 30, 2022
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmount
Balances at December 31, 20217,304,714 $15 $503,609 $(369,135)$134,489 
Net loss— — — (88,887)(88,887)
Vesting of restricted stock units43,396 — — — — 
Taxes paid related to net settlement on stock-based compensation— — (27)— (27)
Stock-based compensation— — 3,250 — 3,250 
Stock issued for conversion of Notes220,575 — 1,673 — 1,673 
Issuance of common stock603,750 7,119 — 7,120 
Balances at June 30, 20228,172,435 $16 $515,624 $(458,022)$57,618 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2021
(in thousands, except share data)
(unaudited)

Three Months Ended June 30, 2021
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmount
Balances at March 31, 2021115,387,140 $11 $464,843 $(367,618)$97,236 
Net loss— — — (5,641)(5,641)
Exercise of stock options and vesting of restricted stock units1,314,137 — — 
Taxes paid related to net settlement on stock-based compensation— — (85)— (85)
Stock-based compensation— — 2,387 — 2,387 
Adjustment of consideration for acquisition— — (955)— (955)
Balances at June 30, 2021116,701,277 $11 $466,192 $(373,259)$92,944 
Six Months Ended June 30, 2021
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmount
Balances at December 31, 2020111,259,037 $11 $451,991 $(363,906)$88,096 
Net loss— — — (9,353)(9,353)
Exercise of stock options and vesting of restricted stock units1,851,573 — — 
Taxes paid related to net settlement on stock-based compensation— — (817)— (817)
Stock-based compensation— — 4,465 — 4,465 
Equity issued for asset acquisitions3,590,667 — 10,545 — 10,545 
Balances at June 30, 2021116,701,277 $11 $466,192 $(373,259)$92,944 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Organization
Waitr Holdings Inc., a Delaware corporation, together with its wholly owned subsidiaries (the “Company,” “Waitr,“ASAP,” “we,” “us” and “our”), operates an online ordering technology platform (the “Platform”), providing delivery, carryout and dine-in options, connecting restaurants, merchants, drivers and diners in certain cities acrossin the United States. The Company’s technology platform includesPlatform uses the Waitr, Bite Squad and Delivery Dudes mobile applications, collectively referred to as the “Platforms”. The Platforms allow“deliver anything ASAP” model making it easy for consumers to browse local restaurantsorder food, alcohol, convenience, grocery, flowers, auto parts and menus, track order and delivery status, and securely store previous orders for ease of use and convenience. Restaurants benefit fromother items. Additionally, the online Platforms through increased exposure to consumers for expanded business in the delivery market and carryout sales.
Additionally, WaitrCompany facilitates access to third parties that provide payment processing solutions for restaurants and other merchants, pursuantmerchants. We entered into the business of facilitating access to third parties that provide payment processing solutions through the acquisition of ProMerchant LLC, Cape Cod Merchant Services LLC and Flow Payments LLC (collectively referred to herein as the Cape“Cape Payment Companies (as defined below) onCompanies”) in August 25, 2021 (see2021.
On November 18, 2022, the Company filed a Certificate of Amendment to amend the Company’s Third Amended and Restated Certificate of Incorporation, which effected a one for twenty (1:20) reverse stock split (the “Reverse Stock Split”) of its outstanding common stock. See Note 412 – Stockholders’ Business CombinationsEquity). for additional information. All common share and per share amounts presented in the unaudited condensed consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the Reverse Stock Split.
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, 20212022 and filed with the SEC on April 17, 2023 (the “2021“2022 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.
ReclassificationsSegments
Certain amounts from prior periods have been reclassified to conformOperating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (the “CODM”) in making decisions regarding resource allocation and assessing performance.The Company has determined that its chief executive officer is the CODM of the Company.
Our operations revolve around two primary areas of service: (i) delivery services, which include operations related to the current period presentation.Company’s technology platform for online ordering and delivery (“Delivery Services”), and (ii) third-party payment processing referral services, which include operations related to facilitating access to third parties that provide payment processing solutions for restaurants and other merchants (“Third-Party Payment Processing Referral Services”). See Note 14 – Segment Information for additional information on the Company’s segments and Note 4 - Revenue for additional information on revenue derived by segments.
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Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all wholly 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:
incurred loss estimates under our insurance policies with large deductibles or retention levels;
loss exposure related to claims;
determination of agent vs. principal classification for revenue recognition purposes;
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income taxes;
useful lives of tangible and intangible assets;
equity compensation;contingencies; and
contingencies;
fair value of goodwill and other intangible assets, including the recoverability of intangible assets with finite lives and other long-lived assets; and
fair value of assets acquired, liabilities assumed and contingent consideration as part of a business combination.assets.
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 accompanying unaudited condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a result of recurring losses from operations and declines in cash positions, management considered its ability to continue as a going concern and evaluated the significance of these results during the six months ended June 30, 2022. The Company has experienced recurring losses from operations and has an accumulated deficit of $458,022 as of June 30, 2022. Additionally, during the second quarter of 2022, the Company’s cash position was impacted by the utilization of $20,000 in cash to pay down debt.
Management has focused its efforts on certain initiatives to improve revenue, operating income and cash positions, including (i) collaborations with convenience stores, (ii) delivery from retailers in a variety of industries, (iii) the entry into new markets and (iv) the development of a proprietary stadium ordering application. In July 2022, the Company entered into a multi-year sponsorship agreement to serve as the exclusive mobile ordering platform at MetLife Stadium, providing an avenue for the Company to expand its delivery services into the New York and New Jersey markets. Our strategy is to grow order volume and revenue both in existing markets and new markets, such as New York and New Jersey. Additionally, management has evaluated its existing cost structure and will continue to implement cost saving initiatives where appropriate to reduce operating costs and manage the Company’s cash position.
Management considered its current business focus on improving revenues and plans to continue to implement cost savings where appropriate, and determined that we currently expect that our cash on hand, estimated cash flow from operations and net proceeds from additional equity raises, including any raises under the ATM Program (see Note 8 – Debt and Note 12 – Stockholders’ Equity), will be sufficient to meet our working capital needs for at least the next twelve months. However, there can be no assurance that we will generate cash flow at the levels we anticipate, nor can there be any assurance that we will be able to raise additional equity capital.
Significant Accounting Policies
See “Recent Accounting Pronouncements” below for a description of accounting principle changes adopted during the six months ended June 30, 2022.2023. There have been no material changes to our significant accounting policies described in the 20212022 Form 10-K.
Recent Accounting Pronouncements
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.
Recently Adopted 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
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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 was effective for and adopted by the Company on January 1, 2022. The adoption of ASU 2020-06 did not have a material impact on the Company’s disclosures or consolidated financial statements.
Pending Accounting Standards
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle in ASC 805 by requiring companies to apply ASC 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The guidance additionally clarifies that companies should apply the definition of a performance obligation in ASC 606 when recognizing contract liabilities assumed in a business combination. ASU 2021-08 iswas effective for and adopted by the Company on January 1, 2023. The Company is currently evaluating the impacts of the provisionsadoption of ASU 2021-08 did not have a material impact on the Company’s disclosures or consolidated financial statements.
3. Going Concern
Pursuant to the requirements of ASC 205-40, Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going
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concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will sufficiently mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company has had recurring losses from operations and declines in cash positions. As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has an accumulated deficit of $596,344 as of June 30, 2023. The Company has experienced negative cash flow from operations during each quarter of fiscal 2022 through the second quarter of fiscal 2023. The Company’s cash position has declined from $12,066 at December 31, 2022 to $5,066 as of June 30, 2023. As of June 30, 2023, the Company has outstanding debt in the principal amount of $56,355 with a maturity date of May 15, 2024. In an effort to alleviate these conditions, management is evaluating the Company’s expected liquidity levels and related disclosures.exploring potential ways of raising additional capital in order to meet its obligations, including the debt repayments which are due in less than twelve months from the date of issuance of these financial statements, although there can be no assurance that we will be able to raise additional capital on commercially acceptable terms, or at all. Additionally, management is evaluating its existing cost structure and implementing cost saving initiatives to reduce operating costs and plans to continue to implement further cost saving initiatives where appropriate. To the extent raising additional equity capital is pursued, management plans to do so in best efforts private placements, rather than through the ATM Program (as defined below) (see Note 12 – Stockholders’ Equity). The Company does not anticipate being able to utilize its ATM Program in fiscal 2023.
The Company’s plans are dependent on conditions and factors, many of which are outside of the Company’s control. There can be no assurance that we will be able to generate positive cash flow from operations in any future period. Additionally, we may be unable to raise additional capital or enter into any financing arrangements when needed on favorable terms or at all. Accordingly, management could not conclude that it was probable that the plans will sufficiently mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. As such, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
3.We are continuously reviewing our liquidity and anticipated working capital needs based on overall market and economic factors. Market conditions, future financial performance or other factors may make it difficult or impractical for us to access sources of capital on favorable terms, if at all. The failure to successfully implement our strategy to raise capital while also achieving cost savings will adversely impact our financial condition, which impact could be material, could reduce the period of time for which our anticipated working capital needs will be sufficient, and could result in the Company terminating, curtailing or ceasing operations or pursuing other strategic alternatives.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business for the twelve-month period following the date the financial statements are issued. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result should the Company be unable to continue as a going concern.
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4. Revenue
The following table presents our revenue disaggregated by offering. Revenue consists of the following for the periods indicated (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Delivery transaction fees$27,756 $48,251 $59,332 $98,727 
Payment processing referral fees2,783 — 5,293 — 
Setup and integration fees— — 
Other632 915 1,586 1,362 
Total Revenue$31,171 $49,167 $66,211 $100,097 

 Three Months Ended June 30,Six Months Ended June 30,
 2023202220232022
Delivery Services Segment:
Delivery Transaction Fees$10,631 $27,756 $24,345 $59,332 
Other revenue447 632 966 1,586 
Total Delivery Services Segment11,078 28,388 25,311 60,918 
Third-Party Payment Processing Referral Services Segment2,873 2,783 5,344 5,293 
Total Revenue$13,951 $31,171 $30,655 $66,211 

Revenue from Contracts with Customers
Delivery Transaction FeesServices Segment
The Delivery Services Segment includes operations related to the Company’s technology platform for online ordering and delivery. While food ordering and delivery is the primary component of the Delivery Services Segment, the Company’s technology platform also includes online ordering and delivery of various other products such as flowers, auto parts, alcohol and luxury goods. The Company generates revenue (“Delivery Transaction Fees”) in the Delivery Services Segment primarily when diners or customers place an order on one of the Platforms. In the case of diner subscription fees relating to our diner subscription program, revenue is recognized for the receipt of the monthly fee in the applicable month for which the delivery service applies to. Platform.
Delivery Transaction Fees represent the revenue recognized from the Company’s obligation to process orders on the Platforms.Platform. The performance obligation is satisfied when the Company successfully processes an order placed on one of the PlatformsPlatform 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 ASC Topic 606, Revenue from Contracts with Customers, the variable consideration due to the Company for processing orders is recognized on a daily basis. The Company is the agent in the transaction as the Platform provides a means for the restaurant to receive orders from customers. As an agent of the restaurant in the transaction, the Company recognizes Delivery Transaction Fees earned from the restaurant on the Platform on a net basis. Delivery Transaction Fees 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.
In addition to Delivery Transaction Fees, revenue in the Delivery Services Segment includes other revenue sources such as paid placement revenue for prominent positioning of a restaurant on the Platform and revenue related to fees received for the early distribution of earnings to independent contractor drivers.
Third-Party Payment Processing Referral FeesServices Segment
The Company also generates revenue from Third-Party Payment Processing Referral Services by facilitating access to third-party payment processing solution providers. Revenue from such services primarily consists of residual payments received from third-party payment processing solution providers, based on the volume of transactions a payment processing solution provider performs for the merchant. The Company also occasionally receives a bonus up-front fee from third-party payment processing solution providers, paid at the time of a merchant’s initial transaction with a payment processing solution provider, based on a price specified in the agreement between the merchant and the payment processing solution provider. Revenue from bonus up-front fees is recognized once the Company receives the initial fixed up-front bonus amount upon merchant activation.
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PaymentThird-party payment processing referral fees represent revenue recognized from the Company’s offering of referral services, connecting a merchant with a third-party payment processing service. The Company’s performance obligation in its contracts with payment processors is for an unknown or unspecified quantity of transactions and the consideration received is contingent upon the number of transactions submitted by the merchant and processed by the payment processor.
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Accordingly, the total transaction price is variable. The performance obligation is satisfied and revenue is recognized by the Company when the third-party payment processor finalizes the processing of a transaction through the payment system and transaction volume is available from the payment processor to the Company. Consistent with the recognition objective in ASC Topic 606, the variable consideration due to the Company for serving as the facilitator of the arrangement between the third-party payment processor and merchant is recognized on a daily basis. The Company is the agent in these arrangements as it establishes the relationship between the third-party payment processor and merchant, and thus, recognizes revenue on a net basis. The third-party payment processor is considered the customer of the Company as no direct contract exists between the merchant and the Company.
Accounts Receivable
The Company records a receivable when it has an unconditional right to the consideration. See Note 5 – Accounts Receivable, Net for additional details on the Company’s accounts receivable.
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 $3,008$2,626 and $2,968$3,128 as of June 30, 20222023 and December 31, 2021,2022, respectively, out of which $913$1,035 and $818,$1,032, respectively, was classified as current. Amortization of expense for the costs to obtain a contract were $221$259 and $173$221 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $429$517 and $322$429 for the six months ended June 30, 20222023 and 2021,2022, 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 onboarding restaurants onto the PlatformsPlatform 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 $1,764$1,620 and $1,385$1,834 as of June 30, 20222023 and December 31, 2021,2022, respectively, out of which $464$539 and $352,$527, respectively, was classified as current. Amortization of expense for the costs to fulfill a contract were $110$134 and $56$110 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $204$266 and $101$204 for the six months ended June 30, 20222023 and 2021,2022, respectively.
4. Business Combinations
2021 Acquisitions
Cape Payment Acquisition
On August 25, 2021, the Company completed the acquisition of certain assets and properties of ProMerchant LLC, Cape Cod Merchant Services LLC and Flow Payments LLC (collectively referred to herein as the “Cape Payment Companies”) (the “Cape Payment Acquisition”). The Cape Payment Companies facilitate merchant access to third-party payment processing solution providers and receive residual payments from the payment providers. The purchase price for the Cape Payment Companies consisted of $12,032 in cash and an aggregate of 2,564,103 shares of the Company’s common stock valued at $1.24 per share (the closing price of the Company’s common stock on August 24, 2021). The
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Cape Payment Acquisition included an earnout provision which provided for a one-time payment to the sellers if the Cape Payment Companies exceed certain future revenue targets. The earnout provision, if any, is payable no later than March 30, 2023, and was valued at $1,686 as of the acquisition date. As of June 30, 2022 and December 31, 2021, the earnout provision was valued at $2,043 and $1,939, respectively (see Note 13 - Fair Value Measurements).
The Cape Payment Acquisition was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. The results of operations of the Cape Payment Companies are included in our condensed consolidated financial statements beginning on the acquisition date, August 25, 2021, and were immaterial. Pro forma results were deemed immaterial to the Company.
Delivery Dudes 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 and 3,562,577 shares of the Company’s common stock valued at $2.96 per share (the closing price of the Company’s common stock on March 11, 2021) (the “Delivery Dudes Acquisition”).
The Delivery Dudes Acquisition was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. The results of operations of Delivery Dudes are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, March 11, 2021. Revenue and net income of Delivery Dudes included in the unaudited condensed consolidated statement of operations in the three months ended June 30, 2022 totaled approximately $2,905 and $326, respectively, and in the six months ended June 30, 2022 totaled approximately $6,151 and $580, respectively.
During the second and third quarters of 2021, the Company acquired the assets of 6 Delivery Dudes franchisees for total consideration of approximately $2,464, including $2,431 in cash. The asset acquisitions were accounted for under the acquisition method with the purchase consideration allocated to customer relationships. The results of operations of the acquired franchisees are included in our condensed consolidated financial statements beginning on their acquisition dates and were immaterial. Pro forma results were deemed immaterial to the Company.
Additional Information
Included in general and administrative expenses in the consolidated statement of operations in certain periods are direct and incremental costs, consisting of legal and professional fees, related to business combinations and asset acquisitions. During the three and six months ended June 30, 2021, the Company incurred direct and incremental costs of $63 and $669, respectively, related to the Delivery Dudes Acquisition.
Pro-Forma Financial Information
The supplemental condensed consolidated results of the Company for the six months ended June 30, 2021 on an unaudited pro forma basis as if the Delivery Dudes Acquisition had been consummated on January 1, 2021 are included in the table below (in thousands).
Six months ended June 30, 2021
Net revenue$102,573 
Net loss$8,989 
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 period presented and are not indicative of consolidated results of operations in future periods. Acquisition costs and other non-recurring charges incurred are included in the period presented.
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5. Accounts Receivable, Net
Accounts receivable consist of the following (in thousands):
June 30,
2022
December 31,
2021
June 30,
2023
December 31,
2022
December 31,
2021
Credit card receivablesCredit card receivables$1,480 $1,354 Credit card receivables$661 $2,334 $1,354 
Residual commissions receivableResidual commissions receivable1,494 1,342 Residual commissions receivable1,850 1,422 1,342 
Receivables from restaurants and customersReceivables from restaurants and customers649 660 Receivables from restaurants and customers610 596 660 
Accounts receivableAccounts receivable$3,623 $3,356 Accounts receivable3,121 4,352 3,356 
Less: allowance for doubtful accounts and chargebacksLess: allowance for doubtful accounts and chargebacks(304)(329)Less: allowance for doubtful accounts and chargebacks(262)(370)(329)
Accounts receivable, netAccounts receivable, net$3,319 $3,027 Accounts receivable, net$2,859 $3,982 $3,027 
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6. 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 and customer relationships. The Company reviews the recoverability of its long-lived assets annually, or when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The Company has determined that the trademark intangible asset and domain names related to the rebranding initiative are indefinite-lived assets and therefore are not subject to amortization but are evaluated annually for impairment.
