What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-10 · 189 added, 173 removed, 714 unchanged (34% of the section changed)

2 unchanged sentences

(In thousands, except par value)

September 30,

2022 December 31,

1 unchanged sentence

Cash and cash equivalents $ 19,494 $ 43,815

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

Accounts receivable, less allowance for doubtful accounts of $ 1,755 and $ 2,094 as of September 30, 2022 and December 31, 2021, respectively

11,835 14,871

29 unchanged sentences

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

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)

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

Treasury stock (at cost, 695 shares at September 30, 2022 and 495 shares at December 31, 2021)

( 6,658 ) ( 5,488 )

7 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

7 unchanged sentences

Total operating expenses 13,252 12,957 40,699 38,071

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

Operating income (loss) 273 ( 261 ) 3,973 2,448

Other income, net 836 3,344 2,454 3,862

8 unchanged sentences

Net income (loss) attributable to Travelzoo—discontinued operations $ 5 $ ( 19 ) $ 4 $ ( 5 )

Income per share—basic

Income (loss) per share—basic

Continuing operations $ 0.06 $ 0.24 $ 0.34 $ 0.36

Discontinued operations $ — $ — $ — $ —

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

Income per share—diluted

Net income (loss) per share —basic $ 0.06 $ 0.24 $ 0.34 $ 0.36

Income (loss) per share—diluted

Continuing operations $ 0.06 $ 0.22 $ 0.33 $ 0.32

Discontinued operations $ — $ — $ — $ —

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

Income (loss) per share—diluted $ 0.06 $ 0.22 $ 0.33 $ 0.32

Shares used in per share calculation from continuing operations—basic 12,489 11,648 12,354 11,510

3 unchanged sentences

See accompanying notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

2 unchanged sentences

Foreign currency translation adjustment ( 811 ) ( 401 ) ( 1,551 ) 171

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

Total comprehensive income (loss) $ ( 14 ) $ 2,430 $ 2,667 $ 4,365

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

Net income $ 4,218 $ 4,194

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

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

Depreciation and amortization 1,652 1,408

24 unchanged sentences

Payment of notes payables — ( 110 )

Proceeds from short swing settlement 46 —

Exercise of stock options, net of taxes paid for net share settlement 1,885 ( 5,424 )

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

Net cash provided by (used in) financing activities 761 ( 7,117 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 3,267 ) ( 126 )

16 unchanged sentences

Shares Amount

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

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

Stock-based compensation expense — — 325 — — 325

Exercise of stock options and taxes paid for net share

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

Repurchase of common stock — — ( 1,170 ) — — ( 1,170 )

Proceeds from short swing settlement — — — 46 — — 46

Foreign currency translation adjustment — — — — ( 811 ) ( 811 )

Net income–Travelzoo — — — 795 — 795

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

Balances, September 30, 2022 13,091 $ 131 $ ( 6,658 ) $ 7,797 $ 4,690 $ ( 5,344 ) $ 616

Common Stock Treasury Stock Additional

4 unchanged sentences

Shares Amount

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

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

Stock-based compensation expense — — — 971 — — 971

3 unchanged sentences

Net income–Travelzoo — — — — 2,823 — 2,823

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

Balances, September 30, 2021 11,923 $ 118 $ ( 1,583 ) $ 3,432 $ 3,792 $ ( 3,888 ) $ 1,871

Common Stock Treasury Stock Additional

8 unchanged sentences

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

Repurchase of common stock — — ( 1,170 ) — — — ( 1,170 )

Proceeds from short swing settlement — — — 46 — — 46

Foreign currency translation adjustment — — — — — ( 1,551 ) ( 1,551 )

Net income–Travelzoo — — — — 4,182 — 4,182

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

Balances, September 30, 2022 13,091 $ 131 $ ( 6,658 ) $ 7,797 $ 4,690 $ ( 5,344 ) $ 616

Common Stock Treasury Stock Additional

6 unchanged sentences

Stock-based compensation expense — — — 2,788 — — 2,788

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

Repurchase of common stock — — ( 1,583 ) — — — ( 1,583 )

Exercise of stock options and taxes paid for net share

2 unchanged sentences

Net income–Travelzoo — — — — 4,195 — 4,195

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

Balances, September 30, 2021 11,923 $ 118 $ ( 1,583 ) $ 3,432 $ 3,792 $ ( 3,888 ) $ 1,871

See accompanying notes to unaudited condensed consolidated financial statements.

10 unchanged sentences

Our publications and products include the Travelzoo website (travelzoo.com), the Travelzoo iPhone and Android apps, the Travelzoo Top 20 ® email newsletter, the Newsflash email alert service, and the Travelzoo Network .

Our Travelzoo website includes Local Deals and Getaways listings that allow our members to purchase vouchers for deals from local businesses such as spas, hotels and restaurants.

Our Travelzoo website Top 20® and Newsflash email alert service include Local Deals and Getaways listings that allow our members to purchase vouchers for deals from local businesses such as spas, hotels and restaurants.

We also license the use of these products and our intellectual property in various countries in Asia Pacific, including but not limited to Australia, New Zealand, Japan, South Korea and Southeast Asia.

1 unchanged sentence

(“Jack’s Flight Club”), which operates Jack’s Flight Club .

On March 14, 2022, we announced the creation of our new Metaverse division and the plan to begin the launch of our Travelzoo META subscription-based service that will provide members with exclusive access to the latest and best Metaverse travel experiences.

For our voucher products, we receive a percentage of the face value of the voucher from the local businesses.

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

As of September 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 June 30, 2022.

The Company recorded this loan as long-term other assets on the condensed consolidated balance sheet as of September 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 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 .

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

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

The Company recognized royalties of $ 8,000 and $ 2,000 for its licensing arrangements from the licensee in Australia for the three months ended September 30, 2022 and 2021, respectively.

The Company recognized royalties of $ 18,000 and $ 2,000 for its licensing arrangements from the licensee in Australia for the nine months ended September 30, 2022 and 2021, respectively.

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 six months ended June 30, 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 nine months ended September 30, 2022.

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

2 unchanged sentences

Government funding

In January 2022, the Company’s German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received the notification and payment of approximately $ 1.2 million from the German Federal Government Bridging Aid III plan.

In January 2022 and July 2022, the Company’s German branch of Travelzoo (Europe) Limited, a wholly-owned subsidiary of the Company (“Travelzoo Germany”), received the notification and payment of approximately $ 1.2 million and $ 494,000 , respectively, from the German Federal Government Bridging Aid III plan.

This program was for companies that suffered a Corona-related decrease in sales of at least 30% in one month compared to the reference month in 2019.

Travelzoo Germany applied for the funding in 2021 and was approved by the German government in January 2022.

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

Travelzoo Germany applied for the funding in 2021 and 2022, respectively, and was approved by the German government in January 2022 and July of 2022.

The Company has to submit a final declaration in connection to this grant by June 30, 2023.

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.

The Company recorded $ 1.2 million and $ 494,000 gains in Other income, net in the first and third quarters of 2022.

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

Job retention related funding from Canada was approximately $ 10,000 and $ 64,000 for the three months ended September 30, 2022 and 2021, respectively, and was approximately $ 164,000 and $ 381,000 for the nine months ended September 30, 2022 and 2021, respectively.

Job retention related funding from European locations was $ 0 and $ 31,000 for the three and nine months ended September 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.

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

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

1 unchanged sentence

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 $ 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.

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.

When all merchant payables are classified as current, there is negative net working capital (which is defined as current assets minus current liabilities) of $ 17.4 million as of September 30, 2022.

Cash used in operating activities was $ 20.8 million for the nine months ended September 30, 2022.

