What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-12 · 242 added, 148 removed, 645 unchanged (38% of the section changed)

5 unchanged sentences

Cash and cash equivalents $ 25,608 $ 43,815

Accounts receivable, less allowance for doubtful accounts of $ 1,981 and $ 2,094 as of March 31, 2022 and December 31, 2021, respectively

Accounts receivable, less allowance for doubtful accounts of $ 1,943 and $ 2,094 as of June 30, 2022 and December 31, 2021, respectively

14,809 14,871

12 unchanged sentences

Total assets $ 78,480 $ 99,727

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

14 unchanged sentences

Common stock, $ 0.01 par value ( 20,000 shares authorized;

12,551 shares issued and 12,056 shares issued and outstanding as of March 31, 2022 and December 31, 2021)

Treasury stock (at cost, 495 shares at March 31, 2022 and December 31, 2021)

13,091 shares issued and 12,551 shares issued as of June 30, 2022 and December 31, 2021)

Treasury stock (at cost, 495 shares at June 30, 2022 and December 31, 2021)

( 5,488 ) ( 5,488 )

2 unchanged sentences

Accumulated other comprehensive loss ( 4,533 ) ( 3,793 )

Total stockholders’ deficit ( 1,469 ) ( 4,232 )

Total liabilities and stockholders’ deficit $ 92,883 $ 99,727

Total stockholders’ equity (deficit) 1,431 ( 4,232 )

Total liabilities and stockholders’ equity (deficit) $ 78,480 $ 99,727

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

(In thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Revenues $ 17,689 $ 19,079 $ 36,142 $ 33,363

5 unchanged sentences

General and administrative 4,811 5,056 9,479 9,616

Impairment of intangible assets and goodwill — —

Total operating expenses 13,745 13,081 27,447 25,114

Operating income (loss) 1,919 ( 767 )

Other income (loss), net 1,423 ( 166 )

Income (loss) from continuing operations before income taxes 3,342 ( 933 )

Income tax expense (benefit) 968 742

Income (loss) from continuing operations 2,374 ( 1,675 )

Loss from discontinued operations, net of taxes ( 11 ) ( 15 )

Net income (loss) 2,363 ( 1,690 )

Operating income 1,781 3,476 3,700 2,709

Other income, net 195 684 1,618 518

Income from continuing operations before income taxes 1,976 4,160 5,318 3,227

Income tax expense 928 1,136 1,896 1,878

Income from continuing operations 1,048 3,024 3,422 1,349

Income (loss) from discontinued operations, net of taxes 10 29 ( 1 ) 14

Net income 1,058 3,053 3,421 1,363

Net income (loss) attributable to non-controlling interest 30 39 34 ( 9 )

Net income (loss) attributable to Travelzoo $ 2,359 $ ( 1,642 )

Net income (loss) attributable to Travelzoo—continuing operations $ 2,370 $ ( 1,627 )

Net loss attributable to Travelzoo—discontinued operations $ ( 11 ) $ ( 15 )

Income (loss) per share—basic

Net income attributable to Travelzoo $ 1,028 $ 3,014 $ 3,387 $ 1,372

Net income attributable to Travelzoo—continuing operations $ 1,018 $ 2,985 $ 3,388 $ 1,358

Net income (loss) attributable to Travelzoo—discontinued operations $ 10 $ 29 $ ( 1 ) $ 14

Income per share—basic

Continuing operations $ 0.08 $ 0.26 $ 0.28 $ 0.12

Discontinued operations $ — $ — $ — $ —

Net income (loss) per share —basic $ 0.20 $ ( 0.14 )

Income (loss) per share—diluted

Net income per share —basic $ 0.08 $ 0.26 $ 0.28 $ 0.12

Income per share—diluted

Continuing operations $ 0.08 $ 0.22 $ 0.27 $ 0.10

Discontinued operations $ — $ — $ — $ —

Income (loss) per share—diluted $ 0.19 $ ( 0.14 )

Income per share—diluted $ 0.08 $ 0.22 $ 0.27 $ 0.10

Shares used in per share calculation from continuing operations—basic 12,513 11,488 12,285 11,440

3 unchanged sentences

See accompanying notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

Net income (loss) $ 2,363 $ ( 1,690 )

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income $ 1,058 $ 3,053 $ 3,421 $ 1,363

Other comprehensive income (loss):

Foreign currency translation adjustment ( 602 ) 162 ( 740 ) 572

Total comprehensive income (loss) $ 2,225 $ ( 1,280 )

Total comprehensive income $ 456 $ 3,215 $ 2,681 $ 1,935

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss) $ 2,363 $ ( 1,690 )

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

Net income $ 3,421 $ 1,363

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization 1,118 960

2 unchanged sentences

Loss on long-lived assets 38 —

Gain on PPP notes payable forgiveness — ( 429 )

Gain on equity investment in WeGo ( 196 ) —

Net foreign currency effect 214 ( 255 )

Provision for (reversal of) loss on accounts receivable, refund reserve and other ( 1,408 ) ( 454 )

Reversal of loss on accounts receivable, refund reserve and other ( 2,246 ) ( 871 )

Changes in operating assets and liabilities, net of acquisitions:

15 unchanged sentences

Repurchase of common stock — ( 1,583 )

Payment of notes payables — ( 110 )

Exercise of stock options, net of taxes paid for net share settlement 1,885 ( 3,067 )

Net cash used in financing activities 1,885 ( 4,760 )

7 unchanged sentences

Cash paid for amounts included in the measurement of lease liabilities $ 1,715 $ 2,281

Accrued employee payroll taxes on cashless exercise $ — $ 2,841

Non-cash consideration for purchase of intangible asset $ 1,150 $ —

8 unchanged sentences

Shares Amount

Balances, January 1, 2022 12,551 $ 126 $ ( 5,488 ) $ 4,415 $ 508 $ ( 3,793 ) $ ( 4,232 )

Balances, March 31, 2022 12,551 $ 126 $ ( 5,488 ) $ 4,957 $ 2,867 $ ( 3,931 ) $ ( 1,469 )

Stock-based compensation expense — — 589 — — 589

Exercise of stock options and taxes paid for net share

settlement of equity awards 540 5 — 1,880 — 1,885

Foreign currency translation adjustment — — — — ( 602 ) ( 602 )