The Bite Squad and Delivery Dudes and Cape Payment Companies trade name intangible assets however, arewere being amortized over their estimated useful lives.lives and were fully impaired as of December 31, 2022. Additionally, as of December 31, 2022, the Company’s internally developed software and customer relationship assets related to the Delivery Services Segment were fully impaired.
As of January 1, 2023, the Company’s remaining intangible assets included the trademark intangible asset and domain names related to the rebranding initiative, and trademarks and customer relationship intangible assets related to the Third-Party Payment Processing Referral Services Segment. See “Impairments” below for details of impairment testing for intangible assets as of June 30, 2023.
Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and impairment and consist of the following at June 30, 2023 and December 31, 2022 (in thousands):
As of June 30, 2022
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Software$40,004 $(12,120)$(11,779)$16,105 
Trademarks/Trade name/Patents6,549 (5,852)— 697 
Customer Relationships96,510 (16,451)(57,378)22,681 
Total intangible assets subject to amortization143,063 (34,423)(69,157)39,483 
Trademarks, not subject to amortization3,023 — — 3,023 
Total$146,086 $(34,423)$(69,157)$42,506 
As of December 31, 2021
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Software$35,686 $(9,632)$(11,779)$14,275 
Trademarks/Trade name/Patents6,549 (5,585)— 964 
Customer Relationships96,510 (14,256)(57,378)24,876 
Total intangible assets subject to amortization138,745 (29,473)(69,157)40,115 
Trademarks, not subject to amortization3,011 — — 3,011 
Total$141,756 $(29,473)$(69,157)$43,126 
During the six months ended June 30, 2022, the Company capitalized approximately $4,318 of software costs related to the development of the Platforms.
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As of June 30, 2023
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Trademarks/Trade name/Patents$376 $(213)$— $163 
Customer Relationships6,500 (1,589)— 4,911 
Total intangible assets subject to amortization6,876 (1,802)— 5,074 
Trademarks, not subject to amortization1,500 — — 1,500 
Total$8,376 $(1,802)$ $6,574 
As of December 31, 2022
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Software$40,341 $(13,542)$(26,799)$— 
Trademarks/Trade name/Patents6,549 (6,044)(284)221 
Customer Relationships96,510 (18,647)(72,519)5,344 
Total intangible assets subject to amortization143,400 (38,233)(99,602)5,565 
Trademarks, not subject to amortization3,038 — (1,538)1,500 
Total$146,438 $(38,233)$(101,140)$7,065 
The Company recorded amortization expense of $2,465$246 and $2,233$2,465 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $4,950$492 and $4,065$4,950 for the six months ended June 30, 2023 and 2022, and 2021, respectively.
Estimated future amortization expense of intangible assets subject to amortization as of June 30, 20222023 is as follows (in thousands):
Amortization
The remainder of 2022$5,186 
202311,551 
20249,423 
20256,171 
20263,458 
Thereafter3,694 
Total future amortization$39,483 
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Amortization
The remainder of 2023$496 
2024953 
2025876 
2026871 
2027867 
Thereafter1,011 
Total future amortization$5,074 
Goodwill
Prior to the three months ended September 30, 2022, we concluded that we had one reporting unit for purposes of goodwill impairment testing. During the three months ended September 30, 2022, we quantitatively and qualitatively reassessed our segment reporting and determined the Third-Party Payment Processing Referral Services Segment is material to the group and now have two reporting units for purposes of goodwill impairment testing.
The changefollowing table presents changes in the carrying value of goodwill for the Company’s single reporting unit prior to the allocation of goodwill to segments (in thousands).
Balance as of December 31, 2021$130,624 
March 15, 2022 impairment(67,190)
Balance prior to segment allocation63,434 
September 30, 2022 impairment(51,991)
Remaining goodwill to be allocated to segments$11,443 
During the three months ended September 30, 2022, the Company reallocated its goodwill from a single reporting unit to the Delivery Services Segment and the Third-Party Payment Processing Referral Services Segment based on a relative fair value analysis using several probability weighted scenarios. The following table presents changes in the carrying value of goodwill for the Company’s segments after the allocation of goodwill to segments through December 31, 2022 (in thousands).
Delivery Services SegmentThird-Party Payment Processing Referral Services SegmentTotal
Goodwill allocation to segments$1,907 $9,536 $11,443 
September 30, 2022 impairment(1,907)— (1,907)
Balance as of December 31, 2022$— $9,536 $9,536 
No events or circumstances occurred during the three months ended March 31, 2023 that would indicate an impairment may have occurred, and accordingly, the Company determined that goodwill and long-lived asset impairment testing was not needed at March 31, 2023. As a result of a sustained decline in the Company’s goodwill balance isstock price and market capitalization during the second quarter of 2023, the Company conducted an impairment test as followsof the valuation date of June 30, 2023, resulting in the full impairment of the Company’s remaining goodwill. See “Impairments” below for additional details. The following table presents the carrying value of goodwill for the six months endedCompany’s segments as of June 30, 2022 and the year ended December 31, 2021
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2023 (in thousands):
June 30,
2022
December 31,
2021
Balance, beginning of period$130,624 $106,734 
Acquisitions during the period— 23,890 
Impairments during the period(67,190)— 
Balance, end of period$63,434 $130,624 
The Company recorded $23,890 of goodwill during the year ended December 31, 2021, including $14,343 associated with the Delivery Dudes Acquisition and $9,547 associated with the Cape Payment Acquisition (see Note 4 – Business Combinations).
Delivery Services SegmentThird-Party Payment Processing Referral Services SegmentTotal
Balance as of December 31, 2022$— $9,536 $9,536 
June 30, 2023 impairment— (9,536)(9,536)
Balance as of June 30, 2023$— $— $— 
Impairments
The Company conductshas historically conducted its goodwill and intangible asset impairment test annually in October, or more frequently if indicators of impairment exist. For purposes of testing for goodwillThe Company conducts the impairment the Company has 1 reporting unit. As a result of a significant decline in the Company’s share price and market capitalization in mid-March 2022, as well as other macroeconomic and industry related conditions during the first quarter of 2022, the Company conducted its impairment test as of the valuation date of March 15, 2022. The impairment test was conducted in accordance with FASB ASC Topic 360, Impairment and Disposal of Long-Lived Assets (“(“ASC 360”) for certain long-lived assets, including capitalized contract costs, developed technology, customer relationships, and trade names, and in accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other (“(“ASC 350”)for the reporting unit’s goodwill. The Company engaged a third-party to assist management in estimating the fair values of long-lived assets and the reporting unit for purposes of impairment testing under ASC 360 and ASC 350.
ASC 360 requires long-lived assets to be tested for impairment using a three-step impairment test. Step 1 of the test is giving consideration to whether indicators of impairment of long-lived assets are present. Given the significant decline in the Company’s market capitalization and other macroeconomic factors, indications were that an impairment may exist andIf indicators are present, the Company proceededproceeds to Step 2 to determine whether an impairment loss should be recognized.measured. As a part of Step 2, the Company performedperforms a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the long-lived assets in question to their carrying amounts. Given that the undiscounted cash flows for the long-lived assets were above the carrying amounts, the Company determined thatof the long-lived asset group is recoverable, and no impairment exists asto its carrying amount. If the estimated undiscounted cash flows are less than the carrying amount of March 15, 2022.
Customer relationships, the Company’s primary long-lived asset was tested forgroup, an impairment under the guidance in ASC 360. The customer relationships intangible asset was 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
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after deducting the operating costs and contributory asset charges associated with supporting the existing customer relationships. The customer relationships analysis represents a Level 3 measurement as it wasloss is measured based on unobservable inputs reflecting the Company’s assumptions used in developing aits fair value estimate. These inputs required significant judgments and estimates at the timeas part of the valuation.
Step 3. ASC 350 requires goodwill and other indefinite lived assets to be tested for impairment at the reporting unit level. Determining the fair value of a reporting unit and intangible assets requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates could change in future periods.
June 30, 2023 Impairment Analysis
As a result of a sustained decline in the Company’s stock price and market capitalization during the second quarter of 2023, the Company conducted an impairment test as of the valuation date of June 30, 2023. The Company engaged a third-party to assist management in estimating the fair values of long-lived assets and the reporting units for purposes of impairment testing under ASC 360 and ASC 350.Given the results of the qualitative assessment and indications of possible impairment, the Company proceeded to Step 2 to determine whether an impairment loss should be measured.
The customer relationships intangible assets, which are entirely related to the Third-Party Payment Processing Referral Services Segment, were tested for impairment under the guidance in ASC 360 using an undiscounted cash flow model. The undiscounted cash flows for the customer relationships intangible assets were above the carrying amounts and the Company determined that the long-lived asset group was recoverable, and no impairment existed as of June 30, 2023.
The trade name intangible assets related to the Third-Party Payment Processing Referral Services Segment were tested for impairment under the guidance in ASC 360 and were valued using an undiscounted cash flow model. The undiscounted cash flows for the trade names related to the Third-Party Payment Processing Referral Services Segment were above the carrying amount and the Company determined that the long-lived asset group was recoverable, and no impairment existed as of June 30, 2023. The Company determined that impairment testing was not warranted at June 30, 2023 for the $1,500 of trademarks related to the rebranding initiative given the recency of the prior valuation in September 2022.
For ASC 350 testing purposes, the Company compared the fair value of the reporting unit with its carrying amount. The fair value of the reporting unit was estimated giving consideration to the Income Approach, including the discounted cash flow method, and the Market Approach, including the similar transactions method and guideline public company method. Significant inputs and assumptions in the ASC 350 analysis included forecasts (e.g., revenue, operating costs and capital expenditures, etc.)expenditures), discount rate, long-term growth rate and tax rates etc. for the reporting unit under the Income Approach and market-based enterprise value to revenue multiples under the Market Approach.
As a result of the ASC 350 analysis, the Company recognized a non-cash pre-tax impairment loss of $67,190 during the three months ended March 31, 2022$9,536 to write down the carrying value of goodwill in the Third-Party Payment Processing Referral Services Segment to its implied fair value. There was 0 goodwill impairment charge recognized during the three months ended June 30, 2022.zero. The non-cash impairment loss is included in the unaudited condensed
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consolidated statement of operations for the three and six months ended June 30, 2023 under the caption “goodwill impairment” during the six months ended June 30, 2022..
Determining the fair value of a reporting unit and intangible assets requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods. There can be no assurance that additional goodwill or intangible assets will not be impaired in future periods.
7. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
June 30,
2022
December 31,
2021
June 30,
2023
December 31,
2022
Accrued insurance expensesAccrued insurance expenses$5,436 $3,932 Accrued insurance expenses$7,243 $7,139 
Accrued estimated workers’ compensation expensesAccrued estimated workers’ compensation expenses411 644 Accrued estimated workers’ compensation expenses159 275 
Accrued medical contingencyAccrued medical contingency366 370 Accrued medical contingency366 366 
Accrued legal contingencyAccrued legal contingency1,250 1,250 Accrued legal contingency1,250 1,250 
Accrued sales tax payableAccrued sales tax payable100 175 Accrued sales tax payable520 307 
Accrued cash incentives108 3,130 
Other accrued expensesOther accrued expenses3,461 3,685 Other accrued expenses1,731 3,157 
Contingent consideration liability2,043 — 
Unclaimed propertyUnclaimed property2,630 2,372 Unclaimed property2,888 2,795 
Other current liabilitiesOther current liabilities2,963 3,751 Other current liabilities1,875 2,307 
Total other current liabilitiesTotal other current liabilities$18,768 $19,309 Total other current liabilities$16,032 $17,596 
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8. Debt
The Company’s outstanding debt obligations are as follows (in thousands):
Coupon Rate
Range in 2021
through 2Q22
Effective
Interest Rate at
June 30, 2022
MaturityJune 30,
2022
December 31,
2021
Coupon Rate
Range in 2022
through 2Q23
Effective
Interest Rate at
June 30, 2023
MaturityJune 30,
2023
December 31,
2022
Short term debt - related party:Short term debt - related party:
Term LoanTerm Loan5.125% - 7.125%13.63%May 2024$15,007 $35,007 Term Loan7.125%13.16%May 2024$12,864 $— 
NotesNotes4.0% - 6.0%6.38%May 202448,754 49,504 Notes4.5% - 6.0%4.86%May 202443,491 — 
$63,761 $84,511 56,355 — 
Less: unamortized debt issuance costs on Term LoanLess: unamortized debt issuance costs on Term Loan(1,628)(2,099)Less: unamortized debt issuance costs on Term Loan(648)— 
Less: unamortized debt issuance costs on NotesLess: unamortized debt issuance costs on Notes(328)(435)Less: unamortized debt issuance costs on Notes(135)— 
Long term debt - related party$61,805 $81,977 
$55,572 $ 
Long term debt - related party:Long term debt - related party:
Term LoanTerm Loan7.125%13.16%May 2024$— $12,579 
NotesNotes4.5% - 6.0%4.86%May 2024— 42,523 
— 55,102 
Less: unamortized debt issuance costs on Term LoanLess: unamortized debt issuance costs on Term Loan— (992)
Less: unamortized debt issuance costs on NotesLess: unamortized debt issuance costs on Notes— (209)
$ $53,901 
Short-term loans for insurance financingShort-term loans for insurance financing3.99% - 4.85%n/aAugust 2022 - March 20232,351 3,142 Short-term loans for insurance financing6.25% - 6.96%n/aSeptember 2023 - March 2024614 1,892 
Total outstanding debtTotal outstanding debt$64,156 $85,119 Total outstanding debt$56,186 $55,793 
Interest expense related to the Company’s outstanding debt totaled $1,461$940 and $1,681$1,461 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $3,165$1,875 and $3,582$3,165 for the six months ended June 30, 20222023 and 2021, 2022,
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respectively. Interest expense includes interest on outstanding borrowings and amortization of debt issuance costs and debt discount. See Note 1516 – Related Party Transactions for additional information regarding the Company’s related party long-term debt.
Term Loan
The Company maintains an agreement with Luxor Capital Group, LP (“Luxor Capital”) (as amended or otherwise modified from time to time, the “Credit Agreement”). The Credit Agreement provides for a senior secured first priority term loan (the “Term Loan”) which is guaranteed by certain subsidiaries of the Company. In connection with the Term Loan, the Company issued to Luxor Capital warrants which are exercisable for 586,845 shares of the Company’s common stock at June 30, 2022 (see Note 12 – Stockholders’ Equity). See Amendments to Loan Agreements below for details on an amendment to the Credit Agreement entered into in May 2022.
Interest on the Term Loan is payable quarterly, in cash or, at the election of the Company, as a payment-in-kind, with interest paid in-kind being added to the aggregate principal balance. The Company elected to pay the interest payments of $221 and $228 due on March 31, 2023 and June 30, 2023, respectively, in-kind, resulting in such amounts being added to the principal balance of the Term Loan.
In January 2023, the Company made prepayments totaling $139 on the Term Loan, representing 60% of the net proceeds received by the Company for sales under the ATM Program that settled in early January 2023. Additionally, the Company made a prepayment of $25 on the Term Loan on June 29, 2023 pursuant to an amendment to the Credit Agreement. See Amendments to Loan Agreements below for additional details on the Term Loan and Credit Agreement.
The Credit Agreement includes a number of customary covenants that, among other things, limit or restrict the ability of 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 Credit Agreement also includes customary affirmative covenants, representations and warranties and events of default.
Notes
Additionally, 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(as amended or otherwise modified from time to astime, the “Convertible Notes Agreement”). The net carrying value of the Notes as of June 30, 20222023 and December 31, 20212022 totaled $48,426$43,356 and $49,069,$42,314, respectively. See Amendments to Loan Agreements and Conversion Agreementbelow for additional details on amendments to the Convertible Notes Agreement and a conversion agreement entered into in May 2022.Notes.
Interest on the Notes is payable quarterly, in cash or, at the Company’s election, up to one-halfapproximately 33% of the dollar amount of an interest payment due can be paid-in-kind. Interest paid-in-kindFor the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, pursuant to certain amendments to the Convertible Notes Agreement, the Company is allowed to pay-in-kind 100% of the interest payments due on such dates (see Amendments to Loan Agreements below). The Company elected to pay the $479 and $489 interest payments due on March 31, 2023 and June 30, 2023, respectively, in-kind, resulting in such amounts being added to the aggregate principal balance.
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balance of the Notes. Interest expense related to the Notes was comprised of the following for the three and six months ended June 30, 20222023 and 20212022 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Contractual interest expenseContractual interest expense$745 $501 $1,488 $996 Contractual interest expense$489 $745 $968 $1,488 
Amortization of debt discountAmortization of debt discount47 298 101 588 Amortization of debt discount37 47 74 101 
$792 $799 $1,589 $1,584 $526 $792 $1,042 $1,589 
The Notes include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of additional shares. 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 are convertible at the holder’s election into shares of the Company’s common stock at a rate of $8.52$127.25 per share at June 30, 2022.2023, subject to certain “blocker” limitations limiting the amount of shares into which the Notes can be converted.
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 (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).
