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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
_______________________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
oTRANSITION 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)
_______________________________________________________
Delaware26-3828008
(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
______________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.0001 Per ShareWTRHThe Nasdaq Stock Market LLC
______________________
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 x NO o
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 x NO o
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 fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o


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

The number of shares of Registrant’s Common Stock outstanding as of August 8, 2022 was 190,780,722.


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Table of Contents
Page


TABLE_CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30,
2022
December 31,
2021
Unaudited
ASSETS
CURRENT ASSETS
Cash$28,203 $60,111 
Accounts receivable, net3,319 3,027 
Capitalized contract costs, current1,377 1,170 
Prepaid expenses and other current assets5,126 8,706 
TOTAL CURRENT ASSETS38,025 73,014 
Property and equipment, net2,599 3,763 
Capitalized contract costs, noncurrent3,395 3,183 
Goodwill63,434 130,624 
Intangible assets, net42,506 43,126 
Operating lease right-of-use assets3,620 4,327 
Other noncurrent assets929 1,070 
TOTAL ASSETS$154,508 $259,107 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
CURRENT LIABILITIES
Accounts payable$5,422 $7,018 
Restaurant food liability2,219 3,327 
Accrued payroll2,330 2,988 
Short-term loans for insurance financing2,351 3,142 
Income tax payable107 74 
Operating lease liabilities1,315 1,581 
Other current liabilities18,768 19,309 
TOTAL CURRENT LIABILITIES32,512 37,439 
Long term debt - related party61,805 81,977 
Accrued medical contingency 53 
Operating lease liabilities, net of current portion2,537 3,034 
Other noncurrent liabilities36 2,115 
TOTAL LIABILITIES96,890 124,618 
Commitments and contingent liabilities (Note 10)
STOCKHOLDERS’ EQUITY:
Common stock, $0.0001 par value; 249,000,000 shares authorized and 163,448,742 and 146,094,300 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
16 15 
Additional paid in capital515,624 503,609 
Accumulated deficit(458,022)(369,135)
TOTAL STOCKHOLDERS’ EQUITY57,618 134,489 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$154,508 $259,107 
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
REVENUE$31,171 $49,167 $66,211 $100,097 
COSTS AND EXPENSES:
Operations and support15,983 31,273 36,262 61,611 
Sales and marketing6,973 4,500 13,226 8,516 
Research and development1,242 854 2,553 1,853 
General and administrative12,213 12,505 23,758 22,691 
Depreciation and amortization3,000 2,965 6,065 5,882 
Goodwill impairment  67,190  
(Gain) loss on disposal of assets(71)162 (88)159 
TOTAL COSTS AND EXPENSES39,340 52,259 148,966 100,712 
LOSS FROM OPERATIONS(8,169)(3,092)(82,755)(615)
OTHER EXPENSES AND LOSSES, NET
Interest expense1,461 1,681 3,165 3,582 
Other expense2,024 835 2,934 5,099 
NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES(11,654)(5,608)(88,854)(9,296)
Income tax expense17 33 33 57 
NET LOSS FROM CONTINUING OPERATIONS$(11,671)$(5,641)$(88,887)$(9,353)
LOSS PER SHARE:
Basic$(0.07)$(0.05)$(0.57)$(0.08)
Diluted$(0.07)$(0.05)$(0.57)$(0.08)
Weighted average shares used to compute net loss per share:
Weighted average common shares outstanding – basic160,531,778 115,644,790 157,099,938 113,998,589 
Weighted average common shares outstanding – diluted160,531,778 115,644,790 157,099,938 113,998,589 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities:
Net loss$(88,887)$(9,353)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Non-cash interest expense577 1,485 
Induced conversion expense related to Notes930  
Stock-based compensation3,250 4,465 
(Gain) loss on disposal of assets(88)159 
Depreciation and amortization6,065 5,882 
Goodwill impairment67,190  
Amortization of capitalized contract costs629 423 
Change in fair value of contingent consideration liability104  
Other(58)(84)
Changes in assets and liabilities:
Accounts receivable(292)(614)
Capitalized contract costs(1,048)(1,389)
Prepaid expenses and other current assets3,580 (1,008)
Other noncurrent assets161 (386)
Accounts payable(1,596)1,623 
Restaurant food liability(1,108)(86)
Income tax payable33 57 
Accrued payroll(658)(1,368)
Accrued medical contingency(53)(258)
Other current liabilities(2,224)6,452 
Other noncurrent liabilities(336)(64)
Net cash (used in) provided by operating activities(13,829)5,936 
Cash flows from investing activities:
Purchases of property and equipment(81)(589)
Internally developed software(4,318)(4,137)
Purchase of domain names(12) 
Acquisitions, net of cash acquired (12,706)
Proceeds from sale of property and equipment32 13 
Net cash used in investing activities(4,379)(17,419)
Cash flows from financing activities:
Proceeds from issuance of stock7,120  
Payments on long-term loan(20,000)(14,472)
Borrowings under short-term loans for insurance financing2,811 5,209 
Payments on short-term loans for insurance financing(3,602)(2,471)
Payments on acquisition loans (132)
Payments on finance lease obligation(2) 
Proceeds from exercise of stock options 8 
Taxes paid related to net settlement on stock-based compensation(27)(817)
Net cash used in financing activities(13,700)(12,675)
Net change in cash(31,908)(24,158)
Cash, beginning of period60,111 84,706 
Cash, end of period$28,203 $60,548 
Supplemental disclosures of cash flow information:
Cash paid during the period for interest$2,588 $2,097 
Supplemental disclosures of non-cash investing and financing activities:
Conversion of convertible notes to stock$1,673 $ 
Stock issued as consideration in acquisition 10,545 
Noncash impact of operating lease assets upon adoption 5,600 
Noncash impact of operating lease liabilities upon adoption 6,005 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2022
(in thousands, except share data)
(unaudited)
Three Months Ended June 30, 2022
 Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
 SharesAmount
Balances at March 31, 2022155,705,647 $15 $511,515 $(446,351)$65,179 
Net loss— — — (11,671)(11,671)
Vesting of restricted stock units715,260 — — —  
Taxes paid related to net settlement on stock-based compensation— — (27)— (27)
Stock-based compensation— — 1,579 — 1,579 
Stock issued for conversion of Notes4,411,500 — 1,673 — 1,673 
Issuance of common stock, net2,616,335 1 884 — 885 
Balances at June 30, 2022
163,448,742 $16 $515,624 $(458,022)$57,618 
Six Months Ended June 30, 2022
 Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
 SharesAmount
Balances at December 31, 2021146,094,300 $15 $503,609 $(369,135)$134,489 
Net loss— — — (88,887)(88,887)
Vesting of restricted stock units867,952 — — —  
Taxes paid related to net settlement on stock-based compensation— — (27)— (27)
Stock-based compensation— — 3,250 — 3,250 
Stock issued for conversion of Notes4,411,500 — 1,673 — 1,673 
Issuance of common stock, net12,074,990 1 7,119 — 7,120 
Balances at June 30, 2022
163,448,742 $16 $515,624 $(458,022)$57,618 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
THREE AND SIX MONTHS ENDED JUNE 30, 2021
(in thousands, except share data)
(unaudited)

Three Months Ended June 30, 2021
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmount
Balances at March 31, 2021115,387,140 $11 $464,843 $(367,618)$97,236 
Net loss— — — (5,641)(5,641)
Exercise of stock options and vesting of restricted stock units1,314,137 — 2 — 2 
Taxes paid related to net settlement on stock-based compensation— — (85)— (85)
Stock-based compensation— — 2,387 — 2,387 
Adjustment of consideration for acquisition— — (955)— (955)
Balances at June 30, 2021
116,701,277 $11 $466,192 $(373,259)$92,944 
Six Months Ended June 30, 2021
Common stockAdditional
paid in
capital
Accumulated
deficit
Total
stockholders’
equity
SharesAmount
Balances at December 31, 2020111,259,037 $11 $451,991 $(363,906)$88,096 
Net loss— — — (9,353)(9,353)
Exercise of stock options and vesting of restricted stock units1,851,573 — 8 — 8 
Taxes paid related to net settlement on stock-based compensation— — (817)— (817)
Stock-based compensation— — 4,465 — 4,465 
Equity issued for asset acquisitions3,590,667 — 10,545 — 10,545 
Balances at June 30, 2021
116,701,277 $11 $466,192 $(373,259)$92,944 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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WAITR HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. Organization
Waitr Holdings Inc., a Delaware corporation, together with its wholly owned subsidiaries (the “Company,” “Waitr,” “we,” “us” and “our”), operates an online ordering technology platform, providing delivery, carryout and dine-in options, connecting restaurants, merchants, drivers and diners in cities across the United States. The Company’s technology platform includes the Waitr, Bite Squad and Delivery Dudes mobile applications, collectively referred to as the “Platforms”. The Platforms allow consumers to browse local restaurants and menus, track order and delivery status, and securely store previous orders for ease of use and convenience. Restaurants benefit from the online Platforms through increased exposure to consumers for expanded business in the delivery market and carryout sales.
Additionally, Waitr facilitates access to third parties that provide payment processing solutions for restaurants and other merchants, pursuant to the acquisition of the Cape Payment Companies (as defined below) on August 25, 2021 (see Note 4Business Combinations).
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The unaudited interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) as they apply to interim financial information. Accordingly, the interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete annual financial statements, although the Company believes that the disclosures made are adequate to make information not misleading. References to the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) included hereafter refer to the ASC and ASUs established by the Financial Accounting Standards Board (the “FASB”) as the source of authoritative GAAP.
The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). The interim condensed consolidated financial statements are unaudited, but in the Company’s opinion, include all adjustments that are necessary for a fair presentation of the results for the periods presented. The interim results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.
Reclassifications
Certain amounts from prior periods have been reclassified to conform to the current period presentation.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all wholly owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and judgments relied upon in preparing these condensed consolidated financial statements affect the following items:
incurred loss estimates under our insurance policies with large deductibles or retention levels;
loss exposure related to claims;
determination of agent vs. principal classification for revenue recognition purposes;
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income taxes;
useful lives of tangible and intangible assets;
equity compensation;
contingencies;
goodwill and other intangible assets, including the recoverability of intangible assets with finite lives and other long-lived assets; and
fair value of assets acquired, liabilities assumed and contingent consideration as part of a business combination.
The Company regularly assesses these estimates and records changes to estimates in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions believed to be reasonable under the circumstances. Changes in the economic environment, financial markets, and any other parameters used in determining these estimates could cause actual results to differ from those estimates.
Liquidity and Capital Resources

The accompanying unaudited condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As a result of recurring losses from operations and declines in cash positions, management considered its ability to continue as a going concern and evaluated the significance of these results during the six months ended June 30, 2022. The Company has experienced recurring losses from operations and has an accumulated deficit of $458,022 as of June 30, 2022. Additionally, during the second quarter of 2022, the Company’s cash position was impacted by the utilization of $20,000 in cash to pay down debt.
Management has focused its efforts on certain initiatives to improve revenue, operating income and cash positions, including (i) collaborations with convenience stores, (ii) delivery from retailers in a variety of industries, (iii) the entry into new markets and (iv) the development of a proprietary stadium ordering application. In July 2022, the Company entered into a multi-year sponsorship agreement to serve as the exclusive mobile ordering platform at MetLife Stadium, providing an avenue for the Company to expand its delivery services into the New York and New Jersey markets. Our strategy is to grow order volume and revenue both in existing markets and new markets, such as New York and New Jersey. Additionally, management has evaluated its existing cost structure and will continue to implement cost saving initiatives where appropriate to reduce operating costs and manage the Company’s cash position.
Management considered its current business focus on improving revenues and plans to continue to implement cost savings where appropriate, and determined that we currently expect that our cash on hand, estimated cash flow from operations and net proceeds from additional equity raises, including any raises under the ATM Program (see Note 8 – Debt and Note 12 – Stockholders’ Equity), will be sufficient to meet our working capital needs for at least the next twelve months. However, there can be no assurance that we will generate cash flow at the levels we anticipate, nor can there be any assurance that we will be able to raise additional equity capital.
Significant Accounting Policies
See “Recent Accounting Pronouncements” below for a description of accounting principle changes adopted during the six months ended June 30, 2022. There have been no material changes to our significant accounting policies described in the 2021 Form 10-K.
Recent Accounting Pronouncements
The Company considered the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on these unaudited condensed consolidated financial statements.
Recently Adopted Accounting Standards
In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt, resulting in
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fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. ASU 2020-06 was effective for and adopted by the Company on January 1, 2022. The adoption of ASU 2020-06 did not have a material impact on the Company’s disclosures or consolidated financial statements.
Pending Accounting Standards
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle in ASC 805 by requiring companies to apply ASC 606 to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. The guidance additionally clarifies that companies should apply the definition of a performance obligation in ASC 606 when recognizing contract liabilities assumed in a business combination. ASU 2021-08 is effective for the Company on January 1, 2023. The Company is currently evaluating the impacts of the provisions of ASU 2021-08 on its consolidated financial statements and related disclosures.
3. Revenue
The following table presents our revenue disaggregated by offering. Revenue consists of the following for the periods indicated (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Delivery transaction fees$27,756 $48,251 $59,332 $98,727 
Payment processing referral fees2,783  5,293  
Setup and integration fees 1  8 
Other632 915 1,586 1,362 
Total Revenue$31,171 $49,167 $66,211 $100,097 


Revenue from Contracts with Customers
Delivery Transaction Fees
The Company generates revenue (“Delivery Transaction Fees”) primarily when diners place an order on one of the Platforms. In the case of diner subscription fees relating to our diner subscription program, revenue is recognized for the receipt of the monthly fee in the applicable month for which the delivery service applies to. Delivery Transaction Fees represent the revenue recognized from the Company’s obligation to process orders on the Platforms. The performance obligation is satisfied when the Company successfully processes an order placed on one of the Platforms and the restaurant receives the order at their location. The obligation to process orders on the Platforms represents a series of distinct performance obligations satisfied over time that the Company combines into a single performance obligation. Consistent with the recognition objective in ASC Topic 606, Revenue from Contracts with Customers, the variable consideration due to the Company for processing orders is recognized on a daily basis. As an agent of the restaurant in the transaction, the Company recognizes Delivery Transaction Fees earned from the restaurant on the Platform on a net basis. Delivery Transaction Fees also include a fee charged to the end user customer when they request the order be delivered to their location. Revenue is recognized for diner fees once the delivery service is completed. The contract period for substantially all restaurant contracts is one month as both the Company and the restaurant have the ability to unilaterally terminate the contract by providing notice of termination.
Payment Processing Referral Fees
The Company also generates revenue by facilitating access to third-party payment processing solution providers. Revenue from such services primarily consists of residual payments received from third-party payment processing solution providers, based on the volume of transactions a payment processing solution provider performs for the merchant. The Company also occasionally receives a bonus up-front fee from third-party payment processing solution providers, paid at the time of a merchant’s initial transaction with a payment processing solution provider, based on a price specified in the agreement between the merchant and the payment processing solution provider.
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Payment processing referral fees represent revenue recognized from the Company’s offering of referral services, connecting a merchant with a third-party payment processing service. The Company’s performance obligation in its contracts with payment processors is for an unknown or unspecified quantity of transactions and the consideration received is contingent upon the number of transactions submitted by the merchant and processed by the payment processor. Accordingly, the total transaction price is variable. The performance obligation is satisfied when the third-party payment processor finalizes the processing of a transaction through the payment system and transaction volume is available from the payment processor to the Company. Consistent with the recognition objective in ASC Topic 606, the variable consideration due to the Company for serving as the facilitator of the arrangement between the third-party payment processor and merchant is recognized on a daily basis. The Company is the agent in these arrangements as it establishes the relationship between the third-party payment processor and merchant, and thus, recognizes revenue on a net basis. The third-party payment processor is considered the customer of the Company as no direct contract exists between the merchant and the Company.
Accounts Receivable
The Company records a receivable when it has an unconditional right to the consideration. See Note 5 – Accounts Receivable, Net for additional details on the Company’s accounts receivable.
Costs to Obtain a Contract with a Customer
The Company recognizes an asset for the incremental costs of obtaining a contract with a restaurant and recognizes the expense over the course of the period when the Company expects to recover those costs. The Company has determined that certain internal sales incentives earned at the time when an initial contract is executed meet these requirements. Capitalized sales incentives are amortized to sales and marketing expense on a straight-line basis over the period of benefit, which the Company has determined to be five years. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less.
Deferred costs related to obtaining contracts with restaurants were $3,008 and $2,968 as of June 30, 2022 and December 31, 2021, respectively, out of which $913 and $818, respectively, was classified as current. Amortization of expense for the costs to obtain a contract were $221 and $173 for the three months ended June 30, 2022 and 2021, respectively, and $429 and $322 for the six months ended June 30, 2022 and 2021, respectively.
Costs to Fulfill a Contract with a Customer
The Company also recognizes an asset for the costs to fulfill a contract with a restaurant when they are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. The Company has determined that certain costs related to onboarding restaurants onto the Platforms meet the capitalization criteria under ASC Topic 340-40, Other Assets and Deferred Costs. Costs related to these implementation activities are deferred and then amortized to operations and support expense on a straight-line basis over the period of benefit, which the Company has determined to be five years.
Deferred costs related to fulfilling contracts with restaurants were $1,764 and $1,385 as of June 30, 2022 and December 31, 2021, respectively, out of which $464 and $352, respectively, was classified as current. Amortization of expense for the costs to fulfill a contract were $110 and $56 for the three months ended June 30, 2022 and 2021, respectively, and $204 and $101 for the six months ended June 30, 2022 and 2021, respectively.
4. Business Combinations
2021 Acquisitions
Cape Payment Acquisition
On August 25, 2021, the Company completed the acquisition of certain assets and properties of ProMerchant LLC, Cape Cod Merchant Services LLC and Flow Payments LLC (collectively referred to herein as the “Cape Payment Companies”) (the “Cape Payment Acquisition”). The Cape Payment Companies facilitate merchant access to third-party payment processing solution providers and receive residual payments from the payment providers. The purchase price for the Cape Payment Companies consisted of $12,032 in cash and an aggregate of 2,564,103 shares of the Company’s common stock valued at $1.24 per share (the closing price of the Company’s common stock on August 24, 2021). The
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Cape Payment Acquisition included an earnout provision which provided for a one-time payment to the sellers if the Cape Payment Companies exceed certain future revenue targets. The earnout provision, if any, is payable no later than March 30, 2023, and was valued at $1,686 as of the acquisition date. As of June 30, 2022 and December 31, 2021, the earnout provision was valued at $2,043 and $1,939, respectively (see Note 13 - Fair Value Measurements).
The Cape Payment Acquisition was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. The results of operations of the Cape Payment Companies are included in our condensed consolidated financial statements beginning on the acquisition date, August 25, 2021, and were immaterial. Pro forma results were deemed immaterial to the Company.
Delivery Dudes Acquisition
On March 11, 2021, the Company completed the acquisition of certain assets and properties from Dude Holdings LLC (“Delivery Dudes”), a third-party delivery business primarily serving the South Florida market, for $11,500 in cash and 3,562,577 shares of the Company’s common stock valued at $2.96 per share (the closing price of the Company’s common stock on March 11, 2021) (the “Delivery Dudes Acquisition”).
The Delivery Dudes Acquisition was considered a business combination in accordance with ASC 805, and was accounted for using the acquisition method. The results of operations of Delivery Dudes are included in our unaudited condensed consolidated financial statements beginning on the acquisition date, March 11, 2021. Revenue and net income of Delivery Dudes included in the unaudited condensed consolidated statement of operations in the three months ended June 30, 2022 totaled approximately $2,905 and $326, respectively, and in the six months ended June 30, 2022 totaled approximately $6,151 and $580, respectively.
During the second and third quarters of 2021, the Company acquired the assets of six Delivery Dudes franchisees for total consideration of approximately $2,464, including $2,431 in cash. The asset acquisitions were accounted for under the acquisition method with the purchase consideration allocated to customer relationships. The results of operations of the acquired franchisees are included in our condensed consolidated financial statements beginning on their acquisition dates and were immaterial. Pro forma results were deemed immaterial to the Company.
Additional Information
Included in general and administrative expenses in the consolidated statement of operations in certain periods are direct and incremental costs, consisting of legal and professional fees, related to business combinations and asset acquisitions. During the three and six months ended June 30, 2021, the Company incurred direct and incremental costs of $63 and $669, respectively, related to the Delivery Dudes Acquisition.
Pro-Forma Financial Information
The supplemental condensed consolidated results of the Company for the six months ended June 30, 2021 on an unaudited pro forma basis as if the Delivery Dudes Acquisition had been consummated on January 1, 2021 are included in the table below (in thousands).
Six months ended June 30, 2021
Net revenue$102,573 
Net loss$8,989 
These pro forma results were based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a consolidated company during the period presented and are not indicative of consolidated results of operations in future periods. Acquisition costs and other non-recurring charges incurred are included in the period presented.
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5. Accounts Receivable, Net
Accounts receivable consist of the following (in thousands):
June 30,
2022
December 31,
2021
Credit card receivables$1,480 $1,354 
Residual commissions receivable1,494 1,342 
Receivables from restaurants and customers649 660 
Accounts receivable$3,623 $3,356 
Less: allowance for doubtful accounts and chargebacks(304)(329)
Accounts receivable, net$3,319 $3,027 
6. Intangibles Assets and Goodwill
Intangible Assets
Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives and include internally developed software, as well as software to be otherwise marketed, and trademarks/trade name/patents and customer relationships. The Company has determined that the trademark intangible asset and domain names related to the rebranding initiative are indefinite-lived assets and therefore are not subject to amortization but are evaluated annually for impairment. The Bite Squad, Delivery Dudes and Cape Payment Companies trade name intangible assets, however, are being amortized over their estimated useful lives.
Intangible assets are stated at cost or acquisition-date fair value less accumulated amortization and consist of the following (in thousands):
As of June 30, 2022
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Software$40,004 $(12,120)$(11,779)$16,105 
Trademarks/Trade name/Patents6,549 (5,852)— 697 
Customer Relationships96,510 (16,451)(57,378)22,681 
Total intangible assets subject to amortization143,063 (34,423)(69,157)39,483 
Trademarks, not subject to amortization3,023 — — 3,023 
Total$146,086 $(34,423)$(69,157)$42,506 
As of December 31, 2021
Gross Carrying
Amount
Accumulated
Amortization
Accumulated
Impairment
Intangible
Assets, Net
Intangible assets subject to amortization:
Software$35,686 $(9,632)$(11,779)$14,275 
Trademarks/Trade name/Patents6,549 (5,585)— 964 
Customer Relationships96,510 (14,256)(57,378)24,876 
Total intangible assets subject to amortization138,745 (29,473)(69,157)40,115 
Trademarks, not subject to amortization3,011 — — 3,011 
Total$141,756 $(29,473)$(69,157)$43,126 
During the six months ended June 30, 2022, the Company capitalized approximately $4,318 of software costs related to the development of the Platforms.
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The Company recorded amortization expense of $2,465 and $2,233 for the three months ended June 30, 2022 and 2021, respectively, and $4,950 and $4,065 for the six months ended June 30, 2022 and 2021, respectively. Estimated future amortization expense of intangible assets subject to amortization as of June 30, 2022 is as follows (in thousands):
Amortization
The remainder of 2022
$5,186 
202311,551 
20249,423 
20256,171 
20263,458 
Thereafter3,694 
Total future amortization$39,483 
Goodwill
The change in the Company’s goodwill balance is as follows for the six months ended June 30, 2022 and the year ended December 31, 2021 (in thousands):
June 30,
2022
December 31,
2021
Balance, beginning of period$130,624 $106,734 
Acquisitions during the period 23,890 
Impairments during the period(67,190) 
Balance, end of period$63,434 $130,624 
The Company recorded $23,890 of goodwill during the year ended December 31, 2021, including $14,343 associated with the Delivery Dudes Acquisition and $9,547 associated with the Cape Payment Acquisition (see Note 4 – Business Combinations).
Impairments
The Company conducts its goodwill and intangible asset impairment test annually in October, or more frequently if indicators of impairment exist. For purposes of testing for goodwill impairment, the Company has one reporting unit. As a result of a significant decline in the Company’s share price and market capitalization in mid-March 2022, as well as other macroeconomic and industry related conditions during the first quarter of 2022, the Company conducted its impairment test as of the valuation date of March 15, 2022. The impairment test was conducted in accordance with FASB ASC Topic 360, Impairment and Disposal of Long-Lived Assets (“ASC 360”) for certain long-lived assets, including capitalized contract costs, developed technology, customer relationships, and trade names, and in accordance with FASB ASC Topic 350, Intangibles – Goodwill and Other (“ASC 350”) for the reporting unit’s goodwill. The Company engaged a third-party to assist management in estimating the fair values of long-lived assets and the reporting unit for purposes of impairment testing under ASC 360 and ASC 350.
ASC 360 requires long-lived assets to be tested for impairment using a three-step impairment test. Step 1 of the test is giving consideration to whether indicators of impairment of long-lived assets are present. Given the significant decline in the Company’s market capitalization and other macroeconomic factors, indications were that an impairment may exist and the Company proceeded to Step 2 to determine whether an impairment loss should be recognized. As a part of Step 2, the Company performed a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the long-lived assets in question to their carrying amounts. Given that the undiscounted cash flows for the long-lived assets were above the carrying amounts, the Company determined that the long-lived asset group is recoverable, and no impairment exists as of March 15, 2022.
Customer relationships, the Company’s primary long-lived asset, was tested for impairment under the guidance in ASC 360. The customer relationships intangible asset was valued using the Income Approach, specifically, the multi-period excess earnings method, which measures the after-tax cash flows attributable to the existing customer relationships
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after deducting the operating costs and contributory asset charges associated with supporting the existing customer relationships. The customer relationships analysis represents a Level 3 measurement as it was based on unobservable inputs reflecting the Company’s assumptions used in developing a fair value estimate. These inputs required significant judgments and estimates at the time of the valuation.
ASC 350 requires goodwill and other indefinite lived assets to be tested for impairment at the reporting unit level. For ASC 350 testing purposes, the Company compared the fair value of the reporting unit with its carrying amount. The fair value of the reporting unit was estimated giving consideration to the Income Approach, including the discounted cash flow method, and the Market Approach, including the similar transactions method and guideline public company method. Significant inputs and assumptions in the ASC 350 analysis included forecasts (e.g., revenue, operating costs, capital expenditures, etc.), discount rate, long-term growth rate, tax rates, etc. for the reporting unit under the Income Approach and market-based enterprise value to revenue multiples under the Market Approach.
As a result of the ASC 350 analysis, the Company recognized a non-cash pre-tax impairment loss of $67,190 during the three months ended March 31, 2022 to write down the carrying value of goodwill to its implied fair value. There was no goodwill impairment charge recognized during the three months ended June 30, 2022. The non-cash impairment loss is included in the unaudited condensed consolidated statement of operations under the caption “goodwill impairment” during the six months ended June 30, 2022.
Determining the fair value of a reporting unit and intangible assets requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods. There can be no assurance that additional goodwill or intangible assets will not be impaired in future periods.
7. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
June 30,
2022
December 31,
2021
Accrued insurance expenses$5,436 $3,932 
Accrued estimated workers’ compensation expenses411 644 
Accrued medical contingency366 370 
Accrued legal contingency1,250 1,250 
Accrued sales tax payable100 175 
Accrued cash incentives108 3,130 
Other accrued expenses3,461 3,685 
Contingent consideration liability2,043  
Unclaimed property2,630 2,372 
Other current liabilities2,963 3,751 
Total other current liabilities$18,768 $19,309 
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8. Debt
The Company’s outstanding debt obligations are as follows (in thousands):
Coupon Rate
Range in 2021
through 2Q22
Effective
Interest Rate at
June 30, 2022
MaturityJune 30,
2022
December 31,
2021
Term Loan
5.125% - 7.125%
13.63%May 2024$15,007 $35,007 
Notes
4.0% - 6.0%
6.38%May 202448,754 49,504 
$63,761 $84,511 
Less: unamortized debt issuance costs on Term Loan(1,628)(2,099)
Less: unamortized debt issuance costs on Notes(328)(435)
Long term debt - related party$61,805 $81,977 
Short-term loans for insurance financing
3.99% - 4.85%
n/aAugust 2022 - March 20232,351 3,142 
Total outstanding debt$64,156 $85,119 
Interest expense related to the Company’s outstanding debt totaled $1,461 and $1,681 for the three months ended June 30, 2022 and 2021, respectively, and $3,165 and $3,582 for the six months ended June 30, 2022 and 2021, respectively. Interest expense includes interest on outstanding borrowings and amortization of debt issuance costs and debt discount. See Note 15 – Related Party Transactions for additional information regarding the Company’s related party long-term debt.
Term Loan
The Company maintains an agreement with Luxor Capital Group, LP (“Luxor Capital”) (as amended or otherwise modified from time to time, the “Credit Agreement”). The Credit Agreement provides for a senior secured first priority term loan (the “Term Loan”) which is guaranteed by certain subsidiaries of the Company. In connection with the Term Loan, the Company issued to Luxor Capital warrants which are exercisable for 586,845 shares of the Company’s common stock at June 30, 2022 (see Note 12 – Stockholders’ Equity). See Amendments to Loan Agreements below for details on an amendment to the Credit Agreement entered into in May 2022.
Interest on the Term Loan is payable quarterly, in cash or, at the election of the Company, as a payment-in-kind, with interest paid in-kind being added to the aggregate principal balance. The Credit Agreement includes a number of customary covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries to incur additional debt, incur liens on assets, engage in mergers or consolidations, dispose of assets, pay dividends or repurchase capital stock and repay certain junior indebtedness. The Credit Agreement also includes customary affirmative covenants, representations and warranties and events of default.
Notes
Additionally, the Company issued unsecured convertible promissory notes (the “Notes”) to Luxor Capital Partners, LP, Luxor Capital Partners Offshore Master Fund, LP, Luxor Wavefront, LP and Lugard Road Capital Master Fund, LP (the “Luxor Entities”) pursuant to an agreement, herein referred to as the “Convertible Notes Agreement”. The net carrying value of the Notes as of June 30, 2022 and December 31, 2021 totaled $48,426 and $49,069, respectively. See Amendments to Loan Agreements and Conversion Agreement below for details on amendments to the Convertible Notes Agreement and a conversion agreement entered into in May 2022.
Interest on the Notes is payable quarterly, in cash or, at the Company’s election, up to one-half of the dollar amount of an interest payment due can be paid-in-kind. Interest paid-in-kind is added to the aggregate principal balance.
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Interest expense related to the Notes was comprised of the following for the three and six months ended June 30, 2022 and 2021 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Contractual interest expense$745 $501 $1,488 $996 
Amortization of debt discount47 298 101 588 
$792 $799 $1,589 $1,584 
The Notes include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of additional shares. Upon maturity, the outstanding Notes (and any accrued but unpaid interest) will be repaid in cash or converted into shares of common stock, at the holder’s election. The Notes are convertible at the holder’s election into shares of the Company’s common stock at a rate of $8.52 per share at June 30, 2022.
The Company’s payment obligations on the Notes are not guaranteed. The Convertible Notes Agreement contains negative covenants, affirmative covenants, representations and warranties and events of default that are substantially similar to those that are set forth in the Credit Agreement (except those that relate to collateral and related security interests, which are not contained in the Convertible Notes Agreement or otherwise applicable to the Notes).
Amendments to Loan Agreements
On May 9, 2022, the Company entered into an amendment to the Credit Agreement and an amendment to the Convertible Notes Agreement (together, the “May 9, 2022 Amended Loan Agreements”). The May 9, 2022 Amended Loan Agreements provide, among other things, (i) that going forward on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances by the Company will be applied to the prepayment of the Term Loan and (ii) a six-month extension of the maturity date of the Credit Agreement and Convertible Notes Agreement until May 15, 2024. Additionally, pursuant to the amendment to the Credit Agreement, the Company made a $20,000 prepayment on the Term Loan on May 9, 2022.
The Company evaluated the amendments in the May 9, 2022 Amended Loan Agreements under ASC 470-50, “Debt Modification and Extinguishment”, and concluded that the amendments did not meet the characteristics of debt extinguishments under ASC 470-50. Accordingly, the amendments were treated as a debt modification, and thus, no gain or loss was recorded. A new effective interest rate for each of the Term Loan and Notes that equates the revised cash flows to the carrying amount of the original debt is computed and applied prospectively.
On May 12, 2022, the Company entered into an additional amendment to the Convertible Notes Agreement (the “May 12, 2022 Amended Convertible Notes Agreement”) which provides that subsequent to the payment in full of the Term Loan outstanding under the existing Credit Agreement, on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances received by the Company will be applied to prepayment of the Notes under the Convertible Notes Agreement. The provisions of the May 12, 2022 Amended Convertible Notes Agreement did not contain changes to the Convertible Notes Agreement that warranted an evaluation of debt modification or extinguishment.
Conversion Agreement
On May 13, 2022, the Company entered into a conversion agreement (the “Conversion Agreement”), pursuant to which the lenders under the Convertible Notes Agreement were permitted to convert $750 of the outstanding principal amount of the Notes into shares of Company common stock at a conversion rate of 5,882 shares of Company common stock per one thousand principal amount of the Notes (calculated based on a per share price of $0.17 of Company common stock on Nasdaq), notwithstanding the conversion rate then in effect pursuant to the terms of the Notes.
Pursuant to the Conversion Agreement, the Luxor Entities converted $750 principal amount of the Notes into 4,411,500 shares of Company common stock during the three months ended June 30, 2022 (see Note 12 - Stockholders’ Equity). In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the fair value of the securities transferred in the induced conversion over the fair value of securities issuable pursuant to the original conversion terms is recognized as induced conversion expense. Accordingly, upon the induced conversion, the Company recognized $930 of expense with a corresponding entry to equity of $1,673 and a net reduction of the Notes of $743, consisting of the $750 of
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principal, net of related discount. The expense is included in general and administrative expenses in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2022.
Short-Term Loans
The Company has outstanding short-term loans as of June 30, 2022 for the purpose of financing portions of its annual insurance premium obligations. The loans are payable in monthly installments until maturity.
9. Income Taxes
The Company provides for income taxes using an asset and liability approach under which deferred income taxes are provided for based upon enacted tax laws and rates applicable to periods in which the taxes become payable. The Company recorded income tax expense of $17 and $33 for the three months ended June 30, 2022 and 2021, respectively, and $33 and $57 for the six months ended June 30, 2022 and 2021, respectively. The Company’s income tax expense is entirely related to state taxes in various jurisdictions. The Company recorded a full valuation allowance against net deferred tax assets as of June 30, 2022 and December 31, 2021 as the Company has historically generated net operating losses, and the Company did not consider future book income as a source of taxable income when assessing if a portion of the deferred tax assets is more likely than not to be realized.
During 2020, the Company was permitted to defer payment of the employer portion of certain payroll taxes under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Company did not defer any payroll taxes after December 31, 2020. As of June 30, 2022, the Company has $667 of employer payroll tax deferrals outstanding, all of which will be paid in 2022. This amount is reflected in other current liabilities in the accompanying unaudited condensed consolidated balance sheet.
10. Commitments and Contingent Liabilities
Workers Compensation and Auto Policy Claims
We establish a liability under our workers’ compensation and auto insurance policies for claims incurred within our self-insured retention levels and an estimate for claims incurred but not yet reported. As of June 30, 2022 and December 31, 2021, $5,724 and $4,305, respectively, in outstanding workers’ compensation and auto policy reserves are included in the unaudited condensed consolidated balance sheet.
Legal Matters
In July 2016, Waiter.com, Inc. filed a lawsuit against Waitr Inc. in the United States District Court for the Western District of Louisiana, alleging trademark infringement based on Waitr’s use of the “Waitr” trademark and logo, Civil Action No.: 2:16-CV-01041. The plaintiff sought injunctive relief and damages relating to Waitr’s use of the “Waitr” name and logo. During the third quarter of 2020, the trial date was rescheduled to June 2021. On June 22, 2021, the Company entered into a License, Release and Settlement Agreement (the “Settlement”) to settle all claims related to this lawsuit. Pursuant to the Settlement, the Company paid the plaintiff $4,700 in cash on July 1, 2021. In connection with the Settlement, we agreed to adopt a new trademark or tradename to replace the Waitr trademark and to discontinue use of the Waitr trademark in connection with the marketing, sale or provision of any web-based or mobile app-based delivery, pick-up, carry-out or dine-in services using the Waitr trademark by June 22, 2022, unless extended by eight additional months in exchange for a one-time payment of $800. During the three months ended March 31, 2022, the Company accrued an $800 reserve in connection with its option to extend the license period by an additional eight months. The $800 legal reserve and $4,700 legal settlement are included in other expense in the unaudited condensed consolidated statement of operations for the six months ended June 30, 2022 and 2021, respectively.
In April 2019, the Company was named as a defendant in a class action complaint filed by certain current and former restaurant partners, captioned Bobby’s Country Cookin’, LLC, et al v. Waitr Holdings Inc., which is currently pending in the United States District Court for the Western District of Louisiana. The plaintiffs assert claims for breach of contract and violation of the duty of good faith and fair dealing, and they seek recovery on behalf of themselves and two separate classes. Based on the current class definitions, as many as 10,000 restaurant partners could be members of the two separate classes at issue. In February 2022, the parties reached a proposed settlement in principle to resolve the litigation in its entirety and requested a stay of the pending litigation. This proposed settlement in principle was subject to Court approval and entry into a settlement agreement between the parties, and contemplated a total potential settlement fund of
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$2,500 of Company shares of common stock. Ultimately, no settlement agreement was executed by the parties nor was Court approval obtained, and the parties have asked the Court to lift the stay and reopen the litigation. Based on the settlement negotiations, the Company accrued a $1,250 reserve in connection with this lawsuit during the three months ended December 31, 2021. The accrued legal contingency is included in other current liabilities in the unaudited condensed consolidated balance sheet at June 30, 2022.
In September 2019, Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC were named as defendants in a putative class action lawsuit entitled Walter Welch, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC. The case was filed in the Western District of Louisiana, Lake Charles Division. In the lawsuit, the plaintiff asserts putative class action claims alleging, inter alia, that various defendants made false and misleading statements in securities filings, engaged in fraud, and violated accounting and securities rules, seeking damages based upon these allegations. A similar putative class action lawsuit, entitled Kelly Bates, Individually and on Behalf of all Others Similarly Situated vs. Christopher Meaux, David Pringle, Jeff Yurecko, Tilman J. Fertitta, Richard Handler, Waitr Holdings Inc. f/k/a Landcadia Holdings Inc., Jefferies Financial Group, Inc. and Jefferies, LLC, was filed in that same court in November 2019. These two cases were consolidated, and an amended complaint was filed in October 2020. The Company filed a motion to dismiss in February 2021. The Court assigned that motion to the Magistrate Judge, who recently issued her Report and Recommendation to the District Court Judge that the motion be granted in all respects. The parties are now briefing their respective positions on the Report and Recommendation and will await the District Court Judge’s ruling. In the meantime, all discovery remains stayed and no trial date has been set. Waitr believes that this lawsuit lacks merit and that it has strong defenses to all of the claims alleged. Waitr continues to vigorously defend the suit.
In addition to the lawsuits described above, Waitr is involved in other litigation arising from the normal course of business activities, including, without limitation, vehicle accidents involving employees and independent contractor drivers resulting in claims alleging personal injuries and medical expenses, labor and employment claims, allegations of intellectual property infringement, and workers’ compensation benefit claims as a result of alleged conduct involving its employees, independent contractor drivers, and third-party negligence. Although Waitr believes that it maintains insurance with standard deductibles that generally covers liability for potential damages in many of these matters where coverage is available on acceptable terms (it is not maintained for claims involving intellectual property), insurance coverage is not guaranteed, there are limits to insurance coverage and in certain instances claims are met with denial of coverage positions by the carriers; accordingly, we could suffer material losses as a result of these claims, the denial of coverage for such claims, or damages awarded for any such claim that exceeds coverage. Litigation is unpredictable and we may determine in the future that certain existing claims have greater exposure or liability than previously understood.
11. Stock-Based Awards and Cash-Based Awards
In June 2021, the Company’s stockholders approved the Waitr Holdings Inc. Amended and Restated 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”), which permits the granting of awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock-based or cash-based awards. As of June 30, 2022, there were 5,529,255 shares of common stock available for future grants pursuant to the 2018 Incentive Plan. The Company also has outstanding equity awards under the 2014 Stock Plan (as amended in 2017, the “Amended 2014 Plan”). Total compensation expense related to awards under the Company’s incentive plans was $1,579 and $2,387 for the three months ended June 30, 2022 and 2021, respectively, and $3,250 and $4,465 for the six months ended June 30, 2022 and 2021, respectively.
Stock-Based Awards
Stock Options
During the six months ended June 30, 2021, 500,000 stock options were granted under the 2018 Incentive Plan. Such options were subsequently forfeited during the three months ended September 30, 2021. There were no grants of stock options during the six months ended June 30, 2022. The Company determines the fair value of stock option grants on the grant date using an option-pricing model with various assumptions regarding the risk-free rate, volatility and expected term. As of March 31, 2022, all outstanding stock options were fully vested and there was no remaining unrecognized compensation cost related to stock options. The Company recognized compensation expense for stock options of $358 for the three months ended June 30, 2021, and $13 and $692 for the six months ended June 30, 2022 and 2021, respectively.
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The stock option activity under the Company’s incentive plans during the six months ended June 30, 2022 and 2021 is as follows:
Six Months Ended June 30, 2022Six Months Ended June 30, 2021
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Grant Date
Fair Value
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Grant Date
Fair Value
Balance, beginning of period9,656,928 $0.39 $0.28 9,753,257 $0.43 $0.33 
Granted   500,000 2.78 2.19 
Exercised   (9,209)0.90 4.50 
Forfeited(21,327)2.20 4.46 (21,553)6.49 4.97 
Expired   (10,097)3.47 4.13 
Balance, end of period9,635,601 $0.38 $0.27 10,212,398 $0.53 $0.40 
Outstanding stock options, which were fully vested and expected to vest and exercisable are as follows as of June 30, 2022 and December 31, 2021:
As of June 30, 2022
As of December 31, 2021
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Options Fully
Vested and
Expected to Vest
Options
Exercisable
Number of Options9,635,601 9,635,601 9,656,928 4,870,026 
Weighted-average remaining contractual term (years)2.532.533.033.06
Weighted-average exercise price$0.38 $0.38 $0.39 $0.40 
Aggregate Intrinsic Value (in thousands)$ $ $3,543 $1,773 
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the fair value of the common stock and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their in-the-money options on each date. This amount will change in future periods based on the fair value of the Company’s stock and the number of options outstanding. There were