What changed in this filing

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Item 1. Financial Statements

2021-04-30 compared with 2020-10-30 · 534 added, 709 removed, 788 unchanged (61% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

(unaudited)  

Current Assets:

4 unchanged sentences

22,446  

16,984  

Marine operating supplies

11 unchanged sentences

Intangibles, net

10,963  

Deferred tax asset

12 unchanged sentences

Long-term debt - current

14,128  

11,255  

Total current liabilities

4 unchanged sentences

471,359  

Deferred tax liabilities

Lease liabilities

4 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Series A redeemable convertible preferred stock, 165,000 and no shares authorized;

85,000 and no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

Series A redeemable convertible preferred stock, 165,000 shares authorized;

85,000 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

85,125  

83,825  

Redeemable noncontrolling interest

10,473  

95,598  

91,319  

STOCKHOLDERS’

Preferred stock, $0.0001 par value, 1,000,000 shares authorized;

85,000 Series A shares issued and outstanding

85,000 Series A shares issued and outstanding as of March 31, 2021 and December 31, 2020

Common stock, $0.0001 par value, 200,000,000 shares authorized;

49,875,186 and 49,717,522 issued, 49,801,510 and 49,626,498 outstanding as of September 30, 2020 and December 31, 2019, respectively

50,126,926 and 49,905,512 issued, 50,058,718 and 49,818,676 outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

1 unchanged sentence

48,127  

Retained earnings

19,473  

Accumulated deficit

( 46,117 )  

3 unchanged sentences

34,958  

123,250  

Total liabilities, stockholders' equity and redeemable noncontrolling interest

Total liabilities, mezzanine equity and stockholders' equity

$ 759,900  

5 unchanged sentences

(In thousands, except share and per share data)

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Tour revenues

1 unchanged sentence

$ 81,238  

$ 81,991  

$ 267,294  

Operating expenses:

1 unchanged sentence

42,192  

62,988  

124,831  

General and administrative

1 unchanged sentence

17,226  

47,615  

Selling and marketing

12,879  

18,413  

42,100  

Depreciation and amortization

23,728  

18,603  

Total operating expenses

1 unchanged sentence

78,987  

141,299  

233,149  

Operating (loss) income

( 31,066 )  

15,659  

( 59,308 )  

34,145  

Other (expense) income:

1 unchanged sentence

( 5,669 )  

( 3,214 )  

( 11,763 )  

Gain (loss) on foreign currency

( 2,338 )  

( 6,334 )  

Other expense

( 74 )  

( 30 )  

( 188 )  

Other income (expense)

Total other expense

( 5,598 )  

( 5,582 )  

( 18,285 )  

(Loss) income before income taxes

( 30,428 )  

10,077  

( 77,593 )  

23,494  

Income tax (benefit) expense

( 2,893 )  

( 7,664 )  

Net (loss) income

( 27,535 )  

( 69,929 )  

18,656  

Net (loss) income attributable to noncontrolling interest

( 156 )  

( 956 )  

Net (loss) income attributable to Lindblad Expeditions Holdings, Inc.

( 27,379 )  

Loss before income taxes

( 36,664 )  

Income tax benefit

( 2,801 )  

Non-cash deemed dividend to warrant holders  

Net (loss) income available to stockholders

( 33,863 )  

Net loss attributable to noncontrolling interest

( 619 )  

Net loss attributable to Lindblad Expeditions Holdings, Inc.

( 33,244 )  

Series A redeemable convertible preferred stock dividend

Net loss available to stockholders

$ ( 34,545 )  

4 unchanged sentences

49,625,127  

49,779,525  

48,863,506  

49,715,663  

49,091,370  

Undistributed (loss) earnings per share available to stockholders

$ ( 0.56 )  

$ ( 0.01 )  

$ ( 1.40 )  

$ 0.32  

$ ( 0.56 )  

$ ( 0.01 )  

Undistributed loss per share available to stockholders:

$ ( 0.66 )  

3 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

For the three months ended September 30,

For the nine months ended September 30,

Net (loss) income

$ ( 27,535 )  

$ 2,726  

$ ( 69,929 )  

For the three months ended March 31,

$ ( 33,863 )  

2 unchanged sentences

Net unrealized gain (loss)

( 7,393 )  

( 7,724 )  

Reclassification adjustment, net of tax

Total other comprehensive income (loss)

( 5,769 )  

( 2,398 )  

Total comprehensive (loss) income

( 25,790 )  

( 3,043 )  

( 72,327 )  

11,626  

comprehensive (loss) income attributive to non-controlling interest

( 156 )  

( 956 )  

Comprehensive (loss) income attributable to stockholders

$ ( 25,634 )  

Total comprehensive loss

( 33,369 )  

comprehensive loss attributive to non-controlling interest

( 619 )  

Comprehensive loss attributable to stockholders

$ ( 32,750 )  

7 unchanged sentences

Total Stockholders'

Balance as of June 30, 2020

Balance as of January 1, 2021

49,905,512  

6 unchanged sentences

139,112  

Issuance of stock for acquisition

82,302  

Repurchase of shares and warrants

Other comprehensive income, net

Redeemable noncontrolling interest

Series A preferred stock dividend  

( 1,301 )  

1 unchanged sentence

( 33,244 )  

Balance as of September 30, 2020

Balance as of March 31, 2021

50,126,926  

22 unchanged sentences

Redeemable noncontrolling interest

Series A preferred stock dividend  

( 901 )  

Net loss available to stockholders

Net loss available to common stockholders

( 1,934 )  

Balance as of September 30, 2020

Balance as of March 31, 2020

49,758,787  

6 unchanged sentences

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’

Equity (continued)

(In thousands, except share data)

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders'

Balance as of June 30, 2019

Stock-based compensation

Issuance of stock for equity compensation plans, net

Other comprehensive loss, net

Net income available to common stockholders

Balance as of September 30, 2019

Additional Paid-In

Accumulated Other Comprehensive

Total Stockholders'

Balance as of January 1, 2019

Stock-based compensation

Issuance of stock for equity compensation plans, net

Repurchase of shares and warrants

Other comprehensive loss, net

Net income available to common stockholders

Balance as of September 30, 2019

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

LINDBLAD EXPEDITIONS HOLDINGS, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

For the nine months ended September 30,

For the three months ended March 31,

Cash Flows From Operating Activities

Net (loss) income

$ ( 33,863 )  

$ 18,656  

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

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

Depreciation and amortization

23,728  

18,603  

Amortization of National Geographic fee

4 unchanged sentences

( 2,801 )  

Loss on foreign currency

(Gain) loss on foreign currency

( 70 )  

Changes in operating assets and liabilities

Marine operating supplies and inventories

( 382 )  

Prepaid expenses and other current assets

( 2,080 )  

Unearned passenger revenues

2 unchanged sentences

Other long-term liabilities

( 4,949 )  

Accounts payable and accrued expenses

6 unchanged sentences

( 3,800 )  

Acquisition (net of cash acquired)

( 6,872 )  

Net cash used in investing activities

3 unchanged sentences

152,695  

30,476  

Proceeds from Series A preferred stock issuance

85,000  

Repayments of long-term debt

3 unchanged sentences

Repurchase under stock-based compensation plans and related tax impacts

( 393 )  

Repurchase of warrants and common stock

Net cash (used in) provided by financing activities

( 538 )  

Warrants exercised

Net cash provided by financing activities

151,873  

Net (decrease) increase in cash, cash equivalents and restricted cash

( 18,130 )  

Net increase (decrease) in cash, cash equivalents and restricted cash

50,573  

9 unchanged sentences

$ 3,862  

$ 1,893  

Non-cash investing and financing activities:

Additional paid-in capital exercise proceeds of option shares

Additional paid-in capital exchange proceeds used for option shares

Non-cash deemed dividend to warrant holders

$ 2,654  

Non-cash preferred share dividend

Shares issued for acquisition  

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

4 unchanged sentences

Lindblad Expeditions Holdings, Inc.

and its consolidated subsidiaries (the “Company”

and its consolidated subsidiaries’

(the “Company”

or “Lindblad”) mission is offering life-changing adventures around the world and pioneering innovative ways to allow its guests to connect with exotic and remote places.

The Company currently operates a fleet of nine owned expedition ships and five seasonal charter vessels under the Lindblad brand and operates eco-conscious expeditions and nature-focused, small-group tours under the Natural Habitat, Inc.

(“Natural Habitat”) brand.

The Company operates the following reportable business segments:

Lindblad –

Offers primarily ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thereby allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture.

Many of these expeditions involve travel to remote places with limited infrastructure and ports (such as Antarctica and the Arctic) or places that are best accessed by a ship (such as the Galápagos, Alaska, Baja’s Sea of Cortez, Costa Rica and Panama), and foster active engagement by guests.

The Company currently operates a fleet of nine owned expedition ships and five seasonal charter vessels under the Lindblad brand, operates land-based eco-conscious expeditions and active nature focused tours under the Natural Habitat, Inc.

(“Natural Habitat”) and Off the Beaten Path, LLC (“Off the Beaten Path”) brands and operates luxury cycling and adventure tours under the DuVine Cycling + Adventure Company (“DuVine”) brand.

The Company operates the following two reportable business segments:

Lindblad Segment.  

The Lindblad segment consists primarily of ship-based expeditions aboard customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thereby allowing Lindblad to offer up-close experiences in the planet’s wild and remote places and capitals of culture.

Many of these expeditions involve travel to remote places with limited infrastructure and ports, such as Antarctica and the Arctic, or places that are best accessed by a ship, such as the Galápagos, Alaska, Baja’s Sea of Cortez, Costa Rica and Panama, and foster active engagement by guests.

Each expedition ship is designed to be comfortable and inviting, while being fully equipped with state-of-the-art tools for in-depth exploration.

The Company has an alliance with National Geographic Partners (“National Geographic”), which provides for lecturers and National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, to join many of the Company’s expeditions.

Natural Habitat – Offers over 100 different expedition itineraries of primarily land-based nature adventures in more than 45 countries spanning all seven  continents.

The expeditions focus on small groups led by award-winning naturalists to achieve close-up wildlife and nature experiences.

Land Experiences Segment.

The Land Experiences segment includes our three primarily land-based brands, Natural Habitat, DuVine and Off the Beaten Path.

Natural Habitat offers over 100 different expedition itineraries in more than 45 countries spanning all seven  continents.

The expeditions focus on small groups led by award-winning naturalists to achieve close-up wildlife and nature experiences. 

Examples of expeditions offered include safaris in Botswana, grizzly bear adventures in Alaska, polar bear tours in Canada and small-group Galápagos tours.

1 unchanged sentence

Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife.

DuVine offers luxury cycling and adventure tours around the world, providing immersive cultural and culinary experiences through thoughtfully designed itineraries led by expert local guides.

Offerings primarily include tours throughout Europe, the United States and South America.

Examples of DuVine's tours include cycling and culinary tours throughout the Bordeaux and Burgundy wine making regions, Tuscan truffle, porcini and chestnut harvest regions, Napa and Sonoma wine making regions and lakes and volcanos throughout Patagonia. DuVine's trips include top-quality gear and support and are tailored to riders of all abilities with an emphasis on exceptional food and wine experiences, along with boutique accommodations.

Off the Beaten Path offers active small-group and private custom journeys around the world.

Off the Beaten Path has a long-standing focus on offering unique adventures and experiences throughout the U.S.

National Parks.

In addition to other U.S.-based adventures such as ranch vacations and fly-fishing expeditions, Off the Beaten Path's small group product offerings include international expeditions across Europe, Africa, Australia, Central and South America and the South Pacific.

Examples of international expeditions include hiking through the Dolomites, enjoying a family adventure in Patagonia’s Lake District and experiencing the culture, architecture and village life of Morocco.

All Off the Beaten Path expeditions are defined by a focus on outdoor activity, including wildlife viewing, hiking, rafting, snorkeling, kayaking and snowshoeing, and comprehensive pre-trip materials paired with experienced, friendly guides.

The Company’s common stock is listed on the NASDAQ Capital Market under the symbol “LIND”.

6 unchanged sentences

All intercompany balances and transactions have been eliminated in these unaudited condensed consolidated financial statements.

These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2019 contained in the Company’s Annual Report on Form 10 -K filed with the SEC on February 26, 2020 ( the “2019 Annual Report”).

The presentation of certain items in the condensed consolidated statements of cash flows have been reclassified to conform to the 2020 presentation.

The reclassification had no effect on previously reported results of net cash provided by operating activities.

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2019 Annual Report, with the exception of those noted below.

Series A Redeemable Convertible Preferred Stock  

The Company’s Series A redeemable convertible preferred stock is accounted for as equity instruments, presented on the condensed consolidated balance sheets in the temporary equity section.

The redemption or conversion of the preferred stock into shares of the Company’s common stock is not solely controlled by the Company.

At the six -year anniversary of the issuance, the holders have the right to require the Company to repurchase their redeemable convertible preferred stock.

The redeemable convertible preferred stock is convertible into the Company’s common stock (i) any time at the holder’s election, (ii) at the six -year anniversary of the issuance of those shares not redeemed at the request of the holder, or (iii) after the third anniversary of the issuance by the Company under certain circumstances. 

COVID- 19 Business Update 

Due to the spread of the COVID- 19 virus and the effects of travel restrictions around the world, the Company has suspended or rescheduled the majority of its expeditions departing March 16, 2020 

through December 31, 

2020  and has rescheduled its 2020 - 2021 Antarctica season.

The Company has been working with guests to amend travel plans and refund payments, as applicable. The Company’s ships are currently being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed.

In accordance with local regulations, the Company closed its offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems. 

The Company moved quickly to implement a comprehensive plan to mitigate the impact of COVID- 19 and preserve and enhance its liquidity position.

The Company is employing a variety of cost reduction and cash preservation measures, while accessing available capital under its existing debt facilities and through the issuance of preferred stock, while exploring additional sources of capital and liquidity.

These measures include the following operating expense and capital expenditure reductions:

Significantly reduced ship and land-based expedition costs including crew payroll, land costs, fuel and food.

All ships have been safely laid up. 

Lowered expected annual maintenance capital expenditures by over $ 10 million, savings of more than 50% from originally planned levels. 

Meaningfully reduced general and administrative expenses through staff furloughs, payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.

Suspended the majority of planned advertising and marketing spend. 

Suspended all repurchases of common stock under the stock repurchase plan.