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Amendments to Loan Agreements
January 6, 2023 Amendments
On May 9,January 6, 2023, ASAP Inc. (f/k/a Waitr Inc.), Waitr Intermediate Holdings, LLC, other guarantors party thereto, Luxor Capital, LLC and Luxor Capital entered into an amendment to the Credit Agreement (the “January 2023 Amended Credit Agreement”). Additionally, on January 6, 2023, Waitr Holdings Inc. and Luxor Capital entered into an amendment to the Convertible Notes Agreement (the “January 2023 Amended Convertible Notes Agreement”). The January 2023 Amended Credit Agreement and January 2023 Amended Convertible Notes Agreement provided that (i) Section 5.1(c) of each of the agreements was amended to waive the requirement for the audit report to be unqualified as to going concern with respect to the fiscal year 2022 financial statements and (ii) the requirement of Section 5.1(i) of each of the agreements that the financial plan demonstrate adequate liquidity through the final maturity date was amended to waive such requirement with respect to the financial plan to be delivered within 30 days of the end of fiscal year 2022.
March 31, 2023 Amendments
On March 31, 2023, the Company entered into an amendment to the Credit Agreement (the “March 2023 Amended Credit Agreement”) and an amendment to the Convertible Notes Agreement (together, the “May 9, 2022(the “March 2023 Amended Loan Agreements”Convertible Notes Agreement”). The May 9, 2022March 2023 Amended Loan Agreements provide, among other things, (i) that going forward on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances by the Company will be applied to the prepayment of the Term Loan and (ii) a six-month extension of the maturity date of the Credit Agreement and March 2023 Amended Convertible Notes Agreement until May 15, 2024. Additionally, pursuantextended the due date from March 31, 2023 to April 17, 2023 for submission of the fiscal year 2022 audited financial statements of the Company to the amendment tolenders. Additionally, the CreditMarch 2023 Amended Convertible Notes Agreement allowed the Company made a $20,000 prepayment onto pay in-kind 100% of the Term Loan on May 9, 2022.accrued interest for the fiscal quarter ended March 31, 2023.
The Company evaluated the amendments in the May 9, 2022March 2023 Amended Loan AgreementsConvertible Notes Agreement under ASC 470-50,470-60,Troubled Debt Modification and ExtinguishmentRestructurings by Debtors, and. Management concluded that there were indicators of financial difficulty for the Company at this date. Additionally, management concluded that the amendments did not meetincrease in the characteristicsallowable percentage of debt extinguishments under ASC 470-50. Accordingly,interest on the amendments were treatedNotes that could be paid-in-kind, from 33% to 100% for the interest payment for the quarter ended March 31, 2023, was a concession granted by the lenders. Therefore, the amendment was accounted for as a troubled debt modification,restructuring. Management assessed whether the total undiscounted future cash payments specified by the March 2023 Amended Convertible Notes Agreement were greater or less than the carrying amount of the debt at the time of the restructuring and thus,determined that the undiscounted future cash payments under the new terms were greater than the carrying amount of the debt at the time of the restructuring. Accordingly, no gain or loss was recorded. Arequired to be recognized on the troubled debt restructuring on March 31, 2023. The change was accounted for prospectively using the new effective interest rate for each of the Term Loan and Notes that equates the revised cash flows to the carrying amount of the original debt is computed and applied prospectively.Notes.
June 29, 2023 Amendments
On May 12, 2022,June 29, 2023, the Company entered into an additionalamendment to the Credit Agreement (the “June 2023 Amended Credit Agreement”) and an amendment to the Convertible Notes Agreement (the “May 12, 2022“June 2023 Amended Convertible Notes Agreement”) which provides that subsequent to the payment in full of the Term Loan outstanding under the existing. The June 2023 Amended Credit Agreement on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances received by the Company will be applied to prepayment of the Notes under the Convertible Notes Agreement. The provisions of the May 12, 2022and June 2023 Amended Convertible Notes Agreement did not contain changesextend the due dates for submission of each of the second and third quarter 2023 financial statements of the Company to the lenders by approximately five days. Additionally, the June 2023 Amended Convertible Notes Agreement that warranted an evaluation of debt modification or extinguishment.
Conversion Agreement
On May 13, 2022,allows the Company entered into a conversion agreement (the “Conversion Agreement”), pursuant to whichpay in-kind 100% of the lenders underaccrued interest for the fiscal quarters ended June 30, 2023 and September 30, 2023.
The Company evaluated the amendments in the June 2023 Amended Convertible Notes Agreement under ASC 470-60, “Troubled Debt Restructurings by Debtors”. Management concluded that there were permittedindicators of financial difficulty for the Company at this date. Additionally, management concluded that the increase in the allowable percentage of interest on the Notes that could be paid-in-kind, from 33% to convert $750 of100% for the outstanding principalinterest payments for the quarters ended June 30, 2023 and September 30, 2023, was a concession granted by the lenders. Therefore, the amendment is accounted for as a troubled debt restructuring. Management assessed whether the total undiscounted future cash payments specified by the June 2023 Amended Convertible Notes Agreement are greater or less than the carrying amount of the Notes into sharesdebt at the time of Company common stock at a conversion rate of 5,882 shares of Company common stock per one thousand principalthe restructuring and determined that the undiscounted future cash payments under the new terms are greater than the carrying amount of the Notes (calculated based on a per share price of $0.17 of Company common stock on Nasdaq), notwithstandingdebt at the conversion rate then in effect pursuant to the termstime of the Notes.
Pursuantrestructuring. Accordingly, no gain or loss was required to be recognized on the Conversion Agreement,troubled debt restructuring on June 29, 2023. The change is accounted for prospectively using the Luxor Entities converted $750 principal amountnew effective interest rate of the Notes into 4,411,500 shares of Company common stock during the three months ended June 30, 2022 (see Note 12 - Stockholders’ Equity). In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the fair value of the securities transferred in the induced conversion over the fair value of securities issuable pursuant to the original conversion terms is recognized as induced conversion expense. Accordingly, upon the induced conversion, the Company recognized $930 of expense with a corresponding entry to equity of $1,673 and a net reduction of the Notes of $743, consisting of the $750 ofNotes.
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principal, net of related discount. The expense is included in general and administrative expenses in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2022.
Short-Term Loans
The Company has outstanding short-term loans as of June 30, 20222023 for the purpose of financing portions of its annual insurance premium obligations. The loans are payable in monthly installments until maturity.
9. 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 of $17$6 and $33$17 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $33$13 and $57$33 for the six months ended June 30, 20222023 and 2021,2022, respectively. The Company’s income tax expense is entirely related to state taxes in various jurisdictions. The Company recorded a full valuation allowance against net deferred tax assets as of June 30, 20222023 and December 31, 20212022 as the Company has historically generated net operating losses, 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.
During 2020, the Company was permitted to defer payment of the employer portion of certain payroll taxes under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Company did not defer any payroll taxes after December 31, 2020. As of June 30, 2022, the Company has $667 of employer payroll tax deferrals outstanding, all of which will be paid in 2022. This amount is reflected in other current liabilities in the accompanying unaudited condensed consolidated balance sheet.
10. Commitments and Contingent Liabilities
Third-Party Delivery for Online Ordering of Food and Other Items
In June 2023, the Company contracted with Uber Technologies Inc. whereby Uber Direct will provide the delivery services for the Company’s online ordering of food and other items. It is expected that this arrangement will be implemented during the third quarter of the current fiscal year. The Company will continue to provide and operate the technology platform for online ordering.
Sponsorship Agreements
In July 2022, the Company entered into a five-year sponsorship agreement (the “MetLife Sponsorship Agreement”) with New Meadowlands Stadium Company, LLC (“NMSC”), pursuant to which the Company was the exclusive mobile ordering platform used at MetLife Stadium. In June 2023, the Company and NMSC mutually agreed to terminate the MetLife Sponsorship Agreement and all future obligations related to the agreement have been extinguished in full.
In September 2022, the Company entered into a four-year sponsorship agreement with the National Hockey League’s Florida Panthers (the “FLA Sponsorship Agreement”) pursuant to which the Company was the official mobile ordering platform used at the FLA Live Arena. In May 2023, the Company terminated the FLA Sponsorship Agreement and entered into a new sponsorship agreement which terminated on June 30, 2023.
Workers Compensation and Auto Policy Claims
We establish a liability under our workers’ compensation and auto insurance policies for claims incurred within our self-insured retention levels and an estimate for claims incurred but not yet reported. As of June 30, 20222023 and December 31, 2021, $5,7242022, $7,390 and $4,305,$7,349, respectively, in outstanding workers’ compensation and auto policy reserves are included in the unaudited condensed consolidated balance sheet.sheets.
Legal Matters
In July 2016, Waiter.com, Inc. filed a lawsuit against Waitr Inc. in the United States District Court for the Western District of Louisiana, alleging trademark infringement based on Waitr’sthe Company’s use of the “Waitr” trademark and logo, Civil Action No.: 2:16-CV-01041. The plaintiff sought injunctive relief and damages relating to Waitr’sthe Company’s use of the “Waitr” name and logo. During the third quarter of 2020, the trial date was rescheduled to June 2021. On June 22, 2021, the Company entered into a License, Release and Settlement Agreement (the “Settlement”) to settle all claims related to this lawsuit. Pursuant to the Settlement, the Company paid the plaintiff $4,700 in cash on July 1, 2021. In connection with the Settlement, we agreed to adopt a new trademark or tradename to replace the Waitr trademark and to discontinue use of the Waitr trademark in connection with the marketing, sale or provision of any web-based or mobile app-based delivery, pick-up, carry-out or dine-in services using the Waitr trademark by June 22, 2022, unlesswhich was extended by eight additional months in exchange for a one-time payment of $800. During the three months ended March 31, 2022, the Company accrued an $800 reserve in connection with its option to extend the license period by an additional eight months, which was
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paid in May 2022. The $800 legal reserve and $4,700 legal settlement areis included in other expense in the unaudited condensed consolidated statement of operations for the six months ended June 30, 2022 and 2021, respectively.2022.
In April 2019, the Company was named as a defendant in a class action complaint filed by certain current and former restaurant partners, captioned Bobby’s Country Cookin’, LLC, et al v. Waitr Holdings Inc., which is currently pending in the United States District Court for the Western District of Louisiana. The plaintiffs assert claims for breach of contract and violation of the duty of good faith and fair dealing, and they seek recovery on behalf of themselves and two separate classes. Based on the current class definitions, as many as 10,000 restaurant partners could be members of the two separate classes at issue. In February 2022, the parties reached a proposed settlement in principle to resolve the litigation in its entirety and requested a stay of the pending litigation. This proposed settlement in principle was subject to Court approval and entry into a settlement agreement between the parties, and contemplated a total potential settlement fund of
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$2,500 of Company shares of common stock. Ultimately, no settlement agreement was executed by the parties nor was District Court approval obtained,obtained. Thereafter, the Company sought and was granted leave to appeal the parties have askeddenial of its motion for summary judgment to the Fifth Circuit. On June 29, 2023, the Fifth Circuit reversed the District Court’s ruling, in part, and then remanded the case to the District Court to lift the stay and reopen the litigation. Based on the settlement negotiations, thefor further proceedings. The Company previously accrued a $1,250 reserve in connection with this lawsuit during the three months ended December 31, 2021. The accrued legal contingency is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2022.2023.
In September 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 wereNovember 2022, the Company was named as defendantsa defendant 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,Jenson et al v. Bitesquad.com, LLC. The case was, No. 22-cv-03044 (NEB), filed in Minnesota state court. The plaintiffs, three customers purporting to represent a class, allege that the Western District of Louisiana, Lake Charles Division. In the lawsuit, the plaintiff asserts putative class action claims alleging, inter alia, that various defendants madeCompany’s advertising is false and misleading statements in securities filings, engaged in fraud, and violated accounting and securities rules, seeking damages based upon these allegations. 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 courtthe Company’s “free delivery” promotions violate the Minnesota Uniform Deceptive Practices Act and the Minnesota False Statement in November 2019. These two cases were consolidated,Advertising Act as a result of the Company charging “other fees” on such orders that plaintiffs assert constitute a “delivery charge.” The plaintiffs seek unspecified damages as well as injunctive and an amended complaint was filed in October 2020.declaratory relief. The Company filed a motionremoved the case to dismissthe United States District Court for the District of Minnesota under the Class Action Fairness Act. Based on the existence of an arbitration provision in February 2021.the BiteSquad website “terms and conditions” section, the Company then moved to compel arbitration under the Federal Arbitration Act. The Court assigned thatparties briefed and presented arguments on this motion to the Magistrate Judge, who recently issued her Reportcourt on March 8, 2023 and Recommendation to the District Court Judge that the motion be granted in all respects. The parties are now briefing their respective positionswaiting on the Report and Recommendation and will await the District Court Judge’scourt’s ruling. In the meantime, all discovery remains stayed and no trial date has been set. WaitrThe Company believes that this lawsuit lacks merit and that it has strong defenses to all of the claims alleged. WaitrThe Company continues to vigorously defend the suit.lawsuit.
In October, 2017, the Company was named as a defendant in the matter of Michael Boone and Jennifer Walters, individually and on behalf of their minor child Grace Boone, vs. Waitr Inc., pending in the 22nd Judicial District Court for the Parish of St. Tammany, State of Louisiana. The action arises from a pedestrian/vehicle collision that occurred in November 2016, and the alleged substantial damages as a result thereof. This matter was not resolved through mediation. A trial date has not been set and discovery is ongoing. The Company intends to vigorously defend this lawsuit.
In May 2020, the Company was named as a defendant in Mary Ritchey, Individually and as Conservator for A.M., a minor, vs. Kristi Rando, Waitr Holdings, Inc., et al., Civil No. 1CCV-20-0722 LWC, and Robert P. McPherson vs. Kristi Rando, Waitr Holdings, Inc., et al., Civil No. 1CCV-20-0764 LWC, consolidated and which is currently pending in the Circuit Court of the First Circuit, State of Hawaii. This action is a result of an automobile accident that occurred in October 2018 involving an employee of a Company subsidiary and the alleged substantial injuries and damages as a result thereof. Discovery is ongoing, as well as the motion practice. The court recently granted plaintiffs’ motion to continue trial, and the trial has been rescheduled for June 2024. The Company intends to vigorously defend this lawsuit.
In May 2020, the Company was named as a defendant in Jessie Stewart, Bradley Stewart & Sheila Ludwig vs. Waitr Inc. of LA., Waitr Holdings, Inc., Delivery Logistics, LLC, et al, in the 22nd Judicial District Court, St. Tammany Parish, Louisiana. This action is a result of an automobile accident that occurred in April 2020 involving an independent contractor and the mother of the three plaintiffs, alleging substantial damages based on the injuries sustained in the accident and the ultimate death of the mother subsequent to the automobile accident. Discovery is ongoing and no trial date has been set. The Company intends to vigorously defend this lawsuit.
In addition to the lawsuits described above, Waitrthe Company is involved in other litigation arising from the normal course of business activities, including, without limitation, vehicle accidents involving employees and independent contractor drivers resulting in claims alleging personal injuries and medical expenses, labor and employment claims, allegations of intellectual property infringement, and workers’ compensation benefit claims as a result of alleged conduct involving its employees, independent contractor drivers, and third-party negligence. Although Waitrthe Company believes that it maintains insurance with standard deductibles that generally covers liability for potential damages 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, there are limits to insurance coverage and in certain instances claims are met with denial of coverage positions by the carriers; accordingly, we could suffer material losses as a result of these claims, the denial of
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coverage for such claims, or damages awarded for any such claim that exceeds coverage. Litigation is unpredictable and we may determine in the future that certain existing claims have greater exposure or liability than previously understood.
11. Stock-Based Awards and Cash-Based Awards
In June 2021,2020, the Company’s stockholders approved the Waitr Holdings Inc. Amended and Restated 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which 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. As of June 30, 2022,2023, there were 5,529,2551,103,004 shares of common stock available for future grants pursuant to the 2018 Incentive Plan. The Company also has outstanding equity awards under the 2014 Stock Plan (as amended in 2017, the “Amended 2014 Plan”)2017). Total compensation expense related to awards under the Company’s incentive plans was $1,579$1,342 and $2,387$1,579 for the three months ended June 30, 20222023 and 2021,2022, respectively, and $3,250$2,407 and $4,465$3,250 for the six months ended June 30, 20222023 and 2021,2022, respectively.
Stock-Based Awards
Stock Options
During the six months ended June 30, 2021, 500,000 stock options were granted under the 2018 Incentive Plan. Such options were subsequently forfeited during the three months ended September 30, 2021. There were no grants of stock options during the six months ended June 30, 2022. The Company determines the fair value of stock option grants on the grant date using an option-pricing model with various assumptions regarding the risk-free rate, volatility and expected term. AsExpected volatility for stock options is typically estimated based on a combination of March 31, 2022, allthe historical volatility of the Company’s stock price and the historical and implied volatility of comparable publicly traded companies. There were no grants of stock options under the 2018 Incentive Plan during the six months ended June 30, 2023 or the six months ended June 30, 2022. All outstanding stock options wereare fully vested and there wasis no remaining unrecognized compensation cost related to stock options. The Company recognized compensation expense for stock options of $358 for the three months ended June 30, 2021, and $13 and $692 for the six months ended June 30, 2022 and 2021, respectively.
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2022.
The stock option activity under the Company’s incentive plans during the six months ended June 30, 20222023 and 20212022 is as follows:
Six Months Ended June 30, 2022Six Months Ended June 30, 2021Six Months Ended June 30, 2023Six Months Ended June 30, 2022
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
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 periodBalance, beginning of period9,656,928 $0.39 $0.28 9,753,257 $0.43 $0.33 Balance, beginning of period481,025 $7.58 $5.25 482,767 $7.74 $5.60 
Granted— — — 500,000 2.78 2.19 
Exercised— — — (9,209)0.90 4.50 
ForfeitedForfeited(21,327)2.20 4.46 (21,553)6.49 4.97 Forfeited(462)66.62 96.23 (1,006)41.29 89.20 
Expired— — — (10,097)3.47 4.13 
Balance, end of periodBalance, end of period9,635,601 $0.38 $0.27 10,212,398 $0.53 $0.40 Balance, end of period480,563 $7.52 $5.17 481,761 $7.67 $5.40 
Outstanding stock options, which were fully vested and expected to vest and exercisable are as follows as of June 30, 20222023 and December 31, 2021:2022:
As of June 30, 2022As of December 31, 2021As of June 30, 2023As of December 31, 2022
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Number of OptionsNumber of Options9,635,601 9,635,601 9,656,928 4,870,026 Number of Options480,563 480,563 481,025 481,025 
Weighted-average remaining contractual term (years)Weighted-average remaining contractual term (years)2.532.533.033.06Weighted-average remaining contractual term (years)1.531.532.022.02
Weighted-average exercise priceWeighted-average exercise price$0.38 $0.38 $0.39 $0.40 Weighted-average exercise price$7.52 $7.52 $7.58 $7.58 
Aggregate Intrinsic Value (in thousands)Aggregate Intrinsic Value (in thousands)$— $— $3,543 $1,773 Aggregate Intrinsic Value (in thousands)$— $— $— $— 
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. There were no exercises of stock options during the six months ended June 30, 2022. The aggregate intrinsic value of awards exercised during the three2023 and six months ended June 30, 2021 was $5 and $20, respectively. Upon exercise, the Company issued new common stock.2022.
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Restricted Stock
The 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 June 30, 2022,2023, there were 3,134,325156,716 performance-based RSUs outstanding under the Company’s 2018 Incentive Plan. Such RSUs were granted to the Company’s chief executive officer, Carl Grimstad, in April 2020 (the “Grimstad RSU Grant”). The Grimstad RSU Grant has an aggregate grant date fair value of $3,542 and vests in full in the event of a change of control, as defined in Mr. Grimstad’s employment agreement with the Company, subject to his continuous employment with the Company through the date of a 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 or he is terminated by the Company for reason other than misconduct. No 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 reason or he is terminated by the Company for reason other than misconduct, should either occur.
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Awards with Time-Based Vesting
During the six months ended June 30, 2022, 8,470,000 RSUs with2023, there were no grants of time-based vesting were grantedRSUs pursuant to the 2018 Incentive Plan (with an aggregate grant fair value of value of $3,445). The RSUs generally vest over three years in accordance with the terms specified in the applicable award agreements, all of which accelerate and vest upon a change of control.
Plan. The Company recognized compensation expense for restricted stock of $1,579$1,342 and $2,029$1,579 during the three months ended June 30, 20222023 and 2021,2022, respectively, and $3,237$2,407 and $3,773$3,237 during the six months ended June 30, 20222023 and 2021,2022, respectively. Unrecognized compensation cost related to unvested time-based RSUs as of June 30, 20222023 totaled $13,916,$6,535, with a weighted average remaining vesting period of approximately 2.51.6 years. The total fair value of restricted shares that vested during the three months ended June 30, 2023 and 2022 was $23 and 2021 was $153, and $2,893, respectively, and $221$54 and $5,386$221 during the six months ended June 30, 20222023 and 2021,2022, respectively.
The activity for restricted stock with time-based vesting under the Company’s incentive plans is as follows for the six months ended June 30, 20222023 and 2021:2022:
Six Months Ended June 30, 2022Six Months Ended June 30, 2021Six Months Ended June 30, 2023Six Months Ended June 30, 2022
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)
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 periodNonvested, beginning of period8,614,746 $2.15 2.54,558,603 $2.23 1.71Nonvested, beginning of period612,191 $24.42 2.05430,728 $43.00 2.50
GrantedGranted8,470,000 0.41 5,308,960 2.55 Granted— — 423,500 8.20 
Shares vestedShares vested(979,570)2.34 (2,103,310)2.03 Shares vested(164,815)23.94 (48,981)46.80 
ForfeituresForfeitures(989,503)1.21 (230,084)1.50 Forfeitures(61,286)19.99 (49,473)24.20 
Nonvested, end of periodNonvested, end of period15,115,673 $1.22 2.57,534,169 $2.53 2.79Nonvested, end of period386,090 $25.32 1.62755,774 $24.40 2.50
Cash-Based Awards
Performance Bonus Agreement
On April 2020, the Company entered into a performance bonus agreement with Mr. Grimstad, which was extended through January 3, 2025 in connection with the extension of his employment agreement. Pursuant to the performance bonus agreement, upon the occurrence of a 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,$40.00, 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 change of control; provided, however, that in the event Mr. Grimstad terminates his employment for good reason or the Company terminates his employment other than for misconduct, Mr. Grimstad will be entitled to receive the Bonus provided the change of control occurs on or before January 3, 2025. Compensation expense related to the bonus agreement will not be recognized until such time that is probable that the performance goal will be achieved.
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Executive Retention Bonuses
On January 31, 2023, the Company agreed to a pay a retention bonus to Mr. Grimstad in the amount of $1,000, of which $750 was payable immediately (and was paid on February 17, 2023) and the balance of $250 is to be paid upon the satisfaction of certain conditions. In the event Mr. Grimstad terminates his employment, other than for good reason (as defined in his employment agreement), or is terminated by the Company for misconduct (as defined in his employment agreement), in each case prior to January 31, 2024, Mr. Grimstad is required to repay the Company an amount of cash equal to the after-tax amount of the retention compensation actually paid.
Additionally, on January 31, 2023, the Company agreed to pay retention bonuses totaling $500 to certain executive officers of the Company (chief financial officer, general counsel and chief engagement officer), of which $375 was payable immediately (and was paid on February 17, 2023) and the balance of $125 is to be paid upon the satisfaction of certain conditions. In the event that any such executive officer terminates his at-will employment for any reason, other than the Company’s failure to timely pay salary, or the Company terminates such employment for such executive officer’s willful misconduct, gross negligence, failure to perform required duties or due to a felony conviction, in each case prior to January 31, 2024, such executive officer is required to repay the Company an amount of cash equal to the after-tax amount of the retention compensation actually paid.
The retention bonuses which were paid in February 2023 are being amortized over the service period of the award, February 1, 2023 through January 31, 2024, and are included in general and administrative expense in the unaudited condensed consolidated statement of operations. The portions of the retention bonuses which are to be paid upon the satisfaction of certain performance conditions and service conditions will not be expensed until such time that is probable that the performance goal will be achieved.
12. Stockholders’ Equity
Common Stock
At June 30, 20222023 and December 31, 2021,2022, there were 249,000,000 shares of common stock authorized and 163,448,74213,506,812 and 146,094,30012,955,299 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, 20222023 or December 31, 2021.2022. The Company’s common stockholders are entitled to one vote per share.
At-the-Market Offering
In November 2021,August 2022, the Company entered into a thirdfourth amended and restated open market sale agreement with respect to an at-the-market offering program (the “ATM Program”) under which the Company maycould offer and sell, from
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time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $50,000 through Jefferies LLC (“Jefferies”) as its sales agent. The issuance and sale of shares by the Company under the open market sales agreement was made pursuant to the Company’s effective registration statementstatements on Form S-3 which was filed on April 4, 2019. Details of sales pursuant toS-3. In January 2023, the ATM Program are included in the table below. There were no salesCompany sold 431,429 shares of common stock pursuant to the ATM Program after April 12, 2022.
November 2021 ATM Program
Sales during December 2021Sales during the period from January 1, 2022 through April 12, 2022 Total
Maximum aggregate offering price (in thousands)$50,000 
Total shares sold1,679,631 12,074,990 13,754,621 
Average sales price per share$0.83 $0.60 $0.63 
Gross proceeds (in thousands)$1,398 $7,211 $8,609 
Net proceeds (in thousands)$1,359 $7,120 $8,479 
for net proceeds of $155. As of August 18, 2023, $44,183 remained unsold under the ATM Program, however, the Company does not anticipate being able to utilize its ATM Program to effect any further sales of common stock in 2023.
Preferred Stock
At June 30, 20222023 and December 31, 2021,2022, the Company was authorized to issue 1,000,000 shares of preferred stock ($0.0001 par value per share). There were no issued or outstanding preferred shares as of June 30, 20222023 or December 31, 2021.2022.
Notes
The Company has outstanding Notes which are convertible into shares of the Company’s common stock at a rate of $8.52$127.25 per share. See Note 8 – Debt for additional information regarding the Notes.
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Pursuant to the Conversion Agreement, the Luxor Entities converted $750 principal amount of the Notes into 4,411,500 shares of Company common stock during the three months ended June 30, 2022, calculated based on a per share price of $0.17, notwithstanding the conversion rate then in effect pursuant to the terms of the Notes. In connection with the conversion, the Company recognized $930 of induced conversion expense (see Note 8 - Debt).TABLE_CONTENTS
Warrants
In November 2018, the Company issued to Luxor Capital warrants which are exercisable for 586,845 shares of the Company’s common stock at June 30, 2022, with an exercise price of $8.52 per 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 certain issuances of additional shares. Additionally, holders of the Debt Warrants have customary registration rights with respect to the shares underlying the Debt Warrants.
13. Fair Value Measurements
Medical Contingency
At December 31, 2021, the Company had an outstanding medical contingency claim which was measured at fair value on a recurring basis. The estimated loss exposure for the medical contingency claim reflected the liability for unpaid medical expenses and dependent death benefits, totaling $423 as of December 31, 2021. The analysis used in the measurement of the reserve for the medical contingency reflected the Company’s assumptions regarding unpaid medical expenses and estimated death benefits used in developing the fair value estimate and was a Level 3 measurement. These inputs required significant judgments and estimates at the time of the valuation.
At March 31, 2022, management no longer deemed the medical contingency claim a liability requiring fair value measurement estimation as the remaining liability at such time consisted entirely of discrete costs related to certain unpaid medical expenses. Accordingly, during the three months ended March 31, 2022, the medical contingency claim was transferred out the Level 3 fair value hierarchy.
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Contingent Consideration
The fair value of contingent consideration is measured at acquisition date, and at the end of each reporting period through the term of the arrangement, using the Black Scholes option-pricing model with assumptions for volatility and risk-free rate. Contingent consideration relatesrelated to thean earnout provision in the Company’s acquisition on August 25, 2021 of the Cape Payment Companies in August 2021 and the future contingent payment based on the achievement of certain revenue targets (see Note 4 – Business Combinations).targets. The contingent consideration liabilityearnout provision, if any, was payable no later than March 30, 2023, and was valued at $1,939 at$1,686 as of the acquisition date. At December 31, 2021 and is included in other non-current liabilities on the condensed consolidated balance sheet. As of June 30, 2022, the contingent consideration liability is valued at $2,043 and is included in other current liabilities on the condensed consolidated balance sheet.
Expected volatility is based on a blended weighted average of the volatility rates for a number of similar publicly-traded companies. The risk-free rates are based on U.S. Treasury securities with similar maturities as the expected term ofCompany determined that it was unlikely that the earnout provision at the date of valuation.would be met, therefore no value was assigned. The fair value measurementearnout provision was basednot met, accordingly, no payment was due on significant inputs not observable in the market and thus, represents Level 3 measurements within the fair value hierarchy. These inputs required significant judgments and estimates at the time of the valuation. The Company engaged a third-party specialist to assist management in estimating the fair value of the contingent consideration obligation.March 30, 2023.
Summary by Fair Value Hierarchy
The following table presents the Company’s liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in thousands):
As of June 30, 2022
Level 1Level 2Level 3Total
Liabilities
Contingent consideration$— $— $2,043 $2,043 
Total liabilities measured and recorded at fair value$ $ $2,043 $2,043 
As of December 31, 2021
Level 1Level 2Level 3Total
Liabilities
Accrued medical contingency$— $— $423 $423 
Contingent consideration— — 1,939 1,939 
Total liabilities measured and recorded at fair value$ $ $2,362 $2,362 
The Company had no assets or liabilities required to be measured at fair value on a recurring basis at June 30, 20222023 or December 31, 2021.
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Adjustments to the fair value of the accrued medical contingency were recognized in other expense (income) on the condensed consolidated statement of operations. The following table presents a reconciliation of the accrued medical contingency liability which was classified as a Level 3 financial instrument prior to March 31, 2022 (in thousands):
Medical Contingency
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Balance, beginning of the period$ $17,300 $423 $17,435 
Increases/additions— 41 — 84 
Reductions/settlements— (159)(53)(337)
Transfers out of Level 3— — (370)— 
Balance, end of the period$ $17,182 $ $17,182 
2022.
Adjustments to the fair value of the contingent consideration liability at the end of each reporting period arewere recognized in income (loss) from operations in the condensed consolidated statement of operations. The following table presents a reconciliation of the contingent consideration liability classified as a Level 3 financial instrument for the three and six months ended June 30, 2022 (in thousands):
Contingent Consideration
Three Months Ended June 30, 2022Six Months Ended June 30, 2022Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Balance, beginning of the periodBalance, beginning of the period$2,020 $1,939 Balance, beginning of the period$2,020 $1,939 
AdditionsAdditions— — Additions— — 
Increase in fair valueIncrease in fair value23 104 Increase in fair value23 104 
Reductions/settlementsReductions/settlements— — Reductions/settlements— — 
Balance, end of the periodBalance, end of the period$2,043 $2,043 Balance, end of the period$2,043 $2,043 
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 4 – Business Combinations).acquisitions. Fair value concepts are also generally applied in estimating the fair value of long-lived assets and a reporting unit in connection with impairment analyses. See Note 6 – Intangible Assets and Goodwill, for further discussion ofAdditionally, the Company applied fair value of long-lived assets and the reporting unit associated with impairment testing conducted at March 15, 2022. Inconcepts in connection with the induced conversion of the Notes during the three months ended June 30, 2022,2022.
14. Segment Information
The Company operates through two reportable operating segments based on two primary areas of service: (i) Delivery Services, which include operations related to the Company applied fair value concepts. SeeCompany’s technology platform for online ordering and delivery, and (ii) Third-Party Payment Processing Referral Services, which include operations related to facilitating access to third parties that provide payment processing solutions for restaurants and other merchants. For additional information about how our reportable segments derive revenue, refer to Note 8 - Debt4 – Revenue for further discussion..
The CODM does not evaluate operating segments using asset information and, accordingly, we do not report asset information by segment. There are no internal revenue transactions between our reportable segments. The accounting policies of the operating segments are the same as those described in the 2022 Form 10-K.
The CODM evaluates segment performance primarily based on segment adjusted EBITDA. Segment adjusted EBITDA is defined as revenue less the following expenses: operations and support, sales and marketing, research and development, general and administrative and certain non-operating expenses associated with our segments. Excluded from segment adjusted EBITDA are non-cash items and other items that do not reflect our core operations. The following table presents information about our segments, with a reconciliation of total segments adjusted EBITDA to net loss from continuing operations of the consolidated Company (in thousands):
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Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Segments adjusted EBITDA:
Delivery Services Segment$(296)$(3,601)$(4,667)$(5,628)
Third-Party Payment Processing Referral Services Segment(514)(10)(1,015)226 
Total segments adjusted EBITDA(810)(3,611)(5,682)(5,402)
Reconciling items:
Interest expense(940)(1,461)(1,875)(3,165)
Income taxes(6)(17)(13)(33)
Depreciation and amortization expense(421)(3,000)(878)(6,065)
Goodwill impairment(9,536)— (9,536)(67,190)
Stock-based compensation expense(1,342)(1,579)(2,407)(3,250)
Gain on disposal of assets11 71 22 88 
Induced conversion expense related to Notes— (930)— (930)
Change in fair value of contingent consideration liability— (23)— (104)
Transaction related expenditures and other non-recurring adjustments92 (1,121)(51)(2,036)
Accrued legal reserve— — — (800)
Net loss from continuing operations$(12,952)$(11,671)$(20,420)$(88,887)

14.15. Loss Per Share Attributable to Common Stockholders
The calculation of basic and diluted loss per share attributable to common stockholders for the three and six months ended June 30, 20222023 and 20212022 is as follows (in thousands, except share and per share data):
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Basic and diluted loss per share:Basic and diluted loss per share:Basic and diluted loss per share:
Net loss attributable to common stockholders - basic and dilutedNet loss attributable to common stockholders - basic and diluted$(11,671)$(5,641)$(88,887)$(9,353)Net loss attributable to common stockholders - basic and diluted$(12,952)$(11,671)$(20,420)$(88,887)
Weighted average number of shares outstanding160,531,778 115,644,790 157,099,938 113,998,589 
Weighted average number of shares outstanding - basic and dilutedWeighted average number of shares outstanding - basic and diluted13,496,985 8,026,589 13,461,325 7,854,998 
Basic and diluted loss per common shareBasic and diluted loss per common share$(0.07)$(0.05)$(0.57)$(0.08)Basic and diluted loss per common share$(0.96)$(1.45)$(1.52)$(11.32)
The Company has outstanding Notes which are convertible into shares of the Company’s common stock. See Note 8 – Debt for additional details on the Notes. Based on the conversion price in effect at the end of the respective periods,June 30, 2023 and June 30, 2022, the Notes were convertible into 5,722,314341,773 and 4,737,237286,116 shares, respectively, of the Company’s common stock atstock. During the three and six months ended June 30, 2023 and the three and six months ended June 30, 2022, the Company’s weighted average common stock price was below the Notes conversion price. Additionally, the Company had net losses during such periods. Accordingly, the shares were not considered in the diluted earnings per share calculation.