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

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

As of September 30, 2022, the Company has recorded merchant payables of $ 38.2 million related to unredeemed vouchers with the majority of vouchers expiring during 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.

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.

Revenue and net income increased for the nine months ended September 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;

Cash and cash equivalents were $ 19.5 million as of September 30, 2022.

Although as mentioned above, all merchant payables are classified as current, the expiration dates of these vouchers range between October 2022 through December 2025 with the majority of the vouchers expiring during 2023;

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

The Company will manage its costs and obtain additional financing if required.

Management therefore believes that it could raise funds through the issuance of equity securities or through debt securities if necessary.

Management believes that it could raise funds through the issuance of equity securities or through debt securities if necessary.

Management therefore concluded that these actions and plans have alleviated the doubt of the Company's ability to continue as a going concern.

1 unchanged sentence

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.

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

As of September 30, 2022 , Ralph Bartel is the Company's largest shareholder, holding approximately 36.3 % of the Company's outstanding shares.

Holger Bartel, the Company's Global Chief Executive Officer, is Ralph Bartel's brother and holds approximately 4.2 % of the Company's outstanding shares.

12 unchanged sentences

Actual results could differ materially from those estimates.

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.

The results of operations for the nine months ended September 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

23 unchanged sentences

For these customers, the Company recognizes revenues each time a user clicks on the ad.

The Company also offers advertising on other bases, such as cost-per-impression, which means that an advertiser pays the Company based on the number of times their advertisement is displayed on Travelzoo properties, email advertisements, Travelzoo Network properties, or social media properties.

The Company also offers advertising on other basis, such as cost-per-impression, which means that an advertiser pays the Company based on the number of times their advertisement is displayed on Travelzoo properties, email advertisements, Travelzoo Network properties, or social media properties.

For these customers, the Company recognizes revenues each time an advertisement is shown or email delivered.

10 unchanged sentences

Commission revenue related to hotel platform is recognized ratably over the period of guest stay, net of an allowance for cancellations based upon historical patterns.

For arrangements for booking non-cancelable reservations where the Company’s performance obligation is deemed to be the successful booking of a hotel reservation, we record revenue for the commissions upon completion of the hotel booking.

For arrangements that are for the booking of non-cancelable reservations where the Company’s performance obligation is deemed to be the successful booking of a hotel reservation, we record revenue for the commissions upon completion of the hotel booking.

The Company’s contracts with customers may include multiple performance obligations in which the Company allocates revenues to each performance obligation based upon its standalone selling price.

6 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 $ 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.

As of December 31, 2021, $ 1.3 million was recorded as deferred revenue for Jack's Flight Club, of which $ 193,000 and $ 1.1 million was recognized in the three and nine months ended September 30, 2022, respectively, $ 473,000 was recorded as deferred revenue for Travelzoo North America and Travelzoo Europe, of which $ 249,000 and $ 465,000 was recognized as revenue in the three and nine months ended September 30, 2022, respectively.

As of September 30, 2022, the deferred revenue balance was $ 2.5 million, of which $ 1.3 million was for Jack's Flight Club and the remaining $ 1.2 million was for Travelzoo North America and Travelzoo Europe.

Reserve for Refunds to Members

6 unchanged sentences

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;

The expiration dates of vouchers range between October 2022 through December 2025 with the majority of vouchers expiring during 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 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 September 30, 2022, the Company had approximately $ 9.6 million of unredeemed vouchers that had been sold through September 30, 2022, representing the Company’s commission earned from the sale.

The Company had estimated a refund liability of $ 1.9 million for these unredeemed vouchers as of September 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.

The Company has recorded Merchant Payables of $ 38.2 million as of September 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 six months ended June 30, 2022 and 2021.

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

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

Operating Leases

12 unchanged sentences

The Company’s business is subject to risks associated with its ability to attract and retain advertisers and offer products or services on compelling terms to our members.

The global pandemic is having an unprecedented impact on the global travel and hospitality industries.

Governmental authorities have implemented numerous measures to try to contain the virus, including restrictions on travel, quarantines, shelter-in-place orders, business restrictions and complete shut-downs.

The global pandemic had and is continuing to have an unprecedented impact on the global travel and hospitality industries, with certain side effects such as inflation, travel supply and demand disparities and political unrest still lingering.

While many countries have lifted travel bans, mandatory quarantine requirements and other COVID-related restrictions which impeded travel, the situation is constantly changing and there continues to be a risk that countries will again impose COVID-related restrictions if cases begin to increase again.

The measures implemented to contain the global pandemic have had, and are expected to continue to have, a significant negative effect on our business, financial condition, results of operations and cash flows.

The Company’s cash, cash equivalents and a ccounts receivable are potentially subject to concentration of credit risk.

Cash and cash equivalents are placed with financial institutions that the management believes are of high credit quality.

Cash and cash equivalents are placed with financial institutions that management believes are of high credit quality.

The accounts receivables are derived from revenue earned from customers located in the U.S.

and internationally.

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.

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

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

The measures implemented to contain COVID have had, and are expected to continue to have, a significant negative effect on the Company’s business, financial condition, results of operations, and cash flows.

The measures implemented led to many of the Company’s advertisers pausing, canceling, or stopping advertising with us, as well as a high level of cancellations for our hotel partners and travel package partners, and refund requests for vouchers sold by Travelzoo for restaurant and spa partners.

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

The measures implemented related to COVID led to many of the Company’s advertisers pausing, canceling, or stopping advertising with us, as well as a high level of cancellations for our hotel partners and travel package partners, and refund requests for vouchers sold by Travelzoo for restaurant and spa partners.

While these effects are beginning to subside, we cannot predict with certainty how various countries and governments will react if cases increase again.

We also cannot predict how the economic side effects of the pandemic, including but not limited to inflation, increased oil prices, increased demand with decreased supply for travel and volatile currency fluctuations, in each case, across various countries, which impact travel and consumer behavior, will resolve.

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

As of September 30, 2022, the Company had merchant payables of $ 38.2 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 July 2022 through December 2025 with the majority of vouchers expiring at the end of 2022 and the remaining primarily expiring in 2023;

The vouchers expire between October 2022 through December 2025 with the majority of vouchers expiring during 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 June 30, 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 September 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:

June 30, December 31,

September 30, December 31,

Cash and cash equivalents $ 19,494 $ 43,815

2 unchanged sentences

Total cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 20,545 $ 44,989

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

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

Net Income Per Share

3 unchanged sentences

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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Net income attributable to Travelzoo—continuing operations $ 790 $ 2,842 $ 4,178 $ 4,200

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

Net income (loss) attributable to Travelzoo—discontinued operations $ 5 $ ( 19 ) $ 4 $ ( 5 )

Weighted average common shares—basic 12,489 11,648 12,354 11,510

2 unchanged sentences

Weighted average common shares—diluted 12,578 12,904 12,586 13,132

Income per share—basic

Income (loss) per share—basic

Continuing operations $ 0.06 $ 0.24 $ 0.34 $ 0.36

Discontinued operations — — — —

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

Income per share—diluted

Net income (loss) per share —basic $ 0.06 $ 0.24 $ 0.34 $ 0.36

Income (loss) per share—diluted

Continuing operations $ 0.06 $ 0.22 $ 0.33 $ 0.32

Discontinued operations — — — —

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.

Net income (loss) per share—diluted $ 0.06 $ 0.22 $ 0.33 $ 0.32

For the three and nine months ended September 30, 2022, options to purchas e 850,000 shares and 750,000 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.

For the three and nine months ended September 30, 2021, options to purchase 50,000 shares of common stock 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

1 unchanged sentence

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.

The metrics were not achieved and thus no payments were made on the earn-out.

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

The BUPA contained typical representations and warranties and indemnification protections, as well as a restrictive covenant, whereby Secret Escapes agreed to leave the Spanish market for at least three ( 3 ) years, subject to a right to purchase a waiver.

9 unchanged sentences

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.

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

The Company recorded the transactions with both Secret Escape Limited and Metaverse Travel Experiences, Inc.

12 unchanged sentences

Jack’s Flight Club's result have been included in the accompanying financial statements from their the dates of acquisition.

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

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 .

The Company also did not identify any indicators of impairment during the nine months ended September 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 and six months ended June 30, 2022 (in thousands):

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

Jack's Flight Club Secret Escape Spain Metaverse Travel

13 unchanged sentences

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):

Amortization of intangible assets with definite lives ( 216 ) ( 30 ) ( 194 )

Intangible assets—September 30, 2022 $ 2,767 $ 369 $ 1,168

Amortization expense for acquired intangibles was $ 440,000 and $ 275,000 for the three months ended September 30, 2022 and 2021, respectively, and was $ 1.3 million and $ 833,000 for the nine months ended September 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 September 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 June 30, 2022 and December 31, 2021.

Accruals for legal contingencies were not material as of September 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 and six months ended June 30, 2022 and 2021.

The Company did not make material payments for the three and nine months ended September 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.

2 unchanged sentences

In order to receive payment under this voluntary program, a person is required to establish that such person validly held shares in Netsurfers.

The Company leases office space in Canada, France, Germany, Spain, the U.K., and the U.S.

The Company leases office space in Canada, Germany, Spain, the U.K., and the U.S.

under operating leases.

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 June 30, 2022.

Refer to Note 11 for leases as of September 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 $ 3.0 million as of June 30, 2022, which represent the minimum obligations the Company has under agreements with certain suppliers.

The Company has purchase commitments aggregating approximately $ 2.8 million as of September 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 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.

The Company's effective tax rate from continuing operations was 29 % and 8 %, respectively, for the three months ended September 30, 2022 and 2021.

The Company’s effective tax rate for the three months ended September 30, 2022 changed from the three months ended September 30, 2021 primarily due to other income recorded for PPP Loan forgiveness in the three months ended September 30, 2021 that was exempt from tax.

The Company's effective tax rate from continuing operations was 34 % and 33 %, respectively, for the nine months ended September 30, 2022 and 2021.

The Company’s effective tax rate for the nine months ended September 30, 2022 changed from the nine months ended September 30, 2021 primarily due to changes in deferred tax assets from limitations on deductible stock-based compensation, offset by PPP Loan forgiveness income exempt from tax during the nine months ended September 30, 2021.

As of September 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 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.

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

As of September 30, 2022 and December 31, 2021, the Company had approximately $ 523,000 and $ 424,000 in accrued interest and penalties, respectively.

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

8 unchanged sentences

Some of the fluctuations may be significant and have a material impact on our results of operations.

On March 27, 2020, President Trump signed into law the CARES Act, which, along with earlier issued IRS guidance, provides for deferral of certain taxes.

On March 27, 2020, the CARES Act, which, along with earlier issued IRS guidance, provides for deferral of certain taxes.

The CARES Act, among other things, also contains numerous other provisions which may benefit the Company.

2 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

2 unchanged sentences

Ending balance $ ( 5,344 ) $ ( 3,888 ) $ ( 5,344 ) $ ( 3,888 )

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

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

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

25 unchanged sentences

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.

The Company received 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.

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.

As of September 30, 2022, 150,000 options were outstanding and 75,000 of these options were vested.

Total stock-based compensation related to these option grants of $ 72,000 and $ 97,000 was recorded in general and administrative expenses for the three months ended September 30, 2022 and 2021.

Total stock-based compensation related to these option grants of $ 217,000 and $ 248,000 was recorded in general and administrative expenses for the nine months ended September 30, 2022 and 2021 .

As of September 30, 2022, there was approximately $ 266,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 0.9 years.

3 unchanged sentences

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

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.

As of September 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 $ 1.2 million was recorded in general and administrative expenses for the nine months ended September 30, 2022 and 2021.

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

2 unchanged sentences

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.

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.

Upon the departure of the one employee in the three months ended September 30, 2022 , 50,000 unvested options were forfeited and the compensation expense of $ 25,000 was reversed from general and administrative expenses.

As of September 30, 2022, 100,000 options were outstanding and 50,000 of these options were vested.

Total stock-based compensation related to these option grants of $ 0 and $ 49,000 was recorded in general and administrative expenses for each of the three months ended September 30, 2022 and 2021.

Total stock-based compensation related to these option grants of $ 98,000 and $ 157,000 was recorded in general and administrative expenses for the nine months ended September 30, 2022 and 2021.

As of September 30, 2022, there was approximately $ 147,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 1.5 years.

1 unchanged sentence

The options expire in January 2026.

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.

As of September 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 $ 62,000 was recorded in general and administrative expenses for the three months ended September 30, 2022 and 2021 .

Total stock-based compensation related to this option grant of $ 108,000 and $ 82,000 was recorded in general and administrative expenses for the nine months ended September 30, 2022 and 2021.

As of September 30, 2022, there was approximately $ 323,000 of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over the next 2.3 years.

2 unchanged sentences

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.

As of September 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 $ 216,000 and $ 649,000 was recorded in general and administrative expenses for the three and nine months ended September 30, 2022.

As of September 30, 2022, there was approximately $ 1.1 million of unrecognized stock-based compensation expense relating to these options.

This amount is expected to be recognized over 1.3 years.

2 unchanged sentences

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.

As of September 30, 2022, 100,000 options were outstanding and none were vested.

The Company did not recognize stock-based compensation expense for this grant as the performance targets were not achieved and thus no shares were vested in the three and nine months ended September 30, 2022.

As of September 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 2.75 years.

2 unchanged sentences

Management is allowed discretion in the execution of the repurchase program based upon market conditions and consideration of capital allocation.

There is currently no outstanding stock repurchase program.

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 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.

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.

This stock repurchase program was completed in 2021.

2 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.

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

In the three months ended September 30, 2022, the Company repurchased 200,000 shares of common stock for an aggregate purchase price of $ 1.2 million, which were recorded as part of treasury stock as of September 30, 2022.

As of September 30, 2022, there were 800,000 shares remaining to be repurchased under 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 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.

During the nine months ended September 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 June 30, 2022 Travelzoo North

Three Months Ended September 30, 2022 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

3 unchanged sentences

Operating profit (loss) $ 812 $ ( 551 ) $ 12 $ — $ 273

Three Months Ended June 30, 2021 Travelzoo North

Three Months Ended September 30, 2021 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

3 unchanged sentences

Operating profit (loss) $ ( 918 ) $ 600 $ 57 $ — $ ( 261 )

Six Months Ended June 30, 2022 Travelzoo North

Nine Months Ended September 30, 2022 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

3 unchanged sentences

Operating profit (loss) $ 5,622 $ ( 1,845 ) $ 196 $ — $ 3,973

Six Months Ended June 30, 2021 Travelzoo North

Nine Months Ended September 30, 2021 Travelzoo North

America Travelzoo Europe Jack’s Flight Club Elimination Consolidated

6 unchanged sentences

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

As of June 30, 2022 Travelzoo North

As of September 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 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.

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

As of September 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

18 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

1 unchanged sentence

United Kingdom 3,883 4,218 11,919 9,325

Germany 957 1,729 3,209 2,897

Rest of the world 2,367 2,863 8,608 8,684

1 unchanged sentence

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

June 30, December 31,

September 30, December 31,

United States $ 293 $ 409

2 unchanged sentences

Discontinued Operations

On March 10, 2020, Travelzoo issued a press release announcing that it will exit its loss-making business in Asia Pacific.

On March 10, 2020, Travelzoo issued a press release announcing that it was exiting its loss-making business in Asia Pacific.

The decision supports the Company ’ s strategy to focus on value creation for shareholders by focusing on growing the businesses in North America and Europe.

2 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 June 30, 2022 and 2021 (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

8 unchanged sentences

Loss from operations ( 7 ) ( 17 ) ( 15 ) ( 29 )

Other income, net 10 29 7 26

Other income (loss), net 12 ( 2 ) 19 24

Income (loss) before income taxes 5 ( 19 ) 4 ( 5 )

13 unchanged sentences

The Japan Buyer repaid $ 133,000 in 2021.

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

The Company did no t recognize royalties from Travelzoo Japan for t he three months ended September 30, 2022 and 2021, respectively.

The Company recognized royalties of $ 0 and $ 9,000 from Travelzoo Japan for the nine months ended September 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.

2 unchanged sentences

Travelzoo was not able to estimate whether the AUS Buyer will generate revenues based on the current uncertainties, and no amount has been recorded for future royalties under this agreement.

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 June 30, 2022 and 2021, respectively.

Licensing revenue is booked with a lag of one quart er.

The Company recorded $ 8,000 and $ 2,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore for the three months ended September 30, 2022 and 2021, respectively.

The Company recorded $ 18,000 and $ 2,000 in licensing revenue from the licensee in Australia, New Zealand, and Singapore for the nine months ended September 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):

September 30,

2022 December 31,

7 unchanged sentences

Total liabilities from discontinued operations $ 413 $ 485

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 )

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

Nine Months Ended

September 30,

Net cash provided by (used in) operating activities $ ( 18 ) $ 10

The Company has operating leases for real estate and certain equipment.

The Company leases office space in Canada, France, Germany, Spain, the U.K., and the U.S.

The Company leases office space in Canada, Germany, Spain, the U.K., and the U.S.

under operating leases.

3 unchanged sentences

All of our leases qualify as operating leases.

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,

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

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

4 unchanged sentences

Total lease cost $ 558 $ 858 $ 2,018 $ 3,051

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.

For the nine months ended September 30, 2022 and 2021, cash payments against the operating lease liabilities total ed $ 2.4 million and $ 3.3 million, respectively.

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

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Operating lease right-of-use assets $ 5,799 $ 7,700

6 unchanged sentences

Years ending December 31,

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

2022 (excluding the nine months ended September 30, 2022) $ 687

Thereafter 4,275

4 unchanged sentences

The loans have a maturity of two ( 2 ) years from the disbursement of the funds and an annual interest rate of 1 %.

The Company used the funds from these loans only for the purposes included in the PPP, including payroll, employee benefits, and rent, and also intends to apply for forgiveness of a portion of the loans in compliance with the CARES Act.

The Company used the funds from these loans only for the purposes included in the PPP, including payroll, employee benefits, and rent, and also applied for forgiveness of a portion of the loans in compliance with the CARES Act.

Interest expense of $ 25,000 for the PPP notes payable in 2020 was recorded in Other income (loss), net.

6 unchanged sentences

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

As of September 30, 2022 , Ralph Bartel is the Company's largest shareholder, holding approximately 36.3 % of the Company's outstanding shares.

Holger Bartel, the Company's Global Chief Executive Officer, is Ralph Bartel's brother and holds approximately 4.2 % of the Company's outstanding shares.

19 unchanged sentences

WeGo Investment

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 .

In December 2020, 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 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.

In March 2022, the Compensation Committee of the Board of Directors 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.

1 unchanged sentence

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

Profits from Sale and Purchase of Travelzoo Common Stock within Six Month Period

Holger Bartel completed sales and purchases of 25,000 shares of Travelzoo common stock within a six month period ended July 29, 2022.

Per Section 16(b) of Securities and Exchange Act, he agreed to immediately remit to the Company $ 46,000 in profits gained from these transactions during the three months ended September 30, 2022.

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