wtrh-10q_20190930.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2019

OR

 

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

 

Commission File Number 001-37788

 

WAITR HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

26-3828008

(State or other jurisdiction of

incorporation or organization)

 

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

214 Jefferson Street, Suite 200

Lafayette, Louisiana

 

70501

(Address of principal executive offices)

 

(Zip Code)

 

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

 

Registrant’s former address: 844 Ryan Street, Suite 300, Lake Charles, Louisiana 70601

______________________

 

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

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

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

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, Par Value $0.0001 Per Share

 

WTRH

 

The Nasdaq Stock Market LLC

The number of shares of Registrant’s Common Stock outstanding as of November 4, 2019 was 76,534,253.

 

 


 

Table of Contents

 

 

 

Page

PART I

Financial Information

1

Item 1.

Condensed Consolidated Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

1

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018

2

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

3

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2019

4

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2018

5

 

Notes to Condensed Consolidated Financial Statements

6

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

 

 

 

PART II

Other Information

37

Item 1.

Legal Proceedings

37

Item 1A.

Risk Factors

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 3.

Defaults Upon Senior Securities

39

Item 4.

Mine Safety Disclosures

39

Item 5.

Other Information

39

Item 6.

Exhibits

40

 

 

 

 

Signatures

41

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

Unaudited

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash

 

$

52,198

 

 

$

209,340

 

Accounts receivable, net

 

 

5,664

 

 

 

3,687

 

Capitalized contract costs, current

 

 

 

 

 

1,869

 

Prepaid expenses and other current assets

 

 

8,474

 

 

 

4,548

 

TOTAL CURRENT ASSETS

 

 

66,336

 

 

 

219,444

 

Property and equipment, net

 

 

4,474

 

 

 

4,551

 

Capitalized contract costs, noncurrent

 

 

 

 

 

827

 

Goodwill

 

 

106,734

 

 

 

1,408

 

Intangible assets, net

 

 

26,430

 

 

 

261

 

Other noncurrent assets

 

 

529

 

 

 

61

 

TOTAL ASSETS

 

$

204,503

 

 

$

226,552

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,420

 

 

$

1,827

 

Restaurant food liability

 

 

6,989

 

 

 

208

 

Accrued payroll

 

 

7,034

 

 

 

3,055

 

Short-term loans

 

 

3,193

 

 

 

658

 

Deferred revenue, current

 

 

767

 

 

 

3,314

 

Income tax payable

 

 

30

 

 

 

25

 

Other current liabilities

 

 

15,107

 

 

 

4,508

 

TOTAL CURRENT LIABILITIES

 

 

38,540

 

 

 

13,595

 

Long-term debt

 

 

120,884

 

 

 

80,985

 

Accrued workers’ compensation liability

 

 

542

 

 

 

908

 

Deferred revenue, noncurrent

 

 

212

 

 

 

1,356

 

Other noncurrent liabilities

 

 

325

 

 

 

217

 

TOTAL LIABILITIES

 

 

160,503

 

 

 

97,061

 

Commitment and contingencies (Note 11)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 249,000,000 shares authorized and 76,150,920

   and 54,035,538 shares issued and outstanding at September 30, 2019 and

   December 31, 2018, respectively

 

 

8

 

 

 

5

 

Additional paid in capital

 

 

384,628

 

 

 

200,417

 

Accumulated deficit

 

 

(340,636

)

 

 

(70,931

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

44,000

 

 

 

129,491

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

204,503

 

 

$

226,552

 

 

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

1


 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUE

 

$

49,201

 

 

$

19,431

 

 

$

148,575

 

 

$

48,000

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operations and support

 

 

37,289

 

 

 

14,022

 

 

 

113,170

 

 

 

35,056

 

Sales and marketing

 

 

15,953

 

 

 

3,947

 

 

 

41,615

 

 

 

9,116

 

Research and development

 

 

1,920

 

 

 

791

 

 

 

6,009

 

 

 

1,988

 

General and administrative

 

 

12,817

 

 

 

6,312

 

 

 

44,115

 

 

 

17,667

 

Depreciation and amortization

 

 

4,851

 

 

 

400

 

 

 

13,791

 

 

 

902

 

Goodwill impairment

 

 

119,212

 

 

 

 

 

 

119,212

 

 

 

 

Intangible and other asset impairments

 

 

72,917

 

 

 

 

 

 

72,935

 

 

 

 

Loss on disposal of assets

 

 

11

 

 

 

 

 

 

26

 

 

 

8

 

TOTAL COSTS AND EXPENSES

 

 

264,970

 

 

 

25,472

 

 

 

410,873

 

 

 

64,737

 

LOSS FROM OPERATIONS

 

 

(215,769

)

 

 

(6,041

)

 

 

(262,298

)

 

 

(16,737

)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

2,775

 

 

 

441

 

 

 

6,570

 

 

 

903

 

Interest income

 

 

(297

)

 

 

(1

)

 

 

(877

)

 

 

(2

)

Gain on derivatives

 

 

 

 

 

(9

)

 

 

 

 

 

(336

)

Other expenses

 

 

1,827

 

 

 

39

 

 

 

1,654

 

 

 

1

 

NET LOSS BEFORE INCOME TAXES

 

 

(220,074

)

 

 

(6,511

)

 

 

(269,645

)

 

 

(17,303

)

Income tax expense

 

 

30

 

 

 

4

 

 

 

60

 

 

 

38

 

NET LOSS

 

$

(220,104

)

 

$

(6,515

)

 

$

(269,705

)

 

$

(17,341

)

LOSS PER SHARE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(2.89

)

 

$

(0.64

)

 

$

(3.77

)

 

$

(1.72

)

Weighted average common shares outstanding – basic and diluted

 

 

76,145,317

 

 

 

10,145,527

 

 

 

71,071,777

 

 

 

10,064,560

 

 

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

2


 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(269,705

)

 

$

(17,341

)

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

 

 

 

 

 

 

 

 

Non-cash interest expense

 

 

3,346

 

 

 

252

 

Non-cash advertising expense

 

 

379

 

 

 

377

 

Stock-based compensation

 

 

6,747

 

 

 

3,481

 

Equity issued in exchange for services

 

 

90

 

 

 

90

 

Loss on disposal of assets

 

 

26

 

 

 

8

 

Depreciation and amortization

 

 

13,791

 

 

 

902

 

Goodwill impairment

 

 

119,212

 

 

 

 

Intangible and other asset impairments

 

 

72,935

 

 

 

 

Amortization of capitalized contract costs

 

 

1,614

 

 

 

1,023

 

Gain on derivatives

 

 

 

 

 

(336

)

Other non-cash expense

 

 

 

 

 

74

 

Imputed interest income

 

 

(39

)

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(248

)

 

 

(1,384

)

Capitalized contract costs

 

 

(3,585

)

 

 

(1,910

)

Prepaid expenses and other current assets

 

 

(2,803

)

 

 

(2,268

)

Accounts payable

 

 

2,640

 

 

 

1,486

 

Restaurant food liability

 

 

5,851

 

 

 

52

 

Deferred revenue

 

 

(3,691

)

 

 

1,889

 

Income tax payable

 

 

5

 

 

 

7

 

Accrued payroll

 

 

2,853

 

 

 

1,983

 

Accrued workers’ compensation liability

 

 

(366

)

 

 

155

 

Other current liabilities

 

 

(474

)

 

 

5,518

 

Other noncurrent liabilities

 

 

111

 

 

 

(47

)

Net cash used in operating activities

 

 

(51,311

)

 

 

(5,989

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,493

)

 

 

(1,836

)

Acquisition of Bite Squad, net of cash acquired

 

 

(192,568

)

 

 

 

Other acquisitions

 

 

(395

)

 

 

(11

)

Collections on notes receivable

 

 

72

 

 

 

 

Internally developed software

 

 

(1,096

)

 

 

 

Proceeds from sale of property and equipment

 

 

28

 

 

 

 

Net cash used in investing activities

 

 

(195,452

)

 

 

(1,847

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

 

 

 

4,000

 

Proceeds from convertible notes issuance

 

 

 

 

 

1,410

 

Waitr shares redeemed for cash

 

 

(10

)

 

 

 

Proceeds from issuance of stock

 

 

50,002

 

 

 

 

Equity issuance costs

 

 

(4,179

)

 

 

 

Proceeds from Additional Term Loans

 

 

42,080

 

 

 

 

Proceeds from short-term loans

 

 

5,032

 

 

 

2,172

 

Payments on short-term loans

 

 

(2,509

)

 

 

(862

)

Proceeds from exercise of stock options

 

 

4

 

 

 

11

 

Taxes paid related to net settlement on stock-based compensation

 

 

(799

)

 

 

 

Net cash provided by financing activities

 

 

89,621

 

 

 

6,731

 

Net change in cash

 

 

(157,142

)

 

 

(1,105

)

Cash, beginning of period

 

 

209,340

 

 

 

3,947

 

Cash, end of period

 

$

52,198

 

 

$

2,842

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for state income taxes

 

$

30

 

 

$

31

 

Cash earned during the period for interest

 

 

838

 

 

 

 

Cash paid during the period for interest

 

 

3,224

 

 

 

88

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Services receivable

 

$

 

 

$

1,000

 

Stock issued as consideration in Bite Squad acquisition

 

 

126,574

 

 

 

 

Stock issued in connection with Additional Term Loans

 

 

3,884

 

 

 

 

Non-cash gain on debt extinguishment

 

 

1,897

 

 

 

 

Seller-financed payables related to other acquisitions

 

 

801

 

 

 

 

Non-cash investments in other acquisitions

 

 

801

 

 

 

142

 

Debt assumed in IndiePlate asset acquisition

 

 

 

 

 

60

 

Bifurcated embedded derivatives

 

 

 

 

 

87

 

Discount on convertible notes due to beneficial conversion feature

 

 

 

 

 

1,529

 

 

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

3


 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019

(in thousands, except share data)

(unaudited)

 

Nine Months Ended September 30, 2019

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity (deficit)

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31,

   2018

 

 

54,035,538

 

 

$

5

 

 

$

200,417

 

 

$

(70,931

)

 

$

129,491

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(269,705

)

 

 

(269,705

)

Gain on debt

   extinguishment

 

 

 

 

 

 

 

 

1,897

 

 

 

 

 

 

1,897

 

Exercise of stock options

   and vesting of restricted

   stock units

 

 

26,425

 

 

 

 

 

 

4

 

 

 

 

 

 

4

 

Taxes paid related to

   net settlement on stock-

   based compensation

 

 

(79,900

)

 

 

 

 

 

(799

)

 

 

 

 

 

(799

)

Stock-based compensation

 

 

 

 

 

 

 

 

6,747

 

 

 

 

 

 

6,747

 

Equity issued in exchange

   for services

 

 

 

 

 

 

 

 

90

 

 

 

 

 

 

90

 

Issuance of common stock

   in connection with

   Additional Term Loans

 

 

325,000

 

 

 

 

 

 

3,884

 

 

 

 

 

 

3,884

 

Public Warrants exchanged

   for common stock

 

 

4,494,889

 

 

 

1

 

 

 

(610

)

 

 

 

 

 

(609

)

Stock issued as

   consideration in Bite

   Squad Merger

 

 

10,591,968

 

 

 

1

 

 

 

126,573

 

 

 

 

 

 

126,574

 

Issuance of common stock

 

 

6,757,000

 

 

 

1

 

 

 

46,425

 

 

 

 

 

 

46,426

 

Balances at September 30,

   2019

 

 

76,150,920

 

 

$

8

 

 

$

384,628

 

 

$

(340,636

)

 

$

44,000

 

 

 

 

Three Months Ended September 30, 2019

 

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity (deficit)

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at June 30,

   2019

 

 

76,134,094

 

 

$

8

 

 

$

382,402

 

 

$

(120,532

)

 

$

261,878

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(220,104

)

 

 

(220,104

)

Exercise of stock options

   and vesting of restricted

   stock units

 

 

16,826

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,195

 

 

 

 

 

 

2,195

 

Equity issued in exchange

   for services

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Balances at September 30,

   2019

 

 

76,150,920

 

 

$

8

 

 

$

384,628

 

 

$

(340,636

)

 

$

44,000

 

 

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

4


 

WAITR HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

(in thousands, except share data)

(unaudited)

 

Nine Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Seed I

 

 

Preferred Seed II

 

 

Preferred Seed AA

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

(deficit)

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31,

   2017

 

 

3,413,235

 

 

$

 

 

 

3,301,326

 

 

$

 

 

 

7,264,489

 

 

$

 

 

 

10,050,180

 

 

$

 

 

$

35,110

 

 

$

(36,620

)

 

$

(1,510

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,341

)

 

 

(17,341

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

211,244

 

 

 

 

 

 

11

 

 

 

 

 

 

11

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,831

 

 

 

 

 

 

2,831

 

Cancellation of stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(132,095

)

 

 

 

 

 

 

 

 

 

 

 

 

Equity compensation on

   Requested Amendment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

650

 

 

 

 

 

 

650

 

Equity issued in exchange

   for services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90

 

 

 

 

 

 

90

 

Stock issued as

   consideration in

   GoGoGrocer asset

   acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,311

 

 

 

 

 

 

142

 

 

 

 

 

 

142

 

Discount on convertible

   notes due to beneficial

   conversion feature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,529

 

 

 

 

 

 

1,529

 

Balances at September 30,

   2018

 

 

3,413,235

 

 

$

 

 

 

3,301,326

 

 

$

 

 

 

7,264,489

 

 

$

 

 

 

10,145,640

 

 

$

 

 

$

40,363

 

 

$

(53,961

)

 

$

(13,598

)

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Seed I

 

 

Preferred Seed II

 

 

Preferred Seed AA

 

 

Common stock

 

 

Additional

paid in

capital

 

 

Accumulated

deficit

 

 

Total

stockholders’

equity

(deficit)

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount