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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 requirement for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

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 June ~~30, 2017~~29, 2018 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common stock held by non-affiliates of the registrant was approximately ~~$229.0~~$290.7 million based on the closing sales price of ~~$10.50~~$13.25 on the NASDAQ Capital Market.

As of February 26, ~~2018,~~22, 2019, there were ~~45,772,845~~45,742,161 shares of the registrant’s common stock outstanding.

Portions of the registrant’s Definitive Proxy Statement relating to its ~~2018~~2019 Annual Meeting of ~~Shareholders~~Stockholders are incorporated by reference in Part III, Items 10-14 of this Annual Report on Form 10-K as indicated herein.

Table of Contents

PART I

Cautionary Note Regarding Forward-Looking Statements

Any statements in this Annual Report on Form 10-K (the “Form 10-K”) about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements. There may be events in the future that we are not able to predict accurately or over which we have no control. Potential risks and uncertainties include, but are not limited to:

	●	general economic conditions;

	●	unscheduled disruptions in our business due to weather events, mechanical failures, or other events;

	●	changes adversely affecting the business in which we are engaged;

	●	management of our growth and our ability to execute on our planned growth;

	●	our business strategy and plans;

	●	our ~~business strategy and plans;~~ability to maintain our relationship with National Geographic Society;

	●	compliance with new and existing laws and regulations, including environmental regulations;

	●	compliance with the financial and/or operating covenants in our ~~Second Amended & Restated Credit Agreement (“Restated Credit Agreement”);~~debt arrangements;

	●	adverse publicity regarding the cruise industry in general;

	●	loss of business due to competition;

	●	the result of future financing efforts;

	●	delays and costs overruns with respect to the construction and delivery of newly constructed vessels;

	●	the inability to meet revenue and Adjusted EBITDA projections; and

	●	those risks discussed in Item 1A. Risk Factors.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events.

Unless the context otherwise requires, in this Form 10-K, “Company,” “Lindblad,” “we,” “us,” “our,” and “ours” refer to Lindblad Expeditions Holdings, Inc., and its subsidiaries.

Table of Contents

Item 1.

Business

Overview

Lindblad provides expedition cruising and adventure travel experiences using itineraries that feature up-close encounters with wildlife, nature, history and culture, and promote guest empowerment and interactivity. Our mission is to offer life-changing adventures ~~on all seven continents~~around the world and pioneer innovative ways to allow our guests to connect with exotic and remote places. Our expedition ships ~~which consist of seven owned vessels and five seasonal charter vessels,~~ are customized, nimble and intimately-scaled vessels that are able to venture where larger cruise ships cannot, thus allowing us to offer up-close experiences in the planet’s wild and remote places and capitals of culture. Many of these expeditions involve travel to remote places with limited infrastructure and ports (such as Antarctica and the Arctic), including places that are best accessed by a ship (such as the Galápagos, ~~Alaska, Baja’s~~the Alaskan coast and Baja California’s Sea of ~~Cortez, Costa Rica and Panama)~~Cortez), and foster active engagement by guests. Each expedition ship is designed to be comfortable and inviting, while being fully equipped with state-of-the-art tools for in-depth exploration. In addition to our sea-based expeditions, we offer land-based, eco-conscious expeditions across the globe from Antarctica to ~~Zambia~~Zimbabwe primarily through our ~~ownership of~~ Natural Habitat, Inc. (“Natural Habitat”). subsidiary.

We choose to visit geographic areas based upon many factors, including weather, marine conditions, migration patterns and various natural phenomena. We continue to expand our travel offerings. In the northern hemisphere summer months, we primarily visit the High Arctic regions of the world, Alaska, the Canadian Maritimes, Europe, as well as the South Pacific. In the northern hemisphere winter months, we primarily travel to Antarctica, South America, Costa Rica, Baja California and the Caribbean. The Galápagos Islands are a year-round destination offering a diverse variety of marine, land and airborne wildlife.

We currently operate a fleet of eight owned expedition ships and five seasonal charter vessels, having recently launched a new owned expedition ship, the National Geographic Venture, in December 2018. In addition, we are building a new polar ice class vessel, the National Geographic Endurance, for delivery in January 2020 and in February 2019, we entered into an agreement with Ulstein Verft to construct a second polar ice class vessel, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million Norwegian Kroner (NOK). The purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date and is due in installments, with the first 20% to be paid shortly after execution of the agreement, 50% to be paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is targeted to be delivered in September 2021.

We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximize yields. We use our charter inventory as a mechanism to both increase travel options for our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.

Our offerings appeal to a wide range of travelers, both individuals and families, with affluent individuals in the U.S. aged 50 years or older representing our largest demographic category. The quality of our offerings has enabled us to achieve and maintain premium pricing in the market instead of pursuing the type of discounting in which most large cruise lines that are focused on the broader market engage. Our product offering, value proposition and differentiated pricing approach have enabled us to achieve high net yields and occupancy rates.

We have a longstanding relationship with the National Geographic Society, which was founded ~~in 2004~~ on a shared interest in exploration, research, technology and conservation. This relationship includes co-selling, co-marketing and branding arrangements with National Geographic Partners, LLC (“National Geographic”) whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through their internal travel divisions. We collaborate with National Geographic on expedition planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.

Our offerings appeal to a wide range of travelers, both individuals and families, with affluent individuals in the U.S. aged 50 years or older representing our largest demographic category. The quality of our offerings has enabled us to achieve and maintain premium pricing in the market instead of pursuing the type of discounting in which most large cruise lines that are focused on the broader market engage. Our product offering, value proposition and differentiated pricing approach enable us to achieve high net yields and occupancy rates.

Our business benefits from significant visibility into future revenues, as our guests generally plan and book their voyages far in advance of their departure dates. As of February 26, ~~2018, 90%~~2019, 87% of the Lindblad segment’s expected guest ticket revenues for ~~2018~~2019 have been booked.

Natural Habitat specializes in nature adventures, providing life-transforming forays into the natural world that benefit wild habitats and the animals and people who live there. Our travel adventures provide unparalleled access to the planet's most extraordinary wildlife, landscapes and cultures. We provide unique itineraries that include access to private wildlife reserves, remote corners of national parks and distinctive, secluded and remote lodges and camps situated where wildlife viewing is best. Because of our commitment to environmentally friendly travel and the exceptional quality of our worldwide adventures, we have partnered with World Wildlife Fund (“WWF”) as their exclusive conservation travel partner. Through our relationship with WWF, their top scientists and staff collaborate with us in planning journeys to the world’s most captivating nature destinations.

We choose to visit geographic areas based upon many factors, including weather, marine conditions, migration patterns and various natural phenomena. In the northern hemisphere summer months, we primarily visit the High Arctic regions

Table of the world, the Canadian Maritimes, Europe, the South Pacific and Alaska. In the northern hemisphere winter months, we primarily travel to Antarctica, South America, Costa Rica, Baja California and the Caribbean. The Galápagos Islands are a year-round destination offering a diverse variety of marine, land and airborne wildlife.

Contents

Lindblad Expeditions Ships and Voyages

Itineraries

Currently we operate a fleet of ~~seven~~eight owned expedition vessels ~~owned~~ and five seasonal chartered ships to provide our signature marine-based adventures to over 40 destinations on ~~seven~~six continents, ~~of the world.~~offering itineraries that last from four to 21 days. We have extensive experience operating in the Galápagos Islands, Alaska, Antarctica and the Arctic, with the Lindblad family having been among the first to bring non-scientist travelers to these regions. We currently operate two vessels providing itineraries in the Galápagos ~~providing week-long itineraries~~ throughout the year. We operate two polar vessels that serve primarily in Antarctica during the northern hemisphere winter, in the Arctic during the northern hemisphere summer and various destinations during the intermediate ~~months, offering itineraries that last from five to 24 days.~~months. We also operate ~~three~~four ships in Alaska during the summer months that travel south along the ~~U.S.~~North American coastline to the Sea of Cortez, ~~and to~~ Belize, Guatemala, Costa Rica and Panama for the winter. In addition, we charter five vessels for seasonal itineraries in the Amazon, Scotland, the Caribbean, the Mediterranean, ~~Cuba,~~ Cambodia and ~~Vietnam.~~Vietnam, and Egypt.

We place a strong focus on innovation, which we seek to achieve by introducing new expedition options and continuously making improvements to our fleet and voyage experiences as new technology or operating procedures are developed. We make deployment decisions with the goal of optimizing the overall profitability of our portfolio, with these decisions generally made 18 to 24 months in advance. ~~We have operated above~~Our occupancy rates were 91%, 87% ~~occupancy rate~~and 90% for ~~each of~~ the years ended December 31, 2018, 2017 and 2016, ~~and 2015,~~respectively, indicating strong consumer interest in our offerings. Adding new capacity will allow us to expand our inventory of existing itineraries, ~~and expand~~extend into new markets and explore new destinations. The following table presents summary information concerning the ships we currently operate and their geographic areas of operation based on ~~2017 itineraries~~:

2019 itineraries:

Vessel Name	Date Built	Guest Capacity	Cabins	Primary Areas of Operation	Flag

National Geographic Endeavour II	2005, renovated in 2016	95	50	Galápagos	Ecuador
National Geographic Explorer	1982, rebuilt in 2008	148	81	Arctic, Antarctica, Europe and the British Isles	Bahamas
National Geographic Islander	1995	47	24	Galápagos	Ecuador
National Geographic Orion	2003	102	53	Arctic, Antarctica and South America	Bahamas
National Geographic Quest	2017	96	50	Alaska, Canada, the Pacific Northwest, Costa Rica and Panama	U.S.A.
National Geographic Sea Bird	1981	62	31	Alaska, Baja California and the Pacific Northwest	U.S.A.
National Geographic Sea Lion	1982	62	31	Alaska, Costa Rica, Panama and the Pacific Northwest	U.S.A.
National Geographic Venture	2018	96	50	Alaska and Baja California	U.S.A.
Delfin II*	2009	28	14	Amazon	Peru
Jahan*	2011	48	24	Vietnam and Cambodia	Vietnam
Lord of the Glens*	1985, renovated in 2016	48	26	Scotland	UK
Oberoi Philae*	1996, renovated in 2015	44	22	Egypt	Egypt
Sea Cloud*	1931, rebuilt in 1979, renovated in 2011	58	28	Caribbean and Mediterranean	Malta

Vessel Name Date Built Guest Capacity Cabins Primary Areas of Operation Flag
National Geographic Endeavour II 2005, renovated in 2016 95 50 Galápagos Ecuador
National Geographic Explorer 1982, rebuilt in 2008 148 81 Arctic, Antarctica, Europe, British Isles, Canada, Patagonia, South America and Transatlantic Bahamas
National Geographic Islander 1995 47 24 Galápagos Ecuador
National Geographic Orion 2003 102 53 Antarctica, Europe, South America and Arctic Bahamas
National Geographic Quest 2017 96 50 Alaska, Canada, Pacific Northwest, Costa Rica, Panama U.S.A.
National Geographic Sea Bird 1981 62 31 Alaska, Baja California and Pacific Northwest U.S.A.
National Geographic Sea Lion 1982 62 31 Alaska, Costa Rica, Panama, Baja California and Pacific Northwest U.S.A.
Delfin II* 2009 28 14 Amazon Peru
Harmony V* 2004 44 23 Cuba Greece
Jahan* 2011 48 24 Vietnam and Cambodia Vietnam
Lord of the Glens* 1985, renovated in 2016 48 26 Scotland UK
Sea Cloud* 1931, rebuilt in 1979, renovated in 2011 58 28 Caribbean and Mediterranean Malta

* Chartered Vessel

The following table presents summary information concerning ~~the two~~our new passenger cruise ~~vessels~~vessel under construction.

Vessel Name

Expected Launch

Date

Guest Capacity

Cabins

Primary Areas of Operation

Flag

Expected Launch Date

Guest Capacity

Cabins

Primary Areas of Operation

Flag

National Geographic Venture

December 2018

West Coast North America and Central America

U.S.A.

National Geographic Endurance

Q2 2020

126

Arctic, Antarctic, Greenland and Norway

Bahamas

Polar Ice Class Vessel

January 2020

126

Bahamas

Q4 2021

126

Arctic, Antarctic, Greenland and Norway

Table of Contents

National Geographic Endeavour II ~~operates in the Galápagos. The~~~~National Geographic Endeavour II~~ joined the fleet in the second quarter of 2016 and, following a significant renovation, deployed during the fourth quarter of ~~2016.~~2016 sailing year-round in the Galápagos. TheNational Geographic Endeavour II accommodates 95 guests in 50 cabins and offers public areas designed for maximum viewing of nature and wildlife. The forward lounge features a presentation space that offers all aboard the chance to participate in evening exploration recaps or special guest events. The ship is also outfitted with the tools of exploration, including Zodiacs, kayaks, paddleboards and underwater cameras, to connect guests with the islands and undersea wildlife.

National Geographic Explorer joined the fleet in 2008 ~~as our ultimate expedition ship.~~and primarily operates in the Arctic and Antarctica. The~~National Geographic Explorer~~is equipped with an ice-strengthened hull, advanced navigation equipment for polar expeditions and a well-appointed interior with multiple interior and exterior locations specifically designed for observing wildlife and the natural environment. Accordingly, the~~National Geographic Explorer~~ ~~is equipped to visit some of the most remote and extreme areas on the planet. The~~National Geographic Explorer accommodates 148 guests in 81 cabins, including 13 cabins with private balconies and six suites. TheNational Geographic Exploreris equipped with an ice-strengthened hull, advanced navigation equipment and is equipped to visit some of the most remote and extreme areas on the planet. The vessel is spacious and modern, with a variety of public areas that offer views of the passing landscape and for observing wildlife, including a window-lined library and observation lounge located at the top of the ship, several observation decks and a forward-facing chart room.

National Geographic Islander joined the fleet in 2005 and sails year-round in the Galápagos. The National Geographic Islander accommodates 47 guests in 24 outside cabins, including two suites The National Geographic Islander is a twin-hulled, yacht-scale ship designed for active ~~exploration. The~~~~National Geographic Islander~~~~sails year-round in the Galápagos,~~exploration which it is ideally suited for as its trim design and maneuvering abilities enable it to visit areas larger vessels cannot, allowing guests to experience the islands from a more up-close perspective. ~~The~~~~National Geographic Islander~~ ~~accommodates 47 guests in 24 outside cabins, including two suites.~~ On board there are open decks that are complete with hammocks as well as a large dining room and large lounges thatform part of the social hub of the ship.

National Geographic Orion joined the fleet in ~~2013.~~2013 and primarily operates in the Arctic, Antarctic, and for 2019 will also explore the Bering Sea, Alaska and Russia. TheNational Geographic Orion accommodates 102 guests in 53 cabins and a variety of public spaces that offer panoramic views of the passing landscape. The National Geographic Orion is a blue water, ice class vessel, equipped with advanced technology, including large retractable stabilizers, sonar, radar and an ice-strengthened ~~hull, which operates in the Artic, Antarctic, Patagonia and the South Pacific~~hull. A shallow draft as well as bow and stern thrusters allow for maneuvering close to shore. ~~The~~~~National Geographic Orion~~ ~~accommodates 102 guests in 53 cabins, including several with balconies and a variety of public spaces that offer panoramic views of the passing landscape.~~ The public rooms include a window-lined main lounge, as well as an observation lounge and library at the top of the ship, with numerous observation decks.

National Geographic Quest~~operates in the Alaska, the Pacific Northwest and Central America. The~~~~National Geographic Quest~~ ~~is a new vessel, which~~ joined the fleet during the third quarter of ~~2017.~~2017 and is the sister-ship of the National Geographic Venture. The vessel ~~was built~~accommodates 96 guests in ~~the United States to meet the precise needs of our unique expeditions.~~50 cabins, including 22 cabins with step-out balconies. The ship features the latest satellite communication and navigation technology, designed with superior viewing experiences from the decks and common areas, and is equipped with ~~reinforced Zodiacs.~~Zodiacs, kayaks, paddleboards and other expeditionary equipment. TheNational Geographic Questhas a shallow draft and small size and can reach places inaccessible to larger ships. ~~The vessel accommodates 96 guests in 50 cabins.~~

National Geographic Sea Birdjoined the fleet in 1991 and is the twin ship of theNational Geographic Sea ~~Lion~~Lion. ~~and offers expedition cruises in Alaska, the Pacific Northwest, Baja California and the Sea of Cortez.~~ The~~National Geographic Sea Bird~~ ~~has a shallow draft and small size and can reach places inaccessible to larger ships. The~~National Geographic Sea Bird accommodates 62 guests in 31 outside cabins and has an open bow that provides for shared wildlife viewing experiences. The vessel offers expedition cruises in Alaska, the Pacific Northwest, Baja California and the Sea of Cortez. The National Geographic Sea Bird has a shallow draft and small size and can reach places inaccessible to larger ships.

National Geographic Sea Lion joined the fleet in 1990 and is the twin ship of ~~the~~National Geographic Sea ~~Bird~~Bird. ~~and operates in Alaska, the Pacific Northwest, Baja California, the Sea of Cortez, Costa Rica and Panama.~~ The~~National Geographic Sea Lion~~ ~~has a shallow draft and a small size so that it can reach places inaccessible to larger ships. The~~National Geographic Sea Lion accommodates 62 guests in 31 outside cabins and has an open bow that provides for shared wildlife viewing experiences. The vessel operates in Alaska, the Pacific Northwest, Baja California, Costa Rica and Panama. The National Geographic Sea Lion has a shallow draft and a small size so that it can reach places inaccessible to larger ships.

National Geographic Venture is our newest vessel, joining the fleet during the fourth quarter of 2018, and is the sister-ship of the National Geographic Quest. The vessel accommodates 96 guests in 50 cabins, including 22 cabins with step-out balconies. The ship will operate in Alaska, Baja California and the Sea of Cortez. The ship features the latest satellite communication and navigation technology, designed with superior viewing experiences from the decks and common areas, and is equipped with Zodiacs, kayaks, paddleboards and other expeditionary equipment. The National Geographic Venture has a shallow draft and small size and can reach places inaccessible to larger ships.

Delfin II is a riverboat built to explore the Peruvian Amazon. TheDelfin II accommodates 28 guests in 10 suites and four master suites. The entire third deck is open-air, offering a view of the river and the rainforest. The ship is purpose built to serve the waterways of the Amazon and the ship is decorated with handicrafts from the ribereños, indigenous people of the native wildlife preserves.

Table of Contents

Jahanis a riverboat built in 2011 for exploring Vietnam and Cambodia. TheJahan accommodates 48 guests in 24 cabins, including two suites. Every cabin has a private balcony and the suites each have a private Jacuzzi.Jahan has four decks and has several public areas where the expedition community can gather to watch life along the riverbank. The public spaces include a covered, open-air observatory, open bow and a pool on the top deck.

Lord of the Glens is specifically sized to be able to sail through the Caledonian Canal in Scotland, which connects the North Sea to the Atlantic and can navigate the coastline and venture to the islands of the Inner Hebrides. TheLord of the Glens accommodates 48 guests in 26 outside cabins.

~~Harmony V~~Oberoi Philae ~~is an expedition vessel used for exploration of~~ explores the ~~southern coastline~~Nile River in Egypt and ~~islands of Cuba. It can accommodate 44~~accommodates 42 guests in ~~23 outside cabins.~~22 cabins, including four suites with modern amenities, and a relaxed, elegant ambiance. Oberoi Philae has the feel of a luxurious private yacht and has five decks with several public spaces. The ~~ship is~~public spaces include a fitness room, a fully ~~air-conditioned, has~~equipped spa with treatment rooms, lounge and library, and a ~~Sun Deck with an al fresco area that can also be enclosed and used as a venue for presentations and recaps. The ship is equipped with stabilizers and satellite communications.~~ pool on the top deck.

Sea Cloud offers the experience of sailing aboard a fully-rigged ship in the Caribbean and Mediterranean and accommodates 58 guests in 28 outside cabins, including two original owner’s suites that still feature original marble baths and fireplaces. TheSea Cloud has extensive public spaces on the top deck, a dining room that can accommodate all guests at once for single seating and a lounge.

In addition to routine repairs and maintenance performed on an ongoing basis and in accordance with applicable requirements, each of our expedition ships is taken out of service for a scheduled deeper maintenance period to conduct repairs and improvements. We maintain our fleet in accordance with applicable regulations, international conventions and insurance requirements. This includes regularly scheduled maintenance, periodic inspections, drydocking, wetdocking and overhaul. In addition, renovations and replacements of various vessel elements are part of the ongoing process of maintaining the vessels to a high ~~standard.~~standard of reliability.

For U.S. flagged ships, the statutory requirement is an annual docking and U.S. Coast Guard inspections, normally conducted in drydock. Internationally flagged ships have scheduled dockings approximately every 12 months, for a period of up to three to six weeks. Drydock interval and required inspections are statutory requirements controlled under chapters of the International Convention of the Safety of Life at Seas (“SOLAS”) and Classification Society instructions. Under these regulations, passenger ships must be inspected in drydock twice in five years, with the maximum duration between each drydock inspection not to exceed three years, and an underwater hull inspection is required annually. To the extent practicable each ship’s crew and hotel staff remain with the ship during docking periods and assist in performing repair and maintenance work. ~~We do not earn revenue while ships are in dock. Accordingly, dockings~~Dockings are typically planned during non-peak demand periods to minimize the adverse effect on revenue that results from ships being out of service.

We provide our guests the opportunity and the tools to be active and engaged explorers. Our vessels carry a variety of equipment for exploration which, depending on the ship and destination, may include Zodiacs for water-based activities and quick transfers to shore, kayaks for personal exploration, motorized skiffs, an underwater camera, a remotely operated vehicle, a video microscope to study some of the smallest organisms of the marine ecosystem, a crow’s nest camera atop a ship’s mast, hydrophones for listening to vocalizations of marine mammals, snorkeling gear, scuba gear and wetsuits. An experienced and knowledgeable expedition staff leads guests in exploration while Zodiac riding, hiking onshore, paddling on the water or observing wildlife from ashore or onboard the ship. All voyages feature a certified photo instructor onboard and many include photographers from National Geographic.

Our ships allow us to offer guests ~~to be close to~~authentic, up-close experiences in the planet's wild, ~~nature,~~remote places, but at the same time, enjoy a high level of comfort, convenience and safety. High-quality dining is an integral part of our expedition experience with influences and flavors that reflect the regions being explored, along with traditional fare. Food prepared aboard is sourced locally whenever practicable from sustainable providers. Seating is open and the atmosphere is relaxed. Our ships offer a range of services and amenities which allow our guests to travel in comfort. Depending on the ship, these may include a fitness center, a spa offering a variety of treatments, a photo kiosk for photographers to edit and sort photos, 24-hour beverage service, internet connection, laundry facilities and a doctor on call.

We offer to handle virtually all travel aspects related to guest reservations and transportation, simplifying the planning and booking process for our guests. We also provide guests the opportunity to purchase pre- and post-expedition extensions or services that may include additional hotel nights, air travel, private transfers, excursions, land travel packages and travel protection insurance.

Table of Contents

Our management team believes the following characteristics of our business model will enable us to successfully execute our strategy:

Our leadership and expertise today are built on the Lindblad family’s decades of experience in expedition adventure travel. Sven-Olof Lindblad, our President and Chief Executive Officer, ~~of the Company,~~ comes from a rich expedition heritage. The International Association of Antarctica Tour Operators, which was established in 1991, believes that the concept of expedition cruising, coupled with education as a major theme, began when Lars-Eric Lindblad, Sven-Olof Lindblad’s father, led the first traveler’s expedition to Antarctica in 1966. Lars-Eric Lindblad has also been recognized byThe New York Times,Travel + LeisureMagazine and other publications for his vision and leadership in developing what is today known as expedition travel. Believing that educated people who saw things with their own eyes would be a potent force for the preservation of the places they visited, Lars-Eric Lindblad worked to promote conservation and restoration projects worldwide. Sven-Olof Lindblad founded Lindblad in 1979, expanding the legacy of his father by providing expanded marine experiences around the world.

Under Mr. Lindblad’s leadership, we have led innovation in the expedition adventure travel industry. We pioneered expeditions in the High Arctic and Baja California’s Sea of Cortez and created what we view as the most innovative and in-depth expedition program in Alaska. We initiated the use of kayaks for active exploration in the Polar Regions and in the Galápagos, a feature which is now available on all of our owned vessels to enable personal, water-level encounters with nature. We were also one of the first to develop an undersea exploration program as part of a small ship expedition utilizing state-of-the-art equipment and technology.

As a pioneer in the expedition adventure travel sector, we have established deep expertise and knowledge of operating expedition cruises in extreme locations. We have earned awards and honors from various representatives of the travel industry, including recognition for the quality of our offerings and our support for conservation and sustainable tourism. Some of the awards we have earned during 2018 are as follows:

When customers select an expedition provider for the types of journeys that we offer, we believe that being known as a trusted brand with extensive operating history and knowledge in the market is a significant competitive strength.

Table of Contents

~~Our brand~~Lindblad is known for delivering voyages that offer in-depth exploration opportunities in locations around the world. Expeditions are operated on intimately-scaled ships with capacities ranging between 28 and 148 guests, fostering a friendly atmosphere on board and extensive interaction between guests, crew and the teams of world-class scientists, naturalists, researchers and photographers that participate in the expeditions. The vessels are nimble and can access locations that are unattainable for large cruise ships, allowing for in-depth exploration itineraries and viewpoints. The ships are customized to provide our signature adventure experiences and activities, such as kayaking among Antarctic icebergs to view penguins or traveling on a Zodiac for an up-close encounter with a whale.

We have a longstanding relationship with the National Geographic Society, which was founded on a shared interest in exploration, research, technology and conservation. We collaborate with National Geographic Partners, LLC (“National Geographic”) on expedition planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.

With the addition of Natural Habitat, our expedition offerings have increased to add over 80 different itineraries of adventure travel, land-based, ecotourism in more than 30 countries spanning six continents. Natural Habitat expeditions focus on small groups led by award-winning naturalists to achieve close-up wildlife and nature experiences. Examples of expeditions offered by Natural Habitat include safaris in Botswana, grizzly bear adventures in Alaska and polar bear tours in Canada. Many of Natural Habitat’s expeditions feature access to private wildlife reserves, remote corners of national parks and distinctive lodges and camps for the best wildlife viewing. The smallest expeditions average between eight to nine guests with itineraries running from six to 25 days, with an average of 10 days.

We are continuously focused on maintaining and elevating the guest experience and identifying new opportunities to help people discover the wonders of the world. We believe that our ~~expedition offerings and our~~ track record of ~~innovation~~high quality expedition offerings, along with our history of providing in-depth and highly innovative itineraries, represent significant competitive advantages for us.

Our business model allows us to generate consistent free cash flow with high revenue visibility. Our guests plan and book their expeditions on average nine months in advance, with a deposit due upon booking, providing us insight into future revenue and a source of cash flow. Based on our product offerings, we are able to support premium pricing with minimal discounting and benefit from low ~~requirements for maintenance~~ capital ~~expenditures,~~expenditure requirements, minimal working capital needs and favorable tax attributes.

We also have a strong cash position, providing us with ample financial flexibility to pursue growth opportunities through investment in new vessels, new charters, tactical land-based products or potential acquisitions of ships or other operators, while still maintaining a prudent capital structure.

We believe affluent ~~Americans~~travelers view their retirement as “a time to travel and explore new places,” favoring travel experiences such as expedition cruising. This has led to strong growth in the specialty cruise segment and we believe these trends will continue. We ~~plan to expand~~have expanded the number of ships in our fleet, with the National Geographic Quest in 2017 and the National Geographic Venture in 2018, including additional chartered vessels, ~~over the next three years. This includes two~~and continue to do so. We have a contracted ~~vessels, a new coastal vessel and a~~ new polar ice class ~~vessel. The~~vessel, the National Geographic Endurance, with expected ~~deliveries of the first two vessels are~~delivery scheduled for the ~~fourth quarter of 2018 and~~ first quarter of 2020, ~~respectively.~~and another recently contracted new polar ice class vessel with anticipated delivery in September 2021. Additionally, we believe that our platform is well positioned to opportunistically seek accretive purchases of operators that lack scale and capital, further extending our growth prospects.

We benefit from a longstanding relationship with the National Geographic Society, one of the world’s leading proponents of eco-tourism and natural history. The strategic alliance, which began in 2004, is built on our shared interest in exploration, research, technology and conservation. Founded in 1888, the National Geographic Society is one of the largest non-profit scientific and educational institutions in the world with interests ranging from geography, archaeology and natural science, to the promotion of environmental and historical conservation. Working to inspire, illuminate and teach, National Geographic reaches more than 600 million people a month through a wide range of media, including print, TV and digital. The National Geographic name has significant value for use in connection with travel-related goods and services. The Lindblad/National Geographic alliance includes a co-selling and co-marketing arrangement through which National Geographic promotes our offerings in its marketing campaigns across web-based, email, print and other marketing platforms and sells our expeditions through its internal travel division. The National Geographic sales channel represented approximately ~~25%~~26% of our guest ticket revenues for the year ended December 31, ~~2017.~~ 2018 with royalty expense totaling $6.1 million. We believe that the alliance with National Geographic provides us with a substantial competitive advantage in the expedition market based on the brand enhancement, expanded marketing reach and the relationship with National Geographic’s naturalists and photographers.

Table of Contents

Through this alliance, we collaborate with National Geographic on exploration, research, technology and conservation in order to provide travel experiences and disseminate geographic knowledge around the globe. The Lindblad/National Geographic alliance is set forth in an Alliance and License Agreement and a Tour Operator Agreement with terms until December 31, ~~2025.~~2025 (that may be terminated early by National Geographic in certain instances). In 2018, this alliance was expanded to include all of the Americas.

Sven-Olof Lindblad, our founder, ~~also serves~~previously served on the National Geographic Society’s International Council of Advisors, which iswas composed of individuals identified by the National Geographic Society as visionary leaders from a range of professions and industries across the globe that exemplify the intellectual curiosity and quest for adventure that has driven the National Geographic Society’s mission since 1888. Mr. John M. Fahey, Jr., one of our directors, previously served as the Chairman and Chief Executive Officer of the National Geographic Society.

On May 4, 2016, we acquired an 80.1% ownership interest in Natural Habitat, an adventure travel, land-based, ecotourism company located in Colorado. Natural Habitat offers over 80 different itineraries in more than 30 countries spanning seven continents. Natural Habitat focuses on small groups led by award-winning naturalists to achieve close-up wildlife and nature experiences. Examples of expeditions offered by Natural Habitat include safaris in Botswana, grizzly bear adventures in Alaska and polar bear tours in Canada and many of Natural Habitat’s expeditions feature access to private wildlife reserves, remote corners of national parks and distinctive lodges and camps for the best wildlife viewing. The smallest expeditions average between eight to nine guests with itineraries running from six to 25 days, with an average of 10 days.

Natural Habitat has partnered with ~~World Wildlife Fund (“WWF”),~~WWF, since 2003, to promote sustainable conservation travel that directly promotes and protects nature. WWF is one of the world’s leading conservation groups with over six million members globally. Natural Habitat’s exclusive license agreement with WWF allows Natural Habitat to use the WWF name and logo through 2023 in return for a royalty fee.

We believe the specialty and small ship cruising segment of the cruise industry demonstrates the following positive fundamentals:

The specialty and small ship cruising segment of the cruise industry is characterized by the smallest vessel size, unique itineraries, active adventures, gourmet culinary programs, highly personalized service and a more inclusive offering. These exclusive attributes, combined with a growing worldwide target population, provide specialty and small ship cruising operators with significant pricing leverage as compared to the other segments of the cruise industry.

The specialty cruise segment has demonstrated strong growth as consumers increasingly prefer experiences over other forms of discretionary spending. According to Cruise Lines International Association (“CLIA”), specialty cruises grew by 21% annually from 2009 to 2014. In ~~a December 2016 survey~~its 2019 Trend and Industry Outlook, 80% of CLIA-member travel agents ~~75%~~ expected increased bookings in ~~2017~~2019 from the prior year, with ~~33% of the agents anticipating~~anticipated passenger growth of ~~10% or greater.~~6% over 2018. Despite this consistent growth, we believe the specialty cruise industry still has low penetration levels compared to similar land-based vacations, which we believe highlights the continued growth potential for the specialty cruise market.

Our offerings appeal to a wide range of travelers, both individuals and families, but affluent individuals in the U.S. aged 50 years or older represent our largest demographic category. We believe that our small ship expedition offerings, with itineraries that promote up-close encounters with wildlife, nature and culture, have significant appeal to this target market. These individuals are also generally near-retirement or retired and have the leisure time and disposable income available to pursue the type of activities that we provide. Based on the U.S. Census Bureau’s ~~2015~~2017 National Projections, the age group of 50 years and older numbered approximately ~~111~~112 million individuals in ~~2015,~~2016, or approximately 35% of the U.S. population, and is expected to grow to approximately ~~120~~126 million in ~~2020,~~2025, an increase of approximately 8%12%.

The cruise industry in general, and the adventure travel and specialty cruise industries ~~in which we operate~~specifically, are characterized by high barriers to entry, which include the expertise and experience required to operate safely and effectively in remote locations, the existence of several well-established and ~~trusted~~recognizable brands and the time and personal relationships required to develop strong networks of experts to lead and support ~~expeditions, the cost and time~~expeditions. Additionally, there are large investments required to build ~~the~~new, sophisticated ships, long lead times necessary to construct new ships and limited newbuild shipyard capacity. Operators must also develop strong travel agent network partnerships, ~~necessary for success,~~as well as acquire local permits orof licenses required to operate in a diverse range of ~~geographies, large capital expenditures and operational insight required to build new and sophisticated ships suited for such specialized activities.~~geographies.

Table of Contents

We compete with a number of cruise lines with competition varying by destination. The market is fragmented and primarily comprised of private operators. The primary competitors that operate in the geographic regions we serve include Silversea Expeditions, Quark Expeditions, Compagnie du Ponant, Hurtigruten and Un-Cruise Adventures. For our land-based expeditions, we compete with a variety of companies offering itineraries in the countries in which we operate. These range from small private operators to larger companies operating across multiple countries. Some of our larger competitors include Abercrombie & Kent, Overseas Adventure Travel and GeoEx. We also compete with other vacation alternatives such as land-based resort hotels and sightseeing destinations for guests’ leisure time. ~~Companies within the vacation market are dependent on consumer discretionary spending.~~

The cruise industry in general and the expedition cruise industry specifically are characterized by high barriers to entry, including the existence of several established and recognizable brands, the large investment required to build a new, sophisticated ship, the long lead time necessary to construct new ships and limited newbuild shipyard capacity.

Our chief governing principle throughout the organization is to ensure that everything adds value to the guest experience. This applies to every step of the process from the first engagement with a potential guest, through the booking process and travel preparations, the actual expedition, whether onboard the vessel or off on explorations, and once back at home.

We believe that our guests do not want to be passive tourists, so our expeditions foster active engagement. Our ships are equipped with tools for exploration to get our guests out in the open for up-close forays, or to let guests see deeper into the marine or terrestrial environments surrounding them. It is our goal to provide guests with differentiated opportunities with an experienced expedition team that adds to the guests’ understanding and appreciation, through dedicated observation, insightful commentary and engaging presentations, weaving the expedition into a cohesive narrative. This could include an opportunity for the guest to watch a killer whale circling a seal on an ice floe, while standing next to a marine biologist and an experienced nature photographer from National Geographic. This intense focus on seeking to elevate the overall experience and engaging with guests has resulted in highly favorable customer feedback. We believe that by consistently delivering exceptional experiences to our guests, we have built a highly valuable and trusted brand in the expedition cruising and land-based expedition market, which attracts a growing number of discerning and affluent guests who are prepared to pay a premium for our offerings.

Given the nature of our expeditions and the expectation that our guests will seek to plan such trips with substantial notice, we begin to market our voyages approximately 12 to 24 months in advance of the departure date, depending on the destination. Guests book their trips, on average, nine months prior to sail date, paying a deposit at booking and the final payment 60 to 120 days within the date of travel, dependent upon the selected voyage. As of February 26, ~~2018, 90%~~2019, 87% of the Lindblad segment’s expected guest ticket revenues for ~~2018~~2019 has been ~~booked.~~booked.

Unlike the large cruise line operators that serve the broader market, our product offering is inclusive of most costs and therefore the advance customer payments provide us strong visibility into future revenues and the associated cash flows. By having such visibility into future business, we can more effectively manage any additional sales and marketing efforts that may be required to ensure that the programs reach their targeted occupancy levels. We do not believe in driving participation through discounting and do not generally pursue such strategies. Instead, we focus on voyage enhancements that add significant value to the product without significant incremental cost, as well as targeted marketing efforts in order to strengthen occupancy rates, if required. Based on our offerings, the targeted audience and premium pricing, our guests are generally older, more affluent and do not travel with three or four individuals in one cabin. As it is industry convention to base 100% occupancy on two persons per cabin, we may report occupancy levels that are somewhat lower than the large cruise lines serving the broader market. However, we have achieved strong occupancy rates for the Lindblad segment in the last three years (based on two persons per cabin), operating at ~~above~~91%, 87% and 90% occupancy rate for the years ended December 31, 2018, 2017 and 2016, ~~and 2015.~~respectively.

We have historically achieved high net yields and continue to see opportunities for growth. Net yield is a frequently referenced metric in the cruise industry and refers to tour revenues net of commissions and certain direct costs in a specific period divided by the number of available guest nights. Our net yields are driven by our offerings, premium pricing and ancillary guest revenue, such as pre- or post-voyage trip extensions, add-on optional activities, trip insurance and onboard spend, including spa services and alcoholic beverages. Our net yields were ~~$985, $976~~$1,044, $985 and ~~$971~~$976 in 2018, 2017 ~~2016~~ and ~~2015,~~2016, respectively. Furthermore, our historical net yield has been significantly higher than the large scale cruise line operators. We expect to be able to continue our track record of maintaining strong pricing and growing ancillary guest revenues through increased sales focus and marketing ~~efforts, particularly~~efforts.

Table of ~~pre- and post-voyage extensions on which we have not historically placed significant emphasis.~~
Contents

Our brand is recognizable by our guests primarily due to our heritage, decades of sales and marketing investment and longstanding strategic alliance with National Geographic. We believe we have fostered strong guest and brand loyalty, which is evidenced by our high levels of repeat guests. In ~~2017, 41%~~2018, 37% of guests booked through our U.S. office were past guests. We have closely aligned our marketing efforts with National Geographic to maximize impact in the marketplace and have engaged in a co-branding strategy with respect to our owned vessels. In addition, we are recognized as a leader in promoting the issue of conservation of the planet and encourage our guests to become engaged through the Lindblad Expeditions – National Geographic Joint Fund for Exploration and Conservation (“LEX-NG Fund”). In the past, we have organized high-level meetings in the Arctic, Antarctic, Galápagos and Baja California to put a spotlight on key environmental issues in conjunction with organizations such as the Aspen Institute, TED and the WWF. These efforts help to build our brand and network of relationships and enhance our thought leadership. We will continue to focus on ensuring that each of our guests associates our brand with high-quality marine based adventure vacation experiences.

We source our business through a combination of direct selling, travel agency networks and our strategic alliance with National Geographic. We invest in maintaining strong relationships with our key travel agency network partners and seek to maintain commission rates and incentive structures that are competitive within the marketplace.

The National Geographic relationship also serves as a channel for bookings. Our alliance with National Geographic includes a co-selling and co-marketing arrangement through which National Geographic promotes our offerings in its marketing campaigns across web-based, email, print and other marketing platforms and sells our expeditions through its internal travel divisions. The National Geographic channel represented approximately 25%, 27% and 24% of guest ticket revenues for 2017, 2016 and 2015, respectively.

We maintain an active presence on numerous social media platforms, focusing primarily on those with the greatest reach to our target demographic. In addition, we routinely feed content to National Geographic’s social media platforms, which extend the reach of our brand significantly.

We are focused on growing our business in a prudent and disciplined manner. When evaluating various strategies for expansion of guest capacity, we consider closely the expected return on invested capital and the range of possibilities, such as a newbuild program, adding selected charters and the acquisitions of existing ships or operators. In 2016, we acquired an 80.1% ownership in Natural Habitat. We launched two new coastal vessels, the National Geographic Quest in 2017 and the National Geographic Venture in the fourth quarter of 2018. Additionally, we currently have a ~~new coastal~~polar ice class vessel, the National Geographic Endurance, under construction and scheduled for delivery in ~~2018~~early 2020, and in February 2019 we entered into an agreement to construct a ~~new~~second polar ice class vessel, ~~under construction scheduled for~~a sister ship of the National Geographic Endurance, with anticipated delivery in ~~2020. We also have options for two additional polar ice class vessels.~~September 2021. We believe that we have ample capital and financial flexibility to fund ~~this investment~~investments in vessel acquisition and management considers it to be an important step to meet increasing demand for our offerings.

We place a strong emphasis on identifying the needs of our guests and creating expedition opportunities and products that guests value. We use communication strategies and marketing campaigns designed to strengthen brand awareness and to emphasize the distinctive qualities of each expedition we offer. Marketing strategies include the use of direct mail, traditional media, social media, brand websites and travel agencies.

Historically, our focus has been to primarily source guests for our expeditions from the United States. Expedition cruise guests sourced from the U.S. represented approximately 90%~~, 89% and 85%~~ of our total global expedition cruise guests’ ticket revenue in 2018 and 2017, ~~2016~~ and ~~2015, respectively.~~89% in 2016.

Our largest channel for guest bookings is direct contact, either by guests calling ~~our toll-free number~~~~(1-800-EXPEDITION)~~and speaking with our expedition specialists, or requesting a reservation online at our ~~website, expeditions.com.~~website. The direct channel represented nearly ~~41%~~40%, ~~39%~~41% and ~~43%~~39% of guest ticket revenues for 2018, 2017 ~~2016~~ and ~~2015,~~2016, respectively.

We also generate significant bookings from travel agents and wholesalers, representing approximately ~~27%~~28% for the year ended ~~2017~~2018 and 27% for the years ended ~~2016~~2017 and ~~2015.~~2016. Agent outreach efforts are focused primarily on consortiums, or travel agent networks, which target affluent travelers. The four consortiums with which we have preferred partner agreements are Virtuoso, Signature, American Express and Ensemble. Preferred status provides their agents with financial incentives to book their customers on our expeditions and provides us the opportunity for enhanced marketing to their agents and end-user customers. Our agent and affinity sales team meet with hundreds of highly-targeted agents annually, at consortium conferences and training seminars, and in-person at agency offices to provide hands-on training, support and product knowledge.

Table of Contents

The National Geographic relationship also serves as a channel for bookings. Our alliance with National Geographic includes a co-selling and co-marketing arrangement through which National Geographic promotes our offerings in its marketing campaigns across web-based, email, print and other marketing platforms and sells our expeditions through its internal travel division. The National Geographic channel represented approximately ~~25%~~26%, ~~27%~~25% and ~~24%~~27% of guest ticket revenues for 2018, 2017 and 2016, ~~and 2015, respectively.~~respectively. As part of this relationship, our owned vessels carry the National Geographic name.

The remainder of our bookings, 6%~~, 7% and 5%~~ of guest ticket revenues for 2018 and 2017 ~~2016~~ and ~~2015,~~7% for 2016, respectively, comes from affinity groups and charters. Affinity groups are predominantly college and university alumni associations, and other travel organizations targeting specific market niches.

We have a broad and diverse marketing mix across multiple media platforms and channels, allowing us to effectively communicate our product offerings to past guests and prospective guests. We continually optimize our media mix to reach our target demographic. The majority of our annual global marketing spend is focused on consumer-direct channels, with direct mail being the largest segment of our marketing expenditures. Our detailed brochures present our expedition offerings comprehensively, providing guests with all the information needed to make an informed travel decision. We also execute direct mail campaigns with the primary purpose of generating qualified leads, upon which we will fulfill requests with the appropriate product brochure and/or digital media. We also promote our expeditions across a variety of print media, primarily magazines targeting affluent travelers, as well as nature and photography enthusiasts.

Our website, www.expeditions.com, is supported internally by a dynamic content management system, allowing frequent updates, a visually-impactful design, large photos and video display with simple, straightforward navigation. We also send weekly mobile-optimized emails to our database of opt-in email subscribers, which link back to key areas on ~~expeditions.com.~~expeditions.com. In addition, we routinely offer webinars to offer greater insights into our expeditions, hosted by members of the expedition teams with intimate knowledge of the geographies featured.

Our marketing team encompasses broad and diverse skill sets including product and channel marketing, digital marketing, database marketing, copywriting and creative, video production and research and analytics.

Our voyage prices typically include accommodations and all expedition activities and meals, other than items of a personal nature, such as airfare to and from an expedition, spa treatments and certain other specialized events or activities. Prices vary depending on many factors, including the vessel, the destinations on a particular voyage, number of guest berths available, expedition length, cabin category selected and time of year during which the expedition takes place. Payment terms generally require an upfront deposit to confirm a reservation with the balance due prior to departure.

We focus on maintaining list pricing of our offerings and any discounting that we pursue is tactical, targeted and infrequent. In addition to our standard expedition packages, we may be able to offer a complete vessel for charter and may provide incentives for this type of arrangement. Group and multi-generational family travel may also be eligible for additional incentives based upon the voyage, duration and number of guests travelling. From time to time, we may incentivize guests to book with us with a variety of offers, including free or reduced price air transportation, hotel nights or other value-added items. We offer rewards to our guests through our loyalty program,Friends for Life, to encourage repeat business.

Lindblad Expeditions – National Geographic Joint Fund for Exploration and Conservation (LEX-NG Fund)

We seek to inspire people to explore and care about the planet. One of our governing principles is to positively impact the areas we explore and in which we work. To this end, we, along with the National Geographic Society, created the LEX-NG Fund to support projects at the global, regional and local level. The objective of the LEX-NG Fund is to ~~protect~~support projects that address the ~~last wild places~~health and viability of our world's oceans, coastlines and coastal communities in the ~~ocean, support innovative local projects~~regions visited by our fleet, and ~~facilitate conservation, research, education and community development projects in the places we explore.~~beyond. Together with our guests, we have raised $9$10.7 million since the Fund was established in 2008. In addition, 500,000 shares of Lindblad common stock were ~~contributed, or committed to be~~ contributed to the LEX-NG Fund by the founders of Capitol Acquisition Corp. II in connection with the merger with Lindblad Expeditions, Inc., to support the regions that we visit. Since we and the National Geographic Society together cover the LEX-NG Fund’s operating costs, 100% of guest contributions go directly to on-the-ground projects. In ~~2017, eight~~2018, the LEX-NG Fund issued 10 unique grants to regional partners in five key regions, ~~plus two~~while also supporting three major National Geographic Society conservation, education and ~~education initiatives~~research initiatives: Pristine Seas, Grosvenor Teacher Fellows and Early Career Grants. All of these activities were supported with an aggregate amount of $1.5 million. The majority of funds were donated by guests traveling aboard our fleet. The LEX-NG Fund is managed jointly by one of our staff members and two National Geographic Society staff members, and the Board is currently comprised of five members, including Sven-Olof Lindblad, our founder, President and Chief Executive Officer, and Dr. Jonathan Baillie, Chief Scientist and Senior Vice President, Science & Exploration at the National Geographic Society.

Table of seven owned expedition ships and five seasonal charter vessels under the Lindblad brand. We have a longstanding relationship with the National Geographic Society, which was founded on a shared interest in exploration, research, technology and conservation. This relationship includes co-selling, co-marketing and branding arrangements with National Geographic Partners, LLC (“National Geographic”) whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel divisions. We collaborate with National Geographic on expedition planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their expedition.
11
Contents

Environmental Stewardship

Our staff is involved in organizations such as the International Association of Antarctic Tour Operators and the Association of Arctic Expedition Cruise Operators, which seek to lead the tourism industry with management best practices for visiting places such as Antarctica, the Arctic and the Galápagos Islands. Our staff also works with the MarViva Foundation (a non-governmental organization focused on promoting the conservation and sustainable use of coastal and marine ecosystems in the eastern tropical Pacific) to provide a consumer market for sustainably caught fish from the first designated responsible fishing area of Costa Rica. We also work with the Charles Darwin Research Station and Charles Darwin Foundation on conservation initiatives geared toward preserving the Galápagos Islands. In 2018, we announced the elimination of single-use plastics fleet-wide.

Seasonality

Our tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results fluctuates due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during nonpeak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Natural Habitat is a seasonal business, with the majority of its tour revenue recorded in the third and fourth ~~quarter~~quarters from its summer season departures and polar bear tours.

Suppliers

Our largest capital expenditures are for ship acquisition and ~~maintenance.~~capital improvements. Our largest operating expenditures are for ship maintenance, payroll, fuel, food and beverage, travel agent services and advertising and marketing. Most of the supplies that we require are available from numerous sources at competitive prices.

Insurance

We maintain comprehensive insurance coverage at commercially reasonable rates and believe that our current coverage is at appropriate levels to protect against most of the risk involved in the conduct of our business.

We maintain insurance on the hull and machinery of each of our ships that includes additional coverage for disbursements, earnings and increased value. We also maintain protection and indemnity insurance for each of our owned ships. In addition, we maintain war risk insurance on each ship, which covers damage due to acts of war, including invasion, insurrection, terrorism, rebellion, piracy and hijacking. This coverage includes coverage for physical damage to the ship, which is not covered under the hull policies as a result of war exclusion clauses in such hull policies. We also maintain protection and indemnity war risk coverage. Consistent with most marine war risk policies, under the terms of the war risk insurance coverage, underwriters can give notice that the policy will be canceled and reinstated at higher premium rates. We also maintain insurance coverage for shoreside property, shipboard inventory and marine and non-marine general liability risks, as well as business interruption insurance for our owned ships based on the evaluation of the financial exposure per vessel for profitability. In addition, we maintain workers compensation, directors’ and officers’ liability and other insurance coverage.

We historically have been able to obtain insurance coverage in amounts and at premiums we have deemed to be commercially acceptable. No assurance can be given that affordable and secure insurance markets will be available in the future, particularly for war risk insurance. All of our insurance coverage is subject to certain limitations, exclusions and deductible levels.

Regulation

Our ships are regulated by various international, national, state and local laws, regulations and treaties in force in the jurisdictions in which they operate. In addition, certain ships are registered in the U.S., the Bahamas or Ecuador, as applicable. Each ship is subject to regulations issued by its country of registry, including regulations issued pursuant to international treaties governing the safety of the ships, guests and crew as well as environmental protection. Each country of registry conducts periodic inspections to verify compliance with these regulations. Ships operating out of U.S. ports are subject to inspection by the U.S. Coast Guard for compliance with international treaties and by the United States Public Health Service for sanitary and health conditions. Ships are also subject to similar inspections pursuant to the laws and regulations of various other countries visited. ~~We consider ourselves to be in material compliance with all the regulations applicable to our ships and that we have all licenses necessary to conduct our business.~~ Health, safety, security, environmental and financial responsibility issues are, and will continue to be, an area of focus by the relevant government authorities in the U.S. and internationally. From time to time, various regulatory and legislative changes may be proposed that could impact operations and subject us to increasing compliance costs in the future.
12

12
Table of Contents
Safety and Security Regulations

Our ships are required to comply with international safety standards defined in ~~the International Convention for Safety of Life at Sea (“SOLAS”),~~SOLAS, which, among other things, establishes requirements for ship design, structural features, materials, construction, life-saving equipment and safe management, and operation of ships to ensure guest and crew safety. The SOLAS standards are revised from time to time and the most recent modifications were phased in through 2010. SOLAS incorporates the International Safety Management Code (“ISM Code”), which provides an international standard for the safe management and operation of ships and for pollution prevention. The ISM Code is mandatory for all vessels, including passenger vessel operators. All of our operations and ships are regularly audited by various national authorities and maintain the required certificates of compliance with the ISM Code.

Our ships are also subject to various security requirements, including the International Ship and Port Facility Security Code (“ISPS Code”), which is part of SOLAS, and the U.S. Maritime Transportation Security Act of 2002 (“MTSA”), which applies to ships that operate in U.S. ports. In order to satisfy these security requirements, we implement security measures, conduct vessel security assessments and develop security plans. The security plans for all of the ships have been submitted to, and approved by, the respective countries of registry for compliance with the ISPS Code and the MTSA.
The Cruise Vessel Security and Safety Act of 2010, which applies to passenger vessels that embark passengers from or include port stops within the U.S., requires the implementation of certain safety design features as well the establishment of practices for the reporting of and dealing with allegations of crime.

Environmental Regulations

We are subject to various U.S. and international laws and regulations relating to environmental protection. Under such laws and regulations, we are prohibited from, among other things, discharging certain materials, such as petrochemicals and plastics, into the waterways. From time to time, environmental and other regulators may consider more stringent regulations, which may affect our operations and increase compliance costs.

The ships are subject to the International Maritime Organization’s regulations under the International Convention for the Prevention of Pollution from Ships (the “MARPOL Regulations”), which includes requirements designed to minimize pollution by oil, sewage, garbage and air emissions. We have obtained the relevant international compliance certificates relating to oil, sewage and air pollution prevention for all of our ships.

The MARPOL Regulations impose global limitations on the sulfur content of fuel used by ships operating worldwide and also establish special Emission Control Areas (“ECAs”) with stringent limitations on sulfur and nitrogen oxide emissions in these areas. As of February 2014, there were four established ECAs: the Baltic Sea, the North Sea/English Channel, certain of the waters surrounding the North American coast, and the waters surrounding Puerto Rico and the U.S. Virgin Islands. Currently, ships operating in ECAs are required to operate on fuel with a sulfur content of not more than 0.1% m/m (mass by mass). Ships operating elsewhere are subject to a limit of 3.5%, which is expected to be reduced to not more than 0.5% m/m on and after January 1, 2020 (or January 1, 2025 if the International Maritime Organization elects to defer the new cap of sulfur content following a review of the availability of low sulfur fuel for use by ships).

In July 2011, MARPOL Regulations introduced mandatory measures to reduce greenhouse gas emissions. These include the utilization of an energy efficiency design index (“EEDI”) for new ships as well as the establishment of an energy efficient management plan for all ships. The EEDI is a performance-based mechanism that requires a certain minimum energy efficiency in new ships. These regulations apply to new vessels commissioned after January 1, 2013. In June 2013, the European Commission proposed legislation which would require cruise ship operators using ports in the European Union to monitor and report on the vessels’ annual carbon dioxide emissions starting in 2018.

The ~~Jones Act~~Coastwise Laws

As U.S. flag vessels, theNational Geographic Sea Bird, theNational Geographic Sea Lion~~and~~, theNational Geographic Questand the National Geographic Venture, are subject to the U.S. laws relating to the transport of passengers or cargo between U.S. ports in the U.S. coastwise trade. ~~Our newbuild coastal vessel, the~~~~National Geographic Venture~~~~, currently under construction, will also be U.S. flagged.~~

These laws relating to vessels are principally contained in 46 U.S.C. ~~Chapter 551 and 46 U.S.C. §50501~~§55103 and the federal regulations promulgated thereunder and are commonly referred to collectively as the ~~“Jones Act.~~“Coastwise Laws.” Subject to limited exceptions, vessels transporting passengers between ports of places in the ~~Jones Act requires, among other things, that vessels engaged in U.S. coastwise trade~~United States, whether directly or by the way of foreign port, must be "coastwise qualified". To be qualified, a vessel must be owned and operated by “citizens of the United States” within the meaning of the ~~Jones Act. For purposes~~governing laws and regulations. In the case of ~~the Jones Act,~~ a corporation ~~for example, must satisfy at least the following requirements~~ to be deemed a U.S. citizen: (i) the corporation must be organized under the laws of the U.S. or of a state, territory or possession thereof; (ii) each of the chief executive officer and the chairman of the board of directors of such corporation, and each person authorized to act in the absence or disability of such persons, must be a U.S. citizen; (iii) no more than a minority of the number of directors of such corporation necessary to constitute a quorum for the transaction of business can be non-U.S. citizens; and (iv) at least 75% of each class or series of stock in such corporation must be beneficially owned by U.S. ~~citizens within the meaning of the Jones Act.~~citizens.
13

13
Table of Contents
Labor Regulations

The International Labour Organization, an agency of the United Nations that develops worldwide employment standards, adopted a Consolidated Maritime Labour Convention (the “Convention”) in 2006, which became effective in August 2013. The Convention reflects a broad range of standards and conditions governing all aspects of crew management for ships in international commerce, including additional requirements not previously in effect relating to the health, safety, repatriation, entitlements and status of crewmembers and crew recruitment practices. Each of our ships, except for our two ships operating in Ecuador (not a signatory to the Convention), has received its certification of compliance with the requirements of the Convention.

Consumer Financial Responsibility Regulations

U.S. law requires the operators of passenger vessels embarking passengers at U.S. ports to be certified by the United States Federal Maritime Commission as to their ability to satisfy obligations with respect to unearned passenger revenue in case of non-performance, and for liability in case of casualty or personal injury. We satisfy these requirements with respect to our operation of theNational Geographic Sea Bird,National Geographic Sea Lion ~~and~~, National Geographic Quest,National Geographic Venture and the U.S. embarking expeditions of the National Geographic Orion through an escrow account for passenger deposits and through our liability insurers.

Certain jurisdictions require that we establish financial responsibility to our guests resulting from the non-performance of our obligations; however, the related amounts do not have a material effect on our costs.
Regulations Regarding Protection of Disabled Persons

Our U.S. flag vessels, theNational Geographic Sea Bird, ~~the~~National Geographic Sea Lion~~and the~~, National Geographic Quest and the National Geographic Venture are subject to the Americans with Disabilities Act (ADA), which creates affirmative requirements intended to facilitate access by disabled persons. The ADA requires that our U.S. flagged vessels make “reasonable accommodation” in their policies, practices and procedures to facilitate the carriage of passengers with disabilities.

In June 2013, the U.S. Architectural and Transportation Barriers Compliance Board proposed guidelines for the construction and alteration of passenger vessels to ensure that the vessels are readily accessible to and usable by passengers with disabilities. If and when finalized, these guidelines will be used by the U.S. Department of Transportation and U.S. Department of Justice to implement mandatory and enforceable standards for passenger vessels covered by the Americans with Disabilities Act. We cannot, at this time, accurately predict whether we will be required to make material modifications or incur significant additional expenses given the status of the proposed guidelines.

Employees

As of December 31, ~~2017,~~2018, we had approximately ~~528~~600 employees, including ~~312~~327 shipboard employees, ~~213~~266 full-time employees and ~~three~~seven part-time employees in our shoreside operations.

Corporate Information and History

We were originally incorporated in Delaware on August 9, 2010 with the name Capitol Acquisition Corp. II as a blank check company to acquire, through a merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar business combination, one or more businesses or entities.

On July 8, 2015, we completed a series of mergers whereby Lindblad Expeditions, Inc., a New York corporation originally incorporated in July 1979, became our wholly-owned subsidiary. Immediately following the mergers, we changed our name to Lindblad Expeditions Holdings, Inc.

Our corporate headquarters are located at 96 Morton Street, 9^th Floor, New York, New York 10014. Our telephone number is (212) 261-9000. Our ~~Internet address~~website iswww.expeditions.com. ~~Our corporate~~All of our filings ~~including~~with the Securities and Exchange Commission, can be accessed free of charge through our website promptly after filing; however, in the event the website is inaccessible, we will provide paper copies of our most recent Annual Report on Form 10-K, ~~our~~the most recent Quarterly ~~Reports~~Report on Form 10-Q, ~~our Current Reports~~current reports filed or furnished on Form 8-K, ~~our Proxy Statements~~ and ~~reports filed by our officers and directors under Section 16(a) of the Securities Exchange Act, and any~~all related amendments ~~to those filings, are available,~~excluding exhibits, free of charge, upon request. These filings are also accessible on ~~our website after we file such material with~~ the Securities and Exchange ~~Commission.~~Commission's website at www.sec.gov. We do not intend for information contained on our website to be a part of this Annual Report on Form ~~10-K.~~10-K and such information is not incorporated by reference herein.

14
Table of Contents

Item 1A.

Risk Factors

You should carefully consider the risk factors set forth below and the other information in this Annual Report on Form 10-K. The matters discussed in the risk factors, and additional risks and uncertainties not currently known to us or that we currently deem immaterial, could have a material adverse effect on our business, financial condition, results of operation and future growth prospects.

Risks Related to Our Business and Operations

Adverse worldwide economic, geopolitical or other conditions could reduce the demand for expedition travel and adversely impact our operating results, cash flows and financial condition.

The demand for travel experiences, including expedition cruises and land-based travel, may be adversely affected by international, national and local economic and geopolitical conditions. In particular, a deterioration in global economic conditions that adversely affects discretionary income and consumer confidence may, in turn, result in decreased bookings, prices and onboard revenues for the expedition and cruise industries. Demand for our expeditions may also be influenced by geopolitical events. Unfavorable conditions, such as cross-border conflicts, civil unrest and governmental changes, can decrease consumer demand and result in reduced pricing for expeditions in areas affected by such conditions.

Incidents or adverse publicity concerning the cruise industry, the expedition travel industry or the travel industry in general, ~~weather conditions and~~terrorist attacks, war, travel restrictions or other ~~natural disasters or~~ disruptions could affect our reputation as well as have a negative impact on our sales and results of operations.

The operation and/or use of cruise ships, land tours, port facilities and shore excursions involves the risk of accidents, illnesses, mechanical failures, environmental incidents including oil spills, and other incidents. Such incidents, whether on one of our expeditions or not, may cause guests and potential guests to question their safety, health, security and vacation satisfaction, and could negatively impact our reputation. Incidents involving cruise ships, particularly the safety and security of guests and crew, media coverage thereof, as well as adverse media publicity in general concerning the cruise industry, have previously impacted and could in the future impact demand for our expeditions and pricing in the industry. The considerable expansion in the use of social media over recent years has compounded the potential scope of the negative publicity that could be generated by those incidents. If any such incident occurs during a time of high seasonal demand, the effect could disproportionately impact our results of operations for the year. In addition, incidents involving cruise ships may result in additional costs to our business, including costs related to increasing government or other regulatory oversight. Incidents involving our own fleet may result in litigation.

Events such as terrorist and pirate attacks, war and other hostilities and the resulting political instability, travel restrictions, such as travel bans to and from certain geographical areas and heightened regulations around customs and border control, the spread of contagious diseases, such as the Zika virus, and other related concerns over the safety, health and security aspects of traveling, or the fear of any of the foregoing, have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry. In view of our global operations, we are susceptible to a wide range of adverse events, which could decrease demand and adversely affect our business. In addition, adverse publicity from incidents at sea or in remote locations, even when not involving any of our ships or travel offerings, may discourage prospective travelers from taking an expedition-style trip.

Our business may be negatively affected by severe or unusual weather conditions, including climate change.

Our fleet and the port facilities we use may also be adversely impacted by weather patterns or natural disasters or disruptions, such as hurricanes, earthquakes and changes in ice floes. From time to time, we may be forced to alter itineraries or cancel expeditions due to these or other factors, which could negatively impact our sales and profitability. ~~Increases~~Additionally, substantial changes to historical weather patterns, whether caused by climate change or other factors, including changing temperature levels, changing rainfall patterns and changing storm patterns and intensities, could significantly impact our future business. Substantial changes to historical weather patterns could result in significant negative changes to the delicate regions that our expeditions venture, such as rising temperatures in the ~~frequency, severity~~Arctic region that could accelerate the melting of the polar ice cap or ~~duration of severe~~changes to the historical weather ~~events, including those related to climate change, could exacerbate~~patterns in delicate areas such as the ~~impact and cause further disruption to our operations.~~ Galapagos that impacts its ecosystem.

In addition, these and any other events that impact the travel industry more generally may negatively impact our ability to deliver guests or crew to our expeditions and/or interrupt our ability to obtain services and goods from key vendors in our supply chain. Any of the foregoing could have an adverse impact on our results of operations and on industry performance.

Table of Contents

Ship repair or revitalization delays or mechanical issues on existing vessels may result in cancellation of expeditions or unscheduled drydockings and repairs and thus adversely affect our results of operations.

We depend on shipyards to repair, maintain and revitalize our ships on a timely basis and to ensure they remain in good working order. The sophisticated nature of repairing and revitalizing a ship involves risks, and shipyards may encounter financial, technical or design problems when doing these jobs. Delays in ship repair or revitalization or mechanical failures have in the past and may in the future result in delays or cancellations of expeditions and unscheduled drydocks and repairs of ships. If there is a significant accident, mechanical failure or similar problem involving a ship, we may have to place a ship in drydock for an extended period for repairs. Any such delays, cancellations of expeditions and/or unscheduled drydockings could have a material adverse effect on our business, results of operations and financial condition. These events and any related adverse publicity could result in lost revenue, increased operating expenses, or both, and thus adversely affect our results of operations.

Delays or cost overruns in building new vessels (including the failure to deliver new vessels) could harm us.

We are currently in the process of building a new polar ice class vessel and expect to contract to build new vessels in the future. Building new vessels is subject to risks of delay or cost overruns caused by conditions beyond our control, including one or more of the following:

	●	unforeseen engineering or construction problems;

	●	changes to design specifications;

	●	delays or unanticipated shortages with respect to necessary materials, equipment or skilled labor;

	●	inability to obtain the requisite permits, approvals or certifications from governmental authorities and the applicable classification society upon completion of work;

	●	financial difficulties of the shipyard building a vessel, including bankruptcy;

	●	lack of shipyard availability;

	●	work stoppages; and

	●	weather interference.

Significant delays, cost overruns and failure to timely deliver new vessels we have committed to service our guests could adversely affect us in several ways, including delaying the implementation of our business strategies, materially increasing our cost of servicing our commitments to our guests or resulting in the cancellation of scheduled ~~expeditions.~~expeditions, which have occurred in the past. In addition, there are a limited number of shipyards with the capability and capacity to build our new ships and, accordingly, increased demand for available new construction slots could impact our ability to construct new ships when and as planned and/or result in stronger bargaining power on the part of the shipyards.

We must make substantial capital expenditures to maintain and/or expand our ~~fleet.~~fleet and we may not be able to obtain sufficient financing or capital on favorable terms or at all.

We must make substantial capital expenditures to maintain our fleet in good working order. Maintenance capital expenditures include those associated with ~~drydocking~~dry docking a vessel, modifying an existing vessel or acquiring a new vessel. These expenditures could increase as a result of changes in the cost of labor and materials; customer requirements; increases in our fleet size or the cost of replacement vessels; governmental regulations and maritime self-regulatory organization standards relating to safety, security or the environment; and competitive standards. In addition, maintenance capital expenditures will vary from quarter to quarter based on the number of vessels ~~drydocked~~dry docked during that quarter. Significant unexpected maintenance capital expenditures could have an adverse impact on our operations.

We ~~are currently making~~also continue to make substantial capital expenditures to increase the size of our fleet by constructing new vessels and may acquire existing vessels from other parties in the future. Shipyards generally require us to make installment payments on any new ship build prior to delivery, which requires us to obtain financing or expend a significant amount of our own money to build a new vessel without any corresponding revenue for an extended period of time. In addition, we may not receive the expected demand for our newly constructed or acquired vessels, which could have an adverse impact on our ~~operations~~operations.

Although we believe we can access sufficient liquidity to fund our maintenance, investments (including new ship construction) and obligations as expected, there can be no assurances to that effect. Our ability to access additional funding as and when needed (including for new ship builds), our ability to timely refinance and/or replace our outstanding debt and credit facilities on acceptable terms or at all will depend upon numerous factors, many of which are beyond our control. Our inability to access sufficient liquidity on favorable terms when needed would have a negative impact on our ability to expand our fleet, our results of operations and our financial condition.

Table of Contents

Failure to maintain our partnership with National Geographic could adversely affect our results of operations.

We have an on-going partnership with National Geographic and any termination or alterations to this relationship will likely have an adverse effect on our business. Pursuant to such agreements, our owned vessels contain the phrase “National Geographic” in their names, we have access to certain of National Geographic’s marks and images for advertising purposes and we and our guests have access to National Geographic photographers, naturalists and other experts. National Geographic has the right in certain instances to unilaterally terminate the Alliance and License Agreement with us, including:

●		in the event of a change of control in which Sven-Olof Lindblad or his designated successor ceases to hold a senior management role with the company,

●		our failure to achieve specified year-over-year percentage revenue growth requirements, or

●		a failure to meet the conditions necessary to extend the relationship through 2025.

If the any of our agreements with National Geographic are terminated or modified in any material respect, due to any of the reasons set forth above or otherwise, our results of operations will likely be materially adversely affected due to loss of name recognition associated with the National Geographic brand as well as a loss of sales generated through National Geographic channels.

An increase in capacity worldwide or excess capacity in a particular market could adversely impact our expedition sales and/or pricing.

Expedition sales and/or pricing may be impacted both by the introduction of new ships into the marketplace and by deployment decisions of us and our competitors. Many new expedition class ships have been ordered or are already under construction for our competitors. The ~~further~~ growth in capacity from these new ships and future orders, without an increase in the cruise industry’s share of the vacation market, could depress expedition prices and impede our ability to ~~achieve yield improvement.~~maintain high yields. In addition, to the extent that we or our competitors deploy ships to a particular itinerary and the resulting capacity in that region exceeds the demand, we may consider pricing adjustments or redeploy to other regions, either of which may result in lower than anticipated profitability. Any of the foregoing could have an adverse impact on our results of operations, cash flows and financial condition.

~~Fears of terrorist and pirate attacks, war and other hostilities, travel restrictions and the spread of contagious diseases could have a negative impact on our results of operations.~~

We may lose business to competitors throughout the vacation market.

We operate in the vacation market, and expedition cruising is one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to other vacation operators who provide other leisure options, including hotels, resorts and package holidays and tours.

We face significant competition from other vacation operators and cruise companies on the basis of pricing, destination, travel agent preference and also in terms of the nature of ships and services we offer to guests. Our competition within the expedition and cruise vacation industries depends on the destination and is fragmented and primarily comprised of private operators.

Currently, we do not directly compete with large cruise operators such as Carnival and others that operate large cruise vessels. However, in the event such large cruise operators expand into offering small, intimately sized vessels to compete directly with us and our itineraries, we would have increased competition and could face pricing pressures by such competitors through discounts or otherwise that would likely negatively impact our profitability.

In the event that we do not differentiate our offerings or otherwise do not compete effectively with other vacation operators and cruise companies, our results of operations and financial position could be adversely affected.

Conducting business globally may result in increased costs and other risks.

We operate our business globally and plan to continue to expand our international presence. Operating internationally exposes us to a number of risks, including unstable local economic conditions, volatile local political conditions, potential changes in duties and taxes, including changing interpretations of existing tax laws and regulations, potential changes in local laws, rules and regulations, required compliance with additional laws and policies affecting cruising, vacation or maritime businesses or governing the operations of foreign-based companies, currency fluctuations, interest rate movements, government controlled fuel prices, difficulties in operating under local business environments, U.S. and global anti-bribery laws orand regulations, imposition of trade barriers, and restrictions on repatriation of earnings. If we are unable to address these risks adequately, our financial position and results of operations could be adversely affected, including potentially impairing the value of our ships, goodwill and other assets.

Table of Contents

Operating globally also exposes us to numerous and sometimes conflicting legal and regulatory requirements. In many parts of the world, including countries in which we operate, practices in the local business communities might not conform to international business standards. We must adhere to policies designed to promote legal and regulatory compliance ~~as well as~~with applicable laws and regulations. However, we might not be successful in ensuring that our employees, agents, representatives and other third parties with whom we associate throughout the world properly adhere to ~~them.~~these laws and regulations.

Failure by us, our employees or any of these third parties to adhere to our policies or applicable laws or regulations could result in penalties, sanctions, damage to our reputation and related costs which in turn could negatively affect our results of operations and cash flows.

Our efforts to expand our business into new markets may not be successful.

~~While our historical focus has been to serve guests from the North American expedition cruise market, we may expand our focus to include other global markets.~~ Expansion into new markets requires significant levels of investment. There can be no assurance that any new markets will develop as anticipated or that we will have success in any new markets, and if we do not, we may be unable to recover our investment, which could adversely impact our business, financial condition and results of operations, including potentially impairing the value of our goodwill.

If our redeployment of vessels to a new market with new itineraries is not successful, our business and operating results may be adversely affected.

We cannot predict whether new expeditions and new itineraries ~~offered by~~that we may offer in connection with the redeployment of any of our vessels ~~redeployed~~ will attract a number of guests comparable to previous expeditions. If redeployments and new expeditions do not attract as many guests as past expeditions or if there is a delay in finalizing or marketing the new itineraries, our business and operating results may be adversely affected.

Failure to develop the value of our brand and differentiate our products could adversely affect our results of operations.

Our success depends on the strength and continued development of our expedition brand and on the effectiveness of our brand strategies. Failure to protect and differentiate our brand from competitors throughout the vacation market could adversely affect our results of operations.

We have ~~an on-going partnership with National Geographic and the termination or alterations in this relationship may have an adverse effect on our business.~~

The National Geographic Society is one of the largest non-profit scientific and educational institutions in the world. Its interests include geography, archaeology and natural science, the promotion of environmental and historical conservation, and the study of world culture and history. In furtherance of similar interests and goals, we have entered into a Tour Operator Agreement and an Alliance and License Agreement (collectively, the “NG Agreements”) with National Geographic Partners, LLC.

Pursuant to the NG Agreements, our owned vessels contain the phrase “National Geographic” in their names, we have access to certain of National Geographic’s marks and images for advertising purposes and we and our guests have access to National Geographic photographers, naturalists and other experts. National Geographic may in certain instances terminate the Alliance and License Agreement with us, including upon a termination event caused by a change of control in which Sven-Olof Lindblad or his designated successor ceases to hold a senior management role with the company, a termination due to our failure to achieve specified year-over-year revenue growth percentage requirements, a failure to meet the conditions necessary to extend the relationship through 2025 or otherwise. If the NG Agreements are terminated or modified in any material respect, due to any of the reasons set forth above or otherwise, our results of operations may be materially adversely affected.

~~We have~~ a relationship with World Wildlife Fund (“WWF”) ~~through our Natural Habitat subsidiary~~ and the termination or alterations in this relationship may have an adverse effect on our Natural Habitat business.

WWF is a leading conservation organization whose mission is to conserve nature and reduce the most pressing threats to the diversity of life on Earth. Natural Habitat partners with WWF to offer conservation travel through a license agreement that allows Natural Habitat to use the WWF name and logo in return for a royalty fee, through 2023.

If Natural Habitat’s license agreement with World Wildlife Fund was terminated or modified in any material respect, our results of operations for the Natural Habitat segment may be materially adversely affected.

We may not be able to obtain sufficient financing or capital for our needs or may not be able to do so on terms that are acceptable or consistent with our expectations.

Any circumstance or event that leads to a decrease in consumer cruise and land-based travel spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, the expedition cruise industry or the travel industry, could negatively affect our operating cash flows. Although we believe that we have sufficient cash flows from operations and will have sufficient access to capital to fund our operations and obligations as expected, there can be no assurances to that effect. Our ability to access additional funding as and when needed, our ability to timely refinance and/or replace outstanding debt and credit facilities on acceptable terms and our cost of funding will depend upon numerous factors including but not limited to the condition of the financial markets, our financial performance and credit ratings and the performance of our industry in general.

Any inability to satisfy any covenants required by existing or future credit facilities could adversely impact our liquidity.

Our Third Amended and Restated Credit Agreement ~~contains~~("Amended Credit Agreement"), which is secured by substantially all of our assets, and our senior secured credit agreement (the"Export Credit Agreement") contain certain financial covenants and is secured by substantially all of our assets. Any failure to comply with such terms, conditions, and covenants could result in an event of default. Further, if an event of default under a ~~credit~~ facility were to occur, cross default provisions, if any, could cause our other outstanding debt, if any, to be immediately due and payable. Upon such an occurrence, there could be no assurance that we would have sufficient liquidity to repay or the ability to refinance the borrowings under any such credit facilities or settle other outstanding contracts if such amounts were accelerated upon an event of default.

Table of Contents

Environmental, labor, health and safety, financial responsibility and other maritime regulations could affect operations and increase operating costs.

~~The~~Due to concern over the risk of climate change or otherwise, the United States and various state and foreign government or regulatory agencies have enacted or are considering new environmental regulations or policies, such as requiring the use of low sulfur fuels, increasing fuel efficiency requirements, further restricting emissions, or other initiatives to limit greenhouse gas emissions ~~that~~compliance with changes in such laws, regulations and obligations could increase costs related to operating and maintaining our ~~cost for fuel, cause~~vessels and require us to ~~incur significant expenses~~install new emission controls, acquire allowances or pay taxes related to ~~purchase and/~~our greenhouse gas emissions, or ~~develop new equipment~~administer and manage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities could also be adversely impact the cruise vacation industry. Some environmental groups, in particular, have also lobbied for more stringent regulation of cruise ships and have generated negative publicity about the cruise vacation industry and its environmental impact. An increase in fuel prices not only impacts our fuel costs, but also some of our other expenses,affected by compliance with such ~~as crew travel, freight, air travel, and commodity prices.~~changes.

In addition, we are subject to various international, national, state and local laws, regulations and treaties that govern, among other things, safety standards applicable to our ships, treatment of disabled persons, health and sanitary standards applicable to our guests, security standards on board our ships and at the ship/port interface areas, and financial responsibilities to our guests. These issues are, and we believe will continue to be, an area of focus by the relevant authorities throughout the world, especially in light of several recent incidents involving cruise ships. This could result in the enactment of more stringent regulation of cruise ships that could subject us to increasing compliance costs in the future.

Our operating costs, particularly fuel expenditures, could increase due to market forces and economic or geopolitical factors beyond our control.

Expenditures for fuel represent a significant cost of operating our business. If fuel prices rise significantly in a short period of time, we may be unable to increase fares or other fees sufficiently to offset fully our increased fuel costs. In addition, volatility in fuel prices or disruptions in fuel supplies could have a material adverse effect on our results of operations, financial condition and liquidity. To date, we have not hedged our fuel costs with any fuel derivative instruments. If we decide to enter into such instruments in the future, we will be subject to the risk that the fuel derivatives will not provide adequate protection against significant increases in fuel prices and could in fact result in hedging losses and result in us effectively paying higher than market prices for fuel.

Our ~~other~~ capital expenditure and other operating costs, including food, hotel, payroll, maintenance and repair, airfare, taxes, insurance and security costs, are subject to increases due to market forces and economic or political conditions or other factors beyond our control. Increases in ~~these~~ capital ~~expenditure~~expenditures and operating costs could adversely affect our profitability.

Price increases for commercial airline service for our guests or major changes or reductions in commercial airline service and/or availability could increase our operating expenses and adversely impact the demand for expedition travel.

Most of our guests depend on scheduled commercial airline services to transport them to or from the ports where our expeditions embark or disembark passengers. Increases in the price of airfare would increase the overall price of the expedition vacation to our guests, which may adversely impact demand for our expeditions. In addition, changes in the availability of commercial airline services could adversely affect our guests’ ability to obtain air transport, which could adversely affect our results of operations.

Our reliance on travel agencies to sell and market our cruises exposes us to certain risks that, if realized, could adversely impact our business.

Because we rely on travel agencies to generate a substantial portion of the bookings for our ships, we must ensure that our commission rates and incentive structures remain competitive. If we fail to offer competitive compensation packages, these agencies may be incentivized to sell vacation packages offered by our competitors to our detriment, which could adversely impact our operating results. In addition, the travel agent industry is sensitive to economic conditions that impact discretionary income. Significant disruptions or contractions in the industry could reduce the number of travel agencies available for us to market and sell our expeditions, which could have an adverse impact on our financial condition and results of operations.

Disruptions in our shoreside operations or our information systems may adversely affect our results of operations.

Our principal executive offices are located in New York, New York, and our principal shoreside operations are located in Seattle, Washington. Actual or threatened natural disasters (e.g., hurricanes, earthquakes, tornadoes, fires, and floods), terrorist attacks, or other similar disruptive events in these locations may have a material impact on our business continuity, reputation and results of operations. In addition, substantial or repeated information systems failures, computer viruses or cyber-attacks impacting our shoreside or shipboard operations could adversely impact our business. We do not generally carry business interruption insurance for our shoreside operations or our information systems. As such, any losses or damages incurred by us could have an adverse impact on our results of operations.

Table of Contents

Fluctuations in foreign currency exchange rates could affect our financial results.

We earn revenues, pay expenses, recognize assets and incur liabilities in currencies other than the U.S. dollar, including, among others, the Euro, the Canadian Dollar, the Australian Dollar, the Norwegian Kroner, the Swedish Krona, the British Pound and the ~~British Pound.~~South African Rand. In 2018, 2017 ~~2016~~ and ~~2015,~~2016, we derived approximately 10%, ~~11%~~10% and ~~15%~~11%, respectively, of our guest ticket revenues from guests outside the United States. Because our consolidated financial statements are presented in U.S. dollars, we must convert revenues, income and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. Therefore, absent offsetting changes in other foreign currencies, increases or decreases in the value of the U.S. dollar against other major currencies will affect our revenues, net income and the value of balance sheet items denominated in foreign currencies. We use limited financial instruments, such as foreign currency forward contracts and swaps, to mitigate our net balance sheet exposure to currency exchange rate fluctuations. However, there can be no assurances that fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against major currencies, would not materially affect our financial results.

In addition, we have ship maintenance contracts and ~~may in the future have~~a ship construction ~~contracts which~~contract that are denominated in currencies other than the U.S. dollar. We may in the future enter into forward contracts and collar options to manage a portion of the currency risk associated with these contracts, and we are or may be exposed to fluctuations in the exchange rates for the portions of the contracts that have not been hedged. Additionally, if a shipyard is unable to perform under such a contract, any foreign currency forward contracts that were entered into to manage the currency risk would need to be terminated. Termination of these contracts could result in a significant loss.

The loss of key personnel, our inability to recruit or retain qualified personnel, or disruptions among our shipboard personnel due to strained employee relations could adversely affect our results of operations.

Our success depends, in large part, on the reputation, skills and contributions of key executives (including Sven-Olof Lindblad, in particular) and other employees, and on our ability to recruit and retain high quality personnel. Our management team is comprised of individuals with a diverse knowledge base and skill sets acquired through extensive experience in expedition cruising, adventure travel, and hospitality. We must continue to sufficiently recruit, retain, train and motivate our employees to maintain our current business and support our projected growth. A loss of key executives or other key employees or disruptions among our personnel could adversely affect our results of operations.

We rely on third-party providers of various services integral to the operation of our businesses. These third parties may act in ways that could harm our business.

In order to achieve cost and operational efficiencies, we outsource to third-party vendors certain services that are integral to the operations of our global businesses. We are subject to the risk that certain decisions are subject to the control of third-party service providers and that these decisions may adversely affect our activities. A failure to adequately monitor a third-party service provider’s compliance with a service level agreement or regulatory or legal requirements could result in significant economic and reputational harm to us.

There is also a risk that the confidentiality, privacy and/or security of data held by third parties or communicated over third-party networks or platforms could become compromised. Such a breach could adversely affect our reputation and in turn adversely affect our business.

A failure to keep pace with developments in technology or technological obsolescence could impair our operations or competitive position.

Our business continues to demand the use of sophisticated technology and systems, such as reservations and reporting systems. These technologies and systems must be refined, updated and/or replaced with more advanced systems in order to continue to meet our guests’ demands and expectations. If we are unable to do so in a timely manner or within reasonable cost parameters or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new technology or system, and a failure to do so could result in higher than anticipated costs or could impair our operating results.

Our information technology systems are subject to cyber and other risks, some of which are beyond our control, which could have a material adverse effect on our business, results of operations and financial position~~We may be exposed to risks and costs associated with protecting the integrity and security of our guests’ and employees’ personal information.~~.

We ~~are subject to various risks associated with~~rely heavily on the ~~collection, handling, storage~~proper functioning and ~~transmission~~availability of ~~sensitive~~our information ~~including risks related to compliance with applicable laws and other contractual obligations,~~systems for our operations as well as for providing services to our customers. Our information systems, including our accounting, communications and data processing systems, as well as our maritime and/or shoreside operations, are integral to the ~~risk~~efficient operation of our business. It is critical that ~~our~~the data processed by these systems ~~collecting such~~remain confidential, as it often includes competitive customer information, ~~could be compromised. In the course of doing business, we collect large volumes of internal and guest data, including~~confidential customer personally identifiable information ~~for various business purposes. If we fail~~and transaction data, employee records and key financial and operational plans, results and statistics. The sophistication of efforts by hackers, foreign governments, cyber-terrorists, and cyber-criminals, acting individually or in coordinated groups, to ~~maintain compliance with the various applicable data collection and privacy laws or with credit card industry standards~~launch distributed denial of service attacks or other ~~applicable~~coordinated attacks that may cause service outages, gain inappropriate or block legitimate access to systems or information, or result in other business interruptions has continued to increase in recent years. We utilize third-party service providers who have access to our systems and certain sensitive data, which exposes us to additional security ~~standards, we could be exposed to fines, penalties, restrictions, litigation~~risks, particularly given the complex and evolving laws and regulations regarding privacy and data protection. Cyber incidents that impact the security, availability, reliability, speed, accuracy or other expenses, and our business could be adversely impacted. In addition, even if we are fully compliant with legal standards and contractual requirements, we still may not be able to prevent security breaches involving sensitive data. Any breach, theft, loss, or fraudulent use of guest, employee or company data could cause consumers to lose confidence in the securityproper functioning of our systems, information ~~technology~~and measures, including outages, computer viruses, break-ins and similar disruptions, could have a significant impact on our operations.

Table of Contents

Although our information systems are protected through physical and ~~choose not~~software safeguards, as well as redundant systems, network security measures and backup systems, it is difficult to ~~purchase from us~~fully protect against the possibility of power loss, telecommunications failures, cyber-attacks, and other cyber incidents in every potential circumstance that may arise. A significant cyber incident, including system failure, security breach, disruption by malware or ransomware, or other damage, could interrupt or delay our operations, damage our reputation and brand, cause a loss of customers, expose us to ~~risks~~a risk of ~~data~~ loss ~~business disruption,~~or litigation, result in regulatory scrutiny, investigations, actions, fines or penalties and/or cause us to incur significant time and ~~other liability,~~expense to remedy such an event, any of which could ~~adversely affect~~have a material adverse impact on our ~~business.~~results of operations and financial position. Furthermore, any failure to comply with data privacy, security or other laws and regulations could result in claims, legal or regulatory proceedings, inquiries or investigations. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modifying or enhancing our systems in the future. Furthermore, while we maintain insurance intended to address costs associated with aspects of cyber incidents, network failures and data privacy-related concerns, our coverage may not sufficiently cover all types of losses or claims that may arise.

A change in our tax status under the United States Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), or other jurisdictions, may have adverse effects on our income.

At the present time, many of our subsidiaries that are foreign corporations do not derive any significant income from sources within the United States, and are not subject to significant United States federal income taxes. Any income earned by these subsidiaries from sources within the United States generally is subject to United States federal income tax (and United States branch profits tax) unless the requirements of the exemption under Section 883 of the Internal Revenue Code are met. Although we expect that any United States source income of our foreign subsidiaries will generally qualify for the benefits of the Section 883 exemption, there is no assurance that such benefits will be available.

In addition, the enactment of legislation implementing changes in taxation of international business activities, the adoption of other corporate tax reform policies, or changes in tax legislation or policies could materially affect our financial position and results of operations. In general, changes in tax laws may affect our tax rate, increase our tax liabilities, carrying value of deferred tax assets, or our deferred tax liabilities. Any substantial changes in international corporate tax policies, enforcement activities or legislative initiatives may materially and adversely affect our business, the amount of taxes we are required to pay and our financial condition and results of operations generally.

Restrictions on travel or access to certain protected or preserved areas could adversely affect our business.

~~We believe that our expedition itineraries are a major reason why guests choose our expedition cruises over competing cruises and vacation options. However, our~~Our ability to follow our planned itinerary for any expedition cruise may be affected by a number of factors, including security concerns, adverse weather conditions and natural disasters, local government regulations and restrictions and other restrictions on access, including access to protected or preserved areas.

For instance, the number of visitors admitted to the Galápagos National Park at any given time is limited by the number of “cupos” permits issued by the Galápagos National Parks Service. In June 2015, a new Ecuadorian Special Law for Protected Areas was approved and updated in November 2015. A Presidential Decree issued by President Correa of Ecuador in November 2015 established that cupos in effect as of July 2015 will have a validity of nine years. Our rights to operate in the Galapagos will therefore expire in July 2024 ~~and~~ based on the new law and ~~decree, we will begin the renewal process in 2020.~~decree.

Although the current holders of cupos will have the opportunity to re-apply for them, other enterprises and individuals will also have the opportunity to bid on cupos as they become subject to renewal. All bidders in this process must present proof that they fulfill the conditions to properly utilize the license. Notable criteria include, without limitation, access to a vessel, experience in tourism, a proven record of environmentally sensitive behavior, marketing requirements, etc. If the Galápagos National Parks Service were to further restrict access to the park, we might be required to alter certain of our travel itineraries. Such a development would negatively impact our business and revenues.

Table of Contents

Changes in other governmental and environmental rules and regulations in the Galápagos Islands and other travel destinations could also cause sudden losses in revenue, together with additional expenditures due to the need to revise our existing itineraries. Restrictions on access for us and our guests to other protected or preserved areas, including national parks, may result in losses in revenues typically generated by our expeditions to such areas.

Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and/or damage our reputation.

Our business is subject to various United States and international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our employees, agents, partners, or expedition representatives could damage our reputation and/or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines. In certain circumstances, it may not be economical to defend against such matters and/or a legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to an adverse impact on our financial condition or results of operations.

In addition, as a result of any ship-related or other incidents, ~~litigation~~ claims, enforcement actions and regulatory actions and investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to personal property, business interruption losses or environmental damage to any affected coastal waters and the surrounding area, may be asserted or brought against various parties, including us and/or our subsidiaries. The time and attention of our management may also be diverted in defending such claims, actions and investigations. Subject to applicable insurance coverage, we may also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined.

Failure to comply with international safety regulations may subject us to increased liability that may adversely affect our insurance coverage resulting in a denial of access to, or detention in, certain ports which could adversely affect our business.

The operation of vessels is affected by the requirements of the International Maritime Organization’s International Safety Management Code for the Safe Operation of Ships and Pollution Prevention (“ISM Code”). The ISM Code requires ship owners and bareboat charterers to develop and maintain an extensive “Safety Management System” that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. Our failure to comply with the ISM Code may subject us to increased liability, invalidate existing insurance or decrease available insurance coverage for the affected vessels and result in a denial of access to or detention in certain ports, all of which could materially and adversely affect our results of operations and liquidity.

Compliance with ~~environmental and other~~existing or changing laws and regulations could adversely affect our business.

Extensive and changing ~~environmental protection and other~~ laws and regulations directly affect the operation of our vessels. These laws and regulations take the form of international conventions and agreements, including the International Maritime Organization conventions and regulations and the International Convention for the Safety of Life at Sea, which are applicable to all internationally trading vessels, and national, state and local laws and regulations, all of which are amended frequently. Under these laws and regulations, various governmental and quasi-governmental agencies and other regulatory authorities may require us to obtain permits, licenses and certificates in connection with our operations. Some countries in which we operate have laws that restrict the nationality of a vessel’s crew and prior and future ports of call, as well as other considerations relating to particular national interests. Changes in governmental regulations and safety or other equipment standards may require unbudgeted expenditures for alterations or the addition of new equipment for our vessels.

An inability to obtain adequate insurance coverage could adversely affect our business, financial condition and results of operations.

While we maintain comprehensive insurance and believe that our current coverage is at appropriate levels, we are not protected against all risks and there can be no assurance that any particular claim will be fully paid by our insurance. Such losses, to the extent they are not adequately covered by contractual remedies or insurance, could affect our financial results. Our protection and indemnity (“P&I”) liability insurance is placed on a mutual basis and we are subject to additional premium calls in amounts based on claim records of all members of the P&I ~~Club.~~Club (i.e. mutual association) in which our ships are entered. We are also subject to additional premium assessments including, but not limited to, investment or underwriting shortfalls experienced by the P&I Club. If we were to sustain significant losses in the future, our ability to obtain insurance coverage at all or at commercially reasonable rates could be materially adversely affected. Moreover, irrespective of the occurrence of such events, there can still be no assurance that we will be able to obtain adequate insurance coverage at commercially reasonable rates or at all.

Table of Contents

If we do not restrict the amount of ownership of our common stock by non-U.S. citizens, we could be prohibited from operating vessels in U.S. coastwise trade, which would adversely impact our business and operating results.

To the extent any of our United States flagged vessels are engaged in transporting passengers on the U.S. coastwise trade, we will be subject to the ~~Jones Act,~~Coastwise Laws, which ~~governs,~~govern, among other things, the ownership and operation of vessels used to carry cargo or passengers between U.S. ports. Subject to limited exceptions, the ~~Jones Act requires~~Coastwise Laws and the regulations promulgated thereunder require that such vessels engaged in the U.S. coastwise trade be built in the United States, registered under the U.S. flag, manned by predominantly U.S. crews, and beneficially owned and operated by U.S. organized companies that are controlled and at least 75% owned by U.S. citizens within the meaning of the ~~Jones Act.~~statutes. A failure to maintain compliance with the ~~Jones Act~~Coastwise Laws would adversely affect our financial position and our results of operations as we would be prohibited from operating vessels in the U.S. coastwise trade during any period in which we do not comply or cannot demonstrate to the satisfaction of the relevant governmental authorities our compliance with the ~~Jones Act.~~Coastwise Laws. In addition, a failure to maintain compliance could subject us to fines and our vessels could be subject to seizure and forfeiture for violations of the ~~Jones Act~~Coastwise Laws and the related U.S. vessel documentation laws.

Restrictions on non-U.S. citizen ownership of certain U.S. flagged vessels could limit our ability to sell off a portion of our business or result in the forfeiture of certain of our vessels.

Compliance with the ~~Jones Act~~Coastwise Laws requires that non-U.S. citizens ~~within the meaning of the Jones Act~~ beneficially own no more than 24.99% in the entities that directly or indirectly own the vessels that operate in the U.S. coastwise trade. If we were to seek to sell any portion of our business that owns any of these vessels, we would have fewer potential purchasers, because some potential purchasers might be unable or unwilling to satisfy the U.S. citizenship restrictions described above. As a result, the sales price for that portion of the business may not attain the amount that could be obtained in an unregulated market.

Risks Related to Our Securities

Our amended and restated certificate of incorporation limits the beneficial ownership of our common stock by individuals and entities that are not U.S. citizens within the meaning of the ~~Jones Act.~~Coastwise Laws. These restrictions may affect the liquidity of our common stock and may result in non-U.S. citizens being required to disgorge profits, sell their shares at a loss or relinquish their voting, dividend and distribution rights.

Under the ~~Jones Act,~~Coastwise Laws, and so long as we operate U.S. flagged vessels in coastwise trade, at least 75% of the outstanding shares of each class or series of our capital stock must be beneficially owned and controlled by U.S. citizens within the meaning of the ~~Jones Act.~~Coastwise Laws. Certain provisions of our amended and restated certificate of incorporation are intended to facilitate compliance with this requirement and may have an adverse effect on certain holders or proposed transferees of shares of our common stock.

Under the provisions of our amended and restated certificate of incorporation, any transfer, or attempted transfer, of any shares of capital stock will be void if the effect of such transfer, or attempted transfer, would be to cause one or more non-U.S. citizens in the aggregate to own (of record or beneficially) shares of any class or series of our capital stock in excess of 22% of the outstanding shares of such class or series. The liquidity or market value of the shares of common stock may be adversely impacted by such transfer restrictions.

In the event such restrictions voiding transfers would be ineffective for any reason, our amended and restated certificate of incorporation provides that if any transfer would otherwise result in the number of shares of any class or series of capital stock owned (of record or beneficially) by non-U.S. citizens being in excess of 22% of the outstanding shares of such class or series, such transfer will cause such excess shares to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries that are U.S. citizens. The proposed transferee will have no rights in the shares transferred to the trust, and the trustee, who is a U.S. citizen chosen by us and unaffiliated with us or the proposed transferee, will have all voting, dividend and distribution rights associated with the shares held in the trust. The trustee will sell such excess shares to a U.S. citizen within 20 days of receiving notice from us and distribute to the proposed transferee the lesser of the price that the proposed transferee paid for such shares and the amount received from the sale, and any gain from the sale will be paid to the charitable beneficiary of the trust.

These trust transfer provisions also apply to situations where ownership of a class or series of capital stock by non-U.S. citizens in excess of 22% would be exceeded by a change in the status of a record or beneficial owner thereof from a U.S. citizen to a non-U.S. citizen, in which case such person will receive the lesser of the market price of the shares on the date of such status change and the amount received from the sale. In addition, under our amended and restated certificate of incorporation, if the sale or other disposition of shares of common stock would result in non-U.S. citizens owning (of record or beneficially) in excess of 22% of the outstanding shares of common stock, the excess shares shall be automatically transferred to a trust for disposal by a trustee in accordance with the trust transfer provisions described above. As part of the foregoing trust transfer provisions, the trustee will be deemed to have offered the excess shares in the trust to us at a price per share equal to the lesser of (i) the market price on the date we accept the offer and (ii) the price per share in the purported transfer or original issuance of shares, as described in the preceding paragraph, or the market price per share on the date of the status change, that resulted in the transfer to the trust.

Table of Contents

As a result of the above trust transfer provisions, a proposed transferee that is a non-U.S. citizen or a record or beneficial owner whose citizenship status change results in excess shares may not receive any return on its investment in shares it purportedly purchases or owns, as the case may be, and it may sustain a loss.

To the extent that the above trust transfer provisions would be ineffective for any reason, our amended and restated certificate of incorporation provides that, if the percentage of the shares of any class or series of capital stock owned (of record or beneficially) by non-U.S. citizens is known to us to be in excess of 22% for such class or series, we, in our sole discretion, shall be entitled to redeem all or any portion of such shares most recently acquired (as determined by us in accordance with guidelines that are set forth in our amended and restated certificate of incorporation), by non-U.S. citizens, or owned (of record or beneficially) by non-U.S. citizens as a result of a change in citizenship status, in excess of such permitted percentage for such class or series at a redemption price based on a fair market value formula that is set forth in our amended and restated certificate of incorporation. Such excess shares shall not be accorded any voting, dividend or distribution rights until they have ceased to be excess shares, provided that they have not been already redeemed by us. As a result of these provisions, a shareholder who is a non-U.S. citizen may be required to sell its shares of common stock at an undesirable time or price and may not receive any return on its investment in such shares. Further, we may have to incur additional indebtedness, or use available cash (if any), to fund all or a portion of such redemption, in which case our financial condition may be materially weakened.

In order to assist our compliance with the ~~Jones Act,~~Coastwise Laws, our amended and restated certificate of incorporation permits us to require that any record or beneficial owner of any shares of our capital stock provide us with certain documentation concerning such owner’s citizenship. These provisions include a requirement that every person acquiring, directly or indirectly, five percent (5%) or more of the shares of any class or series of our capital stock must provide us with specified citizenship documentation. In the event that any person does not submit such requested or required documentation to us, our amended and restated certificate of incorporation provides us with certain remedies, including the suspension of the voting rights of the person’s shares owned by persons unable or unwilling to submit such documentation and the payment of dividends and distributions with respect to those shares into a segregated account. As a result of non-compliance with these provisions, a record or beneficial owner of the shares of our common stock may lose significant rights associated with those shares.

In addition to the risks described above, the foregoing ownership restrictions on non-U.S. citizens could delay, defer or prevent a transaction or change in control that might involve a premium price for common stock or otherwise be in the best interest of our shareholders.

If non-U.S. citizens own more than 22% of our common stock, we may not have the funds or the ability to redeem any excess shares and the charitable trust mechanism described above may be deemed invalid or unenforceable, all with the result that we could be forced to either suspend our operations in the U.S. coastwise trade or be subject to substantial penalties.

Our amended and restated certificate of incorporation contains provisions voiding transfers of shares of any class or series of our capital stock that would result in non-U.S. citizens within the meaning of the ~~Jones Act,~~Coastwise Laws, in the aggregate, owning in excess of 22% of the shares of such class or series. In the event that this transfer restriction would be ineffective, our amended and restated certificate of incorporation provides for the automatic transfer of such excess shares to a trust specified therein. These trust provisions also apply to excess shares that would result from a change in the status of a record or beneficial owner of shares of our capital stock from a U.S. citizen to a non-U.S. citizen. In the event that these trust transfer provisions would also be ineffective, our amended and restated certificate of incorporation permits us to redeem such excess shares. The per-share redemption price may be paid, as determined by our Board of Directors, by cash or redemption notes or the shares may be redeemed for warrants. However, we may not be able to redeem such excess shares for cash because our operations may not have generated sufficient excess cash flow to fund such redemption. Further, the methodology for transfer to and sale by a charitable trust could be deemed invalid or unenforceable in one or more jurisdictions. If, for any reason, we are unable to effect a redemption or charitable sale when beneficial ownership of shares by non-U.S. citizens is in excess of 24.99% of the common stock, or otherwise prevent non-U.S. citizens in the aggregate from beneficially owning shares in excess of 24.99% of any class or series of capital stock, or fail to exercise our redemption or forced sale rights because we are unaware that ownership exceeds such percentage, we will likely be unable to comply with the ~~Jones Act~~Coastwise Laws and will likely be required by the applicable governmental authorities to suspend our operations in the U.S. coastwise trade. Any such actions by governmental authorities would have a severely detrimental impact on our financial position, results of operations and cash flows and any failure to suspend operations in violation of the ~~Jones Act~~Coastwise Laws could cause us to be subject to material financial and operational penalties.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our shares of common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until December 31, 2018. However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our shares of common stock less attractive because we may rely on these provisions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.

Our outstanding warrants may have an adverse effect on the market price of shares of common stock.

As of ~~February 26,~~December 31, 2018, we had issued and outstanding warrants to purchase ~~10,103,828~~ 10,088,074 shares of common stock. The sale, or even the possibility of sale, of the shares underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings.

Table of Contents

We may redeem the warrants at a time that is not beneficial to public investors.

We may call the public warrants for redemption at any time after the redemption criteria described in the prospectus for our initial public offering have been satisfied. If we call the public warrants for redemption, public shareholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so.

Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

If we call our public warrants for redemption after the redemption criteria described in the prospectus for our initial public offering have been satisfied, our management will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our initial shareholders or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.

An active trading market for our common stock may not be sustained, and you may not be able to resell your shares at or above the price at which you purchased them.

An active trading market for our shares may not be sustained. In the absence of an active trading market for our common stock, shares of common stock may not be able to be resold at or above the purchase price of such shares. Although there can be no assurances, we expect that our common stock will continue to be listed on the NASDAQ Stock Market. However, even if our common stock continues to be listed on the NASDAQ Stock Market, there is no assurance that an active market for our common stock will continue in the foreseeable future.

We do not intend to pay any dividends to shareholders in the foreseeable future.

We have not paid any cash dividends on our shares of common stock to date and do not intend to pay cash dividends in the foreseeable future. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial conditions. The payment of any dividends is within the discretion of our Board of Directors. It is the present intention of our Board of Directors to retain all earnings, if any, for use in our business operations and, accordingly, our Board of Directors does not anticipate declaring any dividends in the foreseeable future. As a result, any gain you will realize on our securities will result solely from the appreciation of such securities.

Provisions in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.

Our amended and restated certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting only a minority of the board of directors may be considered for election. Since our “staggered board” may prevent our stockholders from replacing a majority of our board of directors at any given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our Board of Directors has the ability to designate the terms of and issue new series of preferred stock.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Item 1B.

Unresolved Staff Comments

None.

Item 2.

Properties

Our principal executive office is located at 96 Morton Street, New York, New York where we lease approximately 13,000 square feet. Our principal shoreside operations are located at ~~1415 Western~~2505 Second Avenue, Seattle, Washington, consisting of approximately ~~7,200~~11,000 square feet. We also lease our Natural Habitat office in Louisville, Colorado and a media studio in Burlington, ~~Vermont and an office in Sydney, Australia.~~Vermont. A description of our vessels is set forth in Item 1 under the subheading “Lindblad Expeditions, Ships and Voyages.”

Table of Contents

Item 3.

Legal Proceedings

We are involved in various claims, legal actions and regulatory proceedings arising from time to time in the ordinary course of business. We are not currently involved in any litigation nor, to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations.

Item 4.

Mine Safety Disclosures

Not applicable.

Table of Contents

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock and warrants are traded on the NASDAQ Capital Market under the symbols “LIND” and “LINDW,” respectively. ~~The following table sets forth the high and low closing prices for our common stock and warrants as reported by the NASDAQ Capital Market for the two most recent years by quarter:~~

Common Stock Warrants
Period High Low High Low
2017:
Fourth Quarter $ 11.13 $ 9.21 $ 1.95 $ 1.35
Third Quarter $ 11.21 $ 9.76 $ 2.25 $ 1.78
Second Quarter $ 10.50 $ 8.95 $ 2.30 $ 1.87
First Quarter $ 9.72 $ 8.62 $ 2.30 $ 1.90

2016:

Fourth Quarter $ 10.08 $ 7.75 $ 2.55 $ 1.63
Third Quarter $ 10.08 $ 8.51 $ 2.46 $ 1.55
Second Quarter $ 10.70 $ 8.69 $ 2.60 $ 1.50
First Quarter $ 11.40 $ 9.24 $ 3.00 $ 2.21

Holders

As of ~~February 26, 2018,~~January 31, 2019, there were ~~161~~168 holders of record of our common stock and 10 holders of record of our warrants. Since certain of our shares and warrants are held by brokers and other institutions on behalf of shareholders, the foregoing number is not representative of the number of beneficial owners.

Dividends

We have not paid any cash dividends on our common stock to date. We intend to retain all earnings, if any, for use in our business operations and for purchases of our common stock and warrants, accordingly, our Board of Directors does not anticipate declaring any dividends in the foreseeable future. Any determination to pay dividends in the future will be at the discretion of our Board and will depend upon our results of operations, financial condition, restrictions imposed by applicable law and our financing agreements and other factors that our Board of Directors deems relevant.

Recent Sales by the Company of Unregistered Securities

There were no unregistered sales of equity securities during the ~~quarter~~three months ended December 31, ~~2017.~~2018.

Repurchases of Securities

~~On November 2, 2016, our~~Our Board of Directors approved a ~~$15.0 million increase to the original $20.0 million~~ stock and warrant repurchase plan (“Repurchase ~~Plan, announced~~Plan”) in November 2015, and increased the Repurchase Plan to $35.0 ~~million.~~million in November 2016. This Repurchase Plan authorizes us to purchase from time to time our outstanding common stock and warrants through open market repurchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions based on market and business conditions, applicable legal requirements and other factors. Any shares and warrants purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of Directors at any time. The repurchases exclude shares repurchased to settle statutory employee tax withholding related to the vesting of stock awards. ~~All repurchases~~See Notes to the Consolidated Financial Statements Note 12 - Stockholders' Equity for more information. No shares or warrants were ~~made using cash resources. There were no repurchases of common stock in~~repurchased under the ~~fourth quarter of 2017.~~
26
~~The following table represents information with respect to purchases by the Company of outstanding warrants~~Repurchase Plan during the ~~quarter~~three months ended December 31, ~~2017:~~2018.
Period Total
number
of warrants
purchased Average
price paid
per warrant Total
number of
warrants purchased as
part of publicly
announced plans or
programs Approximate dollar
value of shares and warrants that
may yet be purchased
under the plans or
programs
October 1-31, 2017 - $ - - $ 13,001,479
November 1-30, 2017 - - - 13,001,479
December 1-31, 2017 16,495 1.35 16,495 12,979,046
Total 16,495 $ 1.35 16,495 $ 12,979,046

Stock Performance Graph

The following stock performance graph compares the performance of our common stock from ~~July 3,~~December 31, 2013 ~~(the date our warrants and common stock commenced separate trading on the NASDAQ Capital Market)~~ to December 31, ~~2017~~2018 with the performance of the Standard & Poor’s 500 Composite Stock Index and the FTSE 100 Index. The graph assumes an initial investment of $100 on ~~July 3,~~December 31, 2013 and reinvestment of dividends.

12/31/13

12/31/14

12/31/15

12/31/16

12/31/17

12/31/18

LIND
$ 100.00 $ 102.70 $ 115.97 $ 98.23 $ 101.77 $ 139.92
S&P 500
100.00 111.39 126.53 121.38 144.65 135.63
FTSE 100 Index
100.00 97.29 92.49 105.83 113.91 108.00

07/03/13 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17
LIND $ 100.00 $ 100.42 $ 103.13 $ 115.97 $ 98.64 $ 102.19
S&P 500 100.00 114.42 127.45 126.53 138.89 165.51
FTSE 100 Index 100.00 108.33 105.40 100.20 114.65 123.40
27
Table of Contents

The following selected financial data should be read in conjunction with Management’s Discussion and Analysis of Results of Operations and Financial Condition, the Consolidated Financial Statements and the Notes to the Consolidated Financial Statements in this Annual Report on Form 10-K.

Table of Contents

The information contained in this section should be read in conjunction with our consolidated financial statements and related notes and the information contained elsewhere in this Form 10-K under the headings “Risk Factors,” “Selected Financial Data,” and “Business.”

We provide expedition cruising and adventure travel experiences that include itineraries ~~that feature~~featuring up-close encounters with wildlife and nature, history and culture and promote guest empowerment and interactivity. Our mission is offering life-changing adventures ~~on all seven continents~~around the world and pioneering innovative ways to allow our guests to connect with exotic and remote places.

We currently operate a fleet of ~~seven~~eight owned expedition ships and five seasonal charter vessels under the Lindblad brand. We have a strategic business alliance with National Geographic founded on a shared interest in exploration, research, technology and conservation. This relationship includes a co-selling, co-marketing and branding arrangement whereby our owned vessels carry the National Geographic name and National Geographic sells our expeditions through its internal travel division. We collaborate with National Geographic on voyage planning to enhance the guest experience by having National Geographic experts, including photographers, writers, marine biologists, naturalists, field researchers and film crews, join our expeditions. Guests have the ability to interface with these experts through lectures, excursions, dining and other experiences throughout their voyage.

We deploy chartered vessels for various seasonal offerings and continually seek to optimize our charter fleet to balance our inventory with demand and maximized yields. We use our charter inventory as a mechanism to both increase travel options of our existing and prospective guests and also to test demand for certain areas and seasons to understand the potential for longer term deployments and additional vessel needs.

Due to the specific geographies in which we operate and the cost of providing access to fuel in our remote destinations, we have historically not experienced significant fluctuations in fuel costs with changes in world fuel commodity prices. Fuel costs represented ~~3.2%~~3.7%, 3.4% and 4.3% of our Lindblad segment tour revenues for the years ended December 31, 2018, 2017 and 2016, ~~and 2015,~~ respectively.

In November 2017, the Company executed a contract to build a polar ice class vessel targeted to be competed in January 2020, with potential accelerated delivery to November 2019, with a total purchase price of 1,066.0 million Norwegian Kroner (NOK). Subsequently, LME exercised its right to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The first twenty percent of the purchase price was paid shortly after execution of the Agreement with the remaining eighty percent due upon delivery and acceptance of the vessel. The polar ice class contract includes options to build two additional ice class vessels, the first for delivery twelve months after the initial vessel and the second for delivery twelve months thereafter. The new build process exposes us to certain risks typically associated with

Management considers new ship ~~construction, which we manage through detailed planning and close monitoring by our internal marine team.~~

~~In December 2015, we entered into two separate contracts with Ice Floe LLC, to build the~~~~National Geographic Quest~~ ~~and the~~~~National Geographic Venture~~~~. Management considers this investment~~investments to be an important step to meet increasing demand for our expedition cruise offerings. TheNational Geographic Quest launched in the third quarter of 2017 and operated in Alaska and British Columbia during the summer of 2017 before voyaging to Costa Rica and Panama to provide expeditions for the Northern Hemisphere winter season.

~~In December 2016, we launched the~~ The National Geographic ~~Endeavour II,~~~~which replaced the~~~~National Geographic Endeavour~~.~~Endeavour II~~Venture ~~will operate year-round~~launched in ~~the Galápagos Islands.~~~~National Geographic Endeavour~~~~was fully depreciated and we incurred a $0.8 million loss on disposal of the vessel during~~ the fourth quarter of ~~2016~~.2018 and will operate primarily in the Channel Islands, Sea of Cortez and Baja California during the Northern Hemisphere winter seasons and Alaska and British Columbia during the summer.

In November 2017, we executed a contract to build a polar ice class vessel, the ~~fourth quarter of 2016, the~~National Geographic ~~Orion~~Endurance ~~experienced an issue~~, targeted to be completed in January 2020, with ~~its main engine~~a total purchase price of $134.6 million, including hedging costs. The first twenty percent of the purchase price was paid shortly after execution of the agreement with the remaining eighty percent due upon delivery and ~~as a result we cancelled one voyage in 2016 and four voyages during~~acceptance of the ~~first quarter of 2017 for necessary engine repairs and in the first quarter of 2017, the~~~~National Geographic Sea Lion~~ ~~cancelled two voyages to repair the onboard air conditioning system. In addition, the delayed delivery of the~~~~National Geographic Quest~~caused the cancellation of four highly booked voyages. The Company estimates that the impact of these cancellations was approximately $12.4 million in tour revenues and $9.0 million Adjusted EBITDA in 2017.vessel.

On May 4, 2016, we expanded our land-based offerings by acquiring an 80.1% ownership interest in Natural Habitat, Inc. (“Natural Habitat”), an adventure travel and ecotourism company based in Colorado. Natural Habitat was founded by Benjamin L. Bressler, who retains a 19.9% noncontrolling interest in Natural Habitat. Examples of Natural Habitat’s expeditions include African safaris in Botswana, grizzly bear adventures in Alaska and polar bear tours in Canada. Since 2003, Natural Habitat has partnered with the World Wildlife Fund (“WWF”) to offer conservation travel, sustainable travel that directly protects nature. This agreement with WWF extends through 2023.

~~On March 7, 2016,~~In February 2019, we entered into an agreement to construct a ~~Restated Credit Agreement~~second polar ice class vessel, a sister ship of the National Geographic Endurance, with ~~Credit Suisse, amending our existing senior secured credit facility with Credit Suisse (“Restated Credit Facility”~~a total purchase price of 1,291.0 million Norwegian Kroner (NOK). The ~~Restated Credit Facility provides~~purchase price is subject to potential adjustments from contract specifications for variations in speed, deadweight, fuel consumption and delivery date. The purchase price is due in installments, with the first 20% to be paid shortly after execution of the agreement, 50% to be paid over the duration of the build and the final 30% due upon delivery and acceptance of the vessel. The vessel is targeted to be delivered in September 2021. The new build process exposes us to certain risks typically associated with new ship construction, which we manage through detailed planning and close monitoring by our Company’s existing $175.0 million senior secured first lien term loan facility and a new $45.0 million senior secured incremental revolving credit facility (“Revolving Credit Facility”), which includes a $5.0 million letter of credit sub facility. Our obligations under the Restated Credit Facility are secured by substantially all our assets. See Note 7 – Long-Term Debt in the Notes to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional information regarding the Restated Credit Agreement.internal marine team.

The discussion and analysis of our results of operations and financial condition are organized as follows:

Selling and marketing expenses include commissions, royalties and a broad range of advertising and promotional expenses.

General and administrative expenses ~~primarily~~ include the cost of shoreside vessel support, reservations and other administrative functions, including salaries and related benefits, credit card commissions, professional fees and rent.

We use a variety of operational and financial metrics, including non-GAAP financial measures, such as Adjusted EBITDA, Net Yields, Occupancy and Net Cruise Costs, to enable us to analyze our performance and financial condition. We utilize these financial measures to manage our business on a day-to-day basis and believe that they are the most relevant measures of performance. Some of these measures are commonly used in the cruise and tourism industry to evaluate performance. We believe these non-GAAP measures provide expanded insight to assess revenue and cost performance, in addition to the standard GAAP-based financial measures. There are no specific rules or regulations for determining non-GAAP measures, and as such, they may not be comparable to measures used by other companies within the industry.

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. You should read this discussion and analysis of our results of operations and financial condition together with the consolidated financial statements and the related notes thereto also included in Item 8 of this Annual Report on Form 10-K.

Adjusted EBITDAis net income (loss) ~~income~~ excluding depreciation and amortization, net interest expense, other income (expense), income tax (expense) benefit, (gain) loss on foreign currency, (gain) loss on transfer of assets, reorganization costs, and other supplemental adjustments. Other supplemental adjustments include certain non-operating items such as stock-based compensation, executive severance costs, the National Geographic fee amortization, ~~merger-related expenses~~debt refinancing costs and acquisition-related expenses. The Company believes Adjusted EBITDA, when considered along with other performance measures, is a useful measure as it reflects certain operating drivers of the business, such as sales growth, operating costs, selling and administrative expense, and other operating income and expense. The Company believes Adjusted EBITDA helps provide a more complete understanding of the underlying operating results and trends and an enhanced overall understanding of the Company’s financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not take into account certain requirements, such as unearned passenger revenues, capital expenditures and related depreciation, principal and interest payments, and tax payments. The Company’s use of Adjusted EBITDA may not be comparable to other companies within the industry.

Table of Contents

Adjusted Net Cruise Costrepresents Net Cruise Cost adjusted for Non-GAAP other supplemental adjustments which include certain non-operating items such as stock-based compensation, the National Geographic fee amortization ~~merger-related expenses,~~ and acquisition-related expenses.

Available Guest Nightsis a measurement of capacity and represents double occupancy per cabin (except single occupancy for a single capacity cabin) multiplied by the number of cruise days for the period. We also record the number of guest nights available on our limited land programs in this definition.

Gross Cruise Cost represents the sum of cost of tours plus ~~merger-related expenses,~~ selling and marketing expenses, and general and administrative expenses.

Gross Yieldrepresents tour revenues less insurance proceeds divided by Available Guest Nights.

Guest Nights Soldrepresents the number of guests carried for the period multiplied by the number of nights sailed within the period.

Maximum Guestsis a measure of capacity and represents the maximum number of guests in a period and is based on double occupancy per cabin (except single occupancy for a single capacity cabin).

Net Cruise Costrepresents Gross Cruise Cost excluding commissions and certain other direct costs of guest ticket revenues and other tour revenues.

Net Cruise Cost Excluding Fuelrepresents Net Cruise Cost excluding fuel costs.

Net Revenuerepresents tour revenues less ~~insurance proceeds,~~ commissions and direct costs of other tour revenues.

Number of Guestsrepresents the number of guests that travel with us in a period.

Occupancyis calculated by dividing Guest Nights Sold by Available Guest Nights.

Voyagesrepresent the number of ship expeditions completed during the period.

The U.S. dollar is the functional currency in our foreign operations and re-measurement adjustments and gains or losses resulting from foreign currency transactions are recorded as foreign exchange gains or losses in the consolidated statements of operations.

Lindblad tour revenues from the sale of guest tickets are mildly seasonal, historically larger in the first and third quarters. The seasonality of our operating results increases due to our vessels being taken out of service for scheduled maintenance or drydocking, which is typically during non-peak demand periods, in the second and fourth quarters. Our drydock schedules are subject to cost and timing differences from ~~year to year~~year-to-year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions, and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically. Drydocking impacts operating results by reducing tour revenues and increasing cost of tours. Natural Habitat is a seasonal business, with the majority of its tour revenue ~~recorded~~earned in the third and fourth ~~quarter~~quarters from its summer season departures and polar bear tours.

We reported consolidated tour revenues, cost of tours, operating expenses, operating income and net income for the years ended December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016 as shown in the following table:

Table of ~~Years Ended December 31, 2016 and December 31, 2015~~

~~Tour Revenues~~

Tour revenues increased $32.3 million, or 15%, to $242.3 million in 2016 compared to $210.0 million in 2015. The increase was primarily a result of $34.5 million in added tour revenues from the acquisition of Natural Habitat, partially offset by a decrease of $2.2 million of tour revenues at the Lindblad segment.

~~Cost of Tours~~

Total cost of tours increased $23.6 million, or 25%, to $119.0 million in 2016 compared to $95.4 million in 2015. The increase was primarily a result of $22.5 million of additional tour costs related to the acquisition of Natural Habitat and a $1.1 million increase in cost of tours at the Lindblad segment due to increased drydock and charter expenses, partially offset by lower fuel expenses.

~~General and Administrative Expenses~~

General and administrative expenses increased by $12.9 million, or 33%, to $51.9 million in 2016 compared to $39.0 million in 2015. The increase was primarily a result of $6.3 million in added expenses from the acquisition of Natural Habitat and an increase at the Lindblad segment, resulting from $5.3 million in additional personnel and public company costs.

~~Selling and Marketing Expenses~~

Selling and marketing expenses increased $4.0 million, or 11%, to $39.1 million in 2016 compared to $35.1 million in 2015. The increase was primarily a result of $2.7 million in expenses from the acquisition of Natural Habitat and a $1.5 million increase in National Geographic fee amortization.

~~Merger-Related Expenses~~

~~Merger-related expenses for the year ended December 31, 2015 were $13.3 million consisting of one-time professional fees associated with the merger transaction that was completed in July 2015.~~

Contents

~~Depreciation and Amortization Expenses~~

Depreciation and amortization expenses for the years ended December 31, 2016 and 2015 were $18.4 million and $11.6 million, respectively. The $6.8 million increase was primarily related to the $5.0 million of accelerated depreciation for the~~National Geographic Endeavour~~ ~~described in Item 8 of this Annual Report in Note 2 – Summary of Significant Accounting Policies.~~

~~Other (Expense) Income~~

~~Other expenses were $12.1 million in 2016 compared to other income of $1.6 million in 2015. The $13.7 million change was primarily due to the following factors:~~

	●	~~A $0.8 million loss on disposal of~~~~National Geographic Endeavour~~~~in 2016 compared to the $5.0 million success fee income and the gain on the disposal of assets of $7.5 million in 2015.~~

	●	Interest expense, net, decreased $0.8 million to $10.1 million in 2016 from $10.9 million in 2015. The decrease was primarily related to $1.6 million in capitalized interest in 2016 with no capitalized interest for 2015 and a $1.4 million decrease primarily from the accelerated amortization of deferred finance costs related to the repayment of our senior debt in May 2015 partially offset by $2.2 million in higher cash interest primarily due to higher debt levels from our Restated Credit Facility See Item 8 of this Annual Report Note 7 – Long-Term Debt; and

	●	~~In 2016, we recorded a $0.7 million loss in foreign currency translation compared to a small loss in 2015.~~

Results of Operations – Segments

Selected information for our segments is below.The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

	For the years ended December 31,
(In thousands)	2018		2017		Change		%			2016		Change			%
Tour revenues:
Lindblad	$	246,334	$	216,815	$	29,519		14	%	$	207,836	$	8,979			4	%
Natural Habitat (a)		63,400		49,689		13,711		28	%		34,510		15,179			44	%
Total tour revenues	$	309,734	$	266,504	$	43,230		16	%	$	242,346	$	24,158			10	%
Operating income (loss):
Lindblad	$	19,798	$	7,292	$	12,506		172	%	$	11,794	$	(4,502	)		(38	%)
Natural Habitat (a)		5,540		3,452		2,088		60	%		2,187		1,265			58	%
Total operating income	$	25,338	$	10,744	$	14,594		136	%	$	13,981	$	(3,237	)		(23	%)
Adjusted EBITDA:
Lindblad	$	47,815	$	38,655	$	9,160		24	%	$	38,624	$	31			0	%
Natural Habitat (a)		7,031		4,834		2,197		45	%		3,038		1,796			59	%
Total Adjusted EBITDA	$	54,846	$	43,489	$	11,357		26	%	$	41,662	$	1,827			4	%

For the years ended December 31,
(In thousands) 2017 2016 Change % 2015 Change %
Tour revenues:
Lindblad $ 216,815 $ 207,836 $ 8,979 4 % $ 209,985 $ (2,149 ) (1 %)
Natural Habitat* 49,689 34,510 15,179 44 % - 34,510 NA
Total tour revenues $ 266,504 $ 242,346 $ 24,158 10 % $ 209,985 $ 32,361 15 %
Impact of voyage cancellations 12,353 - 12,353 NA - - NA
Total tour revenues excluding
   voyage cancellations $ 278,857 $ 242,346 $ 36,511 15 % $ 209,985 $ 32,361 15 %
Operating income (loss):
Lindblad $ 7,291 $ 11,794 $ (4,503 ) (38 %) $ 15,502 $ (3,708 ) (24 %)
Natural Habitat* 3,452 2,187 1,265 58 % - 2,187 NA
Total operating income 10,743 13,981 (3,238 ) (23 %) 15,502 (1,521 ) (10 %)
Impact of voyage cancellations 8,798 - 8,798 NA - - NA
Total operating income excluding
   voyage cancellations $ 19,541 $ 13,981 $ 5,560 40 % $ 15,502 $ (1,521 ) (10 %)
Adjusted EBITDA:
Lindblad $ 38,655 $ 38,624 $ 31 0 % $ 46,801 $ (8,177 ) (17 %)
Natural Habitat* 4,834 3,038 1,796 59 % - 3,038 NA
Total adjusted EBITDA 43,489 41,662 1,827 4 % 46,801 (5,139 ) (11 %)
Impact of voyage cancellations 9,047 - 9,047 NA - - NA
Total adjusted EBITDA excluding
   voyage cancellations $ 52,536 $ 41,662 $ 10,874 26 % $ 46,801 $ (5,139 ) (11 %)

__________

*(a) The 2016 Natural Habitat segment results represent activity from acquisition date of May 2016 through December 31, 2016.

Results of Operations – Lindblad Segment

Comparison of Years Ended December 31, 2018 to December 31, 2017

Tour Revenues

Tour revenues for the year ended December 31, 2018 increased $29.5 million, or 14%, to $246.3 million compared to $216.8 million for the year ended December 31, 2017. The increase was driven by higher guest ticket revenue primarily from an increase in Available Guest Nights due to the additions to our fleet of the National Geographic Questin the third quarter of 2017 and the National Geographic Venture in the fourth quarter of 2018. In addition, Net Yield for the year ended December 31, 2018 increased to $1,044 compared to $985 for the year ended December 31, 2017, primarily driven by price increases and changes in itineraries. Occupancy rates also increased for the year ended December 31, 2018 to 91% compared to 87% for the year ended December 31, 2017, reflecting higher demand across the fleet. 2017 results also included the impact of the cancellation of four highly booked voyages of the National Geographic Orion and two highly booked voyages of the National Geographic Sea Lion.

Table of Contents

Operating Income

Operating income increased $12.5 million to $19.8 million for the year ended December 31, 2018 compared to $7.3 million for the year ended December 31, 2017. The increase was driven by higher tour revenues, partially offset by higher operating costs, primarily related to the full year of operations of the National Geographic Quest and the addition of the National Geographic Venture to the fleet in the fourth quarter 2018, as well as the impact of the cancelled voyages in 2017. Operating income for 2018 also benefited from lower stock compensation expense and executive severance costs.

Comparison of Years Ended December 31, 2017 to December 31, 2016

Tour Revenues

Tour revenues increased $9.0 million, or 4%, to $216.8 million in 2017 compared to $207.8 million in 2016 primarily due to additional guest ticket revenue associated with the launch of theNational Geographic Questand theNational Geographic EndeavourII, as well as from additional charter expeditions and higher yields. Net Yield in 2017 increased to $985 compared to $976 in 2016,primarily driven by price increases and changes in itineraries. This increase was partially offset by the impact of the cancellation of four highly booked voyages of theNational Geographic Orion and two highly booked voyages of theNational Geographic Sea Lion. It is estimated tour revenues would have increased approximately $21.3 million, or 10%, over the prior year to $229.2 million excluding the impact of the voyage cancellations and the delayed delivery of the~~National Geographic Quest.~~

Operating Income

Operating income decreased $4.5 million, or 38%, to $7.3 million in 2017 compared to $11.8 million in 2016 primarily related to the voyage cancellations on theNational Geographic Orion andNational Geographic Sea Lion during the first quarter of 2017. The operating income also reflects higher tour revenues and lower drydock costs, partially offset by the costs associated with operating theNational Geographic Questfollowing the July 2017 launch and higher charter costs. In addition, higher general and administrative expenses of $4.5 million were due primarily to higher ~~stock based~~stock-based compensation associated with the CEO Share Allocation Plan, as well as executive severance costs. ~~Excluding the impact of cancelled voyages and the delayed delivery of the~~~~National Geographic Quest~~~~, it is estimated that operating income would have increased approximately $4.3 million or 36% over the prior year to $16.1 million.~~

~~Comparison of Years Ended December 31, 2016 to December 31, 2015~~

~~Tour Revenues~~

Tour revenues decreased $2.2 million, or 1%, to $207.8 million in 2016 compared to $210.0 million in 2015. The change was primarily the result of a $2.2 million decrease in other tour revenues. Net Yield amounted to $976 in 2016 compared to $971 in 2015. The increase in Net Yield was primarily related to increased tour prices partially offset by lower occupancy and lower other tour revenues.

~~Operating Income~~

Operating income decreased $3.7 million, or 24%, to $11.8 million in 2016 compared to $15.5 million in 2015. This decrease was primarily related to $13.8 million higher operating expenses and a $2.2 million decrease in other tour revenues, partially offset by the absence of merger-related costs of $13.3 million that occurred in 2015. The higher operating expenses for 2016 were primarily related to additional personnel and public company costs and additional 2016 costs related to the accelerated depreciation for the~~National Geographic Endeavour~~ ~~described in Item 8 of this Annual Report in Note 2 – Summary of Significant Accounting Policies.~~

Results of Operations – Natural Habitat Segment

Comparison of Years Ended December 31, 2018 to December 31, 2017

Tour Revenues

Tour revenues increased $13.7 million, or 28%, to $63.4 million compared to $49.7 million in 2017 primarily due to increased departures and increased pricing.

Operating Income

Operating income increased $2.1 million, or 60%, to $5.5 million in 2018 compared to $3.5 million in 2017 primarily due to the growth in tour revenues, partially offset by higher operating costs related to the additional departures, as well as higher personnel and marketing costs to support future growth initiatives.

Comparison of Years Ended December 31, 2017 to December 31, 2016

Tour Revenues

Tour revenues increased $15.2 million, or 44%, to $49.7 million compared to $34.5 million in 2016 due primarily to a full twelve months of ~~operations in~~results included for 2017.

Operating Income

Operating income increased $1.3 million, or 58%, to $3.5 million in 2017 compared to $2.2 million in 2016 due primarily to a full twelve months of ~~operations in~~results included for 2017.

~~Comparison of Years Ended December 31, 2016 to December 31, 2015~~

~~Natural Habitat reported $34.5 million in tour revenues and $2.2 million in operating income for the period from May 5, 2016, the acquisition date, to December 31, 2016.~~

Adjusted EBITDA – Consolidated

The following table outlines the reconciliation to Net income and calculation of consolidated Adjusted ~~EBITDA for the years ended December 31, 2017, 2016 and 2015.~~EBITDA. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Reconciliation of Net (Loss) Income to Adjusted EBITDA

Consolidated
For the years ended December 31,
(In thousands) 2017 2016* 2015
Net (loss) income $ (7,529 ) $ 5,059 $ 19,742
Income tax expense (benefit) 10,002 (3,200 ) (2,649 )
Interest expense, net 9,736 10,146 10,901
Depreciation and amortization 17,351 18,420 11,645
(Gain) loss on foreign currency (1,144 ) 720 40
(Gain) loss on transfer of assets (454 ) 83 (7,502 )
Other expense (income), net 133 1,173 (5,030 )
Stock-based compensation 10,627 5,411 4,913
National Geographic fee amortization 2,907 2,907 1,397
Executive severance costs 1,409 - -
Reorganization costs 451 - -
Acquisition-related expenses - 943 -
Merger-related expenses - - 13,344
Adjusted EBITDA 43,489 41,662 46,801
Impact of voyage cancellations 9,047 - -
Adjusted EBITDA excluding impact of voyage cancellations $ 52,536 $ 41,662 $ 46,801

Table of Contents

Reconciliation of Net Income to Adjusted EBITDA

Consolidated

* The 2016 Natural Habitat segment results represent activity from acquisition date of May 2016 through December 31, 2016.

	For the years ended December 31,
(In thousands)	2018		2017			2016
Net income (loss)	$	11,552	$	(7,529	)	$	5,059
Interest expense, net		10,830		9,736			10,146
Income tax expense (benefit)		616		10,002			(3,200	)
Depreciation and amortization		20,768		17,351			18,420
Loss (gain) on foreign currency		2,175		(1,144	)		720
(Gain) loss on transfer of assets		-		(454	)		83
Other expense, net		165		133			1,173
Stock-based compensation		4,405		10,627			5,411
National Geographic fee amortization		2,907		2,907			2,907
Executive severance costs		71		1,409			-
Reorganization costs		360		451			-
Debt refinancing costs		997		-			-
Acquisition-related expenses		-		-			943
Adjusted EBITDA	$	54,846	$	43,489		$	41,662

The following tables outline the reconciliation for each segment from operating income to Adjusted ~~EBITDA for the years ended December 31, 2017, 2016 and 2015:~~EBITDA:

Reconciliation of Operating Income to Adjusted EBITDA

Lindblad Segment
For the years ended December 31,
(In thousands) 2017 2016 2015
Operating income $ 7,292 $ 11,794 $ 15,502
Depreciation and amortization 15,969 17,569 11,645
Stock-based compensation 10,627 5,411 4,913
National Geographic fee amortization 2,907 2,907 1,397
Executive severance costs 1,409 - -
Reorganization costs 451 - -
Acquisition-related expenses - 943 -
Merger-related expenses - - 13,344
Adjusted EBITDA 38,655 38,624 46,801
Impact of voyage cancellations 9,047 - -
Adjusted EBITDA excluding impact of voyage cancellations $ 47,702 $ 38,624 $ 46,801

Reconciliation of Operating Income to Adjusted EBITDA

Lindblad Segment

	For the years ended December 31,
(In thousands)	2018		2017		2016
Operating (loss) income	$	19,798	$	7,292	$	11,794
Depreciation and amortization		19,277		15,969		17,569
Stock-based compensation		4,405		10,627		5,411
National Geographic fee amortization		2,907		2,907		2,907
Executive severance costs		71		1,409		-
Reorganization costs		360		451		-
Debt refinancing costs		997		-		-
Acquisition-related expenses		-		-		943
Adjusted EBITDA	$	47,815	$	38,655	$	38,624

Reconciliation of Operating Income to Adjusted EBITDA

Natural Habitat Segment

	For the years ended December 31,
(In thousands)	2018		2017		2016 ^(a)
Operating income	$	5,540	$	3,452	$	2,187
Depreciation and amortization		1,491		1,382		851
Adjusted EBITDA	$	7,031	$	4,834	$	3,038

_________

Reconciliation of Operating Income to Adjusted EBITDA

Natural Habitat Segment
For the years ended
December 31,
(In thousands) 2017 2016*
Operating income $ 3,452 $ 2,187
Depreciation and amortization 1,382 851
Adjusted EBITDA $ 4,834 $ 3,038

*(a) The 2016 Natural Habitat segment results represent activity from acquisition date of May ~~2016 through December 31,~~ 2016.

Guest Metrics

Lindblad Segment

The following tables set forth our Guest Metrics for the Lindblad segment. Please refer to ourDescription of Certain Line Itemsabove for the specific definition by line item and segment.The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Table of Contents

The following table sets forth our Available Guest Nights, Guest Nights Sold, Occupancy, Maximum Guests, Number of Guests and Voyages for the Lindblad ~~segment for the years ended December 31, 2017, 2016 and 2015:~~segment:

	For the years ended December 31,									For the years ended December 31,
	2017			2016			2015			2018			2017			2016
Available Guest Nights		186,719			181,990			184,366			200,849			186,719			181,990
Guest Nights Sold		163,256			164,423			169,303			182,298			163,256			164,423
Occupancy		87.4	%		90.3	%		91.8	%		91	%		87	%		90	%
Maximum Guests		22,805			21,715			21,459			25,449			22,805			21,715
Number of Guests		20,140			19,735			19,824			23,102			20,140			19,735
Voyages		308			290			281			330			308			290

The following table shows the calculations of Gross Yield and Net Yield for the Lindblad ~~segment for the years ended December 31, 2017, 2016 and 2015:~~segment:

	For the years ended December 31,
(In thousands, except for Available Guest Nights, Gross and Net Yield)	2018			2017			2016
Guest ticket revenues	$	220,841		$	191,113		$	183,851
Other tour revenues		25,493			25,702			23,985
Tour Revenues		246,334			216,815			207,836
Less: Orion Insurance Proceeds ^(a)		-			(2,273	)		-
Adjusted Tour Revenues		246,334			214,542			207,836
Less: Commissions		(19,521	)		(16,365	)		(14,954	)
Less: Other tour expenses		(17,106	)		(14,325	)		(15,253	)
Net Revenue	$	209,707		$	183,852		$	177,629
Available Guest Nights		200,849			186,719			181,990
Gross Yield	$	1,226		$	1,149		$	1,142
Net Yield		1,044			985			976

_________

Calculation of Gross Yield and Net Yield
Lindblad Segment

For the years ended December 31,
(In thousands, except for Available Guest Nights, Gross and Net Yield) 2017 2016 2015
Guest ticket revenues $ 191,113 $ 183,851 $ 183,805
Other tour revenues 25,701 23,985 26,180
Tour Revenues 216,814 207,836 209,985
Less: Orion Insurance Proceeds (2,273 ) - -
Adjusted Tour Revenues 214,541 207,836 209,985
Less: Commissions (16,365 ) (14,954 ) (14,460 )
Less: Other tour expenses (14,325 ) (15,253 ) (16,496 )
Net Revenue $ 183,851 $ 177,629 $ 179,029
Available Guest Nights 186,719 181,990 184,366
Gross Yield $ 1,149 $ 1,142 $ 1,139
Net Yield 985 976 971

(a) Insurance proceeds received related to the National Geographic Orion voyage cancellations from the first quarter 2017.

The following table shows the calculations of Gross Cruise Cost per Available Guest Night and Net Cruise Costs per Available Guest Night for the Lindblad ~~segment for the years ended December 31, 2017, 2016 and 2015:~~segment:

	For the years ended December 31,
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost per Available Guest Night)	2018			2017			2016
Cost of tours	$	114,841		$	105,044		$	96,505
Plus: Selling and marketing		42,325			38,429			36,356
Plus: General and administrative		50,093			50,082			45,612
Gross Cruise Cost		207,259			193,555			178,473
Less: Commission expense		(19,521	)		(16,365	)		(14,954	)
Less: Other tour expenses		(17,106	)		(14,325	)		(15,253	)
Net Cruise Cost		170,632			162,865			148,266
Less: Fuel expense		(9,228	)		(7,013	)		(7,138	)
Net Cruise Cost Excluding Fuel		161,404			155,852			141,128
Non-GAAP Adjustments:
Stock-based compensation		(4,405	)		(10,627	)		(5,411	)
National Geographic fee amortization		(2,907	)		(2,907	)		(2,907	)
Executive severance costs		(71	)		(1,409	)		-
Reorganization costs		(360	)		(451	)		-
Debt refinancing costs		(997	)		-			-
Acquisition-related expenses		-			-			(943	)
Adjusted Net Cruise Cost Excluding Fuel	$	152,664		$	140,458		$	131,867
Adjusted Net Cruise Cost	$	161,892		$	147,471		$	139,005
Available Guest Nights		200,849			186,719			181,990
Gross Cruise Cost per Available Guest Night	$	1,032		$	1,037		$	981
Net Cruise Cost per Available Guest Night		850			872			815
Net Cruise Cost Excluding Fuel per Available Guest Night		804			835			775
Adjusted Net Cruise Cost Excluding Fuel per Available Guest Night		760			752			725
Adjusted Net Cruise Cost per Available Guest Night		806			790			764

For the years ended December 31,
(In thousands, except for Available Guest Nights, Gross and Net Cruise Cost) 2017 2016 2015
Cost of tours $ 105,044 $ 96,505 $ 95,417
Plus: Selling and marketing 38,429 36,356 35,083
Plus: General and administrative 50,082 45,612 38,994
Plus: Merger-related expenses - - 13,344
Gross Cruise Cost 193,555 178,473 182,838
Less: Commission expense (16,365 ) (14,954 ) (14,460 )
Less: Other tour expenses (14,325 ) (15,253 ) (16,496 )
Net Cruise Cost 162,865 148,266 151,882
Less: Fuel expense (7,013 ) (7,138 ) (9,004 )
Net Cruise Cost Excluding Fuel 155,852 141,128 142,878
Non-GAAP Adjustments:
Stock-based compensation (10,627 ) (5,411 ) (4,913 )
National Geographic fee amortization (2,907 ) (2,907 ) (1,397 )
Executive severance costs (1,409 ) - -
Acquisition-related expenses - (943 ) -
Merger-related expenses - - (13,344 )
Adjusted Net Cruise Cost Excluding Fuel $ 140,909 $ 131,867 $ 123,224
Adjusted Net Cruise Cost $ 147,922 $ 139,005 $ 132,228
Available Guest Nights 186,719 181,990 184,366
Gross Cruise Cost per Available Guest Night $ 1,037 $ 981 $ 992
Net Cruise Cost per Available Guest Night 872 815 824
Net Cruise Cost Excl. Fuel per Available Guest Night 835 775 775
Adj. Net Cruise Cost Excl. Fuel per Avail. Guest Night 755 725 668
Adjusted Net Cruise Cost per Available Guest Night 792 764 717

Table of Contents

Liquidity and Capital Resources

Sources and Uses of Cash for the Years Ended December 31, 2018, 2017 ~~2016~~ and ~~2015~~2016

Net cash provided by operating activities was $56.4 million in 2018 compared to $52.9 million in ~~2017 compared to $31.4 million in 2016.~~2017. The ~~$21.5~~$3.5 million increase was primarily due to ~~an increase of $20.7 million in unearned revenues.~~improved operating results. Net cash provided by operating activities ~~decreased~~increased by ~~$8.9~~$21.5 million in 2017 to $52.9 million from $31.4 million in 2016 ~~to $31.4 million from $40.3 million in 2015~~ primarily due to ~~merger-related costs, changes~~an increase of $20.5 million in ~~the liabilities for~~ unearned passenger ~~revenue, and changes in accounts payable and accrued expenses, offset by increases related to changes in prepaid expenses.~~revenues.

Net cash used in investing activities was ~~$78.5~~$54.3 million in 2018 compared to $80.5 million in 2017. The $26.2 million decrease was due to the $26.2 million decrease in purchases of property and equipment in 2018 primarily related to higher payments for the new build vessels in 2017. Net cash used in investing activities was $80.5 million in 2017 compared to ~~$86.4~~$85.9 million in 2016. The ~~$7.9~~$5.4 million decrease was primarily related to the $9.9 million net cash used for the acquisition of Natural Habitat in 2016 offset by a $4.6 million increase in purchases of property and equipment in 2017, ~~primarily~~mainly related to growth in capital expenditures for our ~~three~~ newbuild vessels. Net cash used in investing activities was $86.4 million in 2016 compared to $81.5 million in 2015. The $4.9 million increase in cash used in investing activities was primarily related to an increase in purchases of property and equipment related to growth capital expenditures for our two newbuild coastal vessels and the $9.9 million net cash used for the acquisition of Natural Habitat in 2016 as compared to the purchase in May 2015 of our investment in CFMF.

Net cash ~~(used in)~~ provided by financing activities was $16.5 million in 2018 compared to net cash used in financing activities of $13.4 million in 2017. The $29.9 million increase was primarily related to the net proceeds from refinancing the Company's long-term debt. The $3.0 million decrease in cash used in financing activities of $13.4 million in 2017 compared to net cash used in financing activities of $16.4 million in ~~2016. The $3.0 million decrease~~2016 was primarily related to a decrease of $4.2 million in repurchases of ~~shares~~common stock and warrants. The difference in cash used in financing activities of $16.4 million in 2016 as compared to $208.5 million of cash provided by financing activities in 2015 was primarily related to the $134.9 million net proceeds from the issuance of long-term debt in 2015, net of debt repayments and the $96.8 million in net proceeds from the merger.

Contractual Obligations

As of December 31, ~~2017,~~2018, our contractual obligations were as follows:

	Payments due by period										Payments due by period
(In thousands)	Total		2018		2019-2020		2021-2022		After 5 years		Total		2019		2020-2021		2022-2023		After 5 years
Operating Activities:
Operating lease obligations	$	8,074	$	936	$	2,248	$	2,153	$	2,737	$	7,701	$	1,180	$	2,419	$	2,499	$	1,603
Charter commitments		14,575		9,334		5,241		-		-		24,269		10,921		11,498		1,850		-
Other long-term liabilities		684		-		-		-		684		554		-		-		-		554
Investing activities:
Purchase obligations - Fleet expansion		141,164		33,164		108,000		-		-		108,000		-		108,000		-		-
Financing Activities:
Long-term debt obligations		173,150		1,750		6,025		165,375		-		201,525		2,000		6,525		4,000		189,000
Interest on long-term debt		39,997		11,888		23,156		4,953		-		72,809		12,031		23,660		34,460		2,658
Total	$	377,644	$	57,072	$	144,670	$	172,481	$	3,421	$	414,858	$	26,132	$	152,102	$	42,809	$	193,815

Funding Needs and Sources

~~We have historically relied on a combination of cash flows provided by operations and the incurrence of additional debt and/or the refinancing of existing debt to fund obligations.~~ Similar to others in the industry, we have historically operated with a meaningful working capital deficit. This ~~historical~~ deficit is mainly attributable to the fact that, under our business model, a vast majority of guest ticket receipts are collected in advance of the applicable expedition date. These advance passenger receipts remain a current liability until the expedition date and the cash generated from these advance receipts is used interchangeably with cash on hand from other cash from operations. The cash received as advanced receipts can be used to fund operating expenses for the applicable future expeditions or otherwise, pay down credit facilities, ~~invest in~~make long-term investments or any other use of cash. WeAs of December 31, 2018 and 2017, we had a working capital deficit of $9.3 million and $12.7 million, ~~as of December 31, 2017. As a result of the proceeds from the Restated Credit Facility and the merger, we had a net working capital surplus of $47.1 million as of December 31, 2016.~~respectively. As of December 31, 2018 and 2017, we had $113.4 million and $96.4 million, respectively, in cash and cash equivalents, excluding restricted cash.

~~In November 2015, we announced that our~~Our Board of Directors ~~authorized~~approved a ~~$20.0 million~~ stock and warrant repurchase plan (“Repurchase Plan”)~~. In~~ in November ~~2016, our Board of Directors authorized a $15.0 million increase to~~2015 and increased the ~~Repurchase Plan,~~repurchase plan to $35.0 ~~million. This~~million in November 2016. The Repurchase Plan authorizes us to purchase from time to time ~~our~~the Company’s outstanding common stock and warrants through open market repurchases in compliance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and/or in privately negotiated transactions based on market and business conditions, applicable legal requirements and other factors.warrants. Any shares and warrants purchased will be retired. The Repurchase Plan has no time deadline and will continue until otherwise modified or terminated at the sole discretion of our Board of ~~Directors at any time. As~~Directors. These repurchases exclude shares repurchased to settle statutory employee tax withholding related to the exercise of stock options and vesting of stock awards. During the twelve months ended December 31~~2017, under this Repurchase Plan,~~, 2018 we ~~have cumulatively purchased 5,443,480 warrants for $14.0 million and 855,776~~repurchased 9,030 shares of common stock for ~~$8.0~~$0.1 million ~~leaving $13.0 million authorized to be used to purchase our outstanding~~and 568,446 warrants for $0.8 million. As of December 31, 2018, we have cumulatively repurchased an aggregate of 864,806 shares of common stock for $8.1 million and 6,011,926 warrants ~~pursuant to~~for $14.7 million, since plan inception. All repurchases were made using cash resources. The balance for the Repurchase ~~Plan.~~Plan was $12.1 million as of December 31, 2018.

~~In December 2015, we signed a definitive agreement for the purchase of the~~~~National Geographic Endeavour II~~ ~~to be used in our operations in the Galápagos Islands. The purchase price of $18.0 million was paid on April 25, 2016 when we took possession of the ship.~~ We ~~spent an additional $16.5 million in renovation costs, funded through cash on hand, and deployed the ship in the fourth quarter of 2016.~~

~~The company~~ paid Ice Floe, LLC $53.6 million ~~related to~~for theNational Geographic Quest ~~and the vessel~~, which was delivered in ~~July~~the third quarter of ~~2017. The Company amended the agreement~~2017, and paid Ice Floe, LLC $59.2 million for the ~~second vessel, the~~National Geographic Venture, ~~in October 2017. The current contract price is $57.0 million and the vessel is scheduled to be completed~~which was delivered in the fourth quarter of ~~2018, subject to extension for certain events, such as change orders. As~~2018.

Table of ~~December 31, 2017, the Company has paid Ice Floe, LLC $23.8 million related to the~~~~National Geographic Venture~~. The Company may terminate the applicable Agreement in the event the Builder fails to deliver the vessel within one hundred eighty days of the applicable due date or the Builder becomes insolvent or otherwise bankrupt. The Agreement also contains customary representations, warranties, covenants and indemnities.

Contents

In November 2017, ~~the Company~~we executed a contract to build a polar ice class vessel, the National Geographic Endurance,targeted to be ~~competed~~completed in January 2020, ~~with potential accelerated delivery to November 2019, with~~for a total purchase price of 1,066.0 million Norwegian ~~Krone (NOK).~~Kroner. Subsequently, ~~LME~~we exercised ~~its~~our right under the contract to make payments in United States Dollars, which resulted in a purchase price of $134.6 million, including hedging costs. The first twenty percent of the purchase price was paid shortly after execution of the Agreement with the remaining eighty percent due upon delivery and acceptance of the vessel. The remaining purchase price of the ship will be funded through a combination of available cash and borrowing under our Export Credit Agreement and our revolving credit facility.

In February 2019, the Company entered into an agreement with Ulstein Verft to construct a polar ice class vessel, a sister ship of the National Geographic Endurance, with a total purchase price of 1,291.0 million Norwegian Kroner (NOK). The purchase price is subject to potential adjustments from contract ~~includes options to build two additional ice class vessels,~~specifications such as variations in speed, deadweight and fuel consumption. The purchase price is due in installments, with the first ~~for delivery twelve months~~20% to be paid shortly after execution of the ~~initial vessel~~agreement, 50% to be paid over the duration of the build and the ~~second for~~final 30% due upon delivery ~~twelve months thereafter.~~and acceptance of the vessel. The vessel is targeted to be delivered in September 2021. The new build process exposes us to certain risks typically associated with new ship construction which we manage through detailed planning and close monitoring by our internal marine team. ~~The purchase of the ships has been funded through a combination of cash available on our balance sheet, our revolving credit facility and excess cash flows generated by our existing operations.~~

As of December 31, ~~2017,~~2018, we had ~~$173.2~~$201.5 million in long-term debt obligations, including the current portion of long-term debt and excluding deferred financing costs. We believe that our cash on hand, our ~~revolving credit facility~~debt facilities (described below) and expected future operating cash inflows will be sufficient to fund operations, debt service requirements, capital expenditures for our newbuilds and other assets and acquisitions, and our Repurchase Plan. However, there can be no assurance that cash flows from operations will be available in the future to fund future obligations.

Debt Facilities

~~Revolving~~ Credit Facility

On ~~May 8, 2015,~~March 27, 2018, we entered into a ~~credit agreement with~~Third Amended and Restated Credit Suisse A.G. (“Credit Suisse”) as Administrative Agent and Collateral Agent (“Credit Agreement”) for a $150.0 million facility, which was subsequently increased to $175.0 million upon syndication on July 8, 2015 (“AmendedAgreement (the “Amended Credit Agreement”), inproviding for a refinancing and amendment of the ~~form of a $155.0 million U.S. term loan (the “U.S. Term Loan”) and a $20.0 million Cayman term loan for the benefit~~terms of our ~~foreign subsidiaries (the “Cayman Loan,” and together with the U.S. Term Loan, the “Loans”). The net proceeds from the Loans, net~~prior secured credit facility, dated as of ~~discounts, fees and expenses, were approximately $164.1 million. On~~ March 7, 2016 ~~we entered into~~(the “Superseded Agreement”).

The Amended Credit Agreement provided for a second amended and restated credit agreement with Credit Suisse as Administrative Agent and Collateral Agent (“Restated Credit Agreement”), amending our existing senior secured credit facility with Credit Suisse (“Restated Credit Facility”). The Restated Credit Facility provides for our existing $175.0$200.0 million senior secured first lien term loan facility ~~and~~(the “Term Facility”), which represented an increase of $25.0 million from the senior secured first lien term loan facility under the Superseded Agreement. The Term Facility matures March 27, 2025. Consistent with the Superseded Agreement, the Amended Credit Agreement also provides for a ~~new~~ $45.0 million senior secured incremental revolving credit facility ~~(“Revolving Credit~~(the “Revolving Facility”), which includes a $5.0 million letter of credit ~~subfacility.~~sub-facility. Our obligations under the ~~Restated~~Amended Credit ~~Facility are~~Agreement remain secured by substantially all of our assets. As

Borrowings under the Term Facility will bear interest at an adjusted Intercontinental Exchange (“ICE”) Benchmark administration LIBOR plus a spread of 3.50%, which steps down to 3.25% if our debt rating from Moody’s and S&P are both B1 (stable) or better and BB (negative) or better, respectively. The interest rate at December 31, ~~2017 our principal balance on~~2018 was 6.02% under the ~~Loans was $170.6 million and we had not drawn on our Restated Credit~~Term Facility.

~~The Loans~~ Borrowings under the Revolving Facility will bear interest at an adjusted ICE Benchmark ~~Administration LIBO Rate (subject to a floor of 1.00%)~~administration LIBOR plus a spread of ~~4.50%. The Loans mature on May 8, 2021. Borrowings under the Revolving Credit Facility bear interest at an adjusted ICE Benchmark Administration LIBO Rate plus a spread of 4.00%~~3.00%, or, at our option, an alternative base rate plus a spread of ~~3.00%~~2.00%. We are also required to pay a ~~0.50%~~0.5% annual commitment fee on undrawn amounts under the Revolving Credit Facility, which matures on ~~May 8, 2020.~~March 27, 2023.

During the second quarter of 2018, we entered into interest rate cap agreements to hedge our exposure to interest rate movements and manage our interest rate expense related to the Term Facility.

The ~~Restated~~Amended Credit Agreement contains financial covenants that, among other things, (i) require us to maintain a total net leverage ratio (defined as on any date of determination, the ratio of total debt on such date, less up to ~~$25.0~~$50.0 million of the unrestricted cash and cash equivalents to Adjusted EBITDA (as defined in the Amended Credit Agreement) for the trailing 12-month period) of ~~4.75~~5.25 to 1.00 initially, with 0.25 equal reductions ~~annually~~every two years thereafter until ~~March 31, 2020,~~June 30, 2022 when the total net leverage ratio shall be ~~3.50~~4.75 to 1.00 thereafter; (ii) limit the amount of indebtedness we may incur generally and specifically for intercompany debt, debt incurred to finance acquisitions and improvements, for capital and synthetic lease obligations, for standby letters of credit, and in connection with ~~refinancings;~~refinancing; (iii) limit the amount we may spend in connection with certain types of investments; and (iv) require the delivery of certain periodic financial statements and an operating budget. As of December 31, ~~2017, the required net leverage ratio was 4.25 to 1, and~~2018, we were in compliance with the ~~financial~~ covenants.

Senior Secured Credit Agreement

On January 8, 2018, ~~Lindblad Expeditions Holdings, Inc. (the “Company”)~~we and ~~its~~our indirect, wholly-owned subsidiary (the “Borrower”) entered into ~~a senior secured credit agreement (the “Export~~an Export Credit ~~Agreement”)~~Agreement with Citibank, N.A., London Branch (“Citi”) and Eksportkreditt Norge AS (together with Citi, the “Lenders”). Pursuant to the Export Credit Agreement, the Lenders have agreed to make available to the Borrower, at the Borrower’s option and subject to certain conditions, a loan in an aggregate principal amount not to exceed $107.7 million for the purpose of providing financing for up to 80% of the purchase price of the Company’s new ~~expedition ice-class cruise~~polar ice class vessel, the National Geographic Endurance, targeted to be completed in January 2020. Seventy percent of the loan will be guaranteed by Garantiinstituttet for Eksportkreditt, the official export credit agency of Norway. If drawn upon, the loan will be made at the time of delivery of the vessel.

Table of Contents

The Export Credit Agreement contains financial covenants that, among other things, require us to maintain a total net leverage ratio (defined as on any date of determination, the ratio of total debt on such date, less up to $25.0 million of the unrestricted cash and cash equivalents to Adjusted EBITDA (as defined in the Export Credit Agreement) for the trailing 12-month period) of 4.50 to 1.00. As of December 31, 2018, we were in compliance with the covenants.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in Note ~~2 –~~ 2–Summary of Significant Accounting Policies of our consolidated financial statements included elsewhere in this Form 10-K, certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions.

Ship Accounting

Ships, including ship improvements and ships under construction, are our most significant assets, comprising over ~~75%~~75% of our non-current assets at December 31, ~~2017.~~2018. We make several critical accounting estimates with respect to our ship accounting. Given the very large and complex nature of our ships, our accounting estimates related to ships and determinations of ship improvement costs to be capitalized require considerable judgment and are inherently uncertain.

We have to estimate the useful life of each of our ships as well as their residual values. We account for ship improvement costs by capitalizing those costs we believe add value to our ships and have a useful life greater than one year and depreciate those improvements over its estimated remaining useful life. The costs of repairs and maintenance, including minor improvement costs and dry-dock expenses, are charged to expense as incurred.

If materially different conditions existed, or if we materially changed our assumptions of ship useful lives and residual values, our depreciation expense, loss on retirement of ship components and net book value of our ships would be materially different. In addition, if we change our assumptions in making our determinations as to whether improvements to a ship add value, the amounts we expense each year as repair and maintenance expense could increase, which would be partially offset by a decrease in depreciation expense, resulting from a reduction in capitalized costs. We believe we have made reasonable estimates for ship accounting purposes.

Stock-Based Compensation

We estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model and restricted share values and recognize the expense over the required service periods.

For recording our stock-based compensation expense for service-based options, we have chosen to use:

	●	the straight-line method of allocating compensation cost for service-based options;

	●	the Black-Scholes option pricing formula for time-based options;

	●	the simplified method to calculate the expected term for options;

	●	an estimate of expected volatility based on the historical volatility of our share price; and

	●	an estimate for expected forfeitures.

The three factors which most affect stock-based compensation are the fair value of the common stock underlying the stock options, the vesting term of the options and the volatility of such fair value of the underlying common stock. If our estimates are too high or too low, we may overstate or understate our stock-based compensation expense.

Table of Contents

Income Taxes

To measure deferred tax assets and liabilities, we provide a valuation allowance against deferred tax assets if, based upon the weight of available evidence, we do not believe it is “more-likely-than-not” that some or all of the deferred tax assets will be realized. We will continue to evaluate the deferred tax asset valuation allowance balances in all of our foreign and U.S. companies to determine the appropriate level of valuation allowances. While we believe that the amount of the recorded financial statement benefits and tax reserves reflect the more-likely-than-not criteria, it is possible that the ultimate outcome of current or future examinations may result in a reduction to the tax benefits previously recorded on our consolidated financial statements or may exceed the current income tax reserves in amounts that could be material.

Valuation of Long-Lived Assets

We review our long-lived assets, principally our vessels and operating rights, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Upon the occurrence of a triggering event, the assessment of possible impairment is based on our ability to recover the carrying value of our asset, which is determined by using the asset’s estimated undiscounted future cash flows. If these estimated undiscounted future cash flows are less than the carrying value of the asset, an impairment charge is recognized for the excess, if any, of the asset’s carrying value over its estimated fair value. A significant amount of judgment is required in estimating the future cash flows and fair values of our vessels and operating rights.

Off-Balance Sheet Arrangements

~~We did not have any off-balance sheet arrangements~~On January 8, 2018, the Company entered into an Export Credit Agreement as ~~of December 31, 2017 and 2016.~~described under our debt facilities above.

Future Application of Accounting Standards

Refer to Item 8 of this Annual Report Note 2– Summary of Significant Accounting Policies for further information onRecent Accounting Pronouncements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk in the normal course of our ~~business, primarily due to our international operations.~~business. The primary exposure relates to the exchange rate fluctuations between our U.S. dollar functional reporting currency and other currencies. This exposure includes ~~trade receivables~~prepaid assets, newbuild contracted payments and charter commitments that are denominated in currencies other than our functional currency. To date, fluctuations in exchange rates have not had a material impact on our results of operations.

In addition, we have ship maintenance contracts and may, in the future, have ship construction contracts, which are denominated in currencies other than the U.S. dollar. While we have entered into, and may, in the future, enter into, forward contracts and collar options to manage a portion of the currency risk associated with these contracts, we are, or may be, exposed to fluctuations in the exchange rates for the portions of the contracts that have not been hedged. Additionally, if a shipyard is unable to perform under such a contract, any foreign currency forward contracts that were entered into to manage the currency risk would need to be terminated.

Due to specific geographies in which we operate and the cost of providing access to fuel in remote destinations, we have historically not experienced significant fluctuations in fuel costs with changes in world fuel commodity prices and have not historically hedged our fuel purchases.

We are also exposed to market risk from changes in interest rates ~~charged~~related to our variable rate debt. We assess our market risks based on ~~debt. The~~changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings ~~is subject to~~and cash flows based on a hypothetical 1.0% change ~~as a result of movements in market rates. A hypothetical increase~~(increase or decrease) in interest ~~rates~~rates.

As of ~~100 basis points would result in potential reduction~~December 31, 2018, we had interest rate cap agreements to hedge a portion of ~~future pre-tax earnings~~our exposure to interest rate movements of ~~approximately $1.7 million per year for the $170.6 million~~our variable rate debt and to manage our interest expense. The notional amount of outstanding ~~under the Restated Credit Agreement~~debt associated with interest rate cap agreements as of December 31, ~~2017. Our ability to meet~~2018 was $100.0 million. Based on our December 31, 2018 outstanding un-hedged variable rate debt ~~service obligations will be dependent upon~~balance, a hypothetical 1.0% change in the six-month LIBOR interest rates would impact our ~~future performance which, in turn, is subject to future economic conditions and to financial, business and other factors.~~annual interest expense by approximately $1.0 million.

~~Item 8.~~

Item 8.

Financial Statements and Supplementary Data

The consolidated financial statements and related financial statement schedules required under Item 8 are included beginning on page F-1 of this Report.

Table of Contents

Item 9.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

~~Item 9A.~~

Item 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our principal executive officer and principal financial officer, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, ~~2017.~~2018.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and our directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting, as of December 31, ~~2017,~~2018, using the criteria described in Internal Control-Integrated Framework (2013) issued by the ~~COSO.~~Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the updated internal control framework in Internal Control-Integrated Framework (2013), management concluded that our internal control over financial reporting was effective as of December 31, ~~2017.~~

As long as we qualify as an “emerging growth company” as defined by the Jumpstart our Business Startups Act of 2012, we will not be required to obtain an auditor’s attestation report on our internal controls in future Annual Reports on Form 10-K as otherwise required by Section 404(b) of the Sarbanes-Oxley Act. Accordingly, our independent registered public accounting firm did not perform an audit of our internal control over financial reporting for the fiscal year ended December 31, 2017.2018.

Changes in Internal Control Over Financial Reporting

There was no change in the internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

We do not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Shareholders and Board of Directors of

Lindblad Expeditions Holdings, Inc. and Subsidiaries

Opinion on Internal Control over Financial Reporting

We have audited Lindblad Expeditions Holdings, Inc. and Subsidiaries' (the “Company”) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2018 and 2017 and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018 of the Company and our report dated February 28, 2019 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

/s/ Marcum LLP

Marcum LLP

Melville, NY
February 28, 2019

Table of Contents

Item 9B.

Other Information

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Information concerning our executive officers, directors and corporate governance is incorporated herein by reference to our Definitive Proxy Statement to be filed with the Securities and Exchange Commission (“SEC”) within 120 days after the end of our fiscal year covered by this Form 10-K with respect to our 2018 Annual Meeting of ~~Shareholders.~~Stockholders.

Code of Conduct and Ethics

We have adopted Codes of Business Conduct and Ethics that applies to our employees, including our principal executive officer, principal financial officer and persons performing similar functions, and our directors. Our codes of ethics and business conduct can be found posted in the investor relations sections on our website athttp://~~www.expeditions.com~~investors.expeditions.com. None of the websites referenced in this Annual Report on or the information contained therein is incorporated herein by reference. Future material amendments or waivers relating to the Code of Ethics will be disclosed on our website referenced in this paragraph within four business days following the date of such amendment or waiver.

Item 11.

Executive Compensation

Information is incorporated herein by reference to our Definitive Proxy Statement to be filed with the SEC within 120 days after the end of our fiscal year covered by this Form 10-K with respect to our ~~2018~~2019 Annual Meeting of ~~Shareholders.~~Stockholders.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related ~~Shareholder~~Stockholder Matters

Securities Authorized for Issuance under Equity Compensation Plans

Plan category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))				Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders (1)			2,041,939	(2)			N/A				2,102,194	(3)			1,002,506			$	9.63				2,482,276	(2)

(1)	Information is as of December 31, ~~2017.~~2018.
(2)	~~Includes an aggregate of 1,086,134 unvested shares of restricted stock and restricted stock units.~~
~~(3)~~	Consists of shares available for issuance under our 2016 CEO Allocation Plan and our 2015 Long-Term Incentive Plan.

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accountant Fees and Services

Table of Contents

Delaware		27-4749725
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

96 Morton Street, 9th Floor, New York, New York		10014
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Name of each exchange on which registered

Common Stock, par value $0.0001 per share		The NASDAQ Stock Market LLC

Warrants, each to purchase one share of Common Stock at an exercise price of $11.50		The NASDAQ Stock Market LLC

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☐
~~(Do not check if a smaller reporting company)~~	Emerging growth company ☒☐

	For the years ended December 31,											For the years ended December 31,
(In thousands, except share and per share data)	2017			2016		2015		2014		2013		2018		2017			2016		2015		2014
Income Statement Data:
Tour revenues	$	266,504		$	242,346	$	209,985	$	198,459	$	192,237	$	309,734	$	266,504		$	242,346	$	209,985	$	198,459
Operating income	$	10,744		$	13,981	$	15,502	$	30,420	$	23,522		25,338		10,744			13,981		15,502		30,420
Net (loss) income	$	(7,529	)	$	5,059	$	19,742	$	22,245	$	14,844
Net income (loss)													11,552		(7,529	)		5,059		19,742		22,245
Per Share Data:
(Loss) earnings per share:
Earnings (loss) per share:
Basic	$	(0.19	)	$	0.11	$	0.44	$	0.44	$	0.29	$	0.25	$	(0.19	)	$	0.11	$	0.44	$	0.44
Diluted	$	(0.19	)	$	0.10	$	0.43	$	0.44	$	0.29	$	0.24	$	(0.19	)	$	0.10	$	0.43	$	0.44
Weighted average shares outstanding, basic		44,576,912			45,649,971		44,917,829		50,878,894		51,106,436		45,378,188		44,576,912			45,649,971		44,917,829		50,878,894
Weighted average shares outstanding, diluted		44,576,912			46,456,921		45,575,387		50,878,894		51,106,436		46,340,054		44,576,912			46,456,921		45,575,387		50,878,894

		Page(s)

PART I

Item 1.	Business	1
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	25
Item 2.	Properties	25
Item 3.	Legal Proceedings	25
Item 4.	Mine Safety Disclosures	25

PART II

Item 5.	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	26
Item 6.	Selected Financial Data	28
Item 7.	Management’s Discussion and Analysis of the Results of Operations and Financial Condition	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8.	Financial Statements and Supplementary Data	42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	42
Item 9A.	Controls and Procedures	42
Item 9B.	Other Information	43

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	44
Item 11.	Executive Compensation	44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	44
Item 13.	Certain Relationships and Related Transactions, and Director Independence	44
Item 14.	Principal Accounting Fees and Services	44

PART IV

Item 15.	Exhibits, Financial Statement Schedules	45
	Signatures	48

	●	~~2017 Travel + Leisure World’s Best:~~Cruise Critic Editors' Picks Award: Best for Adventure

	●	Conde Nast Traveler 2018 Readers Choice Awards: Top ~~Small-ship Ocean~~Small Ship Cruise Lines

	●	~~2017 Andrew Harper Grand Award for Best Cruise: Antarctica on National Geographic Explorer~~Virtuoso Sustainable Tourism Leadership – Partner

	●	~~2017 Andrew Harper Grand Award Staff of the Year:~~2018 Travel Weekly Magazine Gold Magellan Award:Best Cruise Line Itinerary for Celebrating The ~~staff on National Geographic Explorer~~Year Of The Bird In South Georgia & The Falklands

	●	~~2017 Travvy Award: Best~~Travel + Leisure World’s Best: Top Small Ship Ocean Cruise ~~Line - Expedition/Adventure~~Lines

	●	~~2017 Travel Age West Wave Awards:~~Conde Nast Traveler 2018 Gold List: The World's Best ~~Expedition Cruise Line (ocean-going)~~Cruises: Antarctica, South Georgia and the Falklands aboard National Geographic Orion

	●	~~2017 Recommend Magazine’s Readers’ Choice Awards: Best Cruise Line in Expedition Cruises, Silver~~AFAR VANGUARD Award – Sven Lindblad

	●	~~Conde Nast Traveler 2017 Readers Choice Awards: Top Small Ship Cruise Lines~~ Rocking the Boat's Whitehall Award –Sven Lindblad

	●	~~2017 Porthole~~ Cruise Critic Cruisers’ Choice Awards: #1 Best Dining (Small Ship Category): National Geographic Explorer

	●	2018 Community Distinctions Awards at the Educational Travel Consortium: Covenant Award

	●	Recommend Magazine 2018 Readers’ Choice Awards: Silver Award for Best ~~Expedition~~ Cruise Line

	●	~~2017 Town & Country Travel Cruise Awards: Best Active Itineraries~~

	●	~~2017 Cruise Critic Editors’ Picks Award: Best for Adventure~~

	●	~~Afar Magazine’s Travelers’ Choice Cruise Awards: Best~~ in the Luxury Expedition ~~Cruise Lines~~

	●	~~USA Today’s 10Best.com Readers’ Choice Awards - Best Adventure Cruise Lines~~ category

	Common Stock				Warrants
Period	High		Low		High		Low
2017:
Fourth Quarter	$	11.13	$	9.21	$	1.95	$	1.35
Third Quarter	$	11.21	$	9.76	$	2.25	$	1.78
Second Quarter	$	10.50	$	8.95	$	2.30	$	1.87
First Quarter	$	9.72	$	8.62	$	2.30	$	1.90

2016:
Fourth Quarter	$	10.08	$	7.75	$	2.55	$	1.63
Third Quarter	$	10.08	$	8.51	$	2.46	$	1.55
Second Quarter	$	10.70	$	8.69	$	2.60	$	1.50
First Quarter	$	11.40	$	9.24	$	3.00	$	2.21

Period	Total number of warrants purchased		Average price paid per warrant		Total number of warrants purchased as part of publicly announced plans or programs		Approximate dollar value of shares and warrants that may yet be purchased under the plans or programs
October 1-31, 2017		-	$	-		-	$	13,001,479
November 1-30, 2017		-		-		-		13,001,479
December 1-31, 2017		16,495		1.35		16,495		12,979,046
Total		16,495	$	1.35		16,495	$	12,979,046

	12/31/13		12/31/14		12/31/15		12/31/16		12/31/17		12/31/18
LIND	$	100.00	$	102.70	$	115.97	$	98.23	$	101.77	$	139.92
S&P 500		100.00		111.39		126.53		121.38		144.65		135.63
FTSE 100 Index		100.00		97.29		92.49		105.83		113.91		108.00

	07/03/13		12/31/13		12/31/14		12/31/15		12/31/16		12/31/17
LIND	$	100.00	$	100.42	$	103.13	$	115.97	$	98.64	$	102.19
S&P 500		100.00		114.42		127.45		126.53		138.89		165.51
FTSE 100 Index		100.00		108.33		105.40		100.20		114.65		123.40

	As of December 31,										As of December 31,
(In thousands)	2017		2016		2015		2014		2013		2018		2017		2016		2015		2014
Balance Sheet Data:
Total assets	$	424,348	$	407,701	$	381,613	$	245,925	$	207,028	$	473,409	$	424,348	$	407,701	$	381,613	$	245,925
Long-term debt	$	165,936	$	165,878	$	164,443	$	56,690	$	59,935		190,089		165,936		165,878		164,443		56,690
Total liabilities	$	311,724	$	288,722	$	267,692	$	178,358	$	151,455		350,863		311,724		288,722		267,692		178,358
Total stockholders’ equity	$	106,322	$	113,809	$	113,921	$	67,567	$	55,573
Total stockholders' equity												116,044		106,322		113,809		113,921		67,567

	●	a description of certain line items and operational and financial metrics we utilize to assist us in managing our business;

	●	a comparable discussion of our consolidated and segment results of operations for the years ended December 31, 2018 , 2017 and ~~2016 and for the years ended December 31, 2016 and 2015;~~2016;

	●	a discussion of our liquidity and capital resources, including future capital and contractual commitments and potential funding sources; and

	●	a review of our critical accounting policies.

	●	Guest ticket revenues recognized from the sale of guest tickets; and

	●	Other tour revenues from the sale of pre- or post-expedition excursions, hotel accommodations and land-based expeditions; air transportation to and from the ships, goods and services rendered onboard that are not included in guest ticket prices, trip insurance and cancellation ~~fees and insurance proceeds.~~fees.

	●	Direct costs associated with revenues, including cost of pre- or post-expedition excursions, hotel accommodations and land-based expeditions, air and other transportation expenses and cost of goods and services rendered onboard;

	●	Payroll costs and related expenses for shipboard and expedition personnel;

	●	Food costs for guests and crew, including complimentary food and beverage amenities for guests;

	●	Fuel costs and related costs of delivery, storage and safe disposal of waste; and

	●	Other tour expenses, such as land costs, port costs, repairs and maintenance, equipment expense, drydock, ship insurance and charter hire costs.

	For the years ended December 31,
(In thousands, except per share data)	2018		2017			Change		%			2016		Change			%
Tour revenues	$	309,734	$	266,504		$	43,230		16	%	$	242,346	$	24,158			10	%
Cost of tours		153,743		135,526			18,217		13	%		118,977		16,549			14	%
Gross profit		155,991		130,978			25,013		19	%		123,369		7,609			6	%
General and administrative		62,898		60,529			2,369		4	%		51,896		8,633			17	%
Selling and marketing		46,987		42,354			4,633		11	%		39,072		3,282			8	%
Depreciation and amortization		20,768		17,351			3,417		20	%		18,420		(1,069	)		(6	%)
Operating income	$	25,338	$	10,744		$	14,594		136	%	$	13,981	$	(3,237	)		(23	%)
Net income (loss)	$	11,552	$	(7,529	)	$	19,081		253	%	$	5,059	$	(12,588	)		(249	%)
Earnings (loss) per share available to common stockholders
Basic	$	0.25	$	(0.19	)	$	0.44				$	0.11	$	(0.30	)
Diluted	$	0.24	$	(0.19	)		0.43				$	0.10	$	(0.29	)

	●	In 2018, we recorded a $2.2 million loss in foreign currency translation compared to a gain of $1.1 million in 2017 due to the weakening of the U.S. dollar primarily in relation to the Canadian dollar.

	●	Interest expense, net, increased $1.1 million to $10.8 million in 2018 from $9.7 million in 2017 due to additional borrowings under our first lien term loan facility and the commitment fees for our new senior secured credit agreement, partially offset by higher capitalized interest for the National Geographic Endurance and the National Geographic Venture.

	●	2017 included a $0.5 million gain on sale related to the sale of the National Geographic Endeavour.

	●	In 2017, we recorded a $1.1 million gain in foreign currency translation compared to a loss of $0.7 million in 2016 due to the strength of the U.S. dollar in relation to the Canadian dollar and the Euro.

	●	In 2017, we recognized a $0.5 million gain on sale related to the sale of the National Geographic Endeavour. We had previously recognized a loss on disposal of $0.8 million in 2016 related to the National Geographic Endeavour.

	●	Interest expense, net, decreased $0.4 million to $9.7 million in 2017 from $10.1 million in 2016 due to higher capitalized interest primarily related to theNational Geographic Quest and theNational Geographic Venture offset by higher cash interest ~~caused by~~from higher rates.

Number	Description	Included	Form	Filing Date

~~2.1~~ 3.1	~~Stock Purchase Agreement, dated as of May 4, 2016, by and among Lindblad Expeditions, LLC, Lindblad Expeditions Holdings, Inc., Gaiam, Inc., Gaiam Travel, Inc., and Ben Bressler.~~	~~By Reference~~	~~8-K~~	~~May 5, 2016~~
~~3.1~~	Second Amended and Restated Certificate of Incorporation.	By Reference	DEFM 14-A	June 24, 2015
3.2	Bylaws.	By Reference	S-1	February 15, 2011
4.1	Specimen Common Stock Certificate.	By Reference	8-K	July 10, 2015
4.2	Specimen Warrant Certificate.	By Reference	8-K	July 10, 2015
4.3	Warrant Agreement.	By Reference	8-K	May 15, 2013
10.1	~~Letter Agreement signed by each of Capitol Acquisition Management 2 LLC and Mark D. Ein.~~	~~By Reference~~	~~8-K~~	~~May 15, 2013~~
~~10.2~~	~~Letter Agreement signed by L. Dyson Dryden.~~	~~By Reference~~	~~8-K~~	~~May 15, 2013~~
~~10.3~~	~~Form of Letter Agreement signed by each of Lawrence Calcano, Piyush Sodha and Richard C. Donaldson~~	~~By Reference~~	~~8-K~~	~~May 15, 2013~~
~~10.4~~	~~Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Company.~~	~~By Reference~~	~~8-K~~	~~May 15, 2013~~
~~10.5~~	Stock Escrow Agreement between the Company, Continental Stock Transfer & Trust Company and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden.	~~By Reference~~	~~8-K~~	~~May 15, 2013~~
~~10.6~~	Registration Rights Agreement among the Company and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden.	By Reference	8-K	May 15, 2013
~~10.7~~ 10.2	Sponsor Warrants Purchase Agreement among the Company, Graubard Miller and each of Capitol Acquisition Management 2 LLC, Lawrence Calcano, Richard C. Donaldson, Piyush Sodha and L. Dyson Dryden.	By Reference	8-K	May 15, 2013