Mondee Holdings, Inc. - Quarter Report: 2023 September (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarter ended September 30, 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 number: 001-39943


MONDEE HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)


Delaware						88-3292448
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10800 Pecan Park Blvd.

Suite 315

Austin, Texas 78750

(Address of principal executive offices)

(650) 646-3320

(Issuer’s telephone number)

(Former Name or Former Address, if Changed Since Last Report)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

MOND

The Nasdaq Stock Market LLC

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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

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

As of the last practicable date November 9, 2023, there were 85,820,365 shares of Class A common stock, par value $0.0001 per share issued and outstanding.

Table of Contents

MONDEE HOLDINGS, INC.

FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


		Page
Part I - Financial Information		2
	Item 1. Financial Statements	2
	Condensed Consolidated Balance Sheets (unaudited)	3
	Condensed Consolidated Statements of Operations (unaudited)	5
	Condensed Consolidated Statements of Comprehensive Loss (unaudited)	5
	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Deficit (unaudited)	9
	Condensed Consolidated Statements of Cash Flows (unaudited)	11
	Notes to Condensed Consolidated Financial Statements (unaudited)	13
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	58
	Item 4. Controls and Procedures	58
Part II - Other Information		60
	Item 1. Legal Proceedings	60
	Item 1A. Risk Factors	60
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	65
	Item 3. Defaults Upon Senior Securities	65
	Item 4. Mine Safety Disclosures	65
	Item 5. Other Information	66
	Item 6. Exhibits	67
Signatures		70

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Table of Contents

MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except stock and par value data) (unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	39,896	$	78,841
Restricted cash and cash equivalents	8,023		8,639
Accounts receivable, net of allowance of $6,890 and $4,861 as of September 30, 2023 and December 31, 2022, respectively	108,278		21,733
Contract assets, net of allowance of $7 and $750 as of September 30, 2023 and December 31, 2022, respectively	12,223		5,794
Prepaid expenses and other current assets	8,326		4,673
Total current assets	176,746		119,680
Property and equipment, net	15,072		11,332
Goodwill	77,167		66,420
Intangible assets, net	91,155		57,370

Amounts receivable from related parties	199		—
Operating lease right-of-use assets	2,273		1,384
Deferred income taxes	918		237
Other non-current assets	2,039		1,674
TOTAL ASSETS	$	365,569	$	258,097
Liabilities, Redeemable Preferred Stock and Stockholders’ Deficit
Current liabilities
Accounts payable	$	113,336	$	33,749
Deferred underwriting fee	—		500
Amounts payable to related parties	42		13
Government loans, current portion	72		72
Accrued expenses and other current liabilities	28,211		9,319
Earn-out liability, net, current portion	3,155		—
Deferred revenue, current portion	5,945		5,828
Long-term debt, current portion	10,313		7,514
Total current liabilities	161,074		56,995
Deferred income taxes	111		307
Note payable to related party	200		197
Government loans, excluding current portion	143		159
Earn-out liability, net, excluding current portion	3,411		—
Warrant liability	177		1,293
Long-term debt, excluding current portion	145,142		126,882
Deferred revenue, excluding current portion	12,847		14,656
Operating lease liabilities, excluding current portion	1,750		1,620
Other long-term liabilities	3,003		2,713
Total liabilities	327,858		204,822
Commitments and contingencies (Note 11)

Table of Contents

MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except stock and par value data) (unaudited)


Redeemable preferred stock
Series A preferred stock - 250,000,000 shares authorized, $0.0001 par value, 85,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022 (liquidation preference $95,346 and $87,323 as of September 30, 2023 and December 31, 2022, respectively)	92,484		82,597

Stockholders’ deficit
Class A Common Stock – 500,000,000 shares authorized, $0.0001 par value, 85,498,657 and 82,266,160 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	8		7
Treasury stock - 2,448,928 and 0 shares of Class A Common Stock as of September 30, 2023 and December 31, 2022, respectively	(22,884)		—
Shareholder receivable	—		(20,336)
Additional paid-in capital	296,635		271,883
Accumulated other comprehensive gains (losses)	(655)		(621)
Accumulated deficit	(327,877)		(280,255)
Total stockholders’ deficit	(54,773)		(29,322)
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT	$	365,569	$	258,097

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

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except stock and per share data) (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues, net	$	54,532	$	40,513	$	161,232	$	125,236
Operating expenses

Sales and marketing expenses	35,971		28,650		113,476		88,467
Personnel expenses, including stock-based compensation of $2,638, $55,064, $9,261, and $55,219, respectively	10,696		59,807		30,521		71,131
General and administrative expenses, including non-employee stock-based compensation of $336, $172, $1,078, and $178, respectively	4,629		2,337		14,350		6,802
Information technology expenses	1,073		1,176		3,372		3,639
Provision for credit losses, net	535		211		(166)		297
Depreciation and amortization	4,165		2,963		11,354		8,549
Restructuring expense, net	239		2,130		1,600		2,130
Total operating expenses	57,308		97,274		174,507		181,015
Loss from operations	(2,776)		(56,761)		(13,275)		(55,779)
Other income (expense)
Interest income	243		28		880		289
Interest expense	(8,740)		(7,157)		(25,372)		(19,987)
Gain on extinguishment of PPP loan	—		—		—		2,009
Changes in fair value of warrant liability	744		683		1,116		683
Other expense, net	(9,189)		(1,080)		(7,883)		(316)
Total other expense, net	(16,942)		(7,526)		(31,259)		(17,322)
Loss before income taxes	(19,718)		(64,287)		(44,534)		(73,101)
Provision for income taxes	(381)		(321)		(3,088)		(611)
Net loss	(20,099)		(64,608)		(47,622)		(73,712)
Cumulative dividends allocated to preferred stockholders	(2,859)		(47)		(8,023)		(47)
Net loss attributable to common stockholders	$	(22,958)	$	(64,655)	$	(55,645)	$	(73,759)
Net loss attributable per share to common stockholders
Basic and diluted	$	(0.29)	$	(0.89)	$	(0.72)	$	(1.14)
Weighted-average shares used to compute net loss attributable per share to common stockholders
Basic and diluted	77,925,635		72,462,512		77,162,363		64,730,224

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

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(In thousands) (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(20,099)	$	(64,608)	$	(47,622)	$	(73,712)
Other comprehensive gain (loss), net of tax
Gain (loss) on currency translation adjustment	(2,938)		(158)		(34)		(330)
Comprehensive loss	$	(23,037)	$	(64,766)	$	(47,656)	$	(74,042)

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

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Deficit

For the three and nine months ended September 30, 2023 and 2022

(In thousands, except stock and par value data) (unaudited)


	Mezzanine Equity			Stockholders' Deficit
	Preferred stock			Class A Common Stock			Treasury Stock				Additional Paid-in- Capital		Accumulated Other Comprehensive Gains (Losses)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount		Shares		Amount
Balance at June 30, 2023	85,000	$	88,960	84,242,767	$	8	2,033,578		$	(20,336)	$	291,004	$	2,283	$	(307,778)	$	(34,819)
Issuance of common stock through employee stock plans	—	—		241,549	—		—		—		—		—		—		—
Tax withholding related to vesting of restricted stock units	—	—		(81,309)	—		—		—		(723)		—		—		(723)
Common stock repurchased	—	—		(215,350)	—		215,350		(766)		—		—		—		(766)
Stock-based compensation	—	—		—	—		—		—		2,974		—		—		2,974
Currency translation adjustments	—	—		—	—		—		—		—		(2,938)		—		(2,938)
Net loss	—	—		—	—		—		—		—		—		(20,099)		(20,099)
Acquisitions of Interep and Skypass	—	—		1,311,000	—		—		—		6,904		—		—		6,904
Shares received for divestiture of LBF and post-sales support	—	—		—	—		200,000		(1,782)		—		—		—		(1,782)
Accrual of dividends and accretion of redeemable series A preferred stock	—	3,524		—	—		—		$	—	(3,524)		—		—		(3,524)
Balance at September 30, 2023	85,000	$	92,484	85,498,657	$	8	$	2,448,928	$	(22,884)	$	296,635	$	(655)	$	(327,877)	$	(54,773)

Table of Contents


	Mezzanine Equity			Stockholders' Deficit
	Preferred stock			Class A Common Stock			Treasury Stock			Shareholder		Additional Paid-in- Capital		Accumulated Other Comprehensive Gains (Losses)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount		Shares	Amount		Receivable
Balance at December 31, 2022	85,000	$	82,597	82,266,160	$	7	—	$	—	$	(20,336)	$	271,883	$	(621)	$	(280,255)	$	(29,322)
Issuance of common stock through employee stock plans	—	—		596,649	—		—	—		—		—		—		—		—
Tax withholding related to vesting of restricted stock units	—	—		(186,207)	—		—	—		—		(1,738)		—		—		(1,738)
Common stock repurchased	—	—		(215,350)	—		215,350	(766)		—		—		—		—		(766)
Stock-based compensation	—	—		—	—		—	—		—		10,339		—		—		10,339
Currency translation adjustments	—	—		—	—		—	—		—		—		(34)		—		(34)
Net loss	—	—		—	—		—	—		—		—		—		(47,622)		(47,622)
Settlement of shareholder receivable	—	—		—	—		2,033,578	(20,336)		20,336		—		—		—		—
Acquisitions of Orinter, Interep, and Skypass	—	—		3,037,405	1		—	—		—		26,038		—		—		26,039
Shares received for divestiture of LBF and post-sales support	—	—		—	—		200,000	(1,782)		—		—		—				(1,782)
Accrual of dividends and accretion of redeemable series A preferred stock	—	9,887		—	—		—	—		—		(9,887)		—		—		(9,887)
Balance at September 30, 2023	85,000	$	92,484	85,498,657	$	8	2,448,928	$	(22,884)	$	—	$	296,635	$	(655)	$	(327,877)	$	(54,773)

Dividends accrued for preferred stockholders were $33.64 and $94.39 per share for the three and nine months ended September 30, 2023, and $0.55 per share for the three and nine months ended September 30, 2022.

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Deficit

For the three and nine months ended September 30, 2023 and 2022

(In thousands, except stock and par value data) (unaudited)


	Mezzanine Equity			Stockholders' Deficit
	Preferred Stock			Class A Common Stock			Shareholder Receivable	Additional Paid-in-Capital		Accumulated Other Comprehensive Gains (Losses)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balance at June 30, 2022	—	$	—	1	$	—		$	—	$	163,626	$	(445)	$	(199,121)	$	(35,940)
Retroactive application of recapitalization	—	—		60,799,999	6			—		(6)		—		—		—
Balance at June 30, 2022	—	—		60,800,000	6			—		163,620		(445)		(199,121)		(35,940)
Issuance of Class A Common Stock upon the reverse recapitalization including PIPE financing, net of transaction costs	—	—		13,947,218	1			—		48,340		—		—		48,341
Issuance of Mondee Holdings LLC Class G units upon prepayment of debt	—	—		—	—			—		9,750		—		—		9,750
Merger earn-out shares	—	—		7,400,000	—			—		—		—		—		—
Settlement of related party loan	—	—		—	—			(20,336)		—		—		—		(20,336)
Common control acquisition	—	—		—	—			—		(2,000)		—		—		(2,000)
Payment made on behalf of Mondee Holdings LLC	—	—		—	—			—		(5,241)		—		—		(5,241)
Shares issued upon exercise of common stock warrants	—	—		118,942	—			—		1,368		—		—		1,368
Transfer of Private Warrants to Public Warrants	—	—		—	—			—		536		—		—		536
Issuance of redeemable series A preferred stock, net of issuance costs	85,000	79,549		—	—			—		—		—		—		—
Issuance of common stock warrants	—	—		—	—			—		3,891		—		—		3,891
Accrual of dividends and accretion of redeemable series A preferred stock	—	57		—	—			—		(57)		—		—		(57)
Stock based compensation	—	—		—	—			—		55,236		—		—		55,236
Currency translation adjustment	—	—		—	—			—		—		(158)		—		(158)
Net loss	—	—		—	—			—		—		—		(64,608)		(64,608)
Balance at September 30, 2022	85,000	$	79,606	82,266,160	$	7		$	(20,336)	$	275,443	$	(603)	$	(263,729)	$	(9,218)

Table of Contents


	Mezzanine Equity			Stockholders' Deficit
	Preferred stock			Class A Common Stock			Shareholder	Additional Paid-in-Capital			Accumulated Other Comprehensive Gains (Losses)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount					Receivable
Balance at December 31, 2021	—	$	—	1	$	—		$	—		$	163,465	$	(273)	$	(190,017)	$	(26,825)
Retroactive application of recapitalization	—	—		60,799,999	6			—			(6)		—		—		—
Balance at December 31, 2021	—	—		60,800,000	6			—			163,459		(273)		(190,017)		(26,825)
Issuance of Class A Common Stock upon the reverse recapitalization including PIPE financing, net of transaction costs	—	—		13,947,218	1			—			48,340		—		—		48,341
Issuance of Mondee Holdings LLC Class G units upon prepayment of debt	—	—		—	—			—			9,750		—		—		9,750
Merger earn-out shares	—	—		7,400,000	—			—			—		—		—		—
Settlement of related party loan	—	—		—	—			(20,336)			—		—		—		(20,336)
Common control acquisition	—	—		—	—			—			(2,000)		—		—		(2,000)
Payment made on behalf of Mondee Holdings LLC	—	—		—	—			—			(5,241)		—		—		(5,241)
Shares issued upon exercise of common stock warrants	—	—		118,942	—			—			1,368		—		—		1,368
Transfer of Private Warrants to Public Warrants	—	—		—	—			—			536		—		—		536
Issuance of redeemable series A preferred stock, net of issuance costs	85,000	79,549		—	—			—			—		—		—		—
Issuance of common stock warrants	—	—		—	—			—			3,891		—		—		3,891
Accrual of dividends and accretion of redeemable series A preferred stock	—	57		—	—			—			(57)		—		—		(57)
Stock-based compensation	—	—		—	—			—			55,397		—		—		55,397
Currency translation adjustments	—	—		—	—			—			—		(330)		—		(330)
Net loss	—	—		—	—			—			—		—		(73,712)		(73,712)
Balance at September 30, 2022	85,000	$	79,606	82,266,160	$	7		$	(20,336)		$	275,443	$	(603)	$	(263,729)	$	(9,218)

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

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(47,622)	$	(73,712)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization	11,354		8,549
Non-cash gain on disposal of LBF US	(697)		—
Deferred taxes	(1,050)		138
Provision for credit losses, net	(166)		297
Stock-based compensation	10,339		55,397
Non-cash lease expense and lease impairment charges	753		—
Amortization of loan origination fees	6,403		4,238
Payment in kind interest expense	4,241		8,147
Gain on forgiveness of PPP Loan	—		(2,009)
Gain on termination of lease	(337)		—
Unrealized (gain) loss on foreign currency exchange derivatives	(270)		—
Change in the estimated fair value of earn-out consideration and warrants	(1,008)		(1,259)
Changes in operating assets and liabilities:
Accounts receivable	(19,523)		(15,870)
Accounts receivable from related parties	(199)		—
Contract assets	(6,041)		(2,635)
Prepaid expenses and other current assets	(451)		(17,547)
Operating lease right-of-use assets	—		(320)
Other non-current assets	(315)		(716)
Amounts payable to related parties	18		(716)
Accounts payable	27,469		26,353
Accrued expenses and other liabilities	6,363		12,333
Deferred revenue	(1,692)		(1,658)
Operating lease liabilities	(969)		300
Net cash used in operating activities	(13,400)		(690)
Cash flows from investing activities
Capital expenditures	(7,660)		(5,415)
Purchase of restricted short term investments	—		(394)
Cash paid for acquisitions, net of cash acquired	(24,081)		—
Net cash used in investing activities	(31,741)		(5,809)
Cash flows from financing activities
Repayment of debt	(4,118)		(41,500)
Proceeds from issuance of preferred stock	—		85,000
Issuance cost from preferred stock	—		(1,560)
Proceeds from exercise of common stock warrants	—		1,368
Proceeds from Business Combination and issuance of PIPE shares	—		78,548
Payment of offering costs	(4,372)		(20,053)
Payment made on behalf of Mondee Holdings LLC	—		(5,241)
Loan origination fee for long term debt	(616)		—

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)


Proceeds from long term debt	15,000		—
Net cash provided by by financing activities	5,894		96,562
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents	(314)		(341)
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents	(39,561)		89,722
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period	87,480		15,506
Cash and cash equivalents and restricted cash and cash equivalents at end of period	$	47,919	$	105,228

Supplemental cash flow information
Cash paid for interest	$	8,418	$	140
Cash paid for income taxes	115		—
Cash paid for LBF US transition services	7,386		—
Non-cash financing and investing activities
Right-of-use assets obtained in exchange for new operating lease liabilities	$	249	$	—
Legacy Mondee shares converted to Mondee Holdings Inc.	—		7
Assumption of net liabilities from Business Combination	—		15,002
Unpaid offering costs	—		12,030
Issuance of common stock warrants	—		3,892
Conversion of warrant classification	—		535
Settlement of related party loan	—		(20,336)
Common control acquisition	—		(2,000)
Issuance of Mondee Holdings LLC Class G units upon modification of debt	—		9,750
Property and equipment included in accounts payable	61		—
Fair value of Class A Common Stock issued in connection with acquisitions	26,038		—
Fair value of earn-out liabilities issued in connection with acquisitions	7,014		—
Shares withheld for tax withholding on vesting of restricted stock units	1,738		—
Deferred consideration in connection with acquisitions	2,259		—
Accrued series A preferred stock dividend	8,023		46
Interest capitalized for software development	163		—
Common stock repurchases	766		—
Noncash purchase consideration received for LBF divestiture, net	1,282		—

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

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MONDEE HOLDINGS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(In thousands, except stock, units and par value data)

(unaudited)

1. NATURE OF OPERATIONS

Mondee Holdings, Inc. is a Delaware corporation. We refer to Mondee Holdings, Inc. and its subsidiaries, collectively as “Mondee,” the “Company,” “us,” “we”, “our” and "New Mondee" in these condensed consolidated financial statements. Mondee is a rapid-growth, travel technology company and marketplace with a portfolio of globally recognized brands in the leisure and corporate travel sectors.

Reverse Recapitalization

On July 18, 2022 (the “Closing Date”), we consummated the business combination pursuant to the Business Combination Agreement, dated December 20, 2021, by and among ITHAX Acquisition Corp. (“ITHAX”), Ithax Merger Sub I, LLC, a Delaware limited liability company and wholly owned subsidiary of ITHAX (“First Merger Sub”), Ithax Merger Sub II, LLC a Delaware limited liability company and wholly owned subsidiary of ITHAX (“Second Merger Sub”) and Mondee Holdings II, Inc., a Delaware corporation (“Legacy Mondee”) (the “Business Combination”).

On the Closing Date, following the domestication, First Merger Sub merged with and into Legacy Mondee, with Legacy Mondee surviving such merger as a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, Legacy Mondee merged with and into Second Merger Sub, with Second Merger Sub surviving such merger as a wholly owned subsidiary of the Company.

On the Closing Date, the registrant changed its name from ITHAX Acquisition Corp. to Mondee Holdings, Inc. The transaction was accounted for as a reverse recapitalization, rather than a business combination, for financial accounting and reporting purposes. Accordingly, Legacy Mondee was deemed the accounting acquirer (and legal acquiree) and ITHAX was treated as the accounting acquiree (and legal acquirer). Under this method of accounting, the reverse recapitalization was treated as the equivalent of Legacy Mondee issuing stock for the net assets of ITHAX, accompanied by a recapitalization.

2. IMMATERIAL CORRECTIONS OF PREVIOUSLY ISSUED QUARTERLY FINANCIAL INFORMATION

During the fourth quarter of the year ended December 31, 2022, the Company identified an error related to arrangements with travel agents which requires the recording of travel agent commissions to revenue with a corresponding off-setting entry to sales and marketing expense. As a result, there was an understatement of reported revenues, net and sales and marketing expenses for the unaudited three and nine months ended September 30, 2022. Additionally, the Company identified an error related to the classification of credit card processing fees which should have been recorded in sales and marketing expense rather than revenues, net thereby contributing to the understatement of such financial statement line items. There was no impact to net loss for either period. The Company previously disclosed marketing expenses and sales and other expenses separately through the quarter ended September 30, 2022, and for the year ended December 31, 2022, the Company changed its manner of presentation to its current presentation of sales and marketing expense as one financial statement line item. Management assessed the materiality of these errors and concluded the misstatements were not material to the unaudited financial statements for the period ended September 30, 2022.

The following table summarizes the effect of the revision on the affected financial statement line items, corresponding to the Company’s presentation of the relevant financial statement line item in the period relevant to the error:

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	Three Months Ended September 30, 2022
	As Previously Reported		Adjustments		As Corrected
Condensed Consolidated Statements of Operations
Revenues, net	$	39,466	$	1,047	$	40,513
Marketing expenses	24,298		519		24,817
Sales and other expenses	3,305		528		3,833
Total operating expenses	$	96,227	$	1,047	$	97,274


	Nine Months Ended September 30, 2022
	As Previously Reported		Adjustments		As Corrected
Condensed Consolidated Statements of Operations
Revenues, net	$	119,769	$	5,467	$	125,236
Marketing expenses	73,317		3,464		76,781
Sales and other expenses	9,683		2,003		11,686
Total operating expenses	$	175,548	$	5,467	$	181,015

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Other than policies noted below, there have been no changes to the Company’s significant accounting policies described in the annual consolidated financial statements for the year ended December 31, 2022.

Basis of Presentation

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting. We have included all adjustments necessary for a fair presentation of the results of the interim period. These adjustments consist of normal recurring items. Our interim unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for any other interim period or for the full year. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, previously filed with the Securities and Exchange Commission (“SEC”).

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company’s subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of accumulated other comprehensive gains (losses) in the accompanying condensed consolidated balance sheets. Foreign currency transaction gains and losses are included in other expense, net in the accompanying condensed consolidated statements of operations.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our estimates on an ongoing basis. We base our estimates on our historical experience and also on assumptions that we believe are reasonable; however, actual results could significantly differ from those estimates.

Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts

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Accounts receivable from customers are recorded at the original invoiced amounts net of an allowance for doubtful accounts. We make estimates of expected credit losses for our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history continually updated for new collections data, the credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions and other factors that may affect our ability to collect from customers. The provision for estimated credit losses is recorded in accounts receivable, net of allowance on our condensed consolidated balance sheets.

Contract assets represent unbilled and accrued incentive revenues from airline companies and our GDS service providers based on the achievement of contractual targets defined at contract inception. The provision for estimated credit losses is recorded in contract assets, net of allowance on our condensed consolidated balance sheets.

During the nine months ended September 30, 2023, the Company recorded a gain of $166 to provision for credit losses, net, due to the revision of estimates of expected credit losses on accounts receivables and contract assets, and $1,914 additional allowance associated with acquisitions during the period, offset by $1,205 of write-offs, net of recoveries.

Foreign Currency Exchange Derivatives

The Company is exposed to foreign currency fluctuations and enters into foreign currency exchange derivative financial instruments to reduce the exposure to variability in certain expected future cash flows. The Company uses foreign currency forward contracts with maturities of up to four months to hedge a portion of anticipated exposures. These contracts are not designated as hedging instruments and changes in fair value are recorded in other expense, net on the condensed consolidated statement of operations. Realized gains and losses from the settlement of the derivative assets and liabilities are classified as operating activities on the condensed consolidated statement of cash flows. The foreign currency exchange derivatives are recognized on the condensed consolidated balance sheet at fair value within accrued expenses and other current liabilities. The Company does not hold or issue derivatives for trading purposes.

Goodwill

The Company tests good for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company has two reporting units and tests goodwill for each respective reporting unit. During the third quarter of 2023, the Company voluntarily changed its annual goodwill impairment test date from December 31 to October 1, as the new date of the assessment better aligns with the Company's long-term business planning process. This change was not material to the Company's condensed consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge.

Revenue Recognition

The majority of our revenues are generated by providing online travel reservation services, which principally allow travelers to book travel reservations with travel suppliers through our technology solutions. These transaction-based revenue sources are reflected within our travel marketplace segment and primarily consist of:

•Commissions revenue, including mark-up fees and commissions on airline ticket sales and to a lesser extent, for hotel accommodations and booking of car rentals, and other travel services;

•Incentive revenues earned from Global Distribution System (“GDS”) service providers and airline companies for airline reservations, as well as from our fintech payment programs based on the aggregate gross booking amounts processed by us; and;

•Other travel products and services.

We have determined the nature of our promise is to arrange for travel services to be provided by travel suppliers, and are therefore an agent in the transaction, whereby we record as revenue the net commission we receive in exchange for our travel reservation services. In these transactions, the travel supplier is determined to be our customer. Travel suppliers consist of GDS service providers and airline companies. Our revenue is earned through mark-up fees and commissions, and is recorded net of estimated cancellation, refunds, and chargebacks. Revenue is recognized when the traveler completes a reservation, as our performance obligation is satisfied upon issuance of the ticket or reservation details to the traveler. From time to time, the Company issues credits or refunds to the traveler in the event of cancellations. Additionally, when travel bookings are made, there is a risk of transaction losses as a result of chargebacks pursued by payment processors in connection with fraudulent charges. We record estimates for chargebacks against our mark-up fees or commission earned

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upon travel bookings as variable consideration. We record estimates for losses related to chargebacks of the travel supplier cost as sales and marketing expense. Reserves are recorded based on our assessment of various factors, including the amounts of actual chargeback activity during the current year.

We earn incentives from airline companies based on the volume of airline ticket bookings that have flown. We also receive incentives from our GDS service providers based on the volume of segment bookings mediated by us through the GDS systems. The periods in which the contractual targets are based on a range from months to years. The rate at which the Company earns the incentives from airline companies and GDS service providers, or travel suppliers, is subject to fluctuations as the incentive amount earned on any given day is contingent on the cumulative prior performance under the contract. Additionally, some travel supplier contracts have tiered level pricing where the incentive rate applied depends on several performance targets specified in the contract. At the end of each reporting period, the Company estimates the incentives earned in the period based on the flights taken and the respective incentive rates that would apply to the Company, based on the tier the Company will most likely fall under. Revenue earned and recognized relating to incentives with airline companies and GDS service providers will be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur. This revenue is recognized net of variable consideration, including cancellations, refunds, and shortfall penalty fees, as applicable. In addition to travel-related revenue, we also earn incentives from fintech programs held with banks and financial institutions, which we leverage in our payment processing and settlement platform. Our fintech programs include a wide array of payment options, such as credit cards, wallets, alternate payment methods, and next generation fraud protection tools. These incentives received are based on the aggregate transaction amounts processed by us.

In Brazil and Mexico, the Company partners with financing companies to allow travelers the possibility of purchasing the product of their choice through financing plans established, offered and administrated by such financing companies. Participating financing companies bear full risk of fraud, delinquency, or default by travelers. When travelers elect to finance their purchase, we receive payments from financing companies as installments become due regardless of when the traveler makes the scheduled payments. In most cases, we receive payments before travel occurs or during travel, and the period between completion of booking and receipt of scheduled payments is typically less than one year. The Company uses the practical expedient and does not recognize a significant financing component when the difference between payment and revenue recognition is less than a year.

In partnering with the financing companies mentioned above, the Company has the option to collect payments upfront or receive in installments as they become due. Upfront payments are determined to be factoring transactions, and therefore financing fees associated with these payments are recorded within interest expense. Fees for payments received in installments are recorded within sales and marketing expense. Financing fees associated with these upfront payments are recorded within interest expense. During the three and nine months ended September 30, 2023, the Company incurred factoring fees of $345, and $1,420, respectively, which represents 2% and 5%, respectively, of the total other expense, net on the condensed consolidated statements of operations.

To a lesser extent, we also generate revenues by entering into subscription contracts for access to our travel management offerings. These revenues are reflected within our software-as-a-service (“SaaS”) platform segment. Under these contracts, payment is collected upfront when the customer signs up to use the platform. Subscription revenue is recognized on a straight-line basis over the term of the agreement using a time-based measure of progress, as the nature of the Company’s promise to the customer is to stand ready to provide platform access. The Company earns variable consideration in the form of a booking fee for each instance a traveler books a trip on the platform. The Company applies the series guidance variable consideration estimation exception to recognize the variable fees upon the completion of travel bookings as this is when our performance obligation is satisfied.

Certain Risks and Concentrations

Our business is subject to certain risks and concentrations including dependence on relationships with travel suppliers, primarily airlines, dependence on third-party technology providers, exposure to risks associated with online commerce security and payment related fraud. We also rely on GDS service providers and third-party service providers for certain fulfillment services.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Significant concentrations are those that represent more than 10% of the Company’s total revenue or total accounts receivable and contract assets. As of September 30, 2023, there were two financing companies that accounted for 34% and 14% of the total accounts receivable balance at period end. As of December 31, 2022, two customers accounted for 23% of total accounts receivable and contract assets. The Company performs credit evaluations of its customers and generally does not require collateral for sales on credit. The Company’s accounts receivable comprises of amounts due from affiliates, airline companies, GDS service providers and financing

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companies, which are well established institutions that the Company believes to be of high quality. The Company reviews accounts receivable balances to estimate the expected credit loss and record it within the allowance for doubtful accounts.

The Company’s cash and cash equivalents are on deposit with major financial institutions. Such deposits may be in excess of insured limits. The Company has not experienced any losses due to institutional failure or bankruptcy.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” or ASU No. 2016-13. The amendments in ASU No. 2016-13 introduce an approach based on expected losses to estimated credit losses on certain types of financial instruments, modify the impairment model for available-for-sale debt securities and provide for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new standard requires financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The Company adopted ASU 2016-13 as of January 1, 2023 with no material impact to its condensed consolidated financial statements.

In October 2021, the FASB issued new guidance related to recognizing and measuring contract assets and contract liabilities from contracts with customers acquired in a business combination. The new guidance will require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination as compared to current U.S. GAAP where an acquirer generally recognizes such items at fair value on the acquisition date. The new guidance is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted this guidance as of January 1, 2023 and applied Topic 606 to recognize and measure contract assets and contract liabilities of business combinations executed beginning January 1, 2023 and onwards.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company has considered the applicability of recently issued accounting pronouncements by the FASB and have determined that they are either not applicable or are not expected to have a material impact on the Company’s condensed consolidated financial statements.

Change in Financial Statement Presentation

In connection with the preparation of its condensed consolidated financial statements as of and for the three and nine months ended September 30, 2023 and 2022, the Company changed the presentation of “Sales and other Expense” and “Marketing Expense” within the condensed consolidated statement of operations. The Company combined “Sales and other Expense” and “Marketing Expense” into “Sales and Marketing Expense”. The change is a result of an increased overlap between the nature and purpose of expenses that fall within these groups. This change in presentation has been applied retrospectively and does not change any previously reported subtotals or totals on the condensed consolidated statement of operations and comprehensive loss.

4. FAIR VALUE MEASUREMENT

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period.

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The following table sets forth the Company’s financial assets and liabilities that were measured at fair value, on a recurring basis:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets
Foreign currency exchange derivatives(1)	$	—	$	104	$	—	$	104
Total assets	$	—	$	104	$	—	$	104

Liabilities
Warrant liability - private placement warrants(2)	$	—	$	—	$	177	$	177
Orinter earn-out consideration(3)	—		—		3,990		3,990
Consolid earn-out consideration(4)	—		—		1,120		1,120
Interep earn-out consideration(5)	—		—		1,780		1,780
Skypass earn-out consideration(6)	—		—		232		232
Total liabilities	$	—	$	—	$	7,299	$	7,299

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	December 31, 2022
	Level 1		Level 2		Level 3		Total

Liabilities
Warrant liability - private placement warrants(2)	$	—	$	—	$	1,293	$	1,293

______________________________


(1)			The Company uses foreign currency forwards contracts with maturities of up to 4 months to hedge a portion of anticipated exposures. The foreign currency exchange derivatives are recognized on the condensed consolidated balance sheet at fair value within prepaid expenses and other current assets.
(2)			On February 1, 2021, with the closing of its initial public offering, ITHAX consummated the sale of 675,000 private placement units, including the exercise by the underwriters of their over-allotment option. As of September 30, 2023, the Company had 232,500 private placement warrants outstanding.
(3)			The Orinter earn-out consideration represents arrangements to pay the former owners of Orinter, which was acquired by the Company in 2023. The undiscounted maximum payment under the arrangement is $10,000 in aggregate at the end of fiscal years 2023 through 2025. As of September 30, 2023, no payments have been made. Earn-out consideration is included in earn-out liability, net, current portion and earn-out liability, net, excluding current portion on the Company’s condensed consolidated balance sheets.
(4)			The Consolid earn-out consideration represents arrangements to pay the former owners of Consolid, which was acquired by the Company in 2023. The Company may be required to make earn-out payments up to an aggregate of $1,000 and 400,000 shares of common stock contingent on Consolid meeting certain adjusted EBITDA targets. As of September 30, 2023, no payments have been made. Earn-out consideration is included in earn-out liability, net, current portion and earn-out liability, net, excluding current portion on the Company’s condensed consolidated balance sheets.
(5)			The Interep earn-out consideration represents arrangements to pay the former owners and key executives of Interep, which was acquired by the Company in 2023. The Company may be required to make earn-out payments of up to $3,000 contingent upon Interep reaching specified EBITDA targets by the end of fiscal year 2025. As of September 30, 2023, no payments have been made. Earn-out consideration is included in earn-out liability, net, current portion and earn-out liability, net, excluding current portion on the Company’s condensed consolidated balance sheets.
(6)			The Skypass earn-out consideration represents arrangements to pay the former owners of Skypass, which was acquired by the Company in 2023. The Company may be required to make earn-out payments of up to an aggregate of 1,800,000 shares of common stock contingent on Skypass meeting certain adjusted EBITDA targets. In the event the EBITDA target is exceeded, the Company is required to pay 2.5% on any excess of the EBITDA target, settled in shares. The number of shares payable will be calculated based on the market value of the Company’s Class A Common Stock at settlement date. As of September 30, 2023, no payments have been made. Earn-out consideration is included in earn-out liability, net, current portion and earn-out liability, net, excluding current portion on the Company’s condensed consolidated balance sheets.

Short-Term Financial Assets and Liabilities

The fair value of Company’s short-term financial assets and liabilities including cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, deferred underwriting fee, and accrued expenses approximated their carrying values as of September 30, 2023 and December 31, 2022, due to their short-term nature. The Company’s restricted cash and cash equivalents comprise of cash and certificate of deposits held at banks. All of the Company’s outstanding debt are recorded on an amortized cost basis.

Foreign Currency Exchange Derivatives

The notional amount of the foreign currency exchange derivatives outstanding as of September 30, 2023 is $8,241. The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets. The changes in fair value of the foreign currency exchange derivatives are recorded in other expense, net in the condensed consolidated statement of operations. For the three and nine months ended September 30, 2023 the Company recorded gains of $392 and $270, respectively in other expense, net.

Roll-forward of Level 3 Recurring Fair Value Measurements

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The following tables summarizes the fair value adjustments for liabilities measured using significant unobservable inputs (Level 3):

Earn-out consideration


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	8,330	$	2	$	—	$	597
Additions of earn-out consideration with the acquisition of Orinter	—		—		3,060		—
Additions of earn-out consideration with the acquisition of Interep	—		—		1,700		—
Additions of earn-out consideration with the acquisition of Consolid	—		—		1,820		—
Additions of earn-out consideration with the acquisition of Skypass	434		—		434		—
Change in the estimated fair value of earn-out consideration	(1,642)		19		108		(576)
Balance, end of the period	$	7,122	$	21	$	7,122	$	21

The earn-out consideration consists of the fair values of contingent consideration in connection with the Company’s acquisitions. See Note 6 – Business Combinations and Divestitures for further detail. The earn-out considerations are fair valued using the Monte Carlo Method and is a Level 3 measurement because the Company estimates projections during the earn-out period utilizing various potential pay-out scenarios. The Monte Carlo simulation method repeats a process thousands of times in an attempt to predict all the possible future outcomes. At the end of the simulation, several random trials produce a distribution of outcomes that are then analyzed to determine the average present value of the earn-out liability. The valuation model utilized the following assumptions for the valuation of the earn-out liabilities as of September 30, 2023:


	Orinter	Interep	Consolid	Skypass
Cost of equity	29.0%	33.0%	29.0%	26.0%
EBITDA volatility	61.0%	61.0%	80.0%	57.0%
Equity volatility	78.0%	78.0%	98.0%	75.0%
Required metric risk premium	22.5%	26.0%	23.5%	20.0%

Risk-neutral adjustment factor	0.70 - 0.97	0.67 - 0.97	0.85 - 0.98	0.65 - 0.94

The earn-out consideration is recorded in earn-out liability, net, current portion and earn-out liability, net, excluding current portion on the Company’s condensed consolidated balance sheets. Changes to the unobservable inputs do not have a material impact on the Company’s condensed consolidated financial statements. The Company recognized a gain of $1,642 and a loss of $108 for the remeasurement of the earn-out liabilities during the three and nine months ended September 30, 2023, respectively, recorded as general and administrative expenses within the condensed consolidated statements of operations.

Private placement warrant liability

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Balance, beginning of period	$	921	$	—	$	1,293	$	—
Warrants recognized upon closing of reverse recapitalization	—		1,721		—		1,721
Transfer of Private Warrants to Public Warrants	—		(536)		—		(536)
Change in the estimated fair value of warrants	(744)		(683)		(1,116)		(683)
Balance, end of the period	$	177	$	502	$	177	$	502

The private placement warrant liability is fair valued using the Black-Scholes option-pricing model. The following table provides quantitative information regarding assumptions used in the Black-Scholes option-pricing model to determine the fair value of the private placement warrants as of September 30, 2023 and December 31, 2022:


	September 30, 2023	December 31, 2022
Stock price	$3.57	$10.88
Term (in years)	3.8	4.6
Expected volatility	63.0%	60.0%
Risk-free rate	4.8%	4.1%
Dividend yield	—%	—%

Changes to the unobservable inputs do not have a material impact on the Company’s condensed consolidated financial statements. The Company recognized a gain of $744 and $1,116 during the three and nine months ended September 30, 2023, respectively, and $683 during the three and nine months ended September 30, 2022, recorded in changes in fair value of warrant liability within the condensed consolidated statements of operations.

There were no transfers between Level 1, Level 2 or Level 3 fair value hierarchy categories of financial instruments for the three and nine months ended September 30, 2023 and September 30, 2022.

Assets Measured at Fair Value on a Nonrecurring Basis

Our non-financial assets, such as goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial asset is required to be evaluated for impairment and an impairment is recorded to reduce the non-financial asset’s carrying value to the fair value as a result of such triggering events, the non-financial assets are measured at fair value for the period such triggering events occur.

For the three and nine months ended September 30, 2023 and 2022, respectively, the Company has not recorded any impairment charges on non-financial assets.

5. REVENUE

Disaggregation of Revenue

The Company believes that the disaggregation based on the reportable segments best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market, and other factors. As described in Note 13 – Segment Information, the Company has two reportable segments, travel marketplace and SaaS platform.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue from travel marketplace	$	54,101	$	40,094	$	160,302	$	124,272
Revenue from SaaS Platform	431		419		930		964
	$	54,532	$	40,513	$	161,232	$	125,236

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Contract Balances

The timing of revenue recognition, billing, and cash collection results in the recognition of accounts receivable, contract assets and contract liabilities on the condensed consolidated balance sheets.

Contract assets represent unbilled and accrued incentive revenues from airline companies and our GDS service providers based on the achievement of contractual targets defined at contract inception.

Contract liabilities, discussed below, are recorded as deferred revenue on the condensed consolidated balance sheets and disclosures. Cash received that are contingent upon the satisfaction of performance obligations are accounted for as deferred revenue. Deferred revenue primarily relates to cash advances received from GDS service providers for future bookings of airline tickets.

The opening and closing balances of accounts receivable and deferred revenue are as follows:


	Accounts Receivable		Contract Asset		Deferred Revenue
Ending Balance as of December 31, 2022	$	21,733	$	5,794	$	20,484
Increase/(decrease), net	86,545		6,429		(1,692)
Ending Balance as of September 30, 2023	$	108,278	$	12,223	$	18,792

During the nine months ended September 30, 2023, the Company recognized revenue of $3,174 from the deferred revenue balance as of December 31, 2022.

As of September 30, 2023, the Company expects approximately 32% of total deferred revenue to be realized within one year, approximately 36% within two to three years and the remaining 32% within four to six years.

6. BUSINESS COMBINATIONS AND DIVESTITURES

Orinter Acquisition

On January 31, 2023 (the “Orinter Closing Date”), the Company executed the Share Purchase and Sale Agreement (the “Orinter Purchase Agreement”) to acquire all of the outstanding equity interests in Orinter Tour & Travel, S.A. (“Orinter”) from OTT Holding Ltd (the “Sellers”) (such transactions contemplated by the Orinter Purchase Agreement, the “Orinter Acquisition”). Orinter is a high-growth and leading travel provider that currently serves a multitude of travel companies, with a strong presence in Brazil and Latin America. Through this acquisition, the Company has expanded its geographic footprint to include Brazil’s domestic and outbound travel market. Additionally, Orinter’s direct relationships with Latin American hotels will provide valuable cross-sell opportunities for the Company.

The acquisition date fair value of consideration transferred for Orinter is as follows:


Cash consideration (i)	$	21,556
Issuance of Class A Common Stock (ii)	16,037
Fair value of earn-out consideration (iii)	3,060
Total purchase price consideration	$	40,653

i.Cash consideration of $20,020 paid and $1,536 holdback consideration transferred to an escrow account as a guarantee in case of necessity of reimbursement, payment and/or use by Orinter for fulfillment of obligations of Orinter deriving from customers credits and customers prepayment.

ii.Issuance of 1,726,405 shares of common stock to be maintained in an escrow account. The release of the shares are as follows: (a) 903,202 after a period of 12 months from the Orinter Closing Date, and (b) 823,203 shares after a period of 24 months from the Orinter Closing Date.

iii.The purchase price consideration includes an earn-out obligation of $10,000 (paid in equal installments over 3 years) contingent on Orinter meeting EBITDA targets of $10,500, $11,500, and $12,500, for the years ended December 31, 2024, 2025 and 2026, respectively.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the effective time of the business combination based on information currently available and continues to adjust those estimates upon refinement of

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market participant assumptions for integrating businesses. The Company is continuing to obtain information to finalize acquired tax liabilities and assets with respect to the Orinter Acquisition. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period, but no later than one year from the date of the Orinter Closing Date. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

Final determination of the fair values may result in further adjustments to the values presented in the following table.


Assets acquired:	Estimated Fair Value
Cash	$	624
Accounts receivable	40,431
Prepaid expenses and other current assets	1,447
Property and equipment	336
Goodwill	6,146
Operating lease right-of-use-assets	172
Intangible assets	29,280
Fair value of assets acquired	78,436
Liabilities assumed:
Accounts payable	31,243
Accrued expenses and other current liabilities	6,437
Operating lease liabilities	103
Fair value of liabilities assumed	37,783
Total purchase consideration	$	40,653

During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill.

Goodwill

The excess of the purchase price consideration over the fair values assigned to the assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributable to expected post-acquisition synergies from integrating Orinter’s technology with Mondee’s platform and technology. Goodwill recorded in connection with the acquisition was allocated to the travel marketplace segment and is amortizable for income tax purposes. The goodwill attributable to the acquisition was recorded as a non-current asset and is not amortized but is subject to an annual review for impairment.

Identifiable Intangible Assets

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:


	Useful life (years)	Fair value
Customer relationships	11	$	21,600
Trade names	15	7,680
Total acquired intangibles		$	29,280

Since the acquisition, Orinter was included in the Company’s travel marketplace segment.

Acquisition costs related to the Orinter Acquisition were not material. The amounts of revenue and pretax net income of Orinter included in the Company’s condensed consolidated statement of operations from the Orinter Closing Date to September 30, 2023 were $40,936 and $7,852, respectively.

Interep Acquisition

On May 12, 2023 (the “Interep Closing Date”), the Company acquired all of the outstanding stock of Interep Representações Viagens E Turismo S.A. (“Interep”, such transaction referred to as the “Interep Acquisition”). Interep is a

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Brazilian travel operator that focuses on the upscale segment of the travel market. This acquisition further expands the Company’s geographical footprint in Latin America, enhance its product offerings and provide a complementary distribution network to that of Orinter, given Interep’s focus on the luxury market.

The acquisition date fair value of consideration transferred for Interep is as follows:


Cash consideration (i) (ii)	$	4,633
Issuance of Class A Common Stock (iii)	3,097
Other consideration - travel credit (iv)	50
Fair value of earn-out consideration (v)	1,700
Total purchase consideration	$	9,480

In connection with the acquisition, the Company agreed to pay total consideration of (i) $4,000 on the Interep Closing Date, (ii) a deferred payment of $720 paid in 36 installments, (iii) 411,000 shares of Company Class A Common Stock, (iv) $50 in travel credits, and (v) an earn-out component up to an aggregate of $3,000 contingent on Interep meeting certain adjusted EBITDA targets. The 411,000 shares of Company Class A Common Stock were legally issued on July 12, 2023.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:


Assets acquired:	Estimated Fair Value
Cash	$	2,925
Accounts receivable	21,697
Prepaid expenses and other current assets	683
Property and equipment	61
Operating lease right-of-use-assets	63
Other non-current assets	9
Deferred income tax asset	265
Goodwill	808
Intangible assets	7,120
Fair value of assets acquired	33,631
Liabilities assumed:
Accounts payable	22,962
Accrued expenses and other current liabilities	1,112
Operating lease liabilities	63
Other long-term liabilities	14
Fair value of liabilities assumed	24,151
Total purchase consideration	$	9,480

The Company recorded $4,910 for customer relationships with an estimated useful life of 7.5 years, and $2,210 for trade names with an estimated useful life of 15 years. The resulting goodwill is primarily attributable to the assembled workforce and expanded market opportunities from the Interep Acquisition. Goodwill recorded in connection with the acquisition was allocated to the travel marketplace segment and is amortizable for income tax purposes. Acquisition costs related to the Interep Acquisition were not material.

The amounts of revenue and pretax net income of Interep included in the Company’s condensed consolidated statement of operations from the Interep Closing Date to September 30, 2023 were $9,943 and $2,809, respectively.

Consolid Acquisition

On May 12, 2023 (the “Consolid Closing Date”), the Company acquired all of the outstanding stock in Consolid Mexico Holding, S.A. P.I. de C.V. (“Consolid”) (such transaction referred to as the “Consolid Acquisition”). Consolid is a high-growth, leading travel provider based in Mexico with the main objective of generating higher income for travel agencies in Mexico and around the world through first-class technological tools with products and services. Through this

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acquisition, the Company expands its geographic footprint in Mexico’s domestic and outbound travel market, as well as in other areas of Latin America.

The acquisition date fair value of consideration transferred for Consolid is as follows:


	Amount
Cash consideration	$	3,406
Fair value of earn-out consideration	1,820
Total purchase consideration	$	5,226

In connection with the Consolid Acquisition, the Company agreed to pay cash consideration of $3,406 and an earn-out component up to an aggregate of $1,000 cash and 400,000 shares of Company Class A Common Stock, contingent on Consolid meeting certain adjusted EBITDA targets. The Company intends to claw back the net working capital adjustment of $556 net of future earn-out payments, and therefore, the $556 is recorded net against the fair value of the earn-out liability on the condensed consolidated balance sheet since these amounts have the right to offset.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the effective time of the Consolid Acquisition based on information currently available and continues to adjust those estimates upon refinement of market participant assumptions for integrating businesses. The Company is continuing to obtain information to finalize acquired tax liabilities and assets with respect to the Consolid Acquisition, as well as the clawback amount impacting the purchase consideration. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period, but no later than one year from the date of the Consolid Acquisition. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized, to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. Final determination of the fair values may result in further adjustments to the values presented in the following table.


Assets acquired:	Estimated Fair Value
Cash	$	4,050
Accounts receivable	3,569
Prepaid expenses and other current assets	1,236
Deferred income tax assets	704
Property and equipment	90
Goodwill	1,354
Operating lease right-of-use-assets	143
Intangible assets	1,195
Other non-current assets	41
Fair value of assets acquired	12,382
Liabilities assumed:
Accounts payable	5,441
Accrued expenses and other current liabilities	1,261
Operating lease liability	143

Other long-term liabilities	311
Fair value of liabilities assumed	7,156
Total purchase consideration	$	5,226

The intangible assets acquired include customer relationships with a fair value of $674 and an estimated useful life of 8.5 years, as well as trade names with a fair value of $521 and an estimated useful life of 15 years. The Company recorded approximately $1,354 of goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities obtained through the Consolid Acquisition. Goodwill recorded in connection with the acquisition was allocated to the travel marketplace segment and is not deductible for income tax purposes. Acquisition costs related to the Consolid Acquisition were not material.

The Company has included the financial results of Consolid in its condensed consolidated financial statements from the Consolid Closing Date, which have not been material to date.

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Skypass Acquisition

On August 12, 2023 (the “Skypass Closing Date”), the Company executed the Share Purchase Agreement to purchase all of the outstanding shares of Skypass Travel Inc., Skypass Travel de Mexico Sa de CV, Skypass Travel Private Limited and Skypass Holidays, LLC (collectively, “Skypass”) (such transaction referred to as the “Skypass Acquisition”). Skypass is an international travel operator specializing in national and international air travel and hotel bookings primarily for travelers and employees associated with international corporations. The Skypass Acquisition allows the Company to expand its reach in the cruise and holiday packages travel sectors.

The acquisition date fair value of consideration transferred for Skypass is as follows:


	Amount
Cash consideration(i)	$	3,908
Issuance of Class A Common Stock at Closing(ii)	5,320
Deferred stock consideration(iii)	1,584
Fair value of earn-out consideration(iv)	434
Total purchase price consideration	$	11,246

In connection with the acquisition, the Company agreed to pay total consideration of (i) $3,000 on the Skypass Closing Date, with an adjustment for working capital, (ii) 900,000 shares of Company Class A Common Stock on the Skypass Closing Date, (iii) 100,000 shares of Company Class A Common Stock within 60 days after each of the first, second and third anniversaries of the Skypass Closing Date, and (iv) an earn-out component up to an aggregate of 1,800,000 shares of Company Class A Common Stock over a four year period contingent on Skypass meeting certain adjusted EBITDA growth targets. In the event the EBITDA target is exceeded, the Company is required to pay additional shares of 2.5% on excess of the EBITDA target. The number of shares payable will be calculated based on the market value of the Company’s Class A Common Stock at settlement date.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the effective time of the Skypass Acquisition based on information currently available and continues to adjust those estimates upon refinement of market participant assumptions for integrating businesses. The Company is continuing to obtain information to determine the acquired assets and liabilities, including tax assets, liabilities and other attributes. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period, but no later than one year from the date of the Skypass Closing Date. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized, to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. Final determination of the fair values may result in further adjustments to the values presented in the following table.


Assets acquired:	Estimated Fair Value
Cash	$	1,746
Accounts receivable	3,491
Prepaid expenses and other current assets	25


Goodwill	4,054
Operating lease right-of-use-assets	1,006
Intangible assets	4,135

Fair value of assets acquired	14,457
Liabilities assumed:
Accounts payable	668
Accrued expenses and other current liabilities	684
Operating lease liabilities	714

Deferred income tax	1,145

Fair value of liabilities assumed	3,211
Total purchase consideration	$	11,246

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The intangible assets acquired include customer relationships with a fair value of $3,370 and an estimated useful life of 8.4 years, as well as trade names with a fair value of $765 and an estimated useful life of 15 years. The Company recorded approximately $4,054 of goodwill, which is primarily attributed to the assembled workforce and expanded market opportunities obtained through the Skypass Acquisition. Goodwill recorded in connection with the acquisition was allocated to the travel marketplace segment and is not deductible for income tax purposes. Acquisition costs related to the Skypass Acquisition were not material.

The Company has included the financial results of Skypass in its condensed consolidated financial statements from the Skypass Closing Date, which have not been material to date. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the condensed consolidated statements of operations.

LBF US Divestiture

In July 2023, the Company entered into a letter of intent with a former employee to sell LBF Travel Inc, LBF Travel Holdings LLC, Avia Travel and Tours Inc, and Star Advantage Limited (collectively, "LBF US") for net proceeds of 200,000 shares of the Company’s Class A Common Stock, which was valued at $1.7 million as of the disposal date. The Company allocated $0.5 million of the value of the shares to post-sales support provided to LBF US subsequent to the sale and recognized the remaining $1.2 million as purchase consideration. The divestiture of LBF US closed in September 2023. LBF US was initially acquired by the Company on December 20, 2019 ("2019 Acquisition") and operated within the travel marketplace segment. The buyer was a previous owner of LBF Travel Inc, who then became a Mondee employee along with the 2019 Acquisition until Mondee’s divestiture of LBF US.

In connection with the sale, the Company recognized a gain of $532, which was recorded in other expense, net. The gain on the transaction is comprised of a non-cash gain of $697, offset by the derecognition of $165 of cash. Additionally, the Company provided certain short term transition services to support the divested business through the third quarter of 2023. The Company incurred $9,859 of transition service costs for the three months ended September 30, 2023, which was recorded in other expense, net. As of September 30, 2023, the Company has paid $7,386 towards the LBF US transition services, and have a remaining amount of $2,473 unpaid. The results of the divested business through date of sale and the transition services provided to LBF US post the sale were reflected within the travel marketplace segment.

Unaudited Pro Forma Operating Results

The following unaudited pro forma combined financial information presented the results of operations as if (i) the acquisitions of Orinter, Interep and Consolid and (ii) the divestiture of LBF US were consummated on January 1, 2022 (the beginning of the comparable prior reporting period), including certain pro forma adjustments that were directly attributable to the Orinter, Interep and Consolid Acquisitions, including additional amortization adjustments for the fair value of the assets acquired. These unaudited pro forma results do not reflect any synergies from operating efficiencies post their acquisition dates. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations. The unaudited pro forma financial information did not include the effect of Skypass Acquisition due to its insignificant impact to the Company's consolidated operation results.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues, net	$	53,840	$	51,075	$	172,624	$	145,992
Net loss	(19,699)		(58,610)		(38,382)		(64,295)

7. GOODWILL AND INTANGIBLE ASSETS, NET

The following table presents the changes in goodwill by reportable segments:

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	Travel Marketplace		SaaS Platform		Total
Balance as of December 31, 2022	$	58,999	$	7,421	$	66,420
Additions, including measurement period adjustments (Note 6 – Business Combinations and Divestitures)	12,362		—		12,362
Divestiture of LBF US (Note 6 – Business Combinations and Divestitures)	(1,679)		—		$	(1,679)
Foreign currency translation impact	64		—		64
Balance as of September 30, 2023	$	69,746	$	7,421	$	77,167

Indefinite-lived Intangible Assets. Our indefinite-lived intangible assets relate to trade names acquired in various acquisitions in past periods. Intangible assets, net includes indefinite-life intangible assets of $10,653 as of September 30, 2023 and $12,028 as of December 31, 2022, respectively.

Definite-life intangible assets, net consisted of the following as of September 30, 2023:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	91,481	$	(34,383)	$	57,098
Trade name	20,803		(6,076)		14,727
Supplier relationships	5,767		(1,443)		4,324
Developed technology	7,220		(2,867)		4,353
Balances as of September 30, 2023	$	125,271	$	(44,769)	$	80,502

Definite-life intangible assets, net consisted of the following as of December 31, 2022:


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	60,778	$	(29,288)	$	31,490
Trade name	9,580		(5,295)		4,285
Supplier relationships	5,767		(1,153)		4,614
Developed technology	7,220		(2,267)		4,953
Balances as of December 31, 2022	$	83,345	$	(38,003)	$	45,342

Amortization expense for intangible assets was $2,458 and $1,584 for the three months ended September 30, 2023 and 2022, respectively, and $6,747 and $4,753 for the nine months ended September 30, 2023 and 2022, respectively.

The estimated future amortization expense related to intangible assets with definite lives is as follows:


Fiscal years ending December 31,
2023 (remaining three months)	$	2,508
2024	10,034
2025	9,860
2026	9,510
2027	9,510
Thereafter	39,080
	$	80,502

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8. DEBT

The following table summarizes the Company’s outstanding borrowing arrangements, excluding governmental loans:


	As of September 30,		As of December 31,
	2023		2022
TCW Term Loan	$	102,500	$	106,250
Wingspire Term Loan	14,632		—
TCW Term Loan payment in-kind interest	50,543		46,518
Wingspire Term Loan payment in-kind interest	379		—
Others	—		14
Total outstanding principal balance	168,054		152,782
Less: TCW Term Loan unamortized debt issuance costs and discounts	(12,316)		(18,386)
Less: Wingspire Term Loan unamortized debt issuance costs and discounts	(283)		—
Total debt	155,455		134,396
Less: Current portion of long-term debt	(10,313)		(7,514)
Long-term debt, excluding current portion	$	145,142	$	126,882

TCW Credit Agreement

On December 23, 2019, the Company, entered into a financing agreement (the “TCW Agreement”) with TCW (the “Lenders”) consisting of a $150,000 multi-draw term loan with a maturity date of December 23, 2024 (the “TCW Term Loan”). Additionally, on the same day, the Company entered into a revolving credit facility (“TCW LOC”) with an aggregate principal amount not exceeding $15,000. Undrawn balances available under the revolving credit facility are subject to commitment fees of 1%. These facilities are guaranteed and are secured by substantially all of the assets of the Company.

On January 11, 2023, the Company executed a Ninth Amendment to the financing agreement with TCW (the “Ninth Agreement”), wherein Wingspire Capital LLC (“Wingspire”) became a party to the TCW Agreement. The amendment resulted in the redesignation of $15,000 under the TCW Term Loan from other lenders to Wingspire. Concurrently, Wingspire funded an additional $15,000 of term loan commitment on top of the already outstanding TCW Term Loan (the “Wingspire Term Loan”), with a total of $30,000 contributed by Wingspire as part of this amendment. Additionally, the Ninth Amendment split the TCW Term Loan into two loans. The first loan will be represented by Wingspire with an outstanding principal balance of $30,000 and the second loan will be represented by TCW with an outstanding principal balance of $137,753. Further, pursuant to the Ninth Amendment, Wingspire consented to take over the TCW LOC for a principal amount not to exceed $15,000, which resulted in a total of contributed by Wingspire in the arrangement.

Until January 11, 2024, the Company has the option to increase the Wingspire Term Loan by $20,000 under two conditions: (i) the Company must have a trailing 12-month EBITDA of at least $25,000; and (ii) the Company must draw in increments of at least $5,000.

On January 31, 2023, the Company executed a tenth amendment to the TCW Agreement (the “Tenth Amendment”). The Tenth Amendment (1) set forth the terms on which we could acquire Orinter, pursuant to that certain Orinter Purchase Agreement, among us, Mondee Brazil, LLC, a Delaware limited liability company (“Mondee Brazil”), OTT Holdings Ltda. (“OTT Holdings”), Orinter, and the other parties named therein; (2) set forth the terms on which we could pay the earn-out payment contemplated to be paid to OTT Holdings and certain key executives of OTT Holdings pursuant to the Orinter Purchase Agreement; (3) required that Mondee Brazil join as a party to the TCW Agreement and the Security Agreement (as defined in the TCW Agreement); (4) required that Mondee, Inc. pledge 100% of the equity interests of Mondee Brazil; and (5) required that Mondee Brazil and Mondee Inc. pledge 100% of the equity interests of Orinter.

The effective interest on the TCW Term Loan for the nine months ended September 30, 2023, and 2022 is 24% and 22%, respectively. The effective interest on the Wingspire Term Loan for the nine months ended September 30, 2023 is 17%.

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As of September 30, 2023, and December 31, 2022, the total estimated fair value of the Company’s TCW Term Loan was $147,426 and $143,651, respectively. As of September 30, 2023, the total fair value of the Company’s Wingspire Term Loan was $14,460. The fair value of debt is calculated using a market-based discount rate.

9. EQUITY

Class A Common Stock

As of September 30, 2023, the Company had authorized a total of 500,000,000 shares for issuance of common stock, of which 85,498,657 shares are issued and outstanding. Not reflected in the shares issued and outstanding is approximately 118,769 shares related to restricted stock units (“RSUs”) that vested during 2023, but have not been settled and issued.

As of December 31, 2022, the Company had 82,266,160 shares of the Company’s common stock issued and outstanding. Not reflected in the shares issued and outstanding is approximately 331,600 shares related to RSUs that vested in 2022, but had not been settled and issued.

Warrants

As of September 30, 2023 and December 31, 2022, the Company had the following common stock warrants outstanding:

Warrants

Exercise Price

Issuance Date

Expiration

Private Placement Warrants

232,500

11.50

7/18/2022

7/18/2027

Common Stock Warrants

1,275,000

11.50

9/29/2022

9/29/2027

Total

1,507,500

Share Repurchase Program

On September 21, 2023, the Company’s Board of Directors (the “Board”) authorized a share repurchase program to purchase up to $30,000 of the Company’s outstanding shares of Class A Common Stock (the “Share Repurchase Program”). The amount and timing of repurchases is determined at the Company’s discretion, depending on market and business conditions, and prevailing stock prices among other factors. Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including insider trading laws. The program is not subject to any self-imposed Company trading restrictions or blackout periods and has no expiration date.

During the nine months ended September 30, 2023, the Company repurchased 215,350 shares of its Class A Common Stock for a total of $766. The repurchase was at a weighted-average price of $3.54 per share when excluding commissions, and are recorded to treasury stock. The repurchase liability of $766 is included in accrued expenses and other current liabilities on the Company’s condensed consolidated balance sheets, pending settlement of trade in October 2023. As of September 30, 2023, $29,234 remained available under the Share Repurchase Program. On October 17, 2023, the Company’s Board authorized a $10,000 expansion of the Company’s on-going Share Repurchase Program, bringing the total size of the common stock repurchase program authorized by the Board up to $40,000.

10. STOCK-BASED COMPENSATION

2022 Equity Incentive Plan

The Board adopted, and the stockholders of the Company approved the 2022 Equity Incentive Plan (the “2022 Plan”), effective as of the Closing Date. The maximum number of shares of common stock that may be issued pursuant to the 2022 Plan is 9,615,971.

Restricted Stock Units

RSU activity during the nine months ended September 30, 2023 was as follows:

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	Number of Restricted Stock Incentive Units Outstanding	Weighted-Average Grant Date Fair Value
Unvested - December 31, 2022	105,000	$	9.40
Granted	2,978,378	7.70
Vested	(383,818)	8.90
Forfeited or canceled	—	—
Unvested – September 30, 2023	2,699,560	$	7.30

The Company recognized $2,170 and $3,596 in personnel expense for RSUs in the three and nine months ended September 30, 2023. The Company recognized $59 and $227, respectively, in general and administrative expense for RSUs in the three and nine months ended September 30, 2023. The Company recognized $3,386 in personnel expense for RSUs during the three and nine months ended September 30, 2022. The Company recognized $139 in general and administrative expense for RSUs during the three and nine months ended September 30, 2022.

Secondary Sale

In June 2023, the Company facilitated the sale of 5,250,000 shares of the Company’s Class A Common Stock at a price of $10.00 per share to investors for an aggregate purchase price of $52,500. Of the 5,250,000 shares that were sold in the transaction, 2,148,783 shares of common stock were sold by current and former employees. The Company did not receive any proceeds from the secondary sale, however, as the shares were sold above fair value, the Company recognized the excess purchase price paid above fair value to current and former employees as stock-based compensation expense. The Company recognized $1,848 in personnel expense on the condensed consolidated statement of operations for the nine months ended September 30, 2023.

Of the 5,250,000 shares sold, 2,122,529 shares, or an aggregate purchase price of $1,825, were sold by related parties of the Company.

Earn-out Shares

Earn-out shares were issued following the closing of the reverse recapitalization on July 18, 2022. Holders of the earn-out shares are entitled to the right to receive up to an aggregate amount of 9,000,000 shares of common stock. The earn-out shares would vest in equal thirds if the trading price of the Company’s common stock was greater than or equal to $12.50, $15.00, and $18.00 for any 20 trading days in any 30 consecutive trading day period, at any time during the period beginning on the first anniversary of the Closing Date and ending on the fourth anniversary of the Closing Date. These earn-out shares were determined to be equity-classified

As of September 30, 2023, the earn-out shares were allocated as follows:

Shareholder Type

Grant Date

Number of Shares

Employee

7/18/2022

6,000,000

Investor

7/18/2022

500,000

Employee

9/7/2022

900,000

Non-employee

9/12/2022

200,000

Employee

4/20/2023

180,000

Unallocated shares

—

1,220,000

Total

9,000,000

Except for the 380,000 earn-out shares allocated on September 12, 2022 and April 20, 2023, the remaining earn-out shares have been legally issued to the respective shareholders and have restrictions that prohibit the shareholders from transferring them until the vesting market conditions are met. These earn-out shares in escrow are not considered outstanding for accounting purposes until resolution of the earn-out contingency.

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The estimated grant date fair value of shares allocated in 2023 was determined using the Monte Carlo simulation method. Assumptions used in the valuation were as follows:


			April 20, 2023
Fair value of Class A Common Stock			$10.70
Selected volatility			65.0%
Risk-free interest rate			3.9%
Contractual term (years)			3.2

The Company recognized $450 and $3,787 of compensation expense for employees to personnel expenses within the condensed consolidated statement of operations for the three and nine months ended September 30, 2023, respectively. The non-employee is an advisor to the Company and its stock-based compensation expense of $278 and $851 for the three and nine months ended September 30, 2023, respectively was recorded to general and administrative expenses within the condensed consolidated statement of operations.

The Company recognized $50,734 of compensation expense for employees to personnel expenses within the condensed consolidated statement of operations for the three and nine months ended September 30, 2022. The Company recognized $33 of non-employee stock-based compensation expense to general and administrative expenses within the condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

On the Closing Date, 6,000,000 of the earn-out Class A Common Stock were issued to the chief executive officer of Mondee which was determined to be equity settled in accordance with ASC 480. The chief executive officer was awarded earn out shares primarily to lead and direct activities contributing to successful close of the Business Combination in his capacity of an executive responsible for oversight with no future services required. The Company determined his awards to be compensatory in nature owing to his service agreement and oversight role in the Business Combination. The Company recorded compensation expenses upon completion of the Business Combination totaling $50,060 within personnel expenses on the condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

Subsequent to the Closing Date, the Company allocated an additional 1,100,000 shares. These earn-out shares require future services and therefore were concluded to be compensatory in nature in accordance with ASC 718. The stock based compensation expense for employee earn-out shares were recognized over the derived service period. For non-employee earn-out shares, the Company recorded stock based compensation expense on a monthly basis over the longest period between the implicit or derived service period. The Company recorded an additional $674 of compensation expense for employees to personnel expenses within the condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

Employee Stock Purchase Plan

The Board adopted, and the stockholders of the Company approved, the Employee Stock Purchase Plan (“ESPP”), which became effective as of the Closing Date. The ESPP initially reserves and authorizes the issuances of up to a total of 1,923,194 shares of common stock to participating employees. The ESPP permits participants to purchase common stock of up to the lesser of 8% of their eligible compensation or $25,000 per offering period. The initial offering period began May 1, 2023 and will end on October 31, 2023. On each purchase date, participating employees will purchase the shares at a price per share equal to 85% of the lesser of (1) the fair market value of our common stock on the offering date or (2) the fair market value of our common stock on the purchase date. Stock-based compensation for ESPP for the three months ended September 30, 2023 was not material. As of September 30, 2023, the remaining unrecognized stock-based compensation for ESPP is not material.

11. COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be a party to litigation and subject to claims incidental to its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a material effect on its business. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense and settlement costs, diversion of management resources,

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and other factors. As of September 30, 2023, the Company currently has two outstanding legal claims that may have a material impact.

Litigation Relating to LBF Acquisition. Thomas DeRosa, a shareholder of LBF Travel Management Corp. (f/k/a LBF Travel, Inc.), the entity that sold LBF Travel Holdings, LLC to Mondee, sued LBF Travel Management Corp. and its CEO to recover a portion of the proceeds of the sale of LBF Travel Holdings, LLC to Mondee. Mondee was later added as a party to this litigation via a third-party complaint that alleges, among other things, that Mondee aided and abetted the directors and officers of LBF Travel Management Corp. in breaches of their fiduciary duties in connection with the acquisition. The case remains pending in Federal Court. There is a separate state court action that has been stayed. While the Company believes that they will be successful based on their position, it is nevertheless reasonably possible that the Company could be required to pay any assessed amounts in order to contest or litigate the assessment and an estimate for a reasonably possible range of loss of any such payments cannot be made.

On October 13, 2021, Mondee received a summons from Global Collect Services B.V. to appear in the District Court of Amsterdam with respect to a claim of $548 for past dues and outstanding invoices, fees, plus interest and costs of collection. The Company is in current discussions to settle this lawsuit and at this time the Company cannot reasonably estimate the possible loss.

Letters of Credit

The Company had $7,650 and $7,432 secured letters of credit outstanding as of September 30, 2023 and December 31, 2022, respectively. These primarily relate to securing the payment for the potential purchase of airline tickets in the ordinary course of business and are collateralized by term deposits, for which the contractual obligation is less than a year.

12. RELATED PARTY TRANSACTIONS

A summary of balances due to and from related parties, and transactions with related parties are as follows:


Balances at Period End	September 30, 2023		December 31, 2022
Amount payable to related party (1)	$	42	$	13
Amount receivable from related party (2)	43		38
Loan receivable from related party (3)	92		—
Note payable to related party (4)	200		197
Rent payable to related parties and an affiliate associated with these related parties and an employee(5)	222		—
Amounts receivable from related parties (6)	156		—


	Three Months Ended September 30,				Nine Months Ended September 30,
Transactions with Related Parties	2023		2022		2023		2022
Offshore IT and software development services, sales support and other services (7)	$	—	$	—	$	—	$	660
Interest income (8)	—		26		—		282
Payment made on behalf of Mondee Holdings LLC (9)	—		5,241		—		5,241
Service fees (2)	(1)		441		(1)		2,382
Loan receivable from related party (3)	92		—		92		—
Lease expense (5)	112		58		222		116

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_________________________


(1)			As of December 31, 2022 Mondee Tech Pvt Ltd had a payable to Metaminds Software, which was settled in the three months ending March 31, 2023. As of September 30, 2023, Interep owes a travel credit of $42 to Asi Ginio, a member of the Board of Directors. In connection with the Interep Acquisition, the Company has agreed to provide Mr. Ginio the travel credits in exchange for the general advisory services Mr. Ginio provided to the former owners of Interep.
(2)			Pursuant to a Universal Air Travel Plan (“UATP”) Servicing Agreement dated May 11, 2021, the Company sold certain airline tickets using prepaid UATP credit cards arranged by Mondee Group, LLC (“Mondee Group”), in exchange for a service fee equal to 10.0% of the revenue derived from the sale of such airline tickets. Mondee Group is owned by the Company’s CEO, Prasad Gundumogula, and is not a wholly-owned subsidiary of the Company. Mondee Group led the fundraising and arranged the funds that were used to purchase prepaid UATP credit cards at a discount from their face value from a certain airline.
(3)			In July 2023, the Company provided financing of $100 to its Chief Financial Officer ("CFO") as part of his relocation package. The promissory note bears an annual interest rate of 3.3% per annum and matures at the earlier of April 2026 or when the CFO's employment with the Company terminates. All outstanding principal, inclusive of any accrued and unpaid interest, is slated for settlement upon maturity of the note. The Company has the option to forgive the obligation in one-third increments which is contingent upon the absence of any breach of the CFO's obligations with the Company and his continued service.
(4)			The Company has a note payable to the CEO amounting to $200 and $197 as of September 30, 2023 and December 31, 2022, respectively. The loan is collateralized and carries an interest rate of 2.0% per annum. Principal and interest are due on demand.
(5)			The Company currently leases office space from Metaminds Software. The lease commencement date for this was April 1, 2022. The lease had an original lease term of 11 months, and has been renewed, and the monthly minimum base rent is immaterial. From August 2023, the Company started leasing office spaces from certain employees and entities associated with these employees. These leases were recognized on the Skypass Closing Date and have 3 year terms. The monthly minimum base rent is immaterial.
(6)			Corresponds to receivables from former owners of Interep and Skypass for payments made by the Company on their behalf.
(7)			Metaminds Technologies Pvt. Ltd. and Metaminds Software Solutions Ltd, corporations limited by shares organized under the laws of India, and Metaminds Global Solutions Inc. (“Metaminds”), provide certain consulting services to Mondee and its subsidiaries in the areas of software development, fulfillment and other support. The CEO co-owns Metaminds with his wife. The CEO is a material shareholder in Mondee, and both the CEO and his wife serve on the Board of Directors of Mondee, Inc. and certain of its subsidiaries. Prior to acquisition of certain assets and liabilities of Metaminds Technologies Pvt Ltd (“Metaminds Technologies”), Mondee hired all employees of Metaminds Technologies and Metaminds Software Solutions Ltd (“Metaminds Software”) in April 2022. There were no services rendered by Metaminds Technologies and Metaminds Software for offshore IT, offshore software development, or sales support for the three and nine months ended September 30, 2023.
(8)			The Company had a secured promissory note receivable from Mondee Group, bearing an interest rate of 2.3% compounded annually, with a 10-year term, and was secured by 14,708 Class A units in Mondee Holdings, LLC. The note was settled upon the occurrence of the reverse recapitalization with ITHAX, partly by a right to receive the Company’s Class A Common Stock to the extent of $20,336 and partly by the asset acquisition of Metaminds Technologies (defined below). On March 10, 2023, the Company received 2,033,578 shares of Class A Common Stock, which were valued at $20,336. The shares are reflected as treasury stock on the condensed consolidated balance sheet as the shares have not been retired as of September 30, 2023.
(9)			Corresponds to a payment made to Rocketrip put option holders by the Company on behalf Mondee Holdings LLC.

In addition to the above transactions, in connection with the Orinter Acquisition, the former owners of Orinter agreed that upon the release of the 903,202 escrow shares from escrow 12 months after the Orinter Closing Date the former owners will transfer 80,000 of those escrow shares to Asi Ginio, a current Board member of the Company, in connection with general advisory services Mr. Ginio provided to the former owners.

Prepaid expenses and other current assets on the Company's condensed consolidated balance sheets includes the current portion of loans receivable from related parties and other employees of $98 and $81 as of September 30, 2023 and December 31, 2022, respectively. Other non-current current assets on the Company's condensed consolidated balance sheets includes the non-current portion of loans receivable from related parties and other employees of $322 and $200 as of September 30, 2023 and December 31, 2022, respectively.

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13. SEGMENT INFORMATION

We have the following reportable segments: travel marketplace and SaaS Platform. These reportable segments offer different products and services and are managed separately because the nature of products and services, and methods used to distribute the services are different. Our primary segment measure is Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Assets, liabilities, one-time legal expenses, income tax expense and other expense, net are reviewed on an entity-wide basis by the Chief Operating Decision Maker (“CODM”), and hence are not allocated to these reportable segments. Segment revenue is reported and reviewed by the CODM on a monthly basis.

Such amounts are detailed in our segment reconciliation below.


	Three Months Ended September 30, 2023
	Travel Marketplace		SaaS Platform		Corporate		Total


Revenue	$	54,101	$	431	$	—	$	54,532
Adjusted EBITDA	5,805		(512)		208		5,501
Depreciation and amortization	(4,031)		(134)		—		(4,165)
Stock-based compensation	(2,974)		—		—		(2,974)
Payroll tax expense related to stock-based compensation	(140)		—		—		(140)
Restructuring (expense) income, net	(239)		—		—		(239)
Acquisition cost	(545)		—		—		(545)
Non-recurring legal expense	—		—		(785)		(785)
One time non-recurring expense1	(22)		—		—		(22)
Change in fair value of earn-out liability	593		—		—		593
Operating loss							$	(2,776)
Total other expense, net							(16,942)
Loss before income taxes							(19,718)
Provision for income taxes							(381)
Net loss							$	(20,099)

1 Includes non-recurring transaction filing fees and associated professional services


	Three Months Ended September 30, 2022
	Travel Marketplace		SaaS Platform		Total


Revenue	$	40,094	$	419	$	40,513
Adjusted EBITDA	3,763		(195)		3,568
Depreciation and amortization	(2,826)		(137)		(2,963)
Restructuring (expense) income, net	(2,130)		—		(2,130)
Stock-based compensation	(55,236)		—		(55,236)
Operating loss					$	(56,761)
Total other expense, net					(7,526)
Loss before income taxes					(64,287)
Provision for income taxes					(321)
Net loss					$	(64,608)

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	Nine Months Ended September 30, 2023
	Travel Marketplace		SaaS Platform		Corporate		Total


Revenue	$	160,302	$	930	$	—	$	161,232
Adjusted EBITDA	14,351		(255)		—		14,096
Depreciation and amortization	(10,948)		(406)		—		(11,354)
Stock-based compensation	(10,339)		—		—		(10,339)
Payroll tax expense related to stock-based compensation	(226)		—		—		(226)
Restructuring (expense) income, net	(1,600)		—		—		(1,600)
Acquisition cost	(1,088)		—		—		(1,088)
Non-recurring legal expense	—				(2,024)		(2,024)
One time non-recurring expense1	(632)		—		—		(632)
Change in fair value of earn-out liability	(108)		—		—		(108)
Operating loss							$	(13,275)
Total other expense, net							(31,259)
Loss before income taxes							(44,534)
Provision for income taxes							(3,088)
Net loss							$	(47,622)

1 Includes non-recurring transaction filing fees and associated professional services


	Nine Months Ended September 30, 2022
	Travel Marketplace		SaaS Platform		Total


Revenue	$	124,272	$	964	$	125,236
Adjusted EBITDA	11,500		(1,203)		10,297
Depreciation and amortization	(8,138)		(411)		(8,549)
Restructuring (expense) income, net	(2,130)		—		(2,130)
Stock-based compensation	(55,397)		—		(55,397)
Operating loss					$	(55,779)
Total other expense, net					(17,322)
Loss before income taxes					(73,101)
Provision for income taxes					(611)
Net loss					$	(73,712)

Geographic Information

Revenue by geographic area, based on the geographic location of the Company’s subsidiaries processing the bookings, which is not necessarily representative of the travel destination or customer location, is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	27,729	$	37,004	$	98,306	$	117,588
Brazil	22,015		—		50,879		—
Rest of the world	4,788		3,509		12,047		7,648
	$	54,532	$	40,513	$	161,232	$	125,236

Long-lived assets (excluding capitalized software) and operating lease assets by geographic area is as follows:

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	September 30,		December 31,
	2023		2022
United States	$	1,267	$	1,016
Rest of the world	1,573		642
	$	2,840	$	1,658

14. NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(20,099)	$	(64,608)	$	(47,622)	$	(73,712)
Cumulative dividends allocated to preferred stockholders	(2,859)		(47)		(8,023)		(47)
Net loss attributable to common stockholders, basic and diluted	$	(22,958)	$	(64,655)	$	(55,645)	$	(73,759)
Denominator:
Weighted average shares outstanding, basic and diluted	77,925,635		72,462,512		77,162,363		64,730,224
Basic and diluted net loss per share	$	(0.29)	$	(0.89)	$	(0.72)	$	(1.14)

The following table presents the potential common shares outstanding that were excluded from the computation of diluted net loss per share of common shares as of the periods presented because including them would be anti-dilutive:


	September 30,
	2023	2022
Warrants (public warrants, private warrants, common stock warrants)	1,507,500	13,568,543
Outstanding earn-out shares (a)	7,780,000	7,600,000
Consolid earn-out shares	400,000	—
Skypass earn-out shares	1,800,000	—
Restricted stock units	2,699,560	105,000
ESPP shares	17,550	—
Potential common share excluded from diluted net loss per share	14,204,610	21,273,543

______________________________


(a)			While 7,400,000 of the earn-out shares allocated are legally issued and outstanding, they are excluded from the weighted average shares outstanding calculation because they are contingently returnable based on the Company's stock price during the term of the earn-out shares.

15. RESTRUCTURING EXPENSE, NET

During the three and nine months ended September 30, 2023 and 2022, the Company took actions at some of the office locations to reduce the size of its workforce to optimize efficiency and reduce costs. The Company completed the vast majority of announcements that affected employees by March 2023, including office closures.

During the three and nine months ended September 30, 2023, the Company recorded a net expense of $239 and $1,600, respectively, in restructuring expense, net on the condensed consolidated statements of operations. These expenses

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are one-time and are primarily related to employee severance and other termination benefits. During the nine months ended September 30, 2023, the Company terminated an office lease in India and recognized a gain of $337.

During the three and nine months ended September 30, 2023, the Company made employee severance, other termination benefits, and other restructuring costs payments of $232 and $1,368, respectively. The restructuring activity was completed by the end of June 30, 2023 and the Company currently does not expect material costs associated with restructuring activities in future periods.

During the three and nine months ended September 30, 2022, the Company recorded expense of $2,130, within restructuring expense, net in the condensed consolidated statements of operations. These expenses are one-time cash-based and of employee severance, lease rental termination related, and other termination benefits. During the three and nine months ended September 30, 2022, the Company made employee severance, other termination benefits, and other restructuring costs payments of $1,216. Outstanding restructuring charges at the reporting period are recorded in accrued expenses and other current liabilities, on the Company's condensed consolidated balance sheets.

Activities related to our restructuring impacted our travel marketplace segment. The following is a roll forward of the outstanding restructuring charges by cost type for the nine months ended September 30, 2023:


	Balance as of December 31, 2022		Additions		Adjustments		Cash Payments		Balance as of September 30, 2023
Severance and termination-related costs	$	—	$	1,676	$	(14)	$	(1,118)	$	544
Other exit costs	—		277		(2)		(250)		25
Total	$	—	$	1,953	$	(16)	$	(1,368)	$	569

16. INCOME TAXES

We have assessed our ability to realize our deferred tax assets and have recorded a valuation allowance against such assets to the extent that, based on the weight of all available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. In assessing the likelihood of future realization of our deferred tax assets, we placed significant weight on our history of generating tax losses. As a result, we have a full valuation allowance against all of our net deferred tax assets in the United States and certain other jurisdictions. We expect to maintain a valuation allowance in such jurisdictions for the foreseeable future.

We determine our provision for income taxes for interim periods using an estimate of our annual effective tax rate. We record any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs, including discrete items. The tax expense arising on account of tax amortization of an indefinite lived intangible asset and the state minimum taxes is calculated based on the discrete approach.

The Company recorded a $1,476 liability for an income tax contingency related to the acquisition of Orinter. At the date of acquisition, we recognized an indemnification asset at the same time and on the same basis as the recognized liability, to the extent that collection is reasonably assured, in accordance with ASC 805.

The effective income tax rate was (2)% and (7)% on the pre-tax loss for the three and nine months ended September 30, 2023, respectively, and (1)% and (1)% for the three and nine months ended September 30, 2022, respectively.

The effective tax rate differs from the U.S. statutory tax rate primarily due to the valuation allowances on the Company’s deferred tax assets as it is more likely than not that some or all of the Company’s deferred tax assets will not be realized.

17. EMPLOYEE BENEFIT PLAN

The Company sponsors a 401(k) defined contribution plan covering its employees in the United States of America. Participants may contribute a portion of their compensation to the 401(k) plan, subject to limitations under the Internal Revenue Code. The Company does not match contributions to its 401(k) plan.

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The Company’s Gratuity Plan in India (the “India Plan”) provides for a lump sum payment to vested employees on retirement or upon termination of employment in an amount based on the respective employee’s salary and years of employment with the Company. Liabilities with regard to the India Plan are determined by actuarial valuation using the projected unit credit method. Current service costs for these plans are accrued in the year to which they relate. Actuarial gains or losses or prior service costs, if any, resulting from amendments to the plans are recognized and reported as personnel expenses in the condensed consolidated statement of operations.

Components of net periodic benefit costs are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Current service cost	$	25	$	20	$	87	$	65
Past service cost	10		—		10		—
Interest cost	6		8		24		23
Net actuarial (gain)/loss recognized in the period	(42)		33		(204)		(4)
Expenses recognized in the condensed consolidated statement of operations	$	(1)	$	61	$	(83)	$	84

The components of actuarial gain/(loss) on retirement benefits are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Actuarial gain/(loss) for the period obligation	$	42	$	(33)	$	204	$	4
Actuarial gain/(loss) for the period plan assets	—		—		—		—
Actuarial gain for the period	$	42	$	(33)	$	204	$	4

18. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon this review, other than as described below, the Company did not identify any additional subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

On October 13, 2023, the Company executed an eleventh amendment to the TCW Agreement (the “Eleventh Amendment”). The Eleventh Amendment (1) provided consent to the Company’s acquisitions of Interep, Consolid and Skypass; (2) required that the Company pledge 100% of the equity interests of Interep, Consolid and Skypass, and certain other subsidiaries; (3) specifies that certain leverage ratios, minimum unadjusted EBITDA and fixed charge coverage ratio covenants shall not be measured through the term of the TCW Agreement; (4) sets forth certain qualified cash requirements; (5) adds as an event of default the failure of the Company to achieve certain refinancing milestones; (6) provides that the revolving credit commitment shall be uncommitted and discretionary in nature; and (7) provides for the payment of certain fees.

On October 17, 2023, the Company completed a private placement of the Company’s Series A-3 Preferred Stock and issued 10,000 shares for gross proceeds of $10,000. In conjunction with the closing of the preferred stock financing, the Company issued warrants to purchase 1,275,000 shares of the Company’s Class A Common Stock to the participating investors.

On November 2, 2023, the Company entered into a waiver (the "Waiver") with TCW Asset Management Company, Wingspire Capital LLC regarding the TCW Agreement which waived certain mandatory prepayment obligations of the Company.

On November 13, 2023 (the “Purplegrids Closing Date”), the Company executed a stock purchase agreement to purchase all of the outstanding shares of Purplegrids, Inc. Purplegrids combines open AI with business intelligence and

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RPA to automate customer experiences. In connection with the acquisition, the Company agreed to pay total consideration of approximately 1,900,000 shares adjusted for net working capital to target net working capital, closing cash to target cash, and indebtedness, including approximately i) 700,000 shares at closing with no lock-up; ii) 200,000 shares with a six month lock-up after closing and iii) 1,000,000 shares with a one year lock-up after closing. Sellers may receive up to 1,000,000 earn out shares that can be earned over a two-year period upon the achievement of certain revenue targets. Additionally, sellers may receive up to 1,542,857 shares depending on the price of the Company's stock on the first anniversary of the Purplegrids Closing date.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “we,” “us” or our “Company” refer to Mondee Holdings, Inc., a Delaware corporation, and its wholly-owned subsidiaries. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Investors are cautioned that statements that are not strictly historical statements of fact constitute forward-looking statements, including, without limitation, statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and are identified by words like “believe,” “expect,” “may,” “will,” “should,” “seek,” “anticipate,” or “could” and similar expressions. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:

•changes in domestic and foreign business, market, financial, political, regulatory and legal conditions;

•our ability to execute our business strategy, including monetization of our products;

•our ability to implement our strategic initiatives and continue to innovate our existing services;

•our projected financial information, growth rate and market opportunity;

•the ability to maintain the listing of our Class A common stock, par value $0.0001 per share (our “Class A Common Stock”) on the Nasdaq Global Market, and the potential liquidity and trading of our securities;

•the ability to recognize the anticipated benefits of any mergers and acquisition activity, which may be affected by, among other things, competition, our ability of to grow, manage growth profitably and retain our key employees;

•changes in applicable laws or regulations;

•rising inflationary pressures and fluctuations in interest rates;

•our ability to raise financing in the future and ability to continue as a going concern;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•our ability to maintain relationships with customers and suppliers;

•our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our financial performance;

•our ability to expand or maintain our existing customer base;

•our ability to remediate any material weaknesses and maintain an effective system of internal control over financial reporting;

•the outcome of any legal proceedings that may be instituted against us;

•unfavorable conditions in our industry, the global economy or global supply chain, including financial and credit market fluctuations, international trade relations, pandemics, political turmoil, natural catastrophes, warfare (such as the conflict involving Russia and Ukraine), and terrorist attacks; and

•other factors detailed under the section entitled “Risk Factors” discussed in our Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023.

Forward-looking statements are not assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed or implied by forward-looking statements include those discussed elsewhere in this Quarterly Report and in our future Quarterly Reports on Form 10-Q or other reports we file with the Securities and Exchange Commission (“SEC”).

Any forward-looking statement made by us in this Quarterly Report is based only on information currently available to us and speaks only as of the date of this report. We undertake no obligation to publicly revise or update any forward-

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looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. References to a fiscal quarter refer to our fiscal quarter ended September 30, 2023.

Overview

We are a leading travel technology company and marketplace with a portfolio of globally recognized technology solutions in the leisure, retail and corporate travel sectors.

We provide state-of-the art technologies, operating systems and technology-enabled services that seamlessly facilitate travel market transactions to better serve travelers through travel affiliates and numerous other emerging channels. These technology solutions with access to global travel inventory and extensive negotiated travel content, combined with our distribution network, create a modern travel marketplace. Our modern marketplace provides the increasingly discerning traveler with enhanced options on efficient consumer-friendly distribution platforms, while supporting our travel supplier partners in utilizing highly-perishable travel inventory.

In addition to the rapid development and enhancement of our modern travel marketplace, we are increasingly focused on expanding our penetration of the “gig economy” segment of the travel market. We believe our technology solutions are well-suited to serve gig workers seeking more flexible, diverse content and travel services.

From its founding, our Company began building a leading international wholesale travel business through acquisitions and deployment of our technology platform. We have continued to enhance our technology, expand our market reach and increase our travel market penetration with a combination of organic and inorganic initiatives and transactions. Most recently, we have acquired companies with subscription products, expanded hotel and retail consumer services and added more global content.

We believe the successful execution of our combined organic and inorganic acquisition business strategy has enhanced our modern travel marketplace and positioned us well for emerging travel business opportunities.

We generate revenue primarily from travel-related activity, which is presented as travel marketplace segment revenue on the Company's financial statements disaggregated revenue disclosure. The travel marketplace segment includes revenue earned from:

•Commissions revenue, including mark-up fees and commissions on airline ticket sales and to a lesser extent, for hotel accommodations and booking of car rentals, and other travel services;

•Incentive revenues earned from GDS service providers and airline companies for airline reservations, as well as from our fintech payment programs based on the aggregate gross booking amounts processed by us; and

•Other travel products and services.

The remainder of our revenues are generated from subscription contracts for access to our travel management software-as-a service ("SaaS") platforms. Our SaaS platform revenues are recognized over the term of the duration of the contract.

Recent Developments

Share Pledge Agreement in Connection with the Orinter Acquisition

On January 31, 2023 (the “Orinter Closing Date”), our Company and its wholly-owned subsidiary, Mondee Brazil (“Mondee Brazil”), entered into the Share Purchase and Sale Agreement, with OTT Holding (“OTT”) and Orinter Viagens E Turismo S.A., a corporation organized under the laws of Brazil (“Orinter”), along with other parties thereto (the “Orinter Purchase Agreement”). Pursuant to the Orinter Purchase Agreement, OTT sold all of the issued and outstanding shares of the Orinter to our Company and Mondee Brazil, in exchange for total consideration of $40.7 million (such transactions contemplated by the Orinter Purchase Agreement, the “Orinter Acquisition”).

On April 14, 2023, and in connection with the Orinter Acquisition, Mondee Brazil and Mondee, Inc., a Delaware corporation (“Mondee, Inc.”, together with Mondee Brazil, the “Pledgors”), both subsidiaries of our Company, TCW Asset Management Company, a Delaware limited liability company (the “Administrative Agent”), the lenders from time to time (the “Lenders”) party to the TCW Agreement (as defined herein) and Orinter, executed that certain share pledge agreement,

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effective as of March 28, 2023 (the “Share Pledge Agreement”) pursuant to that certain Amendment No. 10, dated as of January 31, 2023 (the “Tenth Amendment”), to that certain financing agreement, dated as of December 23, 2019, by and among our Company, the Administrative Agent and the other parties thereto (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “TCW Agreement”).

The Share Pledge Agreement sets forth the terms on which: (i) Mondee, Inc., the sole equity owner of Mondee Brazil and minority equity owner of Orinter, pledges 100% of the equity interests of Mondee Brazil, which is the majority equity owner of Orinter, pursuant to the Tenth Amendment; and (ii) the Pledgors pledge 100% of the equity interests of Orinter, pursuant to the Tenth Amendment. The Share Pledge Agreement shall terminate on the termination date of the TCW Agreement.

Pro Rata Distribution and Settlement of Mondee Group Note

In connection with the business combination between ITHAX Acquisition Corp., a Cayman Islands exempted company, and Mondee Holdings II, Inc., a Delaware company, (the “Business Combination”), Mondee Holdings, LLC, a Delaware limited liability company, (the “Mondee Stockholder”) received 60,800,000 shares of our Class A Common Stock. Mondee Holdings, LLC shall distribute the 60,800,000 shares of our Class A Common Stock on a pro rata basis to the members of Mondee Holdings LLC (the “Pro Rata Distribution”).

Upon the completion of the Pro Rata Distribution, Mondee Holdings LLC ceased to hold any shares of our Class A Common Stock, with the exception of the 2,033,578 shares that Mondee Group transferred to Mondee Holdings LLC in order to settle the $19.3 million note entered between Mondee Group and Mondee, Inc on March 25, 2016 (“Mondee Group Note”).

2023 Restructuring

During the nine months ended September 30, 2023, our Company announced reductions to employees in India, Thailand and the United States. The purpose of this action was to pursue greater cost efficiencies and to realign our business and strategic priorities. As part of this action, we generally provided involuntary termination benefits in the amount of one month of compensation as a severance payment. During the three and nine months ended September 30, 2023, the Company recorded a net expense of $239 and $1,600, respectively, in restructuring expense, net on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2022, the Company recorded expense of $2,130, within restructuring expense, net in the condensed consolidated statements of operations.

Skypass Acquisition

On August 12, 2023 (the “Skypass Closing Date”), we executed the Share Purchase Agreement to purchase all of the outstanding shares of Skypass Travel Inc., Skypass Travel de Mexico Sa de CV, Skypass Travel Private Limited and Skypass Holidays, LLC (collectively, "Skypass") (such transaction referred to as the "Skypass Acquisition”). Skypass is an international travel operator specializing in national and international air travel and hotel bookings primarily for travelers and employees associated with international corporations. The Skypass Acquisition allows the Company to expand its reach in the cruise and holiday packages travel sectors.

In connection with the acquisition, we agreed to pay total consideration of (i) $3.0 million on the Skypass Closing Date, with an adjustment for working capital, (ii) 900,000 shares of Company Class A Common Stock on the Skypass Closing Date, (iii) 100,000 shares of Company Class A Common Stock within 60 days after each of the first, second and third anniversaries of the Skypass Closing Date, and (iv) an earn-out component up to an aggregate of 1,800,000 shares of Company Class A Common Stock over a four year period contingent on Skypass meeting certain adjusted EBITDA growth targets. In the event the EBITDA target is exceeded, the Company is required to pay additional shares of 2.5% on excess of the EBITDA target.

LBF US Divestiture

In July 2023, the Company entered into a letter of intent with a related party buyer to sell LBF Travel Inc, LBF Travel Holdings LLC, Avia Travel and Tours Inc, and Star Advantage Limited ("LBF US" collectively) for a net proceeds of 200,000 shares of the Class A Common Stock returned from the buyer. The divestiture of LBF US closed in September 2023. In connection with the sale, the Company recognized a gain of $532, net of transaction costs, which was recorded in other expense, net. Additionally, the Company provided certain short term transition services to support the divested business through the third quarter of 2023. Cost of the transition services of $9,859 was recorded in other expense, net. The results of the divested business through date of sale and the transition services provided to the LBF US post the sale were reflected within the travel marketplace segment.

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Eleventh Amendment to the TCW Agreement

Issuance of Series A-3 Preferred Stock

On October 17, 2023, we issued an additional 10,000 shares of Series A-3 Preferred Stock at a purchase price of $1,000 per share. In conjunction with the closing of the preferred stock financing, we issued warrants to purchase 1,275,000 shares of Class A Common Stock. The preferred stockholders are entitled to receive dividends at an escalating rate ranging from the Secured Overnight Finance Rate (“SOFR”) plus 7.00% per annum to SOFR plus 12.00% per annum.

Factors Affecting Our Performance

Adverse changes in general market conditions for travel services, including the effects of macroeconomic conditions, terrorist attacks, natural disasters, health concerns, civil or political unrest or other events outside our control could materially affect our business, liquidity, financial condition and operating results.

Our revenue is derived from the global travel industry and would be significantly impacted by declines in, or disruptions to, travel activity, particularly air travel. Global factors over which we have no control, but which could impact our clients’ willingness to travel and, depending on the scope and duration, cause a significant decline in travel volumes include, among other things:

•widespread health concerns, epidemics or pandemics, such as the COVID-19 pandemic, the Zika virus, H1N1 influenza, the Ebola virus, avian flu, SARS or any other serious contagious diseases;

•global security concerns caused by terrorist attacks, the threat of terrorist attacks, or the precautions taken in anticipation of such attacks, including elevated threat warnings or selective cancellation or redirection of travel;

•cyber-terrorism, political unrest, the outbreak of hostilities or escalation or worsening of existing hostilities or war;

•natural disasters or severe weather conditions, such as hurricanes, flooding and earthquakes;

•climate change-related impact to travel destinations, such as extreme weather, natural disasters and disruptions, and actions taken by governments, businesses and supplier partners to combat climate change;

•the occurrence of travel-related accidents or the grounding of aircraft due to safety concerns;

•disruptions in travel, such as labor strife in the travel industry;

•adverse changes in visa and immigration policies or the imposition of travel restrictions or more restrictive security procedures; and

•any decrease in demand for consumer or business travel could materially and adversely affect our business, financial condition and results of operations.

Our operating results are impacted by our ability to manage costs and expenses, while achieving a balance between making appropriate investments to grow revenue and increase profitability.

Cost and expense management will have a direct impact on our financial performance. We may look to drive revenue growth through investments in marketing, technology, and acquisitions to increase our net revenue, product offerings, revenue per transaction, and ultimately market share. These investments will need to be weighed against creating a more cost-efficient business to reduce operating expenses as a percentage of revenue.

Operating Metrics

Our financial results are driven by certain operating metrics that encompass the business activity generated by our travel-related services. Transactions represent the number of travel reservations that were processed on Mondee’s platform

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during the period. Gross bookings are defined as the total dollar value, generally inclusive of taxes and fees, of all travel reservations through our platform between a third-party seller or service provider and the traveler, net of cancellations. Take rate is defined as revenues as a percentage of gross bookings.

Management considers these operating metrics to have a correlation to our commission revenues and incentive revenues recognized, and are therefore useful units of measurement for investors. Management also uses these operating metrics as part of its overall assessment of the Company’s operational performance and for its preparation of operating budget and forecasts.

Transactions, gross bookings and take rate for the three and nine months ended September 30, 2023 and 2022, respectively, were as follows (Gross bookings are disclosed in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Transactions	695,694			591,760			2,082,331			1,604,420
Gross bookings	$	597,451		$	583,388		$	1,944,774		$	1,648,954
Take rate	9.1		%	6.9		%	8.3		%	7.6		%

Comparability of Financial Information

Our results of operations between the three and nine months ended September 30, 2023 and the three and nine months ended September 30, 2022 may not be comparable as a result of the Business Combinations and Divestitures.

Additionally, the Company has continued to experience a trend upwards towards pre-pandemic travel activity throughout 2022 and 2023 as vaccination rates increase, infection rates decreased, and travel restrictions were lifted.

Basis of Presentation

We currently conduct our business through two operating segments, namely our travel marketplace, which is our transactional business serving the end travelers directly or through travel affiliates, and our software-as-a service (“SaaS Platform”). Substantially, all of our long-lived assets are maintained in, and all of our losses are attributable to, our activity in the United States of America. See Note 13 – Segment Information to the accompanying unaudited condensed consolidated financial statements for the quarter ended September 30, 2023 included in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information on basis of presentation and operating segments, respectively.

Components of Results of Operation

Revenues, Net

We generate commissions revenue by providing online travel reservation services, primarily for airline ticket sales, and to a lesser extent, for reservation of hotel accommodations, booking of car rentals, and other travel services. We also earn incentives from (1) airlines and GDS service providers for achieving volume targets and (2) on transacted amounts from fintech programs held with banks and financial institutions, which we leverage in our payment processing and settlement platform. Our fintech programs include a wide array of payment options, such as credit cards, wallets, alternate payment methods, and next generation fraud protection tools. We primarily facilitate travel bookings and act as the agent in the transaction as the travel supplier is responsible for providing the travel services, and we do not control the travel services provided to the traveler. Accordingly, revenues are recognized when the Company has completed its booking services, or when performance targets have been met. We do not have any significant obligations following the processing of the transaction. We also generate revenue by providing subscription-based platform access that offers businesses and consumers the ability to purchase travel services directly on the platform.

Sales and Marketing Expenses

We changed the presentation of “Sales and other Expense” and “Marketing Expense” within our condensed consolidated statement of operations by combining “Sales and other Expense” and “Marketing Expense” into “Sales and Marketing Expense”. The change is a result of an increased overlap between the nature and purpose of expenses that fall within these groups.

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Sales expenses are generally variable in nature and consist primarily of: (1) credit cards and other payment processing fees associated with merchant transactions; (2) fees paid to third parties that provide call center, website content translations, fraud protection services, and other services; (3) offshore customer support; and (4) customer chargeback provisions.

We rely on marketing channels to generate a significant amount of traffic to our websites. Marketing expenses consist primarily of the costs of (1) advertising, including digital and physical advertising and (2) affiliate marketing programs. We intend to continue making significant investments in marketing to drive additional revenue, increase our market share, and expand our global customer base. As a result, we expect our marketing expenses to increase in absolute dollars as we expect to invest in growing and training our sales force and broadening our brand awareness.

General and Administrative

General and administrative expenses consist primarily of: (1) occupancy and office expenses; (2) fees for outside professionals, including legal and accounting services; (3) audit and tax fees; and (4) other miscellaneous expenses. We expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and stock exchange listing standards, additional insurance expenses (including directors’ and officers’ insurance), investor relations activities and other administrative and professional services. We also expect to increase the size of our general and administrative functions to support the growth of our business. However, we anticipate general and administrative expenses to decrease as a percentage of revenue over the long term.

Personnel Expenses

Personnel expenses consist of compensation to our personnel, including salaries, bonuses, payroll taxes, and employee health and other benefits, as well as stock-based compensation expense. We expect to incur additional personnel expenses as a result of operating as a public company, including expanding head count through organic growth as well as increasing headcount through mergers and acquisitions. However, we anticipate personnel expenses to decrease as a percentage of revenue over the long term.

IT Expenses

IT expenses consist primarily of: (1) software license and system maintenance fees; (2) outsourced data center and web hosting costs; (3) payments to contractors; and (4) data communications and other expenses associated with operating our services. We expect to incur additional IT expenses as a result of operating as a public company, including expanding our operations through growth of our online booking platform and hosting fees. We also expect an increase in IT expenses to support the growth of our business. However, we anticipate IT expenses to decrease as a percentage of revenue over the long term.

Depreciation and Amortization

Depreciation and amortization expenses consist of: (1) amortization of intangible assets with determinable lives; (2) depreciation of computer equipment; (3) amortization of internally developed and purchased software; and (4) depreciation of furniture and office equipment. We expect to incur additional depreciation and amortization expenses as a result of operating as a public company, including expanding our operations through capital expenditures and purchases of long-lived assets, as well as potential impacts of our continued mergers and acquisitions strategy. However, we anticipate depreciation and amortization expenses to decrease as a percentage of revenue over the long term.

Other Income (Expense)

Other income (expense) consists primarily of: (1) interest income; (2) interest expense; (3) other income and expense, (4) government assistance, and (5) changes in the fair value of our private placement warrant liability (6) gain on the divestiture of LBF. Interest expense relates to interest on loans, amortization of debt issuance costs, and factoring interest. Interest income was recorded from the Mondee Group Note for our related party loan settled upon the consummation the Business Combination. Other expenses include realized gains and losses on foreign currency exchange.

Benefit from (Provision for) Income Taxes

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We are subject to payment of federal and state income taxes in the U.S. and other forms of income taxes in other jurisdictions. Consequently, we determine our consolidated provision for income taxes based on tax obligations incurred using the asset and liability method. Under this method, deferred tax assets and liabilities are calculated based upon the temporary differences between the condensed consolidated financial statements and income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, we believe it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods.

We evaluate uncertain tax positions to determine if it is more likely than not that such tax positions would be sustained upon examination. We record a liability when such uncertainties fail to meet the more likely than not threshold.

A U.S. shareholder is subject to current tax on “global intangible low-taxed income” (“GILTI”) of its controlled foreign corporations (“CFCs”). We are subject to tax under GILTI provisions and include our CFCs’ income in our U.S. income tax provision in the period that the CFCs earn the income.

Results of Operations

Comparison of Three and Nine Months Ended September 30, 2023 and 2022

We have derived this data from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. The results of historical periods are not necessarily indicative of our results of operations for any future period. The following tables set forth our unaudited condensed consolidated statement of operations as well as other financial data that our management considers meaningful for 2023 and 2022:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
	($ in thousands)
Revenues, net	$	54,532	$	40,513	$	14,019	34.6	%	$	161,232	$	125,236	$	35,996	28.7	%
Operating expenses:
Sales and marketing expenses	35,971		28,650		7,321		25.6	%	113,476		88,467		25,009		28.3	%
Personnel expense	10,696		59,807		(49,111)		(82.1)	%	30,521		71,131		(40,610)		(57.1)	%
General and administrative expense	4,629		2,337		2,292		98.1	%	14,350		6,802		7,548		111.0	%
Information technology expense	1,073		1,176		(103)		(8.8)	%	3,372		3,639		(267)		(7.3)	%
Provision for credit losses, net	535		211		324		153.6	%	(166)		297		(463)		(155.9)	%
Depreciation and amortization	4,165		2,963		1,202		40.6	%	11,354		8,549		2,805		32.8	%
Restructuring expense, net	239		2,130		(1,891)		(88.8)	%	1,600		2,130		(530)		(24.9)	%
Total operating expenses	57,308		97,274		(39,966)		(41.1)	%	174,507		181,015		(6,508)		(3.6)	%
Loss from operations	(2,776)		(56,761)		53,985		(95.1)	%	(13,275)		(55,779)		42,504		(76.2)	%
Other income (expense):
Interest income	243		28		215		767.9	%	880		289		591		204.5	%
Interest expense	(8,740)		(7,157)		(1,583)		22.1	%	(25,372)		(19,987)		(5,385)		26.9	%
Gain on extinguishment of PPP loan	—		—		—		N/A		—		2,009		(2,009)		(100.0)	%
Changes in fair value of warrant liability	744		683		61		8.9	%	1,116		683		433		63.4	%
Other expense, net	(9,189)		(1,080)		(8,109)		750.8	%	(7,883)		(316)		(7,567)		2394.6	%
Total other expense, net	(16,942)		(7,526)		(9,416)		125.1	%	(31,259)		(17,322)		(13,937)		80.5	%
Loss before income taxes	(19,718)		(64,287)		44,569		(69.3)	%	(44,534)		(73,101)		28,567		(39.1)	%
Provision for income taxes	(381)		(321)		(60)		18.7	%	(3,088)		(611)		(2,477)		405.4	%
Net loss	$	(20,099)	$	(64,608)	$	44,509	(68.9)	%	$	(47,622)	$	(73,712)	$	26,090	(35.4)	%

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Revenues, net


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
	($ in thousands)
Revenue from travel marketplace	$	54,101	$	40,094	$	14,007	34.9	%	$	160,302	$	124,272	$	36,030	29.0	%
Revenue from SaaS Platform	$	431	$	419	$	12	2.9	%	$	930	$	964	$	(34)	(3.5)	%
Revenues, net	$	54,532	$	40,513	$	14,019	34.6	%	$	161,232	$	125,236	$	35,996	28.7	%

Revenues, net for the three and nine months ended September 30, 2023 increased by $14.0 million and $36.0 million, or 35% and 29%, respectively, compared to the same periods in 2022. The increase was primarily driven by the organic growth and synergies in the expanded market and business associated with the acquisitions of Orinter, Interep, Consolid, and Skypass during 2023 on the Company's integrated technology platform. The Company merged customers and supplier relationships from the business acquisitions into consolidated operations, as such, separating revenues specifically from these acquired entities in future periods becomes impractical.

The revenues, net increase is primarily contributed by our travel marketplace segment. Revenues from our travel marketplace segment for the three and nine months ended September 30, 2023 increased by $14.0 million and $36.0 million, or 35% and 29%, respectively, compared to the same periods in 2022. Specifically, for the three and nine months ended September 30, 2023 we saw an increase of $15.0 and $30.8 million or 56% and 34%, respectively, for commission revenues earned from mark-up fees, airline ticket sales, hotel accommodations, car rental bookings, and other travel services. For the nine months ended September 30, 2023, we saw an increase of $6.2 million or 19%, from incentive revenues earned from GDS service providers and airlines suppliers. For the three months ended September 30, 2023 we saw a decrease of $1.0 million or 73% from ancillary goods and services. The revenue growth in our travel marketplace segment in 2023 was primarily contributed by a 2% and 18% increase in the value of gross bookings during the three and nine months ended September 30, 2023, respectively, and a 18% and 30% increase in the number of transactions processed in our travel marketplace, during the three and nine months ended September 30, 2023, as compared to 2022. Refer to our Operating Metrics for further details.

Operating Expenses and Other (Income) Expense

Sales and Marketing Expenses

Sales and marketing expenses for the three and nine months ended September 30, 2023 increased by $7.3 million and $25.0 million, or 26% and 28%, respectively, compared to the same periods in 2022. The increase was primarily driven by an increase of $12.5 million, and $36.9 million, or 59% and 58%, in affiliate marketing expense and affiliate credit card merchant expense, respectively, for the three and nine months ended September 30, 2023 compared to the same periods in 2022. Of the $12.5 million and $36.9 million increase in affiliate marketing expense and credit card merchant expense during the three and nine months ended September 30, 2023, respectively, $13.8 million and $30.8 million, respectively, was due to additional sales and marketing activities along with the Company's expanded presence post acquisitions of Orinter, Interep, Consolid and Skypass in 2023, which was partially offset by decreases in affiliate marketing expense and credit card merchant expense by the legacy business. These increases were offset by decreases in web advertising expenses of $4.9 million and $10.0 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022.

Personnel Expenses

Personnel expenses for the three and nine months ended September 30, 2023 decreased by $49.1 million and $40.6 million, or 82% and 57%, respectively, compared to the same periods in 2022. The decrease was primarily attributable to a decrease of $52.4 and $46.0 million in stock-based compensation for the three and nine months ended September 30, 2023, respectively, primarily due to $50.7 million stock-based compensation during the three and nine months ended September 30, 2022 related to earn-out shares issued to the CEO and an employee on closing and subsequent to the Business Combination. The decrease was partially offset by increases due to the additional headcount from the acquisitions of Orinter, Interep, Consolid, and Skypass during 2023.

General and Administrative Expenses

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General and administrative expenses for the three and nine months ended September 30, 2023 increased by $2.3 million and $7.5 million, or 98% and 111%, respectively, compared to the same periods in 2022. The increase was primarily due to an increase in legal and professional fees of $1.0 million and $4.0 million for the three and nine months ended September 30, 2023, respectively, which was attributed to our preparation and filings with the SEC. The remainder of the increase is primarily due to an increase in business insurance expense and non-employee stock compensation of $0.3 and $1.1 million for the three and nine months ended September 30, 2023, respectively.

IT Expenses

IT expenses for the three and nine months ended September 30, 2023 decreased by $0.1 million and decreased by $0.3 million, or 9% and 7%, respectively, compared to the same periods in 2022. The decrease was primarily due to an overall decrease in off-shore consulting costs.

Provision for Credit Losses, Net

Provision for credit losses, net for the three months ended September 30, 2023 increased by $0.3 million, or 154%, compared to the same period in 2022, due to changes in estimated recovery of accounts receivable. Provisions for credit losses, net for the nine months ended September 30, 2023 decreased by $0.5 million, or 156%, compared to the same periods in 2022 due to changes in estimated recovery of accounts receivable and contract assets as a result of gradual improvement in travel industry.

Depreciation and Amortization

Depreciation and amortization expenses for the three and nine months ended September 30, 2023 increased by $1.2 million and $2.8 million, or 41% and 33%, respectively, compared to the same periods in 2022. The increase was primarily due to an increase in amortization from additional capitalized software and an increase in amortization of intangibles as a result of the acquisitions of Orinter, Interep, Consolid, and Skypass during 2023.

Restructuring Expense, Net

Restructuring expense, net for the three and nine months ended September 30, 2023 decreased by $1.9 million and $0.5 million, or 89% and 25%, respectively, compared to the same periods in 2022. The decrease was primarily due to restructuring activities at offshore office locations to reduce the size of the workforce to optimize efficiency and reduce costs.

Interest Income

Interest income for the for the three and nine months ended September 30, 2023 increased by $0.2 million and $0.6 million, or 768% and 204%, respectively, compared to the same periods in 2022. The increase was primarily due to an increase in cash interest income on bank balances due to higher interest rates in the current period.

Interest Expense

Interest expense for the three and nine months ended September 30, 2023 increased by $1.6 million and $5.4 million, or 22% and 27%, respectively, compared to the same periods in 2022. The increase was primarily due to the factoring arrangements entered into by Orinter, Interep, and Consolid, as well as the drawdown of additional debt in January 2023.

Gain on Extinguishment of PPP Loan

Gain on extinguishment of PPP Loan for the nine months ended September 30, 2023 decreased by $2.0 million compared to the same periods in 2022. The decrease was primarily due to the forgiveness of PPP Loans that took place during fiscal 2022.

Changes in Fair Value of Warrant Liability

Changes in fair value of warrant liability for the three and nine months ended September 30, 2023 increased by $0.1 million and $0.4 million, or 9% and 63%, respectively, compared to the same periods in 2022. The increase was primarily

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due to the decrease in fair value of the Company’s private warrants during the three and nine months ended September 30, 2023.

Other Expense, net

Other expense, net for the three and nine months ended September 30, 2023 increased by $8.1 million and $7.6 million, or 751% and 2395%, respectively, compared to the same periods in 2022. The increase in other expense, net for both comparative periods is primarily due to the net expense recognized in the three and nine months ended September 30, 2023 of $9.4 million, comprising of $0.5 million gain on the LBF US divestiture and $9.9 million expense incurred on the LBF US transition service costs, and partially offset by gains on foreign currency exchange.

Income Taxes

The provision for income taxes for the three and nine months ended September 30, 2023 increased by $0.1 million and $2.5 million, or 19% and 405%, respectively, compared to the same periods in 2022, mainly driven by the impact of profits earned by the Orinter, Interep, Consolid, and Skypass acquisitions.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with U.S. GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the terms “Adjusted EBITDA”, "Adjusted Net Loss” and "Adjusted Net Loss Per Share” to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures, when taken together with the corresponding U.S. GAAP financial measures, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. We consider Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss Per Share to be important non-GAAP financial measures, because they illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss Per Share are helpful to our investors in assessing the health of our business and our operating performance.

In addition, we believe the following non-GAAP measure, "Free Cash Flow", is helpful in evaluating our liquidity. We use Free Cash Flow to measure cash generated internally that is available to service debt and fund inorganic growth or acquisitions and believe that this measure provides meaningful supplemental information regarding our liquidity. We consider Free Cash Flow to be an important non-GAAP financial measure because it illustrates underlying trends in our business and is helpful to our investors in assessing our liquidity.

Non-GAAP financial information, which is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with U.S. GAAP. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Financial measures that are non-GAAP should not be considered as alternatives to operating income, cash flows from operating activities or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance, or cash flows as measures of liquidity. These measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Adjusted EBITDA

Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance which provides useful information to investors, analysts and rating agencies. By reporting Adjusted EBITDA, we provide a basis

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for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. We define Adjusted EBITDA as net loss before (1) depreciation and amortization; (2) provision for income taxes; (3) interest expense, net; (4) other expense, net; (5) stock-based compensation and the related payroll tax expense; (6) restructuring and related costs; (7) acquisition-related costs (including bank fees, due diligence fees, etc.); (8) legal costs pertaining to acquisitions, and other filings which are not ordinary and outside the course of our business; (9) other non-recurring expenses; and (10) and changes in fair value attributable to earn-out and warrant liabilities. For the periods presented, non-recurring expenses include transaction filing fees and associated professional services.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, not driven by core results of operations, and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business performance.

We began excluding (1) the change in fair value of our earn-out liabilities and (2) stock-based compensation payroll tax expense for the purpose of calculating Adjusted EBITDA beginning the quarter ended June 30, 2023. For comparability, references to prior period non-GAAP measures have been updated to show the effect of removing the change in the fair value of our earn-out liabilities from Adjusted EBITDA. The Company did not incur payroll tax expenses on stock-based compensation prior to this quarter. We believe this updated presentation of Adjusted EBITDA enhances investors’ understanding of our financial performance from activities occurring in the ordinary course of our business.

Some of the limitations of Adjusted EBITDA are as follows: (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future; and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, our investors should be aware that in the future we may not incur expenses similar to the adjustments in this presentation. Lastly, Adjusted EBITDA can obfuscate the one-time impacts of events that happen out of the ordinary course of business.

The following table reconciles net loss to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022, respectively:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
	($ in thousands)
Net loss	$	(20,099)	$	(64,608)	$	44,509	(68.9)	%	$	(47,622)	$	(73,712)	$	26,090	(35.4)	%
Interest expense, (net)	8,497		7,129		1,368		19.2	%	24,492		19,698		4,794		24.3	%
Stock-based compensation expense	2,974		55,236		(52,262)		(94.6)	%	10,339		55,397		(45,058)		(81.3)	%
Payroll tax expense related to stock-based compensation	140		—		140		—	%	226		—		226		—	%
Depreciation and amortization	4,165		2,963		1,202		40.6	%	11,354		8,549		2,805		32.8	%
Restructuring expense, net	239		2,130		(1,891)		(88.8)	%	1,600		2,130		(530)		(24.9)	%
Provision for income taxes	381		321		60		18.7	%	3,088		611		2,477		405.4	%
Changes in fair value of warrant liabilities	(744)		(683)		(61)		8.9	%	(1,116)		(683)		(433)		63.4	%
Changes in fair value of earn-out liabilities	(593)		—		(593)		—	%	108		—		108		—	%
Acquisition costs	545		—		545		—	%	1,088		—		1,088		—	%
Non-recurring legal expense	785		—		785		—	%	2,024		—		2,024		—	%
Other non-recurring expenses1	22		—		22		—	%	632		—		632		—	%
Extinguishment of PPP Loan	—		—		—		—	%	—		(2,009)		2,009		(100.0)	%
LBF US divestiture and transition service expense	9,327		—		9,327		—	%	9,327		—		9,327		—	%

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Other expense (income), net2	(138)		1,080		(1,218)		(112.8)	%	(1,444)		316		(1,760)		(557.0)	%
Adjusted EBITDA	$	5,501	$	3,568	$	1,933	54.2	%	$	14,096	$	10,297	$	3,799	36.9	%

1 Includes non-recurring transaction filing fees and associated professional services

2 Excludes LBF US divestiture and transition service expense for the three and nine months ended September 30, 2023

Adjusted Net Loss and Adjusted Net Loss Per Share

Adjusted Net Loss and Adjusted Net Loss Per Share are key performance measures that our management uses to assess our operating performance which provides useful information to investors, analysts and rating agencies. By reporting Adjusted Net Loss and Adjusted Net Loss Per Share, we provide a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance

We define Adjusted Net Loss as net loss before (1) stock-based compensation expense; (2) amortization of intangibles; (3) provision for income taxes; (4) certain one-time expenses. For the periods presented, one-time expenses include: changes in fair value of warrant liabilities, restructuring expense, legal costs pertaining to acquisitions, TCW term loan amendment fees, and other filings which are not ordinary and outside the course of our business, acquisition costs, changes in fair value of earn-out liabilities, expenses incurred for office relocation, gain on forgiveness of PPP loan, non-recurring transaction filing fees and associated professional services, and net expense incurred on the LBF US divestiture and LBF US transition services.

The following table reconciles net loss to Adjusted Net Loss for the three and nine months ended September 30, 2023 and 2022, respectively:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
	($ in thousands)
Net loss	$	(20,099)	$	(64,608)	$	44,509	(68.9)	%	$	(47,622)	$	(73,712)	$	26,090	(35.4)	%
Stock-based compensation expense	2,974		55,236		(52,262)		(94.6)	%	10,339		55,397		(45,058)		(81.3)	%
Amortization of intangibles	2,458		1,584		874		55.2	%	6,747		4,753		1,994		42.0	%
Income tax provision	381		321		60		18.7	%	3,088		611		2,477		405.4	%
One-time expenses1	9,581		1,656		7,925		478.6	%	13,663		(264)		13,927		(5275.4)	%
Adjusted net loss	$	(4,705)	$	(5,811)	$	1,106	(19.0)	%	$	(13,785)	$	(13,215)	$	(570)	4.3	%

1 Includes changes in fair value of warrant liabilities, restructuring expense, legal costs pertaining to acquisitions, and other filings which are not ordinary and outside the course of our business, other acquisition costs, and changes in` fair value of earn-out liabilities

We define Adjusted Net Loss Per Share as the per share earnings based on the Company’s Adjusted Net Loss attributable to common stockholders, which includes dividends accrued for preferred stockholders, in the respective periods

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presented. The following table reconciles net loss per share to Adjusted Net Loss per share for the three and nine months ended September 30, 2023 and 2022, respectively:

Adjusted Net Loss Per Share


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	($ in thousands)
Net loss	$	(20,099)	$	(64,608)	$	(47,622)	$	(73,712)
Cumulative dividends allocated to preferred stockholders	$	(2,859)	$	(47)	$	(8,023)	$	(47)
Net loss attributable to common stockholders, basic and diluted	$	(22,958)	$	(64,655)	$	(55,645)	$	(73,759)
Weighted average shares outstanding, basic and diluted	77,925,635		72,462,512		77,162,363		64,730,224
Basic and diluted net loss per share	$	(0.29)	$	(0.89)	$	(0.72)	$	(1.14)
Adjusted net loss	$	(4,705)	$	(5,811)	$	(13,785)	$	(13,215)
Cumulative dividends allocated to preferred stockholders	$	(2,859)	$	(47)	$	(8,023)	$	(47)
Adjusted net loss attributable to common stockholders, basic and diluted	$	(7,564)	$	(5,858)	$	(21,808)	$	(13,262)
Weighted average shares outstanding, basic and diluted	77,925,635		72,462,512		77,162,363		64,730,224
Adjusted net loss per share	$	(0.10)	$	(0.08)	$	(0.28)	$	(0.20)

Free Cash Flow

Free Cash Flow is a key measure that is relevant to investors because it provides a measure of cash generated internally that is available both to service debt and to fund inorganic growth or acquisitions and provides useful information to investors regarding our liquidity. By reporting Free Cash Flow, we provide a basis for comparison of our cash generated internally between current, past and future periods. Free Cash Flow has the same limitations as Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss Per Share in that it does not consider the capital structure of our Company.

Free Cash Flow, a non-GAAP liquidity measure, is defined as cash provided by or used in operating activities, less capital expenditures.

We believe the presentation of Free Cash Flow is relevant and useful for investors because it measures cash generated from operations after payment of capital expenditures that we can use to invest in our business and meet our current and future financing needs.

The following table reconciles net cash used in operating activities to Free Cash Flows for the three and nine months ended September 30, 2023, and 2022, respectively:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023		2022		$ Change		% Change		2023		2022		$ Change		% Change
	($ in thousands)
Net cash provided by (used in) operating activities (1)(2)	$	(994)	$	(854)	$	(140)	16.4	%	$	(13,400)	$	(690)	$	(12,710)	1842.0	%
Capital expenditures	(3,186)		(1,943)		(1,243)		64.0	%	(7,660)		(5,415)		(2,245)		41.5	%
Free cash flow(1)(2)	$	(4,180)	$	(2,797)	$	(1,383)	49.4	%	$	(21,060)	$	(6,105)	$	(14,955)	245.0	%


(1)			Included cash paid for interest related to the TCW Agreement for the three and nine months ended September 30, 2023 was $4.2 million and $8.4 million, respectively. No cash was paid for interest related to the TCW Agreement for the three and nine months ended September 30, 2022.
(2)			Included cash paid for LBF US transition services for the three and nine months ended September 30, 2023 was $7.4 million. No cash was paid for LBF US transition services for the three and nine months ended September 30, 2022.

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Financial Position, Liquidity and Capital Resources

Sources of Liquidity

As of September 30, 2023, we had cash and cash equivalents totaling $39.9 million, which were held for working capital purposes and a TCW LOC available for draw down of $15.0 million. Our cash equivalents are comprised primarily of cash checking accounts and our restricted cash and cash equivalents comprise of certificate of deposits held at banks which we intend to hold to maturity. To date, our principal sources of liquidity have been payments received from our revenue arrangements and financing arrangements with banks and financial institutions.

As of September 30, 2023, we held $47.9 million of cash, cash equivalents and restricted cash and cash equivalents, of which $10.7 million was held by our foreign subsidiaries outside of the United States. In the event that we repatriate these funds from our foreign subsidiaries, we may need to accrue and pay applicable United Sates taxes and withholding taxes payable to various countries. As of September 30, 2023, our intent was to permanently reinvest these funds outside of the United States.

Accordingly, no deferred taxes have been provided for withholding taxes, U.S. state income taxes or other taxes that would result upon repatriation of approximately $19.2 million of undistributed earnings from these foreign subsidiaries as those earnings and any excess of financial reporting over the tax basis of these foreign subsidiaries are indefinitely reinvested. It is not practicable to estimate income tax liabilities that might be incurred if such earnings were remitted to the United States due to the complexity of the underlying calculation. The majority of the undistributed earnings would have been previously-taxed for U.S. federal income taxes as a result of the 2017 U.S. Tax and Jobs Act. Although we have no intention to repatriate the undistributed earnings of our foreign subsidiaries for the foreseeable future, if such funds are needed for operations in the United States, to the extent applicable and material, we will revise future filings to address the potential tax implications.

TCW Agreement

On January 11, 2023, we executed the Ninth Amendment to the TCW Agreement wherein Wingspire became a party to the TCW Agreement, among other changes. Wingspire funded an additional $15.0 million of term loan commitment on top of the already outstanding TCW Term Loan. Additionally, the Ninth Amendment split the TCW Term Loan into two loans. The first loan will be represented by Wingspire with an outstanding principal balance of $30.0 million and the second loan will be represented by TCW with an outstanding principal balance of $137.8 million.

Additionally, pursuant to the Ninth Amendment, Wingspire consented to take over the TCW LOC for a principal amount not to exceed $15.0 million (the “Wingspire Term Loan”). Until January 11, 2024, we have the option to increase Term Loan A by $20.0 million under two conditions: (i) the Company must have a trailing 12-month EBITDA of at least $25.0 million; and (ii) the Company must draw in increments of at least $5.0 million.

On January 31, 2023, we executed the Tenth Amendment to the TCW Agreement. The Tenth Amendment (1) set forth the terms on which we could acquire Orinter, pursuant to the Orinter Purchase Agreement; (2) set forth the terms on which we could pay the earn-out payment contemplated to be paid to OTT Holdings and certain key executives of OTT Holdings pursuant to the Orinter Purchase Agreement; (3) required that Mondee Brazil join as a party to the TCW Agreement and the Security Agreement; (4) required that Mondee, Inc. pledge 100% of the equity interests of Mondee Brazil; and (5) required that Mondee Brazil and Mondee Inc. pledge 100% of the equity interests of Orinter.

Financial Position

We are required to make debt repayments aggregating to $10.3 million in the next 12 months from the date of issuance of the condensed consolidated financial statements.

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As of September 30, 2023, we had $39.9 million of unrestricted cash and cash equivalents, $8.0 million of restricted cash and cash equivalents and $15.0 million in unused TCW LOC.

As of the date on which our condensed consolidated financial statements for the fiscal quarter ended September 30, 2023, we believe that the cash on hand, cash generated from operating activities, and access to funds under our LOC with TCW will satisfy our working capital and capital requirements for at least the subsequent 12 months.

Material Cash Requirements and Other Obligations

Our material cash requirements and other obligations as of September 30, 2023 include the following:

•Term Loan - Principal and interest payments related to the TCW and Wingspire Term Loans. As of September 30, 2023, we had an outstanding balance of $168.1 million, with $10.3 million payable within 12 months. See Note 8 – Debt to our condensed consolidated financial statements for additional information.

•Governmental Loans - As of September 30, 2023, our outstanding balance related to the CEBA and HASCAP loans was $0.2 million, with $0.1 million payable within 12 months.

•Operating Lease Obligations - Fixed lease payments related to our operating leases. As of September 30, 2023, we had outstanding operating lease obligations of $3.8 million, with $1.2 million payable within 12 months.

See Note 11 – Commitments and Contingencies to our condensed consolidated financial statements for further information related to our letters of credit and outstanding legal claims.

Off- Balance Sheet Arrangements

We had the following Off-Balance Sheet Arrangements as of September 30, 2023 and December 31, 2022:


	September 30,		December 31,
(In millions)	2023		2022
Letters of credit	$	7.7	$	7.4

No amount on the TCW LOC has been drawn down as of September 30, 2023 and December 31, 2022.

Cash Flow Summary

The following table summarizes our cash flows for the periods presented:


	Nine Months Ended September 30,
	2023		2022
	($ in thousands)
Net cash used in operating activities	$	(13,400)	$	(690)
Net cash used in investing activities	(31,741)		(5,809)
Net cash provided by financing activities	5,894		96,562
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents	(314)		(341)
Net (decrease)/increase in cash, cash equivalents and restricted cash and cash equivalents	$	(39,561)	$	89,722

Cash Used in Operating Activities

During the nine months ended September 30, 2023, cash used in operating activities was $13.4 million. The primary factors affecting our operating cash flows during this period were our net loss totaling $47.6 million, which was offset by non-cash charges of $29.6 million primarily consisting of depreciation and amortization of $11.4 million, stock-based compensation of $10.3 million, non-cash gain on disposal of LBF US of $0.7 million, amortization of loan origination fees of $6.4 million, PIK interest expense of $4.2 million, and a net gain in estimated fair value of earn-out consideration and warrant liability of $1.0 million. Cash provided by our operating assets and liabilities was $4.7 million, primarily owing to

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a $19.5 million increase in accounts receivable, a $6.0 million increase in contract assets, a $1.7 million decrease in deferred revenue, a $0.5 million increase in prepaid expenses and other current assets, and a $1.0 million decrease in operating lease liabilities. These changes were offset by a $27.5 million increase in accounts payable, and a $6.4 million increase in accrued expenses and other liabilities. The increase in accounts receivable was primarily from the acquired business in Orinter, Interep, Consolid and Skypass.

During the nine months ended September 30, 2022, cash used in operating activities was $0.7 million. The primary factors affecting our operating cash flows during this period were our net loss of $73.7 million, which was offset by non-cash charges of $73.5 million primarily consisting of stock-based compensation of $55.4 million, PIK interest expense of $8.1 million and depreciation and amortization of $8.5 million. This reduction attributable to non-cash charges was offset by a $2.0 million gain on forgiveness of our PPP loan. Cash provided from changes in our operating assets and liabilities was $0.5 million, primarily owing to a $26.4 million increase in accounts payable, and $12.3 million increase in accrued expenses and other current liabilities. These increases were offset by a $15.9 million increase in accounts receivable, $17.5 million increase in prepaid expense and other current assets, and $2.6 million increase in contract assets.

Cash Used in Investing Activities

During the nine months ended September 30, 2023, cash used in investing activities was $31.7 million, which was primarily due to cash paid for the acquisitions of Orinter, Interep, Consolid, and Skypass and the purchase of property and equipment.

During the nine months ended September 30, 2022, cash used in investing activities was $5.8 million, which was primarily due to the purchase of property and equipment.

Cash Provided by Financing Activities

During the nine months ended September 30, 2023, cash provided by financing activities was $5.9 million, primarily due to $15.0 million in proceeds from the Wingspire Term Loan, offset by the repayment of debt and offering costs.

During the nine months ended September 30, 2022, cash provided by financing activities was $96.6 million, primarily due to the proceeds from the closing of the Business Combination and issuance of preferred stock.

Critical Accounting Policies and Estimates

The preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We use our judgment to determine the appropriate assumptions to be used in the determination of certain estimates and we evaluate our estimates on an ongoing basis. Estimates are based on historical experience, terms of existing contracts, our observance of trends in the travel industry, and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. Our critical accounting estimates supplement, but not duplicate, the description of accounting policies or other disclosures in the notes to the financial statements. Matters that involve significant estimates and judgments of management include the following:

Revenue Recognition

We make several estimates in our revenue recognition process that affect the net revenues presented on our condensed consolidated statements of operations.

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with airline companies and GDS service providers will be estimated to the extent that it is probable that a significant reversal of any incremental revenue will not occur.

Our revenues are recorded net of cancellations, refunds, and chargebacks, which all represent variable consideration and must be estimated. From time to time, the Company issues credits or refunds to the traveler in the event of cancellations. Additionally, when travel bookings are made, there is a risk of transaction losses as a result of chargebacks pursued by payment processors in connection with fraudulent charges. We estimate and record reserves for cancellations, refunds, and chargebacks based on our assessment of various factors, including the amounts of actual chargeback activity during the current year.

Valuation of Goodwill, Definite-Lived Intangible Assets, and Indefinite-Lived Intangible Assets

The application of the acquisition method of accounting for business combinations requires the use of significant estimates and assumptions to determine the fair value of the assets acquired and liabilities assumed. Our estimates of the fair value are based upon assumptions that we believe are reasonable. When we deem appropriate, we utilize assistance from third-party valuation firms. The consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective values at the acquisition date. The excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill.

We review long-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group.

Goodwill increased during the nine months ended September 30, 2023 due to the acquisitions of Orinter, Interep, Consolid, and Skypass. See Note 6 – Goodwill and Intangible Assets, Net to our condensed consolidated financial statements for additional information related to the acquisitions.

We test goodwill for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have two reporting units and test goodwill for each respective reporting unit. In prior years, our annual goodwill impairment tests were performed as of December 31. During the third quarter of 2023, the Company voluntarily changed its annual goodwill impairment test date from December 31 to October 1, as the new date of the assessment better aligns with the Company's long-term business planning process. This change was not material to the Company's condensed consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge.

As of December 31, 2022, the estimated fair value of our two reporting units was determined using the income approach valuation technique by discounting the Company’s future cash flows. The income approach, applied as of December 31, 2022, reflected a reduction in the forecasted cash flows of our reporting units and a longer assumed recovery period. The discount rate is determined based on the reporting unit’s estimated weighted-average cost of capital and adjusted to reflect the risks inherent in its cash flows, which requires significant judgments. As of December 31, 2022, we performed our annual goodwill impairment test that resulted in the calculation of fair value of the respective reporting units that substantially exceeds carrying value. Therefore, the Company concluded that there was no impairment of goodwill.

The estimation of fair values of our reporting units reflect numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding each reporting unit’s expected growth rates and operating margin and the competitive environment, as well as other key assumptions with respect to matters outside of our control, such as discount rates. The estimation of fair value requires significant judgments and estimates, and actual results could be materially different than the judgments and estimates used. Discount rates have been impacted during the period due to rising interest rates and adverse changes in the macroeconomic environment. Future events and changing market conditions, including economic uncertainties such as inflation, rising interest rates and risks of a potential recession, may lead us to re-evaluate the assumptions used to estimate the fair values of our reporting units, which may result in a need to recognize additional goodwill impairment charges that could have a material adverse effect on our results of operations.

Earn-Out Liabilities

See Note 4 – Fair Value Measurement for additional information related to the Company’s fair value measurements. When little or no market data is available, the fair value is measured using unobservable inputs (“Level 3 inputs”). Our liabilities measured using Level 3 inputs primarily consist of earn-out liabilities acquired from acquisitions. The fair value

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of earn-out liabilities are estimated using the Monte Carlo simulation method. In determining the fair value, the following factors were considered: the expected future financial performance of the acquired entities, the underlying financial metric on which the earn-out payment is based upon, historical financial performance, and the Company’s credit risk.

Equity-Classified Earn-Out Shares

As part of the reverse recapitalization that closed on July 18, 2022, earn-out shares were approved to be issued to holders, would be entitled to the right to receive shares of common stock, which vest based on the trading price of the Company’s Common Stock. The earn-out was determined to be equity-classified, and the Company estimates the fair value of the award on the date the shares are allocated to a holder. The Company obtains a third-party valuation to determine the fair value. The Monte Carlo method was used to determine the expected value of the earn-out shares to be vested by simulating our Common Stock price from the allocation date to the end of the vesting period. The income approach was used to determine the fair value of the award on the allocation date, which includes estimating future cash flows to be received by the award owners over the economic life of the award and converting the cash flows to their present value equivalents using an appropriate discount rate that accounts for the relative risk of not realizing the annual cash flows and for the time value of money.

Recent Accounting Pronouncements

See “Part I, Item 1, Note 3 – Summary of Significant Accounting Policies” to our condensed consolidated financial statements included elsewhere in this Quarterly Report for recently adopted accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of our Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective, due to material weaknesses in our internal control over financial reporting that remain since they were identified in connection with the preparation and filing of the of our Annual Report on Form 10-K for the year ended December 31, 2022, as amended (the “2022 Form 10-K”).

Material Weaknesses

In connection with our Chief Executive Officer and Chief Financial Officer’s evaluation of the effectiveness of our controls, we disclosed in Part II, Item 9A Controls and Procedures in the 2022 Form 10-K that we had identified material weaknesses in internal control over financial reporting. These material weaknesses were related to the control environment, risk assessment and control activities component of internal control over financial reporting as established by the COSO framework. The following control deficiencies constitute material weaknesses, either individually or in the aggregate:

•Failure to maintain a whistle-blower hotline that facilitates anonymous receipt of information relevant to our financial reporting.

•Lack of involvement of personnel with sufficient training and knowledge of U.S. GAAP.

•Failure to perform a formalized risk assessment, including a fraud risk assessment.

•Lack of a formalized process to assess and review the accounting treatment for significant events, significant accounting policies, and significant accounting estimates.

•Lack of segregation of duties related to the ability to create, approve and post journal entries within the Company’s general ledger system.

•Lack of formalized process to review and approve of work performed by management’s third-party consultants related to the measurement of certain instruments measured at fair value.

•Inadequate design, implementation and maintenance of information systems controls including access security and change management controls.

•Failure to timely recognize material transactions, which includes the appropriate determination of revenue recognition based on the terms of the contracts and sales and marketing expenses associated with affiliates of the

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Company, with an appropriate review by management, including review of both internal and external information used by the Company in determining the amount to record.

Management’s Remediation Efforts

In response to these material weaknesses, management is in the process of completing the following remediation actions:

•We plan to implement a global whistle-blower hotline and fraud monitoring program to facilitate the receipt of anonymous tips relevant to financial reporting.

•We are actively recruiting a technical accounting team with relevant accounting certifications and U.S. GAAP experience to assess the accounting treatment of significant transactions and events and oversee the work of our third-party consultants.

•We are establishing a formal risk assessment process to identify and evaluate risks relevant to financial reporting objectives, including fraud risks.

•We are designing and implementing additional control activities related to the review of the accounting treatment for significant events, significant accounting policies, and significant accounting estimates within our accounting and finance department, including those that are prepared by third-party consultants.

•We are implementing segregation of duties by adding system approval workflows to create, approve and post journal entries within the Company’s general ledger system.

•We are designing and implementing adequate information systems controls, including access security and change management controls.

Remediation of the identified material weaknesses and strengthening our internal control environment will require a substantial effort throughout the fiscal year ending December 31, 2023 and beyond, as necessary. We will test the ongoing operating effectiveness of the new and existing controls in future periods. The material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

Other than the material weakness remediation efforts as described above, there were no changes in our internal control over financial reporting identified that occurred during the three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material pending legal proceedings, see Note 11 – Commitments and Contingencies to the accompanying unaudited condensed consolidated financial statements for the quarter ended September 30, 2023 included in Part I, Item 1 of this Quarterly Report.

In addition, from time to time, the Company may be a party to claims that arise in the ordinary course of business. None of these matters are expected to have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this report, including the important information in “Forward-Looking Statements,” you should carefully consider the “Risk Factors” discussed in our 2022 Form 10-K. If any of those factors were to occur, they could materially adversely affect our financial condition or future results, and could cause our actual results to differ materially from those expressed in its forward-looking statements in this report. We are aware of no material changes to the Risk Factors discussed in our 2022 Annual Report, except as described below, however, additional risks not currently known or currently material may also harm our business.

We cannot guarantee that our previously-announced restructuring program will achieve its intended result.

As part of our restructuring plans, we conducted a reduction in workforce (“RIF”) of over 300 employees from July 2022 to October 2022, including involuntary and voluntary positions that were not backfilled. We have closed our Mohali and Dehradun, India, offices and plan to exit or sublease these premises. This right-sizing program resulted in the reduction of front-end sales positions; mid-office quality control, ticketing and related positions; back-office accounting and fraud protection positions; and the vacating of the Mohali and Dehradun facilities. All functional areas are now covered in the remaining Delhi and Hyderabad facilities with existing staff. We recorded, in the aggregate, approximately $2.5 million in restructuring and related charges associated with this restructuring program. During the three months ended March 31, 2023, we conducted an additional RIF of over 260 employees, primarily in India, but also in Thailand and the United States. The purpose of these actions is to pursue greater cost efficiencies and to realign our business and strategic priorities. We cannot guarantee that these restructuring actions will achieve or sustain the targeted benefits, or that the benefits, even if achieved, will be adequate to meet our long-term profitability expectations. Risks associated with these restructuring actions also include additional unexpected costs, negative impacts on our cash flows from operations and liquidity, employee attrition and adverse effects on employee morale and our potential failure to meet operational and growth targets due to the loss of employees, any of which may impair our ability to achieve anticipated results from our operations or otherwise adversely affect our business.

If we fail to either develop new and innovative technologies or enhance our existing technologies and grow our systems and infrastructure in response to changing client demands and rapid technological change, our business may suffer.

The travel industry is subject to changing client preferences and demands relating to travel and travel-related services, including in response to constant and rapid technological change. If we are unable to develop or enhance technology in response to such changes, products or technologies offered or developed by our competitors, our travelers may find our services less attractive.

Our ability to provide high-quality service to our travelers depends upon the use of sophisticated information technologies and systems, including technologies and systems used for reservation systems, communications, procurement and administrative systems. As our operations grow in both size and scope, we continuously need to improve and upgrade our systems and infrastructure to offer and provide support for an increasing number of travelers and travel providers enhanced products, services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure. We may fail to effectively scale and grow our systems and infrastructure to accommodate these increased demands. Further, our systems and infrastructure may not be adequately designed with the necessary reliability and redundancy to avoid performance delays or outages that could be harmful to our business, or could contain errors, bugs or vulnerabilities.

Our future success also depends on our ability to understand, adapt and respond to rapidly changing technologies in the travel industry that will allow us to address evolving industry standards and to improve the breadth, diversity and reliability of our services. For example, technology solutions that include the use of AI to analyze known traveler data and preferences to develop a tailored travel plan are being developed. As they are in the early stages, we must understand and

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respond to the potential impacts of such technology, and evaluate and mitigate any potential additional risks related to the use of such technology in our business, including with respect to intellectual property, cybersecurity and privacy. We may be unsuccessful, or may be less successful than our current or new competitors, in developing such technology or mitigating such risks, which would negatively impact our business and financial performance.

If we are unable to maintain existing systems, obtain new technologies and systems, or replace or introduce new technologies and systems as quickly as our competitors or in a cost-effective manner, our business and operations could be materially adversely affected. Also, we may not achieve the benefits anticipated from any new technology or system or be able to devote financial resources to new technologies and systems in the future.

Cybersecurity attacks or security breaches could adversely affect our ability to operate, could result in personal data and our proprietary information being lost, stolen, made inaccessible, improperly disclosed or misappropriated or could cause us to be held liable or subject to regulatory penalties and sanctions and to litigation (including class action litigation), each of which could have a material adverse effect on our reputation and business.

We, and our travel suppliers and third-party service providers on our behalf, collect, use, transmit and otherwise process a large volume of personal data, which poses a tempting target for malicious actors who may seek to carry out cyber-attacks (or other forms of attempts to obtain personal data) against us or our suppliers or third-party service providers. The secure transmission of client information over the internet contributes to maintaining the confidence of travel suppliers and travelers. Substantial or ongoing data security breaches or cyber-attacks on our systems or other systems on which we rely, whether instigated internally or externally, could result in, among other things: (i) exposure to a significant risk of loss, theft, the rendering inaccessible, improper disclosure or misappropriation of personal data, resulting in regulatory actions, litigation (including class action litigation) and potential liability, damages and regulatory fines and penalties and other related costs (including in connection with our investigation, notification and remediation efforts); (ii) severe damage to our IT infrastructure, including damage that could impair our ability to offer our services; (iii) negative publicity; (iv) damage to our reputation or brand; (v) the disclosure, loss or theft of our intellectual property, including our proprietary software, source code and trade secrets, or proprietary information; (vi) diversion of our management’s time and attention away from daily operations; (vii) regulatory penalties and sanctions, which could lead to further enhanced regulatory oversight; and (viii) travelers and potential travel suppliers losing confidence in our cybersecurity and choosing to use our competitors’ services, any of which could have a material adverse effect on our technology solutions, market share, results of operations and financial condition. Furthermore, some of our third-party service providers, travel suppliers and other third parties may receive or store information, including our clients’ information provided by us. For example, our travel suppliers currently require most travelers to pay for their transactions with their credit cards, especially in the U.S., and such suppliers receive our clients’ personal data to process the transactions and we can carry some liability in relation to the suppliers we use and ensuring that they have appropriate technical and organizational security procedures in place to protect personal data. Increasingly sophisticated technological capabilities and techniques of threat actors, including traditional hackers, organized crime, and nation state and state-supported actors, pose greater cybersecurity threats and could result in a cyber-attack or a compromise or breach of the technology that we use to protect client transaction data. Outside of cybersecurity, there remain similar risks for personal data and our intellectual property and proprietary information in relation to other forms of data breach including through social engineering or human error, negligence or malfeasance.

We incur material expense to protect against cyber-attacks and security breaches and their consequences, and we may need to increase our security-related expenditures to maintain or increase our systems’ security in the future.

However, despite these efforts, our security measures may not prevent cyber-attacks or data security breaches from occurring, and we may ultimately fail to detect, or accurately assess the severity of, a cyber-attack or other form of security breach or not respond quickly enough. In addition, to the extent we experience a cyber-attack or security breach, we may be unsuccessful in implementing remediation plans to address exposure and future harms. It is possible that computer circumvention capabilities, new discoveries or advances or other developments, which change frequently and often are not recognized until launched against a target, could result in a compromise or breach of client data, even if we take all reasonable precautions, including to the extent required by law. These risks are likely to increase as we expand our offerings, expand internationally, integrate our products and services, and store and process more data, including personal data and other sensitive data. Further, if any of our third-party service providers, travel suppliers or other third parties with whom we share client data fail to implement adequate data-security practices or comply with our terms and policies or otherwise suffer a network or other security breach, our clients’ information may be improperly accessed, used or disclosed. We maintain a comprehensive portfolio of insurance policies to both meet our legal obligations and cover perceived risks within our business, including those related to cybersecurity, and we believe that our coverage and the deductibles under these policies are adequate for the risks that we currently face. However, we cannot be certain that our insurance coverage will be adequate for liabilities actually incurred in the event of any breach, that insurance will continue to be available to us on commercially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the

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occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, results of operations and reputation.

If a party (whether internal, external, an affiliate or unrelated third party) either is able to circumvent our data security systems or those of the third parties with whom we share client information, or engages in cyber-attacks, such data breaches or cyber-attacks could result in such bad actor obtaining our proprietary information, the loss, theft or inaccessibility of, unauthorized access to, or improper use or disclosure of, our clients’ data or a significant interruption in our operations. Our business continuity and disaster recovery plans may not be effective, particularly if catastrophic events occur where large numbers of our people are located, or simultaneously affect our people in multiple locations around the world. If these disruptions prevent us from effectively serving our clients, our results of operations could be significantly adversely affected.

Please see the Risk Factor titled “Our collection, storage, use, disclosure and other processing of personal data, including of travelers and our employees, exposes us to risks stemming from possible failure to comply with applicable laws and regulations and other legal obligations relating to data privacy and security” for further information.

Our failure to adequately protect, maintain or enforce our intellectual property may negatively impact our ability to compete effectively against competitors in our industry.

Our success and ability to compete depend, in part, upon our ability to protect, maintain and enforce our intellectual property, including our technology solutions and database. In the U.S. and other jurisdictions, we rely on a combination of copyright, trademark, and trade secret laws, as well as license and confidentiality agreements and internal policies and procedures to protect our intellectual property. Even with these precautions, however, it may be possible for another party to infringe, copy or otherwise obtain and use our owned or licensed intellectual property without our authorization or to develop similar intellectual property independently, particularly in those countries where effective trademark, domain name, copyright, and trade secret protection may not be available. Even where effective protection is available, policing unauthorized use of our intellectual property is difficult and expensive, and despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, or challenged. If it becomes necessary for us to litigate to protect these rights, any proceedings could be burdensome and costly, could result in counterclaims challenging our ownership of intellectual property or its validity or enforceability or accusing us of infringement, and we may not prevail. We cannot be certain that the steps that we have taken or will take in the future will prevent misappropriation or infringement of intellectual property used in our business. Unauthorized use and misuse of our intellectual property or intellectual property we otherwise have the rights to use could reduce or eliminate any competitive advantage we have developed, potentially causing us to lose sales or actual or potential clients, or otherwise harm our business, resulting in a material adverse effect on our business, financial condition or results of operations, and we cannot assure you that legal remedies would adequately compensate us for the damage caused by unauthorized use.

Our use of “open source” software could adversely affect our ability to protect our proprietary software and subject us to possible litigation.

We use open source software in connection with our software development. From time to time, companies that use open source software have faced claims challenging the use of open source software or demanding compliance with open source license terms. We could be subject to suits by parties claiming ownership of what we believe to be open source software, or claiming non-compliance with open source licensing terms. Some open source licenses require licensees who distribute software containing, linking to or derived from open source software to make publicly available the source code of such distributed software, which in some circumstances could be valuable proprietary code, or could require us to license our software for free or permit others to make derivative works based on such software. Further, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on our ability to commercialize our technology solutions incorporating such software. While we have implemented policies to ensure that no open source software is used in a manner that would require us to disclose our proprietary source code, license our software for free or permit others to make derivative works based on it, there can be no guarantee that such use could not inadvertently occur. Any requirement to disclose our proprietary source code, license it for free or license it for purposes of making derivative works, and any requirement to pay damages for breach of contract and/or intellectual property infringement may have a material adverse effect on our business, results of operations or financial condition, and could help our competitors develop services that are similar to or better than ours.

Our collection, storage, use, and disclosure and other processing of personal data, including of travelers and our employees, exposes us to risks stemming from possible failure to comply with applicable laws and regulations and other legal obligations relating to data privacy and security. Such laws, regulations and other obligations, and the costs of

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complying with them, are increasing globally, and any actual or perceived failure to comply with them could have a material adverse effect on our business.

In our processing of travel transactions, we or our travel suppliers and third-party service providers collect, use, analyze, transmit and otherwise process a large volume of personal data in and outside of the U.S. As a result, we are subject to numerous laws with a significant impact on our operations regarding privacy, cyber security and the storage, sharing, use, analysis, transfer, disclosure, protection and other processing of personal data and consumer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent between states within a country or between countries.

Privacy laws are constantly evolving and new legal obligations and liabilities in relation to these are appearing around the world, each of which demand increased compliance resources, including personnel and financing resources. Internationally, many jurisdictions in which we operate have established their own data privacy and security legal framework with which we must comply. For example, the EU’s General Data Protection Regulation (“GDPR”), became effective on May 25, 2018, and continues to result in significantly greater compliance burdens and costs for companies with users or operations in the EU. The GDPR imposes numerous technical and operational obligations on processors and controllers of personal data and provides numerous protections for individuals in the European Economic Area (“EEA”), including, but not limited to, the right to receive notifications regarding certain data breaches, the right to access personal data and the right to delete personal data. The GDPR provides data protection authorities with enforcement powers which include the ability to restrict processing activities and impose fines of up to 20 million Euros or up to 4% of the annual global turnover of the infringer, whichever is greater. In addition, the GDPR imposes strict rules on the transfer of personal data out of the EEA to a so-called “third country,” with the use of European Commission Approved Standard Contractual Clauses (“SCCs”) being a primary mechanism for such transfers. These obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or our practices.

Following the U.K.’s exit from the EU (“Brexit”), the U.K. Data Protection Act contains provisions, including its own derogations, for how the GDPR is applied in the U.K. (“U.K. GDPR”). The U.K. Data Protection Act has been enacted alongside the U.K. GDPR. From the beginning of 2021 (when the transitional period following Brexit expired), we have been required to continue to comply with GDPR and also the U.K. Data Protection Act and the U.K. GDPR, under which our applicable entities may be subject to fines for non-compliance that are of the same amount as provided for in the GDPR. At the current time, the European Commission has issued an “adequacy” decision to the U.K., which facilitates the sharing of personal data between the EEA and the U.K. However, such adequacy decision will sunset in June 2025 unless extended and it may be revoked in the future by the European Commission if the U.K. data protection regime is reformed in ways that deviate substantially from the level of protection currently in place. Adding further complexity for international data flows, in March 2022, the U.K. adopted its own International Data Transfer Agreement (“IDTA”) for transfers of personal data out of the U.K. to so-called third countries, as well as an international data transfer addendum (“U.K. Addendum”) that can be used with the SCCs for the same purpose. The EU has also proposed legislation that would regulate non-personal data and establish new cybersecurity standards, and other countries, including the U.K., may similarly do so in the future. While the GDPR and U.K. GDPR remain substantially similar for the time being, the U.K. GDPR is currently under review in the U.K. and there may be further changes made to it over the next few years, including in ways that may differ from the GDPR, which could result in further compliance obligations. While these developments increase uncertainty with regard to data protection regulation in the U.K., even in their current, substantially similar form, the GDPR and U.K. GDPR can expose businesses to divergent parallel regimes that may be subject to potentially different interpretations and enforcement actions for certain violations and related uncertainty.

Cross-border transfers of data continues to be an area of considerable focus by data protection regulators around the world and we are subject to evolving laws and regulations that dictate whether, how, and under what circumstances we can transfer, process or receive personal data. For example, in July 2020, the Court of Justice of the European Union invalidated the “EU-US Privacy Shield,” a framework for transfers of personal data from the European Economic Area to the United States. Subsequent to this, as noted above, new standard contractual clauses have been adopted by the EU and the U.K. and we are required to use such new contract clauses where appropriate and to carry out additional transfer impact assessments. Additionally, in October 2022, President Biden signed an executive order to implement the EU-U.S. Data Privacy Framework, which would serve as a replacement to the EU-US Privacy Shield. The European Commission initiated the process to adopt an adequacy decision for the EU-US Data Privacy Framework in December 2022, however, the European Commission and the European Data Protection Board both have been critical of the framework and it is unclear if or when the framework will be finalized or adopted. Given that this is such an area of compliance focus by regulators, there remains a risk that transfers of personal data to some jurisdictions could be considered to be unlawful without adequate data transfer mechanisms in place.

In the U.S., there are numerous federal, state and local data privacy and security laws, rules, and regulations governing the collection, sharing, use, retention, disclosure, security, transfer, storage and other processing of personal data, including federal and state data privacy and security laws, data breach notification laws, and data disposal laws. For example, at the

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federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and security), as well as the Electronic Communication Privacy Act and the Computer Fraud and Abuse Act. The United States Congress also has considered, is currently considering, and may in the future consider, various proposals for comprehensive federal data privacy and security legislation, to which we may become subject if passed. If we are found to have violated applicable laws or regulations, we also may be subject to penalties, fines, damages, injunctions or other outcomes that may adversely affect our operations and financial results.

At the state level, we are subject to laws and regulations such as the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (the “CPRA”). The CCPA became effective on January 1, 2020, and limits how we may collect and use personal data, including by requiring companies that process information relating to California residents to make disclosures to consumers about their data collection, use and sharing practices, provide consumers with rights to know and delete personal data and allow consumers to opt out of certain data sharing with third parties. The CCPA also creates an expanded definition of personal data, imposes special rules on the collection of consumer data from minors, and provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase the likelihood and cost of data breach litigation. The potential effects of this legislation are far-reaching and may require us to modify our data processing practices and policies and incur substantial costs and expenses in compliance and potential ligation efforts. Further, the CPRA, which went into effect January 1, 2023, creates certain additional rights for California residents. For example, the CPRA creates the new category of “sensitive personal information,” which covers data types such as precise geolocation information, biometric information, race and ethnicity, and information regarding sex life or sexual orientation. The CPRA also creates new rights for California residents to direct a business to limit the use and disclosure of such information to that which is necessary to perform the services reasonably expected by the consumer and to request that a company correct inaccurate personal data that is retained by us. The Virginia Consumer Data Protection Act, which also became effective on January 1, 2023, gives new data protection rights to Virginia residents and imposes additional obligations on controllers and processors of consumer data similar to the CCPA and CPRA. In addition, other states have signed into law (including Colorado and Connecticut, which laws will become effective July 1, 2023, and Utah, which law will become effective December 31, 2023) or are considering legislation governing the handling of personal data, indicating a trend toward more stringent privacy legislation in the U.S. Moreover, laws in all 50 U.S. states require businesses to provide notice under certain circumstances to consumers whose personal data has been disclosed as a result of a data breach. Existing and evolving compliance obligations in respect of privacy rules relating to marketing and the use of cookies and related advertising technology may also have an impact on the business such as by reducing the use of databases and advertising techniques in order to conduct marketing activities. Compliance failures in this area can result in potential rulings to delete or stop using marketing databases, fines, penalties and claims from individuals. In addition to the existing framework of data privacy laws and regulations, the U.S. Congress, U.S. state legislatures and many states and countries outside the U.S. are considering new privacy and security requirements that would apply to our business. Compliance with current or future privacy, cyber security, data protection, data governance, account access and information and cyber security laws requires ongoing investment in systems, policies and personnel and will continue to impact our business in the future by increasing our legal, operational and compliance costs and could significantly curtail our collection, use, analysis, sharing, retention and safeguarding of personal data and restrict our ability to fully maximize our closed-loop capability, deploy data analytics or AI technology or provide certain products and services, which could materially and adversely affect our profitability. We or our third-party service providers could be adversely affected if legislation or regulations are expanded to require changes in our or our third-party service providers’ business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our or our third-party service providers’ business, results of operations or financial condition.

Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses.

As of December 31, 2022, our Company had net operating loss carryforwards (“NOLs”) for federal and state of approximately $100.95 million and $122.65 million, respectively. As of December 31, 2021, our Company had net operating loss carryforwards for federal and state of approximately $108.53 million and $141.37 million, respectively. The federal net operating losses will begin to expire in 2032, and state net operating losses begin to expire in 2027, if not utilized. Under current law, federal NOLs generated in taxable years ending after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80%. Federal NOLs generated prior to January 1, 2018, however, have a 20-year carryforward period, but are not subject to the 80% limitation.

Under U.S. federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended (the “Code”). In general, an ownership change will occur if there is a cumulative change in a corporation’s ownership by “5 percent shareholders” that exceeds 50 percentage points (by value) over a rolling three-year period. A corporation that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-

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ownership change NOLs equal to the value of the corporation immediately before the ownership change, multiplied by the long-term tax-exempt rate (subject to certain adjustments). Furthermore, our ability to utilize NOLs of companies that we have acquired or may acquire in the future may be subject to similar limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs by federal or state taxing authorities or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities. For these reasons, we may not be able to utilize a material portion of the NOLs reflected on our balance sheet, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition.

A significant portion of our total outstanding shares may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

Although ITHAX Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”), the members of the Sponsor, the Mondee Stockholders and the members of the Mondee Stockholder were prohibited, through January 19, 2023, from transferring any of our securities, in each case, subject to certain customary exceptions, these shares may now be sold and we have filed, and may in the future file or amend, registration statements to provide for the resale of such shares from time to time. If any of these shareholders or another large institutional shareholder were to sell a substantial number of shares of our common stock at once or in large blocks, or are perceived by the market as intending to sell them, the market price of our common stock could decline.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.


(Dollars in thousands, except price per share data	Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
Stock Repurchases1
Quarter Ended September 30, 2023
July 1 to July 31	—	$	—	—	$	—
August 1 to August 31	—	$	—	—	$	—
September 1 to September 30	215,350	$	3.54	215,350	$	39,234
For the three months ended September 30	215,350	$	3.54	215,350	$	39,234

Stocks Retained in Net Settlement2
July 1 to July 31	4,184
August 1 to August 31	50,720
September 1 to September 30	26,405
For the three months ended September 30	81,309

1 On September 21, 2023, the Company’s Board of Directors authorized a share repurchase program to purchase up to $30 million of the Company’s Class A Common Stock (the “Share Repurchase Program”). The Share Repurchase Program has no expiration date.

2 The Company’s Stock Plan permits net settlement of stock issuances relating to equity awards for purposes of settling a grantee’s tax withholding obligations. Stock Retained in Net Settlement was at the vesting price of the corresponding restricted stock unit.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

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Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

Exhibit No

Description

Form

File No

Exhibit

Filing Date

2.1

Business Combination Agreement, dated as of December 20, 2021, by and among ITHAX Acquisition Corp., ITHAX Merger Sub I, LLC, ITHAX Merger Sub II, LLC, and Mondee Holdings II, Inc.

8-K

001-39943

2.1

December 20, 2021

2.2

Share Purchase and Sale Agreement by and among Mondee Brazil, LLC, Mondee Holdings, Inc., OTT Holding Ltda, Orinter Tour & Travel, S.A., and the other parties thereto, dated as of January 31, 2023

8-K

001-39943

2.1

February 1, 2023

2.3†

Stock Purchase Agreement by and among Mondee Brazil, LLC, Mondee Holdings, Inc., Consolid Mexico Holding, S.A.P.I. de C.V., José Luis Castro Gómez, Abraham Shabot Cherem, Judith Guerra Aguijosa, and the other parties thereto, dated as of May 12, 2023.

8-K

001-39943

2.1

May 16, 2023

2.4†

Share Purchase and Sale Agreement by and among Mondee Brazil, LLC, Mondee Holdings, Inc., Diana Krepinsky Rodrigues, Cynthia Sherry Ann Krepinsky Rodrigues, and Interep Representações Viagens E Turismo S.A.. dated as of May 12, 2023

8-K

001-39943

2.1

May 16, 2023

2.5†*

Stock Purchase Agreement between LBF Travel Management Corp. and Mondee, Inc., dated as of September 29, 2023

3.1

Amended and Restated Certificate of Incorporation of Mondee Holdings, Inc.

8-K

001-39943

3.1

July 20, 2022

3.2

Amended and Restated Bylaws of Mondee Holdings, Inc.

8-K

001-39943

3.2

July 13, 2023

3.3

Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock.

8-K

001-39943

3.1

September 30, 2022

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10.1+†*

Employment Agreement, dated September 14, 2023, by and between Mondee Holdings, Inc. and Prasad Gundumogula

10.2+*

Restricted Stock Unit Agreement, dated September 14, 2023, by and between Mondee Holdings, Inc. and Prasad Gundumogula

31.1*

Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a 14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a 14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

Inline XBRL Instance Document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

104**

Cover Page Interactive Data File, formatted in Inline XBRL (formatted as inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

+ Indicates management contract or compensatory plan.

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† Portions of exhibit have been omitted pursuant to Regulation S-K Item 601(a)(5) promulgated under the Exchange Act. The Registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	MONDEE HOLDINGS, INC.

Date: November 14, 2023	By:	/s/ Prasad Gundumogula
	Name:	Prasad Gundumogula
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Date: November 14, 2023	By:	/s/ Jesus Portillo
	Name:	Jesus Portillo
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)