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2022 and 2021. Such shares were excluded from the fully diluted calculations because the effect on net loss per common share would have been anti-dilutive.
Additionally, theThe following table includes securities outstanding at the end of the respective periods, which have been excluded from the fully diluted calculations because the effect on net loss per common share would have been antidilutive:
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Antidilutive shares underlying stock-based awards:Antidilutive shares underlying stock-based awards:Antidilutive shares underlying stock-based awards:
Stock optionsStock options9,635,601 10,212,398 9,635,601 10,212,398 Stock options480,563 481,761 480,563 481,761 
Restricted stock unitsRestricted stock units18,249,998 10,693,494 18,249,998 10,693,494 Restricted stock units542,806 912,490 542,806 912,490 
Debt Warrants (see Note 12 - Stockholders’ Equity)
586,845 478,464 586,845 478,464 
WarrantsWarrants— 29,342 — 29,342 
15.16. Related-Party Transactions
Credit Agreement and Convertible Notes Agreement
In November 2018, the Company entered into the Credit Agreement, and in January 2019, the Company entered into an amendment to the Credit Agreement, and an amendment to the Convertible Notes Agreement with the Luxor Entities. In addition, on each of May 21, 2019, July 15, 2020, March 9, 2021, and May 9, 2022, November 8, 2022, January 6, 2023, March 31, 2023 and June 29, 2023, the Company entered into amendments to the Credit Agreement with Luxor Capital and amendments to the Convertible Notes Agreement with the Luxor Entities. Additionally, on May 12, 2022, the Company entered into an amendment to the Convertible Notes Agreement with the Luxor Entities.
On May 1, 2020, the Company entered into a Limited Waiver and Conversion Agreement with respect to the Credit Agreement and Convertible Notes Agreement. On May 13, 2022, the Company entered into athe May 2022 Conversion Agreement, and on July 22, 2022, the Company entered into the July 2022 Conversion Agreement, with respect to the Convertible Notes Agreement.
During the six months ended June 30, 2023, the Company made prepayments totaling $139 on the Term Loan, representing a portion of the net proceeds received by the Company for sales under the ATM Program pursuant to an amendment to the Credit Agreement. Additionally, the Company made a prepayment of $25 on the Term Loan in June 2023 pursuant to the June 2023 Amended Credit Agreement.
Jonathan Green, a board member of the Company, is a partner at Luxor Capital. See Note 8 - Debt for additional details on related-party debt.
Other Transactions with Related Parties
As of June 30, 2022, we had over 27,0002023, some of the restaurants on our Platforms, some of whichPlatform are affiliated with one current and one prior member of our board of directors (the “Board”). We estimate that we generated total revenue, inclusive of diner fees, of approximately $75$66 and $200$75 during the three months ended June 30, 20222023 and June 30, 2021,2022, respectively, and $177$108 and $463$177 during the six months ended June 30, 20222023 and 2021,2022, respectively, from such restaurants that are affiliated with those current and prior members of ourthe Board. Such restaurants enter into customary master service agreements with the Company, which are generally consistent with the other national partner agreements.
16. Subsequent Events
July Conversion Agreement
On July 22, 2022, the Company, various lenders party thereto, and Luxor Capital entered into a conversion agreement (the “July Conversion Agreement”). Pursuant to the July Conversion Agreement, the lenders agreed to convert $6,750 of the outstanding principal amount of the Notes into shares of Company common stock at a conversion rate of 4,000 shares of Company common stock per one thousand principal amount of the Notes (calculated based on a per share price of $0.25 of Company common stock on Nasdaq), notwithstanding the conversion rate then in effect pursuant to the terms of the Notes. On August 5, 2022, the Luxor Entities converted $6,750 of the Notes into 27,000,000 shares of Company common stock, reducing the outstanding principal balance of the Notes to $42,004.
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Sponsorship Agreement
On July 23, 2022 (the “Effective Date”), the Company entered into a multi-year sponsorship agreement with New Meadowlands Stadium Company, LLC (“NMSC”), pursuant to which the Company will be the exclusive mobile ordering platform used at MetLife Stadium. Pursuant to the sponsorship agreement, NMSC agrees to provide the Company with certain promotions, programs and benefits from New York Jets LLC (the “Jets”) and New York Football Giants, Inc. (the “Giants”), throughout each Contract Year (as defined below) of the agreement, NFL season and NFL post-season. Additionally, the Company was provided various benefits and rights including electronic signage, messaging, merchandise, and rights to use a specified number of players from each of the Jets and Giants in conjunction with advertising and promotional programs. The term “Contract Year” under the agreement refers to each year of the agreement with the first Contract Year beginning on the Effective Date and ending on March 31, 2023, and each subsequent Contract Year beginning on April 1 and ending on the last day of the following March. The term of the sponsorship agreement is five Contract Years, unless sooner terminated pursuant to provisions in such agreement, and will expire on March 31, 2027.
In connection with the sponsorship agreement, the Company has committed to pay an aggregate of $9,128 in sponsorship fees which will be amortized over the performance period. The sponsorship fees are payable over the five Contract Years of the agreement, generally in quarterly installments. Additionally, the Company has agreed to pay a post-season sponsor fee in exchange for certain post-season benefits set forth in the agreement, if the Giants and/or Jets appear in any NFL post-season games during the term of the agreement. The Agreement also provides for customary representations, warranties, and indemnification from the parties.

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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 20212022 Form 10-K filed with the SEC on March 11, 2022.10-K. 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 sections titled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors”.
Dollar amounts in this discussionItem 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, are expressed in thousands, except as otherwise noted.
All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:20 Reverse Stock Split that became effective on November 18, 2022, as if it had taken place as of the beginning of the earliest period presented.
Overview
ASAP.com, the on-demand delivery brand for Waitr Holdings Inc., operates an online ordering technology platform (the “Platform”) using the deliver“deliver anything ASAP” model, includingmaking it easy to order food, alcohol, convenience, grocery, flowers, auto parts and more. Its proprietary in-stadium delivery system nowThe Platform provides an enhanced fan experience at sports and entertainment venues. The online ordering technology platform includes the Waitr, Bite Squad and Delivery Dudes mobile applications, providing delivery, carryout and dine-in options, connecting restaurants, merchants, drivers and diners in certain cities acrossin the United States. Additionally, ASAP facilitates access to third parties that provide payment processing solutions for restaurants and other merchants. We entered into the business of facilitating access to third parties that provide payment processing solutions through the acquisition of ProMerchant LLC, Cape Cod Merchant Services LLC and Flow Payments LLC (collectively referred to herein as the “Cape Payment Companies”) in August 2021.
The Company operates through two reportable operating segments based on the two primary areas of service described above: (i) “Delivery Services”, which include operations related to the Company’s technology platform for online ordering and delivery, and (ii) “Third-Party Payment Processing Referral Services”, which include operations related to facilitating access to third parties that provide payment processing solutions for restaurants and other merchants. Our strategy is to bring inexpand our ecosystem, which today is comprised of our restaurants, merchants, diners and independent contractor drivers, through the logistics infrastructure to underserved populationsenhancement of restaurants, grocery storesour Platform and other merchantsproviding additional products and establish strong market presence or leadership positions inservices, including the markets in which we operate.
Additionally, Waitr facilitates merchantfacilitation of access to third-party payment processing solution providers, pursuantservices for our ecosystem. We believe that the Third Party Payment Processing Referral Service is a business segment with opportunity for growth. We intend to the acquisition of the Cape Payment Companies in August 2021. Revenue from such services primarily consists of residual payments received from third-party payment processing solution providers, basedfocus resources on the volume of transactions a payment processing solution provider performs for the merchant.
During the first half of 2022, we completed various integrations with third party aggregators, point of sale systems and individual restaurants. Our addition of 7-Eleven to our platform in June 2022 and our proprietary in-stadium ordering technology are examples of our commitment to expand into new delivery verticals. We continue to build on our ancillary revenue streams and diversify the Company beyond third-party food delivery with the facilitation of merchant access to third-party payment processing solution providers.
As we entered the third quarter of 2022, we began our transition to rebrand and change the Company name to ASAP. We entered into agreements to begin delivering from retailers in various industries such as apparel, sporting goods, auto parts and more. In addition to providing our customers with access to a broader range of products, this expansion of services allows the Company to provide more earning opportunities to its independent contractor driver base. We also recently entered into a multi-year sponsorship agreement, pursuant to which the Company will be the exclusive mobile ordering platform used at MetLife Stadium over a five year period. See “Liquidity and Capital Resources” below for additional information.business segment.
At June 30, 2022, we had over 27,0002023, our Platform included restaurants in approximately 1,000 cities, on the Platforms.570 cities. Average Daily Orders for the three months ended June 30, 20222023 and 20212022 were approximately 18,0706,559 and 38,583,18,070, respectively, and revenue was $31,171$13,951 and $49,167,$31,171, respectively. For the six months ended June 30, 20222023 and 2021,2022, Average Daily Orders were 20,4757,803 and 38,108,20,475, respectively, and revenue was $30,655 and $66,211, respectively.
In June 2023, the Company contracted with Uber Technologies Inc. whereby Uber Direct will provide the delivery services for the Company’s online ordering of food and $100,097, respectively.other items. It is expected that this arrangement will be implemented during the third quarter of the current fiscal year. The Company will continue to provide and operate the technology platform for online ordering.
Going Concern
The Company has concluded that as a result of recurring losses from operations and declines in cash positions, there exists substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of the financial statements contained in this Form 10-Q. The Company’s results of operations and cash positions have been adversely impacted primarily by declines in order volumes. As of June 30, 2023, the Company has outstanding debt in the principal amount of $56,355 with a maturity date of May 15, 2024. In an effort to alleviate these conditions, management is evaluating the Company’s expected liquidity levels and exploring potential ways of raising additional capital in order to meet its obligations, including the debt repayments which are due in less than
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twelve months from the date of issuance of these financial statements, although there can be no assurance that we will be able to raise additional capital on commercially acceptable terms, or at all. Additionally, management is implementing cost saving initiatives to reduce operating costs and plans to continue to implement further cost saving initiatives where appropriate. The Company’s plans are dependent on conditions and factors, many of which are outside of the Company’s control. There can be no assurance that we will be successful in implementing our plans or that we will be able to generate positive cash flow from operations in any future period, nor can there be any assurance that we will be able to raise additional capital. The result of such inability, whether individually or in the aggregate, will adversely impact our financial condition and could cause us to curtail or cease operations or to pursue other strategic alternatives, including commencing a case under the U.S. Bankruptcy Code. Accordingly, management could not conclude that it was probable that the plans will sufficiently mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. See “Liquidity and Capital Resources” below for additional details.
Impact of Macroeconomic Developments and COVID-19 on our Business
We are exposed to general economic conditions that are beyond our control, including macroeconomic developments and impacts related to inflation, increased gasoline prices and the ongoing effects of the COVID-19 pandemic, both globally and in the U.S. The inflationary trends that the U.S. is experiencing, as well as increased gasoline prices, affect all constituent groups in our ecosystem, including restaurants, consumers and independent contractor drivers. These groups may be negatively impacted by these economic conditions, which in turn could impact our financial position and results of operations. There is uncertainty of the duration of these macroeconomic conditions.
We have thus far been able to operate effectively during the COVID-19 pandemic. In response to economic hardships experienced during the COVID-19 pandemic, the U.S. federal government rolled out stimulus payments in the first quarter of 2021 which we believe had a positive impact on order volumes during such period. However, we also believe the stimulus payments resulted in increased driver labor costs as we were faced with challenges in maintaining an appropriate level of driver supply. In addition, early in the COVID-19 pandemic, we experienced an increase in revenue and orders due to increased consumer demand for delivery and more restaurants using our platform to facilitate both delivery and take-out. During the second quarter of 2021 and thereafter, we believe the impact of the stimulus payments on our order volumes began to decrease.
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There remains uncertainty as to whether or not the COVID-19 pandemic will continue to impact diner behavior, and if so, in what manner.
To the extent that macroeconomic factors, including inflation, increased gasoline prices and the COVID-19 pandemic adversely impactsimpact the Company’s business, results of operations, liquidity or financial condition, itthey may also have the effect of heightening many of the other risks described in the risk factors in the Company’s 20212022 Form 10-K and this quarterly report on Form 10-Q for the three months ended June 30, 2022.10-Q. Management continues to monitor the impact of recent macroeconomic trends and the ongoing impact of new COVID-19 outbreakvariants and the possible effects on its financial position, liquidity, operations, industry and workforce.
Nasdaq Compliance
On July 26, 2022, Waitr Holdings Inc. (the “Company”) received approval (the “Approval”) from the Nasdaq Listing Qualifications Department of the Nasdaq Stock Market (the “Nasdaq”) of the Company’s application to transfer the listing of its common stock from the Nasdaq Global Select Market to the Nasdaq Capital Market. The common stock was transferred to the Nasdaq Capital Market at the opening of trading on July 28, 2022. The Nasdaq Capital Market operates in substantially the same manner as the Nasdaq Global Select Market and the common stock continues to trade under the symbol “WTRH.”
As previously disclosed, on January 26, 2022, the Company received a letter from the Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5450(a)(1) because the closing bid price per share of the Company’s common stock had closed below $1.00 for the previous 30 consecutive business days (the “Bid Price Rule”). The Company was given until July 25, 2022 to regain compliance with the rule.
In response, the Company filed an application to transfer the listing of its common stock from the Nasdaq Global Select Market to the Nasdaq Capital Market. As a result of the Approval, the Company has been granted an additional 180-day grace period, or until January 23, 2023, to regain compliance with the Bid Price Rule. As a condition of the Approval imposed by Nasdaq Listing Rule 5810(c)(3)(a)(i), the Company notified the Nasdaq that it would seek to implement a reverse stock split, if necessary, to regain compliance with the Bid Price Rule.
If we do not regain compliance with the Bid Price Rule in the relevant compliance period, the Staff may provide written notification to the Company that its securities will be delisted.
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:
incurred loss estimates under our insurance policies with large deductibles or retention levels;
loss exposure related to claims;
determination of agent vs. principal classification for revenue recognition purposes;
income taxes;
useful lives of tangible and intangible assets;
equity compensation;contingencies; and
contingencies;
fair value of goodwill and other intangible assets, including the recoverability of intangible assets with finite lives and other long-lived assets; and
fair value of assets acquired, liabilities assumed and contingent consideration as part of a business combination.assets.
Other than the changes disclosed in Part I, Item 1, Note 2 – Basis 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 20212022 Form 10-K.
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New Accounting Pronouncements and Pending Accounting Standards
See Part I, Item 1, Note 2 – Basis of Presentation and Summary of Significant Accounting Policies for a description of accounting standards adopted during the six months ended June 30, 2022. Also described2023. The Company considered the applicability and impact of all ASUs. ASUs not listed in Note 2 were assessed and determined to be either not applicable or are pending standards and their estimated effectexpected to have minimal impact on ourthese unaudited condensed consolidated financial statements.
Factors Affecting the Comparability of Our Results of Operations
Acquisitions.Goodwill and Long-Lived Asset Impairments. The Delivery Dudes Acquisition and Cape Payment Acquisition were considered business combinations in accordance with ASC 805, and have been accounted for usingDuring the acquisition method. Under the acquisition method of accounting, total purchase consideration, acquired assets, assumed liabilities and contingent consideration are recorded based on their estimated fair values on the acquisition date. For each of these acquisitions, the excess of the fair value of purchase consideration over the fair value of the assets less liabilities acquired (and contingent consideration when applicable) has been recorded as goodwill on our condensed consolidated balance sheet as of June 30, 2022. The results of operations of Delivery Dudes and Cape Payment Companies are included in our consolidated financial statements beginning on the acquisition dates, March 11, 2021 and August 25, 2021, respectively.
In connection with the Delivery Dudes Acquisition, the Company incurred direct and incremental costs during the three and six months ended June 30, 20212023, we recognized a non-cash goodwill impairment charge totaling $9,536. During the six months ended June 30, 2022, we recognized a non-cash goodwill impairment charge totaling $67,190. Determining the fair value of approximately $63a reporting unit and $669, respectively, consistingintangible and other assets requires the use of legalestimates and professional fees, whichsignificant judgments that are includedbased on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates used could change in generalfuture periods. Significant goodwill and administrative expenses inintangible asset impairments may impact the consolidated statementcomparability of operations in such periods.our results from period to period.
Changes in Fee Structure. Our fee structure has changed at various times since our 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 (whether externally to comply with governmental imposed caps or as a result of internal decision-making) could affect the comparability of our results of operations from period to period.
Goodwill Impairment. During the three months ended March 31, 2022, we recognized a non-cash impairment charge totaling $67,190 to write down the carrying value of goodwill to its implied fair value, as a result of our goodwill impairment analysis, which concluded that the fair value of the reporting unit (the Company) at such time was less than its carrying amount. There was no goodwill impairment charge recognized during the three months ended June 30, 2022. Determining the fair value of a reporting unit and intangible assets requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates used could change in future periods. There can be no assurance that additional goodwill or intangible assets will not be impaired in future periods. Significant goodwill and intangible asset impairments may impact the comparability of our results from period to period.
Seasonality and Holidays. Our business tends to follow restaurant closure and diner behavior patterns with respect to demand of our service offering. In many of our markets, we have historically experienced variations in order frequency 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 Day, among others. 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, severe weather-related events such as snowstorms, ice storms, hurricanes and tropical storms have adverse effects on order volume, particularly if they cause property damage or utility interruptions to our restaurant partners. The COVID-19 pandemic, as well as the federal government’s responses thereto, have had an impact on our typical seasonality trends and could impact future periods.