Bookings Trends

The Company was off to a strong start to the year with Lindblad segment bookings at the end of February up 25 % for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86 % of its originally projected guest ticket revenues for the year.

Since that point, the Company has experienced a substantial impact from the COVID- 19 virus including elevated cancellations and softness in near-term demand.

As of October 26, 2020, 

Lindblad segment bookings for travel in 2020 are now 74 % below the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages.

The Company has substantial advanced bookings for travel in 2021 and despite increased cancellations for travel in the first quarter of 2021, total bookings for 2021 are 4 % ahead of bookings for 2019 as of the same date in 2018 and only 12 % below the same date a year ago for 2020.

 For the last nine months of 2021 bookings are 12 % ahead of the bookings for the same period in 2020 as of the same date a year ago.

The Company continues to see new bookings for future travel including over $ 44.0  million since March 1, 2020, and it is receiving deposits and final payments for future travel.

For 2020 voyages that have been cancelled or rescheduled, the Company is providing future travel credits with incremental value or full refunds, as applicable, to its fully paid guests.

As of October 26, 2020, 

the majority of guests have opted for future travel credits.

These unaudited condensed consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto for the year ended December 31, 2020 contained in the Company’s Annual Report on Form 10 -K filed with the SEC on March 12, 2021 ( the “2020 Annual Report”).

There have been no significant changes to the Company’s accounting policies from those disclosed in the 2020 Annual Report.

COVID- 19 Business Update

Due to the spread of the COVID- 19 virus and the effects of travel restrictions around the world, the Company has suspended or rescheduled the majority of its expeditions and trips departing March 16, 2020 

through May 31, 

2021  and has been working with guests to reschedule travel plans and refund payments, as applicable.

The Company has announced plans to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos and is working with local health authorities on plans to operate in additional geographies during the second half of the year.

As the Company’s ships are currently not in operations, the majority of the fleet is being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed.

For those ships that are preparing to resume sailing, we have begun to increase crew levels as needed. In accordance with local regulations, the Company offices are closed, and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems.

The Company continues to adhere to the comprehensive plan it implemented in March 2020 to mitigate the impact of COVID- 19 and preserve and enhance its liquidity position. This plan employs a variety of cost reduction and cash preservation measures including significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending.

The Company has also accessed available capital under existing debt facilities and through the issuance of preferred stock, while continuing to explore additional sources of capital and liquidity.

Return to Fleet Operations

The Company has announced plans to resume operations with vaccinated guests in Alaska and the Galapagos in 

June 2021 

and is working with local health authorities on plans to operate in additional geographies during the second half of the year.

The Company believes there are a variety of strategic advantages that enable it to deploy its ships safely and quickly as travel restrictions are lifted.

The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols.

The small nature of the Company’s ships should also allow it to efficiently and effectively test its guests and crew prior to boarding.

Additionally, the majority of expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.

Balance Sheet and Liquidity

As of September 30, 2020, the Company had $ 129.6  million in unrestricted cash and $ 16.5  million in restricted cash primarily related to deposits on future travel originating from U.S.

During the first quarter of 2020 the Company drew down $ 45.0 million under its revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID- 19 pandemic and borrowed $ 107.7 million under its first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020.

During April 2020, the Company drew down $ 30.6 million under its second export credit agreement in conjunction with its third installment payment on the National Geographic Resolution , scheduled for delivery in the fourth quarter of 2021.

As of March 31, 2021, the Company had $ 163.9  million in unrestricted cash and $ 22.4  million in restricted cash primarily related to deposits on future travel originating from U.S.

As of March 31, 2021, the Company had a total debt position of $ 498.4  million and was in compliance with all of its debt covenants.

Following the quarter, in April 2021, the Company drew down an additional $ 15.5 million under its second senior secured credit agreement in conjunction with its fourth installment payment on the National Geographic Resolution, scheduled for delivery in the fourth quarter of 2021.

During the last twelve months, the Company has taken a variety of steps to strengthen its balance sheet and increase liquidity including:

During April 2020, the Company drew down $ 30.6 million under its second export credit agreement in conjunction with its third installment payment on the National Geographic Resolution . 

During May 2020, the Company amended its $ 2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

During June 2020, the Company amended its export credit agreements to defer approximately $ 9.0 million in aggregate scheduled amortization payments originally due in 

June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

During June 2020, the Company amended its export credit agreements to defer approximately $ 9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

During August 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75 % has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

During August 2020, the Company raised $ 85.0 million in gross proceeds through the private placement issuance of 85,000 shares of Series A Redeemable Convertible Preferred Stock (“Preferred Stock”), that carries a 6.0 % annual dividend, which is payable in kind for two years and thereafter in cash or in-kind at the Company’s option. The Preferred Stock is convertible into shares of Lindblad common stock at a conversion price of $ 9.50 per share, representing a premium of 23 % to Lindblad’s 30 -trading volume weighted average price on the date of issuance. The holders may request redemption of the Preferred Stock at the six -year anniversary of the issuance.

As of September 30, 2020, the Company had a total debt position of $ 412.2  million and was in compliance with all of its debt covenants in effect.

The Company has no material debt maturities until 2023.

The Company estimates its monthly cash usage while its vessels are not in operations to be approximately $ 10 - 15 million including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments.

The Company continues to evaluate additional strategies to enhance its liquidity position which may include, but are not limited to, further reductions in operating expenses, capital expenditures and administrative costs as well as additional financings. 

In April 2020, the Company received a U.S.

Small Business Administration Loan related to the COVID- 19 crisis in the amount of $6.6 million.

The Company subsequently returned the funds received from this loan and, as a result, made additional adjustments to its cost structure.

In connection with the amendment, the interest rate of the term loan was increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to the term loan and certain covenants have been amended to be more restrictive.

2020, the Company raised $ 85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a 6 % annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at the Company’s option. The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $ 9.50 per share, representing a premium of 23 % to Lindblad’s 30 -day trading volume weighted average price on the date of issuance.

During December 2020, the Company amended its term loan and revolving credit facilities and borrowed an incremental $ 85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System.

The incremental borrowing carries an interest rate of LIBOR plus 3.0 %, without any LIBOR floor, and matures December 2025 with no early payment restrictions. 

The Company estimates its current monthly cash usage to be approximately $ 10 - 15 million, including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments.

As the Company implements plans to resume operations, the monthly cash usage will increase as it incurs costs in preparation for returning ships to service, spends to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed.

The Company also anticipates a significant increase in guest payments as it receives final payments for upcoming expeditions as well as deposits for new reservations for future travel. 

The Company has not previously experienced a complete cessation of its operations and, as a consequence, its ability to predict the impact of such cessation on its costs and future prospects is limited.

Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of the COVID- 19 virus on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future.

It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place.

The estimates for monthly cash usage reflect the Company’s current forecast for operating costs, capital expenditures and expected debt and interest payments.

Based on current liquidity, the actions taken to date and its current forecast, which assumes rescheduled operations during 2020 with a ramp up in operations throughout 2021, the Company believes that its liquidity should be adequate to meet its obligations for the next 12 months from October 29, 2020, the date of this Quarterly Report on Form 10 -Q. 

Return to Operations

The Company already has a robust set of operating protocols and, in preparation for the resumption of operations, has been proactively working in close cooperation with various medical policy experts and public health authorities to further augment its procedures and protocols for health and safety onboard its vessels to mitigate the potential impacts of the COVID- 19 virus.

These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of an expedition.

While it is uncertain when the Company will return to operations, it believes there are a variety of strategic advantages that should enable it to deploy its ships safely and quickly once travel restrictions have been lifted.

The most notable is the size of its owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols.

The small nature of the Company’s ships should also allow it to efficiently and effectively test its guests and crew prior to boarding.

On average, the Company estimates it will only take a few thousand tests a month to ensure all guests and crew across its entire fleet have been tested.

Additionally, the majority of its expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.

The Company also has the ability to be flexible with regards to existing itineraries and is actively investigating additional itinerary opportunities both internationally and domestically.

Lastly, the Company’s guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty. 

Valuation of Goodwill

In accordance with ASC 360, the Company tests for impairment annually as of September 30, or more frequently if warranted.

The Company assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of goodwill is less than its carrying amount.

The Company completed the annual impairment test as of September 30, 2020 with no indication of goodwill impairment.

Given the dynamic nature of this situation, the Company cannot reasonably estimate the impacts of the COVID- 19 pandemic on its financial condition, results of operations, cash flows, plans and growth for the foreseeable future.

It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect the Company’s current forecast for operating costs, capital expenditures and expected debt and interest payments.

Based on the actions taken to date by the Company, its planned and anticipated actions and its current forecast, the Company believes that it can meet its obligations for the next 12 months from April 30, 2021, the date of this Quarterly Report on Form 10 -Q. 

Valuation of Goodwill and  

The effects of the COVID- 19 pandemic on the Company’s expected future operating cash flows was an indicator of potential impairment.

As a result, the Company performed an analysis of its reporting units’

goodwill for potential impairment as of March 31, 2021.

Based on this analysis, there was no impairment of goodwill.

Valuation of Long-lived Assets

The effects of COVID- 19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable.

The Company performed an undiscounted cash flow analysis of its long-lived assets for potential impairment as of September 30, 2020, and based on the analysis, it was determined that there was 

The effects of COVID- 19 on the Company’s expected future operating cash flows was a potential indicator that the carrying value of the Company's long-lived assets may not be recoverable.

As a result, the Company performed an undiscounted cash flow analyses of its long-lived assets for potential impairment as of March 31, 2021.

Based on this analysis, there was 

no impairment to the Company's long-lived assets.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 

3 unchanged sentences

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, and early adoption is permitted.

The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.

The Company adopted this ASU as required, and it has not had, nor is it expected to have, a material impact to the Company’s financial statements.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020 - 4, Reference Rate Reform (Topic 848 )—Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

3 unchanged sentences

The Company is currently reviewing its agreements impacted by the reference rate reform and does not expect this ASU to have a material impact to the Company’s financial statements.

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 )—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.

The amendments in this Update address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity.

The amendments in this Update reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and address convertible instruments with conversion features, as well as other items.

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 )—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.

The amendments in this ASU address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity.

The amendments reduce the number of accounting models for convertible debt instruments and convertible preferred stock, and address convertible instruments with conversion features, as well as other items.

This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, early adoption is permitted for fiscal years beginning after December 15, 2020, and must be adopted at the beginning of an entities’

The Company will adopt this ASU as required and is currently reviewing the impacts this ASU will have on its financial statements.

The Company will adopt this ASU as required and does not expect it to have a material impact to the Company’s financial statements.

NOTE 2 —

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Earnings per Common Share

Earnings per common share is computed using the two -class method related to its Preferred Stock.

Under the two -class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of convertible preferred shares based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock.

Earnings (loss) per common share is computed using the two -class method related to its Preferred Stock.

Under the two -class method, undistributed earnings available to stockholders for the period are allocated on a pro rata basis to the common stockholders and to the holders of convertible preferred shares based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion of the Preferred Stock.

Diluted earnings per share is computed using the weighted average number of common shares outstanding and, if dilutive, potential common shares outstanding during the period.

Potential common shares consist of the dilutive incremental common shares associated with restricted stock awards, shares issuable upon the exercise of stock options and previously outstanding warrants, using the treasury stock method, and the potential common shares that could be issued from conversion of the Preferred Stock, using the if-converted method. When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted EPS calculation.

For the three and nine months ended September 30, 2020 and 2019, the Company calculated earnings (loss) per share as follows:

For the three months ended September 30,

For the nine months ended September 30,

When a net loss occurs, potential common shares have an anti-dilutive effect on earnings per share and such shares are excluded from the diluted earnings per share calculation.

For the three months ended March 31, 2021 and 2020, the Company incurred a net loss from operations, therefore basic and diluted net loss per share are the same for the periods.

As of March 31, 2021, 

0.9 million restricted shares, 0.5 million options and 9.3 million common shares issuable upon the conversion of the Preferred Stock were excluded from dilutive potential common shares for the period as they were anti-dilutive and basic and diluted net loss per share are the same for the period.

As of March 31, 2020, 0.5 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the period as they were anti-dilutive.

For the three months ended March 31, 2021 and 2020, the Company calculated earnings (loss) per share as follows:

For the three months ended March 31,

(unaudited)  

(In thousands, except share and per share data)

Net (loss) income attributable to Lindblad Expeditions Holdings, Inc.

$ ( 27,379 )  

$ 2,161  

$ ( 68,973 )  

$ 17,822  

Series A redeemable convertible preferred stock dividend  

Non-cash deemed dividend to warrant holders

Undistributed (loss) earnings available to stockholders

$ ( 27,804 )  

$ ( 493 )  

Net loss attributable to Lindblad Expeditions Holdings, Inc.

$ ( 33,244 )  

Series A redeemable convertible preferred stock dividend

Undistributed loss available to stockholders

$ ( 34,545 )  

3 unchanged sentences

49,625,127  

49,715,663  

46,704,634  

Dilutive potential common shares

252,279  

Dilutive potential options

66,105  

Dilutive potential redeemable convertible preferred shares  

Dilutive potential warrants

2,068,352  

Total weighted average shares outstanding, diluted

1 unchanged sentence

49,625,127  

49,715,663  

49,091,370  

Undistributed (loss) earnings per share available to stockholders

$ ( 0.56 )  

$ ( 0.01 )  

$ ( 1.40 )  

$ 0.32  

$ ( 0.56 )  

$ ( 0.01 )  

Undistributed loss per share available to stockholders:

$ ( 0.66 )  

For the three and nine months ended September 30, 2020, the Company incurred a net loss from operations, therefore 0.3  million restricted shares, 0.2 million options and 8.9  million common shares issuable upon the conversion of the Preferred Stock as of September 30, 2020, were excluded from dilutive potential common shares for the periods as they are anti-dilutive, and basic and diluted net loss per share are the same for the periods.

For the three months ended September 30, 2019, the Company incurred a net loss available to common stockholders, therefore 0.6 million restricted shares and 0.2 million options were excluded from dilutive potential common shares for the period as they are anti-dilutive, and basic and diluted net loss per share are the same for the period.

For the nine months ended September 30, 2019, 0.1  million restricted shares were excluded from dilutive potential common shares as performance conditions have not been met. 

NOTE 3 —

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Guest deposits consist of guest ticket revenues as well as revenues from the sale of pre- and post-expedition excursions, hotel accommodations, land-based expeditions and air transportation to and from the ships.

