tzoo-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________________________

Form 10-Q/A

(Amendment No. 1)

______________________________________________________________________________

(Mark One)


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

For the quarterly period ended March 31, 2023


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

For the transition period from to .

Commission File No.: 000-50171

_______________________________________________________________________________

Travelzoo

(Exact name of registrant as specified in its charter)

________________________________________________________________________________


Delaware			36-4415727
(State or other jurisdiction of incorporation or organization)			(I.R.S. employer identification no.)

590 Madison Avenue, 35th Floor New York, New York			10022
(Address of principal executive offices)			(Zip code)

Registrant’s telephone number, including area code: +1 (212) 516-1300

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

TZOO

The NASDAQ Stock Market

_________________________________________________________________________________

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 ¨

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x No ¨

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


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisited financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

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

The number of shares of Travelzoo common stock outstanding as of August 10, 2023 was 14,910,098 shares.

EXPLANATORY NOTE

This Amendment No. 1 to our Quarterly Report on Form 10-Q/A (“Form 10-Q/A” or “Amended First Quarter 2023 Quarterly Report”) amends and restates certain information included in our Quarterly Report on Form 10-Q for the three months ended March 31, 2023, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 12, 2023 (the “Original First Quarter 2023 Quarterly Report”).

As previously announced in our Current Report on Form 8-K filed with the SEC on August 8, 2023, in connection with the preparation of our second quarter 2023 condensed consolidated financial statements, Travelzoo (the “Company”, “management”, “we”) realized that the presentation of the non-controlling interest (NCI) classification during the first quarter of 2022, the second quarter of 2022, the third quarter of 2022, the year ended December 31, 2022 and the first quarter of 2023 had not been correctly updated in the consolidated balance sheet and consolidated statement of stockholders’ equity. Specifically, when the put/call option in the Company’s stock purchase agreement with JFC Travel Group Co. expired in January 2022, the Company did not reclassify the NCI from temporary equity to permanent equity. The reclassification of NCI of approximately $4.6 million from temporary equity to permanent equity reduced temporary equity and increased permanent equity but did not have any impact on the Company's previously reported total assets, total liabilities and stockholder’s equity (deficit), results of operations or cash flows.

Except as described above, no other changes have been made to the Original Quarterly Reports on Form 10-Q for the first quarter of 2023. This Amendment No. 1 does not reflect events occurring after the filing of the Original Form 10-Q. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filings.

Internal Control Considerations

In connection with the restatement, management has re-evaluated the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of March 31, 2023. The Company’s management has concluded that the material weakness in the Company’s internal control over financial reporting previously disclosed in the Form 10-Q for the period ending March 31, 2023 applies to the reason behind this restatement, specifically, relating to having sufficient resources for the accounting for certain non-routine, unusual or complex transactions. Management has already begun working on a remediation plan, including hiring additional resources and utilizing subject matter experts as and when needed. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Item 4, “Controls and Procedures” of this Amended Form 10-Q.

TRAVELZOO

Table of Contents


PART I—FINANCIAL INFORMATION			Page

Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022			4
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022			5
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022			6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022			7
Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022			8
Notes to Condensed Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3. Quantitative and Qualitative Disclosures About Market Risk			44
Item 4. Controls and Procedures			44

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			45
Item 1A. Risk Factors			45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45
Item 3. Defaults Upon Senior Securities			45
Item 4. Mine Safety Disclosures			45
Item 5. Other Information			45
Item 6. Exhibits			46
Signature			47

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

TRAVELZOO

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value)


	March 31, 2023			December 31, 2022
	As Restated
ASSETS
Current assets:
Cash and cash equivalents	$	19,138		$	18,693
Accounts receivable, less allowance for doubtful accounts of $1,386 and $1,468 as of March 31, 2023 and December 31, 2022, respectively	13,672			13,820
Prepaid income taxes	1,401			1,778
Prepaid expenses and other	1,764			1,289
Assets from discontinued operations	10			11
Total current assets	35,985			35,591
Deposits and other	4,618			5,094
Deferred tax assets	3,248			3,222
Restricted cash	679			675
Operating lease right-of-use assets	6,852			7,440
Property and equipment, net	692			657
Intangible assets, net	3,249			3,651
Goodwill	10,944			10,944
Total assets	$	66,267		$	67,274
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,143		$	4,271
Merchant payables	27,976			32,574
Accrued expenses and other	4,611			5,049
Deferred revenue	3,124			2,216
Operating lease liabilities	2,682			2,972
Liabilities from discontinued operations	453			452
Total current liabilities	41,989			47,534

Long-term operating lease liabilities	7,926			8,326
Other long-term liabilities	3,530			2,563
Total liabilities	53,445			58,423
Commitments and contingencies	—			—

Stockholders’ equity:
Common stock, $0.01 par value (20,000 shares authorized; 16,505 shares issued and 15,669 shares outstanding and 16,505 shares issued and 15,704 outstanding as of March 31, 2023 and December 31, 2022, respectively)	165			165
Treasury stock (at cost, 836 shares at March 31, 2023 and 801 shares at December 31, 2022)	(7,316)			(7,130)
Additional paid in capital	23,670			23,274
Tax indemnification	(9,537)			(9,537)
Note receivable from shareholder	(4,753)			(4,753)
Retained earnings	10,815			7,142
Accumulated other comprehensive loss	(4,825)			(4,905)
Total Travelzoo stockholders’ equity	8,219		8,219	4,256
Non-controlling interest	4,603			4,595
Total stockholders’ equity	12,822			8,851
Total liabilities and stockholders’ equity	$	66,267		$	67,274

See accompanying notes to unaudited condensed consolidated financial statements.

TRAVELZOO

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)


			Three Months Ended
			March 31,
			2023						2022

SEC Form 10-Q/A filed by Travelzoo (Amendment)