Net income–Travelzoo — — — 1,028 — 1,028

Balances, June 30, 2022 13,091 $ 131 $ ( 5,488 ) $ 7,426 $ 3,895 $ ( 4,533 ) $ 1,431

Common Stock Treasury Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Stockholders’

Equity (Deficit)

Shares Amount

Balances, March 31, 2021 11,570 $ 115 $ ( 1,583 ) $ 4,279 $ ( 2,045 ) $ ( 3,649 ) $ ( 2,883 )

Stock-based compensation expense — — 935 — — 935

Exercise of stock options and taxes paid for net share

settlement of equity awards 24 ( 226 ) ( 226 )

Foreign currency translation adjustment — — — — 162 162

Net income–Travelzoo — — — 3,014 — 3,014

Balances, June 30, 2021 11,594 $ 115 $ ( 1,583 ) $ 4,988 $ 969 $ ( 3,487 ) $ 1,002

Common Stock Treasury Stock Additional

6 unchanged sentences

Stock-based compensation expense — — — 1,131 — — 1,131

Exercise of stock options and taxes paid for net share

settlement of equity awards 540 5 — 1,880 — — 1,885

Foreign currency translation adjustment — — — — — ( 740 ) ( 740 )

Net income–Travelzoo — — — — 3,387 — 3,387

Balances, June 30, 2022 13,091 $ 131 $ ( 5,488 ) $ 7,426 $ 3,895 $ ( 4,533 ) $ 1,431

Common Stock Treasury Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Stockholders’

Equity (Deficit)

Shares Amount

Balances, January 1, 2021 11,365 $ 114 $ — $ 6,239 $ ( 403 ) $ ( 4,059 ) $ 1,891

Stock-based compensation expense — — — 1,817 — — 1,817

Treasury stock — — ( 1,583 ) — — — ( 1,583 )

2 unchanged sentences

Foreign currency translation adjustment — — — — — 572 572

Net loss–Travelzoo — — — — ( 1,642 ) — ( 1,642 )

Balances, March 31, 2021 11,570 $ 115 $ ( 1,583 ) $ 4,279 $ ( 2,045 ) $ ( 3,649 ) $ ( 2,883 )

Net income–Travelzoo — — — — 1,372 — 1,372

Balances, June 30, 2021 11,594 $ 115 $ ( 1,583 ) $ 4,988 $ 969 $ ( 3,487 ) $ 1,002

See accompanying notes to unaudited condensed consolidated financial statements.

18 unchanged sentences

(“Jack’s Flight Club”), which operates Jack’s Flight Club , a subscription service that provides members with information about exceptional airfares.

As of March 31, 2022, Jack’s Flight Club h ad 1.7 million subscribers.

As of June 30, 2022, Jack’s Flight Club h ad 1.8 million subscribers.

Jack’s Flight Club’s revenues are generated by subscription fees paid by members.

8 unchanged sentences

An interest free loan was provided to the licensee for JPY 46 million (approximately $ 430,000 ) to be repaid over 3 years, of which $ 133,000 was repaid in 2021.

The Company recorded this loan as long-term other assets on the condensed consolidated balance sheet as of March 31, 2022.

The Company recorded this loan as long-term other assets on the condensed consolidated balance sheet as of June 30, 2022.

The license agreement for Australia, New Zealand and Singapore provides a license to the licensee to use the intellectual property of Travelzoo exclusively in Australia, New Zealand and Singapore for quarterly royalty payments based upon net revenue over a 5 year term, with an option to renew.

The Company records royalties for its licensing arrangements on a one-quarter lag basis.

The Company recognized royalties of $ 9,000 from Travelzoo Japan for the three months ended March 31, 2021 .

The Company did not recognize any royalty from Travelzoo Japan for the three months ended March 31, 2022 .

The Company recognized royalties of $ 2,000 for its licensing arrangements from AUS Buyer for the three months ended March 31, 2022.

The Company did not recognize any royalty from AUS Buyer for the three months ended March 31, 2021.

The Company did not recognize any royalty from Travelzoo Japan for the six months ended June 30, 2022.

The Company recognized royalties of $ 9,000 from Travelzoo Japan for the six months ended June 30, 2021 .

The Company recognized royalties of $ 5,000 and $ 12,000 for its licensing arrangements from AUS Buyer for the three and six months ended June 30, 2022, respectively.

The Company did not recognize any royalty from AUS Buyer for the six months ended June 30, 2021 .

We expect the royalty payments to increase over time as the effects of the pandemic subside.

3 unchanged sentences

Per the Share Purchase Agreement, by and among Travelzoo (Europe) Limited, trivago, and the other shareholders of WeGo (the “trivago SPA”), the Company sold all of its shares in WeGo to trivago for a total purchase price of approximately $ 2.9 million, of which $ 196,000 was placed in escrow for one year.

The Company recorded $ 468,000 gain in Other income (loss), net.

for the sale of WeGo shares in 2020.

The Company received the full escrow payment in January 2022 and recorded the gain in Other income (loss), net for the three months ended March 31, 2022.

The Company recorded $ 468,000 gain in Other income

(loss), net for the sale of WeGo shares in 2020.

The Company received the full escrow payment in January 2022 and recorded the gain in Other income (loss), net for the six months ended June 30, 2022.

WeGo agreed to pay in a lump sum the remaining amount outstanding pursuant to the Insertion Order equal to approximately $ 200,000 .

The payment was made and recorded in the three months ended March 31, 2021.

The payment was made and recorded in the first quarter of 2021.

The Second Insertion Order and any obligation for additional payments from WeGo for marketing were terminated.

4 unchanged sentences

The Company has to submit a final declaration in connection to this grant by December 31, 2022.

The Company believes it was eligible to participate in plan and is entitled to the payment and does not expect significant changes to the amount already received from the final submission.

The Company recorded $ 1.2 million gain in Other income, net in the three months ended March 31, 2022.

The Company also received other government fundings for the three months ended March 31, 2022 and 2021.

Job retention related funding from Canada was approximately $ 68,000 and $ 168,000 for the three months ended March 31, 2022 and 2021, respectively, and from European locations was approximately $ 20,000 for the three months ended March 31, 2021 .