Acquisition Pipeline. We continue to maintain and evaluate an active pipeline of potential acquisition targets and may pursue acquisitions in the future, both in the restaurant delivery space as well as other verticals, such as payments and other complimentary businesses.future. These potential business acquisitions may impact the comparability of our results in future periods relative to prior periods.
Key Factors Affecting Our Performance
Efficient Market Expansion and Penetration. Our continued revenue growth and improvedcompetition has negatively impacted our cash flow, and profitabilitywhich is dependent on successful restaurant, merchant, diner and driver penetration of our markets and achieving our targeted scale in current and future markets. Failure in achieving our targeted scale could adversely affect our working capital,
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which in turn, could slowwould continue to negatively impact our growth plans. 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.condition.
Our Restaurant, Diner and Driver Network. A significant partPart of our growthstrategy is our ability to successfully expandmaintain our network of restaurants, merchants, diners and independent contractor drivers using the Platforms.Platform. If we fail to retain existing restaurants, merchants, diners and independent contractor drivers using the Platforms,Platform, or to add new restaurants,merchants, diners and independent contractor drivers to the Platforms,Platform, our revenue, financial results and business may be adversely affected.
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:plans for our Delivery Services Segment. We currently do not have any defined key business metrics related to our Third-Party Payment Processing Referral Services Segment.
Active Diners. We count Active Diners as the number of unique diner accounts from which an order has been completed through the PlatformsPlatform 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 PlatformsPlatform is a key revenue driver and a valuable measure of the size of our engaged diner base.
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Average Daily Orders. We calculate Average Daily Orders as the number of completed orders during the period divided by the number of days in that period, including holidays. Average Daily Orders is an important metric for us because the number of orders processed on our PlatformsPlatform is a key revenue driver and, in conjunction with the number of Active Diners, a valuable measure of diner activity on our PlatformsPlatform 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 PlatformsPlatform during a given period. Gross Food Sales are different than the order value upon which we charge our fee to restaurants, which excludes gratuities and diner fees. Prepaid gratuities, which are not included in our revenue, are determined by diners and may vary 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 PlatformsPlatform 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 completed orders during the same period. Average Order Size is an important metric for us because the average value of gross food sales on our PlatformsPlatform is a key revenue driver.
Three Months Ended June 30,Six Months Ended June 30,
Key Business Metrics(1)
2022202120222021
Active Diners (as of period end)1,327,971 1,878,904 1,327,971 1,878,904 
Average Daily Orders18,070 38,583 20,475 38,108 
Gross Food Sales (dollars in thousands)$86,315 $154,738 $187,383 $305,019 
Average Order Size (in dollars)$52.49 $44.07 $50.56 $44.22 
_____________________
Three Months Ended June 30,Six Months Ended June 30,
Key Business Metrics2023202220232022
Active Diners (as of period end)692,054 1,327,971 692,054 1,327,971 
Average Daily Orders6,559 18,070 7,803 20,475 
Gross Food Sales (dollars in thousands)$35,207 $86,315 $81,780 $187,383 
Average Order Size (in dollars)$58.98 $52.49 $57.90 $50.56 
(1)The key business metrics include the operations of Delivery Dudes beginning on the acquisition date, March 11, 2021.
Basis of Presentation
Revenue
We generate revenue primarily when diners place an order on one of the Platforms.Platform. We recognize revenue from diner orders when orders are delivered. Our revenue consists primarily of net Delivery Transaction Fees. Additionally, effective August 25, 2021, we generate revenue by facilitating merchant access to third-party payment processing solution providers.
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Cost and Expenses:
Operations and Support. Operations and support expense consists primarily of salaries, benefits, stock-based compensation and bonuses for employees engaged in operations and customer service, as well as territory managers, market success associates, restaurant onboarding, 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 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 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 advertisements, sponsorships and print marketing. Sales and marketing expense also includes referral agent commissions related to the facilitation of merchant access to third-party payment processing solution providers.
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,Platform, net of costs capitalized for the development of the Platforms.Platform. This expense also includes such items as software subscriptions that are necessary for the upkeep and maintenance of the Platforms.Platform.
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, accounting, and other professional services, insurance (including workers’ compensation, auto liability and general liability), travel, facilities rent, and other corporate overhead costs.
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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 and equipment, primarily consisting of tablets deployed in restaurants. We do not allocate depreciation and amortization expense to other line items.
Other Expenses (Income) and Losses (Gains), Net. Other expenses (income) and losses (gains), net, includes interest expense on outstanding debt, as well as any other items not considered to be incurred in the normal operations of the business, including accrued legal settlements and contingencies and expense related to the induced conversion of the Notes.
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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 June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except percentages(1))
(in thousands, except percentages(1))
2022% of Revenue2021% of Revenue2022% of Revenue2021% of Revenue
(in thousands, except percentages(1))
2023% of Revenue2022% of Revenue2023% of Revenue2022% of Revenue
RevenueRevenue$31,171 100 %$49,167 100 %$66,211 100 %$100,097 100 %Revenue$13,951 100 %$31,171 100 %$30,655 100 %$66,211 100 %
Costs and expenses:Costs and expenses:Costs and expenses:
Operations and supportOperations and support15,983 51 %31,273 64 %36,262 55 %61,611 62 %Operations and support6,012 43 %15,983 51 %14,223 46 %36,262 55 %
Sales and marketingSales and marketing6,973 22 %4,500 %13,226 20 %8,516 %Sales and marketing3,629 26 %6,973 22 %8,197 27 %13,226 20 %
Research and developmentResearch and development1,242 %854 %2,553 %1,853 %Research and development783 %1,242 %1,943 %2,553 %
General and administrativeGeneral and administrative12,213 39 %12,505 25 %23,758 36 %22,691 23 %General and administrative5,697 41 %12,213 39 %14,416 47 %23,758 36 %
Depreciation and amortizationDepreciation and amortization3,000 10 %2,965 %6,065 %5,882 %Depreciation and amortization421 %3,000 10 %878 %6,065 %
Goodwill impairmentGoodwill impairment— %— %67,190 101 %— — %Goodwill impairment9,536 68 %— — %9,536 31 %67,190 101 %
(Gain) loss on disposal of assets(71)%162 %(88)— %159 — %
Gain on disposal of assetsGain on disposal of assets(11)— %(71)— %(22)— %(88)— %
Total costs and expensesTotal costs and expenses39,340 126 %52,259 106 %148,966 225 %100,712 101 %Total costs and expenses26,067 187 %39,340 126 %49,171 160 %148,966 225 %
Loss from operationsLoss from operations(8,169)(26)%(3,092)(6)%(82,755)(125)%(615)(1)%Loss from operations(12,116)(87)%(8,169)(26)%(18,516)(60)%(82,755)(125)%
Other expenses and losses, net:
Other expenses (income) and losses (gains), net:Other expenses (income) and losses (gains), net:
Interest expenseInterest expense1,461 %1,681 %3,165 %3,582 %Interest expense940 %1,461 %1,875 %3,165 %
Other expense2,024 %835 %2,934 %5,099 %
Other (income) expenseOther (income) expense(110)(1)%2,024 %16 — %2,934 %
Net loss before income taxesNet loss before income taxes(11,654)(37)%(5,608)(11)%(88,854)(134)%(9,296)(9)%Net loss before income taxes(12,946)(93)%(11,654)(37)%(20,407)(67)%(88,854)(134)%
Income tax expenseIncome tax expense17 %33 %33 — %57 — %Income tax expense— %17 — %13 — %33 — %
Net lossNet loss$(11,671)(37)%$(5,641)(11)%$(88,887)(134)%$(9,353)(9)%Net loss$(12,952)(93)%$(11,671)(37)%$(20,420)(67)%$(88,887)(134)%
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(1)Percentages may not foot due to rounding.
The following section includes a discussion of our results of operations for the three and six months ended June 30, 20222023 and 2021. The results of operations of Delivery Dudes and the Cape Payment Companies are included in our unaudited condensed consolidated financial statements beginning on the acquisition dates of March 11, 2021 and August 25, 2021, respectively (see2022.
Revenue
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
2023202220232022
(dollars in thousands)(dollars in thousands)
Revenue$13,951 $31,171 (55 %)$30,655 $66,211 (54 %)
See Part I, Item 1, Note 4 – Business Combinations- Revenue).
Revenue
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
2022202120222021
(dollars in thousands)(dollars in thousands)
Revenue$31,171 $49,167 (37 %)$66,211 $100,097 (34 %)
for details of revenue by operating segment. Revenue decreased for the three and six months ended June 30, 20222023 compared to the three and six months ended June 30, 2021,2022, primarily as a result of decreased order volumes.volumes in our Delivery Services Segment. Partially offsetting the impact of decreased order volumes was
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an increase in the Average Order Size in the 2022 periodsthree and six months ended June 30, 2023 compared to the 2021 periods, as well as revenue from the Cape Payment Companies.three and six months ended June 30, 2022. The Average Order Size was $58.98 for the three months ended June 30, 2023, compared to $52.49 for the three months ended June 30, 2022, compared to $44.07 for the three months ended June 30, 2021, an improvement of 19%12%. The Average Order Size was $57.90 for the six months ended June 30, 2023, compared to $50.56 for the six months ended June 30, 2022, compared to $44.22an improvement of 15%.
Revenue for our Third-Party Payment Processing Referral Services Segment was relatively flat for the three and six months ended June 30, 2021, an improvement of 14%.
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2022.
Operations and Support
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage ChangeThree Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
20222021202220212023202220232022
(dollars in thousands)(dollars in thousands)(dollars in thousands)(dollars in thousands)
Operations and supportOperations and support$15,983 $31,273 (49 %)$36,262 $61,611 (41 %)Operations and support$6,012 $15,983 (62 %)$14,223 $36,262 (61 %)
As a percentage of revenueAs a percentage of revenue51 %64 %55 %62 %As a percentage of revenue43 %51 %46 %55 %
Operations and support expenses decreased in dollar terms and as a percentage of revenue in the three and six months ended June 30, 20222023 compared to the three and six months ended June 30, 2021,2022, primarily due to lower driver operations costs in our Delivery Services Segment as a result of decreased order volumes.
Sales and Marketing
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage ChangeThree Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
20222021202220212023202220232022
(dollars in thousands)(dollars in thousands)(dollars in thousands)(dollars in thousands)
Sales and marketingSales and marketing$6,973 $4,500 55 %$13,226 $8,516 55 %Sales and marketing$3,629 $6,973 (48 %)$8,197 $13,226 (38 %)
As a percentage of revenueAs a percentage of revenue22 %%20 %%As a percentage of revenue26 %22 %27 %20 %
SalesThe overall decrease in sales and marketing expense increased in dollar terms and as a percentage of revenue in the three and six months ended June 30, 20222023, compared to the three and six months ended June 30, 2021,2022, was primarily attributabledue to referral agent commissiona reduction in workforce and decreased advertising spend in our Delivery Services Segment. Slightly offsetting the decrease was an increase in sales and marketing expense related tofor our Third-Party Payment Processing Referral Services Segment as a result of increased sales efforts.
Decreased order volumes in our Delivery Services Segment during the Cape Payment Companies acquisition.
Research2023 periods resulted in an increase in sales and Development
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
2022202120222021
(dollars in thousands)(dollars in thousands)
Research and development$1,242 $854 45 %$2,553 $1,853 38 %
As a percentage of revenue%%%%
Research and developmentmarketing expense increased in dollar terms and as a percentage of revenue infor the three and six months ended June 30, 2022,2023 compared to the three and six months ended June 30, 2021,2022.
Research and Development
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
2023202220232022
(dollars in thousands)(dollars in thousands)
Research and development$783 $1,242 (37 %)$1,943 $2,553 (24 %)
As a percentage of revenue%%%%
Research and development expense is primarily related to costs associated with our Delivery Services Segment. The expense decreased in dollar terms in the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022, primarily due to the hiring ofa decrease in product and engineering personnelpersonnel. As a percentage of revenue, research and development expense increased for the three and six months ended June 30, 2023, compared to further developthe three and refine our Platforms.six months ended June 30, 2022, as a result of decreased order volumes.
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General and Administrative
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage ChangeThree Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
20222021202220212023202220232022
(dollars in thousands)(dollars in thousands)(dollars in thousands)(dollars in thousands)
General and administrativeGeneral and administrative$12,213 $12,505 (2 %)$23,758 $22,691 %General and administrative$5,697 $12,213 (53 %)$14,416 $23,758 (39 %)
As a percentage of revenueAs a percentage of revenue39 %25 %36 %23 %As a percentage of revenue41 %39 %47 %36 %
General and administrative expense decreased in dollar terms in the three and six months ended June 30, 2022,2023, compared to the three months ended June 30, 2021, primarily due to decreased stock based compensation expense. For theand six months ended June 30, 2022, generalprimarily due to staff reductions and administrative expense was relatively flat compared to the six months ended June 30, 2021.a decrease in insurance expense. Decreased order volumes in the 20222023 periods resulted in an increase in general and administrative expense as a percentage of revenue for the three and six months ended June 30, 20222023 compared to the three and six months ended June 30, 2021.
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2022.
Depreciation and Amortization
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage ChangeThree Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
20222021202220212023202220232022
(dollars in thousands)(dollars in thousands)(dollars in thousands)(dollars in thousands)
Depreciation and amortizationDepreciation and amortization$3,000 $2,965 %$6,065 $5,882 %Depreciation and amortization$421 $3,000 (86 %)$878 $6,065 (86 %)
As a percentage of revenueAs a percentage of revenue10 %%%%As a percentage of revenue%10 %%%
DepreciationA significant portion of the Company’s intangible assets and property and equipment were impaired as of December 31, 2022 due to the significant decline in the Company’s market capitalization during the year ended December 31, 2022. As a result, depreciation and amortization expense increaseddecreased in dollar terms and as a percentage of revenue in the three and six months ended June 30, 20222023, compared to the three and six months ended June 30, 2021, driven by an increase in depreciation expense related to computer tablets for restaurants on the Platforms and amortization expense on intangible assets acquired in the Delivery Dudes Acquisition and Cape Payment Companies Acquisition.2022.
Goodwill Impairment
During the three months ended March 31, 2022, we recognized a non-cash goodwill impairment charge of $67,190 to write down the carrying value of goodwill to its implied fair value. The primary factor contributing to a reduction in the fair value was the significant decline in the Company’s stock price in mid-March 2022, resulting in a market capitalization that was lower than the carrying value of the Company’s consolidated stockholders’ equity. No events or circumstances occurred during the three months ended June 30, 2022 that would indicate an impairment may have occurred, and accordingly, the Company determined that goodwill and long-lived asset impairment testing was not needed at June 30, 2022.
No events or circumstances occurred during the three months ended March 31, 2023 that would indicate an impairment may have occurred, and accordingly, the Company determined that goodwill and long-lived asset impairment testing was not needed at March 31, 2023.During the three months ended June 30, 2023, we recognized a non-cash goodwill impairment charge of $9,536 to write down the carrying value of goodwill to its implied fair value. The primary factor contributing to a reduction in the fair value was the sustained decline in the Company’s stock price and market capitalization in the second quarter of 2023. As of June 30, 2023, the Company’s goodwill has been fully impaired. See Part I, Item 1, Note 6 – Intangible Assets and Goodwill for additional details. There was no goodwill impairment charge recognized during the three months ended June 30, 2022.
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Other Expenses (Income) and Losses (Gains), Net
Three Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage ChangeThree Months Ended June 30,Percentage ChangeSix Months Ended June 30,Percentage Change
20222021202220212023202220232022
(dollars in thousands)(dollars in thousands)(dollars in thousands)(dollars in thousands)
Other expenses and losses, net$3,485 $2,516 39 %$6,099 $8,681 (30 %)
Other expenses (income) and losses (gains), netOther expenses (income) and losses (gains), net$830 $3,485 (76 %)$1,891 $6,099 (69 %)
As a percentage of revenueAs a percentage of revenue11 %%%%As a percentage of revenue%11 %%%
Other expenses (income) and losses (gains), net for the three months ended June 30, 2023 primarily consisted of $924 of interest expense associated with the Term Loan and Notes. For the three months ended June 30, 2022, other expenses (income) and losses (gains), net primarily consisted of $1,436 of interest expense associated with the Term Loan and Notes and $930 of expense associated with the induced conversion of the Notes. See Part I, Item 1, Note 8 - Debt for additional details on the Notes conversion.
For the threesix months ended June 30, 2021,2023, other expenses (income) and losses (gains), net primarily consisted of $1,660$1,835 of interest expense associated with the Term Loan and Notes and a $700 accrual for a legal settlement.
Notes. For the six months ended June 30, 2022, other expenses (income) and losses (gains), net primarily consisted of $3,109 of interest expense associated with the Term Loan and Notes and $930 of induced conversion expense for the Notes. For the six months ended June 30, 2021, other expenses and losses, net primarily consisted of a $4,700 accrual for a legal settlement and $3,520 of interest expense associated with the Term Loan andinduced conversion of the Notes.
Income Tax Expense
Income tax expense for the three months ended June 30, 2023 and 2022 was $6 and 2021 was $17, respectively, and $13 and $33 respectively, and $33 and $57 for the six months ended June 30, 20222023 and 2021,2022, respectively. The Company’s income tax expense is entirely related to state taxes in various jurisdictions. We have historically generated net operating losses; therefore, a valuation allowance has been recorded on our net deferred tax assets.
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Segments Adjusted EBITDA
The CODM evaluates segment performance primarily based on segment adjusted EBITDA. Segment adjusted EBITDA is defined as revenue less the following expenses: operations and support, sales and marketing, research and development, general and administrative and certain non-operating expenses associated with our segments. Excluded from segment adjusted EBITDA are non-cash items and other items that do not reflect our core operations. The following table presents information about our segments, with a reconciliation of total segments adjusted EBITDA to loss from operations of the consolidated Company (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Segments adjusted EBITDA:
Delivery Services Segment$(296)$(3,601)$(4,667)$(5,628)
Third-Party Payment Processing Referral Services Segment(514)(10)(1,015)226 
Total segments adjusted EBITDA(810)(3,611)(5,682)(5,402)
Reconciling items:
Interest expense(940)(1,461)(1,875)(3,165)
Income taxes(6)(17)(13)(33)
Depreciation and amortization expense(421)(3,000)(878)(6,065)
Goodwill impairment(9,536)— (9,536)(67,190)
Stock-based compensation expense(1,342)(1,579)(2,407)(3,250)
Gain on disposal of assets11 71 22 88 
Induced conversion expense related to Notes— (930)— (930)
Change in fair value of contingent consideration liability— (23)— (104)
Transaction related expenditures and other non-recurring adjustments92 (1,121)(51)(2,036)
Accrued legal reserve— — — (800)
Net loss from continuing operations$(12,952)$(11,671)$(20,420)$(88,887)
A discussion of operational results by segment is included in “- Results of Operations” above.
Liquidity and Capital Resources
Overview
Pursuant to the requirements of ASC 205-40, Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will sufficiently mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company has experiencedconcluded that as a result of recurring losses from operations and has an accumulated deficitdeclines in cash positions, there exists substantial doubt about the Company’s ability to continue as a going concern for a period of $458,022 asat least twelve months from the date of June 30, 2022.issuance of the financial statements in this Form 10-Q. The Company’s results of operations and cash positions have been adversely impacted primarily by declines in order volumes and increased expenses, resulting in recurring losses from operations, use of cash to fund operations and declines in cash positions. In addition to the impact of declines in order volumes, the Company’s operations have been impacted by
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macroeconomic factors including the COVID-19 pandemic, rising gas prices, inflation and increased competition from national delivery service providers. Management has focused its efforts on certain initiatives to improve revenue, operating income and cash positions, including (i) collaborations with convenience stores, (ii) delivery from retailers in a variety of industries, (iii) the entry into new markets and (iv) the development of a proprietary stadium ordering application. In July 2022, the Company entered into a multi-year sponsorship agreement to serve as the exclusive mobile ordering platform at MetLife Stadium, providing an avenue for the Company to expand its delivery services into the New York and New Jersey markets. Our strategy is to grow order volume and revenue both in existing markets and new markets, such as New York and New Jersey. Additionally, management has evaluated its existing cost structure and will continue to implement cost saving initiatives where appropriate to reduce operating costs and manage the Company’s cash position.
As of June 30, 2022, we had cash on hand of $28,203.volumes. Our primary sourcessource of liquidity have been cash flowduring the year ended December 31, 2022 was from operations and proceeds from the issuance of stockour common stock. The Company experienced a trend of negative cash flow from operations during the year ended December 31, 2022 and in the first and
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second quarters of 2023. Cash flow used in operations totaled $28,716 for the year ended December 31, 2022 and $5,727 for the six months ended June 30, 20222023. The Company has had recurring net losses, and fiscal 2021 and 2020. Duringas reflected in the six months ended June 30, 2022, pursuant to our ATM Program, we sold 12,074,990 shares of the Company’s common stock for net proceeds of $7,120. During the first and second quarters of 2022, we made investments in our business related to the enhancement of our Platforms and initiatives focused on further supplementing our offerings beyond third-party food delivery.
During the second quarter of 2022, accompanying unaudited condensed consolidated financial statements, the Company entered into the May 9, 2022 Amended Debt Agreements, pursuant to which the Company made a $20,000 prepayment on the Term Loan, reducing the outstanding amounthas an accumulated deficit of the Term Loan from $35,007 to $15,007. Additionally, the May 9, 2022 Amended Debt Agreements (i) provide that going forward on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances will be applied to the prepayment of the Term Loan under the Credit Agreement and, subsequent to the prepayment in full of the Term Loan, to the prepayment of the Notes under the Convertible Notes Agreement and (ii) include a six-month extension of the maturity date of each of the Credit Agreement and Convertible Notes Agreement until May 15, 2024. In May 2022, the Company entered into an additional amendment to the Convertible Notes Agreement which provides that subsequent to the payment in full of the Term Loan outstanding under the existing Credit Agreement, on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances received by the Company will be applied to prepayment of the Notes under the Convertible Notes Agreement. In May 2022, pursuant to the Conversion Agreement, the lenders under the Convertible Notes Agreement converted $750 of outstanding principal amount of the Notes into shares of Company common stock.
The aggregate principal amount of outstanding long-term debt totaled $63,761$596,344 as of June 30, 2023. The Company’s cash position has declined from $12,066 at December 31, 2022 consistingto $5,066 as of $15,007 for the Term Loan and $48,754 of Notes.June 30, 2023. As of June 30, 2022,2023, the Company had $2,351 ofhas outstanding short-term loans for insurance premium financing.
In July 2022,debt in the Company, various lenders party thereto, and Luxor Capital entered into the July Conversion Agreement, pursuant to which the lenders agreed to convert $6,750 of the outstanding principal amount of the Notes into shares$56,355 with a maturity date of Company common stock at a conversion rateMay 15, 2024. Our cash position as of 4,000 shares of Company common stock per one thousand principal amount of the Notes (calculated based on a per share price of $0.25 of Company common stock on Nasdaq), notwithstanding the conversion rate then in effect pursuant to the terms of the Notes. On August 5, 2022, a total of 27,000,000 shares of Company common stock were issued to the Luxor Entities in connection with the conversion. As of August 8, 2022, the outstanding principal amount of the Notes totaled $42,004.
In July 2022, the Company entered into a multi-year sponsorship agreement with NMSC, pursuant to which the Company will be the exclusive mobile ordering platform used at MetLife Stadium. The sponsorship agreement also provides the Company with benefits and rights including electronic signage, messaging, merchandise, and rights to use a specified number of players from each of the Jets and Giants in conjunction with advertising and promotional programs. In connection with the sponsorship agreement, the Company has committed to pay an aggregate of $9,128 in sponsorship fees which will be amortized over the performance period. The sponsorship fees are payable over the five Contract Years of the agreement, generally in quarterly installments. Additionally, the Company has agreed to pay a post-season sponsor fee in exchange for certain post-season benefits set forth in the agreement, if the Giants and/or Jets appear in any NFL post-season games during the term of the agreement.
31, 2023 was approximately $5,187. We currently believe that ourwe have sufficient cash on hand estimated cash flow fromto fund operations and proceeds from additional equity raises will be sufficient to meet our working capital needs forthrough at least the nextthird fiscal quarter of 2023.
In an effort to alleviate these conditions, management is evaluating the Company’s expected liquidity levels and exploring potential ways of raising additional capital in order to meet its obligations, including the debt repayments which are due in less than twelve months; however,months from the date of issuance of these financial statements, although there can be no assurance that we will be able to raise additional capital on commercially acceptable terms, or at all. Additionally, management is evaluating its existing cost structure and implementing cost saving initiatives to reduce operating costs and plans to continue to implement further cost saving initiatives where appropriate. To the extent raising additional equity capital is pursued, management plans to do so in best efforts private placements, rather than through the ATM Program. The Company does not anticipate utilizing its ATM Program in fiscal 2023.
The Company’s plans are dependent on conditions and factors, many of which are outside of the Company’s control. There can be no assurance that we will be able to generate positive cash flow at the levels we anticipate,from operations in any future period, nor can there be any assurance that we will be able to raise additional equity capital. capital; the result of such inability, whether individually or in the aggregate, will adversely impact our financial condition. Accordingly, management could not conclude that it was probable that the plans will sufficiently mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. As such, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.
We are continuously reviewing our liquidity and anticipated working capital needs based
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on overall market and economic factors. Market conditions, future financial performance or other factors may make it difficult or impractical for us to access sources of capital on favorable terms, if at all. The failure to successfully implement our strategy to raise capital while also achieving cost savings will adversely impact our financial condition, which impact could be material, could reduce the period of time for which our anticipated working capital needs will be sufficient, and could result in the Company terminating, curtailing or ceasing operations or pursuing other strategic alternatives, including commencing a case under the U.S. Bankruptcy Code.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business for the twelve-month period following the date the financial statements are issued. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result should the Company be unable to continue as a going concern.
Debt
In January 2023, the Company made prepayments totaling $139 on the Term Loan, representing 60% of the net proceeds received by the Company for sales under the ATM Program that settled in early January 2023. In June 2023, the Company made a $25 prepayment on the Term Loan pursuant to the June 2023 Amended Credit Agreement. The Company elected to pay 100% of the interest payments due on March 31, 2023 for the Term Loan and Notes, totaling $221 and $479, respectively, in-kind. Additionally, the Company elected to pay 100% of the interest payments due on June 30, 2023 for the Term Loan and Notes, totaling $228 and $489, respectively, in-kind.
The aggregate principal amount of outstanding short-term debt totaled $56,355 as of June 30, 2023, consisting of $12,864 for the Term Loan and $43,491 of Notes. As of June 30, 2023, the Company had $614 of outstanding short-term loans for insurance premium financing.
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Capital Expenditures
Our main capital expenditures relate to investments in the development and maintenance of the Platforms, which are expected to increase as we continue to grow our business.Platform. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors” in our 2021the 2022 Form 10-K and subsequent filings with the SEC, including this quarterly report on Form 10-Q for the three months ended June 30, 2022.10-Q.
Cash Flow
The following table sets forth our summary cash flow information for the periods indicated:
Six Months Ended June 30,Six Months Ended June 30,
(in thousands)(in thousands)20222021(in thousands)20232022
Net cash (used in) provided by operating activities$(13,829)$5,936 
Net cash used in investing activities(4,379)(17,419)
Net cash used in operating activitiesNet cash used in operating activities$(5,727)$(13,829)
Net cash provided by (used) in investing activitiesNet cash provided by (used) in investing activities33 (4,379)
Net cash used in financing activitiesNet cash used in financing activities(13,700)(12,675)Net cash used in financing activities(1,306)(13,700)
Cash Flows (Used in) Provided byUsed in Operating Activities
For the six months ended June 30, 2022,2023, net cash used in operating activities was $13,829,$5,727, compared to net cash provided byused in operating activities of $5,936$13,829 for the six months ended June 30, 2021. The decrease in cash flows from operating activities in2022. During the six months ended June 30, 2022 from2023, the comparable 2021 period was primarily driven by a decrease in revenue and changesnet change in operating assets and liabilities decreased net cash provided by operating activities by $689, primarily consisting of a decrease in accounts payable of $1,809 and a decrease in other current liabilities of $1,571, partially offset by a decrease in operationsprepaid expenses and support expenses.other current assets of $2,912. During the six months ended June 30, 2022, the net change in operating assets and liabilities decreased net cash provided by operating activities by $3,541, primarily consisting of a decrease in other current liabilities of $2,224 and a decrease in accounts payable of $1,596, partially offset by a decrease$1,596.
Cash Flows Provided By (Used) in prepaid expenses and other current assets of $3,580. DuringInvesting Activities
For the six months ended June 30, 2021, the net change in operating assets and liabilities increased2023, net cash provided by operatinginvesting activities by $2,959, primarily consistingincluded $33 of an increase in other current liabilitiesproceeds from the sale of $6,452, partially offset by a decrease in accrued payroll of $1,368, an increase in capitalized contract costs of $1,389property and an increase in prepaid expenses and other current assets of $1,008.
Cash Flows Used in Investing Activities
equipment. For the six months ended June 30, 2022, net cash used in investing activities consisted primarily of $4,318 for internally developed software. For the six months ended June 30, 2021, net cash used in investing activities consisted primarily of $12,706 for the acquisition of a business and related intangible assets and $4,137 of costs for internally developed software.
Cash Flows Used in Financing Activities
For the six months ended June 30, 2023, net cash used in financing activities consisted of $164 of payments on the Term Loan and $1,525 of payments on short-term loans for insurance financing, partially offset by $155 of net proceeds from the sales of common stock under the Company’s ATM Program. For the six months ended June 30, 2022, net cash used in financing activities consisted primarily of a $20,000 payment on the Term Loan and $3,602 of payments on short-term loans for insurance financing, partially offset by $7,120 of net proceeds from the sales of common stock under the Company’s ATM Program. For the six months ended June 30, 2021, net cash used in financing activities primarily consisted of a $14,472 principal payment on the Term Loan.
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 fact, 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,” “goal,” “strategy,” “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
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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 20212022 Form 10-K and subsequent filings with the SEC (Part I, Item 1A, SEC:
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Risks Related to Our Operations
failureinability to retain existing dinersfinance our operations through the sale or add new dinersissuance of debt or equity securities or through bank or other financing as a result of the existence of substantial doubt about our ability to continue as a going concern;
inability to successfully generate or otherwise obtain sufficient funds for our working capital needs, resulting in the need to substantially alter, or possibly discontinue, cease or curtail operations or to pursue other strategic alternatives, including commencing a case under the U.S. Bankruptcy Code;
risks related to a shift in our business strategy;
continuing to experience a decrease in the number of diners and number of orders or decrease in order sizes on the Platforms;Platform;
declines in our delivery service levels or lack of increases in business for restaurants;
loss of restaurants on the Platforms,Platform, including due to changes in our fee structure;
inability to successfully expand our operations of facilitating the entry into merchant agreements by and between merchants and third-party payment processing solution providers;
risks related to market closures and employee reductions;
inability to achieve 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;
recent inflationary pressures, increased gasoline prices economic impact resulting from the Ukrainian conflict, and other macroeconomic factors that are largely beyond our control;
inability to maintain and enhance our brands, including possible degradation thereto resulting from our comprehensive rebranding initiative to change our corporate name and visual identity, 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;operations;
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 successfully expand our operations of facilitating the entry into merchant agreements by and between merchants and third-party payment processing solution providers;Platform;
inability of third-party payment processing services, of which we may facilitate the entry into merchant agreements, to comply with applicable state or federal regulations;
inability to comply with applicable law or standards if we were to 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, restaurants and restaurants;merchants;
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;Platform;
loss of senior management or key operating personnel and dependence on skilled personnel to grow and operate our business;
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inability to successfully integrate and maintain acquired businesses;
failure to protect our intellectual property;
patent lawsuits and other intellectual property rights claims;
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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.reporting; (see Part I, Item 4 for details of the identification of material weaknesses in our internal controls); and
failure to remediate a material weakness in, or inherent limitations associated with, our internal controls (see Part I, Item 4).
Risks Related to Our Industry
the highly competitive and fragmented nature of our industry;
dependence on discretionary spending patterns in the areas in which the restaurants on our PlatformsPlatform operate and in the economy at large;
general economic and business risks affecting our industry that are largely beyond our control;
the COVID-19 variants and continued pandemic concerns, or a similar public health threat that could significantly affect our business, financial condition and results of operations;
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;
federal and state laws and regulations regarding privacy, data protection, and other matters affecting our business;
the potential for increased misclassification claims following the change to the U.S. presidential administration;
risks relating to our relationships with the independent contractor drivers, including shortages of available drivers and possible increases in driver compensation; and
risks related to the cannabis industry with respect to the business operations of referring merchants to third-party payment processing solution providers.
Risks Related to Ownership of Our Securities
risks related to future sales of a substantial number of shares by existing stockholders which could in turn cause our share price to decline;
the risk that management’s use of the net proceeds from, or the continuation of, our ATM Program does not increase the value of a stockholder’s investment;
the risk that future offerings of debt or equity securities that rank senior to our common stock may adversely affect the market price of our common stock;
the risk that the Debt Warrants and Notes as well as other derivative securities, if exercised or converted into shares of our common stock, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders; and
the risk that we fail to continue to meet all applicable NasdaqOTCQB Venture Market (“OTCQB”) listing requirements in future periods and risks relating to the consequent delisting of our common stock from Nasdaq,the OTCQB if we fail to meet continued listing requirements, which could further adversely affect the market liquidity of our common stock, the ability for us to raise capital, and could decrease the market price of our common stock significantly.
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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.
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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 June 30, 2022,2023, we had outstanding interest-bearing long-termshort-term debt totaling $63,761,$56,355, consisting of the Term Loan in the amount of $15,007$12,864 and the Notes in the principal amount of $48,754,$43,491, both of which bear interest at fixed rates. As a result, we were not exposed to interest rate risk on our outstanding debt at June 30, 2022.2023. 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.
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 as of June 30, 2023, our disclosure controls and procedures were not effective to accomplish their objectives atbecause of the reasonable assurance level asmaterial weaknesses in our internal control over financial reporting described below under “Material Weaknesses in Internal Control Over Financial Reporting”. Our management, including our principal executive officer and principal financial officer, has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the unaudited condensed consolidated financial statements in this Form 10-Q present fairly, in all material respects, our financial position, results of June 30, 2022.operations and cash flows for the periods presented in conformity with U.S. GAAP.
Changes in Internal Control Over Financial Reporting
ThereOther than the material weaknesses described below, there has not been any change in our internal control over financial reporting that occurred during the quarter ended June 30, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Material Weaknesses in Internal Control Over Financial Reporting
As disclosed in Part II Item 9A. “Controls and Procedures” in the 2022 Form 10-K, as of December 31, 2022, we identified a material weakness in internal controls related to ineffective design and operation of information technology general controls (“ITGC”) in the areas of program change management and user access over certain information technology (“IT”) systems that support the Company’s financial reporting processes. The Company did not adequately design and maintain user access and program change management controls to ensure that IT program and data changes affecting the Company’s online ordering technology systems are authorized and implemented appropriately. The Company’s revenue process controls were also deemed ineffective because they could have been adversely impacted. The material weakness did not result in any identified misstatements to the financial statements and there were no changes in previously released financial results.
In the course of preparing our financial statements for the interim period ended June 30, 2023, management identified a material weakness in our internal control over financial reporting that existed due to a deficiency in the operation of our control that is designed to evaluate goodwill and intangible assets for impairment. Such control did not
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operate effectively to identify the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount or indicate that the carrying amount of intangible assets may not be recoverable. The material weakness did not result in any changes in previously released financial results.
The material weaknesses described above may have an impact to the Company’s financial reporting process which creates a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis and represent material weaknesses in the Company’s internal control over financial reporting. Our management, including our principal executive officer and principal financial officer, has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the unaudited condensed consolidated financial statements in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Remediation plan
During the three months ended March 31, 2023, we began implementing our previously disclosed remediation plan for the ITGC material weakness, as described below, and continued to implement our remediation plan through the date of the filing of this Form 10-Q. While significant progress has been made and we expect that the remediation of this material weakness will be completed by December 31, 2023, the material weakness cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and we have concluded, through testing, that these controls are designed and operating effectively.
Management has taken steps with the intention of remediating the ITGC material weakness, including updated program change management policies and user access reviews. As part of the remediation plan, management has implemented a control which includes a monthly review of activity logs from affected IT applications to identify instances in which a user has developed and implemented a code change, bypassing the standard application rules that require review of code changes prior to implementation. Under the updated policy, each instance identified in the monthly review of the code change log will be reviewed by management for authorization and approval. Additionally, we have implemented monthly user access reviews over our affected IT development applications.
Management is enhancing its internal control over the identification of impairment indicators for goodwill and long-lived assets. The Company currently has a documented process to identify, assess and calculate impairment of goodwill and long-lived assets. Management will review the process and enhance the documentation of evidence reviewed as part of the control. The material weakness cannot be considered completely remediated until the applicable remedial control has operated for a sufficient period of time and management has concluded, through testing, that the control is designed and operating effectively.
The remediation of the material weaknesses described above is among our highest priorities. Our Audit Committee will continually assess the progress and sufficiency of these initiatives and make adjustments as and when necessary.
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PART II. OTHER INFORMATION
Dollar amounts in the discussion in Part II. Other Information are expressed in thousands, except as otherwise noted.
Item 1. Legal Proceedings
In July 2016, Waiter.com, Inc. filed a lawsuit against Waitr Inc. in the United States District Court for the Western District of Louisiana, alleging trademark infringement based on Waitr’sthe Company’s use of the “Waitr” trademark and logo, Civil Action No.: 2:16-CV-01041. The plaintiff sought injunctive relief and damages relating to Waitr’sthe Company’s use of the “Waitr” name and logo. During the third quarter of 2020, the trial date was rescheduled to June 2021. On June 22, 2021, the Company entered into a License, Release and Settlement Agreement (the “Settlement”) to settle all claims related to this lawsuit. Pursuant to the Settlement, the Company paid the plaintiff $4,700 in cash on July 1, 2021. In connection with the Settlement, we agreed to adopt a new trademark or tradename to replace the Waitr trademark and to discontinue use of the Waitr trademark in connection with the marketing, sale or provision of any web-based or mobile app-based delivery, pick-up, carry-out or dine-in services using the Waitr trademark by June 22, 2022, unless extended by eight additional months in exchange for a one-time payment of $800.$800, which was paid in May 2022. During the three months ended March 31, 2022, the Company accrued an $800 reserve in connection with its option to extend the license period by an additional eight months. The $800 legal reserve and $4,700 legal settlement areis included in other expense in the unaudited condensed consolidated statement of operations for the six months ended June 30, 2022 and 2021, respectively.2022.
In April 2019, the Company was named as a defendant in a class action complaint filed by certain current and former restaurant partners, captioned Bobby’s Country Cookin’, LLC, et al v. Waitr Holdings Inc., which is currently pending in the United States District Court for the Western District of Louisiana. The plaintiffs assert claims for breach of contract and violation of the duty of good faith and fair dealing, and they seek recovery on behalf of themselves and two separate classes. Based on the current class definitions, as many as 10,000 restaurant partners could be members of the two separate classes at issue. In February 2022, the parties reached a proposed settlement in principle to resolve the litigation in its entirety and requested a stay of the pending litigation. This proposed settlement in principle was subject to Court approval and entry into a settlement agreement between the parties, and contemplated a total potential settlement fund of $2,500 of Company shares of common stock. Ultimately, no settlement agreement was executed by the parties nor was District Court approval obtained,obtained. Thereafter, the Company sought and was granted leave to appeal the parties have askeddenial of its motion for summary judgment to the Fifth Circuit. On June 29, 2023, the Fifth Circuit reversed the District Court’s ruling, in part, and then remanded the case to the District Court to lift the stay and reopen the litigation. Based on the settlement negotiations, thefor further proceedings. The Company previously accrued a $1,250 reserve in connection with this lawsuit during the three months ended December 31, 2021. The accrued legal contingency is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2022.2023.
In September 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 wereNovember 2022, the Company was named as defendantsa defendant 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,Jenson et al. v. Bitesquad.com, LLC. The case was, No. 22-cv-03044 (NEB), filed in Minnesota state court. The plaintiffs, three customers purporting to represent a class, allege that the Western District of Louisiana, Lake Charles Division. In the lawsuit, the plaintiff asserts putative class action claims alleging, inter alia, that various defendants madeCompany’s advertising is false and misleading statements in securities filings, engaged in fraud, and violated accounting and securities rules, seeking damages based upon these allegations. 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 courtthe Company’s “free delivery” promotions violate the Minnesota Uniform Deceptive Practices Act and the Minnesota False Statement in November 2019. These two cases were consolidated,Advertising Act as a result of the Company charging “other fees” on such orders that plaintiffs assert constitute a “delivery charge.” The plaintiffs seek unspecified damages as well as injunctive and an amended complaint was filed in October 2020.declaratory relief. The Company filed a motionremoved the case to dismissthe United States District Court for the District of Minnesota under the Class Action Fairness Act. Based on the existence of an arbitration provision in February 2021.the BiteSquad website “terms and conditions” section, the Company then moved to compel arbitration under the Federal Arbitration Act. The Court assigned thatparties briefed and presented arguments on this motion to the Magistrate Judge, who recently issued her Reportcourt on March 8, 2023 and Recommendation to the District Court Judge that the motion be granted in all respects. The parties are now briefing their respective positionswaiting on the Report and Recommendation and will await the District Court Judge’scourt’s ruling. In the meantime, all discovery remains stayed and no trial date has been set. WaitrThe Company believes that this lawsuit lacks merit and that it has strong defenses to all of the claims alleged. WaitrThe Company continues to vigorously defend the suit.lawsuit.
In October, 2017, the Company was named as a defendant in the matter of Michael Boone and Jennifer Walters, individually and on behalf of their minor child Grace Boone, vs. Waitr Inc., pending in the 22nd Judicial District Court for the Parish of St. Tammany, State of Louisiana. The action arises from a pedestrian/vehicle collision that occurred in November 2016, and the alleged substantial damages as a result thereof. This matter was not resolved through mediation. A trial date has not been set and discovery is ongoing. The Company intends to vigorously defend this lawsuit.
In May 2020, the Company was named as a defendant in Mary Ritchey, Individually and as Conservator for A.M., a minor, vs. Kristi Rando, Waitr Holdings, Inc., et al., Civil No. 1CCV-20-0722 LWC, and Robert P. McPherson vs. Kristi Rando, Waitr Holdings, Inc., et al., Civil No. 1CCV-20-0764 LWC, consolidated and which is currently pending in the Circuit Court of the First Circuit, State of Hawaii. This action is a result of an automobile accident that occurred in October 2018 involving an employee of a Company subsidiary and the alleged substantial injuries and damages as a result thereof. Discovery is ongoing, as well as the motion practice. The court recently granted plaintiffs’ motion to continue trial, and the trial has been rescheduled for June 2024. The Company intends to vigorously defend this lawsuit.
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In May 2020, the Company was named as a defendant in Jessie Stewart, Bradley Stewart & Sheila Ludwig vs. Waitr Inc. of LA., Waitr Holdings, Inc., Delivery Logistics, LLC, et al, in the 22nd Judicial District Court, St. Tammany Parish, Louisiana. This action is a result of an automobile accident that occurred in April 2020 involving an independent contractor and the mother of the three plaintiffs, alleging substantial damages based on the injuries sustained in the accident and the ultimate death of the mother subsequent to the automobile accident. Discovery is ongoing and no trial date has been set. The Company intends to vigorously defend this lawsuit.
In addition to the lawsuits described above, Waitrthe Company is involved in other litigation arising from the normal course of business activities, including, without limitation, vehicle accidents involving employees and independent contractor drivers resulting in claims alleging personal injuries and medical expenses, labor and employment claims, allegations of intellectual property infringement, and workers’ compensation benefit claims as a result of alleged conduct involving its employees, independent contractor drivers, and third-party negligence. Although Waitrthe Company believes that it maintains insurance with standard deductibles that generally covers liability for potential damages in many of these matters where coverage is
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available on acceptable terms (it is not maintained for claims involving intellectual property), insurance coverage is not guaranteed, there are limits to insurance coverage and in certain instances claims are met with denial of coverage positions by the carriers; accordingly, we could suffer material losses as a result of these claims, the denial of coverage for such claims, or damages awarded for any such claim that exceeds coverage. Litigation is unpredictable and we may determine in the future that certain existing claims have greater exposure or liability than previously understood.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes with respect to Waitr’sthe Company’s risk factors previously reported in Part I, Item 1A, of the 20212022 Form 10-K.
We have experienced recurring losses from operations and negative cash flows from operating activities.
The CompanyAs required by ASC 205-40, Going Concern, our management has experienced recurring losses from operationsperformed an analysis of our ability to continue as a going concern and has an accumulated deficitidentified substantial doubt about our ability to continue as a going concern and management’s plans to alleviate this condition may be unsuccessful.
Pursuant to the requirements of $458,022 as of June 30, 2022. The Company’s results of operations have been adversely impacted by declinesASC 205-40, Going Concern, management must evaluate whether there are conditions or events, considered in order volumes and increased expenses, resulting in recurring losses from operations, use of cash to fund operations and declines in cash positions. During the second quarter of 2022,aggregate, that raise substantial doubt about the Company’s cash position was further impacted byability to continue as a going concern within one year after the utilization of $20,000 in cashdate that the financial statements are issued. Based on their assessment, our management has raised concerns about our ability to pay down debt. As reflected in ourcontinue as a going concern within one year after the date that the unaudited condensed consolidated financial statements the Company had negative cash flow from operations of $13,829 and a net loss of $88,887 for the six months ended June 30, 2022. Includedcontained in the net loss was a goodwill impairment of $67,190.
this report are issued. Management has focused its efforts on certain initiatives to improve revenue, operating income andits cash positions,position, including collaborations with convenience stores, delivery from retailers in a variety of industries, the entry into new markets and the development of a proprietary stadium ordering application. In July 2022, the Company entered into a sponsorship agreement to serve as the exclusive mobile ordering platform at MetLife Stadium, for a $9,128 commitment over a five-year period, providing an avenue for the Company to expand its delivery services into the New York and New Jersey markets. Our strategy is to grow order volume and revenue both in existing markets and new markets, such as New York and New Jersey. Additionally, management hascost reductions. Management evaluated its existing cost structure and will continue to implementimplemented cost savingsavings initiatives where appropriate to reduce operating costs and manage the Company’s cash position.plans to continue to implement further cost saving initiatives where appropriate. While the Company believes that the cost savings initiatives described above will result in improved liquidity and cash flow, there can be no assurance that the Company will be able to generate positive cash flow from operations in the future, affecting the Company’s ability to continue as a going concern.
The Company’s results of operations and cash positions have been adversely impacted primarily by declines in order volumes. Our primary source of liquidity during the year ended December 31, 2022 was proceeds from the issuance of our common stock. The Company experienced a trend of negative cash flow from operations during the year ended December 31, 2022 and the first and second quarters of 2023. Cash flow used in operations totaled $28,716 during the year ended December 31, 2022 and $5,727 during the six months ended June 30, 2023. The Company has had recurring net losses, and as reflected in the accompanying unaudited condensed consolidated financial statements, the Company had an accumulated deficit of $596,344 as of June 30, 2023. The Company was delisted from the Nasdaq Capital Market on February 2, 2023, and as such, our ability to sell shares of common stock using the ATM Program going forward is impaired. The Company’s cash position has declined from $12,066 at December 31, 2022 to $5,066 as of June 30, 2023 and approximately $5,187 as of July 31, 2023. As of June 30, 2023, the levels anticipated. Moreover,Company has outstanding debt in the principal amount of $56,355 with a maturity date of May 15, 2024. We believe that we have sufficient cash on hand to fund operations through at least the third fiscal quarter of 2023.
As substantial doubt about our ability to continue as a going concern exists, our ability to finance our operations through the sale and issuance of debt or equity securities or through bank or other financing could be impaired. Management continues to explore raising additional capital to supplement the Company’s capitalization and liquidity and expects that the Company will seek to additionally fund its operations through proceeds from one or more equity raises, but there iscan be no assurance that such financing will be available on terms commercially acceptable to the Company, or at all. Our ability to continue as a going concern may depend on our ability to obtain additional capital, as there can be no
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assurance that we will be able to generate positive cash flow from operations in the future.
While If we currently believe thatraise funds by issuing debt securities or preferred stock, or by incurring loans, these forms of financing would have rights, preferences, and privileges senior to those of holders of our cash on hand, estimated cash flow fromcommon stock. If adequate capital is not available to us when needed, or in the amounts required, we may be forced to terminate, significantly curtail or cease our operations and proceeds from any equity raises will be sufficientor to meet our working capital needs for at leastpursue other strategic alternatives, including commencing a case under the next twelve months, there can be no assurance that we will generate cash flow at the levels we anticipate, nor can there be any assurance that we will be able to raise additional equity capital on acceptable terms, if at all. Market conditions, future financial performance or other factors may make it difficult or impractical for us to access sources of equity capital.
Additional impairments of the carrying amounts of goodwill or other indefinite-lived assets could negatively affect our financial condition andU.S. Bankruptcy Code. Our consolidated results of operations.
We conduct our goodwilloperations could be materially adversely affected by these decisions and intangible asset impairment test annually in October, or more frequently if indicators of impairment exist, and we review the recoverability of long-lived assets, including acquired technology, capitalized software costs, and property and equipment when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. For purposes of testing for goodwill impairment, we have one reporting unit. As a result of the significant declineyour investment in the Company’s stock price in mid-March 2022 and other macroeconomic and industry factors, thereby contributing to a decline in the Company’s market capitalization, we conducted the impairment test as of March 15, 2022. The impairment test was conducted in accordance with ASC 360, Impairment and Disposal of Long-Lived Assets for certain long-lived assets including capitalized contract costs, developed technology, customer relationships, and trade names, and in accordance with ASC 350, Intangibles – Goodwill and Other for the reporting unit’s goodwill. As a result of the ASC 360 and ASC 350 analyses, we recognized a non-cash pre-tax impairment loss of $67,190 during the three months ended March 31, 2022 to write down the carrying value of goodwill to its implied fair value. See Part I, Item 1, Note 6 – Intangible Assets and Goodwill for additional details. There was no goodwill impairment recognized during the three months ended June 30, 2022.
Determining the fair value of a reporting unit and intangible assets requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the
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judgments and estimates used could change in future periods. There can be no assurance that additional goodwill or intangible assets will not be impaired and that the carrying value of other indefinite-lived assets will be recoverable in future periods, which could adversely affect our financial results and stockholders’ equity.
Our strategic initiative to change our corporate name and visual identity in a comprehensive rebrand may not be successful and may negatively impact our name recognition with customers and partners or otherwise impact our business.
In connection with the Settlement, we agreed to adopt a new trademark or tradename to replace the Waitr trademark and to discontinue use of the Waitr trademark in connection with the marketing, sale or provision of any web-based or mobile app-based delivery, pick-up, carry-out or dine-in services using the Waitr trademark by June 22, 2022, unless extended by eight additional months in exchange for a one-time payment of $800. During the three months ended March 31, 2022, the Company accrued an $800 reserve in connection with its option to extend the license period by an additional eight months. In July 2022, we began our transition to rebrand and change the Company name to ASAP. There is no assurance that our rebranding initiative will be successful or result in a positive return on investment. The failure by us to timely cease using the Waitr trademark provides Waiter.com, Inc. the right to pursue injunctive relief and liquidated damages. We could be required to devote significant resources to advertising and marketing in order to increase awareness of the new brand and for the successful integration of our rebranding process. Furthermore, our rebranding initiative may negatively impact our name recognition with customers and partners, which could have an adverse impact on our business.materially impaired.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
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Item 6. Exhibits
Exhibit No.Description
10.1
10.2
10.3
10.4
10.5
31.1
31.2
32.1
32.2
 101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentdocument.
 101.SCHInline XBRL Taxonomy Extension Schema DocumentDocument.
 101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
 101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentDocument.
 101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentDocument.
 101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).
_____________
(1)Filed herewith
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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: August 8, 202218, 2023By:/s/ Armen Yeghyazarians
Armen Yeghyazarians
Chief Financial Officer and Chief Accounting Officer
(Principal Financial Officer and Duly Authorized Officer)
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