Company Quick10K Filing
Landcadia
Price9.81 EPS-4
Shares76 P/E-3
MCap747 P/FCF-15
Net Debt77 EBIT-263
TEV824 TEV/EBIT-3
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-03-16
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-15
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-12
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-11
10-Q 2017-03-31 Filed 2017-05-12
10-K 2016-12-31 Filed 2017-03-30
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
8-K 2020-06-16
8-K 2020-05-22
8-K 2020-05-01
8-K 2020-05-01
8-K 2020-04-23
8-K 2020-04-16
8-K 2020-03-20
8-K 2020-03-16
8-K 2019-12-27
8-K 2019-12-02
8-K 2019-11-12
8-K 2019-11-07
8-K 2019-11-01
8-K 2019-10-09
8-K 2019-09-11
8-K 2019-08-30
8-K 2019-08-13
8-K 2019-08-08
8-K 2019-06-12
8-K 2019-06-05
8-K 2019-05-30
8-K 2019-05-21
8-K 2019-05-17
8-K 2019-05-16
8-K 2019-05-16
8-K 2019-05-08
8-K 2019-04-24
8-K 2019-04-18
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8-K 2019-02-25
8-K 2019-02-10
8-K 2019-01-25
8-K 2019-01-17
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8-K 2018-12-04
8-K 2018-12-02
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8-K 2018-11-01
8-K 2018-10-02
8-K 2018-10-01
8-K 2018-08-21
8-K 2018-08-02
8-K 2018-05-30
8-K 2018-05-21
8-K 2018-05-16
8-K 2018-01-02

LCA 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.2 wtrh-ex102_163.htm
EX-10.5 wtrh-ex105_263.htm
EX-10.6 wtrh-ex106_264.htm
EX-31.1 wtrh-ex311_9.htm
EX-31.2 wtrh-ex312_10.htm
EX-32.1 wtrh-ex321_8.htm
EX-32.2 wtrh-ex322_7.htm

Landcadia Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
4253402551708502015201620182020
Assets, Equity
55-1-57-113-169-2252018201820192020
Rev, G Profit, Net Income
555-45-95-145-1952015201620182020
Ops, Inv, Fin

10-Q 1 wtrh-10q_20200331.htm 10-Q wtrh-10q_20200331.htm

TABLE_CONTENTS

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                      TO                     

 

Commission File Number 001-37788

 

WAITR HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

26-3828008

(State or other jurisdiction of

incorporation or organization)

 

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

214 Jefferson Street, Suite 200

Lafayette, Louisiana

 

70501

(Address of principal executive offices)

 

(Zip Code)

 

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

______________________

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  NO 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES  NO 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.0001 Per Share

 

WTRH

 

The Nasdaq Stock Market LLC

The number of shares of Registrant’s Common Stock outstanding as of May 5, 2020 was 90,896,555.

 

 


TABLE_CONTENTS

 

Table of Contents

 

 

 

Page

PART I

Financial Information

1

Item 1.

Condensed Consolidated Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019

1

 

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

2

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019

3

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2020 and 2019

4

 

Notes to Condensed Consolidated Financial Statements

5

Item 2.

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

 

 

 

PART II

Other Information

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

 

 

 

 

Signatures

33

 

 

 

 


TABLE_CONTENTS

 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

Unaudited

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash

 

$

39,376

 

 

$

29,317

 

Accounts receivable, net

 

 

3,362

 

 

 

3,272

 

Capitalized contract costs, current

 

 

409

 

 

 

199

 

Prepaid expenses and other current assets

 

 

5,083

 

 

 

8,329

 

TOTAL CURRENT ASSETS

 

 

48,230

 

 

 

41,117

 

Property and equipment, net

 

 

3,608

 

 

 

4,072

 

Capitalized contract costs, noncurrent

 

 

1,543

 

 

 

772

 

Goodwill

 

 

106,734

 

 

 

106,734

 

Intangible assets, net

 

 

24,869

 

 

 

25,761

 

Other noncurrent assets

 

 

484

 

 

 

517

 

TOTAL ASSETS

 

$

185,468

 

 

$

178,973

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,082

 

 

$

4,384

 

Restaurant food liability

 

 

5,021

 

 

 

5,612

 

Accrued payroll

 

 

7,414

 

 

 

5,285

 

Short-term loans

 

 

1,578

 

 

 

3,612

 

Deferred revenue, current

 

 

80

 

 

 

414

 

Income tax payable

 

 

68

 

 

 

51

 

Other current liabilities

 

 

12,125

 

 

 

12,630

 

TOTAL CURRENT LIABILITIES

 