Those fundings were recorded against salary and related expenses.

Travelzoo funds operations primarily with revenues generated from advertising fees.

The global pandemic has had and is expected to continue to have, a significant effect on the Company and many of our advertisers.

The Company believes it was eligible to participate in the plan and is entitled to the payment and does not expect significant changes to the amount already received from the final submission.

The Company recorded $ 1.2 million gain in Other income, net in the first quarter of 2022.

The Company also received other government fundings for the three and six months ended June 30, 2022 and 2021.

Job retention related funding from Canada was approximately $ 85,000 and $ 149,000 for the three months ended June 30, 2022 and 2021, respectively, and was approximately $ 153,000 and $ 317,000 for the six months ended June 30, 2022 and 2021, respectively.

Job retention related funding from European locations was $ 10,000 and $ 31,000 for the three and six months ended June 30, 2021.

These fundings were recorded against salary and related expenses.

The Company did not receive any job retention related funds from European locations for the six months ended June 30, 2022.

Travelzoo funds its operations primarily with revenues generated from advertising fees.

The global pandemic has had and is expected to continue to have, a significant adverse effect on the Company and many of our advertisers.

In the Company’s financial statements presented in this 10-Q report, following GAAP accounting principles, we classified all merchant payables as current.

When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $ 20.8 million as of March 31, 2022.

Cash used in operating activities was $ 6.8 million for the three months ended March 31, 2022.

When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $ 17.2 million as of June 30, 2022.

Cash used in operating activities was $ 17.0 million for the six months ended June 30, 2022.

In order to appeal to its members, Travelzoo adjusted its refund policy in the second quarter of 2020 so that vouchers were fully refundable until expiration or redemption by the customer.

As of March 31, 2022 , the Company has recorded merchant payables of $ 60.5 million related to unredeemed vouchers with the majority of vouchers expiring in 2022 and the remaining primarily expiring in 2023.

This refund policy has mostly been adjusted as of April 1, 2022, back to fully refundable within seven days of purchase unless a surcharge is paid at the time of the voucher purchase for the right to be fully refundable.

As of June 30, 2022 , the Company has recorded merchant payables of $ 47.9 million related to unredeemed vouchers with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023.

Management understands that these conditions could raise doubt over the Company’s ability to meet all of its obligations over the next twelve months, however, management has evaluated these conditions and concluded that management's plans alleviate these concerns.

Revenue and net income increased for three months ended March 31, 2022 compared to the same quarter of last year and prior quarter.

The Company is expecting revenue and net income to increase continuously for the remaining of 2022 based on improving conditions for travel in 2022.

The cash and cash equivalents were $ 35.6 million as of March 31, 2022 .

Although as mentioned above all merchant payables are classified as current, the expiration dates of these vouchers range between April 2022 through December 2025 with the majority of the vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

Management’s plans include, among others, a focus on managing operating expenses while increasing revenues, as well as obtaining additional financing if required.

Revenue and net income increased for six months ended June 30, 2022 compared to the same period of last year.

The Company is expecting revenue and net income to increase for the remaining of 2022 based on improving conditions for travel in 2022.

The cash and cash equivalents were $ 25.6 million as of June 30, 2022 .

Although as mentioned above all merchant payables are classified as current, the expiration dates of these vouchers range between July 2022 through December 2025 with the majority of the vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

provided, that these expiration dates may sometimes be extended on a case-by-case basis.

4 unchanged sentences

Ralph Bartel, who founded Travelzoo and who is the Chairman of the Board of Directors of the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro Capital Inc.

(“Azzurro” ).

As of March 31, 2022, Ralph Bartel is the Company's largest shareholder, holding approximately 38.0 % of the Company's outstanding shares.

As of June 30, 2022 , Ralph Bartel is the Company's largest shareholder, holding approximately 35.7 % of the Company's outstanding shares.

Holger Bartel, the Company's Global Chief Executive Officer, is Ralph Bartel's brother and holds approximately 3.9 % of the Company's outstanding shares.

Financial Statements

11 unchanged sentences

Actual results could differ materially from those estimates.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other future period, and the Company makes no representations related thereto.

The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other future period, and the Company makes no representations related thereto.

(b) Recent Accounting Pronouncements

45 unchanged sentences

Deferred revenue primarily consists of customer prepayments and undelivered performance obligations related to the Company’s contracts with multiple performance obligations.

As of December 31, 2021, $ 1.3 million was recorded as deferred revenue for Jack's Flight Club, of which $ 575,000 was recognized in the three months ended March 31, 2022, $ 473,000 was recorded as deferred revenue for Travelzoo North America and Travelzoo Europe, of whi ch $ 211,000 was re cognized as revenue in the three months ended March 31, 2022.

As of March 31, 2022, the deferred revenue balance was $ 2.3 million, of which $ 1.7 million was for Jack's Flight Club, and the remaining $ 652,000 was for Travelzoo North America and Travelzoo Europe.

As of December 31, 2021, $ 1.3 million was recorded as deferred revenue for Jack's Flight Club, of which $ 329,000 and $ 904,000 was recognized in the three and six months ended June 30, 2022, respectively, $ 473,000 was recorded as deferred revenue for Travelzoo North America and Travelzoo Europe, of which $ 5,000 and $ 216,000 was recognized as revenue in the three and six months ended June 30, 2022, respectively.

As of June 30, 2022, the deferred revenue balance was $ 2.1 million, of which $ 1.4 million was for Jack's Flight Club and the remaining $ 736,000 was for Travelzoo North America and Travelzoo Europe.

Reserve for Refunds to Members

5 unchanged sentences

Merchant agreements for Getaways advertisers are typically for periods between twelve months and twenty-four months and are not automatically renewed.

Since the second quarter of 2020, the Company expanded

its voucher refund policy to fully refundable until the voucher expires or is redeemed by the customer.

The expiration dates of vouchers range between April 2022 through December 2025 with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

Since the second quarter of 2020, the Company expanded its voucher refund policy to fully refundable until the voucher expires or is redeemed by the customer.

The expiration dates of vouchers range between July 2022 through December 2025 with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

provided, that these expiration dates may sometimes be extended on a case-by-case basis.

