FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2023

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. The following table sets forth the Company’s financial liabilities that were measured at fair value, on a recurring basis (in thousands):


	December 31, 2023





Liabilities	Level 1		Level 2		Level 3		Total
Foreign currency exchange derivatives(1)	$	—	$	300	$	—	$	300
Private placement warrant liability(2)	—		—		137		137
Orinter earn-out consideration(3)	—		—		6,540		6,540
Consolid earn-out consideration(4)	—		—		780		780
Interep earn-out consideration(5)	—		—		2,240		2,240
Skypass earn-out consideration(6)	—		—		161		161

Total liabilities	$	—	$	300	$	9,858	$	10,158


	December 31, 2022
Liabilities	Level 1		Level 2		Level 3		Total

Private placement warrant liability(2)	$	—	$	—	$	1,293	$	1,293

______________________________


(1)			The Company uses foreign currency forward contracts with maturities of up to nine months to hedge a portion of anticipated exposures. The foreign currency exchange derivatives are recognized on the consolidated balance sheet at fair value within accrued expenses and other current liabilities.
(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 December 31, 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 million in aggregate at the end of fiscal years 2023 through 2025. As of December 31, 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 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 $1.0 million and 400,000 shares of common stock contingent on Consolid meeting certain adjusted EBITDA targets for the trailing 12 months ending May 12, 2024 and the year ended December 31, 2024. As of December 31, 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 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 $3.0 million contingent upon Interep reaching specified EBITDA targets by the end of fiscal year 2025. As of December 31, 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 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 December 31, 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 consolidated balance sheets.

Short-Term Financial Assets and Liabilities

The carrying values of the Company’s short-term financial assets and liabilities including cash, cash equivalents, restricted cash and short-term investments, accounts receivable, accounts payable, deferred underwriting fees, and accrued expenses approximated their fair values as of December 31, 2023 and 2022, due to their short-term nature. The Company’s restricted cash and short-term investments 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 December 31, 2023 is $9.6 million. 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 income

(expense), net in the consolidated statement of operations. For the year ended December 31, 2023 the Company recorded loss of $0.1 million, in other income (expense), net.

Roll-forward of Level 3 Recurring Fair Value Measurements

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


	Year Ended December 31,
	2023		2022
Balance, beginning of year	$	—	$	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		—
Change in the estimated fair value of earn-out consideration	2,707		(597)
Balance, end of the year	$	9,721	$	—

The earn-out consideration represents the fair values of contingent consideration in connection with the Company’s acquisitions. See Note 7 — Acquisitions and Divestitures for further detail. The earn-out considerations are fair valued using the Monte Carlo Method and are Level 3 measurements 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 inputs for the valuation of the earn-out liabilities as of December 31, 2023:


	Orinter	Interep	Consolid	Skypass
Cost of equity	28.0%	32.0%	28.0%	25.5%
EBITDA volatility	66.0%	66.0%	74.0%	59.0%
Equity volatility	87.0%	87.0%	97.0%	78.0%
Required metric risk premium	21.0%	24.5%	21.5%	19.5%
Risk-neutral adjustment factor	0.75 - 1.00	0.72 - 1.00	0.91 - 0.97	0.69 - 0.98

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 consolidated balance sheets. Changes to the unobservable inputs do not have a material impact on the Company’s consolidated financial statements. The Company recognized a loss of $2.7 million and a gain of $0.6 million for the

remeasurement of the earn-out liabilities during the year ended December 31, 2023 and 2022, respectively, recorded as general and administrative expenses within the consolidated statements of operations.

Private placement warrant liability

Fair value of the warrant liability is as follows (in thousands):


	Year Ended December 31,
	2023		2022
Balance, beginning of the year	1,293		—
Private placement warrants recognized upon closing of reverse recapitalization	—		1,721
Transfer of private placement warrants to public warrants	—		(536)
Change in the estimated fair value of private placement warrants	(1,156)		108
Balance, end of the year	$	137	$	1,293

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


	December 31,
	2023	2022
Stock price	$2.76	$10.88
Expected term (in years)	3.6	4.6
Expected volatility	73.0%	60%
Risk-free rate	4.0%	4.1%
Dividend yield	—%	—%

Changes to the unobservable inputs do not have a material impact on the Company’s consolidated financial statements. The Company recognized a gain of $1.2 million and a loss of $0.1 million during the years ended December 31, 2023 and 2022, respectively, recorded in changes in fair value of warrant liability within the 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 years ended December 31, 2023 and 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 instrument’s carrying value to the fair value as a result of such triggering events, the non-financial asset is measured at fair value when such triggering events occur.

For the years ended December 31, 2023 and 2022 the Company did not record any impairment charges on non-financial assets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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