 

31,368

 

 

 

31,988

 

Long-term debt

 

 

125,707

 

 

 

123,244

 

Accrued workers’ compensation liability

 

 

394

 

 

 

463

 

Deferred revenue, noncurrent

 

 

2

 

 

 

45

 

Other noncurrent liabilities

 

 

324

 

 

 

325

 

TOTAL LIABILITIES

 

 

157,795

 

 

 

156,065

 

Commitment and contingencies (Note 10)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 249,000,000 shares authorized and 80,807,908

   and 76,579,175 shares issued and outstanding at March 31, 2020 and

   December 31, 2019, respectively

 

 

8

 

 

 

8

 

Additional paid in capital

 

 

392,004

 

 

 

385,137

 

Accumulated deficit

 

 

(364,339

)

 

 

(362,237

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

27,673

 

 

 

22,908

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

185,468

 

 

$

178,973

 

 

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

1


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

REVENUE

 

$

44,243

 

 

$

48,032

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

Operations and support

 

 

26,365

 

 

 

36,183

 

Sales and marketing

 

 

2,826

 

 

 

10,323

 

Research and development

 

 

1,470

 

 

 

1,940

 

General and administrative

 

 

10,778

 

 

 

18,918

 

Depreciation and amortization

 

 

2,064

 

 

 

4,116

 

Intangible and other asset impairments

 

 

 

 

 

18

 

Loss on disposal of assets

 

 

8

 

 

 

5

 

TOTAL COSTS AND EXPENSES

 

 

43,511

 

 

 

71,503

 

INCOME (LOSS) FROM OPERATIONS

 

 

732

 

 

 

(23,471

)

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

 

 

 

 

 

 

 

 

Interest expense

 

 

2,914

 

 

 

1,605

 

Interest income

 

 

(60

)

 

 

(339

)

Other income

 

 

(37

)

 

 

(50

)

NET LOSS BEFORE INCOME TAXES

 

 

(2,085

)

 

 

(24,687

)

Income tax expense

 

 

17

 

 

 

62

 

NET LOSS

 

$

(2,102

)

 

$

(24,749

)

LOSS PER SHARE:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.03

)

 

$

(0.38

)

Weighted average common shares outstanding – basic and diluted

 

 

76,884,717

 

 

 

64,525,610

 

 

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

2


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(2,102

)

 

$

(24,749

)

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

 

 

 

 

 

 

 

 

Non-cash interest expense

 

 

2,396

 

 

 

388

 

Non-cash advertising expense

 

 

 

 

 

142

 

Stock-based compensation

 

 

848

 

 

 

2,033

 

Equity issued in exchange for services

 

 

 

 

 

30

 

Loss on disposal of assets

 

 

8

 

 

 

5

 

Depreciation and amortization

 

 

2,064

 

 

 

4,116

 

Intangible and other asset impairments

 

 

 

 

 

18

 

Amortization of capitalized contract costs

 

 

68

 

 

 

583

 

Other non-cash income

 

 

(12

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(90

)

 

 

(2,883

)

Capitalized contract costs

 

 

(1,049

)

 

 

(1,007

)

Prepaid expenses and other current assets

 

 

3,246

 

 

 

961

 

Accounts payable

 

 

698

 

 

 

(49

)

Restaurant food liability

 

 

(591

)

 

 

7,428

 

Deferred revenue

 

 

(378

)

 

 

347

 

Income tax payable

 

 

17

 

 

 

62

 

Accrued payroll

 

 

2,129

 

 

 

2,168

 

Accrued workers’ compensation liability

 

 

(69

)

 

 

(176

)

Other current liabilities

 

 

(155

)

 

 

(2,093

)

Other noncurrent liabilities

 

 

(1

)

 

 

(11

)

Net cash provided by (used in) operating activities

 

 

7,027

 

 

 

(12,687

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(70

)

 

 

(627

)

Acquisition of Bite Squad, net of cash acquired

 

 

 

 

 

(192,419

)

Other acquisitions

 

 

(242

)

 

 

 

Collections on notes receivable

 

 

21

 

 

 

22

 

Internally developed software

 

 

(671

)

 

 

(59

)

Proceeds from sale of property and equipment

 

 

3

 

 

 

21

 

Net cash used in investing activities

 

 

(959

)

 

 

(193,062

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of stock

 

 

6,584

 

 

 

 

Equity issuance costs

 

 

(114

)

 

 

(600

)

Proceeds from Additional Term Loans

 

 

 

 

 

42,080

 

Payments on short-term loans

 

 

(2,028

)

 

 

(658

)

Proceeds from exercise of stock options

 

 

8

 

 

 

1

 

Taxes paid related to net settlement on stock-based compensation

 

 

(459

)

 

 

(799

)

Net cash provided by financing activities

 

 

3,991

 

 

 

40,024

 

Net change in cash

 

 

10,059

 

 

 

(165,725

)

Cash, beginning of period

 

 

29,317

 

 

 

209,340

 

Cash, end of period

 

$

39,376

 

 

$

43,615

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash earned during the period for interest

 

$

48

 

 

$

 

Cash paid during the period for interest

 

 

518

 

 

 

1,215

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Stock issued as consideration in Bite Squad acquisition

 

 

 

 

 

126,573

 

Stock issued in connection with Additional Term Loans

 

 

 

 

 

3,884

 

 

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

3


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(in thousands, except share data)

(unaudited)

 

Three Months Ended March 31, 2020

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity (deficit)

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2019

 

 

76,579,175

 

 

$

8

 

 

$

385,137

 

 

$

(362,237

)

 

$

22,908

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,102

)

 

 

(2,102

)

Exercise of stock options and vesting of restricted

   stock units

 

 

35,990

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Taxes paid related to net settlement on stock-based

  compensation

 

 

 

 

 

 

 

 

(459

)

 

 

 

 

 

(459

)

Stock-based compensation

 

 

 

 

 

 

 

 

848

 

 

 

 

 

 

848

 

Issuance of common stock

 

 

4,192,743

 

 

 

 

 

 

6,470

 

 

 

 

 

 

6,470

 

Balances at March 31, 2020

 

 

80,807,908

 

 

$

8

 

 

$

392,004

 

 

$

(364,339

)

 

$

27,673

 

 

 

Three Months Ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

(deficit)

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

 

54,035,538

 

 

$

5

 

 

$

200,417

 

 

$

(70,931

)

 

$

129,491

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(24,749

)

 

 

(24,749

)

Exercise of stock options

 

 

886

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Taxes paid related to net settlement on stock-based

  compensation

 

 

(79,900

)

 

 

 

 

 

(799

)

 

 

 

 

 

(799

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,033

 

 

 

 

 

 

2,033

 

Equity issued in exchange for services

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Issuance of common stock in connection with

   Additional Term Loans

 

 

325,000

 

 

 

 

 

 

3,884

 

 

 

 

 

 

3,884

 

Public Warrants exchanged for common stock

 

 

4,494,889

 

 

 

1

 

 

 

(600

)

 

 

 

 

 

(599

)

Stock issued as consideration in Bite Squad Merger

 

 

10,591,968

 

 

 

1

 

 

 

126,573

 

 

 

 

 

 

126,574

 

Balances at March 31, 2019

 

 

69,368,381

 

 

$

7

 

 

$

331,539

 

 

$

(95,680

)

 

$

235,866

 

 

 

 

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

 

 

 

 

 

 

4


TABLE_CONTENTS

 

WAITR HOLDINGS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

1.   Organization

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

2.   Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) as they apply to interim financial information. Accordingly, the interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete annual financial statements, although the Company believes that the disclosures made are adequate to make information not misleading.

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, 2019 (the “2019 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.

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:

 

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

 

variable consideration;

 

other obligations such as product returns and refunds;

 

allowance for doubtful accounts and chargebacks;

 

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

 

income taxes;

 

useful lives of tangible and intangible assets;

 

depreciation and amortization;

 

equity compensation;

 

contingencies;

 

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

 

impairments; and

 

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

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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 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. The Company has sustained losses since its inception and experienced declines in working capital through 2019, resulting from changes in market conditions in the online food ordering and delivery industry, particularly increased competition from other national delivery service providers. In addition, the Company invested heavily in sales and marketing efforts in 2019, further reducing its working capital and liquidity, until the suspension of such efforts in the fourth quarter of 2019. The Company’s working capital and liquid asset (cash on hand) positions as of March 31, 2020 and December 31, 2019 are as follows (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Working capital

 

$

16,862

 

 

$

9,129

 

Liquid assets

 

 

39,376

 

 

 

29,317

 

 

Management has continued with its several initiatives, implemented towards the end of fiscal 2019. Our focus on improving revenue per order, cash flow, profitability and liquidity, through reductions of staff in November 2019 and January 2020, modifications to the Company’s fee structure in August 2019 and February 2020, the closures of approximately 60 unprofitable, non-core markets in December 2019 and January 2020, and the switch to an independent contractor model for delivery drivers have resulted in the positive results for the quarter ended March 31, 2020. Additionally, on March 20, 2020, the Company entered into an open market sale agreement with respect to an at-the-market offering program (see Note 12 – Stockholders’ Equity), pursuant to which the Company sold 4,192,743 shares of common stock during the three months ended March 31, 2020 for net proceeds of approximately $6,470. As of March 31, 2020, cash on hand was $39,376.  

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

Impact of COVID-19 on our Business

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

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

Critical Accounting Policies and Estimates

Except as set forth below, there has been no material change to our critical accounting policies and estimates described in the 2019 Form 10-K.

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Revenue

The Company generates revenue (“transaction fees”) primarily when diners place an order on one of the Platforms. In the case of diner subscription fees for unlimited delivery, revenue is recognized when payment for the monthly subscription is received. Revenue consists of the following for the periods indicated (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Transaction fees

 

$

43,811

 

 

$

46,968

 

Setup and integration fees

 

 

378

 

 

 

1,022

 

Other

 

 

54

 

 

 

42

 

Total Revenue

 

$

44,243

 

 

$

48,032

 

 

Transaction fees represent the revenue recognized from the Company’s obligation to process orders on the Platforms. The performance obligation is satisfied when the Company successfully processes an order placed on one of the Platforms and the restaurant receives the order at their location. The obligation to process orders on the Platforms represents a series of distinct performance obligations satisfied over time that the Company combines into a single performance obligation. Consistent with the recognition objective in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the variable consideration due to the Company for processing orders is recognized on a daily basis. As an agent of the restaurant in the transaction, the Company recognizes transaction fees earned from the restaurant on the Platform on a net basis. 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.

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

The Company sells gift cards on the Bite Squad Platform and recognizes revenue upon gift card redemption. Gift cards that have not yet been utilized amounted to $685 as of March 31, 2020 and are included on the unaudited condensed consolidated balance sheet in other current liabilities.

Significant Judgment

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

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

Contract Balances

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

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

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

Costs to Obtain a Contract with a Customer

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

Deferred costs related to obtaining contracts with restaurants were $1,622 and $701 as of March 31, 2020 and December 31, 2019, respectively, out of which $338 and $143, respectively, was classified as current. Amortization of expense for the costs to obtain a contract were $53 and $209 for the three months ended March 31, 2020 and 2019, respectively.

Costs to Fulfill a Contract with a Customer

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

Deferred costs related to fulfilling contracts with restaurants were $330 and $270 as of March 31, 2020 and December 31, 2019, respectively, out of which $71 and $56, respectively, was classified as current. Amortization of expense for the costs to fulfill a contract were $15 and $374 for the three months ended March 31, 2020 and 2019, respectively.

Fair Value Measurements

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

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

 

Recent Accounting Pronouncements

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

The Company considered the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on these unaudited condensed consolidated financial statements. As an emerging growth company, the Company has elected to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which removes, modifies or adds disclosure requirements regarding fair value

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measurements. The amendments in this ASU are effective for all entities beginning after December 15, 2019, with amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and narrative description of measurement uncertainty requiring prospective adoption and all other amendments requiring retrospective adoption. The Company adopted ASU 2018-13 on January 1, 2020. The adoption of ASU 2018-13 did not have a material impact on the Company’s disclosures or the unaudited condensed consolidated financial statements.

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

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

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company will be required to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. ASU 2016-13 is effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2020, including interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. As an emerging growth company, the Company will not be subject to the requirements of ASU 2016-13 until fiscal year 2020. The Company is currently evaluating the impact that adopting this ASU will have on the unaudited condensed consolidated financial statements. 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The Company has not completed the process of evaluating the effects that will result from adopting ASU 2016-02. The principal objective of ASU 2016-02 is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the consolidated balance sheet. ASU 2016-02 continues to retain a distinction between finance and operating leases but requires lessees to recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a corresponding lease liability on the balance sheet for all leases with terms greater than twelve months. ASU 2016-02 is effective for annual periods beginning after December 15, 2020 due to the Company’s emerging growth election under Section 107(b) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company therefore has not yet determined the effects that this standard may have on its consolidated financial statements and the related expansion of its footnote disclosures upon adoption of this ASU.

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3.   Business Combinations

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

The Bite Squad Merger was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. Under the acquisition method of accounting, total merger consideration, acquired assets and assumed liabilities are recorded based on their estimated fair values on the acquisition date, with the excess of the fair value of merger consideration over the fair value of the assets less liabilities acquired recorded as goodwill.

The results of operations of Bite Squad are included in our unaudited condensed financial statements beginning on the acquisition date, January 17, 2019. Revenue and net loss attributable to Bite Squad for the three months ended March 31, 2019 totaled approximately $22,915 and $4,584, respectively.

In connection with the Bite Squad Merger, the Company incurred direct and incremental costs of $6,949, including debt modification expense of $375, consisting of legal and professional fees, which are included in general and administrative expenses in the unaudited condensed consolidated statement of operations in the three months ended March 31, 2019.

Pro-Forma Financial Information (Unaudited)

The supplemental condensed consolidated results of the Company on an unaudited pro forma basis as if the Bite Squad Merger had been consummated on January 1, 2019 are as follows (in thousands):

 

 

Three Months Ended

 

 

 

March 31, 2019

 

Net Revenue

 

$

52,318

 

Net Loss

 

 

26,410

 

 

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

4.   Accounts Receivable, Net

 

Accounts receivable consist of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Credit card receivables

 

$

3,254

 

 

$

2,803

 

Receivables from restaurants and customers

 

 

845

 

 

 

950

 

Accounts receivable

 

$

4,099

 

 

$

3,753

 

Less: allowance for doubtful accounts and chargebacks

 

 

(737

)

 

 

(481

)

Accounts receivable, net

 

$

3,362

 

 

$

3,272

 

 

5.   Intangibles Assets and Goodwill

Intangible Assets

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

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

As of March 31, 2020

 

 

Gross Carrying

Amount

 

Accumulated

Amortization

 

Accumulated

Impairment

 

Intangible

Assets, Net

 

Software

$

21,894

 

$

(4,577

)

 

$

(11,795

)

 

$

5,522

 

Trademarks/Trade name/Patents

 

5,405

 

 

(2,177

)

 

 

 

 

 

3,228

 

Customer Relationships

 

 

82,320

 

 

 

(8,823

)

 

 

(57,378

)

 

 

16,119

 

Total

$

109,619

 

$

(15,577

)

 

$

(69,173

)

 

$

24,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2019

 

Gross Carrying

Amount

 

Accumulated

Amortization

 

Accumulated

Impairment

 

Intangible

Assets, Net

 

Software

$

21,223

 

$

(4,113

)

 

$

(11,795

)

 

$

5,315

 

Trademarks/Trade name/Patents

 

5,405

 

 

(1,725

)

 

 

 

 

 

3,680

 

Customer Relationships

 

 

82,343

 

 

 

(8,199

)

 

 

(57,378

)

 

 

16,766

 

Total

$

108,971

 

$

(14,037

)

 

$

(69,173

)

 

$

25,761

 

During the three months ended March 31, 2020, the Company capitalized approximately $671 of software costs related to the development of the Platforms. The estimated useful life of the Company’s capitalized software costs is three years.

The Company recorded amortization expense of $1,540 and $3,635 for the three months ended March 31, 2020 and 2019, respectively. Estimated future amortization expense of intangible assets is as follows (in thousands):

 

 

Amortization

 

The remainder of 2020

 

$

4,859

 

2021

 

 

6,453

 

2022

 

 

4,610

 

2023

 

 

2,702

 

2024

 

 

2,635

 

Thereafter

 

 

3,605

 

Total future amortization

 

$

24,864

 

 

Goodwill

The Company’s goodwill balance is as follows as of March 31, 2020 and December 31, 2019 (in thousands):

 

March 31,

 

 

December 31,

 

2020

 

2019

 

Balance, beginning of period

$

106,734

 

 

$

1,408

 

Acquisitions during the period

 

 

 

 

224,538

 

Impairments during the period

 

 

 

 

 

(119,212

)

Balance, end of period

$

106,734

 

 

$

106,734

 

 

 

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6.   Other Current Liabilities

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

March 31,

 

 

December 31,

 

2020

 

2019

 

Accrued advertising expenses

 

$

159

 

 

$

451

 

Accrued insurance expenses

 

 

1,210

 

 

 

949

 

Accrued estimated workers' compensation expenses

 

 

2,748

 

 

 

2,355

 

Accrued legal contingency

 

 

2,000

 

 

 

2,000

 

Accrued sales tax payable

 

 

644

 

 

 

681

 

Accrued incentive compensation

 

 

366

 

 

 

 

Other accrued expenses

 

 

2,529

 

 

 

3,469

 

Other current liabilities

 

2,469

 

 

 

2,725

 

Total other current liabilities

$

12,125

 

 

$

12,630

 

 

7.   Debt

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

 

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Term Loans

 

$

70,798

 

 

$

69,545

 

Notes

 

 

61,595

 

 

 

61,132

 

Promissory notes

 

 

352

 

 

 

284

 

 

 

$

132,745

 

 

$

130,961