The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (the "Form 10-Q") and with the audited consolidated financial statements included in the Company's 2021 Form 10-K filed with the
SECon March 11, 2022. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are set forth in the sections titled "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors".
Dollar amounts in this discussion are expressed in thousands, unless otherwise specified.
Waitroperates online ordering technology Platforms, including the Waitr, Bite Squad and Delivery Dudes mobile applications. Our technology platform provides delivery, carryout and dine-in options, connecting restaurants, drivers and diners in cities across the United States. Our strategy is to bring in the logistics infrastructure to underserved populations of restaurants, grocery stores and other merchants and establish strong market presence or leadership positions in the markets in which we operate. Our business has been built with a restaurant-first philosophy by providing differentiated and brand additive services to the restaurants on the Platforms. These merchants benefit from the online Platforms through increased exposure to consumers for expanded business in the delivery market and carryout sales. Our 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. Additionally, Waitrfacilitates merchant access to third-party payment processing solution providers, pursuant to the acquisition of the Cape Payment Companiesin August 2021. 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. At the end of 2021, we initiated several integrations expected to be completed by mid-2022 with other companies to deliver their products. During the first quarter of 2022, we focused our efforts on these initiatives with the goal of further expanding our last-mile delivery offerings as well as continuing to build on our ancillary revenue streams and diversifying the Company beyond third-party food delivery. Another key step in pursuing our overall growth strategy has been to facilitate merchant access to third-party payment processing solution providers. Through our acquisitions in August 2021, we now facilitate merchant and restaurant access to third parties that provide payment processing solutions. During the first quarter of 2022, we recognized a non-cash impairment charge totaling $67,190to write down the carrying value of goodwill to its implied fair value, resulting from the significant decline in the Company's market capitalization in March 2022. See Part I, Item 1, Note 6 - Intangible Assets and Goodwillfor additional details. The write-down to goodwill was determined using estimates of fair value, which utilize significant inputs and assumptions such as forecasts (e.g., revenue, operating costs, capital expenditures, etc.), discount rate, long-term growth rate, tax rates, and market-based enterprise value to revenue multiples, among others. Should our estimates or assumptions worsen, or should negative events or circumstances occur, additional impairments may be needed. As previously announced, we acquired the "ASAP.com" domain name and several related domains and also reserved the Nasdaq trading symbol "ASAP" in connection with our rebranding strategy. We are making progress on our rebranding strategy and we expect that "ASAP" will serve as the foundation of our brand moving forward, as we believe it better embodies the future direction of our Company.
Impact of COVID-19 on our business
We have thus far been able to operate effectively during the COVID-19 pandemic. In response to economic hardships experienced during the COVID-19 pandemic, the
U.S.federal government rolled out stimulus payments in the first quarter of 2021 which we believe had a positive impact on order volumes during such period. However, we also believe the stimulus payments resulted in increased driver labor costs as we were faced with challenges in maintaining an appropriate level of driver supply. In addition, early in the COVID-19 pandemic, we experienced an increase in revenue and orders due to increased consumer demand for delivery and more restaurants using our platform to facilitate both delivery and take-out. During the second quarter of 2021 and thereafter, we believe the impact of the stimulus payments on our order volumes began to decrease. There remains uncertainty as to whether or not the pandemic will continue to impact diner behavior, and if so, in what manner. To the extent that the COVID-19 pandemic adversely impacts the Company's business, results of operations, liquidity or financial condition, it may also have the effect of heightening many of the other risks described in the risk factors in the Company's 2021 Form 10-K and this quarterly report on Form 10-Q for the three months ended March 31, 2022. Management continues to monitor the impact of the COVID-19 outbreak and the possible effects on its financial position, liquidity, operations, industry and workforce.
January 26, 2022, we received written notice from Nasdaq Listing Qualifications staff of The Nasdaq Stock Market(the "Staff"), indicating that the minimum bid price of our common stock has closed at less than $1.00per share over the last 30 consecutive business days and, as a result, did not comply with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00per share (the "Bid Price Rule"). The notification has no immediate effect on the listing of the Company's common stock. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial period of 180 calendar days, or until July 25, 2022, to regain compliance with the Bid Price Rule. If at any time before July 25, 2022, the bid price of our common stock closes at $1.00per share or more for a minimum of 10 consecutive business days, the Staff will provide us with written confirmation of compliance with the Bid Price Rule and the matter will be closed. If we fail to regain compliance with the Bid Price Rule before July 25, 2022, but meet certain other applicable standards, the Company may be eligible for additional time to comply with the Bid Price Rule. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards of The Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period. If we do not regain compliance with the Bid Price Rule in the relevant compliance period, the Staff may provide written notification to the Company that its securities will be delisted. The Company may then appeal the delisting determination to a Nasdaq Listing Qualifications Hearings Panel. The Company is actively taking steps to regain compliance with the Nasdaq Listing Rules, including actively monitoring the bid price for its common stock between now and July 25, 2022and considering available options to resolve the deficiency and regain compliance with the Bid Price Rule, including a reverse stock split.
Significant Accounting Policies and Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, along with related disclosures. We regularly assess these estimates and record changes to estimates in the period in which they become known. We base our 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 estimates. Significant estimates and judgements relied upon in preparing these condensed consolidated financial statements affect the following items:
•estimates of losses incurred under our insurance policies with significant deductibles or retention levels;
•exposure to losses related to claims;
• determination of the agent’s classification in relation to the principal for revenue recognition purposes;
•useful lives of tangible and intangible fixed assets;
• stock-based compensation;
•goodwill and other intangible assets, including the recoverability of finite-life intangible assets and other long-lived assets; and
•fair value of assets acquired, liabilities assumed and contingent consideration within the framework of a business combination.
Other than the changes disclosed in Part I, Item 1, Note 2 - Basis of Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements in this Form 10-Q, there have been no material changes to our significant accounting policies and estimates described in the 2021 Form 10-K.
New accounting pronouncements and pending accounting standards
See Part I, Item 1, Note 2 - Basis of Presentation and Summary of Significant Accounting Policies for a description of accounting standards adopted during the three months ended
March 31, 2022. Also described in Note 2 are pending standards and their estimated effect on our condensed consolidated financial statements.
Factors affecting the comparability of our results of operations
Acquisitions. The Delivery Dudes Acquisition and
Cape Payment Acquisitionwere considered business combinations in accordance with ASC 805, and have been accounted for using the acquisition method. Under the acquisition method of accounting, total purchase consideration, acquired assets, assumed liabilities and contingent consideration are recorded based on their estimated fair values on the acquisition date. For each of these acquisitions, the excess of the fair value of purchase consideration over the fair value of the assets less liabilities acquired (and contingent consideration when applicable) has been recorded as goodwill on our condensed consolidated balance sheet as of March 31, 2022. The results of operations of Delivery Dudes and Cape Payment Companiesare included in our consolidated financial statements beginning on the acquisition dates, March 11, 2021and August 25, 2021, respectively. In connection with the Delivery Dudes Acquisition, the Company incurred direct and incremental costs of $606during the three months ended March 31, 2021, consisting of legal and professional fees, which are included in general and administrative expenses in the consolidated statement of operations in such period. Changes in Fee Structure. Our fee structure has changed at various times since our inception. We continue to review and update our current rate structure, as necessary, as we look to offer new and enhanced value-adding services to our restaurant partners. Any changes to our fee structure (whether externally to comply with governmental imposed caps or as a result of internal decision-making) could affect the comparability of our results of operations from period to period. Goodwill Impairment. During the three months ended March 31, 2022, we recognized a non-cash impairment charge totaling $67,190to write down the carrying value of goodwill to its implied fair value, as a result of our goodwill impairment analysis, which concluded that the fair value of the reporting unit (the Company) at such time was less than its carrying amount. 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 used could change in future periods. There can be no assurance that additional goodwill or intangible assets will not be impaired in future periods. Significant goodwill and intangible asset impairments may impact the comparability of our results from period to period. Seasonality and Holidays. Our business tends to follow restaurant closure and diner behavior patterns with respect to demand of our service offering. In many of our markets, we have historically experienced variations in order frequency as a result of weather patterns, university summer breaks and other vacation periods. In addition, a significant number of restaurants tend to close on certain major holidays, including Thanksgiving, Christmas Eveand Christmas Day, among others. Further, diner activity may be impacted by unusually cold, rainy, or warm weather. Cold weather and rain typically drive increases in order volume, while unusually warm or sunny weather typically drives decreases in orders. Furthermore, severe weather-related events such as snowstorms, ice storms, hurricanes and tropical storms have adverse effects on order volume, particularly if they cause property damage or utility interruptions to our restaurant partners. The 25
The COVID-19 pandemic, as well as the federal government’s responses to it, have impacted our typical seasonal trends and may impact future periods.
Acquisition Pipeline. We continue to maintain and evaluate an active pipeline of potential acquisition targets and may pursue acquisitions in the future, both in the restaurant delivery space as well as other verticals, such as payments and other complimentary businesses. These potential business acquisitions may impact the comparability of our results in future periods relative to prior periods.
Key factors affecting our performance
Efficient Market Expansion and Penetration. Our continued revenue growth and improved cash flow and profitability is dependent on successful restaurant, diner and driver penetration of our markets and achieving our targeted scale in current and future markets. Failure in achieving our targeted scale could adversely affect our working capital, which in turn, could slow our growth plans. Our financial condition, cash flows, and results of operations depend, in significant part, on our ability to achieve and sustain our target profitability thresholds in our markets. Our Restaurant, Diner and Driver Network. A significant part of our growth is our ability to successfully expand our network of restaurants, diners and independent contractor drivers using the Platforms. If we fail to retain existing restaurants, diners and independent contractor drivers using the Platforms, or to add new restaurants, diners and independent contractor drivers to the Platforms, our revenue, financial results and business may be adversely affected. Key Business Metrics Defined below are the key business metrics that we use to analyze our business performance, determine financial forecasts, and help develop long-term strategic plans: Active Diners. We count Active Diners as the number of unique diner accounts from which an order has been completed through the Platforms during the past twelve months (as of the end of the relevant period) and consider Active Diners an important metric because the number of diners using our Platforms is a key revenue driver and a valuable measure of the size of our engaged diner base. Average Daily Orders. We calculate Average Daily Orders as the number of completed orders during the period divided by the number of days in that period, including holidays. Average Daily Orders is an important metric for us because the number of orders processed on our Platforms is a key revenue driver and, in conjunction with the number of Active Diners, a valuable measure of diner activity on our Platforms for a given period. Gross Food Sales. We calculate Gross Food Sales as the total food and beverage sales, sales taxes, prepaid gratuities, and diner fees processed through the Platforms during a given period. Gross Food Sales are different than the order value upon which we charge our fee to restaurants, which excludes gratuities and diner fees. Prepaid gratuities, which are not included in our revenue, are determined by diners and may vary from order to order. Gratuities other than prepaid gratuities, such as cash tips, are not included in Gross Food Sales. Gross Food Sales is an important metric for us because the total volume of food sales transacted through our Platforms is a key revenue driver. Average Order Size. We calculate Average Order Size as Gross Food Sales for a given period divided by the number of completed orders during the same period. Average Order Size is an important metric for us because the average value of gross food sales on our Platforms is a key revenue driver. 26
TABLE_CONTENTS Three Months Ended March 31, Key Business Metrics(1) 2022 2021 Active Diners (as of period end) 1,523,618 1,966,815 Average Daily Orders 22,907 37,627 Gross Food Sales (dollars in thousands)
$ 101,068 $ 150,281Average Order Size (in dollars) $ 49.02 $ 44.38_____________________
(1) Key business metrics include Delivery Dudes business from the date of acquisition,
We generate revenue primarily when diners place an order on one of the Platforms. We recognize revenue from diner orders when orders are delivered. Our revenue consists primarily of net Delivery Transaction Fees. Additionally, effective
August 25, 2021, we generate revenue by facilitating merchant access to third-party payment processing solution providers.
Costs and Expenses:
Operations and Support. Operations and support expense consists primarily of salaries, benefits, stock-based compensation, and bonuses for employees engaged in operations and customer service, as well as territory managers, market success associates, restaurant onboarding, and driver logistics personnel, and payments to independent contractor drivers for delivery services. Operations and support expense also includes payment processing costs incurred on customer orders and the cost of software and related services providing support for diners, restaurants and drivers.
Sales and Marketing. Sales and marketing expenses primarily include salaries, commissions, benefits, stock-based compensation, and bonuses for personnel supporting sales and marketing efforts, including restaurant business development managers, marketing employees and contractors, and third-party marketing expenses such as social media and research. engine marketing, online advertisements, sponsorships and print marketing.
Research and Development. Research and development expense consists primarily of salaries, benefits, stock-based compensation and bonuses for employees and contractors engaged in the design, development, maintenance and testing of the Platforms, net of costs capitalized for the development of the Platforms. This expense also includes such items as software subscriptions that are necessary for the upkeep and maintenance of the Platforms.
General and administrative. General and administrative expenses primarily include salaries, benefits, stock-based compensation and bonuses for executives, finance and accounting, human resources and other administrative employees, as well as legal services, third-party accounting and other professional services, insurance (including indemnity, motor vehicle liability and general liability), travel, facility rental and other general corporate expenses.
Depreciation and Amortization. Depreciation and amortization expense consists primarily of amortization of capitalized costs for software development, trademarks and customer relationships and depreciation of leasehold improvements and equipment, primarily consisting of tablets deployed in restaurants. We do not allocate depreciation and amortization expense to other line items. Other Expenses and Losses, Net. Other expenses and losses, net, includes interest expense on outstanding debt, as well as any other items not considered to be incurred in the normal operations of the business, including accrued legal settlements and contingencies. 27
The following table sets forth our results of operations for the periods indicated, with line items presented in thousands of dollars and as a percentage of our revenues:
Three Months Ended March 31, (in thousands, except percentages(1)) 2022 % of Revenue 2021 % of Revenue Revenue
$ 35,040100 % $ 50,930100 % Costs and expenses: Operations and support 20,279 58 % 30,338 60 % Sales and marketing 6,253 18 % 4,016 8 % Research and development 1,311 4 % 999 2 % General and administrative 11,545 33 % 10,186 20 % Depreciation and amortization 3,065 9 % 2,917 6 % Goodwill impairment 67,190 192 % - - % Gain on disposal of assets (17) - % (3) - % Total costs and expenses 109,626 313 % 48,453 95 % (Loss) income from operations (74,586) (213) % 2,477 5 % Other expenses and losses, net: Interest expense 1,704 5 % 1,901 4 % Other expense 910 3 % 4,264 8 % Net loss before income taxes (77,200) (220) % (3,688) (7) % Income tax expense 16 - % 24 - % Net loss $ (77,216)(220) % $ (3,712)(7) % ________________
(1)Percentages may not add up due to rounding.
The following section includes a discussion of our results of operations for the three months ended
March 31, 2022and 2021. The results of operations of Delivery Dudes and the Cape Payment Companiesare included in our unaudited condensed consolidated financial statements beginning on the acquisition dates of March 11, 2021and August 25, 2021, respectively (see Part I, Item 1, Note 4 - Business Combinations). Revenue Three Months Ended March 31, 2022 2021 Percentage Change (dollars in thousands) Revenue $ 35,040$ 50,930 (31 %) Revenue decreased for the three months ended March 31, 2022compared to the three months ended March 31, 2021, primarily as a result of decreased order volumes. Partially offsetting the impact of decreased order volumes was an increase in the Average Order Size in such period as well as revenue from the Cape Payment Companiesand Delivery Dudes acquisitions, beginning on their respective acquisition dates. The Average Order Size was $49.02for the three months ended March 31, 2022, compared to $44.38for the three months ended March 31, 2021, an improvement of 10%. 28
TABLE_CONTENTS Operations and Support Three Months Ended March 31, Percentage 2022 2021 Change (dollars in thousands) Operations and support
$ 20,279 $ 30,338(33 %) As a percentage of revenue 58 % 60 % Operations and support expenses decreased in dollar terms and as a percentage of revenue in the three months ended March 31, 2022compared to the three months ended March 31, 2021, primarily due to lower driver operations costs as a result of decreased order volumes. Sales and Marketing Three Months Ended March 31, 2022 2021 Percentage Change (dollars in thousands) Sales and marketing $ 6,253$ 4,016 56 % As a percentage of revenue 18 % 8 % Sales and marketing expense increased in dollar terms and as a percentage of revenue in the three months ended March 31, 2022compared to the three months ended March 31, 2021, primarily attributable to referral agent commission expense related to the Cape Payment Companiesacquisition. Research and Development Three Months Ended March 31, 2022 2021 Percentage Change (dollars in thousands) Research and development $ 1,311$ 999 31 % As a percentage of revenue 4 % 2 %
Research and development expenses increased in dollars and as a percentage of revenue in the three months ended
General and Administrative Three Months Ended March 31, Percentage 2022 2021 Change (dollars in thousands) General and administrative
$ 11,545 $ 10,18613 % As a percentage of revenue 33 % 20 % General and administrative expense increased in dollar terms and as a percentage of revenue in the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to increased insurance expense and recruiting fees. 29
Depreciation and amortization
Three Months Ended March 31, 2022 2021 Percentage Change (dollars in thousands) Depreciation and amortization
$ 3,065$ 2,917 5 % As a percentage of revenue 9 % 6 % Depreciation and amortization expense increased in dollar terms and as a percentage of revenue in the three months ended March 31, 2022compared to the three months ended March 31, 2021, driven by an increase in depreciation expense related to computer tablets for restaurants on the Platforms and amortization expense on intangible assets acquired in the Delivery Dudes Acquisition and Cape Payment Companies Acquisition.
Impairment of goodwill
During the three months ended
March 31, 2022, we recognized a non-cash goodwill impairment charge of $67,190to write down the carrying value of goodwill to its implied fair value. The primary factor contributing to a reduction in the fair value was the significant decline in the Company's stock price in mid-March 2022, resulting in a market capitalization that was lower than the carrying value of the Company's consolidated stockholders' equity. See Part I, Item 1, Note 6 - Intangible Assets and Goodwillfor additional details.
Other expenses and losses, net
Three Months Ended March 31, 2022 2021 Percentage Change (dollars in thousands) Other expenses and losses, net
$ 2,614$ 6,165 (58 %) As a percentage of revenue 7 % 12 % Other expenses and losses, net for the three months ended March 31, 2022primarily consisted of $1,673of interest expense associated with the Term Loan and Notes and $800of expense for an accrued legal reserve. For the three months ended March 31, 2021, other expenses and losses, net primarily consisted of a $4,000accrual for a legal contingency and $1,860of interest expense associated with the Term Loan and Notes. See Part I, Item 1, Note 10 - Commitments and Contingent Liabilities for additional details on the accrued legal reserve and contingency. Income Tax Expense Income tax expense for the three months ended March 31, 2022and 2021 was $16and $24, respectively, entirely related to state taxes in various jurisdictions. We have historically generated net operating losses; therefore, a valuation allowance has been recorded on our net deferred tax assets.
Cash and capital resources
March 31, 2022, we had cash on hand of $54,877. Our primary sources of liquidity have been cash flow from operations and proceeds from the issuance of stock in the first quarter of 2022 and fiscal 2021 and 2020.
During the first quarter of 2022, we made investments in our business related to enhancing our platforms and initiatives to further complement our offerings beyond third-party food delivery.
November 2021, we entered into an amended and restated open market sale agreement with respect to our ATM Program. Pursuant to the ATM Program, we sold 9,458,655 shares of the Company's common stock during the three months ended March 31, 2022for gross proceeds of $6,313, and from April 1, 2022through April 12, 2022, we sold 2,616,335 shares of common stock for gross proceeds of $898. In April 2022, we filed a universal shelf registration 30
statement on Form S-3 for issuance from time to time of up to
The aggregate principal amount of outstanding long-term debt totaled
$84,511as of March 31, 2022, consisting of $35,007for the Term Loan and $49,504of Notes. As of March 31, 2022, the Company had $1,293of outstanding short-term loans for insurance premium financing. On May 9, 2022, the Company entered into the Amended Debt Agreements, pursuant to which the Company will make a $20,000prepayment on the Term Loan, reducing the outstanding amount of the Term Loan from $35,007to $15,007. Additionally, the Amended Debt Agreements (i) provide that going forward on a quarterly basis, 50% of the proceeds of any future at-the-market public common stock issuances will be applied to the prepayment of the Term Loan under the Credit Agreement and (ii) include a six-month extension of the maturity date of each of the Credit Agreement and Convertible Notes Agreement until May 15, 2024. We currently expect that our cash on hand and estimated cash flow from operations 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. We may use cash on hand to repay additional debt or to acquire or invest in complementary businesses, products, services and technologies. We continually evaluate additional opportunities to strengthen our liquidity position, fund growth initiatives and/or combine with other businesses by issuing equity or equity-linked securities (in both public or private offerings) and/or incurring additional debt. However, market conditions, future financial performance or other factors may make it difficult for us to access sources of capital, on favorable terms or at all, should we determine in the future to raise additional funds. We are continuously reviewing our liquidity and anticipated working capital needs, particularly in light of the uncertainty created by the COVID-19 pandemic, inflationary pressures, the Ukrainian conflict, increased gasoline prices and other macroeconomic factors that could affect consumer demand, order volume and restaurant prices, all of which could impact our business.
Our main capital expenditures relate to the purchase of tablets for restaurants on the Platforms and investments in the development of the Platforms, which are expected to increase as we continue to grow our business. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under "Risk Factors" in our 2021 Form 10-K and subsequent filings with the
SEC, including this quarterly report on Form 10-Q for the three months ended March 31, 2022.
The following table sets forth our summary cash flow information for the periods indicated: Three Months Ended March 31, (in thousands) 2022 2021 Net cash (used in) provided by operating activities
$ (7,235) $ 12,809Net cash used in investing activities (2,385) (12,805) Net cash provided by (used in) financing activities 4,386 (16,847)
Cash flows (used in) provided by operating activities
For the three months ended
March 31, 2022, net cash used in operating activities was $7,235, compared to net cash provided by operating activities of $12,809for the three months ended March 31, 2021. The decrease in cash flows from operating activities in the three months ended March 31, 2022from the comparable 2021 period was primarily driven by a decrease in revenue and changes in operating assets and liabilities, partially offset by a decrease in operations and support expenses. During the three months ended March 31, 2022, the net change in operating assets and liabilities decreased net cash provided by operating activities by $2,597, primarily consisting of a decrease in accrued payroll of $1,542and a decrease in accounts payable of $1,033. During the three months ended March 31, 2021, the net change in operating assets and liabilities increased net cash provided by operating activities by $10,629, primarily consisting of an increase in other current liabilities of $8,051related to accrued expenses at the end of the reporting period. 31
Cash flows used in investing activities
For the three months ended
March 31, 2022, net cash used in investing activities consisted primarily of $2,347for internally developed software. For the three months ended March 31, 2021, net cash used in investing activities consisted primarily of $10,927for the acquisition of a business and related intangible assets and $1,722of costs for internally developed software.
Cash flows generated by (used in) financing activities
For the three months ended
March 31, 2022, net cash provided by financing activities consisted primarily of $6,235of net proceeds from the sales of common stock under the Company's ATM Program, less $1,849of payments on short-term loans for insurance financing. For the three months ended March 31, 2021, net cash used in financing activities included a $14,472principal payment on the Term Loan and $1,583of payments on short-term loans for insurance financing.
Caution Regarding Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. All statements, other than statements of historical or current fact, that reflect future plans, estimates, beliefs or expected performance are forward-looking statements. In some cases, you can identify forward-looking statements because they are preceded by, followed by or include words such as "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions. These forward-looking statements are based on information available as of the date of this Form 10-Q and our management's current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties, including the following factors, in addition to the factors discussed elsewhere in this Form 10-Q, and the factors discussed in our 2021 Form 10-K and subsequent filings with the
SEC(Part I, Item 1A, Risk Factors):
Risks related to our operations
•failure to retain existing diners or add new diners or continuing to experience a decrease in number of diners and number of orders or decrease in order sizes on the Platforms;
• lower delivery service levels or no increase in restaurant activity;
•the loss of restaurants on the Platforms, in particular due to changes in our pricing structure;
•the inability to maintain profitability in the future;
•risks relating to our relationships with independent contractor drivers, including shortages of available drivers, loss of independent contractor drivers, adverse conditions affecting independent contractor drivers and possible increases in driver compensation. drivers;
•recent inflationary pressures, increased gasoline prices, economic impact resulting from the Ukrainian conflict, and other macroeconomic factors that are largely beyond our control; •inability to maintain and enhance our brands, including possible degradation thereto resulting from our comprehensive rebranding initiative to change our corporate name and visual identity, or occurrence of events that damage our reputation and brands, including unfavorable media coverage; •seasonality and the impact of inclement weather, including major hurricanes, tropical cyclones, major snow and/or ice storms in areas not accustomed to them and other instances of severe weather and other natural phenomena;
• inability to manage growth and meet demand;
• the inability to successfully enhance the restaurant and restaurant experience in a cost-effective manner;
• changes to our products or to the operating systems, hardware, networks or standards upon which our business depends;
•dependency of our business on our ability to maintain and upgrade our technical infrastructure;
• personal data, Internet security breaches or loss of data provided by guests or restaurants on our Platforms;
•inability to successfully expand our operations of facilitating the entry into merchant agreements by and between merchants and third-party payment processing solution providers;
• the failure of third-party payment processing services, which we may facilitate to enter into merchant agreements, to comply with applicable state or federal regulations;
• the inability to comply with applicable law or standards if we were to become a payment processor at some time in the future;
• the risks associated with credit card and debit card payments that we accept;
•the use of third-party suppliers to provide products and services;
•substantial competition in technology innovation and distribution and the inability to continue to innovate and deliver desirable technology to diners and restaurants;
• the inability to pursue and successfully complete additional acquisitions;
•non-compliance with the covenants of agreements governing our debt;
•additional depreciation of the book values of goodwill or other assets with an indefinite useful life;
• reliance on search engines, display advertising, social media, email, online content-based advertising and other online sources to attract customers to the Platforms;
•loss of senior management or key operating personnel and dependence on qualified personnel to develop and operate our business;
•the inability to successfully integrate and maintain acquired businesses;
•failure to protect our intellectual property;
• patent lawsuits and other claims relating to intellectual property rights;
• liability and potential expenses for existing and future legal claims, including claims that may exceed insurance coverage or are uninsured;
•our use of open source software;
•insufficient capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances;
•the unionization of our employees, the extent of which will increase if our independent drivers were one day reclassified as employees; and
•Failure to maintain an effective system of disclosure controls and internal control over financial reporting.
Risks related to our industry
•the highly competitive and fragmented nature of our industry;
• reliance on discretionary spending patterns in the areas where restaurants on our Platforms operate and in the economy generally;
•general economic and commercial risks affecting our industry which are largely beyond our control;
•the COVID-19 pandemic, or a similar public health threat that could materially affect our business, financial condition and results of operations;
•the establishment of cost caps by the courts in the areas where we operate;
•the inability of the restaurants in our networks to maintain their level of service;
•slower than expected growth in Internet usage through websites, mobile devices and other platforms;
• federal and state laws and regulations regarding privacy, data protection and other matters affecting our business;
• the potential for an increase in claims for misclassification following the modification of the
•risks relating to our relationships with independent drivers, including shortages of available drivers and possible increases in driver compensation; and
•risks related to the cannabis industry with respect to merchant business operations referring to third-party payment processing solution providers.
Risks related to the ownership of our securities
•the risks associated with future sales of a substantial number of shares by existing shareholders which could in turn cause our share price to decline;
•the risk that management’s use of the net proceeds of, or continuation of, our ATM program will not increase the value of a shareholder’s investment;
•the risk that future offerings of debt or equity securities senior to our common stock may adversely affect the market price of our common stock;
•the risk that the Debt Warrants and Notes as well as other derivative securities, if exercised or converted into shares of our common stock, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders; and •the risk that we fail to continue to meet all applicable Nasdaq listing requirements and risks relating to the consequent delisting of our common stock from Nasdaq, which could adversely affect the market liquidity of our common stock, the ability for us to raise capital, and could decrease the market price of our common stock significantly. These risks and uncertainties may be outside of our control. Forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Our actual results could differ materially from those discussed in these forward-looking statements.
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