2 unchanged sentences

The Company estimated the refund reserve by using historical and current refund rates by product and by merchant location to calculate the estimated future refunds.

As of March 31, 2022 the Company had approximately $ 15.1 million of unredeemed vouchers that had been sold through March 31, 2022 representing the Company’s commission earned from the sale.

The Company had estimated a refund liability of $ 3.8 million for these unredeemed vouchers as of March 31, 2022, which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet.

As of December 31, 2021, the Company had approximately $ 17.2 million of unredeemed vouchers that had been sold during 2020 representing the Company’s commission earned from the sale and estimated a refund liability of $ 5.2 million for these unredeemed vouchers as of December 31, 2021, which was recorded as a reduction of revenues and was reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet.

The Company has recorded Merchant Payables of $ 60.5 million as of March 31, 2022 related to unredeemed vouchers.

As of June 30, 2022, the Company had approximately $ 12.0 million of unredeemed vouchers that had been sold through June 30, 2022, representing the Company’s commission earned from the sale.

The Company had estimated a refund liability of $ 2.9 million for these unredeemed vouchers as of June 30, 2022, which is recorded as a reduction of revenues and is reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet.

As of December 31, 2021, the Company had approximately $ 17.2 million of unredeemed vouchers that had been sold through 2021 representing the Company’s commission earned from the sale and estimated a refund liability of $ 5.2 million for these unredeemed vouchers as of December 31, 2021, which was recorded as a reduction of revenues and was reflected as a current liability in Accrued expenses and other on the condensed consolidated balance sheet.

The Company has recorded Merchant Payables of $ 47.9 million as of June 30, 2022 related to unredeemed vouchers.

Insertion orders and merchant agreements for Local Deals are typically for periods between one month and twelve months and are not automatically renewed except for merchant contracts in foreign locations.

16 unchanged sentences

The Company performed its annual test as of October 31, 2021 and no impairment charge was identified in connection with the annual impairment tes t.

The Company did no t identify any indicators of impairment during the three months ended March 31, 2022 and 2021 .

The Company did no t identify any indicators of impairment during the six months ended June 30, 2022 and 2021.

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying net tangible and intangible assets.

Goodwill is evaluated for impairment annually, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.

In testing goodwill for impairment, the Company first uses a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount.

In testing goodwill for impairment, the Company

first uses a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount.

If the qualitative assessment indicates that goodwill impairment is more likely than not, the Company performs an impairment test by comparing the book value of net assets to the fair value of the reporting units.

The Company performed its annual impairment test as of October 31, 2021 and no impairment charge was identified in connection with the

annual impairment test .

The Company did no t identify any indicators of impairment during the three months ended March 31, 2022 and 2021.

The Company performed its annual impairment test as of October 31, 2021 and no impairment charge was identified in connection with the annual impairment test .

The Company did no t identify any indicators of impairment during the six months ended June 30, 2022 and 2021 .

Operating Leases

19 unchanged sentences

and internationally.

As of March 31, 2022 and December 31, 2021, the Company did not have any customers that accounted for 10% or more of accounts receivable.

As of June 30, 2022 and December 31, 2021, the Company did not have any customers that accounted for 10% or more of accounts receivable.

Many of the Company’s advertisers and partners are part of the global travel and hospitality industry.

2 unchanged sentences

It is difficult to estimate the impact of the COVID pandemic on the Company’s future revenues, results of operations, cash flows, liquidity, or financial condition.

As of March 31, 2022, the Company had merchant payables of $ 60.5 million related to the sale of vouchers.

As of June 30, 2022, the Company had merchant payables of $ 47.9 million related to the sale of vouchers.

In the Company’s financial statements presented in this 10-Q report, following GAAP accounting principles, we classified all merchant payables as current.

1 unchanged sentence

Payables to merchants are generally due upon redemption of vouchers.

The vouchers have maturities from April 2022 through December 2025 with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

The vouchers have maturities from July 2022 through December 2025 with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

provided, that these expiration dates may sometimes be extended on a case-by-case basis.

Management believes that redemptions may be delayed for international vouchers in the current environment.

Based on current projections of redemption activity, management expect that cash on hand as of March 31, 2022 will be sufficient to provide for working capital needs for at least the next twelve months.

Based on current projections of redemption activity, management expect that cash on hand as of June 30, 2022 will be sufficient to provide for working capital needs for at least the next twelve months.

However, if redemption activity is more accelerated, if the Company’s business is not profitable, or if the Company’s planned targets for cash flows from operations are not met, the Company may need to obtain additional financing to meet its working capital needs in the future.

5 unchanged sentences

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts shown in the unaudited condensed consolidated statements of cash flows:

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 25,608 $ 43,815

2 unchanged sentences

Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 26,680 $ 44,989

The Company’s restricted cash was included in noncurrent assets as of March 31, 2022 and December 31, 2021.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding for the period.

The Company’s restricted cash was included in noncurrent assets as of June 30, 2022 and December 31, 2021.

Net Income Per Share

Basic net income per share is computed using the weighted-average number of common shares outstanding for the period.

Diluted net income per share is computed by adjusting the weighted-average number of common shares outstanding for the effect of dilutive potential common shares outstanding during the period.

1 unchanged sentence

The following table sets forth the calculation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Three Months Ended

Net income (loss) attributable to Travelzoo—continuing operations $ 2,370 $ ( 1,627 )

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Net income attributable to Travelzoo—continuing operations $ 1,018 $ 2,985 $ 3,388 $ 1,358

Net loss attributable to Travelzoo—discontinued operations $ 10 $ 29 $ ( 1 ) $ 14

3 unchanged sentences

Weighted average common shares—diluted 12,637 13,408 12,591 13,248

Income (loss) per share—basic

Income per share—basic

Continuing operations $ 0.08 $ 0.26 $ 0.28 $ 0.12

Discontinued operations — — — —

Net income (loss) per share —basic $ 0.20 $ ( 0.14 )

Income (loss) per share—diluted

Net income per share —basic $ 0.08 $ 0.26 $ 0.28 $ 0.12

Income per share—diluted

Continuing operations $ 0.08 $ 0.22 $ 0.27 $ 0.10

Discontinued operations — — — —

Net income (loss) per share—diluted $ 0.19 $ ( 0.14 )

For the three months ended March 31, 2022 and 2021, options to purchase 50,000 s hares and 2.8 million shares of common stock, respectively, were not included in the computation of diluted net income (loss) per share because the effect would have been anti-dilutive.

Net income per share—diluted $ 0.08 $ 0.22 $ 0.27 $ 0.10

For the three and six months ended June 30, 2022 and 2021, options to purchase 750,000 s hares and 50,000 shares of common stock, respectively, were not included in the computation of diluted net income per share because the effect would have been anti-dilutive.

Travelzoo (Europe) Limited, Sucursal en España Acquired Secret Escapes Limited’s Spanish Business Unit

On March 3, 2022, Travelzoo (Europe) Ltd, Sucursal en Espana, the Spanish branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Spain”), entered into a Business Unit Purchase Agreement (“BUPA”) with Secret Escapes Limited (“Secret Escapes”) for the purchase of its Spanish business unit, which included, among other things, a database of approximately 940,000 members.

The purchase price was 400,000 Euros, with an earn-out opportunity of an additional 100,000 Euros payable by the Company upon the achievement of certain metrics by the business unit in six months .

The purchase price was 400,000 Euros, with an earn-out opportunity of an additional 100,000 Euros payable by the Company upon the achievement of certain metrics by the business unit in six months (September 2022).

Travelzoo was granted the right to use the Secret Escapes name exclusively in Spain for a continuity period of six ( 6 ) months.

9 unchanged sentences

The License Agreement was reviewed and unanimously approved by the Audit Committee of the Board of Directors, which consists solely of independent directors.

The purchase price for the transaction was $ 1.75 million, with $ 600,000 payable in cash upon closing and the remaining $ 1.15 million payable in the form of a credit with Seller relating to prepaid license fees, under the License Agreement.

The purchase price for the transaction was $ 1.75 million, with $ 600,000 paid in cash upon closing in March 2022 and the remaining $ 1.15 million payable in the form of a credit with Seller relating to prepaid license fees, under the License Agreement.

The remaining commitment of the Company under the License Agreement for the then-current remaining term (equal to $ 825,000 ) were eliminated.

2 unchanged sentences

Cost accumulation model was used to account for the cost of the acquisition and the 100,000 Euros earn-out was considered as contingent consideration based on ASC 805-50.

Travelzoo acquired database of members and recorded $ 2.0 million intangible assets from both agreements.

Travelzoo acquired the database of members and recorded $ 2.2 million intangible assets from both agreements.

Acquisition of Jack's Flight Club

9 unchanged sentences

The Company recorded a goodwill impairments of $ 2.1 million and a Trade name impairment of $ 810,000 due to the pandemic in the first quarter of 2020.

The Company performs annual impairment test in October did not identify any further indicators of impairment.

The Company also did not identify any indicators of impairment during the three months ended March 31, 2022.

The Company performed an annual impairment test in October did not identify any further indicators of impairment as of December 31, 2021.

The Company also did not identify any indicators of impairment during the six months ended June 30, 2022 .

Intangible Assets

6 unchanged sentences

Intangible assets (Metaverse Travel member database) 1,751 2.3

The following table represents the activities of intangible assets for the three months ended March 31, 2022 (in thousands):

The following table represents the activities of intangible assets for the three and six months ended June 30, 2022 (in thousands):

Jack's Flight Club Secret Escape Spain Metaverse Travel

8 unchanged sentences

Intangible assets—December 31, 2021 3,426

Acquisitions — 445 1,751

Acquisitions—March 2022 — 445 1,751

Amortization of intangible assets with definite lives ( 226 ) ( 12 ) ( 195 )

Intangible assets—March 31, 2022 3,200 433 1,556

Amortization expense for acquired intangibles was $ 433,000 and $ 284,000 for the three months ended March 31, 2022 and 2021, respectively.

Expected future amortization expense of acquired intangible assets as of March 31, 2022 is as follows (in thousands):

Amortization of intangible assets with definite lives ( 217 ) ( 34 ) ( 194 )

Intangible assets—June 30, 2022 $ 2,983 $ 399 $ 1,362

Amortization expense for acquired intangibles was $ 445,000 and $ 275,000 for the three months ended June 30, 2022 and 2021, respectively, and was $ 878,000 and $ 559,000 for the six months ended June 30, 2022 and 2021, respectively.

Expected future amortization expense of acquired intangible assets, excluding the $ 1.65 million for the indefinite-lived trade name asset,

as of June 30, 2022 is as follows (in thousands):

Years ending December 31,

3 unchanged sentences

The Company accrues for legal contingencies if the Company can estimate the potential liability and if the Company believes it is probable that the case will be ruled against it.

Accruals for legal contingencies were not material as of March 31, 2022 and December 31, 2021.

Accruals for legal contingencies were not material as of June 30, 2022 and December 31, 2021.

If a legal claim for which the Company did not accrue is resolved against it, the Company would record the expense in the period in which the ruling was made.

12 unchanged sentences

This voluntary program is not available for individuals whose promotional shares have been escheated to a state by the Company, except those individuals for which their residence was unknown to the Company.

The Company did not make any payments for the three months ended March 31, 2022 and 2021.

The Company did not make any payments for the three and six months ended June 30, 2022 and 2021.

The total cost of this program cannot be reliably estimated because it is based on the ultimate number of valid requests received and future levels of the Company’s common stock price.

5 unchanged sentences

Our leases have remaining lease terms ranging from less than one year to up to eight years .

Refer to Note 11 for Leases as of March 31, 2022.

Refer to Note 11 for Leases as of June 30, 2022.

The Company maintains several standby letters of credit (“LOC”) to serve as collateral issued to certain landlords.

The LOCs are collateralized with cash which is included in the line item “Restricted cash” in the Condensed Consolidated Balance Sheets.

The Company has purchase commitments aggregating approximately $ 2.3 million as of March 31, 2022, which represent the minimum obligations the Company has under agreements with certain suppliers.

The Company has purchase commitments aggregating approximately $ 3.0 million as of June 30, 2022, which represent the minimum obligations the Company has under agreements with certain suppliers.

These minimum obligations are less than the Company's projected use for those periods.

1 unchanged sentence

In determining the quarterly provisions for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on our expected annual income and statutory tax rates in the U.S., Canada, and the U.K.

The Company's effective tax rate from continuing operations was 29 % and ( 80 )%, respectively, for the three months ended March 31, 2022 and 2021.

The Company’s effective tax rate for the three months ended March 31, 2022, changed from the three months ended March 31, 2021, primarily due to pre-tax book income in the three months ended March 31, 2022, versus a pre-tax book loss in the three months ended March 31, 2021, and a decrease in non-tax deductible stock compensation in the three months ended March 31, 2022.

As of March 31, 2022, the Company is permanently reinvested in certain of its non-U.S.

The Company's effective tax rate from continuing operations was 47 % and 27 %, respectively, for the three months ended June 30, 2022 and 2021.

The Company’s effective tax rate for the three months ended June 30, 2022, changed from the three months ended June 30, 2021, primarily due to other income recorded for PPP Loan forgiveness in the three months ended June 30, 2021 that is exempt from tax and changes in deferred tax assets from limitations on deductible stock-based compensation.

The Company's effective tax rate from continuing operations was 36 % and 58 %, respectively, for the six months ended June 30, 2022 and 2021 .

The Company’s effective tax rate for the six months ended June 30, 2022 changed from the six months ended June 30, 2021 primarily due to a decrease in non-tax deductible stock compensation in the six months ended June 30, 2022.

As of June 30, 2022, the Company is permanently reinvested in certain of its non-U.S.

subsidiaries and does not have a deferred tax liability related to its undistributed foreign earnings.

2 unchanged sentences

The Company maintains liabilities for uncertain tax positions.

As of March 31, 2022, the Company had approximately $ 1.0 million in total unrecognized tax benefits, which if recognized, would favorably affect the Company’s effective income tax rate.

As of June 30, 2022, the Company had approximately $ 1.0 million in total unrecognized tax benefits, which if recognized, would favorably affect the Company’s effective income tax rate.

The Company’s policy is to include interest and penalties related to unrecognized tax positions in income tax expense.

To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in the overall income tax provision in the period that such determination is made.

As of March 31, 2022 and December 31, 2021, the Company had approximately $ 440,000 and $ 424,000 in accrued interests and penalties, respectively.

As of June 30, 2022 and December 31, 2021, the Company had approximately $ 500,000 and $ 424,000 in accrued interest and penalties, respectively.

The Company files income tax returns in the U.S.

13 unchanged sentences

The following table summarizes the changes in accumulated other comprehensive loss (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Beginning balance $ ( 3,931 ) $ ( 3,649 ) $ ( 3,793 ) $ ( 4,059 )

1 unchanged sentence

Ending balance $ ( 4,533 ) $ ( 3,487 ) $ ( 4,533 ) $ ( 3,487 )

There were no amounts reclassified from accumulated other comprehensive loss for the three months ended March 31, 2022.

There were no amounts reclassified from accumulated other comprehensive loss for the three and six months ended June 30, 2022 and 2021.

Accumulated other comprehensive income (loss) consists of foreign currency translation gain or loss.

24 unchanged sentences

As of December 31, 2021, stock-based compensation related to the 2019 Option Agreement and applicable Option Agreement Amendment was fully expensed.

Bartel did not exercise options during the three months ended March 31, 2022.

In April 2022, 540,000 options granted pursuant to the 2019 Option Agreement were exercised by Mr.

Bartel for aggregate cash proceeds of $ 1.9 million.

Bartel exercised the remaining 540,000 options granted pursuant to the 2019 Option Agreement during the three months ended June 30, 2022 .

The Company received an aggregate cash proceeds of $ 1.9 million.

In September 2019, pursuant to executed Option Agreements, the Company granted six employees stock options to purchase 50,000 shares of common stock each ( 300,000 in the aggregate) with an exercise price of $ 10.79 , of which 75,000 options vest in total and become exercisable annually starting on September 5, 2020 and ending on December 31, 2023.

4 unchanged sentences

In 2021, 125,000 unvested options were forfeited upon employees’ departure, 150,000 options were exercised and 88,917 shares of common stock were issued as the result of the cashless exercises or net settlement with respect to the option exercise price which were approved by Travelzoo’s Board of Directors.

Total stock-based compensation related to these option grants of $ 71,000 and $ 55,000 was recorded in general and administrative expenses for the three months ended March 31, 2022 and 2021.

As of March 31, 2022, there was approximately $ 137,000 of unrecognized stock-based compensation expense relating to these options.

As of June 30, 2022, 150,000 options were outstanding and none of these options were vested.

Total stock-based compensation related to these option grants of $ 72,000 and $ 41,000 was recorded in general and administrative expenses for the three months ended June 30, 2022 and 2021.

Total stock-based compensation related to these option grants of $ 145,000 and $ 96,000 was recorded in general and administrative expenses for the six months ended June 30, 2022 and 2021 .

As of June 30, 2022, there was approximately $ 338,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 1.2 years.

3 unchanged sentences

This grant was approved at the 2020 Annual Meeting of the shareholders.

Total stock-based compensation related to these option grants of $ 385,000 was recorded in general and administrative expenses for each of the three months ended March 31, 2022 and 2021.

As of March 31, 2022, stock-based compensation related to this grant was fully expensed.

As of June 30, 2022, 200,000 options were outstanding and all of these options were vested.

Total stock-based compensation related to this option grant of $ 385,000 and $ 771,000 was recorded in general and administrative expenses for the six months ended June 30, 2022 and 2021.

S tock-based compensation related to this grant was fully expensed by the end of the first quarter of 2022.

On May 29, 2020, pursuant to an executed Option Agreement, the shareholders of the Company approved the grant of stock options to purchase 200,000 shares of common stock to two key employees, with an exercise price of $ 3.49 with annual vesting starting March 30, 2021 and ending on March 31, 2024.

1 unchanged sentence

In 2021, 50,000 options were exercised, and 24,474 shares of common stock were issued as the result of the cashless exercises which were approved by Travelzoo’s Board of Directors.

Total stock-based compensation related to these option grants of $ 49,000 and $ 59,000 was recorded in general and administrative expenses for the three months ended March 31, 2022 and 2021.

As of March 31, 2022, there was approximately $ 393,000 of unrecognized stock-based compensation expense relating to these options.

As of June 30, 2022, 150,000 options were outstanding and 50,000 of these options were vested.

Total stock-based compensation related to these option grants of $ 49,000 was recorded in general and administrative expenses for each of the three months ended June 30, 2022 and 2021.

Total stock-based compensation related to these option grants of $ 98,000 and $ 108,000 was recorded in general and administrative expenses for the six months ended June 30, 2022 and 2021.

As of June 30, 2022, there was approximately $ 344,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 1.8 years.

1 unchanged sentence

The options expire in January 2026.

Total stock-based compensation related to these option grants of $ 36,000 was recorded in general and administrative expenses for the three months ended March

As of March 31, 2022, there was approximately $ 395,000 of unrecognized stock-based compensation expense relating to these options.

As of June 30, 2022, 50,000 options were outstanding and 12,500 of these options were vested.

Total stock-based compensation related to this option grant of $ 36,000 and $ 21,000 was recorded in general and administrative expenses for the three months ended June 30, 2022 and 2021 .

Total stock-based compensation related to this option grant of $ 72,000 and $ 21,000 was recorded in general and administrative expenses for the six months ended June 30, 2022 and 2021.

As of June 30, 2022, there was approximately $ 359,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 2.5 years.

In March 2022, pursuant to an executed Option Agreement, the Company granted its Global Chief Executive Officer, Holger Bartel, options to purchase 600,000 shares of common stock of the Company, with an exercise price of $ 8.14 and vesting 25 % every six months over two years beginning on June 30, 2022 and ending on December 31, 2023.

The options expire in March 2027.

This grant was approved at the 2022 Annual Meeting of the shareholders.

As of June 30, 2022, 600,000 options were outstanding and 150,000 of these options were vested.

Total stock-based compensation related to this option grant of $ 433,000 was recorded in general and administrative expenses for the three and six months ended June 30, 2022.

As of June 30, 2022, there was approximately $ 1.3 million of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 1.5 years.

In June 2022, the Company granted an employee options to purchase 100,000 shares of common stock with an exercise price of $ 6.78 and quarterly vesting beginning on September 30, 2022 and ending on June 30, 2025 with vesting based on both time-based service condition and also performance conditions.

However, if the performance targets are not met as of the first date on which the time condition is met, the time condition may be extended by one quarter up to three times.

The options expire in June 2027.

As of June 30, 2022 , 100,000 options were outstanding and none of these options was vested.

The Company did not recognize any stock-based compensation expense for this grant in the three and six months ended June 30, 2022 as achievement of the performance condition was not considered probable.

As of June 30, 2022 , there was approximately $ 368,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 3 years.

Stock Repur chase Program

3 unchanged sentences

In May 2019, the Company announced a stock repurchase program authorizing the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock.

The Company repurchased and retired 436,369 shares and 169,602 shares of common stock of common stock in 2019 and 2020, respectively.

The Company repurchased and retired 436,369 shares and 169,602 shares of common stock in 2019 and 2020, respectively.

In 2021, the Company repurchased 395,029 shares of common stock for an aggregate purchase price of $ 3.9 million, which were recorded as part of treasury stock as of December 31, 2021.

3 unchanged sentences

This transaction was approved by the Compensation Committee of the Board of Directors.

In June 2022, the Company announced its board of directors has approved a stock repurchase program authorizing the repurchase of up to 1,000,000 shares of the Company’s outstanding common stock.

As of June 30, 2022, the Company has not repurchased shares of common stock related to this program.

Segment Reporting and Significant Customer Information

1 unchanged sentence

Historically, the Company managed its business geographically and operated in three reportable segments including Asia Pacific, Europe and North America.

During the three months ended March 31, 2022, the Company classified the results of its Asia Pacific segment as discontinued operations in its condensed consolidated financial statements for current and prior periods presented.

During the six months ended June 30, 2022, the Company classified the results of its Asia Pacific segment as discontinued operations in its condensed consolidated financial statements for current and prior periods presented.

On January 13, 2020, Travelzoo agreed to the SPA with the Sellers of Jack’s Flight Club to purchase 60 % of the Shares.

8 unchanged sentences

The following is a summary of operating results by business segment (in thousands):

Three Months Ended March 31, 2022 Travelzoo North

Three Months Ended June 30, 2022 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

3 unchanged sentences

Operating profit (loss) $ 3,092 $ ( 1,472 ) $ 161 $ — $ 1,781

Three Months Ended March 31, 2021 Travelzoo North

Three Months Ended June 30, 2021 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

3 unchanged sentences

Operating profit (loss) $ 3,533 $ ( 227 ) $ 170 $ — $ 3,476

Six Months Ended June 30, 2022 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

Revenues from unaffiliated customers $ 23,845 $ 10,522 $ 1,775 $ — $ 36,142

Intersegment revenues (expenses) 234 ( 234 ) — — —

Total net revenues 24,079 10,288 1,775 — 36,142

Operating profit (loss) $ 4,810 $ ( 1,294 ) $ 184 $ — $ 3,700

Six Months Ended June 30, 2021 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

Revenues from unaffiliated customers $ 23,478 $ 8,138 $ 1,747 $ — $ 33,363

Intersegment revenues (expenses) 326 ( 326 ) — — —

Total net revenues 23,804 7,812 1,747 — 33,363

Operating profit (loss) $ 3,572 $ ( 923 ) $ 60 $ — $ 2,709

Property and equipment are attributed to the geographic region in which the assets are located.

1 unchanged sentence

The following is a summary of assets by business segment (in thousands):

As of March 31, 2022 Travelzoo North

As of June 30, 2022 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

5 unchanged sentences

Total assets excluding discontinued operations $ 116,700 $ 28,167 $ 18,436 $ ( 63,647 ) $ 99,656

For the three months ended March 31, 2022 and 2021, the Company did not have any customers that accounted for 10% or more of revenue.

As of March 31, 2022 and December 31, 2021, the Company did not have any customers that accounted for 10% or more of accounts receivable.

For the six months ended June 30, 2022 and 2021, the Company did not have any customers that accounted for 10% or more of revenue.

As of June 30, 2022 and December 31, 2021, the Company did not have any customers that accounted for 10% or more of accounts receivable.

The following table sets forth the breakdown of revenues (in thousands) by category and segment.

1 unchanged sentence

Local revenue includes Local Deals vouchers and entertainment offers (vouchers and direct bookings).

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Travelzoo North America

7 unchanged sentences

Jack’s Flight Club

952 860 1,775 1,747

Travelzoo Travel 15,521 16,796 32,195 29,087

1 unchanged sentence

Jack’s Flight Club

952 860 1,775 1,747

Total revenues $ 17,689 $ 19,079 $ 36,142 $ 33,363

3 unchanged sentences

The following table sets forth revenue for countries that exceed 10% of total revenue (in thousands):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

United States $ 11,222 $ 13,214 $ 21,865 $ 22,435

4 unchanged sentences

The following table sets forth property and equipment by geographic area (in thousands):

March 31, December 31,

June 30, December 31,

United States $ 316 $ 409

7 unchanged sentences

Prior periods have been reclassified to conform with the current presentation.

The following table provides a summary of amounts included in discontinued operations for the three and six months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

The following table provides a summary of amounts included in discontinued operations for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Revenues $ — $ — $ — $ —

7 unchanged sentences

Loss from operations — — ( 8 ) ( 12 )

Other income (loss), net ( 3 ) ( 3 )

Other income, net 10 29 7 26

Income (loss) before income taxes 10 29 ( 1 ) 14

13 unchanged sentences

The Japan Buyer repaid $ 133,000 in 2021.

The Company recognized royalties of $ 0 and $ 9,000 from Travelzoo Japan three months ended March 31, 2022 and 2021, respectively.

The Company recognized royalties of $ 0 and $ 9,000 from Travelzoo Japan for the three months ended June 30, 2022 and 2021, respectively.

On August 24, 2020, the Company completed a sale of 100 % of the outstanding capital stock of Travelzoo (Singapore) Pty Ltd (“Travelzoo Singapore”), to an unaffiliated entity, Finest Hotels Pty Ltd d/b/a Travelzoo (“AUS Buyer”), which is fully owned by Mr.

3 unchanged sentences

Licensing revenue is booked with a lag of one quarter.

The Company also recorded $ 7,000 and $ 0 in licensing revenue from the licensee in Australia, New Zealand, and Singapore for the three months ended March 31, 2022 and 2021, respectively.

The Company also recorded $ 7,000 and $ 0 in licensing revenue from the licensee in Australia, New Zealand, and Singapore for the three months ended June 30, 2022 and 2021, respectively.

The following table presents information related to the major classes of assets and liabilities that were classified as assets and liabilities from discontinued operations in the Condensed Consolidated Balance Sheets (in thousands):

8 unchanged sentences

Total liabilities from discontinued operations $ 448 $ 485

The net cash used in operating activities for the discontinued operations for the three months ended March 31, 2022 and 2021, were as follows (in thousands):

Three Months Ended

The net cash used in operating activities for the discontinued operations for the six months ended June 30, 2022 and 2021, were as follows (in thousands):

Six Months Ended

Net cash used in operating activities $ ( 21 ) $ ( 85 )

6 unchanged sentences

All of our leases qualify as operating leases.

The following table summarizes the components of lease expense for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

The following table summarizes the components of lease expense for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2022 2021 2022 2021

Operating lease cost $ 558 $ 920 $ 1,243 $ 1,802

3 unchanged sentences

Total lease cost $ 640 $ 1,108 $ 1,460 $ 2,193

For the three months ended March 31, 2022 and 2021, cash payments against the operating lease liabilities total ed $ 938,000 and $ 1.1 million, respectively.

ROU assets obtained in exchange for lease obligations was $ 0 and $ 1.0 million for three months ended March 31, 2022 and 2021, respectively.

For the six months ended June 30, 2022 and 2021, cash payments against the operating lease liabilities total ed $ 1.7 million and $ 2.3 million, respectively.

ROU assets obtained in exchange for lease obligations was $ 0 and $ 1.8 million for six months ended June 30, 2022 and 2021, respectively.

The following table summarizes the presentation in our condensed consolidated balance sheets of our operating leases (in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Operating lease right-of-use assets $ 6,192 $ 7,700

6 unchanged sentences

Years ending December 31,

2022 (excluding the three months ended March 31, 2022) $ 2,233

2022 (excluding the six months ended June 30, 2022) $ 1,426

Thereafter 4,275

13 unchanged sentences

(“Azzurro” ).

As of March 31, 2022, Ralph Bartel is the Company's largest shareholder, holding approximately 38.0 % of the Company's outstanding shares.

As of June 30, 2022 , Ralph Bartel is the Company's largest shareholder, holding approximately 35.7 % of the Company's outstanding shares.

Holger Bartel, the Company's Global Chief Executive Officer, is Ralph Bartel's brother and holds approximately 3.9 % of the Company's outstanding shares.

Asset Purchase Agreement between Metaverse Travel Experiences, Inc.

7 unchanged sentences

The License Agreement was reviewed and unanimously approved by the Audit Committee of the Board of Directors, which consists solely of independent directors.

The remaining commitment of the Company under the License Agreement for the then-current remaining term (equal to $ 825,000 ) were eliminated.

9 unchanged sentences

The Company sold all of its shares in WeGo to trivago for a total purchase price of approximately $ 2.9 million, of which $ 196,000 was placed in escrow for one year .

The Company received the full escrow payment in January 2022 and recorded the gain in Other income (loss), net for the three months ended March 31, 2022.

The Company received the full escrow payment in January 2022 and recorded the gain in Other income (loss), net in the first quarter of 2022.

Stock Option Agreement

In March 2022, the Company granted Holger Bartel 600,000 stock options that vest through December 31, 2023.

This grant was approved by the shareholders of the Company at the 2022 annual meeting of shareholders.

Holger Bartel is the brother of Ralph Bartel and is our Global Chief Executive Officer .

See Note 3 to the unaudited condensed consolidated financial statements for further information.

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