Guest deposits represent unearned revenues and are reported as unearned passenger revenues in the condensed consolidated balance sheets when received and are subsequently recognized as tour revenue over the duration of the expedition.

Accounting Standards Codification, Revenue from Contracts with Customers (Topic 606 ) defines a “contract liability”

9 unchanged sentences

15,999  

Balance as of September 30, 2020

Balance as of March 31, 2021

$ 88,257  

The following table disaggregates our tour revenues by the sales channel it was derived from:

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

Guest ticket revenue:

National Geographic

Direct  

National Geographic  

Agencies  

Affinity  

Guest ticket revenue

Other tour revenue

Tour revenues

NOTE 4 –

NOTE 4 — 

FINANCIAL STATEMENT DETAILS

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows: 

As of September 30,

(In thousands)

The following is a reconciliation of cash, cash equivalents and restricted cash to the statement of cash flows:

For the three months ended March 31,

(In thousands)  

(unaudited)  

Cash and cash equivalents

3 unchanged sentences

22,446  

22,791  

Total cash, cash equivalents and restricted cash as presented in the statement of cash flows

1 unchanged sentence

$ 159,831  

Restricted cash consist of the following: 

As of September 30, 2020

Restricted cash consist of the following:

As of March 31, 2021

As of December 31, 2020

(In thousands)

(unaudited)  

Federal Maritime Commission escrow

6 unchanged sentences

$ 16,984  

The Company’s prepaid expenses and other current assets consist of the following: 

As of September 30, 2020

The Company’s prepaid expenses and other current assets consist of the following:

As of March 31, 2021

As of December 31, 2020

(In thousands)

(unaudited)  

Prepaid tour expenses

1 unchanged sentence

$ 5,630  

Prepaid air expense

Prepaid marketing, commissions and other expenses

Prepaid client insurance

Prepaid corporate insurance

Prepaid air expense

Prepaid port agent fees

Prepaid corporate insurance

Prepaid income taxes

2 unchanged sentences

$ 17,014  

The Company’s accounts payable and accrued expenses consist of the following: 

As of September 30, 2020

The Company’s accounts payable and accrued expenses consist of the following:

As of March 31, 2021

As of December 31, 2020

3 unchanged sentences

$ 5,285  

Foreign currency forward contract liability

Accrued other expense

Employee liability

Refunds and commissions payable

Accrued other expense

Bonus compensation liability

Foreign currency forward contract liability

Refunds and commissions payable

Travel certificate liability

Accrued travel insurance expense

Royalty payable

Income tax liabilities

2 unchanged sentences

$ 22,341  

Loan Receivable

The Company’s loan receivable is recorded at amortized cost within other long-term assets.

The Company reviewed its loan receivable for credit losses in connection with the preparation of its condensed consolidated financial statements for the period ended September 30, 2020.

In evaluating the allowance for loan losses, the Company considered factors such as historical loss experience, the type and amount of loan, adverse situations that may affect the borrower’s ability to repay and prevailing economic conditions.

Based on these credit loss estimation and experience factors, the Company realized no allowance for loan loss for the nine months ended September 30, 2020.

The roll-forward of the loan receivable balance is as follows:

Loan Receivable

The following is a rollforward of the receivable balance:

For the three months ended March 31, 2021

(In thousands)

1 unchanged sentence

$ 4,220  

Adjustment for ship building expense  

Accrued interest

Amortization of deferred costs

Balance as of September 30, 2020

Balance as of March 31, 2021

$ 3,860  

1 unchanged sentence

LONG-TERM DEBT

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

10 unchanged sentences

44,697  

45,000  

( 341 )  

44,659  

Credit Facility

9 unchanged sentences

105,961  

107,695  

( 1,784 )  

105,911  

2nd Senior Secured Credit Agreement

23 unchanged sentences

$ 471,359  

For the three and nine months ended September 30, 2020, deferred financing costs charged to interest expense were $ 0.5  million and $ 1.5 million, respectively.

For the three and nine months ended September 30, 2019, deferred financing costs charged to interest expense was $ 0.5  million and $ 1.4 million, respectively. 

The Company has amended its export credit agreements, term loan and revolving credit facilities.

During June 2020, the Company amended its export credit agreements to defer approximately $ 9.0 million in aggregate scheduled amortization payments originally due 

June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75 % has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

For the three months ended March 31, 2021 and 2020, deferred financing costs charged to interest expense were $ 0.7  million and $ 0.5 million, respectively.

Credit Facility

In March 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), providing for a $ 200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $ 45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $ 5.0 million letter of credit sub-facility.

The Term Facility, as amended, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a floor of 0.75 %, plus a spread of 4.50 %, for an aggregated rate of 5.25 % as of September 30, 2020. 

During March 2020, the Company drew $ 45.0 million against the Revolving Facility as a reserve for general corporate purposes and other expense needs due to the uncertainty related to the COVID- 19 pandemic. Borrowings under the Revolving Facility mature 

March 2023 and, as amended, bear interest at an adjusted ICE Benchmark administration LIBOR, with a minimum of 0.75 %, plus a spread of 3.00 %, for an aggregated rate of 3.75 % as of September 30, 2020.

Export Credit Agreements

In January 2018, the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, which made available to the Company a loan in an aggregate principal amount not to exceed $ 107.7 million for the purpose of providing financing for up to 80 % of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance .

In March 2018, the Company entered into the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) providing for a $ 200.0 million senior secured term facility (the “Term Facility”), maturing March 2025, and a $ 45.0 million senior secured revolving credit facility (the “Revolving Facility”) maturing March 2023, which includes a $ 5.0 million letter of credit sub-facility.

In March 2020, the Company drew $ 45.0 million against the Revolving Facility as a reserve for general corporate purposes and other expense needs due to the uncertainty related to the COVID- 19 pandemic.

In August 2020, the Company amended the Amended Credit Agreement to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75 % was added to the Term Facility and certain covenants were amended to be more restrictive. 

In December 2020, the Company amended the Amended Credit Agreement to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of $ 85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility (the “Main Street Loan”). Interest on the Main Street Loan shall be paid-in-kind for the first year and the principal shall amortize at a rate of 15 % in each of the third and fourth years, with the remaining amounts to be paid at maturity.

The Company may voluntarily prepay the Main Street Loan at any time and from time to time, without premium or penalty, other than customary “breakage costs”

and fees for LIBOR-based loans.

The Term Facility, as amended, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR with a minimum of 0.75 %, plus a spread of 4.75 %, for an aggregated rate of 5.50 % as of December 31, 2020.

125 basis points of the spread are to be paid-in-kind at maturity.

Borrowings under the Revolving Facility as amended, bears interest at an adjusted ICE Benchmark administration LIBOR, plus a spread of 3.00 %, for an aggregated rate of 3.12 % as of March 31, 2020.

The Main Street Loan bears interest at a rate per annum adjusted ICE Benchmark administration LIBOR for an interest period of 3 -months plus 3.00 %, for an aggregated rate of 3.20 % as of March 31, 2021. 

Senior Secured Credit Agreement

In January 2018, the Company entered into a senior secured credit agreement (the “Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, to make available to the Company a loan in an aggregate principal amount not to exceed $ 107.7 million for the purpose of providing financing for up to 80 % of the purchase price of the Company’s new ice class vessel, the National Geographic Endurance .

During March 2020, the Company took possession of the National Geographic Endurance and borrowed $ 107.7 million under the Export Credit Agreement for final payment .

The Export Credit Agreement bears interest at a floating interest rate equal to three -month LIBOR plus a margin of 3.00 % per annum, for an aggregated rate of 3.25 % over the borrowing period covering September 30, 2020. 

In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with the Citibank, N.A., London Branch and Eksportkreditt Norge AS.

Pursuant to the Second Export Credit Agreement, the Lenders have agreed to make available to the Company, at the Company's option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $ 122.8 million for the purpose of providing pre- and post-delivery financing for up to 80 % of the purchase price of the Company’s new expedition ice-class vessel, the 

The Export Credit Agreement bears interest at a floating interest rate equal to three -month LIBOR plus a margin of 3.00 % per annum, for an aggregated rate of 3.18 % as of March 31, 2021. 

In April 2019, the Company entered into a senior secured credit agreement (the “Second Export Credit Agreement”) with Citibank, N.A., London Branch and Eksportkreditt Norge AS, to make available to the Company, at the Company's option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $ 122.8 million for the purpose of providing pre- and post-delivery financing for up to 80 % of the purchase price of the Company’s new expedition ice-class cruise vessel, the 

National Geographic Resolution , scheduled to be delivered in the fourth quarter of 2021.

30% of the borrowing will mature over five years from the final drawdown, and 70% of the borrowing will mature over twelve years from the final drawdown.

Additionally, 70% percent of the loan will be guaranteed by Garantiinstituttet for Eksportkreditt, the official export credit agency of Norway. In September 2019 and April 2020, the Company drew approximately $ 30.5 million and $ 30.6 million, respectively, under the Second Export Credit Agreement for contracted installment payments on the 

National Geographic Resolution . 

The Second Export Credit Agreement bears a variable interest rate equal to three -month LIBOR plus a margin of 3.00 % per annum, or 3.23 % over the borrowing period covering September 30, 2020.

In September 2019, 

April 2020 and April 2021, the Company drew approximately $ 30.5 million, $ 30.6 million and $ 15.5 million, respectively, against the Second Export Credit Agreement for contracted installment payments on the 

National Geographic Resolution . The Second Export Credit Agreement bears a variable interest rate equal to three -month LIBOR plus a margin of 3.00 % per annum, or 3.19 % as of March 31, 2021.

After completion of the vessel, the Second Export Credit Agreement, at the Company’s option, will bear an interest rate of either a fixed rate of 6.36 % or a variable rate equal to three -month LIBOR plus a margin of 3.00 % per annum.

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued an unsecured promissory note to Benjamin L.

Bressler, the founder of Natural Habitat, with an outstanding principal amount of $ 2.5 million. The promissory note accrues interest at a rate of 1.44 % annually, with interest payable every six months.

On May 1, 2020, the promissory note was amended, changing the maturity date of the principal payments to be due in three equal installments with the first payment due on December 22, 2020, the second on December 22, 2021 and the final payment on December 22, 2022.

On April 10, 2020, 

the Company received a U.S.

Small Business Administration Loan related to the COVID- 19 crisis in the amount of $ 6.6 million.

The Company subsequently returned the funds received from this loan.

The Company’s Amended Credit Agreement, Export Credit Agreement and Second Export Credit Agreement contain financial and restrictive covenants that include among others, net leverage ratios, minimum liquidity, limits on additional indebtedness and limits on certain investments. The net leverage ratios covenants of the Company’s credit agreements have been suspended or waived through June 2021. 

As of September 30, 2020, the Company was in compliance with its covenants.

NOTE 6 –

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

June 2020, the Company amended its export credit agreements to defer approximately $ 9.0 million in aggregate scheduled amortization payments originally due June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

Notes Payable

In connection with the Natural Habitat acquisition in May 2016, Natural Habitat issued a $ 2.5 million unsecured promissory note, amended in May 2020, to Benjamin L.

Bressler, the founder of Natural Habitat, with an outstanding principal amount of $ 1.7 million as of March 31, 2021. 

The promissory note accrues interest at a rate of 1.44 % annually, with interest payable every six months and the remaining principal payments to be due in equal installments on December 22, 2021 and 2022.

As of March 31, 2021, the net leverage ratio covenant of the Company’s Amended Credit Agreement has been waived through June 2021.

The Company was in compliance with its covenants in effect as of March 31, 2021.

NOTE 6  

 FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

6 unchanged sentences

The Company uses currency exchange contracts to manage its exposure to changes in currency exchange rates associated with certain of its non-U.S.-dollar denominated receivables and payables.

The Company primarily hedges a portion of its current-year currency exposure to several currencies, which normally include, but are not limited to, the Canadian and New Zealand dollars, the Brazilian Real, the South African Rand, the Euro and the British pound sterling.

The Company primarily hedges a portion of its current-year currency exposure to the Canadian and New Zealand dollars, the Brazilian Real, the South African Rand, the Euro and the British pound sterling.

The fluctuations in the value of these forward contracts largely offset the impact of changes in the value of the underlying risk they economically hedge.

In March 2019, the Company entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge its exposure to Norwegian Kroner ("NOK"), related to the Company’s contract to purchase the new polar ice-class vessel (see Note 11 –

Commitments and Contingencies).

4 unchanged sentences

Any changes in fair values of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income (loss) into earnings.

No gains or losses of the Company’s cash flow hedges were considered to be ineffective for the period ended September 30, 2020.

The Company reclassified $ 5.3 million from other comprehensive income (loss) to earnings for the nine months ended September 30, 2020 due to the maturity of a cash flow hedge and the hedged item.

The Company estimates that approximately $ 6.9  million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to maturity of the cash flow hedge and the hedged item.

No gains or losses of the Company’s cash flow hedges were considered to be ineffective and reclassified from other comprehensive income (loss) to earnings for the period ended March 31, 2021.

The Company estimates that approximately $ 1.8 million of losses currently recorded in accumulated other comprehensive income (loss) will be recognized in earnings over the next 12 months due to maturity of the cash flow hedge and the hedged item.

The Company will continue to assess the effectiveness of the hedges on an ongoing basis.

The Company held the following derivative instruments with absolute notional values as of September 30, 2020:

The Company held the following derivative instruments with absolute notional values as of March 31, 2021:

(in thousands)

5 unchanged sentences

Estimated fair values (Level 2 ) of derivative instruments were as follows:

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

8 unchanged sentences

$ 2,008  

Interest rate cap (b)

$ 1,782  

1 unchanged sentence

Derivative instruments not designated as cash flow hedging instruments:

Foreign exchange forward (c)

Foreign exchange forward (b)

$ 1,023  

Recorded in accounts payable and accrued expenses, and other long-term liabilities.

Recorded in prepaid expenses and other current assets, and other long-term assets.

Recorded in prepaid expenses and other current assets, and accounts payable and accrued expenses. 

 Changes in the fair value of the Company’s hedging instruments are recorded in accumulated other comprehensive income, pursuant to the guidelines of cash flow hedge accounting as outlined in ASC 815.

The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:

For the three months ended September 30,

For the nine months ended September 30,

Recorded in prepaid expenses and other current assets. 

The effects of derivatives recognized in the Company’s condensed consolidated financial statements were as follows:

For the three months ended March 31,

(In thousands)

3 unchanged sentences

$ 13,277  

$ 2,261  

Interest rate cap (b)

Interest rate cap (a)

( 77 )  

Derivative instruments not designated as cash flow hedging instruments:

Foreign exchange forward (c)

( 715 )  

( 1,008 )  

Foreign exchange forward (b)

( 70 )  

1 unchanged sentence

$ 9,956  

For the three and nine months ended 

September 30, 2020, a $ 1.7  million gain and a $ 7.6  million loss, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’

equity, and for the nine months ended September 30, 2020, $ 5.3 million was recognized as a loss on foreign currency in the condensed consolidated statements of income.

For the three and nine months ended September 30, 2019, $ 1.6  million was recognized as a loss on foreign currency in the condensed consolidated statements of income, and $ 5.5  million and $ 6.4  million, respectively, was recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’

Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’

Recognized, net of tax, as a component of other comprehensive income (loss) within stockholders’ equity.

Gains (losses) related to derivative instruments are expected to be largely offset by (losses) gains on the underlying exposures being hedged.

During the three and nine months ended 

September 30, 2020, a gain of $ 1.0 million and a loss of $ 1.0 million was recognized in gain (loss) on foreign currency.

During the three and nine  months ended September 30, 2019, a loss of $ 0.7  million and a gain of $ 0.4  million, respectively, was recognized in gain (loss) on foreign currency.

During the three months ended March 31, 2021, a gain of $ 0.1  was recognized in gain (loss) on foreign currency.

During the three months ended March 31, 2020, a loss of $ 3.4 million was recognized in gain (loss) on foreign currency.

Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to the short-term nature of these instruments.

The carrying value of long-term debt approximates fair value given that the terms of the agreement were comparable to the market as of September 30, 2020. 

As of September 30, 2020 and December 31, 2019, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

The carrying value of long-term debt approximates fair value given that the terms of the agreements were comparable to the market as of March 31, 2021.

As of March 31, 2021 and December 31, 2020, the Company had no other significant liabilities that were measured at fair value on a recurring basis.

NOTE 7 —

STOCKHOLDERS ’

Stock and Warrant Repurchase Plan

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $ 35.0 million in November 2016.

The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants.

Any shares purchased will be retired.

The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors.

These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards.

All repurchases were made using cash resources.

In March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID- 19 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock repurchases. The Company has cumulatively repurchased 875,218  shares of common stock for $ 8.3  million and 6,011,926 warrants for $ 14.7 million, since plan inception.

The remaining balance for the Repurchase Plan was $ 12.0  million as of March 31, 2021.

Preferred Stock

7 unchanged sentences

At the six -year anniversary of the closing date, each investor has the right to require the Company to repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into common shares of the Company equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

For the three and nine months ended September 30, 2020, the Company recorded $ 0.4 million in accrued dividends for Preferred Stock.

The Preferred Stock deferred issuance costs was approximately $ 2.8  million as of September 30, 2020.

As of September 30, 2020, the Preferred Stock could be converted at the option of the holders into approximately 8.9  million shares of the Company’s common stock.

Stock and Warrant Repurchase Plan

The Company’s Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $ 35.0 million in November 2016.

The Repurchase Plan authorizes the Company to purchase, from time to time, the Company’s outstanding common stock and previously outstanding warrants.

Any shares purchased will be retired.

The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of the Company’s Board of Directors.

These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards.

Since March 2020, the Repurchase Plan has been suspended due to the uncertain impact of the COVID- 19 virus.

Prior to its suspension, the Company had repurchased 8,517  shares of common stock for approximately $ 127,000 during 2020.

The Company has cumulatively repurchased 875,218  shares of common stock for $ 8.3  million and 6,011,926 warrants for $ 14.7 million since plan inception.

All repurchases were made using cash resources.

The remaining balance for the Repurchase Plan was $ 12.0  million as of September 30, 2020.

The Preferred Stock deferred issuance costs was approximately $ 2.9  million as of March 31, 2021.

NOTE 8 —

STOCK BASED COMPENSATION

The Company is authorized to issue up to 2.5 million shares of common stock under the 2015 Long-Term Incentive Plan to directors and key employees, and as of September 30, 2020, approximately 1.0 million shares were available to be granted.

As of September 30, 2020 and December 31, 2019, options to purchase an aggregate of 200,000 shares of the Company’s common stock, with a weighted average exercise price of $ 9.47 , were outstanding. All 200,000  options were exercisable as of September 30, 2020.

The Company recorded stock-based compensation expense of $ 0.3  million and $ 1.9  million during the three and nine months ended 

September 30, 2020, respectively, and $ 0.9 million and $ 2.7 million during the three and nine months ended September 30, 2019, respectively.

2020 Long-Term Incentive Compensation

During the nine months ended September 30, 2020, the Company granted 186,515 restricted stock units ("RSUs") with a weighted average grant price of $ 6.07 .

The RSUs will vest, depending on the grant, either on the first anniversary of the grant date or in equal installments over a three -year period, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of the Company's common stock on the date of the award. 

During the nine months ended September 30, 2020, the Company granted 55,048 restricted shares with a weighted average grant price of $ 8.26 .

The restricted shares will vest on the first anniversary of the grant date, subject to the recipient's continued service or employment with the Company on the applicable vesting date.

During the nine months ended September 30, 2020, the Company awarded 86,783  targeted performance stock units ("PSUs") with a weighted average grant price of $ 5.42 .

The PSUs are performance-vesting equity incentive awards that will be earned based on the Company's performance against metrics relating to annual Adjusted EBITDA and annual revenue.

Awards will vest after a three -year performance period and may be earned at a level ranging from 0 %- 200 % of the number of PSUs granted, depending on performance.

The number of shares were determined based upon the closing price of our common stock on the date of the award. The PSUs granted during the nine months ended September 30, 2020 represented 50 % of the 2020 long-term incentive compensation PSU awards.

Due to the circumstances related to the impact of the COVID- 19 virus, the compensation committee of the Company's Board of Directors initially approved the deferral of a portion of the PSU awards and during September 2020, awarded market share units in lieu of the remainder of the PSU grants.

On September 30, 2020, the Company awarded 98,030  market performance share units (“MSUs”) with a weighted average grant price of $ 8.51 .

The Company is authorized to issue up to 2.5 million shares of common stock under the 2015 Long-Term Incentive Plan to key employees, and as of March 31, 2021, approximately 0.1  million shares were available to be granted.

The Company has proposed a new long-term incentive plan for approval at the 2021 annual meeting. 

As of March 31, 2021 and December 31, 2020, options to purchase an aggregate of 510,000 shares of the Company’s common stock, with a weighted average exercise price of $ 10.30 , were outstanding.

As of March 31, 2021, 200,000  options were exercisable.

The Company recorded stock-based compensation expense of $ 1.6  million and $ 0.9 million during the three months ended 

March 31, 2021 and 2020, respectively.

2021  Long-Term Incentive Compensation

During the three months ended March 31, 2021, the Company granted 109,921 restricted stock units ("RSUs") with a weighted average grant price of $ 18.74 .

The RSUs will primarily vest equally over three years on the anniversary of the grant date, subject to the recipient’s continued employment or service with the Company on the applicable vesting date. The number of shares were determined based upon the closing price of our common stock on the date of the award.

During the three months ended March 31, 2021, the Company awarded 50,072  market performance share units (“MSUs”) with a weighted average grant price of $ 18.90 .

The MSUs are market-based equity incentive awards based on a performance-multiplier of change in the stock price of the Company’s common stock between the grant date and March 31, 2024.

The number of shares that will eventually be earned and vest may be more or less then the number of MSUs that are awarded, depending on the Company's common stock price.

The MSUs will vest 50 % on March 31, 2022 and 50 % on March 31, 2023.

The number of shares that will eventually be earned and vest may be more or less then the number of MSUs that are awarded, depending on the Company's common stock price, at a level ranging from 0 % to 150 %.

The number of MSUs earned shall be determined and shall vest on March 31, 2024.

Natural Habitat Contingent Arrangement

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Bressler will be granted options with a fair value equal to 10.1 % of such excess, subject to certain conditions.

Lawrence, President of Off the Beaten Path, was issued 1,007 profit interest units in the equity of Off the Beaten Path as part of the overall acquisition structure.

The profit interest units had a $ 132.86 per share grant date fair value and are considered vested upon issuance.

The Company recorded $ 0.1 million in stock-based compensation expense related to the value of these profit units for the three months ended March 31, 2021.

NOTE 9  —

RELATED PARTY TRANSACTIONS

In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note to Mr.

Bressler, the founder of Natural Habitat, with an outstanding principal amount of $ 2.5 million.

The promissory note was amended during May 2020.

In May 2016, in connection with the Company's acquisition of Natural Habitat, Natural Habitat issued an unsecured promissory note, amended May 2020, to Mr.

Bressler, the founder of Natural Habitat.

See Note 5 —

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While the Company believes that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than- not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on its condensed consolidated financial statements or may exceed the current income tax reserves in amounts that could be material.

As of September 30, 2020, and December 31, 2019, the Company had a liability for unrecognized tax benefits of $ 0.0 million.

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three and nine months ended September 30, 2020 and 2019, interest and penalties related to uncertain tax positions included in income tax expense are not significant.

The Company's effective tax rate for the three and nine months ended September 30, 2020 was a benefit of 9.5 % and 9.9 %, respectively, versus an expense of 72.9 % and 20.6 % for the three and nine months ended September 30, 2019, respectively, primarily due to the timing of losses in the 

first quarter and the expected amount of losses for the full year 2020 due to the impact of COVID- 19 on the Company's operations.

As of March 31, 2021, and December 31, 2020, the Company had a liability for unrecognized tax benefits of $ 0.0 million.

The Company’s policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. During the three months ended March 31, 2021 and 2020, interest and penalties related to uncertain tax positions included in income tax expense are not significant.

The Company's effective tax rate for the three months ended March 31, 2021 was a benefit of 7.6 % versus a benefit of 42.5 % for the three months ended March 31, 2020, primarily due to the timing of losses in the 

first quarter and the expected amount of income for the full year 2021 as compared to 2020 due to the impact of the COVID- 19 pandemic on the Company's operations.

The Company is subject to tax audits in all jurisdictions for which it files tax returns.

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NOTE 11  —

To further expand the Company’s land-based experiential travel offerings and increase its addressable market, on February 1, 2021, the Company acquired, through its Natural Habitat subsidiary, 90.1 % of the outstanding common stock of Off the Beaten Path, LLC, a land-based travel operator specializing in authentic national park experiences, and on March 3, 2021, acquired 70 % of the outstanding common stock of DuVine Cycling + Adventure LLC, an international luxury cycling and adventure company focused on exceptional food and wine experiences. 

The acquisitions had an aggregate purchase price of $ 10.6 million, including $ 1.8 million in Company stock at closing.

The acquisitions were accounted for under purchase accounting and are included in our consolidated results from the acquisition dates.

Acquisition related cost were approximately $ 0.4 million and are included in general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2021.

The financial results of the acquired businesses are immaterial to the Company's financial statements individually or in aggregate.

The purchase accounting valuations for the acquisitions are ongoing and have not been completed as of this report date and is subject to change as third -party valuations are finalized.

The Company recorded approximately $ 6.5 million in intangible assets related to tradenames and customer lists and approximately $ 11.5  million in goodwill related to these acquisitions.

The revenue and operating income contributed by the acquisitions during the three months ended March 31, 2021 were immaterial.

Following are the pro forma revenue and net loss available to stockholders for the three months ended March 31, 2021 and 2020, had the Company had completed the acquisitions on January 1, 2020. 

For the three months ended March 31,  

(in thousands)

(unaudited)  

Revenue  

$ 1,833  

$ 82,764  

Net loss available to stockholders  

( 34,848 )  

NOTE 12  —

COMMITMENTS AND CONTINGENCIES

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In February 2019, the Company entered into an agreement, which was amended in December 2019, 

with Ulstein Verft, to construct a second polar ice class vessel, the National Geographic Resolution , with a total purchase price of 1,291.0  million NOK.

The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date.

In March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the second polar ice class vessel of $ 153.5  million, subject to potential contract specification adjustments.

The purchase price is due in installments, with 20 % paid shortly after execution of the agreement, 20 % paid in September 2019, 

20 % paid in April 2020 and 10 % due in April 2021.

with Ulstein Verft, to construct a second polar ice class vessel, the National Geographic Resolution , with a total purchase price of 1,291.0  million NOK.

The purchase price is subject to potential adjustments from contract specifications for variations in speed, dead weight, fuel consumption and delivery date. In March 2019, the Company entered into foreign exchange forward contracts to lock in a purchase price for the second polar ice class vessel of $ 153.5 million, subject to potential contract specification adjustments.

The purchase price is due in installments, with 20 % paid shortly after execution of the agreement, 20 % paid in September 2019, 20 % paid in April 2020 and 10 % paid in April 2021.

The final 30% is due upon delivery and acceptance of the vessel.

The vessel is scheduled to be delivered in the fourth quarter of 2021.

Royalty Agreement –

National Geographic

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo.

In return for these rights, the Company is charged a royalty fee.

The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

The amount is calculated based upon a percentage of certain ticket revenues less travel agent commission, including the revenues received from cancellation fees and any revenues received from the sale of pre- and post-expedition extensions.

Royalty expense for the three and nine months ended September 30, 2020 was $ 0.0  million and $ 1.3  million, respectively, and for the three and nine months ended September 30, 2019, was $ 1.7  million and $ 4.8  million, respectively.

The royalty balances outstanding to National Geographic as of September 30, 2020 and December 31, 2019 were $ 0.0  million and $ 2.2  million, respectively, and are included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

Royalty Agreement –

World Wildlife Fund

Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo.

In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales.

The fees are included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

This royalty fee expense was $ 0.1 million and $ 0.1 million for the three and nine months ended September 30, 2020, respectively, and $ 0.3  million and $ 0.7 million for the three and nine months ended September 30, 2019, respectively. 

Charter Commitments

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions.

Future minimum payments on its charter agreements as of September 30, 2020 are as follows:

For the years ended December 31,

(In thousands)

2020 (three months)

$ 2,168  

$ 13,453  

Natural Habitat Redeemable Non-Controlling Interest  

Bressler, founder of Natural Habitat, retains a 19.9 % noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement.

The arrangement between the Company and Mr.

In December 2019, the Company and Ulstein Verft amended the National Geographic Resolution construction agreement, providing for an expedited delivery schedule for the vessel and a loan agreement for which all or a portion may be considered as a delivery bonus and forgiven, as determined by the expedited delivery schedule per the agreement. The vessel is scheduled to be delivered in the fourth quarter of 2021.

Redeemable Non-Controlling Interest  

Bressler, founder of Natural Habitat, retains a 19.9 % noncontrolling interest in Natural Habitat, which is subject to a put/call arrangement, amended in May 2020.

The arrangement between the Company and Mr.

Bressler was established in order to provide a formal exit opportunity for Mr.

Bressler and a path to 100% ownership for the Company.

Bressler has a put option, amended in May 2020, that under certain conditions and subject to providing notice by January 

31, 2024, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023.

Bressler has a put option that under certain conditions, and subject to providing notice by January 31, 2024, that enables him, but does not obligate him, to sell his remaining interest in Natural Habitat to the Company, valued as of December 31, 2023.

The Company has a call option, but not an obligation, with an expiration of March 31, 2029, under which it can buy Mr.

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Bressler’s put option, subject to a call purchase price minimum.

Since the redemption of the noncontrolling interest is not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’

Lawrence, in a combination of his minority interest and profit interest units, retains a 19.9 % noncontrolling interest in Off the Beaten Path, which is subject to a put/call arrangement.

The arrangement between the Company and Mr.

Lawrence was established in order to provide a formal exit opportunity for Mr.

Lawrence and a path to 100% ownership for the Company.

Lawrence has a put option, that under certain conditions and subject to providing notice by October 31, 2025, that enables him, but does not obligate him, to sell his remaining interest in Off the Beaten Path to the Company on December 31, 2025.

The Company has a call option, but not an obligation, with an expiration of December 31, 2030, under which it can buy Mr.

Lawrence’s remaining interest at a similar fair value measure as Mr.

Lawrence’s put option.

Levine, founder of DuVine, retains a 30 % noncontrolling interest in DuVine, which is subject to a put/call arrangement.

The arrangement between the Company and Mr.

Levine was established in order to provide a formal exit opportunity for Mr.

Levine and a path to 100% ownership for the Company.

Levine has a put option, that under certain conditions and subject to providing notice by January 31, 2026, that enables him, but does not obligate him, to sell his remaining interest in DuVine to the Company as of December 31, 2025.

The Company has call options, but not an obligation, with a first call option to on or after December 31, 2023, expiring December 31, 2025, to acquire an additional 10 % of DuVine from Mr.

Levine, and a second call option with an expiration of December 31, 2030, under which it can buy Mr.

Levine’s remaining interest at a similar fair value measure as Mr.

Levine’s put option, subject to a call purchase price minimum.

Since the redemption of the noncontrolling interests are not solely in the Company’s control, the Company is required to record the redeemable noncontrolling interest outside of stockholders’

equity but after its total liabilities.

The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of Mr.

Bressler’s put option.

In addition, if it is probable that the instrument will become redeemable, as such solely due to the passage of time, the redeemable noncontrollable interest should be adjusted to the redemption value via one of two measurement methods. The Company elected the income classification-excess adjustment and accretion methods for recognizing changes in the redemption value of the put options.

Under this methodology, a calculation of the present value of the redemption value is compared to the carrying value of the redeemable noncontrolling interest and the carrying value of the redeemable noncontrolling interest is adjusted to the redemption value’s present value.

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Adjustments in excess of the fair value of the noncontrolling interest, are treated as a decrease to net income available to common stockholders.

The fair value of Mr.

Bressler’s put option was determined using a discounted cash flow model.

The redemption value was adjusted to its present value using the Company’s weighted average cost of capital.

The fair value of the put options were determined using a discounted cash flow model.

The redemption values were adjusted to their present value using the Company’s weighted average cost of capital.

The following is a rollforward of redeemable non-controlling interest:

Three Months Ended September 30 ,

Nine Months Ended September 30 ,

For the three months ended March 31,

(In thousands)

(unaudited)  

Beginning balance

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$ 16,112  

Net loss attributable to noncontrolling interest

( 619 )  

Net income attributable to noncontrolling interest

Acquired businesses' noncontrolling interest  

Fair value adjustment of put option

Ending balance

Balance March 31,

$ 10,473  

$ 16,476  

Royalty Agreement –

National Geographic

The Company is party to an alliance and license agreement with National Geographic, which allows the Company to use the National Geographic name and logo.

In return for these rights, the Company is charged a royalty fee.

The royalty fee is included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

Royalty expense for the three months ended March 31, 2021 and 2020 was $ 0.0  million and $ 1.2 million, respectively.

The royalty balances payable to National Geographic as of March 31, 2021 and December 31, 2020 were each $ 0.0  million.

If there were any royalty balances they would have been included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets.

Royalty Agreement –

World Wildlife Fund

Natural Habitat has a license agreement with WWF, which allows it to use the WWF name and logo.

In return for these rights, Natural Habitat is charged a royalty fee and a fee based on annual gross sales.

The fees are included within selling and marketing expense on the accompanying condensed consolidated statements of operations.

This royalty fee expense was $ 0.0 million and $ 0.2  million for the three months ended March 31, 2021 and 2020, respectively.

Charter Commitments

From time to time, the Company enters into agreements to charter vessels onto which it holds its tours and expeditions.

Future minimum payments on its charter agreements as of March 31, 2021 are as follows:

For the years ended December 31,

(In thousands)

$ 5,421  

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SEGMENT INFORMATION

The Company is primarily a specialty cruise and adventure expedition operator with operations in two segments, Lindblad and Natural Habitat.

The Company is primarily a specialty cruise and experiential travel operator with operations in two segments, Lindblad and Land Experiences.

The Company evaluates the performance of the business based largely on the results of its operating segments.

The chief operating decision maker, or CODM, and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level.

The chief operating decision maker, and management review operating results monthly, and base operating decisions on the total results at a consolidated level, as well as at a segment level.

The reports provided to the Board of Directors are at a consolidated level and also contain information regarding the separate results of both segments.

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The Company evaluates the performance of its business segments based largely on tour revenues and operating income, without allocating other income and expenses, net, income taxes and interest expense, net.

For the three and nine months ended September 30, 2020 and 2019, operating results were as follows:

For the three months ended September 30,

For the nine months ended September 30,

(In thousands)

For the three months ended March 31, 2021 and 2020, operating results were as follows:

For the three months ended March 31,

(In thousands)  

(unaudited)  

Tour revenues:

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$ ( 69,055 )  

$ 69,533  

$ 217,549  

$ ( 148,016 )  

Natural Habitat

24,402  

( 23,399 )  

12,458  

Land Experiences

11,699  

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$ ( 79,458 )  

$ 81,991  

$ 267,294  

$ ( 185,303 )  

Operating (loss) income:

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$ ( 29,485 )  

$ ( 54,287 )  

$ 31,514  

$ ( 85,801 )  

Natural Habitat

( 1,979 )  

( 5,068 )  

Land Experiences

( 3,770 )  

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$ ( 33,317 )  

$ ( 59,308 )  

$ 34,145  

$ ( 93,453 )  

Depreciation and amortization are included in segment operating income as shown below:

For the three months ended September 30,

For the nine months ended September 30,

(In thousands)

For the three months ended March 31,

(In thousands)  

(unaudited)  

Depreciation and amortization:

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$ 1,619  

$ 22,075  

$ 17,380  

Land Experiences

( 60 )  

Natural Habitat

Total depreciation and amortization

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$ 1,559  

$ 23,728  

$ 18,603  

$ 5,125  

The following table presents our total assets, intangibles, net and goodwill by segment: 

(In thousands)

As of September 30, 2020

As of March 31, 2021

As of December 31, 2020

Total Assets:

(unaudited)  

$ 677,920  

$ 698,420  

Natural Habitat

Land Experiences

81,980  

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$ 2,599  

Natural Habitat

Land Experiences

Total intangibles, net

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$ 4,817  

Natural Habitat

Land Experiences

33,652  

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$ 22,105  

For the three and nine months ended September 30, 2020, there were $ 0.0  million and $ 2.2 million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.

For the three and nine months ended September 30, 2019 there were $ 1.3  million and $ 3.8  million in intercompany tour revenues between the Lindblad and Natural Habitat segments eliminated in consolidation, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

For the three months Ended March 31, 2021 and 2020 there were $ 0.0  million and $ 2.2 million in intercompany tour revenues between the Lindblad and Land Experiences segments eliminated in consolidation, respectively.

NOTE 14  —

SUBSEQUENT EVENT

On April 1, 2021, the Company drew down an additional $ 15.5 million under its Second Export Credit Agreement in conjunction with its fourth installment payment on the National Geographic Resolution , scheduled for delivery in the fourth quarter of 2021.

 On April 26, 2021, the Company amended its Amended Credit Agreement to, among other things, extend the waiver of its total net leverage ratio covenant through March 31, 2022, adjust the annualized EBITDA used in its covenant calculation through December 31, 2022 and increase the interest rate spreads of the Term Facility, excluding the Main Street Loan, and the Revolving Facility by 50bps,  such additional interest to be paid in cash.

Certain other covenants under the Amended Credit Agreement continue to be more restrictive during the extended covenant waiver period.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis addresses material changes in the financial condition and results of operations of the Company for the periods presented.

This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Form 10-Q”), as well as the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 26, 2020.

This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q ( “

Form 10-Q ”

), as well as the audited consolidated financial statements and related notes included in the Company ’

s Annual Report on Form 10-K filed with the Securities and Exchange Commission ( “

) on March 12, 2021.

Cautionary Note Regarding Forward-Looking Statements

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Potential risks and uncertainties include, but are not limited to:

suspended operations and disruptions to our business and operations related to COVID-19;

the impacts of COVID-19 on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth;

the impacts of COVID-19 on future travel and the cruise and airline industries in general;

suspended operations and disruptions to our business and operations related to the novel corona virus COVID-19;

the impacts of the novel coronavirus COVID-19 on our financial condition, liquidity, results of operations, cash flows, employees, plans and growth;

the impacts of the novel coronavirus COVID-19 on future travel and the cruise and airline industries in general;

unscheduled disruptions in our business due to travel restrictions, weather events, mechanical failures, pandemics or other events; 

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delays and costs overruns with respect to the construction and delivery of newly constructed vessels;

the inability to meet revenue and Adjusted EBITDA projections;

those risks discussed herein, in Item 1A.

Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on February 26, 2020 (the “2019 Annual Report”) and in Item 1A.

Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 31, 2020, as filed with the SEC on May 6, 2020.

those risks discussed herein and in Item 1A.

Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 12, 2021 (the “2020 Annual Report”).

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q.

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Business Overview

We provide expedition cruising and land-based adventure travel experiences, using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment and interactivity.

Our mission is to offer life-changing adventures around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places.

Many of these expeditions involve travel to remote places, such as the Arctic, Antarctica, the Galápagos, Alaska, Baja's Sea of Cortez, Costa Rica, Panama, Churchill and Africa.

We operate a fleet of nine owned expedition ships and have contracted for a new polar ice class vessel, the National Geographic Resolution , scheduled to be delivered in the fourth quarter of 2021.

In addition, we operate five seasonal charter vessels under the Lindblad brand.

We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximize yields.

We use our charter inventory as a mechanism to both increase travel options for our existing and prospective guests and to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs. 

We provide expedition cruising, land-based adventure travel and cycling touring experiences, using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment, human connections and interactivity.

Our mission is offering life-changing adventures around the world and pioneering innovative ways to allow our guests to connect with exotic and remote places. 

We currently operate a fleet of nine owned expedition ships and have contracted for a new polar ice class vessel, the National Geographic Resolution , scheduled to be delivered in the fourth quarter of 2021, and operate five seasonal charter vessels under the Lindblad Expeditions Holdings, Inc.

(“Lindblad”) brand.

Our voyages include destinations such as the Arctic, Antarctic, the Galápagos, Alaska and Baja's Sea of Cortez.

We have a longstanding relationship with the National Geographic Society dating back to 2004, which is based on a shared interest in exploration, research, technology and conservation.

This relationship includes co-selling, co-marketing and branding arrangements with National Geographic Partners, LLC (“National Geographic”) whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through their internal travel divisions.

We collaborate with National Geographic on expedition planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions.

Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.

COVID-19 Business Update 

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we have suspended or rescheduled the majority of our expeditions departing March 16, 2020 through December 31, 2020 and have rescheduled our 2020-2021 Antarctica season.

We have been working with guests to amend travel plans and refund payments, as applicable.

Our ships are currently being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed.

In accordance with local regulations, we closed our offices and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems. 

We moved quickly to implement a comprehensive plan to mitigate the impact of COVID-19 and preserve and enhance our liquidity position.

We are employing a variety of cost reduction and cash preservation measures, while accessing available capital under our existing debt facilities and through the issuance of preferred stock, while exploring additional sources of capital and liquidity.

These measures include the following operating expense and capital expenditure reductions:

Significantly reduced ship and land-based expedition costs including crew payroll, land costs, fuel and food.

All ships have been safely laid up.

Lowered expected annual maintenance capital expenditures by over $10 million, savings of more than 50% from originally planned levels.

Meaningfully reduced general and administrative expenses through staff furloughs, payroll reductions and the elimination of all non-essential travel, office expenses and discretionary spending.

Suspended the majority of planned advertising and marketing spend. 

Suspended all repurchases of common stock under the stock repurchase plan.

Bookings Trends

We were off to a strong start to the year with Lindblad segment bookings at the end of February up 25% for the full year 2020 as compared to the same point a year ago for 2019, and had sold 86% of our originally projected guest ticket revenues for the year.

Since that point, we have experienced a substantial impact from the COVID-19 virus including elevated cancellations and softness in near-term demand.

As of October 26, 2020, Lindblad segment bookings for travel in 2020 are now 74% below the same point a year ago for 2019 due primarily to the cancelled and rescheduled voyages. We have substantial advanced bookings for travel in 2021 and despite increased cancellations for travel in the first quarter of 2021, total bookings for 2021 are 4% ahead of bookings for 2019 as of the same date in 2018 and only 12% below the same date a year ago for 2020. 

For the last nine months of 2021 bookings are 12% ahead of the bookings for the same period in 2020 as of the same date a year ago. We continue to see new bookings for future travel including over $44.0 million since March 1, 2020, and we are receiving deposits and final payments for future travel.

For 2020 voyages that have been cancelled or rescheduled, we are providing future travel credits with incremental value or full refunds, as applicable, to our fully paid guests.

As of October 26, 2020, the majority of guests have opted for future travel credits. 

Balance Sheet and Liquidity

As of September 30, 2020, we had $129.6 million in unrestricted cash and $16.5 million in restricted cash primarily related to deposits on future travel originating from U.S.

During the first quarter of 2020 we drew down $45.0 million under our revolving credit facility as a precautionary measure for working capital and general corporate purposes given the uncertainty related to the COVID-19 pandemic and borrowed $107.7 million under our first export credit agreement in conjunction with final payment on delivery of the National Geographic Endurance in March 2020.

During April 2020, we drew down $30.6 million under our second export credit agreement in conjunction with the third installment payment on the National Geographic Resolution , scheduled for delivery in the fourth quarter of 2021. 

During May 2020, we amended our $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment of due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

During June 2020, the Company amended its export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due in June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

On August 7, 2020, the Company amended its term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to the term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

During August 2020, we raised $85.0 million in gross proceeds through the private placement issuance of 85,000 shares of Series A Redeemable Convertible Preferred Stock, that carries a 6.0% annual dividend, which is payable in kind for two years and thereafter in cash or in-kind at the Company’s option. The redeemable convertible preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-trading volume weighted average price on the date of issuance. The holders may request redemption of the Preferred Stock at the six-year anniversary of the issuance.

As of September 30, 2020, we had a total debt position of $412.2 million and were in compliance with all of our debt covenants currently in effect.

We have no material debt maturities until 2023.

We estimate our monthly cash usage while our vessels are not in operations to be approximately $10-15 million including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments. We continue to evaluate additional strategies to enhance our liquidity position which may include, but are not limited to, further reductions in operating expenses, capital expenditures and administrative costs as well as additional financings.

In April 2020, we received a U.S.

Small Business Administration Loan related to the COVID-19 crisis in the amount of $6.6 million.

We subsequently returned the funds received from this loan and, as a result, have made additional adjustments to our cost structure.

We have not previously experienced a complete cessation of our operations and, as a consequence, our ability to predict the impact of such cessation on our costs and future prospects is limited.

Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 virus on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future.

It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place. The estimates for monthly cash usage reflect our current forecast for operating costs, capital expenditures and expected debt and interest payments.

Based on current liquidity, the actions taken to date and our current forecast, which assumes rescheduled operations during 2020 with a ramp up in operations throughout 2021, we believe that our liquidity should be adequate to meet our obligations for the next 12 months from October 29, 2020, the date of this Quarterly Report on Form 10-Q. 

Return to Operations

We already have a robust set of operating protocols and, in preparation for the resumption of operations, have been proactively working in close cooperation with various medical policy experts and public health authorities to further augment our procedures and protocols for health and safety onboard our vessels to mitigate the potential impacts of the COVID-19 virus.

These protocols encompass, but are not limited to, medical care, screening, testing, social distancing, personal protective equipment, and sanitization during all aspects of an expedition.

While it is uncertain when we will return to operations, we believe there are a variety of strategic advantages that should enable us to deploy our ships safely and quickly once travel restrictions have been lifted.

This relationship includes a co-selling, co-marketing and branding arrangement with National Geographic Partners, LLC (“National Geographic”), whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division.

We collaborate with National Geographic on voyage planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions.

Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage.

We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximized yields.

We use our charter inventory as a mechanism to both increase travel options of our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.

We operate land-based nature adventure travel expeditions around the globe, with unique itineraries designed to offer intimate encounters with nature and the planet's wild destinations and the animals and people who live there.

Natural Habitat, Inc.

(“Natural Habitat”) creates opportunities for adventure and discovery that transform lives with eco-conscious expeditions and nature-focused, small-group tours that include polar bear tours in Churchill, Canada, Alaskan grizzly bear adventures, small-group Galápagos tours and African safaris.

Natural Habitat has partnered with World Wildlife Fund (“WWF”) to offer conservation travel, which is sustainable travel that contributes to the protection of nature and wildlife. 

DuVine Cycling + Adventure Company (“DuVine”) provides international cycling adventures and unforgettable travel experiences, connecting with local character and culture on small, intimate group cycling tours around the world with cycling experts as guides, immersion in local cuisine, accommodations and history.

Cycling tours include in the United States, from cycling beneath the shadow of majestic California redwoods to pedaling through farmland on a Vermont bike tour, wine tastings in the world-class vineyards of Napa and Sonoma or farm-to-table renaissance dining, cycling through exotic Costa Rican rainforests, the rocky coasts of Ireland, deep in the vineyards of Spain, or high in the Swiss Alps, exploring the roads of ancient cities and trek the Atlas desert by camel, to bamboo forests and Buddhist temples or pedaling past tea plantations in Kyoto.

Off the Beaten Path, LLC (“Off the Beaten Path”) provides small group travel, led by local, experienced guides, with distinct focus on wildlife, hiking national parks and culture, to change people's lives through exceptional travel.

Off the Beaten Path is known for providing distinctive insider national park experiences in the Rocky Mountains, Desert Southwest, and Alaska, and includes unique trips across Europe, Africa, Australia, Central and South America and the South Pacific, for connecting the heart of the traveler with the soul of the place.

The Company operates two segments including the Lindblad segment, which consists of the operations of our Lindblad brand, and the Land Experiences segment, consisting of our Natural Habitat, DuVine and Off the Beaten Path brands.

First Quarter Highlights

During the first quarter of 2021, we completed the acquisitions of Off the Beaten Path, a land-based travel operator specializing in authentic national park experiences, and DuVine, an international luxury cycling and adventure company focused on exceptional food and wine experiences.

COVID-19 Business Update

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we have suspended or rescheduled the majority of Lindblad’s expeditions and trips departing March 16, 2020 through May 31, 2021 and have been working with guests to reschedule travel plans and refund payments, as applicable.

We have announced plans to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos and are working with local health authorities on plans to operate in additional geographies during the second half of the year. As our ships are currently not in operations, the majority of our fleet is being maintained with minimally required crew on-board to ensure they comply with all necessary regulations and can be fully put back into service quickly as needed.

For those ships that are preparing to resume sailing, we have begun to increase crew levels as needed. In accordance with local regulations, our offices are closed, and most employees are working remotely to maintain general business operations, to provide assistance to existing and potential guests and to maintain information technology systems.

We continue to adhere to the comprehensive plan we implemented in March 2020 to mitigate the impact of COVID-19 and preserve and enhance our liquidity position. 

This plan employs a variety of cost reduction and cash preservation measures including significantly reducing ship and land-based expedition costs such as capital expenditures, crew payroll, land costs, fuel and food, and meaningfully reducing general and administrative expenses through reduced payroll and the elimination of all non-essential travel, office expenses and discretionary spending. We have also accessed available capital under existing debt facilities and through the issuance of preferred stock, while continuing to explore additional sources of capital and liquidity.

Return to Fleet Operations

We have announced plans to resume operations with vaccinated guests in Alaska and the Galapagos in June 2021 and are working with local health authorities on plans to operate in additional geographies during the second half of the year. We believe there are a variety of strategic advantages that enable us to deploy our ships safely and quickly as travel restrictions are lifted.

The most notable is the size of our owned and operated vessels which range from 48 to 148 passengers, allowing for a highly controlled environment that includes stringent cleaning protocols.

The small nature of our ships should also allow us to efficiently and effectively test our guests and crew prior to boarding.

On average, we estimate it will only take a few thousand tests a month to ensure all guests and crew across our entire fleet have been tested.

Additionally, the majority of our expeditions take place in remote locations where human interactions are limited, so there is less opportunity for external influence.

We also have the ability to be flexible with regards to existing itineraries and are actively investigating additional itinerary opportunities both internationally and domestically.

Lastly, our guests are explorers by nature, eager to travel and have historically been very resilient following periods of uncertainty. 

Bookings Trends

We have experienced a substantial impact from the COVID-19 virus including elevated cancellations and softness in near-term demand.

Despite the COVID-19 impact, we still have substantial advanced reservations for future travel.

Bookings for the full year 2022 are 39% ahead of the bookings for 2021 as of the same date a year ago and 32% ahead of the bookings for 2020 as of the same date two years ago.

We continue to see new bookings for future travel including over $92.0 million since the beginning of 2021 and are receiving significant deposits and final payments for future travel.

For 2021 voyages that have been cancelled or rescheduled, we are offering future travel credits with incremental value or full refunds to our fully paid guests. As of April 24, 2021, the majority of guests have opted for future travel credits.   

Balance Sheet and Liquidity

As of March 31, 2021, we had $163.9 million in unrestricted cash and $22.4 million in restricted cash primarily related to deposits on future travel originating from U.S.

As of March 31, 2021, we had a total debt position of $498.4 million and were in compliance with all of our debt covenants.

Following the quarter, in April 2021, we drew down an additional $15.5 million under our second senior secured credit agreement in conjunction with the fourth installment payment on the National Geographic Resolution , scheduled for delivery in the fourth quarter of 2021.  

During the last twelve months, we have taken a variety of steps to strengthen our balance sheet and increase liquidity including:

During April 2020, we drew down $30.6 million under our second export credit agreement in conjunction with our third installment payment on the National Geographic Resolution . 

During May 2020, we amended our $2.5 million promissory note, changing the maturity date of the principal payments to be due in three equal installments, with the first payment due on December 22, 2020, the second due on December 22, 2021 and the final payment due on December 22, 2022.

During June 2020, we amended our export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments from June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

During August 2020, we amended our term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the term loan has been increased by 125bps, to be paid-in-kind at maturity, a LIBOR floor of 75bps has been added to the term loan facility and certain covenants were amended to be more restrictive.

During August 2020, we raised $85.0 million in gross proceeds through the private placement issuance of Redeemable Convertible Series A Preferred Stock that carries a 6% annual dividend, which is payable in kind for two years and, thereafter, in cash or in-kind at our option. The preferred stock is convertible into shares of Lindblad common stock at a conversion price of $9.50 per share, representing a premium of 23% to Lindblad’s 30-day trading volume weighted average price on the date of issuance.

During December 2020, we amended our term loan and revolving credit facilities and borrowed an incremental $85.0 million under the amended term loan facility through the Main Street Expanded Loan Facility program established by the Board of Governors of the Federal Reserve System.

The incremental borrowing carries an interest rate of LIBOR plus 3.0%, without any LIBOR floor, and matures December 2025 with no early payment restrictions. 

We estimate our current monthly cash usage to be approximately $10-15 million, including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments.

As we implement plans to resume operations, the monthly cash usage will increase as we incur costs in preparation for returning ships to service, spends to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed.

We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel. 

We have not previously experienced a complete cessation of our operations and, as a consequence, our ability to predict the impact of such cessation on our costs and future prospects is limited.

Given the dynamic nature of this situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our financial condition, results of operations, cash flows, plans and growth for the foreseeable future.

It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place.

Our estimates for monthly cash usage reflect our current forecast for operating costs, capital expenditures and expected debt and interest payments. Based on the actions we have taken to date, our planned and anticipated actions and our current forecast, we believe that we can meet our obligations for the next 12 months from April 30, 2021, the date of this Quarterly Report on Form 10-Q.

The discussion and analysis of our results of operations and financial condition are organized as follows :

a description of certain line items and operational and financial metrics we utilize to assist us in managing our business;

results and a comparable discussion of our consolidated and segment results of operations for the three and nine months ended September 30, 2020 and 2019;

results and a comparable discussion of our consolidated and segment results of operations for the three months ended March 31, 2021 and 2020;

a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources;

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Gross Cruise Cost represents the sum of cost of tours plus, selling and marketing expenses, and general and administrative expenses.

Gross Yield represents tour revenues divided by Available Guest Nights.

Gross Yield per Available Guest Night represents tour revenues less insurance proceeds divided by Available Guest Nights.

Guest Nights Sold represents the number of guests carried for the period multiplied by the number of nights sailed within the period.

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Net Cruise Cost Excluding Fuel represents Net Cruise Cost excluding fuel costs.

Net Revenue represents tour revenues less commissions and direct costs of other tour revenues.

Net Yield represents Net Revenue divided by Available Guest Nights.

Net Yield represents tour revenues less insurance proceeds, commissions and direct costs of other tour revenues.

Net Yield per Available Guest Night represents Net Yield divided by Available Guest Nights.

Number of Guests represents the number of guests that travel with us in a period.

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dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the condensed consolidated statements of operations.

Traditionally, our tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters.

Traditionally, our Lindblad brand tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters.

The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours.

Natural Habitat is a seasonal business, with the majority of its tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours.

Natural Habitat, DuVine and Off the Beaten Path are seasonal businesses, with the majority of Natural Habitat’s tour revenue recorded in the third and fourth quarters from its summer season departures and polar bear tours, while the majority of Off the Beaten Path and DuVine’s revenues are recorded during the second and third quarters from their summer season tours and cycling adventures.

Results of Operations - Consolidated

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

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Operating (loss) income

Net (loss) income

Undistributed (loss) earnings per share available to stockholders

Comparison of the Three and Nine Months Ended September 30, 2020  and 

2019 - Consolidated

Undistributed loss per share available to stockholders:

Comparison of the Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020 - Consolidated

Tour Revenues

Tour revenues for the three months ended September 30, 2020 decreased $100.0 million, or 99%, compared to the same period in 2019 as a result of rescheduling nearly all expeditions due to COVID-19. 

Tour revenues for the nine months ended September 30, 2020 decreased $185.3 million, or 69%, to $82.0 million, compared to $267.3 million for the nine months ended September 30, 2019.

The Lindblad segment tour revenues decreased by $148.0 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19.

At the Natural Habitat segment, tour revenues decreased $37.3 million over the prior year period, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19.

Tour revenues for the three months ended March 31, 2021 decreased $79.5 million, or 98%, to $1.8 million compared to $81.2 million for the three months ended March 31, 2020.

The Lindblad segment tour revenues decreased by $69.1 million and the Land Experiences segment decreased $10.4 million, primarily as a result of rescheduling nearly all expeditions and trips due to COVID-19 during the first quarter 2021. 

Cost of Tours

Total cost of tours for the three months ended September 30, 2020 decreased $40.2 million, or 83%, to $8.1 million compared to $48.3 million for the three months ended September 30, 2019.

At the Lindblad segment, cost of tours decreased $25.5 million, primarily related to rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up and from the addition of the 

National Geographic Endurance to our fleet in March 2020.

At the Natural Habitat segment, cost of tours decreased $14.7 million due to rescheduled trips directly related to COVID-19.

