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Acquisitions | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | Acquisitions Jack’s Flight Club In January 2020, the Company acquired a 60% interest in JFC Travel Group Co. (“Jack’s Flight Club”), which operates Jack’s Flight Club, a subscription service that provides members with information about exceptional airfares. Stock Purchase Agreement (“SPA”) between Travelzoo and Azzurro In connection with the acquisition of Metaverse Travel Experiences (“MTE”), formerly a wholly-owned subsidiary of Azzurro, the Company completed a private placement of newly issued shares with Azzurro. Ralph Bartel, who founded the Company, is the sole beneficiary of the Ralph Bartel 2005 Trust, which is the controlling shareholder of Azzurro. Azzurro was the Company’s largest shareholder at the time of the MTE acquisition and, as of December 31, 2022, Azzurro and Ralph Bartel, in his individual capacity, owned approximately 50.3% of the Company’s outstanding shares. On December 28, 2022, the stockholders of Travelzoo approved the issuance and sale of 3.4 million shares of common stock (the “Shares”) of Travelzoo to Azzurro, in exchange for certain consideration, and on December 30, 2022 (the “Closing Date”), the transaction was consummated. The closing price of Travelzoo’s common stock on December 30, 2022 was $4.45 per share, resulting in an aggregate fair value of the Shares of $15.2 million. The consideration for the Shares consisted of the following: (a) $1.0 million in cash paid on the Closing Date; (b) $4.8 million paid in the form of a promissory note, carrying a 12% interest rate per annum, issued on the Closing Date and payable by June 30, 2023; and (c) the transfer to the Company of all outstanding capital stock of MTE, which was effected pursuant to a merger of MTE with a wholly-owned subsidiary of the Company on the Closing Date. The Company records the $4.8 million promissory note as Note receivable from shareholder in the stockholders’ equity section. In October 2023, the Company and Azzurro agreed to a payment plan for payment of the promissory note in five installments, ending in February 2024, with interest on the outstanding principal accruing at 16% per annum beginning on July 1, 202 3. During the year ended December 31, 2023, Azzurro paid $3.0 million of principal. Azzurro paid interest of $70,000 and $190,000 in the three months ended September 30, 2024 and 2023, respectively. Azzurro paid interest of $210,000 and $475,000 in the nine months ended September 30, 2024 and 2023, respectively. The remaining principal amount of $1.8 million, together with interest of $19,000, was paid off in October 2024. Intangible Assets The following table represents the fair value and estimated useful lives of intangible assets from acquisitions (in thousands):
| Fair Value |  | Estimated Life (Years)
Customer relationships (Jack’s Flight Club) | $ | 3,500 |  |  | 5.0
Trade name (Jack’s Flight Club) | 2,460 |  |  | indefinite
Non-compete agreements (Jack’s Flight Club) | 660 |  |  | 4.0
Secret Escapes Spain member database | 445 |  |  | 3.0
Secret Escapes U.S. member database | 1,751 |  |  | 2.3
Assets Measured at Fair Value on a Non-recurring Basis The Company’s non-financial assets, such as goodwill, intangible assets and property and equipment, are adjusted to fair value if an impairment is recognized during the period. The fair value measurements are based on Level 3 inputs which are unobservable inputs based on management assumptions used to measure assets at fair value. The goodwill assessment was performed by comparing the fair value of the reporting units to their carrying value. The fair value estimates for the reporting units were based on a blended analysis of the present value of future discounted cash flows and the market value approach, using Level 3 inputs. The indefinite-lived intangible assets assessment was performed using the relief-from-royalty method, which includes unobservable inputs, classified as Level 3, including projected revenues and approximately 5% royalty rate. The Company performed an annual impairment test in October 2023 and did not identify any indicators of impairment for the year ended December 31, 2023. Amortization of Acquired Intangible Assets The following table represents the activities of intangible assets for the three months ended September 30, 2024 and 2023 (in thousands):
| Jack’s Flight Club |  | Secret Escape Spain |  | Secret Escape U.S.
Intangible assets—December 31, 2022 | $ | 2,351 |  |  | $ | 327 |  |  | $ | 973 |
Amortization of intangible assets with definite lives | (168) |  |  | (39) |  |  | (195) |
Intangible assets—March 31, 2023 | 2,183 |  |  | 288 |  |  | 778 |
Amortization of intangible assets with definite lives | (158) |  |  | (36) |  |  | (194) |
Intangible assets—June 30, 2023 | 2,025 |  |  | 252 |  |  | 584 |
Amortization of intangible assets with definite lives | (157) |  |  | $ | (29) |  |  | $ | (195) |
Intangible assets—September 30, 2023 | 1,868 |  |  | 223 |  |  | 389 |
Amortization of intangible assets with definite lives | (158) |  |  | (37) |  |  | (194) |
Intangible assets—December 31, 2023 | 1,710 |  |  | 186 |  |  | 195 |
Amortization of intangible assets with definite lives | (75) |  |  | (48) |  |  | (195) |
Intangible assets—March 31, 2024 | 1,635 |  |  | 138 |  |  | — |
Amortization of intangible assets with definite lives | (59) |  |  | (28) |  |  | — |
Intangible assets—June 30, 2024 | 1,576 |  |  | 110 |  |  | — |
Amortization of intangible assets with definite lives | (58) |  |  | (37) |  |  | — |
Intangible assets—September 30, 2024 | $ | 1,518 |  |  | $ | 73 |  |  | $ | — |
Amortization expense for acquired intangibles was $95,000 and $381,000 for the three months ended September 30, 2024 and 2023, respectively. Amortization expense for acquired intangibles was $500,000 and $1.2 million for the nine months ended September 30, 2024 and 2023, respectively. Expected future amortization expense of acquired intangible assets as of September 30, 2024 is as follows (in thousands):
Years ending December 31, |
2024 (excluding the nine months ended September 30, 2024) | 94 |
2025 | 47 |
| $ | 141 |
The Company performed its annual impairment testing of Trade name as of October 31, 2023 using a relief from royalty method. No impairment was identified in 2023. As of September 30, 2024, the carrying value of the Trade name was $1.5 million. The Company did not identify any indicators of impairment during the nine months ended September 30, 2024.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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