Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 28, 2021 | Jun. 30, 2020 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity Registrant Name | ONE Group Hospitality, Inc. | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | STKS | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 26,794,876 | ||
Entity Common Stock, Shares Outstanding | 29,120,116 | ||
Entity Central Index Key | 0001399520 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 24,385 | $ 12,344 |
Accounts receivable | 5,777 | 10,351 |
Inventory | 2,490 | 3,058 |
Other current assets | 1,348 | 1,047 |
Due from related parties, net | 376 | 341 |
Total current assets | 34,376 | 27,141 |
Property and equipment, net | 67,344 | 70,483 |
Operating lease right-of-use assets | 80,960 | 81,097 |
Deferred tax assets, net | 13,226 | 7,751 |
Intangibles, net | 16,313 | 17,183 |
Other assets | 2,446 | 1,622 |
Security deposits | 904 | 1,308 |
Total assets | 215,569 | 206,585 |
Current liabilities: | ||
Accounts payable | 7,404 | 8,274 |
Accrued expenses | 15,684 | 11,198 |
Deferred license revenue | 207 | 332 |
Deferred gift card revenue and other | 1,990 | 3,183 |
Current portion of operating lease liabilities | 4,817 | 4,397 |
Current portion of CARES Act Loans | 10,057 | |
Current portion of long-term debt | 588 | 749 |
Total current liabilities | 40,747 | 28,133 |
Deferred license revenue, long-term | 953 | 1,036 |
Operating lease liabilities, net of current portion | 98,569 | 98,278 |
CARES Act Loans, net of current portion | 8,257 | |
Long-term debt, net of current portion | 45,064 | 45,226 |
Total liabilities | 193,590 | 172,673 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value, 75,000,000 shares authorized; 29,083,183 and 28,603,829 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 3 | 3 |
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | ||
Additional paid-in capital | 46,538 | 44,853 |
Accumulated deficit | (20,716) | (7,891) |
Accumulated other comprehensive loss | (2,646) | (2,651) |
Total stockholders’ equity | 23,179 | 34,314 |
Noncontrolling interests | (1,200) | (402) |
Total equity | 21,979 | 33,912 |
Total liabilities and equity | $ 215,569 | $ 206,585 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 29,083,183 | 28,603,829 |
Common stock, shares outstanding | 29,083,183 | 28,603,829 |
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | ||
Owned restaurant net revenue | $ 136,618 | $ 108,775 |
Management, license and incentive fee revenue | 5,325 | 11,906 |
Total revenues | 141,943 | 120,681 |
Owned operating expenses: | ||
Owned restaurant cost of sales | 34,024 | 28,005 |
Owned restaurant operating expenses | 87,042 | 67,883 |
Total owned operating expenses | 121,066 | 95,888 |
General and administrative (including stock-based compensation of $1,773 and $1,306 for the years ended December 31, 2020 and 2019, respectively) | 13,922 | 11,472 |
Depreciation and amortization | 10,114 | 5,404 |
COVID-19 related expenses | 5,492 | |
Transaction costs | 1,109 | 2,513 |
Lease termination expenses | 3,315 | 573 |
Agreement restructuring expenses | 452 | |
Pre-opening expenses | 178 | 565 |
Bargain purchase gain | (10,963) | |
Loss on impairment of investments | 2,684 | |
Other income, net | (11) | (246) |
Total costs and expenses | 155,637 | 107,890 |
Operating (loss) income | (13,694) | 12,791 |
Other expenses, net: | ||
Interest expense, net of interest income | 5,329 | 1,954 |
Loss on early debt extinguishment | 858 | |
Total other expenses, net | 5,329 | 2,812 |
(Loss) income before benefit for income taxes | (19,023) | 9,979 |
Benefit for income taxes | (5,400) | (11,154) |
Net (loss) income | (13,623) | 21,133 |
Less: net (loss) income attributable to noncontrolling interest | (798) | 302 |
Net (loss) income attributable to The ONE Group Hospitality, Inc. | (12,825) | 20,831 |
Currency translation gain (loss) | 5 | (341) |
Comprehensive (loss) income attributable to The ONE Group Hospitality, Inc. | $ (12,820) | $ 20,490 |
Net income attributable to The ONE Group Hospitality, Inc. per share: | ||
Basic net (loss) income per share | $ (0.44) | $ 0.73 |
Diluted net (loss) income per share | $ (0.44) | $ 0.70 |
Shares used in computing basic earnings per share | 28,909,963 | 28,454,385 |
Shares used in computing diluted earnings per share | 28,909,963 | 29,636,219 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | ||
Stock-based compensation | $ 1,773 | $ 1,306 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Stockholders' equity | Noncontrolling interests | Total |
Balance at Dec. 31, 2018 | $ 3 | $ 43,543 | $ (28,722) | $ (2,310) | $ 12,062 | $ (452) | $ 12,514 |
Balance (in shares) at Dec. 31, 2018 | 28,313,017 | ||||||
Stock-based compensation | 1,218 | 1,218 | 1,218 | ||||
Stock-based compensation (in shares) | 47,469 | ||||||
Exercise of stock options | 92 | 92 | $ 92 | ||||
Exercise of stock options (in shares) | 42,000 | 42,000 | |||||
Issuance of vested restricted shares, net of tax withholding (in shares) | 201,343 | ||||||
Distributions to noncontrolling interests | (252) | (252) | |||||
Gain (loss) on foreign currency translation, net | (341) | (341) | $ (341) | ||||
Net income (loss) | 20,831 | 21,133 | 302 | 20,831 | |||
Balance at Dec. 31, 2019 | $ 3 | 44,853 | (7,891) | (2,651) | 33,912 | (402) | 34,314 |
Balance (in shares) at Dec. 31, 2019 | 28,603,829 | ||||||
Stock-based compensation | 1,773 | 1,773 | 1,773 | ||||
Stock-based compensation (in shares) | 226,983 | ||||||
Exercise of stock options | 38 | 38 | $ 38 | ||||
Exercise of stock options (in shares) | 18,000 | 18,000 | |||||
Issuance of vested restricted shares, net of tax withholding | (126) | (126) | $ (126) | ||||
Issuance of vested restricted shares, net of tax withholding (in shares) | 234,371 | ||||||
Gain (loss) on foreign currency translation, net | 5 | 5 | 5 | ||||
Net income (loss) | (12,825) | (13,623) | (798) | (12,825) | |||
Balance at Dec. 31, 2020 | $ 3 | $ 46,538 | $ (20,716) | $ (2,646) | $ 21,979 | $ (1,200) | $ 23,179 |
Balance (in shares) at Dec. 31, 2020 | 29,083,183 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | ||
Net (loss) income | $ (13,623) | $ 21,133 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,114 | 5,404 |
Stock-based compensation | 1,773 | 1,306 |
Bargain purchase gain | (10,963) | |
Loss on early debt extinguishment | 858 | |
Amortization of discount on warrants and debt issuance costs | 479 | 233 |
Deferred taxes | (5,475) | (11,757) |
Loss on impairment of investments | 2,684 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 4,378 | (2,385) |
Inventory | 568 | (541) |
Other current assets | (301) | 1,042 |
Due from related parties, net | (35) | (296) |
Security deposits | 405 | 767 |
Other assets | (826) | (440) |
Accounts payable | (939) | 926 |
Accrued expenses | 4,468 | (438) |
Operating lease liabilities and right-of-use assets | 848 | 589 |
Deferred revenue | (1,403) | 238 |
Net cash provided by operating activities | 431 | 8,360 |
Investing activities: | ||
Acquisition related payments, net of cash acquired | (26,040) | |
Purchase of property and equipment | (5,787) | (4,357) |
Net cash used in investing activities | (5,787) | (30,397) |
Financing activities: | ||
Proceeds from CARES Act Loans | 18,314 | |
Borrowings of long-term debt | 64,750 | |
Repayments of long-term debt | (752) | (28,517) |
Debt issuance costs | (50) | (2,864) |
Exercise of stock options | 38 | 92 |
Tax-withholding obligation on stock based compensation | (126) | (88) |
Distributions to non-controlling interests | (252) | |
Net cash provided by financing activities | 17,424 | 33,121 |
Effect of exchange rate changes on cash | (27) | (332) |
Net increase in cash and cash equivalents | 12,041 | 10,752 |
Cash and cash equivalents, beginning of year | 12,344 | 1,592 |
Cash and cash equivalents, end of year | 24,385 | 12,344 |
Supplemental disclosure of cash flow data: | ||
Interest paid | 3,925 | 1,743 |
Income taxes paid | 286 | 467 |
Non-cash property and equipment additions | $ 303 | $ 165 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
Description of Business | |
Description of Business | Note 1 – Description of Business The ONE Group Hospitality, Inc. and its subsidiaries (collectively, the “Company”) is a global hospitality company that develops, owns and operates, manages and licenses upscale and polished casual, high-energy restaurants and lounges and provides turn-key food and beverage (“F&B”) services for hospitality venues including hotels, casinos and other high-end locations. Turn-key F&B services are food and beverage services that can be scaled, customized and implemented by the Company at a particular hospitality venue and customized for the client. The Company’s primary restaurant brands are STK, a multi-unit steakhouse concept that combines a high-energy, social atmosphere with the quality and service of a traditional upscale steakhouse, and Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in a polished casual atmosphere. As of December 31, 2020, the Company owned, operated, managed or licensed 54 venues including 20 STKs and 24 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 10 F&B venues in five hotels and casinos in the United States and Europe. In January 2021, we opened a managed STK restaurant in Scottsdale, Arizona. For those restaurants and venues that are managed or licensed, we generate management fees based on top-line revenues and incentive fee revenue based on a percentage of the location’s revenues and net profits. On October 4, 2019, the Company acquired substantially all of the assets of Kona Grill Inc. and its affiliates (“Kona Grill”), which was composed of 24 domestic restaurants. The Company purchased the assets for a contractual price of $25.0 million plus approximately $1.5 million of consideration paid primarily for the apportionment of rent and utilities. The Company also assumed approximately $7.7 million in current liabilities. The Company has integrated Kona Grill by leveraging its corporate infrastructure, hospitality business knowledge and unique Vibe Dining program, elevating the brand experience and driving improved performance. The results of operations of these restaurants are included in the Company’s consolidated financial statements from the date of acquisition. COVID-19 The novel coronavirus (“COVID-19”) pandemic has significantly impacted the Company’s business, and public concerns about the spread of COVID-19 continue to be widespread. The Company experienced a significant reduction in guest traffic at its restaurants as a result of restrictions mandated by state and local governments and temporary closure of several restaurants and the shift in operations to provide only take-out and delivery service. Starting in May 2020, state and local governments began easing restrictions on stay-at-home orders; however, certain states have reimposed restrictions as COVID-19 cases increased during the fall of 2020. Currently, all domestic Company-owned restaurants are open for outdoor dining or in-person dining with seating capacity restrictions. Certain of the Company’s managed and licensed venues internationally are temporarily closed or on to-go/delivery only due to COVID-19. The Company has taken significant steps to adapt its business to increase sales while providing a safe environment for guests and employees. In response to these conditions, and out of concern for its customers and partners, the Company has implemented enhanced safety measures and sanitation procedures to allow for in-person dining at its restaurants. As the Company navigates through the pandemic, it has also implemented measures to reduce its costs including the deferral of capital projects and negotiations with suppliers and landlords regarding deferral or abatement of payments. Given the ongoing uncertainty surrounding the effects of the COVID-19 pandemic, the Company cannot reasonably predict when its restaurants will be able to return to normal dining room operations. The Company expects that its results of operations could be materially and negatively affected by COVID-19 in 2021. The Company’s resumption of normal dining operations is subject to events beyond its control, including the effectiveness of governmental efforts to halt the spread of COVID-19. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The financial results of Kona Grill have been included in the Company’s consolidated financial statements from the date of acquisition on October 4, 2019. The Company consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation an entity in which it has certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. The Company evaluates its investments for impairment whenever an event or change in circumstances occurs that may have a significant adverse impact on the fair value of the investment. If a loss in value has occurred and is deemed to be other than temporary, an impairment loss is recorded. Several factors are reviewed to determine whether a loss has occurred that is other than temporary, including the absence of an ability to recover the carrying amount of the investment, the length and extent of the fair value decline, and the financial condition and future prospects of the investee. For the year ended December 31, 2019, the Company recorded a non-cash write down of $2.7 million related to its investments. Refer to Note 9 – Nonconsolidated Variable Interest Entities for additional information regarding the Company’s investments and related impairment. Prior Period Reclassifications Certain reclassifications of the 2019 amounts in the accrued expenses and segment reporting footnotes have been made to conform to the current year presentation. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions for the reporting period and as of the reporting date. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingencies. Actual results could differ from those estimates. Business Combination On October 4, 2019, the Company acquired substantially all the assets of Kona Grill, which was accounted for using the acquisition method of accounting prescribed by Accounting Standard Codification Topic 805, Business Combinations. Acquired assets and assumed liabilities were assigned fair values based on widely accepted valuation techniques, in accordance with Accounting Standard Codification Topic 820, Fair Value Measurements. The process for estimating fair values in many cases requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates. Unanticipated events or circumstances may occur which could affect the accuracy of the Company’s fair value estimates, including assumptions regarding industry economic factors and business strategies. Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities are valued based upon observable and non-observable inputs. Valuations using Level 1 inputs are based on unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 inputs utilize significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly. Valuations using Level 3 inputs are based on significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. There were no significant transfers between levels during any period presented. Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and highly liquid instruments with original maturities of three months or less when purchased. The Company’s cash and cash equivalents consist of cash in banks and at the restaurants as of December 31, 2020 and 2019. Accounts Receivable The majority of the Company’s receivables arise primarily from credit cards, management agreements, trade customers and other reimbursable amounts due from hotel operators where the Company operates a food and beverage service. The Company determines an allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss and payment history, the customer’s current ability to pay its obligation to the Company and the condition of the general economy and industry as a whole. The Company has not reserved any trade receivables as of December 31, 2020 and 2019. Inventory Inventories, which consist of food, liquor and other beverages, are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs to sell. The Company has not reserved any inventory as of December 31, 2020 and 2019. Property and Equipment Additions to property and equipment, including leasehold improvements, are recorded at cost. Costs incurred to repair and maintain the Company’s operations and equipment are expensed as incurred. Restaurant smallwares are capitalized during the initial year of operation of a particular restaurant. All restaurant supplies purchased subsequent to the first year are expensed as incurred. When assets are retired or otherwise disposed of, the cost of the assets and the related accumulated depreciation are removed from the accounts, and any gain or loss on retirements is reflected in operating income in the year of disposition. After the asset has been placed into service, depreciation is based on the estimated useful life of the asset using the straight-line method for financial statement purposes. Computers and equipment as well as furniture and fixtures are depreciated over their useful lives from three to ten years. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining term of the associated lease. Lease terms begin on the date the Company takes possession under the lease and include option periods where failure to exercise such options would result in an economic penalty. Other Assets Other assets include liquor license acquisition costs and costs to fulfill obligations under the Company’s management and license agreements. The gross carrying amount of the contract costs related to management and license agreements was $0.5 million and $0 as of December 31, 2020 and 2019, respectively. These costs are amortized on a straight-line basis over the term of the agreement. Intangible Assets Intangible assets consist of the “Kona Grill” trade name. The “Kona Grill” tradename is amortized using the straight-line method over its estimated useful life of 20 years. As of December 31, 2020 and 2019, the gross carrying amount of the tradename intangible was $17.4 million. The accumulated amortization of the tradename was $1.1 million and $0.2 million as of December 31, 2020 and 2019, respectively, and the amortization expense was $0.9 million and $0.2 million for the years ending December 31, 2020 and 2019, respectively. The Company’s estimated aggregate amortization expense for each of the five succeeding fiscal years is approximately $0.9 million annually. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values of these assets may not be fully recoverable. The impairment evaluation is generally performed at the individual venue asset group level. Recoverability of restaurant assets is measured by a comparison of the carrying amount of an individual restaurant’s assets to the estimated identifiable undiscounted future cash flows expected to be generated by those restaurant assets. If the carrying amount of an individual restaurant’s assets exceeds its estimated, identifiable, undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds its fair value. Fair value is determined by discounting a restaurant’s identifiable future cash flows. For the years ended December 31, 2020 and 2019, the Company did not identify any event or changes in circumstances that indicated that the carrying values of its restaurant assets were impaired. Debt Issuance Costs Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense based on the term of the related debt agreement using the straight-line method, which approximates the effective interest method. The Company has recorded debt issuance costs as an offset to long-term debt, net of current portion on the consolidated balance sheets. Income Taxes The Company computes income taxes using the asset and liability method. Under this method, deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes, using the enacted statutory rate in effect for the year these differences are expected to be taxable or refunded. Deferred income tax expenses or credits are based on the changes in the asset or liability, respectively, from period to period. A deferred tax asset or liability is recognized whenever there are future tax effects from existing temporary differences and operating loss and tax credit carry-forwards. If the Company determines that a deferred tax asset or liability could be realized in a greater or lesser amount than recorded, the deferred tax asset or liability is adjusted and a corresponding adjustment is made to the provision for income taxes in the consolidated statements of operations and comprehensive income in the period during which the determination is made. The Company reduces its deferred tax assets by a valuation allowance if it determines that it is more likely than not that some portion or all of these tax assets will not be realized. In making this determination, the Company considers various qualitative and quantitative factors, such as: · the level of historical taxable income; · the projection of future taxable income over periods in which the deferred tax assets would be deductible; · events within the restaurant industry; · the health of the economy; and, · historical trending. As of December 31, 2019, the Company released approximately $10.3 million of its valuation allowance based on an assessment of the realizability of its deferred tax assets. As of December 31, 2020, the remaining valuation allowance of $0.3 million relates to foreign tax credits the Company does not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S. The recording of deferred taxes requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and particular facts and circumstances. The Company recognizes the tax benefit from an uncertain tax position when it determines that it is more-likely-than-not that the position would be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If the Company derecognizes an uncertain tax position, the Company’s policy is to record any applicable interest and penalties within the (benefit) provision for income taxes in the consolidated statements of operations and comprehensive income. Revenue Recognition Revenue is derived from restaurant sales, management services and license related operations. The Company recognizes restaurant revenues, net of discounts, when goods and services are provided. Sales tax amounts collected from customers that are remitted to governmental authorities are excluded from net revenue. Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee in license agreements are generally based on a percentage of the licensed restaurant’s revenue. These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur. The Company recognizes initial licensing fees and upfront fees related to management and license agreements on a straight-line basis over the term of the agreement as a component of management, license and incentive fee revenue on the consolidated statements of operations and comprehensive income. The Company has a loyalty program for Kona Grill to encourage customers to frequent its restaurants. The loyalty rewards program awards a customer one point for every dollar spent. When a customer is part of the rewards program, the obligation to provide future discounts related to points earned is considered a separate performance obligation, to which a portion of the transaction price is allocated. The performance obligation related to loyalty points is deemed to have been satisfied, and the amount deferred in the balance sheet is recognized as revenue, when the points are converted to a reward and redeemed, or the likelihood of redemption is remote. A portion of the transaction price is allocated to loyalty points, if necessary, on a pro-rata basis, based on the stand-alone selling price, as determined by menu pricing and loyalty points terms. As of December 31, 2020 and 2019 the Gift Cards Proceeds from the sale of gift cards are recorded as deferred revenue and recognized as revenue when redeemed by the holder. There are no expiration dates on the Company’s gift cards and the Company does not charge any service fees that would result in a decrease to a customer’s available balance. Although the Company will continue to honor all gift cards presented for payment, it may determine the likelihood of redemption to be remote for certain gift cards due to, among other things, long periods of inactivity. In these circumstances, to the extent the Company determines there is no requirement for remitting balances to government agencies under unclaimed property laws, outstanding gift card balances may then be recognized as breakage in the consolidated statements of operations and comprehensive income as a component of owned restaurant net revenue. For the years ended December 31, 2020 and 2019, the Company recognized $1.0 million and $0.2 million, respectively, in revenue from gift card breakage. Pre-opening Costs Pre-opening costs for Company owned restaurants are expensed as incurred prior to a restaurant opening for business. Pre-opening costs for the years ended December 31, 2020 and 2019 were $0.2 million and $0.6 million, respectively. Advertising Costs The Company expenses the cost of advertising and promotions as incurred. Advertising expense amounted to $2.5 million and $3.1 million for the years ended December 31, 2020 and 2019, respectively. Leases Contracts are evaluated to determine whether they contain a lease at inception. The Company’s contracts determined to be or contain a lease include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or financing. If it is determined that the contract contains an operating lease, a right-of-use asset and operating lease liability are recorded on the consolidated balance sheets. A right-of-use asset represents the Company’s right to use the underlying asset and the lease liability represents the Company’s contractually obligated payments. Both the right-of-use asset and the lease liability are recognized as of the commencement date of the lease and are based upon the present value of lease payments due over the course of the lease. The right-of-use asset is reduced by any lease incentives received and is adjusted for any prepayments. For leases that do not have a rate implicit in the lease, the Company’s incremental borrowing rate at the date of commencement is used to determine the present value of the lease payments. The Company’s incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term on an amount equal to the lease payments in a similar economic environment. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the operating lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company assesses its right-of-use assets for impairment in accordance with Accounting Standard Codification Topic 360, Property, Plant, and Equipment. The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease cost on a straight-line basis over the lease term. Additionally, the Company has elected not to separate the accounting for lease components and non-lease components, for all leased assets. Given the importance of each of its restaurant locations to its operations, the Company has historically concluded that it was reasonably assured of exercising two renewal periods included in its leases as failure to exercise such options would result in an economic penalty. The Company enters into contracts to lease office space, restaurant space and equipment with terms that expire at various dates through 2041, which includes exercise of options to extend the lease. Under ASC Topic 842, the lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considered a number of factors when evaluating whether the options in its lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties. Certain of the Company’s leases also provide for percentage rent, which are variable lease costs determined as a percentage of gross sales in excess of specified, minimum sales targets, as well as other lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain non-lease components that transfer a distinct service to the Company, such as common area maintenance services. These percentage rents and other variable lease costs are not included in the calculation of lease payments when classifying a lease and in the measurement of the lease liability as they do not meet the definition of in-substance, fixed-lease payments under ASC Topic 842. Stock-Based Compensation The Company maintains an equity incentive compensation plan under which it may grant options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services to the Company. Restricted stock and restricted stock units (“RSUs”) are valued using the closing stock price on the date of grant. The fair value of an option award or warrant is determined using the Black-Scholes option pricing model. The Black-Scholes model requires estimates of the expected term of the option, the risk-free interest rate, future volatility and dividend yield. The Company’s assumptions are as follows: · Expected Term – The expected term of options is based upon evaluations of historical and expected future exercise behavior with consideration of both the vesting period and contractual terms of the instruments. · Risk Free Interest Rate – The risk-free interest rate is based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. · Implied Volatility – Implied volatility is based upon an average of the volatilities of an industry peer group who are publicly traded. · Dividend Yield – The Company has historically not paid dividends and does not plan to do so in the foreseeable future. Under the plan, vesting of awards can either be based on the passage of time or on the achievement of performance goals. For awards that vest on the passage of time, compensation cost is recognized over the vesting period. For performance-based awards, the Company recognizes compensation costs over the requisite service period when conditions for achievement become probable. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ or are expected to differ. These estimates, which are currently at 10%, are based on historical forfeiture behavior exhibited by employees of the Company. Earnings per Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period and income available to common stockholders. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period plus the dilutive effect of all potential shares of common stock including common stock issuable pursuant to stock options, warrants, and RSUs. As a result, the sum of per share amount may not equal the total. Refer to Note 14 for the calculations of basic and diluted earnings per share. Segment Reporting In the fourth quarter of 2019, in conjunction with the Kona Grill acquisition, the Company implemented certain organizational changes, including the reorganization of our internal reporting structure to better facilitate its strategy for growth, operational efficiency and management accountability. As a result of these organizational changes, the Company has identified the following four reportable operating segments: STK, Kona Grill, ONE Hospitality and Corporate. Refer to Note 17 for additional details and certain financial information regarding the Company’s operating segments relating to the years ended December 31, 2020 and 2019. Prior year amounts have been revised to conform to the current year segment presentation. Foreign Currency Translation Assets and liabilities of foreign operations are translated into U.S. dollars at the balance sheet date. Revenues and expenses are translated at average monthly exchange rates. Gains or losses resulting from the translation of foreign subsidiaries represent other comprehensive income (loss) and are accumulated as a separate component of stockholders’ equity. Currency translation gains or (losses) are recorded in accumulated other comprehensive loss within stockholders’ equity and amounted to approximately $5,000 and ($0.3) million during the years ended December 31, 2020 and 2019, respectively. Comprehensive Income Comprehensive income consists of two components: net income and other comprehensive income (loss). The Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments. All of the Company’s foreign currency translation adjustments relate to wholly-owned subsidiaries of the Company. Recent Accounting Pronouncements In June 2020, the American Institute of Certified Public Accountants in conjunction with the Financial Accounting Standards Board (“FASB”) developed Technical Question and Answer (“TQA”) 3200.18, “Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program”, which is intended to provide clarification on how to account for loans received from the Paycheck Protection Program (“PPP”). TQA 3200.18 states that an entity may account for PPP loans under ASC 470, “Debt” or, if the entity is expected to meet PPP eligibility criteria and the PPP loan is expected to be forgiven, the entity may account for the loans under IAS 20, “Accounting for Government Grants and Disclosure of Government Assistance”. Although the Company anticipates forgiveness of the entire amount of the CARES Act Loans, no assurances can be provided that the Company will obtain forgiveness of the CARES Act Loans in whole or in part. Therefore, the Company has elected to account for PPP loan proceeds under ASC 470 as allowed by TQA 3200.18. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Updated (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Accounting Standard Codification Topic 740, Income Taxes, and it clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020. The Company is evaluating the impact of the adoption of ASU 2019-12 on its financial statements but does not expect the adoption of ASU 2019-12 to be material. In August 2018, the FASB issued ASU No. 2018‑15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract” (“ASU 2018‑15”). ASU 2018‑15 aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018‑15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. Entities can choose to adopt the new guidance prospectively or retrospectively. The adoption of ASU 2018-15 did not have a material impact on the Company’s financial position, results of operations, or cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, and we do not expect the adoption of ASU 2016-13 to be material. |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2020 | |
Business Combination | |
Business Combination | Note 3 – Business Combination On October 4, 2019, the Company acquired substantially all of the assets of Kona Grill Inc. and its affiliates comprising 24 domestic restaurants. The Company purchased the assets for a contractual price of $25.0 million plus $1.5 million of consideration paid primarily for the apportionment of rent and utilities. The Company also assumed approximately $7.7 million in current liabilities. The Company believes that Kona Grill is complementary and enables the Company to capture market share in the Vibe Dining segment. Kona Grill Inc. and its affiliates were purchased pursuant to a Chapter 11 bankruptcy. As a result, the Company recognized a bargain purchase gain of approximately $11.0 million in the consolidated statements of operations and comprehensive (loss) income for the year ended December 31, 2019, which represents the excess of the aggregate fair value of net assets acquired and liabilities assumed over the purchase price. The purchase accounting represents estimates and assumptions that were subject to change during the measurement period (up to one year from the acquisition date). The following table summarizes the fair value of identified assets acquired and liabilities assumed as of the acquisition date (amounts in thousands): Net assets acquired: Cash $ 450 Current assets, excluding cash 2,830 Property and equipment 31,781 Operating lease right-of-use assets 42,398 Intangible assets 17,400 Other assets 692 Current liabilities (7,690) Deferred tax liability (4,044) Operating lease liabilities (46,364) Total net assets acquired $ 37,453 Purchase consideration: Contractual purchase price 25,000 Apportionment of rent and utilities 775 Assumption of real estate lease consultant contract 465 Escrow deposit 250 Consideration paid $ 26,490 Bargain purchase gain attributable to Kona Grill acquisition $ 10,963 Pro Forma Results of Operations (unaudited) The following pro forma results of operations for the year ended December 31, 2019 have been prepared as though the acquisition occurred as of January 1, 2019. The pro forma financial information is not indicative of the results of operations that the Company would have attained had the acquisition occurred at the beginning of the periods presented, nor is the pro forma financial information indicative of the results of operations that may occur in the future. Amounts are in thousands, except earnings per share related data. For the year ended December 31, 2019 Total revenues $ 196,906 Net income attributable to The ONE Group Hospitality, Inc. $ 10,789 Net income attributable to The ONE Group Hospitality, Inc. per share: Basic net income per share $ 0.38 Diluted net income per share $ 0.36 |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2020 | |
Inventory | |
Inventory | Note 4 – Inventory Inventory consists of the following (in thousands): December 31, December 31, 2020 2019 Beverages $ 1,439 $ 1,832 Food 1,051 1,226 Total $ 2,490 $ 3,058 |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2020 | |
Other Current Assets | |
Other Current Assets | Note 5 – Other Current Assets Other current assets consist of the following (in thousands): December 31, December 31, 2020 2019 Prepaid expenses $ 1,174 $ 624 Prepaid taxes 174 353 Other — 70 Total $ 1,348 $ 1,047 |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, net | |
Property and Equipment, net | Note 6 – Property and Equipment, net Property and equipment, net consist of the following (in thousands): December 31, December 31, 2020 2019 Furniture, fixtures and equipment $ 22,328 $ 20,512 Leasehold improvements 71,654 69,925 Less: accumulated depreciation and amortization (30,948) (21,997) Subtotal 63,034 68,440 Construction in progress 2,294 97 Restaurant smallwares 2,016 1,946 Total $ 67,344 $ 70,483 Depreciation and amortization related to property and equipment amounted to $9.2 million and $5.4 million for the years ended December 31, 2020 and 2019, respectively. The Company does not depreciate construction in progress, assets not yet put into service or restaurant smallwares. For the years ended December 31, 2020 and 2019, the Company did not identify any event or changes in circumstances that indicated that the carrying values of its restaurant assets were impaired. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses | |
Accrued Expenses | Note 7 – Accrued Expenses Accrued expenses consist of the following (in thousands): December 31, December 31, 2020 2019 Payroll and related (1) $ 4,860 $ 4,519 Accrued lease exit costs (2) 4,144 1,411 Variable rent 1,883 545 VAT and sales taxes 1,119 1,488 Legal, professional and other services 462 1,103 Interest 474 2 Income taxes and related — 547 Insurance 330 100 Other 2,412 1,483 Total $ 15,684 $ 11,198 (1) Payroll and related includes $2.6 million in employer payroll taxes for which payment has been deferred under the CARES Act. (2) Amount relates to lease exit costs for restaurants never built and still under dispute with landlords. |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2020 | |
Long Term Debt | |
Long Term Debt | Note 8 – Long Term Debt Long-term debt consists of the following (in thousands): December 31, December 31, 2020 2019 Term loan agreements $ 47,400 $ 47,880 Revolving credit facility — — Equipment financing agreements 108 380 Total long-term debt 47,508 48,260 Less: current portion of long-term debt (588) (749) Less: debt issuance costs (1,856) (2,285) Total long-term debt, net of current portion $ 45,064 $ 45,226 Future minimum loan payments: 2021 $ 588 2022 480 2023 480 2024 45,960 Total $ 47,508 Interest expense for all the Company’s debt arrangements, excluding the amortization of debt issuance costs and other discounts and fees, was approximately $4.4 million and $1.7 million for the years ended December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the Company had $1.3 million and $1.2 million, respectively, in standby letters of credit outstanding for certain restaurants. As of December 31, 2019 the Company had $0.4 million of cash collateralized letters of credit, which are recorded as a component of security deposits on the consolidated balance sheet. Goldman Sachs Bank USA Credit and Guaranty Agreement On October 4, 2019, in conjunction with the acquisition of Kona Grill, the Company entered into a credit and guaranty agreement with Goldman Sachs Bank USA (“Credit Agreement”). The Credit Agreement provides for a secured revolving credit facility of $12.0 million and a $48.0 million term loan. The term loan is payable in quarterly installments, with the final payment due in October 2024. The revolving credit facility also matures in October 2024. Additionally, the Company’s consolidated adjusted EBITDA as defined by the Credit Agreement for determining covenant compliance includes pro forma adjustments for the annualization of the Kona Grill restaurant performance which includes results before the acquisition date. On May 4, 2020, Goldman Sachs Bank USA (“GSB”), as administrative agent, collateral agent and lead arranger under the Credit Agreement, (1) consented to the CARES Act Loans described below and (2) agreed that the amount of the CARES Act Loans will not be counted toward the permitted amount of Consolidated Total Debt, as defined under the Credit Agreement, to the extent the amounts are retained as cash during the term of the CARES Act Loans in a segregated deposit account or used for purposes that are forgivable under the CARES Act, provided that the proceeds of the CARES Act Loans must be used only for “allowable uses” under the CARES Act (with at least 75% of the utilized proceeds to be used for purposes that result in the CARES Act Loans being eligible for forgiveness) or used for the repayment of the CARES Act Loans. On May 8, 2020 and August 10, 2020, GSB and the Company and certain of its subsidiaries amended the Credit Agreement to: · Eliminate testing of the fixed charge coverage ratio for the balance of 2020 and 2021; · For the purpose of testing, replace maximum “Leverage Ratio” with maximum “Net Leverage Ratio”. The maximum Net Leverage Ratio is (i) 2.85 to 1.00 as of the fiscal quarter ending September 30, 2020, (ii) 3.60 to 1.00 as of the fiscal quarter ending December 31, 2020, (iii) 3.10 to 1.00 as of the fiscal quarter ending March 31, 2021, (iv) 2.10 to 1.00 as of the fiscal quarters ending June 30, 2021 and September 30, 2021, and (v) 1.90 to 1.00 as of the fiscal quarter ending December 31, 2021; · Reduce the maximum consolidated capital expenditures to $7,000,000 for 2020 and $7,000,000 for 2021; and · Require minimum “Consolidated Liquidity” of not less than $4,000,000 for the balance of 2020 and 2021 (from $1,500,000 for 2021). A summary of the financial covenants under the Credit Agreement, as amended, is as follows: · The minimum consolidated fixed charge coverage ratio is (i) eliminated for the balance of 2020 and 2021; and (ii) 1.50 to 1.00 as of any fiscal quarter thereafter; · A maximum consolidated Net Leverage Ratio of (i) 2.85 to 1.00 as of the fiscal quarter ending September 30, 2020, (ii) 3.60 to 1.00 as of the fiscal quarter ending December 31, 2020, (iii) 3.10 to 1.00 as of the fiscal quarter ending March 31, 2021, (iv) 2.10 to 1.00 as of the fiscal quarters ending June 30, 2021 and September 30, 2021, (v) 1.90 to 1.00 as of the fiscal quarter ending December 31, 2021, and (vii) maximum consolidated Leverage Ratio of 1.50 to 1.00 as of the end of any fiscal quarter thereafter. For purposes of calculating this ratio for the first four quarters, the agreement provides for a pro forma adjustment to reflect one full year of Kona Grill operations. In addition, the consolidated net leverage ratio reduces the Company ’ s debt by its cash and cash equivalents. The consolidated leverage ratio has no such reductions; · Maximum consolidated capital expenditures not to exceed (i) $7,000,000 in each of 2020 and 2021, and (ii) $8,000,000 in every fiscal year thereafter; and, · Minimum consolidated liquidity of not less than (i) $4,000,000 for the remainder of 2020 and 2021, and (ii) $1,500,000 at any time thereafter. The Company’s ability to borrow under its revolving credit facility is dependent on several factors. The Company’s total borrowings cannot exceed a gross leverage incurrence multiple of (i) 2.25 to 1.00 as of the fiscal quarters ending September 30, 2020 and December 31, 2020, (ii) 2.00 to 1.00 as of the fiscal quarter ending March 31, 2021, (iii) 1.75 to 1.00 as of the fiscal quarter ending June 30, 2021, (iv) 1.70 to 1.00 as of the fiscal quarter ending September 30, 2021, (v) 1.65 to 1.00 as of the fiscal quarter ending December 31, 2021, and (vi) 1.50 to 1.00 as of the end of any fiscal quarter thereafter. In addition, after giving effect to any new borrowings under the revolving credit facility, the Company’s cash and cash equivalents cannot exceed $4,000,000. The Credit Agreement has several borrowing and interest rate options, including the following: (a) a LIBOR rate (or a comparable successor rate) subject to a 1.75% floor; or (b) a base rate equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50%, (iii) the LIBOR rate for a one-month period plus 1.00%, or (iv) 4.75%. Loans under the Credit Agreement bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of between 5.75% and 6.75% (for LIBOR rate loans) and 4.75% and 5.75% (for base rate loans). The Company’s weighted average interest rate on the borrowings under the Credit Agreement as of December 31, 2020 and December 31, 2019 was 8.50% and 8.55%, respectively. The Credit Agreement contains customary representations, warranties and conditions to borrowing including customary affirmative and negative covenants, which include covenants that limit or restrict the Company’s ability to incur indebtedness and other obligations, grant liens to secure obligations, make investments, merge or consolidate, alter the organizational structure of the Company and its subsidiaries, and dispose of assets outside the ordinary course of business, in each case subject to customary exceptions for credit facilities of this size and type. The Company and certain operating subsidiaries of the Company guarantee the obligations under the Credit Agreement, which also are secured by liens on substantially all of the assets of the Company and its subsidiaries. The Company has incurred approximately $2.5 million of debt issuance costs related to the Credit Agreement, which were capitalized and are recorded as a direct deduction to the long-term debt, net of current portion, on the consolidated balance sheets. As of December 31, 2020, the Company was in compliance with the covenants required by the Credit Agreement. Equipment Financing Agreements On June 5, 2015 and August 16, 2016, the Company entered into financing agreements with Sterling National Bank for $1.0 million and $0.7 million, respectively, to purchase equipment for the STKs in Orlando, Chicago, San Diego, and Denver. Each of these financing agreements have five- year terms and bear interest at a rate of 5% per annum, payable in equal monthly installments. CARES Act Loans On May 4, 2020, two subsidiaries of the Company entered into promissory notes (“CARES Act Loans”) with BBVA USA under the Paycheck Protection Program (“PPP”) created by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Repayment of the CARES Act Loans is guaranteed by the U.S. Small Business Administration (“SBA”). The ONE Group, LLC received a loan of $9.8 million related to the operations of STK restaurants, and Kona Grill Acquisition, LLC received a loan of $8.5 million related to the operation of Kona Grill restaurants. The CARES Act Loans are scheduled to mature on April 28, 2022 and have a 1.00% interest rate and are subject to the terms and conditions applicable to PPP loans. Among other terms, BBVA USA may declare a default of the CARES Act Loans if the SBA disputes the validity of the guaranty of indebtedness, if a material adverse change occurs in the Company’s financial condition, or if BBVA USA believes the prospect of repayment of the CARES Act Loans or performance of obligations under the promissory notes is impaired. On an event of default, BBVA USA may declare principal and unpaid interest immediately due and payable, and it may charge default interest of 10%. The CARES Act Loans are eligible for forgiveness if the proceeds are used for qualified purposes within a specified period and if at least 60% is spent on payroll costs. As of December 31, 2020, the Company has used all of the proceeds from the CARES Act Loans for qualified purposes in accordance with the CARES Act and SBA regulations, and these funds have supported the re-opening of in person dining and the return of approximately 3,000 furloughed employees to work. The Company applied for forgiveness of the CARES Act Loans in February 2021. The Company anticipates forgiveness of the entire amount of the CARES Act Loans; however, no assurance can be provided that the Company will obtain forgiveness of the CARES Act Loans in whole or in part. Therefore, the Company has elected to classify the entire principal amount of the CARES Act Loans as debt on the consolidated balance sheet as of December 31, 2020. Principal and interest payments are expected to be repaid beginning in August 2021, ten months after the end of the covered period which was from April 2020 to October 2020. Debt Extinguishment On May 15, 2019, the Company entered into the Bank of America Credit Agreement, which was replaced with the Credit Agreement described above on October 4, 2019. The Bank of America Credit Agreement provided for a secured revolving credit facility of $10.0 million and a $10.0 million term loan. The term loan was payable in quarterly installments, with the final payment due in May 2024. The revolving credit facility also matured in May 2024. In conjunction with entering into the Bank of America Credit Agreement, the Company incurred $0.4 million of debt issuance costs. On October 4, 2019, the unamortized debt issuance costs of $0.4 million was recognized as a loss on early debt extinguishment on the consolidated statements of operations and comprehensive (loss) income. In conjunction with entering into the Bank of America Credit Agreement on May 15, 2019, the Company prepaid the outstanding debt balances to early extinguish the $2.6 million of outstanding term loans with BankUnited, the $5.3 million of outstanding promissory notes with Anson Investments Master Fund LP, and the $1.0 million outstanding promissory note with 2235570 Ontario Limited. The Company recognized a $0.4 million loss on early debt extinguishment on the consolidated statements of operations and comprehensive (loss) income, primarily caused by the recognition of the unamortized discounts related to warrants issued with the promissory notes and the recognition of unamortized debt issuance costs related to the debt extinguished. Additionally, the Company prepaid the $1.2 million of outstanding cash advances due to the TOG Liquidation Trust, a related party. Please refer to Note 10 for additional details on transactions with related parties. |
Nonconsolidated Variable Intere
Nonconsolidated Variable Interest Entities | 12 Months Ended |
Dec. 31, 2020 | |
Nonconsolidated Variable Interest Entities | |
Nonconsolidated Variable Interest Entities | Note 9 – Nonconsolidated Variable Interest Entities As of December 31, 2020 and 2019, the Company owned interests in the following companies, which directly or indirectly operate restaurants: · 31.24% interest in Bagatelle NY LA Investors, LLC (“Bagatelle Investors”) · 51.13% interest in Bagatelle Little West 12th, LLC (“Bagatelle NY”) Bagatelle Investors is a holding company that has an interest in Bagatelle NY. Both entities were formed in 2011. In the second quarter of 2019, Bagatelle NY notified the Company that it had no intent to renew its sublease with the Company for the restaurant space. As a result, the Company determined that it no longer had the ability to exercise significant influence over its investees, Bagatelle Investors and Bagatelle NY. On June 30, 2019, the Company recorded its retained interests in Bagatelle Investors and Bagatelle NY as investments, with the initial basis being the previous carrying amounts of the investments. Prior to June 30, 2019, the Company had accounted for its investments in these entities under the equity method of accounting based on management’s assessment that it was not the primary beneficiary of these entities because it did not have the power to direct their day to day activities. On December 31, 2019, the Company determined that, because of the short term remaining on the lease (November 2020) and current market conditions, it was unable to recover the carrying amount of the investments in Bagatelle Investors and Bagatelle NY. As a result, the Company recorded a non-cash write down of $2.7 million related to its investments for the year ended December 31, 2019. As of December 31, 2020 and 2019, the Company did not have a carrying value of the investment in Bagatelle Investors or Bagatelle NY. Upon expiration of the lease in November 2020, the Company exited its contract with Bagatelle. There was no equity in income of investee companies for the year ended December 31, 2020 and 2019. Additionally, the Company had a management agreement with Bagatelle NY. Under this agreement, the Company recorded management fee revenue of less than $0.1 million and $0.4 million for the years ended December 31, 2020 and 2019, respectively. The Company also received rental income from Bagatelle NY for restaurant space that it subleased to Bagatelle NY. Rental income of $0.5 million and $0.5 million was recorded from this entity for the year ended December 31, 2020 and 2019, respectively. Net receivables from the Bagatelle Entities included in due from related parties, net were approximately $0.4 million and $0.3 million as of December 31, 2020 and 2019. These receivables represent the Company’s maximum exposure to loss. The Company has provided no additional types of support to these entities other than what is contractually required. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 10 – Related Party Transactions Net amounts due from related parties were $0.4 million and $0.3 million as of December 31, 2020 and 2019, respectively. The Company has not reserved any related party receivables as of December 31, 2020 and 2019. During the fourth quarter of 2016, the Company received approximately $1.2 million in cash advances from the TOG Liquidation Trust. The TOG Liquidation Trust is a trust that was set up in connection with a 2013 merger transaction to hold previously issued and outstanding warrants held by members of the predecessor company. Amounts due to the trust were non-interest bearing and were repayable in 2021 when the trust expires. In conjunction with entering into the Bank of America Credit Agreement on May 15, 2019, the Company prepaid the $1.2 million balance due to the TOG Liquidation Trust. As a result of the prepayment, there was no amount outstanding to the TOG Liquidation Trust as of December 31, 2020 and 2019. Refer to Note 9 for details on other transactions with other related parties and refer to Note 8 for details related to the Bank of America Credit Agreement. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | Note 11 – Income Taxes The components of income before benefit for income taxes were as follows (in thousands): For the years ended December 31, 2020 2019 Domestic $ (19,129) $ 7,780 Foreign 106 2,199 Total $ (19,023) $ 9,979 The components of the Company’s (benefit) provision for income taxes were as follows (in thousands): For the years ended December 31, 2020 2019 Current: Federal $ — $ — State and local 39 109 Foreign 36 546 Total current 75 655 Deferred: Federal (4,593) (9,242) State and local (887) (2,600) Foreign 5 33 Total deferred (5,475) (11,809) Total benefit for income taxes $ (5,400) $ (11,154) The Company’s effective tax rate differs from the statutory rates as follows: For the years ended December 31, 2020 2019 Income tax benefit at federal statutory rate 21.0 % 21.0 % State and local taxes 4.4 % 0.6 % FICA tip credit 5.3 % (10.5)% Foreign rate differential — (0.8)% Change in valuation allowance (103.0)% Global intangible low-taxed income (“GILTI”) — 3.9 % Bargain purchase gain — (23.1)% Other items, net (3.2)% 0.1 % Effective income tax rate 28.4 % (111.8)% The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows (in thousands): For the years ended December 31, 2020 2019 Deferred tax assets: Deferred rent liabilities $ 2,647 $ 2,502 Lease incentives 2,227 2,088 Stock compensation 439 401 FICA tip credit carryforward 6,860 5,575 Net operating loss 6,167 3,496 Goodwill 1,283 1,427 Inventory 23 6 Charitable contributions carryforward 2 — Foreign tax credit carryforward 336 510 Deferred revenue 321 373 State and local tax credit carryforward 299 420 Expenses not deductible until paid 985 306 Basis in LLC interest 175 173 IRC 163(j) disallowed interest carryforward 835 — Kona related acquisition costs 201 — Deferred payroll taxes 703 — Total deferred tax assets 23,503 17,277 Deferred tax liabilities: Depreciation and amortization (9,812) (8,835) ASC 740‑10 liability (129) (181) Total deferred tax liabilities (9,941) (9,016) Valuation allowance (336) (510) Net deferred tax assets $ 13,226 $ 7,751 As of December 31, 2020, the Company has federal net operating loss (“NOL”) carryforwards of $23.7 million. The Company has various state NOL carryforwards. The determination of the state NOL carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. Federal NOLs of $16.0 million expire at various dates from 2035 to 2037, while the remaining $7.7 million have no expiration date. The state NOLs expire at various dates from 2035 to 2039. In assessing the realizability of deferred tax assets, the Company evaluates whether it is more likely than not that the deferred tax assets will be realized. In the assessment of the valuation allowance, appropriate consideration was given to all positive and negative evidence including current operating results, tax planning strategies and forecasts of future earnings. As of December 31, 2019, the Company released approximately $10.3 million of the valuation allowance based on an assessment of the realizability of its deferred tax assets, resulting in a benefit for income taxes for the year ended December 31, 2019. The remaining valuation allowance of $0.3 million and $0.5 million as of December 31, 2020 and 2019, respectively, relates to foreign tax credits the Company does not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S. Uncertain tax positions The following table summarizes the activity related to the Company’s uncertain tax positions (in thousands): For the years ended December 31, 2020 2019 Balance, beginning of year $ 814 $ 807 Increase related to current year positions 209 209 Decrease related to prior period positions (209) (202) Balance, end of year $ 814 $ 814 The Company is subject to income taxes in the U.S. federal jurisdiction, and the various states and local jurisdictions in which it operates. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company’s federal tax filings remain subject to examination for federal tax years 2017 through 2019. The IRS conducted an examination into tax year 2015 and did not propose any changes. The Company’s state and local tax filings remain subject to examination for tax years 2017 through 2019. NOL carryforwards are subject to examination regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOL’s generated as such NOL’s are utilized. The Company’s foreign income tax returns prior to fiscal year 2017 are closed and management continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. |
Revenue recognition
Revenue recognition | 12 Months Ended |
Dec. 31, 2020 | |
Revenue recognition | |
Revenue recognition | Note 12 – Revenue recognition The following table provides information about contract receivables and liabilities from contracts with customers, which include deferred license revenue, deferred gift card revenue and the Konavore rewards program (in thousands): December 31, December 31, 2020 2019 Receivables (1) $ 125 $ 250 Deferred license revenue (2) 1,160 1,368 Deferred gift card and gift certificate revenue (3) 1,945 3,210 Konavore rewards program (4) $ 102 $ 84 (1) Receivables are included in accounts receivable on the consolidated balance sheets. (2) Includes the current and long-term portion of deferred license revenue. (3) Deferred gift card revenue is included in deferred gift card revenue and other on the consolidated balance sheets. (4) Konavore rewards program is included in accrued expenses on the consolidated balance sheets. Significant changes in deferred license revenue and deferred gift card revenue for the years ended December 31, 2020 and 2019 are as follows (in thousands): December 31, December 31, 2020 2019 Revenue recognized from deferred license revenue $ 206 $ 483 Revenue recognized from deferred gift card revenue 1,904 2,145 Deferred gift card revenue acquired in Kona Grill acquisition $ — $ 2,277 As of December 31, 2020, the estimated deferred license revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2020 were as follows for each year ending (in thousands): 2021 $ 207 2022 180 2023 169 2024 134 2025 133 Thereafter 337 Total future estimated deferred license revenue $ 1,160 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | Note 13 – Leases The Company subleases portions of its office and restaurant space where it does not use the entire space for its operations. For the year ended December 31, 2020 and 2019, sublease income was $0.5 million and $0.7 million, respectively, of which $0.5 million was from related party, Bagatelle NY. Refer to Note 9 and Note 10 for details on transactions with this related party. The components of lease expense for the period were as follows (in thousands): December 31, December 31, 2020 2019 Lease cost Operating lease cost $ 11,613 $ 8,494 Variable lease cost 2,001 3,185 Short-term lease cost 479 446 Sublease income (493) (696) Total lease cost $ 13,600 $ 11,429 Weighted average remaining lease term – operating leases 12 years 13 years Weighted average discount rate – operating leases 8.09 % 8.48 % Due to the negative effects of COVID-19, the Company implemented measures to reduce its costs, including negotiations with landlords regarding rent concessions. The Company is in ongoing discussions with landlords regarding rent obligations, including deferrals, abatements, and/or restructuring of rent. As the rent concessions received and currently being contemplated do not result in a significant increase in cash payments, the Company has elected to account for these concessions as a variable lease payment in accordance with ASC Topic 842. The Company’s right-of-use assets and operating lease liabilities have not been remeasured for lease concessions received. Variable lease cost is comprised of percentage rent and common area maintenance, offset by rent concessions received as a result of COVID-19. Supplemental cash flow information related to leases for the period was as follows (in thousands): December 31, December 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 8,491 $ 8,368 Right-of-use assets obtained in exchange for operating lease obligations $ 4,968 $ 43,474 As of December 31, 2020, maturities of the Company’s operating lease liabilities are as follows (in thousands): 2021 $ 13,276 2022 13,229 2023 13,531 2024 12,927 2025 11,893 Thereafter 112,867 Total lease payments 177,723 Less: imputed interest (74,337) Present value of operating lease liabilities $ 103,386 |
Earnings per share
Earnings per share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings per share | |
Earnings per share | Note 14 – Earnings per share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period and income available to common stockholders. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period plus the dilutive effect of all potential shares of common stock including common stock issuable pursuant to stock options, warrants, and restricted stock units. For the years ended December 31, 2020 and 2019, the earnings per share was calculated as follows (in thousands, except earnings per share and related share data): Year ended December 31, 2020 2019 Net (loss) income attributable to The ONE Group Hospitality, Inc. $ (12,825) $ 20,831 Basic weighted average shares outstanding 28,909,963 28,454,385 Dilutive effect of stock options, warrants and restricted share units — 1,181,834 Diluted weighted average shares outstanding 28,909,963 29,636,219 Net (loss) income available to common stockholders per share - Basic $ (0.44) $ 0.73 Net (loss) income available to common stockholders per share - Diluted $ (0.44) $ 0.70 For the years ended December 31, 2020 and 2019, stock options, warrants and restricted share units totaling 1.4 million and 1.0 million, respectively, were determined to be anti-dilutive and were therefore excluded from the calculation of diluted earnings per share. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 15 – Stockholders’ Equity Common Stock The Company is authorized by its amended and restated certificate of incorporation to issue up to 75.0 million shares of common stock, par value $0.0001 per share. As of December 31, 2020 and 2019, there are 29.1 million and 28.6 million shares of common stock outstanding, respectively. The Company has the following warrants to purchase shares of common stock outstanding as of December 31, 2020 and 2019: Shares available for purchase as of Warrants Exercise December 31, December 31, Issuance date Holder of warrants Expiration date Issued Price 2020 2019 June 27, 2016 2235570 Ontario Limited June 27, 2026 100,000 $ 100,000 100,000 August 11, 2016 Anson Investments Master Fund LP August 11, 2026 300,000 300,000 300,000 October 24, 2016 Anson Investments Master Fund LP October 24, 2026 340,000 340,000 340,000 November 15, 2017 2017 Securities Purchase Agreement investors May 15, 2023 875,000 $ 125,000 125,000 The issuance of a dividend is dependent on a variety of factors, including but not limited to, available cash and the overall financial condition of the Company. The issuance of a dividend is also subject to legal restrictions and the terms of the Company’s credit agreement. The Company did not issue dividends related to its common stock in the years ended December 31, 2020 or 2019. Preferred Stock The Company is authorized by its amended and restated certificate of incorporation to issue 10.0 million shares of preferred stock, par value $0.0001 per share. The Company’s Board may designate the rights, powers and preferences of the preferred stock, which may have superior rights to common shareholders in terms of liquidation and dividend preference, voting and other rights. As of December 31, 2020 and 2019, the Board had not designated the rights of the preferred stock and there were no outstanding shares of preferred stock. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2020 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 16 – Employee Benefit Plans Defined Contribution Retirement Plan The Company sponsors a qualified defined contribution retirement plan (the “401(k) Plan”) covering all eligible employees, as defined in the 401(k) Plan. The 401(k) Plan allows participating employees to defer the receipt of a portion of their compensation, on a pre-tax or post-tax basis, and contribute such amount to one or more investment options. Employer contributions to the plan are at the discretion of the Company. The Company did not accrue or make any employer contributions in 2020 and 2019. Equity Incentive Plan In October 2013, the Board approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Equity Plan”). The 2013 Equity Plan provides for the granting of stock options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. All awards are required to be approved by the Board or a designated committee of the Board. Options are generally granted with an exercise price equal to fair market value on the date of grant and expire after ten years. Vesting of options and restricted stock can either be based on the passage of time or on the achievement of performance goals. The 2013 Equity Plan will terminate automatically in October 2023, unless terminated by the Board at an earlier date. The Board has the authority to amend, modify or terminate the 2013 Equity Plan, subject to any required approval by the Company’s stockholders under applicable law or upon advice of counsel. No such action would affect any options previously granted under the 2013 Equity Plan without the consent of the holders. Effective June 4, 2019, the Company’s stockholders approved amendments to the 2013 Equity Plan (the “2019 Equity Plan”). Among other things, the amendments increased the number of shares of common stock authorized for issuance under the 2019 Equity Plan by 2,300,000 shares to a new maximum aggregate limit of 7,073,922 shares. As of December 31, 2020, the Company had 1,216,192 remaining shares available for issuance under the 2019 Equity Plan. Stock-based compensation cost for the years ended December 31, 2020 and 2019 was $1.8 million and $1.3 million, respectively, and is included in general and administrative expenses in the consolidated statements of income and comprehensive income. Included in stock-based compensation cost was $0.3 million and $0.2 million of unrestricted stock granted to directors for years ended December 31, 2020 and 2019, respectively. Such grants were awarded consistent with the Board’s compensation practices. Stock Option Activity Changes in outstanding stock options during the years ended December 31, 2020 and 2019 were as follows: Weighted Weighted average Intrinsic average exercise remaining value Shares price contractual life (thousands) Outstanding at December 31, 2018 2,001,008 $ 3.29 Granted 68,000 2.99 Exercised (42,000) 2.13 Cancelled, expired or forfeited (220,500) 2.70 Outstanding at December 31, 2019 1,806,508 $ 3.37 5.87 years $ 1,428 Exercisable at December 31, 2019 1,270,508 $ 3.93 5.10 years $ 667 Granted — — Exercised (18,000) 2.13 Cancelled, expired or forfeited (81,500) 3.75 Outstanding at December 31, 2020 1,707,008 $ 3.37 4.98 years $ 1,454 Exercisable at December 31, 2020 1,443,675 $ 3.57 4.68 years $ 1,112 The fair value of options granted in the year ended December 31, 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions by grant year: Expected life, in years 8.5 years Risk-free interest rate 2.62 % Volatility 42.0 % Dividend yield — % The weighted average fair value of stock options issued was $1.55 for the year ended December 31, 2019. There were no stock options granted in the year ended December 31, 2020. A summary of the status of the Company’s non-vested stock options as of December 31, 2020 and 2019 and changes during the years then ended, is presented below: Weighted average Shares grant date fair value Non-vested stock options at December 31, 2018 926,500 $ 0.91 Granted 68,000 2.99 Vested (281,500) 1.12 Cancelled, expired or forfeited (177,000) 0.95 Non-vested stock options at December 31, 2019 536,000 $ 0.87 Granted — — Vested (272,667) 0.75 Cancelled, expired or forfeited — — Non-vested stock options at December 31, 2020 263,333 $ 0.99 The fair value of options that vested in the years ended December 31, 2020 and 2019 were $0.2 million and $0.3 million, respectively. As of December 31, 2020, there are 579,402 milestone-based options outstanding, and there is approximately $0.7 million of unrecognized compensation cost related to these milestone-based options. These options vest based on the achievement of Company and individual objectives as set by the Board. As of December 31, 2020, there is approximately $0.2 million of total unrecognized compensation cost related to non-vested awards, which will be recognized over a weighted-average period of 1.8 years. Restricted Stock Unit Activity The Company issues restricted stock units (“RSUs”) under the 2019 Equity Plan. The fair value of these RSUs is determined based upon the closing fair market value of the Company’s common stock on the grant date. A summary of the status of RSUs and changes during the years ended December 31, 2020 and 2019 is presented below: Weighted average Shares grant date fair value Non-vested RSUs at December 31, 2018 764,201 $ 2.54 Granted 584,593 3.04 Vested (227,889) 2.64 Cancelled, expired or forfeited (165,894) 2.73 Non-vested RSUs at December 31, 2019 955,011 $ 2.69 Granted 1,316,174 1.21 Vested (305,027) 2.77 Cancelled, expired or forfeited (94,566) 2.12 Non-vested RSUs at December 31, 2020 1,871,592 $ 1.68 As of December 31, 2020, 150,000 restricted shares subject to performance-based vesting were still outstanding, and there is approximately $0.4 million of unrecognized compensation cost related to these milestone-based options. As of December 31, 2020, the Company had approximately $1.7 million of total unrecognized compensation costs related to restricted stock awards, which will be recognized over a weighted average period of 1.8 years. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting | |
Segment Reporting | Note 17 – Segment Reporting In the fourth quarter of 2019, in conjunction with the Kona Grill acquisition, the Company implemented certain organizational changes, including the reorganization of our internal reporting structure to better facilitate our strategy for growth and operational efficiency. As a result of these organizational changes, the Company has identified its reportable operating segments as follows: · STK . The STK segment consists of the results of operations from STK restaurant locations, competing in the full-service dining industry, as well as management, license and incentive fee revenue generated from the STK brand and operations of STK restaurant locations. · Kona Grill . The Kona Grill segment includes the results of operations of Kona Grill restaurant locations. · ONE Hospitality . The ONE Hospitality segment is comprised of the management, license and incentive fee revenue and results of operations generated from the Company’s other brands and venue concepts, which include ANGEL, Heliot, Hideout, Marconi, and Radio. Additionally, this segment includes the results of operations generated from F&B hospitality management agreements with hotels, casinos and other high-end locations. · Corporate . The Corporate segment consists of the following: general and administrative costs, stock-based compensation, acquisition related gains and losses, lease termination expenses, transaction costs, COVID-19 related expenses and other income and expenses. This segment also includes STK Meat Market, an e-commerce platform that offers signature steak cuts nationwide, the Company’s major off-site events group, which supports all brands and venue concepts, and revenue generated from gift card programs. The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker, manages the business and allocates resources via a combination of restaurant sales reports and operating segment profit information, defined as revenues less operating expenses, related to the Company’s four operating segments. Certain financial information relating to the years ended December 31, 2020 and 2019 for each segment is provided below (in thousands). Prior year amounts have been revised to conform to the current year segment presentation. STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2020 Total revenues $ 60,932 $ 78,591 $ 1,197 $ 1,223 $ 141,943 Operating income (loss) (1) 6,523 3,356 (517) (23,056) (13,694) Capital asset additions $ 2,734 $ 1,952 $ 206 $ 895 $ 5,787 As of December 31, 2020 Total assets $ 81,431 $ 96,262 $ 5,484 $ 32,392 $ 215,569 STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2019 Total revenues $ 89,857 $ 23,741 $ 5,964 $ 1,119 $ 120,681 Operating income (loss) (2) 15,242 1,511 1,726 (5,688) 12,791 Capital asset additions $ 3,330 $ 195 $ 40 $ 792 $ 4,357 As of December 31, 2019 Total assets $ 82,691 $ 93,829 $ 8,252 $ 21,813 $ 206,585 (1) Operating loss for the Corporate segment for the year ended December 31, 2020 includes $5.5 million in COVID-19 related expenses. (2) Operating loss for the Corporate segment for the year ended December 31, 2019 includes $11.0 million bargain purchase gain from the Kona Grill acquisition. |
Geographic Information
Geographic Information | 12 Months Ended |
Dec. 31, 2020 | |
Geographic Information | |
Geographic Information | Note 18 – Geographic Information Certain financial information by geographic location relating to the years ended December 31, 2020 and 2019 is provided below (in thousands). For the year ended December 31, 2020 2019 Domestic revenues $ 140,537 $ 115,449 International revenues 1,406 5,232 Total revenues $ 141,943 $ 120,681 December 31, December 31, 2020 2019 Domestic long-lived assets $ 180,935 $ 179,143 International long-lived assets 258 301 Total long-lived assets $ 181,193 $ 179,444 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 19 – Commitments and Contingencies The Company is party to claims in lawsuits incidental to its business, including lease disputes and employee-related matters. In the opinion of management, the ultimate outcome of such matters and judgments, individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position or results of operations. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
COVID-19 | COVID-19 The novel coronavirus (“COVID-19”) pandemic has significantly impacted the Company’s business, and public concerns about the spread of COVID-19 continue to be widespread. The Company experienced a significant reduction in guest traffic at its restaurants as a result of restrictions mandated by state and local governments and temporary closure of several restaurants and the shift in operations to provide only take-out and delivery service. Starting in May 2020, state and local governments began easing restrictions on stay-at-home orders; however, certain states have reimposed restrictions as COVID-19 cases increased during the fall of 2020. Currently, all domestic Company-owned restaurants are open for outdoor dining or in-person dining with seating capacity restrictions. Certain of the Company’s managed and licensed venues internationally are temporarily closed or on to-go/delivery only due to COVID-19. The Company has taken significant steps to adapt its business to increase sales while providing a safe environment for guests and employees. In response to these conditions, and out of concern for its customers and partners, the Company has implemented enhanced safety measures and sanitation procedures to allow for in-person dining at its restaurants. As the Company navigates through the pandemic, it has also implemented measures to reduce its costs including the deferral of capital projects and negotiations with suppliers and landlords regarding deferral or abatement of payments. Given the ongoing uncertainty surrounding the effects of the COVID-19 pandemic, the Company cannot reasonably predict when its restaurants will be able to return to normal dining room operations. The Company expects that its results of operations could be materially and negatively affected by COVID-19 in 2021. The Company’s resumption of normal dining operations is subject to events beyond its control, including the effectiveness of governmental efforts to halt the spread of COVID-19. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. The financial results of Kona Grill have been included in the Company’s consolidated financial statements from the date of acquisition on October 4, 2019. The Company consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation an entity in which it has certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. The Company evaluates its investments for impairment whenever an event or change in circumstances occurs that may have a significant adverse impact on the fair value of the investment. If a loss in value has occurred and is deemed to be other than temporary, an impairment loss is recorded. Several factors are reviewed to determine whether a loss has occurred that is other than temporary, including the absence of an ability to recover the carrying amount of the investment, the length and extent of the fair value decline, and the financial condition and future prospects of the investee. For the year ended December 31, 2019, the Company recorded a non-cash write down of $2.7 million related to its investments. Refer to Note 9 – Nonconsolidated Variable Interest Entities for additional information regarding the Company’s investments and related impairment. |
Prior Period Reclassifications | Prior Period Reclassifications Certain reclassifications of the 2019 amounts in the accrued expenses and segment reporting footnotes have been made to conform to the current year presentation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions for the reporting period and as of the reporting date. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingencies. Actual results could differ from those estimates. |
Business Combination | Business Combination On October 4, 2019, the Company acquired substantially all the assets of Kona Grill, which was accounted for using the acquisition method of accounting prescribed by Accounting Standard Codification Topic 805, Business Combinations. Acquired assets and assumed liabilities were assigned fair values based on widely accepted valuation techniques, in accordance with Accounting Standard Codification Topic 820, Fair Value Measurements. The process for estimating fair values in many cases requires the use of significant estimates, assumptions and judgments, including determining the timing and estimates of future cash flows and developing appropriate discount rates. Unanticipated events or circumstances may occur which could affect the accuracy of the Company’s fair value estimates, including assumptions regarding industry economic factors and business strategies. |
Fair Value Measurements | Fair Value Measurements Fair value represents the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Assets and liabilities are valued based upon observable and non-observable inputs. Valuations using Level 1 inputs are based on unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 inputs utilize significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly. Valuations using Level 3 inputs are based on significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. There were no significant transfers between levels during any period presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and highly liquid instruments with original maturities of three months or less when purchased. The Company’s cash and cash equivalents consist of cash in banks and at the restaurants as of December 31, 2020 and 2019. |
Accounts Receivable | Accounts Receivable The majority of the Company’s receivables arise primarily from credit cards, management agreements, trade customers and other reimbursable amounts due from hotel operators where the Company operates a food and beverage service. The Company determines an allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss and payment history, the customer’s current ability to pay its obligation to the Company and the condition of the general economy and industry as a whole. The Company has not reserved any trade receivables as of December 31, 2020 and 2019. |
Inventory | Inventory Inventories, which consist of food, liquor and other beverages, are stated at the lower of cost or net realizable value. Cost is determined by the first in, first out method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs to sell. The Company has not reserved any inventory as of December 31, 2020 and 2019. |
Property and Equipment | Property and Equipment Additions to property and equipment, including leasehold improvements, are recorded at cost. Costs incurred to repair and maintain the Company’s operations and equipment are expensed as incurred. Restaurant smallwares are capitalized during the initial year of operation of a particular restaurant. All restaurant supplies purchased subsequent to the first year are expensed as incurred. When assets are retired or otherwise disposed of, the cost of the assets and the related accumulated depreciation are removed from the accounts, and any gain or loss on retirements is reflected in operating income in the year of disposition. After the asset has been placed into service, depreciation is based on the estimated useful life of the asset using the straight-line method for financial statement purposes. Computers and equipment as well as furniture and fixtures are depreciated over their useful lives from three to ten years. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining term of the associated lease. Lease terms begin on the date the Company takes possession under the lease and include option periods where failure to exercise such options would result in an economic penalty. |
Intangible Assets | Intangible Assets Intangible assets consist of the “Kona Grill” trade name. The “Kona Grill” tradename is amortized using the straight-line method over its estimated useful life of 20 years. As of December 31, 2020 and 2019, the gross carrying amount of the tradename intangible was $17.4 million. The accumulated amortization of the tradename was $1.1 million and $0.2 million as of December 31, 2020 and 2019, respectively, and the amortization expense was $0.9 million and $0.2 million for the years ending December 31, 2020 and 2019, respectively. The Company’s estimated aggregate amortization expense for each of the five succeeding fiscal years is approximately $0.9 million annually. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values of these assets may not be fully recoverable. The impairment evaluation is generally performed at the individual venue asset group level. Recoverability of restaurant assets is measured by a comparison of the carrying amount of an individual restaurant’s assets to the estimated identifiable undiscounted future cash flows expected to be generated by those restaurant assets. If the carrying amount of an individual restaurant’s assets exceeds its estimated, identifiable, undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset exceeds its fair value. Fair value is determined by discounting a restaurant’s identifiable future cash flows. For the years ended December 31, 2020 and 2019, the Company did not identify any event or changes in circumstances that indicated that the carrying values of its restaurant assets were impaired. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense based on the term of the related debt agreement using the straight-line method, which approximates the effective interest method. The Company has recorded debt issuance costs as an offset to long-term debt, net of current portion on the consolidated balance sheets. |
Income Taxes | Income Taxes The Company computes income taxes using the asset and liability method. Under this method, deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes, using the enacted statutory rate in effect for the year these differences are expected to be taxable or refunded. Deferred income tax expenses or credits are based on the changes in the asset or liability, respectively, from period to period. A deferred tax asset or liability is recognized whenever there are future tax effects from existing temporary differences and operating loss and tax credit carry-forwards. If the Company determines that a deferred tax asset or liability could be realized in a greater or lesser amount than recorded, the deferred tax asset or liability is adjusted and a corresponding adjustment is made to the provision for income taxes in the consolidated statements of operations and comprehensive income in the period during which the determination is made. The Company reduces its deferred tax assets by a valuation allowance if it determines that it is more likely than not that some portion or all of these tax assets will not be realized. In making this determination, the Company considers various qualitative and quantitative factors, such as: · the level of historical taxable income; · the projection of future taxable income over periods in which the deferred tax assets would be deductible; · events within the restaurant industry; · the health of the economy; and, · historical trending. As of December 31, 2019, the Company released approximately $10.3 million of its valuation allowance based on an assessment of the realizability of its deferred tax assets. As of December 31, 2020, the remaining valuation allowance of $0.3 million relates to foreign tax credits the Company does not expect to utilize as a result of generating income in a jurisdiction with a higher income tax rate than the U.S. The recording of deferred taxes requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and particular facts and circumstances. The Company recognizes the tax benefit from an uncertain tax position when it determines that it is more-likely-than-not that the position would be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If the Company derecognizes an uncertain tax position, the Company’s policy is to record any applicable interest and penalties within the (benefit) provision for income taxes in the consolidated statements of operations and comprehensive income. |
Revenue Recognition | Revenue Recognition Revenue is derived from restaurant sales, management services and license related operations. The Company recognizes restaurant revenues, net of discounts, when goods and services are provided. Sales tax amounts collected from customers that are remitted to governmental authorities are excluded from net revenue. Management agreements typically call for a management fee based on a percentage of revenue, a monthly marketing fee based on a percentage of revenues and an incentive fee based on a managed venue’s net profits. Similarly, royalties from the licensee in license agreements are generally based on a percentage of the licensed restaurant’s revenue. These management, license and incentive fees are recognized as revenue in the period the restaurant’s sales occur. The Company recognizes initial licensing fees and upfront fees related to management and license agreements on a straight-line basis over the term of the agreement as a component of management, license and incentive fee revenue on the consolidated statements of operations and comprehensive income. The Company has a loyalty program for Kona Grill to encourage customers to frequent its restaurants. The loyalty rewards program awards a customer one point for every dollar spent. When a customer is part of the rewards program, the obligation to provide future discounts related to points earned is considered a separate performance obligation, to which a portion of the transaction price is allocated. The performance obligation related to loyalty points is deemed to have been satisfied, and the amount deferred in the balance sheet is recognized as revenue, when the points are converted to a reward and redeemed, or the likelihood of redemption is remote. A portion of the transaction price is allocated to loyalty points, if necessary, on a pro-rata basis, based on the stand-alone selling price, as determined by menu pricing and loyalty points terms. As of December 31, 2020 and 2019 the |
Gift Cards | Gift Cards Proceeds from the sale of gift cards are recorded as deferred revenue and recognized as revenue when redeemed by the holder. There are no expiration dates on the Company’s gift cards and the Company does not charge any service fees that would result in a decrease to a customer’s available balance. Although the Company will continue to honor all gift cards presented for payment, it may determine the likelihood of redemption to be remote for certain gift cards due to, among other things, long periods of inactivity. In these circumstances, to the extent the Company determines there is no requirement for remitting balances to government agencies under unclaimed property laws, outstanding gift card balances may then be recognized as breakage in the consolidated statements of operations and comprehensive income as a component of owned restaurant net revenue. For the years ended December 31, 2020 and 2019, the Company recognized $1.0 million and $0.2 million, respectively, in revenue from gift card breakage. |
Pre-opening Costs | Pre-opening Costs Pre-opening costs for Company owned restaurants are expensed as incurred prior to a restaurant opening for business. Pre-opening costs for the years ended December 31, 2020 and 2019 were $0.2 million and $0.6 million, respectively. |
Advertising Costs | Advertising Costs The Company expenses the cost of advertising and promotions as incurred. Advertising expense amounted to $2.5 million and $3.1 million for the years ended December 31, 2020 and 2019, respectively. |
Leases | Leases Contracts are evaluated to determine whether they contain a lease at inception. The Company’s contracts determined to be or contain a lease include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Leases are classified as either operating or financing. If it is determined that the contract contains an operating lease, a right-of-use asset and operating lease liability are recorded on the consolidated balance sheets. A right-of-use asset represents the Company’s right to use the underlying asset and the lease liability represents the Company’s contractually obligated payments. Both the right-of-use asset and the lease liability are recognized as of the commencement date of the lease and are based upon the present value of lease payments due over the course of the lease. The right-of-use asset is reduced by any lease incentives received and is adjusted for any prepayments. For leases that do not have a rate implicit in the lease, the Company’s incremental borrowing rate at the date of commencement is used to determine the present value of the lease payments. The Company’s incremental borrowing rate is the rate of interest that it would have to borrow on a collateralized basis over a similar term on an amount equal to the lease payments in a similar economic environment. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the operating lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company assesses its right-of-use assets for impairment in accordance with Accounting Standard Codification Topic 360, Property, Plant, and Equipment. The Company has made an accounting policy election not to recognize right-of-use assets and lease liabilities for leases with a lease term of 12 months or less, including renewal options that are reasonably certain to be exercised, that also do not include an option to purchase the underlying asset that is reasonably certain of exercise. Instead, lease payments for these leases are recognized as lease cost on a straight-line basis over the lease term. Additionally, the Company has elected not to separate the accounting for lease components and non-lease components, for all leased assets. Given the importance of each of its restaurant locations to its operations, the Company has historically concluded that it was reasonably assured of exercising two renewal periods included in its leases as failure to exercise such options would result in an economic penalty. The Company enters into contracts to lease office space, restaurant space and equipment with terms that expire at various dates through 2041, which includes exercise of options to extend the lease. Under ASC Topic 842, the lease term at the lease commencement date is determined based on the non-cancellable period for which the Company has the right to use the underlying asset, together with any periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option, and periods covered by an option to extend (or not to terminate) the lease in which the exercise of the option is controlled by the lessor. The Company considered a number of factors when evaluating whether the options in its lease contracts were reasonably certain of exercise, such as length of time before option exercise, expected value of the leased asset at the end of the initial lease term, importance of the lease to overall operations, costs to negotiate a new lease, and any contractual or economic penalties. Certain of the Company’s leases also provide for percentage rent, which are variable lease costs determined as a percentage of gross sales in excess of specified, minimum sales targets, as well as other lease costs to reimburse the lessor for real estate tax and insurance expenses, and certain non-lease components that transfer a distinct service to the Company, such as common area maintenance services. These percentage rents and other variable lease costs are not included in the calculation of lease payments when classifying a lease and in the measurement of the lease liability as they do not meet the definition of in-substance, fixed-lease payments under ASC Topic 842. |
Stock-Based Compensation | Stock-Based Compensation The Company maintains an equity incentive compensation plan under which it may grant options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services to the Company. Restricted stock and restricted stock units (“RSUs”) are valued using the closing stock price on the date of grant. The fair value of an option award or warrant is determined using the Black-Scholes option pricing model. The Black-Scholes model requires estimates of the expected term of the option, the risk-free interest rate, future volatility and dividend yield. The Company’s assumptions are as follows: · Expected Term – The expected term of options is based upon evaluations of historical and expected future exercise behavior with consideration of both the vesting period and contractual terms of the instruments. · Risk Free Interest Rate – The risk-free interest rate is based on U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. · Implied Volatility – Implied volatility is based upon an average of the volatilities of an industry peer group who are publicly traded. · Dividend Yield – The Company has historically not paid dividends and does not plan to do so in the foreseeable future. Under the plan, vesting of awards can either be based on the passage of time or on the achievement of performance goals. For awards that vest on the passage of time, compensation cost is recognized over the vesting period. For performance-based awards, the Company recognizes compensation costs over the requisite service period when conditions for achievement become probable. The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ or are expected to differ. These estimates, which are currently at 10%, are based on historical forfeiture behavior exhibited by employees of the Company. |
Earnings per Share | Earnings per Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the period and income available to common stockholders. Diluted earnings per share is computed using the weighted average number of common shares outstanding during the period plus the dilutive effect of all potential shares of common stock including common stock issuable pursuant to stock options, warrants, and RSUs. As a result, the sum of per share amount may not equal the total. Refer to Note 14 for the calculations of basic and diluted earnings per share. |
Segment Reporting | Segment Reporting In the fourth quarter of 2019, in conjunction with the Kona Grill acquisition, the Company implemented certain organizational changes, including the reorganization of our internal reporting structure to better facilitate its strategy for growth, operational efficiency and management accountability. As a result of these organizational changes, the Company has identified the following four reportable operating segments: STK, Kona Grill, ONE Hospitality and Corporate. Refer to Note 17 for additional details and certain financial information regarding the Company’s operating segments relating to the years ended December 31, 2020 and 2019. Prior year amounts have been revised to conform to the current year segment presentation. |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities of foreign operations are translated into U.S. dollars at the balance sheet date. Revenues and expenses are translated at average monthly exchange rates. Gains or losses resulting from the translation of foreign subsidiaries represent other comprehensive income (loss) and are accumulated as a separate component of stockholders’ equity. Currency translation gains or (losses) are recorded in accumulated other comprehensive loss within stockholders’ equity and amounted to approximately $5,000 and ($0.3) million during the years ended December 31, 2020 and 2019, respectively. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of two components: net income and other comprehensive income (loss). The Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments. All of the Company’s foreign currency translation adjustments relate to wholly-owned subsidiaries of the Company. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2020, the American Institute of Certified Public Accountants in conjunction with the Financial Accounting Standards Board (“FASB”) developed Technical Question and Answer (“TQA”) 3200.18, “Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program”, which is intended to provide clarification on how to account for loans received from the Paycheck Protection Program (“PPP”). TQA 3200.18 states that an entity may account for PPP loans under ASC 470, “Debt” or, if the entity is expected to meet PPP eligibility criteria and the PPP loan is expected to be forgiven, the entity may account for the loans under IAS 20, “Accounting for Government Grants and Disclosure of Government Assistance”. Although the Company anticipates forgiveness of the entire amount of the CARES Act Loans, no assurances can be provided that the Company will obtain forgiveness of the CARES Act Loans in whole or in part. Therefore, the Company has elected to account for PPP loan proceeds under ASC 470 as allowed by TQA 3200.18. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Updated (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” (“ASU 2019-12”) which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Accounting Standard Codification Topic 740, Income Taxes, and it clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020. The Company is evaluating the impact of the adoption of ASU 2019-12 on its financial statements but does not expect the adoption of ASU 2019-12 to be material. In August 2018, the FASB issued ASU No. 2018‑15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract” (“ASU 2018‑15”). ASU 2018‑15 aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018‑15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. Entities can choose to adopt the new guidance prospectively or retrospectively. The adoption of ASU 2018-15 did not have a material impact on the Company’s financial position, results of operations, or cash flows. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326)” (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, and we do not expect the adoption of ASU 2016-13 to be material. |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Business Combination | |
Summary the fair value of identified assets acquired and liabilities assumed as of the acquisition date | The following table summarizes the fair value of identified assets acquired and liabilities assumed as of the acquisition date (amounts in thousands): Net assets acquired: Cash $ 450 Current assets, excluding cash 2,830 Property and equipment 31,781 Operating lease right-of-use assets 42,398 Intangible assets 17,400 Other assets 692 Current liabilities (7,690) Deferred tax liability (4,044) Operating lease liabilities (46,364) Total net assets acquired $ 37,453 Purchase consideration: Contractual purchase price 25,000 Apportionment of rent and utilities 775 Assumption of real estate lease consultant contract 465 Escrow deposit 250 Consideration paid $ 26,490 Bargain purchase gain attributable to Kona Grill acquisition $ 10,963 |
Schedule of information showing pro forma results of operations | Amounts are in thousands, except earnings per share related data. For the year ended December 31, 2019 Total revenues $ 196,906 Net income attributable to The ONE Group Hospitality, Inc. $ 10,789 Net income attributable to The ONE Group Hospitality, Inc. per share: Basic net income per share $ 0.38 Diluted net income per share $ 0.36 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory | |
Schedule of inventory | Inventory consists of the following (in thousands): December 31, December 31, 2020 2019 Beverages $ 1,439 $ 1,832 Food 1,051 1,226 Total $ 2,490 $ 3,058 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Current Assets | |
Schedule of other current assets | Other current assets consist of the following (in thousands): December 31, December 31, 2020 2019 Prepaid expenses $ 1,174 $ 624 Prepaid taxes 174 353 Other — 70 Total $ 1,348 $ 1,047 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, net | |
Schedule of property and equipment, net | Property and equipment, net consist of the following (in thousands): December 31, December 31, 2020 2019 Furniture, fixtures and equipment $ 22,328 $ 20,512 Leasehold improvements 71,654 69,925 Less: accumulated depreciation and amortization (30,948) (21,997) Subtotal 63,034 68,440 Construction in progress 2,294 97 Restaurant smallwares 2,016 1,946 Total $ 67,344 $ 70,483 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): December 31, December 31, 2020 2019 Payroll and related (1) $ 4,860 $ 4,519 Accrued lease exit costs (2) 4,144 1,411 Variable rent 1,883 545 VAT and sales taxes 1,119 1,488 Legal, professional and other services 462 1,103 Interest 474 2 Income taxes and related — 547 Insurance 330 100 Other 2,412 1,483 Total $ 15,684 $ 11,198 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Long Term Debt | |
Schedule of long-term debt | Long-term debt consists of the following (in thousands): December 31, December 31, 2020 2019 Term loan agreements $ 47,400 $ 47,880 Revolving credit facility — — Equipment financing agreements 108 380 Total long-term debt 47,508 48,260 Less: current portion of long-term debt (588) (749) Less: debt issuance costs (1,856) (2,285) Total long-term debt, net of current portion $ 45,064 $ 45,226 Future minimum loan payments: 2021 $ 588 2022 480 2023 480 2024 45,960 Total $ 47,508 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of components of income before (benefit) provision for income taxes | The components of income before benefit for income taxes were as follows (in thousands): For the years ended December 31, 2020 2019 Domestic $ (19,129) $ 7,780 Foreign 106 2,199 Total $ (19,023) $ 9,979 |
Schedule of components of (benefit) provision for income taxes | The components of the Company’s (benefit) provision for income taxes were as follows (in thousands): For the years ended December 31, 2020 2019 Current: Federal $ — $ — State and local 39 109 Foreign 36 546 Total current 75 655 Deferred: Federal (4,593) (9,242) State and local (887) (2,600) Foreign 5 33 Total deferred (5,475) (11,809) Total benefit for income taxes $ (5,400) $ (11,154) |
Schedule of effective tax rate differs from the statutory rates | The Company’s effective tax rate differs from the statutory rates as follows: For the years ended December 31, 2020 2019 Income tax benefit at federal statutory rate 21.0 % 21.0 % State and local taxes 4.4 % 0.6 % FICA tip credit 5.3 % (10.5)% Foreign rate differential — (0.8)% Change in valuation allowance (103.0)% Global intangible low-taxed income (“GILTI”) — 3.9 % Bargain purchase gain — (23.1)% Other items, net (3.2)% 0.1 % Effective income tax rate 28.4 % (111.8)% |
Schedule of income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities | The income tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows (in thousands): For the years ended December 31, 2020 2019 Deferred tax assets: Deferred rent liabilities $ 2,647 $ 2,502 Lease incentives 2,227 2,088 Stock compensation 439 401 FICA tip credit carryforward 6,860 5,575 Net operating loss 6,167 3,496 Goodwill 1,283 1,427 Inventory 23 6 Charitable contributions carryforward 2 — Foreign tax credit carryforward 336 510 Deferred revenue 321 373 State and local tax credit carryforward 299 420 Expenses not deductible until paid 985 306 Basis in LLC interest 175 173 IRC 163(j) disallowed interest carryforward 835 — Kona related acquisition costs 201 — Deferred payroll taxes 703 — Total deferred tax assets 23,503 17,277 Deferred tax liabilities: Depreciation and amortization (9,812) (8,835) ASC 740‑10 liability (129) (181) Total deferred tax liabilities (9,941) (9,016) Valuation allowance (336) (510) Net deferred tax assets $ 13,226 $ 7,751 |
Schedule of activity of uncertain tax positions | The following table summarizes the activity related to the Company’s uncertain tax positions (in thousands): For the years ended December 31, 2020 2019 Balance, beginning of year $ 814 $ 807 Increase related to current year positions 209 209 Decrease related to prior period positions (209) (202) Balance, end of year $ 814 $ 814 |
Revenue recognition (Tables)
Revenue recognition (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue recognition | |
Schedule of contract receivables and liabilities | The following table provides information about contract receivables and liabilities from contracts with customers, which include deferred license revenue, deferred gift card revenue and the Konavore rewards program (in thousands): December 31, December 31, 2020 2019 Receivables (1) $ 125 $ 250 Deferred license revenue (2) 1,160 1,368 Deferred gift card and gift certificate revenue (3) 1,945 3,210 Konavore rewards program (4) $ 102 $ 84 (1) Receivables are included in accounts receivable on the consolidated balance sheets. (2) Includes the current and long-term portion of deferred license revenue. (3) Deferred gift card revenue is included in deferred gift card revenue and other on the consolidated balance sheets. (4) Konavore rewards program is included in accrued expenses on the consolidated balance sheets. |
Schedule of changes in deferred license revenue and deferred gift card revenue | Significant changes in deferred license revenue and deferred gift card revenue for the years ended December 31, 2020 and 2019 are as follows (in thousands): December 31, December 31, 2020 2019 Revenue recognized from deferred license revenue $ 206 $ 483 Revenue recognized from deferred gift card revenue 1,904 2,145 Deferred gift card revenue acquired in Kona Grill acquisition $ — $ 2,277 |
Schedule of estimated deferred license revenue to be recognized in the future related to performance obligations | As of December 31, 2020, the estimated deferred license revenue to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2020 were as follows for each year ending (in thousands): 2021 $ 207 2022 180 2023 169 2024 134 2025 133 Thereafter 337 Total future estimated deferred license revenue $ 1,160 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Schedule of components of lease expense | The components of lease expense for the period were as follows (in thousands): December 31, December 31, 2020 2019 Lease cost Operating lease cost $ 11,613 $ 8,494 Variable lease cost 2,001 3,185 Short-term lease cost 479 446 Sublease income (493) (696) Total lease cost $ 13,600 $ 11,429 Weighted average remaining lease term – operating leases 12 years 13 years Weighted average discount rate – operating leases 8.09 % 8.48 % |
Schedule of supplemental cash flow information related to leases | Supplemental cash flow information related to leases for the period was as follows (in thousands): December 31, December 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 8,491 $ 8,368 Right-of-use assets obtained in exchange for operating lease obligations $ 4,968 $ 43,474 |
Schedule of maturities of operating lease liabilities | As of December 31, 2020, maturities of the Company’s operating lease liabilities are as follows (in thousands): 2021 $ 13,276 2022 13,229 2023 13,531 2024 12,927 2025 11,893 Thereafter 112,867 Total lease payments 177,723 Less: imputed interest (74,337) Present value of operating lease liabilities $ 103,386 |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings per share | |
Schedule of earnings per share, basic and diluted | For the years ended December 31, 2020 and 2019, the earnings per share was calculated as follows (in thousands, except earnings per share and related share data): Year ended December 31, 2020 2019 Net (loss) income attributable to The ONE Group Hospitality, Inc. $ (12,825) $ 20,831 Basic weighted average shares outstanding 28,909,963 28,454,385 Dilutive effect of stock options, warrants and restricted share units — 1,181,834 Diluted weighted average shares outstanding 28,909,963 29,636,219 Net (loss) income available to common stockholders per share - Basic $ (0.44) $ 0.73 Net (loss) income available to common stockholders per share - Diluted $ (0.44) $ 0.70 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of warrants to purchase shares of common stock outstanding | The Company has the following warrants to purchase shares of common stock outstanding as of December 31, 2020 and 2019: Shares available for purchase as of Warrants Exercise December 31, December 31, Issuance date Holder of warrants Expiration date Issued Price 2020 2019 June 27, 2016 2235570 Ontario Limited June 27, 2026 100,000 $ 100,000 100,000 August 11, 2016 Anson Investments Master Fund LP August 11, 2026 300,000 300,000 300,000 October 24, 2016 Anson Investments Master Fund LP October 24, 2026 340,000 340,000 340,000 November 15, 2017 2017 Securities Purchase Agreement investors May 15, 2023 875,000 $ 125,000 125,000 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Employee Benefit Plans | |
Schedule of stock option activity | Changes in outstanding stock options during the years ended December 31, 2020 and 2019 were as follows: Weighted Weighted average Intrinsic average exercise remaining value Shares price contractual life (thousands) Outstanding at December 31, 2018 2,001,008 $ 3.29 Granted 68,000 2.99 Exercised (42,000) 2.13 Cancelled, expired or forfeited (220,500) 2.70 Outstanding at December 31, 2019 1,806,508 $ 3.37 5.87 years $ 1,428 Exercisable at December 31, 2019 1,270,508 $ 3.93 5.10 years $ 667 Granted — — Exercised (18,000) 2.13 Cancelled, expired or forfeited (81,500) 3.75 Outstanding at December 31, 2020 1,707,008 $ 3.37 4.98 years $ 1,454 Exercisable at December 31, 2020 1,443,675 $ 3.57 4.68 years $ 1,112 |
Schedule of fair value of options granted | The fair value of options granted in the year ended December 31, 2019 was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions by grant year: Expected life, in years 8.5 years Risk-free interest rate 2.62 % Volatility 42.0 % Dividend yield — % |
Schedule of non-vested stock options | A summary of the status of the Company’s non-vested stock options as of December 31, 2020 and 2019 and changes during the years then ended, is presented below: Weighted average Shares grant date fair value Non-vested stock options at December 31, 2018 926,500 $ 0.91 Granted 68,000 2.99 Vested (281,500) 1.12 Cancelled, expired or forfeited (177,000) 0.95 Non-vested stock options at December 31, 2019 536,000 $ 0.87 Granted — — Vested (272,667) 0.75 Cancelled, expired or forfeited — — Non-vested stock options at December 31, 2020 263,333 $ 0.99 |
Schedule of restricted stock awards and changes | A summary of the status of RSUs and changes during the years ended December 31, 2020 and 2019 is presented below: Weighted average Shares grant date fair value Non-vested RSUs at December 31, 2018 764,201 $ 2.54 Granted 584,593 3.04 Vested (227,889) 2.64 Cancelled, expired or forfeited (165,894) 2.73 Non-vested RSUs at December 31, 2019 955,011 $ 2.69 Granted 1,316,174 1.21 Vested (305,027) 2.77 Cancelled, expired or forfeited (94,566) 2.12 Non-vested RSUs at December 31, 2020 1,871,592 $ 1.68 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting | |
Schedule of segment information | Certain financial information relating to the years ended December 31, 2020 and 2019 for each segment is provided below (in thousands). Prior year amounts have been revised to conform to the current year segment presentation. STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2020 Total revenues $ 60,932 $ 78,591 $ 1,197 $ 1,223 $ 141,943 Operating income (loss) (1) 6,523 3,356 (517) (23,056) (13,694) Capital asset additions $ 2,734 $ 1,952 $ 206 $ 895 $ 5,787 As of December 31, 2020 Total assets $ 81,431 $ 96,262 $ 5,484 $ 32,392 $ 215,569 STK Kona Grill ONE Hospitality Corporate Total For the year ended December 31, 2019 Total revenues $ 89,857 $ 23,741 $ 5,964 $ 1,119 $ 120,681 Operating income (loss) (2) 15,242 1,511 1,726 (5,688) 12,791 Capital asset additions $ 3,330 $ 195 $ 40 $ 792 $ 4,357 As of December 31, 2019 Total assets $ 82,691 $ 93,829 $ 8,252 $ 21,813 $ 206,585 (1) Operating loss for the Corporate segment for the year ended December 31, 2020 includes $5.5 million in COVID-19 related expenses. (2) Operating loss for the Corporate segment for the year ended December 31, 2019 includes $11.0 million bargain purchase gain from the Kona Grill acquisition. |
Geographic Information (Tables)
Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Geographic Information | |
Schedule of revenues by geographic location | Certain financial information by geographic location relating to the years ended December 31, 2020 and 2019 is provided below (in thousands). For the year ended December 31, 2020 2019 Domestic revenues $ 140,537 $ 115,449 International revenues 1,406 5,232 Total revenues $ 141,943 $ 120,681 |
Schedule of long-lived assets by geographic location | December 31, December 31, 2020 2019 Domestic long-lived assets $ 180,935 $ 179,143 International long-lived assets 258 301 Total long-lived assets $ 181,193 $ 179,444 |
Description of Business (Detail
Description of Business (Details) $ in Thousands | Oct. 04, 2019USD ($)restaurant | Dec. 31, 2020restaurantitem |
Number of venues | 54 | |
STK | ||
Number of venues | 20 | |
Kona Grill | ||
Number of venues | 24 | |
F&B Venues | ||
Number of venues | 10 | |
Number of hotels provided F&B services | item | 5 | |
Number of casinos | item | 5 | |
Kona Grill Inc. | ||
Contractual purchase price | $ | $ 25,000 | |
Current liabilities | $ | $ 7,690 | |
Number of domestic restaurants acquired | 24 | |
Other purchase consideration paid | $ | $ 1,500 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
Write down of cost method investments | $ 2,684 | |
Amortization expense | $ 900 | 200 |
Amortization expense, 2021 | 900 | |
Amortization expense, 2022 | 900 | |
Amortization expense, 2023 | 900 | |
Amortization expense, 2024 | 900 | |
Amortization expense, 2025 | 900 | |
Amount of valuation allowance determined to release | 10,300 | |
Valuation allowance of deferred tax assets, net | $ 336 | 510 |
Recognized uncertain tax position, Description | The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. | |
Revenue recognized, gift card breakage | $ 1,000 | 200 |
Pre-opening costs | 178 | 565 |
Advertising expense | $ 2,500 | 3,100 |
Estimated percentage of forfeitures | 10.00% | |
Number of reportable segments | segment | 4 | |
Gain (loss) on foreign currency translation, net | $ 5 | $ (341) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | ||
Deferred revenue | $ 100 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year | |
Trade Names | ||
Intangible assets, estimated useful life | 20 years | |
Gross carrying amount, intangible assets | $ 17,400 | $ 17,400 |
Accumulated amortization | 1,100 | 200 |
Contract cost | ||
Gross carrying amount, intangible assets | $ 500 | 0 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment, estimated useful lives | shorter of their estimated useful lives or the remaining term of the associated lease | |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | ||
Deferred revenue | $ 100 | |
Maximum | Computer and Equipment Furniture and Fixture [Member] | ||
Property, Plant and Equipment, useful life | 10 years | |
Minimum | Computer and Equipment Furniture and Fixture [Member] | ||
Property, Plant and Equipment, useful life | 3 years |
Business Combination (Details)
Business Combination (Details) - USD ($) $ in Thousands | Oct. 04, 2019 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||
Bargain purchase gain attributable to Kona Grill acquisition | $ 10,963 | |
Kona Grill Inc. | ||
Business Acquisition [Line Items] | ||
Cash | $ 450 | |
Current assets, excluding cash | 2,830 | |
Property and equipment | 31,781 | |
Operating lease right-of-use assets | 42,398 | |
Intangible assets | 17,400 | |
Other assets | 692 | |
Current liabilities | (7,690) | |
Deferred tax liability | (4,044) | |
Operating lease liabilities | (46,364) | |
Total net assets acquired | 37,453 | |
Contractual purchase price | 25,000 | |
Apportionment of rent and utilities | 775 | |
Assumption of real estate lease consultant contract | 465 | |
Escrow deposit | 250 | |
Consideration paid | 26,490 | |
Bargain purchase gain attributable to Kona Grill acquisition | $ 10,963 | $ 11,000 |
Business Combination - Narrativ
Business Combination - Narrative (Details) $ in Thousands | Oct. 04, 2019USD ($)restaurant | Dec. 31, 2019USD ($) |
Business Acquisition [Line Items] | ||
Bargain purchase gain attributable to Kona Grill acquisition | $ 10,963 | |
Kona Grill Inc. | ||
Business Acquisition [Line Items] | ||
Number of domestic restaurants acquired | restaurant | 24 | |
Contractual purchase price | $ 25,000 | |
Other purchase consideration paid | 1,500 | |
Current liabilities | 7,690 | |
Bargain purchase gain attributable to Kona Grill acquisition | $ 10,963 | $ 11,000 |
Business Combination - Pro Form
Business Combination - Pro Forma Results of Operations (Details) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / shares | |
Business Combination | |
Total revenues | $ | $ 196,906 |
Net income attributable to The ONE Group Hospitality, Inc. | $ | $ 10,789 |
Net income attributable to The ONE Group Hospitality, Inc. per share: | |
Basic net income per share | $ / shares | $ 0.38 |
Diluted net income per share | $ / shares | $ 0.36 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||
Inventory | $ 2,490 | $ 3,058 |
Beverages | ||
Inventory [Line Items] | ||
Inventory | 1,439 | 1,832 |
Food | ||
Inventory [Line Items] | ||
Inventory | $ 1,051 | $ 1,226 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Other Current Assets | ||
Prepaid expenses | $ 1,174 | $ 624 |
Prepaid taxes | 174 | 353 |
Other | 70 | |
Total | $ 1,348 | $ 1,047 |
Property and Equipment, net - T
Property and Equipment, net - Total PPE (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation and amortization | $ (30,948) | $ (21,997) |
Property and equipment, net | 67,344 | 70,483 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 22,328 | 20,512 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 71,654 | 69,925 |
Total amount net of accumulated depreciation and amortization | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 63,034 | 68,440 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 2,294 | 97 |
Restaurant smallwares | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 2,016 | $ 1,946 |
Property and Equipment, net - N
Property and Equipment, net - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | $ 10,114 | $ 5,404 |
Impairment charge | 0 | 0 |
Property And Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | $ 9,200 | $ 5,400 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Expenses | ||
Payroll and related | $ 4,860 | $ 4,519 |
Accrued lease exit costs | 4,144 | 1,411 |
Variable rent | 1,883 | 545 |
VAT and sales taxes | 1,119 | 1,488 |
Legal, professional and other services | 462 | 1,103 |
Interest | 474 | 2 |
Income taxes and related | 547 | |
Insurance | 330 | 100 |
Other | 2,412 | 1,483 |
Total | 15,684 | $ 11,198 |
Employer payroll taxes, deferred | $ 2,600 |
Long Term Debt - Debt and Matur
Long Term Debt - Debt and Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 47,508 | $ 48,260 |
Less: current portion of long-term debt | (588) | (749) |
Less: debt issuance costs | (1,856) | (2,285) |
Long-term debt, net of current portion | 45,064 | 45,226 |
Future minimum loan payments: | ||
2021 | 588 | |
2022 | 480 | |
2023 | 480 | |
2024 | 45,960 | |
Total long-term debt | 47,508 | 48,260 |
Medium-term Notes | Term Loan Agreements | ||
Debt Instrument [Line Items] | ||
Long-term debt | 47,400 | 47,880 |
Future minimum loan payments: | ||
Total long-term debt | 47,400 | 47,880 |
Construction Loans | Equipment Financing Agreements | ||
Debt Instrument [Line Items] | ||
Long-term debt | 108 | 380 |
Future minimum loan payments: | ||
Total long-term debt | $ 108 | $ 380 |
Long Term Debt - Narrative (Det
Long Term Debt - Narrative (Details) | Aug. 10, 2020USD ($) | May 08, 2020 | May 04, 2020USD ($)subsidiary | Oct. 04, 2019USD ($) | May 15, 2019USD ($) | Aug. 16, 2016USD ($) | Jun. 05, 2015USD ($) | Dec. 31, 2020USD ($)employee | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | |||||||||
Interest expense | $ 4,400,000 | $ 1,700,000 | |||||||
Weighted average interest rate | 8.50% | 8.55% | |||||||
Standby letters of credit outstanding | $ 1,300,000 | $ 1,200,000 | |||||||
Cash collateral letter of credit | 400,000 | ||||||||
Debt issuance costs | 1,856,000 | 2,285,000 | |||||||
Debt instrument, term | 5 years | 5 years | |||||||
Debt interest rate | 5.00% | 5.00% | |||||||
Loss on early debt extinguishment | $ 400,000 | $ 400,000 | $ (858,000) | ||||||
TOG Liquidation Trust | Cash Advances | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of related party debt | 1,200,000 | ||||||||
Credit Agreement with Bank of America, N.A. [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt issuance costs | 400,000 | ||||||||
Goldman Sachs Credit Agreement | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum cash and cash equivalents amount | $ 4,000,000 | ||||||||
Basis spread on variable rate | 4.75% | ||||||||
Debt issuance costs | $ 2,500,000 | ||||||||
Goldman Sachs Credit Agreement | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Minimum consolidated liquidity | $ 1,500,000 | ||||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending September 30, 2020 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 2.85 | 2.85 | |||||||
Goldman Sachs Credit Agreement | Fiscal quarters ending September 30, 2020 and December 31, 2020, | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 2.25 | ||||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending December 31, 2020 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 3.60 | 3.60 | |||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending March 31, 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 3.10 | 2 | 3.10 | ||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending June 30, 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 1.75 | ||||||||
Goldman Sachs Credit Agreement | Fiscal quarters ending June 30, 2021 and September 30, 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 2.10 | 2.10 | |||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending September 30, 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 1.70 | ||||||||
Goldman Sachs Credit Agreement | Fiscal quarter ending December 31, 2021 | |||||||||
Debt Instrument [Line Items] | |||||||||
Consolidated leverage ratio | 1.90 | 1.65 | 1.90 | ||||||
Goldman Sachs Credit Agreement | Fiscal quarter thereafter | |||||||||
Debt Instrument [Line Items] | |||||||||
Fixed charge coverage ratio | 1.50 | ||||||||
Consolidated leverage ratio | 1.50 | 1.50 | |||||||
Goldman Sachs Credit Agreement | Fiscal year 2020 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum consolidated capital expenditures | $ 7,000,000 | ||||||||
Goldman Sachs Credit Agreement | Fiscal year 2021 | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Minimum consolidated liquidity | $ 1,500,000 | ||||||||
Goldman Sachs Credit Agreement | Fiscal year 2021 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum consolidated capital expenditures | 7,000,000 | ||||||||
Goldman Sachs Credit Agreement | Fiscal year 2020 and 2021 | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Minimum consolidated liquidity | $ 4,000,000 | 4,000,000 | |||||||
Goldman Sachs Credit Agreement | Fiscal year 2020 and 2021 | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum consolidated capital expenditures | 7,000,000 | ||||||||
Goldman Sachs Credit Agreement | Fiscal year 2021 and every fiscal year thereafter | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum consolidated capital expenditures | $ 8,000,000 | ||||||||
Goldman Sachs Credit Agreement | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.75% | ||||||||
Goldman Sachs Credit Agreement | Base Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 0.50% | ||||||||
Goldman Sachs Credit Agreement | One Month LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.00% | ||||||||
Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Secured revolving credit facility | $ 12,000,000 | ||||||||
Face value of debt | 10,000,000 | ||||||||
Term Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Face value of debt | $ 48,000,000 | 10,000,000 | |||||||
Term Loans | Bank United | |||||||||
Debt Instrument [Line Items] | |||||||||
Prepayment of outstanding balances | 2,600,000 | ||||||||
Term Loans | LIBOR | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 5.75% | ||||||||
Term Loans | LIBOR | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 6.75% | ||||||||
Term Loans | Base Rate | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 4.75% | ||||||||
Term Loans | Base Rate | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 5.75% | ||||||||
Promissory Notes | Anson Investments Master Fund LP | |||||||||
Debt Instrument [Line Items] | |||||||||
Prepayment of outstanding balances | 5,300,000 | ||||||||
Promissory Notes | Ontario Limited | |||||||||
Debt Instrument [Line Items] | |||||||||
Prepayment of outstanding balances | $ 1,000,000 | ||||||||
First Sterling Agreement | Construction Loans | Sterling National Bank | |||||||||
Debt Instrument [Line Items] | |||||||||
Face value of debt | $ 1,000,000 | ||||||||
Second Sterling Agreement | Construction Loans | Sterling National Bank | |||||||||
Debt Instrument [Line Items] | |||||||||
Face value of debt | $ 700,000 | ||||||||
CARES ACT Loans | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of employees return to work from furlough | employee | 3,000 | ||||||||
Number of subsidiaries | subsidiary | 2 | ||||||||
Debt instrument default percentage | 10.00% | ||||||||
Eligibility percentage for loan forgiveness | 60.00% | ||||||||
CARES ACT Loans | STK | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan received | $ 9,800,000 | ||||||||
CARES ACT Loans | Kona Grill | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan received | $ 8,500,000 |
Nonconsolidated Variable Inte_2
Nonconsolidated Variable Interest Entities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||
Write down of cost method investments | $ 2,684 | |
Equity in income of investee companies | $ 0 | 0 |
Due from related parties, net | $ 376 | $ 341 |
Bagatelle NY LA Investors, LLC (Bagatelle Investors) | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage equity method investment | 31.24% | 31.24% |
Equity method investments | $ 0 | $ 0 |
Bagatelle Little West 12th, LLC (Bagatelle NY) | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage equity method investment | 51.13% | 51.13% |
Write down of cost method investments | $ 2,700 | |
Cost method investments | $ 0 | 0 |
Management fee revenue | 400 | |
Rental income | 500 | 500 |
Bagatelle Little West 12th, LLC (Bagatelle NY) | Maximum | ||
Schedule of Equity Method Investments [Line Items] | ||
Management fee revenue | 100 | |
Variable Interest Entity, Primary Beneficiary | ||
Schedule of Equity Method Investments [Line Items] | ||
Due from related parties, net | $ 400 | $ 300 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | May 15, 2019 | Dec. 31, 2016 | Dec. 31, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||||
Due from related parties | $ 400 | $ 300 | ||
TOG Liquidation Trust | ||||
Related Party Transaction [Line Items] | ||||
Due to related parties | $ 0 | $ 0 | ||
Cash Advances | TOG Liquidation Trust | ||||
Related Party Transaction [Line Items] | ||||
Proceeds from cash advances from TOG Liquidation Trust | $ 1,200 | |||
Repayment of due to related parties, long-term | $ 1,200 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income before (Benefit) Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income before (benefit) provision for income taxes | ||
Domestic | $ (19,129) | $ 7,780 |
Foreign | 106 | 2,199 |
(Loss) income before benefit for income taxes | $ (19,023) | $ 9,979 |
Income Taxes - Summary of Provi
Income Taxes - Summary of Provision for Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current | ||
State and local | $ 39 | $ 109 |
Foreign | 36 | 546 |
Total current income tax provision | 75 | 655 |
Deferred | ||
Federal | (4,593) | (9,242) |
State and local | (887) | (2,600) |
Foreign | 5 | 33 |
Total deferred provision for income taxes | (5,475) | (11,809) |
Total benefit for income taxes | $ (5,400) | $ (11,154) |
Income Taxes - Summary of Effec
Income Taxes - Summary of Effective Statutory Federal Income Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||
Income tax benefit at federal statutory rate | 21.00% | 21.00% |
State and local taxes | 4.40% | 0.60% |
FICA tip credit | 5.30% | (10.50%) |
Foreign rate differential | (0.80%) | |
Change in valuation allowance | 0.90% | (103.00%) |
Global intangible low-taxed income ("GILTI") | 3.90% | |
Bargain purchase gain | (23.10%) | |
Other items, net | (3.20%) | 0.10% |
Effective income tax rate | 28.40% | (111.80%) |
Income Taxes - Summary of Defer
Income Taxes - Summary of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Deferred rent liabilities | $ 2,647 | $ 2,502 |
Lease incentives | 2,227 | 2,088 |
Stock compensation | 439 | 401 |
FICA tip credit carryforward | 6,860 | 5,575 |
Net operating loss | 6,167 | 3,496 |
Goodwill | 1,283 | 1,427 |
Inventory | 23 | 6 |
Charitable contributions carryforward | 2 | |
Foreign tax credit carryforward | 336 | 510 |
Deferred revenue | 321 | 373 |
State and local tax credit carryforward | 299 | 420 |
Expenses not deductible until paid | 985 | 306 |
Basis in LLC interest | 175 | 173 |
IRC 163(j) disallowed interest carryforward | 835 | |
Kona related acquisition costs | 201 | |
Deferred payroll taxes | 703 | |
Total deferred tax assets | 23,503 | 17,277 |
Deferred tax liabilities: | ||
Depreciation and amortization | (9,812) | (8,835) |
ASC 740-10 liability | (129) | (181) |
Total deferred tax liabilities | (9,941) | (9,016) |
Valuation allowance | (336) | (510) |
Net deferred tax assets | $ 13,226 | $ 7,751 |
Income Taxes - Summary of Uncer
Income Taxes - Summary of Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance, beginning of year | $ 814 | $ 807 |
Increase related to current year positions | 209 | 209 |
Decrease related to prior period positions | (209) | (202) |
Balance, end of year | $ 814 | $ 814 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance of deferred tax assets, net | $ 336 | $ 510 |
Amount of valuation allowance determined to release | $ 10,300 | |
Federal income tax | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss | $ 23,700 | |
Federal income tax | Minimum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss, expiration date | Dec. 31, 2035 | |
Federal income tax | Maximum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss, expiration date | Dec. 31, 2039 | |
Federal income tax | Tax year 2035 to 2037 | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss | $ 16,000 | |
Federal income tax | Tax year, no expiration | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss | $ 7,700 | |
State income tax | Minimum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss, expiration date | Dec. 31, 2035 | |
State income tax | Maximum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss, expiration date | Dec. 31, 2039 |
Revenue recognition - Contract
Revenue recognition - Contract Receivables and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Receivables | $ 125 | $ 250 |
Deferred license revenue | ||
Deferred revenue | 1,160 | 1,368 |
Deferred gift card and gift certificate revenue | ||
Deferred revenue | 1,945 | 3,210 |
Konavore rewards program | ||
Deferred revenue | $ 102 | $ 84 |
Revenue recognition - Changes i
Revenue recognition - Changes in Deferred License Revenue and Deferred Gift Card Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred gift card revenue acquired in Kona Grill acquisition | $ 2,277 | |
Deferred license revenue | ||
Revenue recognized | $ 206 | 483 |
Deferred gift card and gift certificate revenue | ||
Revenue recognized | $ 1,904 | $ 2,145 |
Revenue recognition - Future Es
Revenue recognition - Future Estimated Deferred License Revenue (Details) - Deferred license revenue $ in Thousands | Dec. 31, 2020USD ($) |
2021 | $ 207 |
2022 | 180 |
2023 | 169 |
2024 | 134 |
2025 | 133 |
Thereafter | 337 |
Total future estimated deferred license revenue | $ 1,160 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Lease cost | ||
Operating lease cost | $ 11,613 | $ 8,494 |
Variable lease cost | 2,001 | 3,185 |
Short-term lease cost | 479 | 446 |
Sublease income | (493) | (696) |
Total lease cost | $ 13,600 | $ 11,429 |
Weighted average remaining lease term - operating leases | 12 years | 13 years |
Weighted average discount rate - operating leases | 8.09% | 8.48% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 8,491 | $ 8,368 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 4,968 | $ 43,474 |
Leases - Operating Lease Liabil
Leases - Operating Lease Liabilities (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Operating Lease Liabilities, Payments Due [Abstract] | |
2021 | $ 13,276 |
2022 | 13,229 |
2023 | 13,531 |
2024 | 12,927 |
2025 | 11,893 |
Thereafter | 112,867 |
Total lease payments | 177,723 |
Less: imputed interest | (74,337) |
Present value of operating lease liabilities | $ 103,386 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Sublease income | $ 493 | $ 696 |
Bagatelle Little West 12th, LLC (Bagatelle NY) | ||
Lessee, Lease, Description [Line Items] | ||
Sublease income | $ 500 | $ 500 |
Earnings per share - Calculatio
Earnings per share - Calculation (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings per share | ||
Net (loss) income attributable to The ONE Group Hospitality, Inc. | $ (12,825) | $ 20,831 |
Basic weighted average shares outstanding | 28,909,963 | 28,454,385 |
Dilutive effect of stock options, warrants and restricted share units | 0 | 1,181,834 |
Diluted weighted average shares outstanding | 28,909,963 | 29,636,219 |
Net (loss) earnings available to common stockholders per share - Basic | $ (0.44) | $ 0.73 |
Net (loss) earnings available to common stockholders per share - Diluted | $ (0.44) | $ 0.70 |
Earnings per share - Narrative
Earnings per share - Narrative (Details) - shares shares in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted earnings per share | 1.4 | 1 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted earnings per share | 1.4 | 1 |
Restricted Share Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded from the calculation of diluted earnings per share | 1.4 | 1 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Stockholders' Equity Note [Abstract] | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares outstanding | 29,083,183 | 28,603,829 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares outstanding | 0 | 0 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants to Purchase Shares of Common Stock Outstanding (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Common Stock Warrants Maturing on June 27, 2026 | ||
Warrants Issued | $ 100,000 | |
Exercise Price | $ 2.61 | |
Shares available for purchase | 100,000 | 100,000 |
Common Stock Warrants Maturing on August 11, 2026 | ||
Warrants Issued | $ 300,000 | |
Exercise Price | $ 2.61 | |
Shares available for purchase | 300,000 | 300,000 |
Common Stock Warrants Maturing on October 24, 2026 | ||
Warrants Issued | $ 340,000 | |
Exercise Price | $ 2.39 | |
Shares available for purchase | 340,000 | 340,000 |
Common Stock Warrants Maturing on May 15, 2023 | ||
Warrants Issued | $ 875,000 | |
Exercise Price | $ 1.63 | |
Shares available for purchase | 125,000 | 125,000 |
Employee Benefit Plans - Summar
Employee Benefit Plans - Summary of Status of Company's Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Shares | ||
Outstanding at the beginning (in shares) | 1,806,508 | 2,001,008 |
Exercisable (in shares) | 1,270,508 | |
Stock options, granted | 0 | 68,000 |
Exercised (in shares) | (18,000) | (42,000) |
Cancelled, expired or forfeited (in shares) | (81,500) | (220,500) |
Outstanding at the ending (in shares) | 1,707,008 | 1,806,508 |
Exercisable (in shares) | 1,443,675 | 1,270,508 |
Weighted average exercise price | ||
Outstanding at the beginning (in dollars per share) | $ 3.37 | $ 3.29 |
Exercisable (in dollars per share) | 3.93 | |
Granted (in dollars per share) | 0 | 2.99 |
Exercised (in dollars per share) | 2.13 | 2.13 |
Cancelled, expired or forfeited (in dollars per share) | 3.75 | 2.70 |
Outstanding at the ending (in dollars per share) | 3.37 | 3.37 |
Exercisable (in dollars per share) | $ 3.57 | $ 3.93 |
Weighted average remaining contractual life (Years) | ||
Weighted average remaining contractual life | 4 years 11 months 23 days | 5 years 10 months 13 days |
Exercisable weighted average remaining contractual life | 4 years 8 months 5 days | 5 years 1 month 6 days |
Intrinsic value | ||
Intrinsic Value Outstanding | $ 1,454 | $ 1,428 |
Intrinsic Value Exercisable | $ 1,112 | $ 667 |
Employee Benefit Plans - Valuat
Employee Benefit Plans - Valuation Assumptions (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plans | |
Expected life (in years) | 8 years 6 months |
Risk-free interest rate | 2.62% |
Volatility | 42.00% |
Dividend yield | 0.00% |
Employee Benefit Plans - Summ_2
Employee Benefit Plans - Summary of Non-Vested Stock Options (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Shares | ||
Non-vested stock options (in shares) | 536,000 | 926,500 |
Granted | 0 | 68,000 |
Vested (in shares) | (272,667) | (281,500) |
Cancelled, expired or forfeited (in shares) | 0 | (177,000) |
Non-vested stock options (in shares) | 263,333 | 536,000 |
Weighted average grant date fair value | ||
Non-vested stock options (in dollars per share) | $ 0.87 | $ 0.91 |
Granted (in dollars per share) | 0 | 2.99 |
Vested (in dollars per share) | 0.75 | 1.12 |
Cancelled, expired or forfeited (in dollars per share) | 0 | 0.95 |
Non-vested stock options (in dollars per share) | $ 0.99 | $ 0.87 |
Employee Benefit Plans - Summ_3
Employee Benefit Plans - Summary of Status of Company's Restricted Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Shares | ||
Non-vested RSUs at beginning of period (in shares) | 955,011 | 764,201 |
Granted (in shares) | 1,316,174 | 584,593 |
Vested (in shares) | (305,027) | (227,889) |
Cancelled, expired or forfeited (in shares) | (94,566) | (165,894) |
Non-vested RSUs at ending of period (in shares) | 1,871,592 | 955,011 |
Weighted Average Grant Date Fair Value | ||
Non-vested RSUs at beginning of period (in dollars per share) | $ 2.69 | $ 2.54 |
Granted (in dollars per share) | 1.21 | 3.04 |
Vested (in dollars per share) | 2.77 | 2.64 |
Cancelled, expired or forfeited (in dollars per share) | 2.12 | 2.73 |
Non-vested RSUs at ending of period (in dollars per share) | $ 1.68 | $ 2.69 |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 04, 2019 | Oct. 31, 2013 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation | $ 1,773 | $ 1,306 | |||
Weighted average fair value of stock options issued | $ 1.55 | ||||
Stock options, granted | 0 | 68,000 | |||
Options outstanding (in shares) | 1,707,008 | 1,806,508 | 2,001,008 | ||
General and Administrative Expense. | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation | $ 1,800 | $ 1,300 | |||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of options vested | $ 200 | 300 | |||
Options outstanding (in shares) | 579,402 | ||||
Unrecognized compensation cost related to non-vested awards | $ 200 | ||||
Unrecognized compensation cost, recognition period | 1 year 9 months 18 days | ||||
Unrecognized compensation cost related to milestone based options | $ 700 | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to non-vested awards | $ 1,700 | ||||
Unrecognized compensation cost, recognition period | 1 year 9 months 18 days | ||||
Restricted shares outstanding | 150,000 | ||||
Milestone-Based Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation cost related to non-vested awards | $ 400 | ||||
The 2013 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Contractual term | 10 years | ||||
Shares remaining available for issuance (in shares) | 1,216,192 | ||||
Equity Incentive Plan 2019 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Increase in authorized shares (in shares) | 2,300,000 | ||||
Authorized shares (in shares) | 7,073,922 | ||||
Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation | $ 300 | $ 200 |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | Oct. 04, 2019USD ($) | Dec. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 4 | ||
Total revenues | $ 141,943 | $ 120,681 | |
Operating income (loss) | (13,694) | 12,791 | |
Capital asset additions | 5,787 | 4,357 | |
Total assets | 215,569 | 206,585 | |
COVID-19 related expenses | 5,492 | ||
Bargain purchase gain attributable to Kona Grill acquisition | 10,963 | ||
Kona Grill Inc. | |||
Segment Reporting Information [Line Items] | |||
Bargain purchase gain attributable to Kona Grill acquisition | $ 10,963 | 11,000 | |
STK | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 60,932 | 89,857 | |
Operating income (loss) | 6,523 | 15,242 | |
Capital asset additions | 2,734 | 3,330 | |
Total assets | 81,431 | 82,691 | |
Kona Grill | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 78,591 | 23,741 | |
Operating income (loss) | 3,356 | 1,511 | |
Capital asset additions | 1,952 | 195 | |
Total assets | 96,262 | 93,829 | |
ONE Hospitality | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 1,197 | 5,964 | |
Operating income (loss) | (517) | 1,726 | |
Capital asset additions | 206 | 40 | |
Total assets | 5,484 | 8,252 | |
Corporate | |||
Segment Reporting Information [Line Items] | |||
Total revenues | 1,223 | 1,119 | |
Operating income (loss) | (23,056) | (5,688) | |
Capital asset additions | 895 | 792 | |
Total assets | 32,392 | 21,813 | |
COVID-19 related expenses | $ 5,500 | ||
Corporate | Kona Grill Inc. | |||
Segment Reporting Information [Line Items] | |||
Bargain purchase gain attributable to Kona Grill acquisition | $ 11,000 |
Geographic Information (Details
Geographic Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 141,943 | $ 120,681 |
Long-lived assets | 181,193 | 179,444 |
Domestic | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 140,537 | 115,449 |
Long-lived assets | 180,935 | 179,143 |
International | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 1,406 | 5,232 |
Long-lived assets | $ 258 | $ 301 |