Total cost of tours for the nine months ended September 30, 2020 decreased $61.8 million, or 50%, to $63.0 million, compared to $124.8 million for the nine months ended September 30, 2019.

At the Lindblad segment, cost of tours decreased $39.2 million, primarily related to cancelled, disrupted and rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up, and from the addition of the 

National Geographic Endurance to our fleet in March 2020.

At the Natural Habitat segment, cost of tours decreased $22.6 million, primarily due to cancelled, disrupted and rescheduled trips directly related to COVID-19.

Total cost of tours for the three months ended March 31, 2021 decreased $33.9 million, or 80%, to $8.3 million compared to $42.2 million for the three months ended March 31, 2020.

At the Lindblad segment, cost of tours decreased $27.9 million, due to rescheduled expeditions due to COVID-19, partially offset by costs incurred while ships are laid up.

At the Land Experiences segment, cost of tours decreased $6.0 million, due to rescheduled trips directly related to COVID-19 during the first quarter 2021.

General and Administrative

General and administrative expenses for the three months ended September 30, 2020 decreased $6.1 million, or 40%, to $9.1 million compared to $15.3 million for the three months ended September 30, 2019.

At the Lindblad segment, general and administrative expenses decreased $3.6 million over the prior year period primarily due to reduced credit card commissions and personnel costs related to the disruption of operations due to COVID-19.

At the Natural Habitat segment, general and administrative expenses decreased $2.5 million, primarily due to a decrease in personnel costs related to the disruption of operations due to COVID-19.

General and administrative expenses for the nine months ended September 30, 2020 decreased $11.4 million, or 24%, to $36.2 million, compared to $47.6 million for the nine months ended September 30, 2019.

At the Lindblad segment, general and administrative expenses decreased $6.8 million primarily due to reduced personnel costs and credit card commissions related to the disruption of operations due to COVID-19.

At the Natural Habitat segment, general and administrative expenses decreased $4.6 million, primarily due to a decrease in personnel costs related to the disruption of operations due to COVID-19.

General and administrative expenses for the three months ended March 31, 2021 decreased $3.4 million, or 20%, to $13.8 million compared to $17.2 million for the three months ended March 31, 2020.

At the Lindblad segment, general and administrative expenses decreased $3.0 million from the prior year period due to decreased personnel costs and credit card commissions, partially offset by higher stock-based compensation expense.

At the Land Experiences segment, general and administrative expenses decreased $0.4 million, primarily due to a decrease in personnel costs.

Selling and Marketing

Selling and marketing expenses for the three months ended September 30, 2020 decreased $13.4 million, or 86%, to $2.1 million compared to $15.5 million for the three months ended September 30, 2019.

At the Lindblad segment, selling and marketing expenses decreased $12.1 million, primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures.

At the Natural Habitat segment, selling and marketing expenses decreased $1.3 million, primarily driven by a decrease in advertising expenditures.

 Selling and marketing expenses for the nine months ended September 30, 2020 decreased $23.7 million, or 56%, to $18.4 million, compared to $42.1 million for the nine months ended September 30, 2019.

At the Lindblad segment, selling and marketing expenses decreased $20.9 million, primarily due to lower commission expenses related to the impact of COVID-19 on revenue and decreased advertising expenditures.

At the Natural Habitat segment, selling and marketing expenses decreased $2.8 million, primarily driven by a decrease in advertising expenditures.

Selling and marketing expenses for the three months ended March 31, 2021 decreased $10.4 million, or 81%, to $2.5 million compared to $12.9 million for the three months ended March 31, 2020.

At the Lindblad segment, selling and marketing expenses decreased $10.3 million, primarily due to lower commission expenses related to the impact of the COVID-19 on revenue.

At the Land Experiences segment, selling and marketing expenses decreased $0.1 million.

Depreciation and Amortization

Depreciation and amortization expenses for the three months ended September 30, 2020 increased $2.3 million, or 36%, to $8.5 million, compared to $6.2 million for the three months ended September 30, 2019, primarily due to the addition of the National Geographic Endurance 

to the fleet in March 2020.

Depreciation and amortization expenses for the nine months ended September 30, 2020 increased $5.1 million, or 28%, to $23.7 million, compared to $18.6 million for the nine months ended September 30, 2019, primarily due to the addition of the National Geographic Endurance 

to the fleet in March 2020.

Depreciation and amortization expenses for the three months ended March 31, 2021 increased $1.6 million, or 23%, to $8.2 million, compared to $6.7 million for the three months ended March 31, 2020, primarily due to the addition of the National Geographic Endurance to the fleet in March 2020.

Other Expense

Other expenses, for the three months ended September 30, 2020, decreased $2.0 million to $3.6 million from $5.6 million for the three months ended September 30, 2019, primarily due to the following:

A $1.0 million gain in foreign currency translation in 2020, related to the strengthening of the U.S dollar primarily in relation to the Canadian dollar, South African Rand and British Pound Sterling, compared to a $2.3 million loss in 2019, primarily due to a loss of $1.6 million loss on the maturity of a foreign currency hedge related to the installment payment for the 

National Geographic Resolution .

A $1.3 million increase in interest expense, net to $4.5 million in 2020 primarily due to increased borrowings related to our new vessel builds, the draw down under the revolving credit facility during the first quarter and increased rates under the term loan and revolving credit facilities.

Other expenses, for the nine months ended September 30, 2020, increased $7.6 million to $18.3 million from $10.7 million for the nine months ended September 30, 2019, primarily due to the following:

A $6.3 million loss in foreign currency translation in 2020 due primarily to a loss of $5.3 million on the maturity of a foreign currency hedge related to the installment payment for the 

National Geographic Resolution , compared to a $1.2 million loss in 2019, primarily due to a loss of $1.6 million on the maturity of a foreign currency hedge related to the installment payment for the 

National Geographic Resolution .

A $2.4 million increase in interest expense, net to $11.8 million in 2020, primarily due to increased borrowings related to our new vessel builds, the draw down under the revolving credit facility during the first quarter and an increase in rates under the term loan and revolving credit facilities. 

Other expenses for the three months ended March 31, 2021, decreased $1.0 million to $5.6 million from $6.6 million for the three months ended March 31, 2020, primarily due to the following:

A $0.1 million gain in foreign currency translation in 2021 compared to a loss of $3.4 million in 2020 due to the strengthening of the U.S dollar primarily in relation to the Canadian dollar.

A $2.6 million increase in interest expense, net to $5.7 million in 2021, primarily due to increased borrowings under our term loan facility as part of the Main Street Lending Program, the drawdown of our revolving credit facility and the additional drawdowns under our export credit agreements related to our new builds, the National Geographic Endurance  and the National Geographic Resolution , as well as higher rates on our term loan facility and revolving credit facility. 

Results of Operations –

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The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

Tour revenues:

Natural Habitat

Land Experiences

Total tour revenues

Operating (loss) income:

Natural Habitat

Land Experiences

Total operating (loss) income

Adjusted EBITDA:

Natural Habitat

Land Experiences

Total adjusted EBITDA

1 unchanged sentence

Lindblad Segment

The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages for the three and nine months ended September 30, 2020 and 2019:

For the three months ended September 30,

For the nine months ended September 30,

The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages for the three months ended March 31, 2021 and 2020:

For the three months ended March 31,

Available Guest Nights

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Number of Guests

The following table shows the calculations of Gross Yield and Net Yield for the three and nine months ended September 30, 2020 and 2019.

The following table shows the calculations of Gross Yield and Net Yield for the three months ended March 31, 2021 and 2020.

Gross Yield is calculated by dividing Tour Revenues by Available Guest Nights and Net Yield is calculated by dividing Net Revenue by Available Guest Nights:

For the three months ended September 30,

For the nine months ended September 30,

(In thousands, except for Available Guest Nights, Gross and Net Yield)

Calculation of Gross Yield per Available Guest Night and Net Yield per Available Guest Night

For the three months ended March 31,

(In thousands, except for Available Guest Nights, Gross and Net Yield per Available Guest Night)

Guest ticket revenues

3 unchanged sentences

Available Guest Nights

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night for the three and nine months ended September 30, 2020 and 2019:

Gross Yield per Available Guest Night

Net Yield per Available Guest Night

The following table reconciles operating income to our Net Yield Guest Metric for the Lindblad Segment:

For the three months ended

(In thousands)

Operating (loss) income

Cost of tours

General and administrative

Selling and marketing

Depreciation and amortization

Other tour expenses

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night for the three months ended March 31, 2021 and 2020:

Calculation of Gross Cruise Cost and Net Cruise Cost

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Avail.

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National Geographic fee amortization

Warrant exchange and debt refinancing costs

Adjusted Net Cruise Cost Excluding Fuel

6 unchanged sentences

Adjusted Net Cruise Cost per Available Guest Night

Comparison of Three and Nine Months Ended September 30, 2020  and 

Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020 at the Lindblad Segment

Tour Revenues

Tour revenues for the three months ended September 30, 2020 decreased $76.6 million, or 100%, to $0.0 million compared to $76.6 million for the three months ended September 30, 2019.

The decrease was a result of rescheduling all expeditions due to COVID-19. 

Tour revenues for the nine months ended September 30, 2020 decreased $148.0 million, or 68%, to $69.5 million, compared to $217.5 million for the nine months ended September 30, 2019.

The decrease was primarily driven by cancelled, disrupted and rescheduled expeditions due to COVID-19.

Tour revenues for the three months ended March 31, 2021 decreased $69.1 million, or 99%, to $0.5 million compared to $69.5 million for the three months ended March 31, 2020.

The decrease was a result of rescheduling all expeditions in the first quarter of 2021 due to COVID-19.

Operating Income

Operating income decreased $37.4 million to a loss of $24.8 million for the three months ended September 30, 2020, compared to $12.6 million operating income for the three months ended September 30, 2019.

The decrease was primarily a result of rescheduling all expeditions due to COVID-19.

Operating income decreased $85.8 million to a loss of $54.3 million for the nine months ended September 30, 2020, compared to operating income of $31.5 million for the nine months ended September 30, 2019.

The decrease was primarily driven by lower revenue from cancelled, disrupted and rescheduled voyages due to COVID-19 and costs associated with adding the 

National Geographic Endurance to the fleet in March 2020.

Operating income decreased $29.5 million to loss of $27.3 million for the three months ended March 31, 2021 compared to operating income of $2.2 million for the three months ended March 31, 2020. The decrease was a result of rescheduling all expeditions in the first quarter of 2021 due to COVID-19.

Results of Operations –

Natural Habitat Segment

Comparison of Three and Nine Months Ended September 30, 2020  and 

Land Experiences Segment

Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020

Tour Revenues

Tour revenues for the three months ended September 30, 2020 decreased $23.4 million, compared to $24.4 million for the three months ended September 30, 2019, as a result of cancelled and rescheduled expeditions due to COVID-19. 

Tour revenues for the nine months ended September 30, 2020 decreased $37.3 million, or 75%, to $12.4 million compared to $49.7 million for the nine months ended September 30, 2019, due primarily to cancelled, disrupted and rescheduled expeditions due to COVID-19.

Tour revenues for the three months ended March 31, 2021 decreased $10.4 million, or 89%, to $1.3 million compared to $11.7 million for the three months ended March 31, 2020, as a result of cancelled and rescheduled trips in the first quarter 2021 due to COVID-19. 

Operating Income

Operating income for the three months ended September 30, 2020 decreased $5.1 million to a loss of $2.0 million compared to income of $3.1 million for the three months ended September 30, 2019.

The decrease was primarily a result of cancelled and rescheduled expeditions due to COVID-19.

 Operating income for the nine months ended September 30, 2020 decreased $7.6 million to a loss of $5.0 million compared to income of $2.6 million for the nine months ended September 30, 2019.

The decrease was primarily a result of cancelled, disrupted and rescheduled expeditions due to COVID-19.

Adjusted EBITDA

The following table outlines the reconciliation to net income and calculation of consolidated Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019.

An operating loss of $3.8 million was incurred for the three months ended March 31, 2021, compared to operating income of $0.1 million for the three months ended March 31, 2020.

The decrease was primarily a result of cancelled and rescheduled expeditions in the first quarter 2021 due to COVID-19.

Adjusted EBITDA –

The following table outlines the reconciliation to net income (loss) and calculation of consolidated Adjusted EBITDA for the three months ended March 31, 2021 and 2020.

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

Net (loss) income

Interest expense, net

Income tax (benefit) expense

Income tax benefit

Depreciation and amortization

(Gain) loss on foreign currency

Loss (gain) on foreign currency

Other expense

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National Geographic fee amortization

Warrant exchange and financing costs

Adjusted EBITDA

The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019.

The following tables outline the reconciliation for each segment from operating income to Adjusted EBITDA for the three months ended March 31, 2021 and 2020.

Lindblad Segment

For the three months ended September 30,

For the nine months ended September 30,

For the three months ended March 31,

(In thousands)

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National Geographic fee amortization

Warrant exchange and financing costs

Adjusted EBITDA

Natural Habitat Segment

For the three months ended September 30,

For the nine months ended September 30,

Land Experiences Segment

For the three months ended March 31,

(In thousands)

Operating loss

Operating (loss) income

Depreciation and amortization

Stock-based compensation

Adjusted EBITDA

Liquidity and Capital Resources

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we suspended or rescheduled the majority of expeditions and fleet operations departing March 16, 2020 through November 30, 2020 and have been working with guests to reschedule travel plans and refund payments, as applicable. The COVID-19 pandemic has already had a material negative impact on our operations and financial results and we expect the evolving pandemic to have ongoing material negative effects on operations, financial results and liquidity.

It is unknown when travel restrictions and various border closures will be lifted and what the demand for expedition travel will be once these restrictions are no longer in place.

As of September 30, 2020, we had approximately $412.2 million in long-term debt obligations, including the current portion of long-term debt.

We estimate that our monthly cash usage while our vessels are not in operations is approximately $10-15 million, excluding guest payments for future travel and cash refunds requested on previously made guest payments.

To date, the majority of guests on rescheduled voyages have requested future travel credits.

Additionally, we continue to see deposits for future travel.

We believe that our cash on hand, our Second Export Credit Agreement and expected future operating cash inflows will be sufficient to fund operations, debt service requirements, and necessary capital expenditures.

However, there can be no assurance that we will commence operating in the near term or if we do commence operations, that the level of initial demand will generate cash flows from operations will be sufficient enough to fund future obligations. We are continuing to evaluate additional strategies to enhance our liquidity position.

These strategies may include, but are not limited to, pursuing additional financing from both the public and private markets through the issuance of equity and/or debt.

The timing and structure of any transaction, if completed, will depend on market conditions.

There can be no assurance that debt or equity financing will be available to us on favorable terms or at all.

Sources and Uses of Cash for the Nine Months Ended September 30, 2020 and 2019

Net cash used by operating activities was $71.7 million in 2020 compared to $41.6 million provided by operations in 2019, primarily due to the rescheduling of expeditions due to COVID-19 pandemic.

Net cash used in investing activities was $152.8

million in 2020 compared to $76.7 million in 2019.

The $76.1 million increase was primarily due to the final payment for the completion of the National Geographic Endurance , and a $30.6 million contracted installment payment for the 

National Geographic Resolution during the current year, partially offset by the $30.2 million initial down-payment for the 

National Geographic Resolution  in the first quarter of 2019 and other capital expenditures. 

Net cash provided by financing activities was $261.4 million in 2020 compared to $25.1 million in 2019.

The $236.3 million increase in cash provided was primarily due to borrowing $107.7 million under the first senior secured credit agreement for the final contracted payment of the National Geographic Endurance , $85.0 million generated from the issuance of Preferred Stock, borrowing $30.6 million under the second senior secured credit agreement for a contracted installment payment on the 

National Geographic Resolution and a $45.0 million drawdown of our revolving credit facility, partially offset by the 2019 borrowing of $30.5 million under the second senior secured credit agreement for a contracted installment payment on the 

National Geographic Resolution .

Due to the spread of the COVID-19 virus and the effects of travel restrictions around the world, we suspended or rescheduled the majority of expeditions and fleet operations departing March 16, 2020 through May 31, 2021 and have been working with guests to reschedule travel plans and refund payments, as applicable. Although our Land Experiences segment has operated limited tours during the first quarter 2021 and we are planning to resume ship operations beginning June 2021 with expeditions to Alaska and the Galapagos, the COVID-19 pandemic has already had a material negative impact on our operations and financial results and we expect the evolving pandemic to have ongoing material negative effects on operations, financial results and liquidity.

It is unknown when travel restrictions and various border closures will be completely lifted and what the demand for expedition travel will be once these restrictions are no longer in place.

As of March 31, 2021, we had approximately $498.4 million in long-term debt obligations, including the current portion of long-term debt.

However, there can be no assurance that cash flows from operations will be available to fund future obligations or that we will not experience delays with respect to the resumption of our operations.

We estimate our current monthly cash usage to be approximately $10-15 million, including ship and office operating expenses, necessary capital expenditures and interest and principal payments. This excludes guest payments for future travel and cash refunds requested on previously made guest payments.

As we implement plans to resume operations, the monthly cash usage will increase as it incurs costs in preparation for returning ships to service, spends to market and advertise upcoming expeditions and reinstates furloughed and part-time office staff as needed.

We also anticipate a significant increase in guest payments as we receive final payments for upcoming expeditions as well as deposits for new reservations for future travel. 

Sources and Uses of Cash for the Three Months Ended March 31, 2021 and 2020

Net cash used in operating activities was $6.9 million in 2021 compared to net cash provided by operating activities of $15.4 million in 2020, due to the rescheduling of operations due to the COVID-19 pandemic.

Net cash used in investing activities was $10.7 million in 2021 compared to $116.7 million in 2020.

The $106.1 million decrease was primarily due to payments for the completion of the National Geographic Endurance  during the first quarter 2020, partially offset by the net cash used for the acquisitions of Off the Beaten Path and DuVine during 2021.  

Net cash used in financing activities was $0.5 million in 2021 compared to net cash provided by financing activities of $151.9 million in 2020.

The $152.4 million decrease in cash provided by financing activities was primarily due to borrowing $107.7 million under the senior secured credit agreement for the final contracted payment of the National Geographic Endurance and a $45.0 million drawdown of our revolving credit facility during the first quarter 2020.

Funding Sources

Debt Facilities  

Revolving Credit Facility

Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), provides a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured incremental revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility.

During March 2020, we drew $45.0 million on our Revolving Facility, maturing March 2023.

The Term Facility bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 4.50%, or 5.25% as of September 30, 2020, and the Revolving Facility bears interest at ICE LIBOR, with a minimum of 0.75%, plus a spread of 3.00%, or 3.75% as of September 30, 2020.

In 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movements and manage our interest rate expense related to the Term Facility. 

Credit Facility

Our Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”), provides a $200.0 million senior secured first lien term loan facility (the “Term Facility”), maturing March 2025, and a $45.0 million senior secured revolving credit facility (the “Revolving Facility”), which includes a $5.0 million letter of credit sub-facility.

In March 2020, we drew $45.0 million on our Revolving Facility, which matures in March 2023.

The Amended Credit Agreement was amended in August 2020 to waive the application of the total net leverage ratio covenant through June 2021 and in December 2020 to provide for the borrowing of a new tranche of incremental term loans under the Amended Credit Agreement in an amount of $85.0 million, maturing December 2025, made under the Main Street Expanded Loan Facility (the “Main Street Loan”).

In connection with the amendments, the interest rate of the Term Facility was increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% was added to the Term Facility and certain covenants were amended to be more restrictive.

The Term Facility (excluding the Main Street Loan), as amended as of March 31, 2021, bears interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR, with a minimum of 0.75%, plus a spread of 4.75%, for an aggregated rate of 5.50% as of March 31, 2021, and the Revolving Facility bears interest at an adjusted ICE Benchmark administration LIBOR plus a spread of 3.00%, for an aggregated rate of 3.12% as of March 31, 2021.

The Main Street Loan bears interest at a rate per annum of an adjusted ICE Benchmark administration LIBOR for an interest period of 3-months plus 3.00%, for an aggregated rate of 3.20% as of March 31, 2021.

In 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movements and manage our interest rate expense related to the Term Facility.

Senior Secured Credit Agreements

Our senior secured credit agreement (the “Export Credit Agreement”) made available a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of our new polar ice class vessel, the National Geographic Endurance .

During March 2020, we took possession of the National Geographic Endurance and borrowed the $107.7 million under the Export Credit Agreement for the final payment.

The Export Credit Agreement bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.25% for the period covered as of September 30, 2020.

Our senior secured credit agreement (the “Second Export Credit Agreement”) makes available to us a loan in an aggregate principal amount not to exceed $122.8 million for the purpose of providing pre- and post- delivery financing for up to 80% of the purchase price of Company’s new expedition ice-class vessel, the 

National Geographic Resolution , scheduled to be delivered in the fourth quarter of 2021.

The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.23% for the period covered as of September 30, 2020.

Our senior secured credit agreement (the “Export Credit Agreement”) makes available a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of our new polar ice class vessel, the National Geographic Endurance .

During March 2020, we borrowed the $107.7 million under the Export Credit Agreement for the final contracted payment of the National Geographic Endurance .

The Export Credit Agreement bears interest at a floating interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.18% as of March 31, 2021, with interest and principal payments due every 90 days from borrowing date, with final principal due January 2032.

The Second Export Credit Agreement bears a variable interest rate equal to three-month LIBOR plus a margin of 3.00% per annum, or 3.19% as of March 31, 2021.

After completion of the vessel, the Second Export Credit Agreement, at our option, will bear an interest rate of either a fixed rate of 6.36% or a variable rate equal to three-month LIBOR plus a margin of 3.00% per annum.

In September 2019 and April 2020, we drew approximately $30.5 million and $30.6 million, respectively, under the Second Export Credit Agreement for the second and third contracted payments, respectively, on the National Geographic Resolution . 

During June 2020, we amended our export credit agreements to defer approximately $9.0 million in aggregate scheduled amortization payments originally due June 2020 through March 2021 and to suspend the total net leverage ratio covenant from June 2020 through June 2021.

On August 7, 2020, we amended our term loan and revolving credit facilities to waive the application of the total net leverage ratio covenant through June 2021.

In connection with the amendment, the interest rate of the term loan has been increased 125 basis points, to be paid-in-kind at maturity, a LIBOR minimum of 0.75% has been added to our term loan and revolving credit facilities and certain covenants have been amended to be more restrictive.

The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants.

As of September 30, 2020, we were in compliance with our covenants.

In September 2019, April 2020 and April 2021, we drew approximately $30.5 million, $30.6 million and $15.5 million, respectively, against the Second Export Credit Agreement for contracted installment payments on the National Geographic Resolution .

The final 30% is due upon delivery and acceptance of the vessel. 

During 2019, we entered into foreign exchange forward contracts, designated as cash flow hedges, to hedge our exposure to the Norwegian kroner (“NOK”), related to our installment payments under the contract to purchase the National Geographic Resolution .

The Amended Credit Agreement, the Export Credit Agreement and the Second Export Credit Agreement contain financial and restrictive covenants, which were amended in June 2020.

As March 31, 2021, the total net leverage ratio covenants of our credit agreements have been waived through June 2021.

We were in compliance with our covenants in effect as of March 31, 2021.

Preferred Stock

On August 31, 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million.

In August 2020, we issued and sold 85,000 shares of Series A Redeemable Convertible Preferred Stock, par value of $0.0001, (“Preferred Stock”) for $1,000 per share for gross proceeds of $85.0 million.

The Preferred Stock has senior and preferential ranking to our common stock.

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After the second anniversary of the issuance date, the dividends may be paid-in-kind or be paid in cash at our option.

The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50.

At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days.

The Preferred Stock is convertible at any time, at the holder’s election, into a number of shares of our common stock equal to the quotient obtained by dividing the then-current accrued value by the conversion price of $9.50.

At any time after the third anniversary of the issuance, we may, at our option, convert all, but not less than all, of the Preferred Stock into common stock if the closing price of shares of common stock is at least 150% of the conversion price for 20 out of 30 consecutive trading days.

The number of shares of common stock received in such conversion shall be equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

Funding Needs 

At the six-year anniversary of the closing date, each investor has the right to request that we repurchase their Preferred Stock and any Preferred Stock not requested to be repurchased shall be converted into our common shares equal to the quotient obtained by dividing the then-current accrued value by the conversion price.

Funding Needs

We generally rely on a combination of cash flows provided by operations and the incurrence of additional debt to fund obligations.

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The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down credit facilities, make long-term investments or any other use of cash.

As of September 30, 2020 and December 31, 2019, we had working capital of $14.6 million and a working capital deficit of $36.3 million, respectively.

As of September 30, 2020 and December 31, 2019, we had $129.6 million and $101.6 million, respectively, in cash and cash equivalents, excluding restricted cash.

While traditionally we run a working capital deficit, as of March 31, 2021 and December 31, 2020, we had working capital of $30.2 million and $73.4 million, respectively.

As of March 31, 2021 and December 31, 2020, we had $163.9 million and $187.5 million, respectively, in cash and cash equivalents, excluding restricted cash.

Our Board of Directors approved a stock and warrant repurchase plan (“Repurchase Plan”) in November 2015 and increased the repurchase plan to $35.0 million in November 2016.

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These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards.

During March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 virus.

Prior to its suspension, we repurchased 8,517 shares of common stock for approximately $127,000 during 2020.

We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million, since plan inception.

During March 2020, the Repurchase Plan was suspended due to the uncertain impact of the COVID-19 pandemic and our borrowings through the Main Street Expanded Loan Facility program places restrictions on stock repurchases.

We have cumulatively repurchased 875,218 shares of common stock for $8.3 million and 6,011,926 warrants for $14.7 million since plan inception.

All repurchases were made using cash resources.

The balance for the Repurchase Plan was $12.0 million as of September 30, 2020.

In February 2019, we entered into an agreement with Ulstein Verft to construct a polar ice-class vessel, the National Geographic Resolution , with a total purchase price of 1,291.0 million Norwegian Kroner (NOK ) .

In March 2019, we entered into foreign exchange forward contract hedges to lock in a purchase price of $153.5 million, including hedging costs.

The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date.

The purchase price is due in installments, with 20% paid shortly after execution of the agreement, 20% paid in September 2019 and 20% paid in April 2020, with a future payment of 10% due in April 2021 and the final 30% due upon delivery and acceptance of the vessel.

The vessel is scheduled to be delivered in the fourth quarter of 2021.

In September 2019 and April 2020, we drew approximately $30.5 million and $30.6 million, respectively, under the Second Export Credit Agreement for the contracted installment payments. The remaining purchase price of the vessel is expected to be funded through a combination of cash available on our balance sheet, our Second Export Credit Agreement and excess cash flows generated by our existing operations.

During March 2020, we borrowed the $107.7 million under the Export Credit Agreement for the final contracted payment of the National Geographic Endurance  and drew $45.0 million on our Revolver Facility.

During April 2020, we drew $30.6 million under the Second Export Credit Agreement for a contracted installment payment on the 

National Geographic Resolution . During May 2020, we amended the maturity dates of the note payable and during June 2020, we amended the senior secured credit agreements.

The additional borrowings and amendments created material changes in our future obligations from those reported in our 2019 Annual Report.

The additional or amended related obligations as of September 30, 2020 are as follows:

(In thousands)

Export Credit Agreement

Second Export Credit Agreement

The balance for the Repurchase Plan was $12.0 million as of March 31, 2021. 

In February 2019, we entered into an agreement with Ulstein Verft to construct a polar ice-class vessel, the National Geographic Resolution, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million NOK, which was amended in December 2019 to (i) provide a $4 million loan to the builder, to be repaid at 112% of the principle balance on maturity in December 2023, and (ii) an expedited delivery incentive that, if the National Geographic Resolution is delivered early, as determined by the expedited delivery schedule per the agreement, that all or a portion of the of the loan will be considered as a delivery bonus and forgiven.

The purchase price is due in installments, with the first 20% paid shortly after execution of the agreement, 50% being paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel.

The vessel is scheduled to be delivered in the fourth quarter of 2021.

The new-build process exposes us to certain risks typically associated with new ship construction which we manage through detailed planning and close monitoring by our internal marine team. In September 2019, April 2020, and April 2021, we drew approximately $30.5 million, $30.6 million and $15.5 million, respectively, against the Second Export Credit Agreement for contracted installment payments on the National Geographic Resolution .

The final 30% is due upon delivery and acceptance of the vessel.

The remaining purchase price will be funded through a combination of available cash, borrowing under our Second Export Credit Agreement and our Revolving Facility and excess cash flows generated by our existing operations.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements