Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 16, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ONE Group Hospitality, Inc. | |
Entity Central Index Key | 1,399,520 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 24,972,515 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,795,847 | $ 7,905,004 |
Accounts receivable, net | 4,285,218 | 4,408,396 |
Inventory | 1,066,565 | 1,139,305 |
Other current assets | 2,616,828 | 1,937,392 |
Due from related parties | 1,369,795 | 1,157,134 |
Total current assets | 11,134,253 | 16,547,231 |
Property and equipment, net | 26,199,351 | 18,815,625 |
Investments | 2,991,607 | 2,802,443 |
Deferred tax assets | 8,424,563 | 35,418 |
Other assets | 789,219 | 793,002 |
Security deposits | 2,357,978 | 2,368,422 |
Total assets | 51,896,971 | 41,362,141 |
Current liabilities: | ||
Cash overdraft | 608,769 | 85,598 |
Current portion of long term debt | 1,929,167 | 1,495,000 |
Accounts payable | 3,046,999 | 3,433,198 |
Accrued expenses | 4,979,840 | 2,004,704 |
Due to related parties | 0 | 19,608 |
Deferred revenue | 188,079 | 127,950 |
Total current liabilities | 10,752,854 | 7,166,058 |
Other long-term liabilities | 0 | 67,277 |
Derivative liability | 2,324,000 | 6,241,000 |
Long term debt, net of current portion | 9,079,020 | 5,980,000 |
Deferred rent payable | 11,887,118 | 9,435,109 |
Total liabilities | 34,042,992 | 28,889,444 |
Stockholders’ equity: | ||
Common stock, $0.0001 par value, 75,000,000 shares authorized; 24,972,515 and 24,940,195 shares issued and outstanding at September 30, 2015 (unaudited) and December 31, 2014, respectively | 2,497 | 2,494 |
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2015 (unaudited) and December 31, 2014, respectively | 0 | 0 |
Additional paid-in capital | 31,633,461 | 30,966,611 |
Accumulated deficit | (12,721,823) | (18,005,401) |
Accumulated other comprehensive loss | (492,439) | (230,696) |
Total stockholders’ equity | 18,421,696 | 12,733,008 |
Noncontrolling interest | (567,717) | (260,311) |
Total stockholders’ equity including noncontrolling interest | 17,853,979 | 12,472,697 |
Total Liabilities and Stockholders’ Equity | $ 51,896,971 | $ 41,362,141 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 24,972,515 | 24,940,195 |
Common stock, shares outstanding (in shares) | 24,972,515 | 24,940,195 |
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Owned unit net revenues | $ 13,314,507 | $ 10,444,821 | $ 35,818,733 | $ 28,722,921 |
Management and incentive fee revenue | 1,939,376 | 1,945,363 | 6,112,629 | 6,207,523 |
Total revenue | 15,253,883 | 12,390,184 | 41,931,362 | 34,930,444 |
Owned operating expenses: | ||||
Food and beverage costs | 3,346,841 | 2,811,806 | 9,082,231 | 7,482,382 |
Unit operating expenses | 8,807,632 | 6,245,617 | 23,898,483 | 17,661,544 |
General and administrative | 2,610,599 | 1,922,482 | 7,647,589 | 6,024,364 |
Depreciation and amortization | 630,249 | 327,810 | 1,620,009 | 1,000,464 |
Management and royalty fees | 310 | (35,214) | 46,959 | 60,324 |
Pre-opening expenses | 1,634,171 | 315,905 | 4,399,192 | 1,149,078 |
Transaction costs | 405,797 | 0 | 506,131 | 0 |
Equity in (income) of investee companies | (205,273) | (268,660) | (728,504) | (588,996) |
Derivative (income) expense | (1,139,000) | 991,588 | (3,917,000) | (1,793,124) |
Interest expense, net of interest income | 1,210 | (6,268) | (3,980) | 52,220 |
Other (income) expense | 127,692 | (1,227,698) | (476,932) | (1,157,067) |
Total costs and expenses | 16,220,228 | 11,077,368 | 42,074,178 | 29,891,189 |
(Loss) income from continuing operations before provision for income taxes | (966,345) | 1,312,816 | (142,816) | 5,039,255 |
Provision (benefit) for income taxes | 922,427 | 462,898 | (5,619,504) | 813,580 |
(Loss) income from continuing operations | (1,888,772) | 849,918 | 5,476,688 | 4,225,675 |
Loss (income) from discontinued operations, net of taxes | (62,501) | (177,050) | (23,929) | 1,094,376 |
Net (loss) income | (1,826,271) | 1,026,968 | 5,500,617 | 3,131,299 |
Less: net income attributable to noncontrolling interest | 189,698 | 279,542 | 217,039 | 92,478 |
Net (loss) income attributable to The ONE Group Hospitality, Inc. | (2,015,969) | 747,426 | 5,283,578 | 3,038,821 |
Amounts attributable to The ONE Group Hospitality, Inc.: | ||||
(Loss) income from continuing operations | (2,078,470) | 570,376 | 5,259,649 | 4,133,197 |
Loss (income) from discontinued operations, net of taxes | (62,501) | (177,050) | (23,929) | 1,094,376 |
Other comprehensive loss | ||||
Currency translation adjustment | (30,900) | (78,177) | (261,743) | (33,955) |
Comprehensive (loss) income | $ (2,046,869) | $ 669,249 | $ 5,021,835 | $ 3,004,866 |
Basic and diluted (loss) income per share: | ||||
Continuing operations (in dollars per share) | $ (0.08) | $ 0.04 | $ 0.21 | $ 0.17 |
Discontinued operations (in dollars per share) | 0 | 0.01 | 0 | 0.04 |
Net (loss) income per share attributable to The ONE Group Hospitality, Inc. (in dollars per share) | $ (0.08) | $ 0.03 | $ 0.21 | $ 0.13 |
Shares used in computing basic income per share (in shares) | 24,972,515 | 24,940,195 | 24,956,177 | 24,942,328 |
Shares used in computing diluted income per share (in shares) | 24,972,515 | 24,940,195 | 24,956,177 | 24,942,328 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) | Total | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' (loss) income equity | Noncontrolling interest |
Beginning balance at Dec. 31, 2014 | $ 12,472,697 | $ 2,494 | $ 30,966,611 | $ (18,005,401) | $ (230,696) | $ 12,733,008 | $ (260,311) |
Beginning balance (in shares) at Dec. 31, 2014 | 24,940,195 | 24,940,195 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation expense | $ 666,853 | $ 3 | 666,850 | 666,853 | |||
Stock based compensation expense (in shares) | 32,320 | ||||||
Member distributions | (524,445) | (524,445) | |||||
Loss on foreign currency translation, net | (261,743) | (261,743) | (261,743) | ||||
Net income | 5,500,617 | 5,283,578 | 5,283,578 | 217,039 | |||
Ending balance at Sep. 30, 2015 | $ 17,853,979 | $ 2,497 | $ 31,633,461 | $ (12,721,823) | $ (492,439) | $ 18,421,696 | $ (567,717) |
Ending balance (in shares) at Sep. 30, 2015 | 24,972,515 | 24,972,515 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities: | ||
Net income | $ 5,500,617 | $ 3,131,299 |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,620,009 | 1,129,064 |
Deferred rent payable | 2,452,009 | 289,275 |
Deferred taxes | (8,389,145) | 140,333 |
Equity in income of investee companies | (728,504) | (588,996) |
Derivative income | (3,917,000) | (1,793,124) |
Stock-based compensation | 666,853 | 326,753 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 123,178 | (805,422) |
Inventory | 72,740 | 33,708 |
Prepaid expenses and other current assets | (679,436) | 263,438 |
Security deposits | 10,444 | 109,200 |
Other assets | 3,784 | (43,109) |
Accounts payable | (386,199) | (1,418,169) |
Accrued expenses | 2,977,787 | (1,417,458) |
Deferred revenue | (7,148) | 83,963 |
Net cash used in operating activities | (680,011) | (559,245) |
Investing activities: | ||
Purchase of property and equipment | (9,003,733) | (4,562,397) |
Purchase of minority interest | 0 | (75,000) |
Distributions from equity investees | 539,340 | 502,753 |
Due from related parties | (232,269) | (60,487) |
Net cash used in investing activities | (8,696,662) | (4,195,131) |
Financing activities: | ||
Cash overdraft | 523,171 | 442,515 |
Proceeds from term loan | 4,215,000 | 6,897,940 |
Proceeds from equipment financing agreement | 502,548 | 0 |
Repayment of term loan | (1,184,361) | (5,087,551) |
Repayment of notes payable | 0 | (15,000) |
Distributions to members | (524,445) | (760,605) |
Net cash provided by financing activities | 3,531,913 | 1,477,299 |
Effect of exchange rate changes on cash | (264,397) | (34,115) |
Net decrease in cash | (6,109,157) | (3,311,192) |
Cash and cash equivalents, beginning of period | 7,905,004 | 11,681,086 |
Cash and cash equivalents, end of period | 1,795,847 | 8,369,894 |
Supplemental disclosure of cash flow data: | ||
Interest paid | 246,745 | 107,070 |
Income taxes paid | $ 80,148 | $ 217,172 |
Merger
Merger | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Merger | Merger: On October 16, 2013, The ONE Group Hospitality, Inc. (the "Company") closed a merger transaction (the “Merger”) with The ONE Group, LLC, a privately held Delaware limited liability company (“ONE Group”), pursuant to an Agreement and Plan of Merger, dated as of October 16, 2013 (the “Merger Agreement”), by and among The ONE Group Hospitality, Inc., formerly known as Committed Capital Acquisition Corporation, CCAC Acquisition Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“Merger Sub”), ONE Group and Samuel Goldfinger as ONE Group Representative. Pursuant to the Merger Agreement, ONE Group became a wholly-owned subsidiary of the Company through a merger of Merger Sub with and into ONE Group, and the former members of ONE Group received shares of the Company, Inc. that constituted a majority of the outstanding shares of the Company. The Merger was accounted for as a reverse-merger and recapitalization in accordance with GAAP, whereby the Company was the accounting acquiree and ONE Group was the accounting acquirer. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the Merger are those of ONE Group, and the consolidated financial statements after completion of the Merger include the assets and liabilities of the Company and ONE Group, historical operations of ONE Group and operations of the Company from the October 16, 2013 effective date. Membership interests and the corresponding capital amounts of ONE Group pre-Merger have been retroactively restated as shares of common stock reflecting the 8.09 to one exchange ratio in the Merger. All references in this Report to equity securities and all equity-related historical financial measurements, including weighted average shares outstanding, earnings per share, par value of $0.0001 per share of the Company's common stock ("Common Stock"), additional paid in capital, option exercise prices and warrant exercise prices, have been retroactively restated to reflect the Merger exchange ratio. On June 5, 2014, the Company changed its corporate name from Committed Capital Acquisition Corporation to The ONE Group Hospitality, Inc. |
Business and basis of presentat
Business and basis of presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and basis of presentation | Business and basis of presentation: Principles of consolidation: The accompanying consolidated financial statements of The ONE Group Hospitality, Inc. and subsidiaries include the accounts of ONE Group and its subsidiaries, Little West 12t h LLC, One-LA, L.P., Bridge Hospitality, LLC, STK-LA, LLC, WSATOG (Miami), LLC, STK Miami Service, LLC (“Miami Services”), STK Miami, LLC (“STK Miami”), Basement Manager, LLC, JEC II, LLC, One TCI Ltd., One Marks, LLC, MPD Space Events LLC, One 29 Park Management, LLC (“One 29 Park Management”), STK Midtown Holdings, LLC, STK Midtown, LLC, STKOUT Midtown, LLC, STK Atlanta, LLC, STK-Las Vegas, LLC (“STK Vegas”), One Atlantic City, LLC, Asellina Marks LLC, Heraea Vegas, LLC (“Heraea”), Xi Shi Las Vegas, LLC (“Xi Shi Las Vegas”), T.O.G. (UK) Limited, Hip Hospitality Limited (“Hip Hospitality UK”), T.O.G. (Aldwych) Limited (“TOG Aldwych”), CA Aldwych Limited, T.O.G. (Milan) S.r.l. ("TOG Milan"), BBCLV, LLC, STK DC, LLC, STK Orlando, LLC, STK Chicago, LLC ("STK Chicago"), TOG Biscayne, LLC, STK Westwood, LLC, STK Denver, LLC, STK Rebel Austin, LLC, STK Dallas, LLC, STK Rebel San Diego, LLC, STK Texas Holdings, LLC, STK Holdings II, LLC, 9401415 Canada Ltd., STK Ibiza, LLC and STK Rebel (Edinburgh) Limited. The entities are collectively referred to herein as the “Company” or “Companies,” as appropriate, and are consolidated on the basis of common ownership and control. All significant intercompany balances and transactions have been eliminated in consolidation. Net Income (Loss) Per Common Share Basic net income (loss) per common share is based upon the weighted-average common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock. Fair value measurements The carrying amount of the Company’s accounts receivable, accounts payable and accrued expenses approximate fair value because of the short term nature of the financial instruments. The carrying value of the long term debt approximates fair value since the terms of the loan have been recently negotiated. Nature of business: The Company is a hospitality company that develops and operates upscale, 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 in the United States and England. We opened our first restaurant in January 2004 in New York City and as of November 16, 2015, we owned and operated (under lease agreements) 12 and managed (under management agreements) 15 restaurants and lounges globally, including 10 STKs in major metropolitan cities in the United States and Europe (of which 7 are owned and 3 managed). In addition, we provided food and beverage services in five hotels and casinos, one of which is under a lease agreement and four of which are under separate management agreements. We generate management and incentive fee revenue from those restaurants and lounges that we manage on behalf of our F&B hospitality clients. Unaudited interim financial information: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other interim period or other future year. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes for the fiscal year ended December 31, 2014 included in the Company’s Annual Report filed on Form 10-K/A for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2015. |
Recent accounting pronouncement
Recent accounting pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Recent accounting pronouncements | Recent accounting pronouncements: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). ASU 2014-09 addresses the reporting of revenue by most entities and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This update is effective in fiscal periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016. The impact on our financial statements of adopting ASU 2014-09 is currently being assessed by management. In August 2014, the FASB issued ASU No. 2014-15 “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The impact on our financial statements of adopting ASU 2014-15 is currently being assessed by management. In February 2015, the FASB issued ASC 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company does not expect this standard to have a significant impact on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “Interest- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update is effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. This standard is subsequently updated by ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which codifies an SEC staff announcement relative to debt issuance costs for line-of-credit arrangements. The Company does not expect these updates to have a significant impact on its consolidated financial statements and has not yet concluded whether it will adopt ASU 2015-03 and ASU 2015-15 prior to their effective dates. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory." The update states that inventory should be measured at the lower of cost and “net realizable value.” Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The amendment is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. The Company does not expect this standard to have a significant impact on its consolidated financial statements and has not yet concluded whether it will adopt ASU 2015-11 prior to the effective date. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory: Inventory consisted of the following: At September 30, At December 31, Food $ 187,213 $ 134,355 Beverages 879,352 1,004,950 Totals $ 1,066,565 $ 1,139,305 |
Property and equipment, net
Property and equipment, net | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and equipment, net: Property and equipment, net consisted of the following: At September 30, At December 31, Furniture, fixtures and equipment $ 8,279,065 $ 7,336,956 Leasehold improvements 26,149,307 20,719,230 Less accumulated depreciation and amortization 13,814,832 13,833,271 20,613,540 14,222,915 Construction in progress 4,551,867 3,871,670 Restaurant supplies 1,033,944 721,040 Total $ 26,199,351 $ 18,815,625 Depreciation and amortization related to property and equipment included in continuing operations amounted to $630,249 and $327,810 in the three months ended September 30, 2015 and 2014 , respectively, and $1,620,009 and $1,000,464 in the nine months ended September 30, 2015 and 2014 , respectively. Additionally, included in discontinued operations for the nine months ended September 30, 2014 was depreciation of $128,600 . |
Accrued expenses
Accrued expenses | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued expenses | Accrued expenses: Accrued expenses consisted of the following: At September 30, At December 31, Sales tax payable $ 692,145 $ 168,172 Payroll and related 1,122,294 435,259 Current and deferred income taxes payable 2,628,404 494,152 Due to hotels 200,000 200,000 Other 336,997 707,121 Totals $ 4,979,840 $ 2,004,704 |
Long term debt
Long term debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long term debt | Long term debt: Long term debt consists of the following: September 30, 2015 December 31, 2014 Term Loan Agreements $ 10,555,639 $ 7,475,000 Equipment Financing Agreement 452,548 — 11,008,187 7,475,000 Less: Current portion of Long Term Debt 1,929,167 1,495,000 Long Term Debt, net of Current Portion $ 9,079,020 $ 5,980,000 Future minimum loan payments: 2015 $ 423,750 2016 2,397,500 2017 2,631,666 2018 2,434,215 2019 2,418,556 Thereafter 702,500 Total $ 11,008,187 On December 17, 2014, the Company entered into a Term Loan Agreement with BankUnited, N.A. in the amount of $7,475,000 maturing December 1, 2019 (the "Term Loan Agreement"). The Term Loan Agreement replaced the existing credit agreement which was terminated and the aggregate principal amount of the existing loans outstanding of $6,395,071 was converted into the Term Loan Agreement. Commencing on January 1, 2015, the Company made the first of sixty ( 60 ) consecutive monthly installments of $124,583 plus interest that will accrue at an annual rate of 5.0% . Our obligations under the Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Term Loan Agreement at September 30, 2015 and December 31, 2014 was $6,340,639 and $7,475,000 , respectively. On June 2, 2015, the Company entered into a second term loan agreement (the "Second Term Loan Agreement") with BankUnited, N.A., wherein BankUnited, N.A. agreed to make multiple advances to the Company in the aggregate principal amount of up to $6,000,000 . Commencing on April 1, 2016 the Company will pay fifty-four ( 54 ) consecutive equal monthly installments, with each such installment to be in the principal amount of $111,111 or such lesser amount as shall be equal to the quotient of (x) the outstanding principal amount of all advances on March 31, 2016, divided by (y) fifty-four ( 54 ); provided, however, that the final principal installment shall be in an amount equal to the aggregate principal amount of all advances outstanding on September 1, 2020, or such earlier date on which all outstanding advances shall become due and payable, whether by acceleration or otherwise. This second term loan bears interest at a rate per annum equal to 5.0% . Our obligations under the Second Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Second Term Loan Agreement at September 30, 2015 was $ 4,215,000 . The Term Loan Agreement and the Second Term Loan Agreement contain certain affirmative and negative covenants, including negative covenants that limit or restrict, among other things, liens and encumbrances, indebtedness, mergers, asset sales, investments, assumptions and guaranties of indebtedness of other persons, change in nature of operations, changes in fiscal year and other matters customarily restricted in such agreements. The financial covenants contained in these agreements require the borrowers to maintain a certain adjusted tangible net worth and a debt service coverage ratio. The Company was in compliance with all of its financial covenants under the Term Loan Agreement and Second Term Loan Agreement as of September 30, 2015 and the Company believes based on current projections that the Company will continue to comply with such covenants through the remainder of 2015. On June 5, 2015, the Company entered into a $1,000,000 Equipment Finance Agreement (the "Agreement") with Sterling National Bank. The Agreement covers certain equipment in our STKs that are under construction in Orlando and Chicago. At September 30, 2015, a deposit of $452,548 had been made on the equipment with the remainder to be financed once the equipment has been installed. The Agreement calls for sixty ( 60 ) monthly payments of $16,667 plus interest commencing July 1, 2015. Interest expense recognized related to these agreements amounted to $94,677 and $26,823 for the three months ended September 30, 2015 and 2014, respectively, and $246,745 and $134,629 for the nine months ended September 30, 2015 and 2014, respectively. Capitalized interest amounted to $93,464 and $26,481 for the three months ended September 30, 2015 and 2014, respectively, and $250,717 and $58,333 for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 , the issued letters of credit in the total amount of approximately $1.5 million for our STK locations in Orlando, Florida, Chicago, Illinois and Westwood, California remain outstanding for security deposits. |
Nonconsolidated variable intere
Nonconsolidated variable interest entities | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nonconsolidated variable interest entities | Nonconsolidated variable interest entities: Accounting principles generally accepted in the United States of America provide a framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited-liability corporation, trust, or any other legal structure used to conduct activities or hold assets that (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to direct the activities of the entity that most significantly impact its economic performance, or (3) has a group of equity owners that do not have the obligation to absorb losses of the entity or the right to receive returns of the entity. A VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE that is considered a variable interest (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. At September 30, 2015 and December 31, 2014, the Company held investments that were evaluated against the criteria for consolidation and determined that it is not the primary beneficiary of the investments because the Company lacks the power to direct the activities of the variable interest entities that most significantly impacts their economic performance. Therefore, consolidation in the Company’s financial statements is not required. At September 30, 2015 and December 31, 2014 , the Company held the following equity investments: At September 30, At December 31, Bagatelle NY LA Investors, LLC ("Bagatelle Investors") $ 68,469 $ 357,896 Bagatelle Little West 12th, LLC ( "Bagatelle NY") 2,391,000 1,938,252 Bagatelle La Cienega, LLC ("Bagatelle LA") — — One 29 Park, LLC ("One 29 Park") 532,138 506,295 Totals $ 2,991,607 $ 2,802,443 Three Months Ended September 30, Nine Months Ended 2015 2014 2015 2014 Equity in income of investee companies $ (205,273 ) $ (268,660 ) $ (728,504 ) $ (588,996 ) Bagatelle Investors is a holding company that has interests in two operating restaurant companies, Bagatelle NY and Bagatelle LA. All three entities were formed in 2011. The Company holds interests in all three entities. The Company holds a 31.24% ownership over Bagatelle Investors as of September 30, 2015 and December 31, 2014. The Company holds a 5.23% direct ownership over Bagatelle NY and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 45.90% for a total effective ownership of 51.13% as of September 30, 2015 and December 31, 2014. The Company holds a 5.23% direct ownership over Bagatelle LA and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 38.10% for a total effective ownership of 43.33% as of September 30, 2015 and December 31, 2014. The Company holds a 10% direct ownership over One29 Park as of September 30, 2015 and December 31, 2014. The Company accounts for its investment in One 29 Park under the equity method since it has ability to exercise significant influence over the entity. During the quarter and year ended September 30, 2015 and December 31, 2014 , respectively, the Company provided no explicit or implicit financial or other support to these VIEs that were not previously contractually required. The amounts presented above represent maximum exposure to loss. |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions: Due from related parties consists of amounts related to the Company and its related entities which arose from noninterest bearing cash advances and are expected to be repaid within the next twelve months. As of September 30, 2015 and December 31, 2014 , these advances aggregated to a total of $1,369,795 and $1,157,134 , respectively. The Company incurred approximately $104,000 and $144,000 for the three months ended September 30, 2015 and 2014 , respectively, and $382,000 and $380,000 for the nine months ended September 30, 2015 and 2014 , respectively, for design services at various restaurants to an entity owned by one of the Company’s shareholders. Included in accounts payable and accrued expenses at September 30, 2015 and December 31, 2014 is a balance due to this entity of approximately $45,000 and $0 , respectively. The Company incurred approximately $213,000 and 168,000 for the three months ended September 30, 2015 and 2014 , and $422,000 and $385,000 for the nine months ended September 30, 2015 and 2014 , respectively, for legal fees to an entity owned by one of the Company’s shareholders. Included in accounts payable and accrued expenses at September 30, 2015 and December 31, 2014 is a balance due to this entity of approximately $187,000 and $70,000 , respectively. The Company also received rental income on office space sublet to this entity of $40,207 and $24,000 for the three months ended September 30, 2015 and 2014 and $98,452 and $72,000 for the nine months ended September 30, 2015 and 2014 , respectively, there were no receivables outstanding at September 30, 2015 and December 31, 2014 , respectively. The Company incurred approximately $3.6 million and $807,000 for the three months ended September 30, 2015 and 2014 , respectively, and $8.3 million and $3.1 for the nine months ended September 30, 2015 and 2014 , respectively, for construction services to an entity owned by one of the Company’s shareholders. Included in accounts payable at September 30, 2015 and December 31, 2014 is a balance due to this entity of $187,000 and $6,669 , respectively. |
Derivative liability
Derivative liability | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liability | Derivative liability: On October 16, 2013, the Merger provided for up to an additional $14,100,000 of payments to the former holders of ONE Group membership interests (the "TOG Members") and to a liquidating trust (the "Liquidating Trust") established for the benefit of the TOG Members and the holders of warrants to acquire membership interests of ONE Group (the "TOG Warrant Owners") based on a formula as described in the Merger Agreement and which is contingent upon the exercise of outstanding Company warrants to purchase 5,750,000 shares of Common Stock at an exercise price of $5.00 per share (the “Parent Warrants”). The Company is required to make any payments on a monthly basis. Additionally, certain ONE Group employees are entitled to receive a contingent sign-on bonus of an aggregate of approximately $900,000 upon the exercise of the Parent Warrants. Any Parent Warrants that are unexercised will expire on the date that is the earlier of (i) February 27, 2016 or (ii) the forty-fifth (45th) day following the date that the Company’s Common Stock closes at or above $6.25 per share for 20 out of 30 trading days commencing on February 27, 2014. The Company estimates the fair value of the derivative liability using the Monte Carlo method, which is comprised of the $14,100,000 in payments and the $900,000 in contingent sign-on bonus for a total of $15,000,000 . The fair value of the derivative liability was initially measured on October 16, 2013 and is re-measured at the end of every reporting period with the change in value over the period reported in the statements of operations and comprehensive income (loss) as a derivative income or loss. In applying the Monte Carlo method, the Company uses the following key inputs and assumptions; the stock price on the valuation date, the exercise price of the warrants of $5.00 , the trigger price of $6.25 , the expected volatility which is based on an analysis of comparable companies historical stock price volatilities for a period comparable to the term of the warrants, the expected months until effective registration statement, the term based on the period from the valuation date until the two -year period following the expected date of the effective registration, the risk-free rate based on the rate of US treasury securities with the same term and the discount rate based on the aggregate of the expected short-term margin and the risk-free rate. The following tables summarize the inputs and assumptions used in valuing derivative liabilities: September 30, December 31, Fair value of derivative liability (3) $ 2,324,000 $ 6,241,000 Significant assumptions (or ranges): Trading market values (1) $ 3.55 $ 4.85 Term (years) (2) 4 months, 27 days 1 year, 58 days Expected volatility (1) 67.0 % 26.8 % Risk-free rate (2) 0.05 % 0.32 % Discount rate (3) 0.91 % 1.18 % Effective Exercise price (2) $ 5.00 $ 5.00 Trigger price (2) $ 6.25 $ 6.25 Fair value hierarchy: (1) Level 1 inputs are quoted prices in active markets for identical assets and liabilities, or derived therefrom. (2) Level 2 inputs are inputs other than quoted prices that are observable. (3) Level 3 inputs are unobservable inputs. Inputs for which any parts are level 3 inputs are classified as level 3 in their entirety. The Company recorded $1,139,000 and $ 3,917,000 of income from the change in the fair value of the derivative liability balance during the three and nine months ended September 30, 2015 . |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies: Operating leases: The Company is obligated under several operating leases for the restaurants, equipment and office space, expiring in various years through 2031, which provide for minimum annual rentals, escalations, percentage rent, common area expenses or increases in real estate taxes. Future minimum rental commitments under the leases and minimum future rental income per the sublease in five years subsequent to September 30, 2015 and thereafter are as follows: Year Ending Expense Income Net Amount 2015 $ 1,490,030 $ (314,829 ) $ 1,175,201 2016 8,337,502 (1,279,269 ) 7,058,233 2017 8,183,697 (1,059,545 ) 7,124,152 2018 8,306,805 (1,079,640 ) 7,227,165 2019 8,434,651 (1,116,229 ) 7,318,422 Thereafter 110,944,547 (3,084,946 ) 107,859,601 Total $ 145,697,232 $ (7,934,458 ) $ 137,762,774 Rent expense (including percentage rent of $71,428 and $101,936 for the three months ended September 30, 2015 and 2014 , respectively and $239,204 and $329,545 for the nine months ended September 30, 2015 and 2014 , respectively), included in continued operations, amounted to $937,700 and $779,164 for the three months ended September 30, 2015 and 2014 and $2,832,266 and $2,802,466 for the nine months ended September 30, 2015 and 2014 , respectively. Rent expense included in continuing operations has been reported in the consolidated statements of operations and comprehensive loss net of rental income of $179,186 and $188,480 for the three months ended September 30, 2015 and 2014 , respectively and $545,348 and $600,099 for the nine months ended September 30, 2015 and 2014 , respectively, related to subleases with related and unrelated parties which expire through 2025. License and management fees: Pursuant to its amended and restated operating agreement executed in June 2007 , Bridge Hospitality, LLC is obligated to pay management fees equal to 2% of revenues to a member for the life of the agreement. Management fees amounted to $258 and $19,156 for the three months ended September 30, 2015 and 2014 , respectively and $39,132 and $60,324 for the nine months ended September 30, 2015 and 2014 , respectively. Included in accounts payable at September 30, 2015 and December 31, 2014 are amounts due for management fees of $0 and $27,365 , respectively. In January 2010 , STK Vegas entered into a management agreement with a third party for a term of 10 years , with two five -year option periods. Under this agreement, STK Vegas shall receive a management fee equal to 5% of gross sales, as defined (“gross sales fee”) plus 20% of net profits prior to the investment breakeven point date and 43% of net profits thereafter (“incentive fee”). In addition, STK Vegas is entitled to receive a development fee equal to $200,000 . The Company has elected to receive a credit against a portion of its obligation (estimated at approximately $387,000 ) to fund the build-out in lieu of receiving the $200,000 . Management fees amounted to $1,015,876 and $1,059,993 for the three months ended September 30, 2015 and 2014 , respectively, and $3,589,914 and $3,604,433 for the nine months ended September 30, 2015 and 2014 , respectively. In July 2009 , One 29 Park Management entered into an agreement with a third party. Under this agreement, One 29 Park Management shall receive a management fee equal to 5% of gross revenues, as defined, from the restaurant, banquets, room service and rooftop sales and 50% of the base beverage fee, as defined, for the life of the management agreement which expires in 2025. Management fees amounted to $148,521 and $163,199 for the three months ended September 30, 2015 and 2014 , respectively, and $425,469 and $462,313 for the nine months ended September 30, 2015 and 2014 , respectively. In July 2010 , Hip Hospitality UK entered into a management agreement with a third party to manage and operate the food and beverage operations in the Hippodrome Casino in London. Under this agreement, Hip Hospitality UK shall receive a management fee equal to 5.5% of total revenue, as defined, as well as an incentive fee if certain conditions are met, for the life of the management agreement which expires in 2022. Management fees amounted to $148,191 and $195,792 for the three months ended September 30, 2015 and 2014 , respectively, and $476,608 and $554,039 for the nine months ended September 30, 2015 and 2014 , respectively. Included in accounts receivable and other assets at September 30, 2015 and December 31, 2014 are amounts due for management fees and reimbursable expenses of $313,685 and $377,320 , respectively. In December 2011 , TOG Aldwych entered into a management agreement with a third party to operate a restaurant, bar and lounges in the ME Hotel in London. Under this agreement, TOG Aldwych shall receive a management fee equal to 5% of receipts received from food and beverages operations. In addition, TOG Aldwych is entitled to receive a monthly marketing fee equal to 1.5% of receipts received from food and beverages operations and an additional fee equal to 65% of net operating profits, as defined, for the life of the management agreement which expires in 2032. Management fees amounted to $346,448 and $430,450 for the three months ended September 30, 2015 and 2014 , respectively, and $940,997 and $1,129,341 for the nine months ended September 30, 2015 and 2014 , respectively. Included in accounts receivable at September 30, 2015 and December 31, 2014 are amounts due for management fees of $929,689 and $200,124 , respectively. In June 2014, TOG (Milan) S.R.L. entered into a management agreement with Sol Melia Italia S.R.L. to operate a restaurant, rooftop bar and food and beverage services at the ME Milan Il Duca hotel in Milan, Italy. TOG (Milan) S.R.L. shall receive a management fee equal to 5% of operating revenue, as defined, and an additional fee equal to 65% of net operating revenue, as defined, for the life of the management agreement which expires in 2025. In addition, TOG (Milan) S.L.R. is entitled to receive a monthly marketing fee equal to 1.5% of operating revenues. Management fees amounted to $154,241 for the three and nine months ended September 30, 2015. Included in accounts receivable and other assets at September 30, 2015 are amounts due for management fees of $430,084 . |
Discontinued operations
Discontinued operations | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations | Discontinued operations: Management decided to cease operations for the following entities in 2014: Miami Services and Tenjune. On May 1, 2014, the Company entered into a settlement agreement and mutual general release with the landlord of the Bagatelle in Las Vegas, which closed in 2014 . In connection with this release, the Company agreed to make certain payments to the landlord and on May 22, 2014 made a payment for the remaining balance on an operating lease for certain equipment that was at the location. On May 30, 2014, the Company entered into a termination, mutual release and settlement agreement with a third party in Las Vegas (“Owners”) for the management agreement for the Heraea property and the lease agreement for the Xi Shi property in Las Vegas. In connection with this release, the Company agreed to make certain payments to the Owners. The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company's consolidated balance sheets as of September 30, 2015 and December 31, 2014: September 30, December 31, Other current assets $ 48,343 $ 67,676 Due from related parties 806,846 814,227 Assets of discontinued operations - current 855,189 881,903 Property and equipment, net 169,175 169,175 Security deposits 75,000 75,000 Assets of discontinued operations - long term 244,175 244,175 Accounts payable and accrued liabilities 409,108 551,266 Due to related parties (1) 3,606,667 3,654,552 Liabilities of discontinued operations - current 4,015,775 4,205,818 Net assets $ (2,916,411 ) $ (3,079,740 ) (1) Note - due to related parties represents amounts due to consolidating entities that are eliminated in consolidation. Summarized operating results related to these entities are included in discontinued operations in the accompanying consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended 2015 2014 2015 2014 Revenue $ — $ — $ — $ 102,330 Costs and Expenses (62,501 ) (177,050 ) (23,929 ) 1,196,706 Net loss from discontinued operations, net of taxes $ 62,501 $ 177,050 $ 23,929 $ (1,094,376 ) |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation: The Company is party to claims in lawsuits incidental to its business. In the opinion of management, the ultimate outcome of such matters, individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position or results of operations. |
Stockholders' equity
Stockholders' equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Stockholders' equity | Stockholders’ equity: The Company is authorized by its amended and restated certificate of incorporation to issue up to 75,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. As of September 30, 2015 and December 31, 2014 , there were 24,972,515 and 24,940,195 , outstanding shares of Common Stock, respectively, and no outstanding shares of preferred stock. |
Stock-based compensation
Stock-based compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation | Stock-based compensation: In October 2013, the board of directors approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”) pursuant to which the Company may issue options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. The 2013 Plan has reserved 4,773,992 shares of common stock for issuance. All awards will be approved by the board of directors or a committee of the board of directors to be established for such purpose. The Company’s outstanding stock options have maximum contractual terms of up to ten years , principally vest on a quarterly basis ratably over five years and were granted at exercise prices equal to the market price of the Company’s common stock on the date of grant. The Company’s outstanding stock options are exercisable into shares of the Company’s common stock. The Company measures the cost of employee services received in exchange for an award of equity instruments, including grants of employee stock options and restricted stock awards, based on the fair value of the award at the date of grant in accordance with the modified prospective method. The Company uses the Black-Scholes model for purposes of determining the fair value of stock options granted and recognizes compensation costs ratably over the requisite service period, net of estimated forfeitures. For restricted stock awards, the grant-date fair value is the quoted market price of the stock. As of September 30, 2015 , all 1,702,578 options outstanding were excluded from the calculation of dilutive earnings per share as their effect would have been anti-dilutive as the exercise price of these grants are above the average market price. For the three months ended September 30, 2015 and 2014, the Company recognized $162,850 and $159,385 , respectively, and for the nine months ended September 30, 2015 and 2014, the Company recognized $506,853 and $326,753 of non-cash stock-based compensation expense related to options, respectively, in general and administrative expense in the consolidated statements of operations. As of September 30, 2015 , there was approximately $3,733,014 of total unrecognized compensation cost related to unvested share-based compensation grants, which is expected to be amortized over a weighted-average period of 4.6 years. A summary of the status of stock option awards and changes during the nine months ended September 30, 2015 are presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Intrinsic Value Outstanding at December 31, 2014 2,046,578 $ 5.00 Cancelled, expired, or forfeited 344,000 — Outstanding at Exercisable at September 30, 2015 1,702,578 $ 5.01 9.44 $ — Exercisable at September 30, 2015 599,680 $ 5.20 9.44 $ — The weighted-average grant-date fair value of option awards vested and non-vested during the nine months ended September 30, 2015 was $1.86 . On May 18, 2015, the Company granted four board members an unrestricted immediate vesting grant of 8,080 shares each. The closing stock price was $4.95 . The Company recorded compensation expense related to these awards of $0 and $160,000 for the three and nine months ended September 30, 2015. |
Segment reporting
Segment reporting | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment reporting | Segment reporting: The Company operates in three segments: owned STK units ("STKs"), food and beverage hospitality management agreements ("F&B") and Other concepts ("Other"). We believe STKs, F&B and Other to be our reportable segments as they do not have similar economic or other characteristics to be aggregated into a single reportable segment. Our STKs segment consists of leased restaurant locations and competes in the full service dining industry. Our F&B segment consists of management agreements in which the Company operates the food and beverage services in hotels or casinos and could include an STK, which we refer to as managed STK units. We refer to owned STK units and managed STK units together as “STK units.” These management agreements generate management and incentive fees on net revenue at each location. Our Other segment includes owned non-STK leased locations. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: STKs $ 13,304,698 $ 10,375,136 $ 35,425,710 $ 27,807,365 F&B 1,939,376 1,945,363 6,112,629 6,207,523 Other 9,809 69,685 393,023 915,556 $ 15,253,883 $ 12,390,184 $ 41,931,362 $ 34,930,444 Segment Profits (loss): STKs $ 1,200,787 $ 1,564,275 $ 2,803,271 $ 3,488,507 F&B 1,939,376 1,945,363 6,112,629 6,207,523 Other (40,753 ) (176,877 ) 34,748 90,488 Total segment profit 3,099,410 3,332,761 8,950,648 9,786,518 General and administrative 2,610,599 1,922,482 7,647,589 6,024,364 Depreciation and amortization 630,249 327,810 1,620,009 1,000,464 Interest expense, net of interest income 1,210 (6,268 ) (3,980 ) 52,220 Other 823,697 (224,079 ) (170,154 ) (2,329,785 ) Income from continuing operations before provision for income taxes $ (966,345 ) $ 1,312,816 $ (142,816 ) $ 5,039,255 September 30, December 31, Property & equipment, net: STKs $ 25,604,325 $ 17,456,993 F&B 364,755 229,771 Other 230,271 1,128,861 Total $ 26,199,351 $ 18,815,625 |
Geographic information
Geographic information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Geographic information | Geographic information: The following table contains certain financial information by geographic location for the nine months ended September 30, 2015 and 2014 : Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 United States: Revenues - owned units $ 13,314,507 $ 10,444,821 $ 35,818,733 $ 28,709,010 Management, incentive and royalty fee revenue 1,384,556 1,360,148 4,385,104 4,346,117 Foreign: Revenues - owned units $ — $ — $ — $ 13,911 Management and development fee revenue 554,820 585,216 1,727,525 1,861,407 The following table contains certain financial information by geographic location at September 30, 2015 and December 31, 2014 : September 30, December 31, United States: Net assets $ 12,815,249 $ 6,290,470 Foreign: Net assets $ 4,683,427 $ 890,464 |
Income taxes Income taxes
Income taxes Income taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes: In June 2015, the Company made the decision to release the valuation allowance amounting to $7.7 million against its deferred tax assets net of deferred tax liabilities. Recent profitable quarters and projected future pretax income are sources of positive evidence that led the Company to conclude that it is more likely than not that it will realize its net deferred tax assets. The Company recognized an income tax expense of $922,427 for the three months ended September 30, 2015, compared to income tax expense of $462,898 for the three months ended September 30, 2014. The Company’s effective tax rate was (123.69)% for the three months ended September 30, 2015 compared to 35.26% for the three months ended September 30, 2014. The Company recognized income tax benefit of $5.6 million for the nine months ended September 30, 2015, compared to income tax expense of $813,580 for the nine months ended September 30, 2014. The Company’s effective tax rate, exclusive of the discrete tax benefit, was approximately (129.31)% for the nine months ended September 30, 2015, compared to 59.9% for the nine months ended September 30, 2014. The net decrease in the effective tax rate, exclusive of the discrete tax benefit, for the nine months ended September 30, 2015, compared to the same periods in 2014, was primarily due to the release of the valuation allowance on deferred tax assets amounting to $2.2 million that impacted the normalized rate during these periods. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events: On October 21, 2015, the Company and SBEEG Holdings, LLC ("sbe") announced that it was in their mutual interests to terminate the agreements relating to the acquisition of sbe's Katsuya and Cleo brands and entered into a Termination and Mutual Release Agreement, dated as of October 21, 2015. On October 7, 2015, the Company received a payment of $67,680 in full settlement of the property damage portion of the insurance claim relating to water damages sustained at STK Miami. The Company filed a claim for property damages in the estimated amount of $500,000 and has received approximately $443,000 to date against this claim. On October 5, 2015, the Company announced that it entered into an agreement with Standard Life Assurance Limited to open an STK Rebel in Edinburgh, Scotland in 2017. On November 16, 2015, the Company announced the signing of a license agreement with Foxhole Holdings Limited to open an STK in Ibiza, Spain. The restaurant is expected to open in 2017. |
Business and basis of present26
Business and basis of presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of consolidation | Principles of consolidation: The accompanying consolidated financial statements of The ONE Group Hospitality, Inc. and subsidiaries include the accounts of ONE Group and its subsidiaries, Little West 12t h LLC, One-LA, L.P., Bridge Hospitality, LLC, STK-LA, LLC, WSATOG (Miami), LLC, STK Miami Service, LLC (“Miami Services”), STK Miami, LLC (“STK Miami”), Basement Manager, LLC, JEC II, LLC, One TCI Ltd., One Marks, LLC, MPD Space Events LLC, One 29 Park Management, LLC (“One 29 Park Management”), STK Midtown Holdings, LLC, STK Midtown, LLC, STKOUT Midtown, LLC, STK Atlanta, LLC, STK-Las Vegas, LLC (“STK Vegas”), One Atlantic City, LLC, Asellina Marks LLC, Heraea Vegas, LLC (“Heraea”), Xi Shi Las Vegas, LLC (“Xi Shi Las Vegas”), T.O.G. (UK) Limited, Hip Hospitality Limited (“Hip Hospitality UK”), T.O.G. (Aldwych) Limited (“TOG Aldwych”), CA Aldwych Limited, T.O.G. (Milan) S.r.l. ("TOG Milan"), BBCLV, LLC, STK DC, LLC, STK Orlando, LLC, STK Chicago, LLC ("STK Chicago"), TOG Biscayne, LLC, STK Westwood, LLC, STK Denver, LLC, STK Rebel Austin, LLC, STK Dallas, LLC, STK Rebel San Diego, LLC, STK Texas Holdings, LLC, STK Holdings II, LLC, 9401415 Canada Ltd., STK Ibiza, LLC and STK Rebel (Edinburgh) Limited. The entities are collectively referred to herein as the “Company” or “Companies,” as appropriate, and are consolidated on the basis of common ownership and control. All significant intercompany balances and transactions have been eliminated in consolidation. |
Net income (loss) per common share | Net Income (Loss) Per Common Share Basic net income (loss) per common share is based upon the weighted-average common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock. |
Fair value measurements | Fair value measurements The carrying amount of the Company’s accounts receivable, accounts payable and accrued expenses approximate fair value because of the short term nature of the financial instruments. The carrying value of the long term debt approximates fair value since the terms of the loan have been recently negotiated. |
Nature of business | Nature of business: The Company is a hospitality company that develops and operates upscale, 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 in the United States and England. We opened our first restaurant in January 2004 in New York City and as of November 16, 2015, we owned and operated (under lease agreements) 12 and managed (under management agreements) 15 restaurants and lounges globally, including 10 STKs in major metropolitan cities in the United States and Europe (of which 7 are owned and 3 managed). In addition, we provided food and beverage services in five hotels and casinos, one of which is under a lease agreement and four of which are under separate management agreements. We generate management and incentive fee revenue from those restaurants and lounges that we manage on behalf of our F&B hospitality clients. |
Unaudited interim financial information | Unaudited interim financial information: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other interim period or other future year. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes for the fiscal year ended December 31, 2014 included in the Company’s Annual Report filed on Form 10-K/A for the year ended December 31, 2014 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2015. |
Recent accounting pronouncements | Recent accounting pronouncements: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). ASU 2014-09 addresses the reporting of revenue by most entities and will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This update is effective in fiscal periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016. The impact on our financial statements of adopting ASU 2014-09 is currently being assessed by management. In August 2014, the FASB issued ASU No. 2014-15 “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The impact on our financial statements of adopting ASU 2014-15 is currently being assessed by management. In February 2015, the FASB issued ASC 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company does not expect this standard to have a significant impact on its consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “Interest- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update is effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. This standard is subsequently updated by ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which codifies an SEC staff announcement relative to debt issuance costs for line-of-credit arrangements. The Company does not expect these updates to have a significant impact on its consolidated financial statements and has not yet concluded whether it will adopt ASU 2015-03 and ASU 2015-15 prior to their effective dates. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory." The update states that inventory should be measured at the lower of cost and “net realizable value.” Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The amendment is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. The Company does not expect this standard to have a significant impact on its consolidated financial statements and has not yet concluded whether it will adopt ASU 2015-11 prior to the effective date. |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consisted of the following: At September 30, At December 31, Food $ 187,213 $ 134,355 Beverages 879,352 1,004,950 Totals $ 1,066,565 $ 1,139,305 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment, net consisted of the following: At September 30, At December 31, Furniture, fixtures and equipment $ 8,279,065 $ 7,336,956 Leasehold improvements 26,149,307 20,719,230 Less accumulated depreciation and amortization 13,814,832 13,833,271 20,613,540 14,222,915 Construction in progress 4,551,867 3,871,670 Restaurant supplies 1,033,944 721,040 Total $ 26,199,351 $ 18,815,625 |
Accrued expenses (Tables)
Accrued expenses (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consisted of the following: At September 30, At December 31, Sales tax payable $ 692,145 $ 168,172 Payroll and related 1,122,294 435,259 Current and deferred income taxes payable 2,628,404 494,152 Due to hotels 200,000 200,000 Other 336,997 707,121 Totals $ 4,979,840 $ 2,004,704 |
Long term debt (Tables)
Long term debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Debt | Long term debt consists of the following: September 30, 2015 December 31, 2014 Term Loan Agreements $ 10,555,639 $ 7,475,000 Equipment Financing Agreement 452,548 — 11,008,187 7,475,000 Less: Current portion of Long Term Debt 1,929,167 1,495,000 Long Term Debt, net of Current Portion $ 9,079,020 $ 5,980,000 Future minimum loan payments: 2015 $ 423,750 2016 2,397,500 2017 2,631,666 2018 2,434,215 2019 2,418,556 Thereafter 702,500 Total $ 11,008,187 |
Schedule of Maturities of Long-term Debt | September 30, 2015 December 31, 2014 Term Loan Agreements $ 10,555,639 $ 7,475,000 Equipment Financing Agreement 452,548 — 11,008,187 7,475,000 Less: Current portion of Long Term Debt 1,929,167 1,495,000 Long Term Debt, net of Current Portion $ 9,079,020 $ 5,980,000 Future minimum loan payments: 2015 $ 423,750 2016 2,397,500 2017 2,631,666 2018 2,434,215 2019 2,418,556 Thereafter 702,500 Total $ 11,008,187 |
Nonconsolidated variable inte31
Nonconsolidated variable interest entities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Nonconsolidated Variable Interest Entities | At September 30, 2015 and December 31, 2014 , the Company held the following equity investments: At September 30, At December 31, Bagatelle NY LA Investors, LLC ("Bagatelle Investors") $ 68,469 $ 357,896 Bagatelle Little West 12th, LLC ( "Bagatelle NY") 2,391,000 1,938,252 Bagatelle La Cienega, LLC ("Bagatelle LA") — — One 29 Park, LLC ("One 29 Park") 532,138 506,295 Totals $ 2,991,607 $ 2,802,443 Three Months Ended September 30, Nine Months Ended 2015 2014 2015 2014 Equity in income of investee companies $ (205,273 ) $ (268,660 ) $ (728,504 ) $ (588,996 ) |
Derivative liability (Tables)
Derivative liability (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Inputs and Assumptions Used in Valuing Derivative Liabilities | The following tables summarize the inputs and assumptions used in valuing derivative liabilities: September 30, December 31, Fair value of derivative liability (3) $ 2,324,000 $ 6,241,000 Significant assumptions (or ranges): Trading market values (1) $ 3.55 $ 4.85 Term (years) (2) 4 months, 27 days 1 year, 58 days Expected volatility (1) 67.0 % 26.8 % Risk-free rate (2) 0.05 % 0.32 % Discount rate (3) 0.91 % 1.18 % Effective Exercise price (2) $ 5.00 $ 5.00 Trigger price (2) $ 6.25 $ 6.25 Fair value hierarchy: (1) Level 1 inputs are quoted prices in active markets for identical assets and liabilities, or derived therefrom. (2) Level 2 inputs are inputs other than quoted prices that are observable. (3) Level 3 inputs are unobservable inputs. Inputs for which any parts are level 3 inputs are classified as level 3 in their entirety. |
Commitments and contingencies (
Commitments and contingencies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Commitments and Minimum Future Rental Income | Future minimum rental commitments under the leases and minimum future rental income per the sublease in five years subsequent to September 30, 2015 and thereafter are as follows: Year Ending Expense Income Net Amount 2015 $ 1,490,030 $ (314,829 ) $ 1,175,201 2016 8,337,502 (1,279,269 ) 7,058,233 2017 8,183,697 (1,059,545 ) 7,124,152 2018 8,306,805 (1,079,640 ) 7,227,165 2019 8,434,651 (1,116,229 ) 7,318,422 Thereafter 110,944,547 (3,084,946 ) 107,859,601 Total $ 145,697,232 $ (7,934,458 ) $ 137,762,774 |
Discontinued operations (Tables
Discontinued operations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Components of Assets and Liabilities that are Classified as Discontinued Operations | The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company's consolidated balance sheets as of September 30, 2015 and December 31, 2014: September 30, December 31, Other current assets $ 48,343 $ 67,676 Due from related parties 806,846 814,227 Assets of discontinued operations - current 855,189 881,903 Property and equipment, net 169,175 169,175 Security deposits 75,000 75,000 Assets of discontinued operations - long term 244,175 244,175 Accounts payable and accrued liabilities 409,108 551,266 Due to related parties (1) 3,606,667 3,654,552 Liabilities of discontinued operations - current 4,015,775 4,205,818 Net assets $ (2,916,411 ) $ (3,079,740 ) (1) Note - due to related parties represents amounts due to consolidating entities that are eliminated in consolidation. |
Schedule of Operating Results Related to Entities Included in Discontinued Operations | Summarized operating results related to these entities are included in discontinued operations in the accompanying consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 and 2014 : Three Months Ended September 30, Nine Months Ended 2015 2014 2015 2014 Revenue $ — $ — $ — $ 102,330 Costs and Expenses (62,501 ) (177,050 ) (23,929 ) 1,196,706 Net loss from discontinued operations, net of taxes $ 62,501 $ 177,050 $ 23,929 $ (1,094,376 ) |
Stock-based compensation (Table
Stock-based compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of the Status of Stock Option Awards | A summary of the status of stock option awards and changes during the nine months ended September 30, 2015 are presented below: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Intrinsic Value Outstanding at December 31, 2014 2,046,578 $ 5.00 Cancelled, expired, or forfeited 344,000 — Outstanding at Exercisable at September 30, 2015 1,702,578 $ 5.01 9.44 $ — Exercisable at September 30, 2015 599,680 $ 5.20 9.44 $ — |
Segment reporting (Tables)
Segment reporting (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: STKs $ 13,304,698 $ 10,375,136 $ 35,425,710 $ 27,807,365 F&B 1,939,376 1,945,363 6,112,629 6,207,523 Other 9,809 69,685 393,023 915,556 $ 15,253,883 $ 12,390,184 $ 41,931,362 $ 34,930,444 Segment Profits (loss): STKs $ 1,200,787 $ 1,564,275 $ 2,803,271 $ 3,488,507 F&B 1,939,376 1,945,363 6,112,629 6,207,523 Other (40,753 ) (176,877 ) 34,748 90,488 Total segment profit 3,099,410 3,332,761 8,950,648 9,786,518 General and administrative 2,610,599 1,922,482 7,647,589 6,024,364 Depreciation and amortization 630,249 327,810 1,620,009 1,000,464 Interest expense, net of interest income 1,210 (6,268 ) (3,980 ) 52,220 Other 823,697 (224,079 ) (170,154 ) (2,329,785 ) Income from continuing operations before provision for income taxes $ (966,345 ) $ 1,312,816 $ (142,816 ) $ 5,039,255 September 30, December 31, Property & equipment, net: STKs $ 25,604,325 $ 17,456,993 F&B 364,755 229,771 Other 230,271 1,128,861 Total $ 26,199,351 $ 18,815,625 |
Geographic information (Tables)
Geographic information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Summary of Financial Information by Geographic Location | The following table contains certain financial information by geographic location for the nine months ended September 30, 2015 and 2014 : Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 United States: Revenues - owned units $ 13,314,507 $ 10,444,821 $ 35,818,733 $ 28,709,010 Management, incentive and royalty fee revenue 1,384,556 1,360,148 4,385,104 4,346,117 Foreign: Revenues - owned units $ — $ — $ — $ 13,911 Management and development fee revenue 554,820 585,216 1,727,525 1,861,407 The following table contains certain financial information by geographic location at September 30, 2015 and December 31, 2014 : September 30, December 31, United States: Net assets $ 12,815,249 $ 6,290,470 Foreign: Net assets $ 4,683,427 $ 890,464 |
Merger (Details)
Merger (Details) | Oct. 16, 2013$ / shares | Sep. 30, 2015$ / shares | Dec. 31, 2014$ / shares |
Business Acquisition [Line Items] | |||
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
The One Group | |||
Business Acquisition [Line Items] | |||
Merger exchange ratio | 8.09 |
Business and basis of present39
Business and basis of presentation (Details) | Sep. 30, 2015restaurant_and_loungelocation |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Number of restaurants and lounges owned and operated | 12 |
Number of restaurants and lounges managed | 15 |
Number of locations with food and beverage services | location | 5 |
Number of locations with leased food and beverage services | location | 1 |
Number of locations operated under food and beverage hospitality management agreements | location | 4 |
STKs | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Number of restaurants and lounges owned and operated | 7 |
Number of restaurants and lounges managed | 3 |
Number of restaurants and lounges | 10 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory [Line Items] | ||
Inventory | $ 1,066,565 | $ 1,139,305 |
Food | ||
Inventory [Line Items] | ||
Inventory | 187,213 | 134,355 |
Beverages | ||
Inventory [Line Items] | ||
Inventory | $ 879,352 | $ 1,004,950 |
Property and equipment, net (De
Property and equipment, net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||||
Less accumulated depreciation and amortization | $ 13,814,832 | $ 13,814,832 | $ 13,833,271 | ||
Property and equipment, net | 26,199,351 | 26,199,351 | 18,815,625 | ||
Depreciation and amortization | 630,249 | $ 327,810 | 1,620,009 | $ 1,000,464 | |
Furniture, fixtures and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 8,279,065 | 8,279,065 | 7,336,956 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 26,149,307 | 26,149,307 | 20,719,230 | ||
Furniture, fixtures, and equipment and leasehold improvements, less accumulated depreciation and amortization | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, net | 20,613,540 | 20,613,540 | 14,222,915 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 4,551,867 | 4,551,867 | 3,871,670 | ||
Restaurant supplies | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 1,033,944 | 1,033,944 | $ 721,040 | ||
Continuing Operations | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | $ 630,249 | $ 327,810 | $ 1,620,009 | 1,000,464 | |
Discontinued Operations | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | $ 128,600 |
Accrued expenses (Details)
Accrued expenses (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Sales tax payable | $ 692,145 | $ 168,172 |
Payroll and related | 1,122,294 | 435,259 |
Current and deferred income taxes payable | 2,628,404 | 494,152 |
Due to hotels | 200,000 | 200,000 |
Other | 336,997 | 707,121 |
Totals | $ 4,979,840 | $ 2,004,704 |
Long term debt - Schedule of De
Long term debt - Schedule of Debt (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Total long term debt | $ 11,008,187 | $ 7,475,000 |
Less: Current portion of Long Term Debt | 1,929,167 | 1,495,000 |
Long Term Debt, net of Current Portion | 9,079,020 | 5,980,000 |
Future minimum loan payments: | ||
2,015 | 423,750 | |
2,016 | 2,397,500 | |
2,017 | 2,631,666 | |
2,018 | 2,434,215 | |
2,019 | 2,418,556 | |
Thereafter | 702,500 | |
Medium-term Notes | ||
Debt Instrument [Line Items] | ||
Total long term debt | 10,555,639 | 7,475,000 |
Construction Loans | Equipment Finance Agreement | ||
Debt Instrument [Line Items] | ||
Total long term debt | $ 452,548 | $ 0 |
Long term debt - Narrative (Det
Long term debt - Narrative (Details) | Jun. 05, 2015USD ($)installment | Dec. 17, 2014USD ($)installment | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 02, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | ||||||||
Long-term debt | $ 11,008,187 | $ 11,008,187 | $ 7,475,000 | |||||
Interest expense | 94,677 | $ 26,823 | 246,745 | $ 134,629 | ||||
Interest costs capitalized | 93,464 | $ 26,481 | 250,717 | $ 58,333 | ||||
STK Locations | ||||||||
Debt Instrument [Line Items] | ||||||||
Letters of credit outstanding | 1,500,000 | 1,500,000 | ||||||
Medium-term Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Long-term debt | 10,555,639 | 10,555,639 | 7,475,000 | |||||
Term Loan Agreement | Medium-term Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of debt | $ 7,475,000 | |||||||
Number of periodic payments | installment | 60 | |||||||
Periodic principal payments | $ 124,583 | |||||||
Debt interest rate | 5.00% | |||||||
Long-term debt | 6,340,639 | 6,340,639 | 7,475,000 | |||||
Second Term Loan Agreement | Medium-term Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of debt | $ 6,000,000 | |||||||
Number of periodic payments | installment | 54 | |||||||
Periodic principal payments | $ 111,111 | |||||||
Debt interest rate | 5.00% | |||||||
Long-term debt | 4,215,000 | 4,215,000 | ||||||
Equipment Finance Agreement | Construction Loans | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value of debt | $ 1,000,000 | |||||||
Number of periodic payments | installment | 60 | |||||||
Periodic principal payments | $ 16,667 | |||||||
Long-term debt | $ 452,548 | $ 452,548 | $ 0 | |||||
Line of Credit | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit facility, revolving credit conversion to term loan | $ 6,395,071 |
Nonconsolidated variable inte45
Nonconsolidated variable interest entities (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2015USD ($)operating_restaurant_company | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)operating_restaurant_company | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2011variable_interest_entity | |
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Investments | $ 2,991,607 | $ 2,991,607 | $ 2,802,443 | |||
Equity in income of investee companies | (205,273) | $ (268,660) | (728,504) | $ (588,996) | (588,996) | |
Number of entities formed | variable_interest_entity | 3 | |||||
Bagatelle NY LA Investors, LLC | ||||||
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Investments | $ 68,469 | $ 68,469 | $ 357,896 | |||
Number of interests held in operating restaurant companies | operating_restaurant_company | 2 | 2 | ||||
Ownership interest (percent) | 31.24% | 31.24% | ||||
Bagatelle Little West 12th Street, LLC | ||||||
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Investments | $ 2,391,000 | $ 2,391,000 | $ 1,938,252 | |||
Ownership interest (percent) | 5.23% | 5.23% | ||||
Indirect ownership interest (percent) | 45.90% | 45.90% | ||||
Effective ownership interest (percent) | 51.13% | 51.13% | ||||
Bagatelle La Cienega, LLC | ||||||
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Investments | 0 | $ 0 | $ 0 | |||
Ownership interest (percent) | 5.23% | 5.23% | ||||
Indirect ownership interest (percent) | 38.10% | 38.10% | ||||
Effective ownership interest (percent) | 43.33% | 43.33% | ||||
One 29 Park, LLC | ||||||
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Investments | $ 532,138 | $ 532,138 | $ 506,295 | |||
Ownership interest (percent) | 10.00% | 10.00% | ||||
Bagatelle NY LA Investors, LLC, Little West 12th Street, LLC, and La Cienega, LLC | ||||||
Equity Method Investment, Financial Statement, Reported Amounts [Abstract] | ||||||
Number of interests held in operating restaurant companies | operating_restaurant_company | 3 | 3 |
Related party transactions (Det
Related party transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Related Party Transaction [Line Items] | |||||
Other assets | $ 789,219 | $ 789,219 | $ 793,002 | ||
Due to related parties | 0 | 0 | 19,608 | ||
Non-Interest Bearing Cash Advances | |||||
Related Party Transaction [Line Items] | |||||
Other assets | 1,369,795 | 1,369,795 | 1,157,134 | ||
Design Services | |||||
Related Party Transaction [Line Items] | |||||
Incurred expenses | 104,000 | $ 144,000 | 382,000 | $ 380,000 | |
Due to related parties | 45,000 | 45,000 | 0 | ||
Legal Fees | |||||
Related Party Transaction [Line Items] | |||||
Incurred expenses | 213,000 | 168,000 | 422,000 | 385,000 | |
Due to related parties | 187,000 | 187,000 | 70,000 | ||
Rental Revenue | |||||
Related Party Transaction [Line Items] | |||||
Related party revenues | 40,207 | 24,000 | 98,452 | 72,000 | |
Construction Serivces | |||||
Related Party Transaction [Line Items] | |||||
Incurred expenses | 3,600,000 | $ 807,000 | 8,300,000 | $ 3,100,000 | |
Due to related parties | $ 187,000 | $ 187,000 | $ 6,669 |
Derivative liability (Details)
Derivative liability (Details) - USD ($) | Oct. 16, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Fair Value Measurements [Line Items] | ||||||
Fair value of derivative liability | $ 2,324,000 | $ 2,324,000 | $ 6,241,000 | |||
Trading market values | $ 3.55 | $ 4.85 | ||||
Term (years) | 4 months 27 days | 1 year 58 days | ||||
Expected volatility | 67.00% | 26.80% | ||||
Risk-free rate | 0.05% | 0.32% | ||||
Discount rate | 0.91% | 1.18% | ||||
Effective Exercise price | $ 5 | $ 5 | $ 5 | |||
Trigger price | $ 6.25 | $ 6.25 | ||||
Derivative income | $ 1,139,000 | $ (991,588) | $ 3,917,000 | $ 1,793,124 | ||
The One Group | ||||||
Fair Value Measurements [Line Items] | ||||||
Additional payments to TOG Members | $ 14,100,000 | |||||
Shares required for additional payments to TOG Members | 5,750,000 | |||||
Exercise price of warrants (in dollars per share) | $ 5 | |||||
Aggregate contingent sign-on bonus | $ 900,000 | |||||
Minimum price per share per agreement (in dollars per share) | $ 6.25 | |||||
Threshold number of days above minimum stock price during measurement period | 20 days | |||||
Number of days in measurement period | 30 days | |||||
Fair value of derivative liability | $ 15,000,000 | |||||
Period following expected date of effective registration | 2 years | |||||
Effective Exercise price | $ 5 | |||||
Trigger price | $ 6.25 |
Commitments and contingencies48
Commitments and contingencies (Operating Leases) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Expense | ||||
2,015 | $ 1,490,030 | $ 1,490,030 | ||
2,016 | 8,337,502 | 8,337,502 | ||
2,017 | 8,183,697 | 8,183,697 | ||
2,018 | 8,306,805 | 8,306,805 | ||
2,019 | 8,434,651 | 8,434,651 | ||
Thereafter | 110,944,547 | 110,944,547 | ||
Total | 145,697,232 | 145,697,232 | ||
Income | ||||
2,015 | (314,829) | (314,829) | ||
2,016 | (1,279,269) | (1,279,269) | ||
2,017 | (1,059,545) | (1,059,545) | ||
2,018 | (1,079,640) | (1,079,640) | ||
2,019 | (1,116,229) | (1,116,229) | ||
Thereafter | (3,084,946) | (3,084,946) | ||
Total | (7,934,458) | (7,934,458) | ||
Net Amount | ||||
2,015 | 1,175,201 | 1,175,201 | ||
2,016 | 7,058,233 | 7,058,233 | ||
2,017 | 7,124,152 | 7,124,152 | ||
2,018 | 7,227,165 | 7,227,165 | ||
2,019 | 7,318,422 | 7,318,422 | ||
Thereafter | 107,859,601 | 107,859,601 | ||
Total | 137,762,774 | 137,762,774 | ||
Percentage rent | 71,428 | $ 101,936 | 239,204 | $ 329,545 |
Rent expense | 937,700 | 779,164 | 2,832,266 | 2,802,466 |
Rental income related to subleases | $ 179,186 | $ 188,480 | $ 545,348 | $ 600,099 |
Commitments and contingencies49
Commitments and contingencies (License and Management Fees) (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||
Jun. 30, 2014 | Dec. 31, 2011 | Jul. 31, 2010 | Jan. 31, 2010USD ($)option_period | Jul. 31, 2009 | Jun. 30, 2007 | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Bridge Hospitality, LLC | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management fee, percent of revenues | 2.00% | ||||||||||
Management fee expense | $ 258 | $ 19,156 | $ 39,132 | $ 60,324 | |||||||
Management fee payable | 0 | 0 | $ 27,365 | ||||||||
STK Vegas | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management agreement term | 10 years | ||||||||||
Number of five year option periods | option_period | 2 | ||||||||||
Management Agreement, Option Period Term | 5 years | ||||||||||
Management fee, percent of gross sales | 5.00% | ||||||||||
Management fee, net profits prior to breakeven point | 20.00% | ||||||||||
Management fee, net profits after investment breakeven point | 43.00% | ||||||||||
Development fee | $ 200,000 | ||||||||||
Credit against obligation | $ 387,000 | ||||||||||
Management fee revenue | 1,015,876 | 1,059,993 | 3,589,914 | 3,604,433 | |||||||
One 29 Park Management | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management fee revenue | 148,521 | 163,199 | 425,469 | 462,313 | |||||||
Management fee, percent of gross revenue | 5.00% | ||||||||||
Management fee, percent of base beverage fee | 50.00% | ||||||||||
Hip Hospitality UK | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management fee revenue | 148,191 | 195,792 | 476,608 | 554,039 | |||||||
Management fee, percent of total revenue | 5.50% | ||||||||||
Management fees receivable | 313,685 | 313,685 | 377,320 | ||||||||
TOG Aldwych | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management fee revenue | 346,448 | $ 430,450 | 940,997 | $ 1,129,341 | |||||||
Management fees receivable | 929,689 | 929,689 | $ 200,124 | ||||||||
Management fee, percent of receipts from food and beverage operations | 5.00% | ||||||||||
Marketing fee, percent of receipts from food and beverage | 1.50% | ||||||||||
Additional fee, percent of net operating profits | 65.00% | ||||||||||
TOG (Milan) S.R.L. | |||||||||||
License and Management Fees [Line Items] | |||||||||||
Management fee revenue | 154,241 | 154,241 | |||||||||
Management fees receivable | $ 430,084 | $ 430,084 | |||||||||
Management fee, percent of operating revenue | 5.00% | ||||||||||
Additional fee, percent of net operating revenue | 65.00% | ||||||||||
Marketing fee, percent of operating revenue | 1.50% |
Discontinued operations (Detail
Discontinued operations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | |||||
Other current assets | $ 48,343 | $ 48,343 | $ 67,676 | ||
Due from related parties | 806,846 | 806,846 | 814,227 | ||
Assets of discontinued operations - current | 855,189 | 855,189 | 881,903 | ||
Property and equipment, net | 169,175 | 169,175 | 169,175 | ||
Security deposits | 75,000 | 75,000 | 75,000 | ||
Assets of discontinued operations - long term | 244,175 | 244,175 | 244,175 | ||
Accounts payable and accrued liabilities | 409,108 | 409,108 | 551,266 | ||
Due to related parties | 3,606,667 | 3,606,667 | 3,654,552 | ||
Liabilities of discontinued operations - current | 4,015,775 | 4,015,775 | 4,205,818 | ||
Net assets | (2,916,411) | (2,916,411) | $ (3,079,740) | ||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||
Revenue | 0 | $ 0 | 0 | $ 102,330 | |
Costs and Expenses | (62,501) | (177,050) | (23,929) | 1,196,706 | |
Net loss from discontinued operations, net of taxes | $ 62,501 | $ 177,050 | $ 23,929 | $ (1,094,376) |
Stockholders' equity (Details)
Stockholders' equity (Details) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 | Oct. 16, 2013 |
Equity [Abstract] | |||
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 | |
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | |
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares outstanding (in shares) | 24,972,515 | 24,940,195 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Stock-based compensation (Narra
Stock-based compensation (Narrative) (Details) | May. 18, 2015board_member$ / sharesshares | Oct. 31, 2013shares | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation | $ 666,853 | $ 326,753 | ||||
Number of board members receiving grants | board_member | 4 | |||||
Closing stock price (in dollars per share) | $ / shares | $ 4.95 | |||||
Director | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation | $ 0 | $ 160,000 | ||||
Options granted in period (in shares) | shares | 8,080 | |||||
Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted shares excluded from calculation of dilutive earnings per share | shares | 1,702,578 | |||||
2013 Plan | Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Authorized shares | shares | 4,773,992 | |||||
Contractual term | 10 years | |||||
Option vesting period | 5 years | |||||
Stock-based compensation | 162,850 | $ 159,385 | $ 506,853 | $ 326,753 | ||
Unrecognized compensation cost related to unvested stock-based awards | $ 3,733,014 | $ 3,733,014 | ||||
Unrecognized compensation cost, recognition period | 4 years 7 months 24 days | |||||
Options granted, weighted-average grant date fair value | $ / shares | $ 1.86 |
Stock-based compensation (Summa
Stock-based compensation (Summary of Status of Company's Stock Option Activity) (Details) - Stock Options | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Shares | |
Beginning balance (in shares) | shares | 2,046,578 |
Cancelled, expired, or forfeited (in shares) | shares | 344,000 |
Ending balance (in shares) | shares | 1,702,578 |
Exercisable at end of period (in shares) | shares | 599,680 |
Weighted Average Exercise Price | |
Beginning balance (in dollars per share) | $ 5 |
Cancelled, expired, or forfeited (in dollars per share) | 0 |
Ending balance (in dollars per share) | 5.01 |
Exercisable at end of period (in dollars per share) | $ 5.20 |
Weighted-Average Remaining Contractual Term | |
Outstanding ending balance | 9 years 5 months 10 days |
Exercisable at end of period | 9 years 5 months 10 days |
Intrinsic Value | |
Outstanding ending balance | $ | $ 0 |
Exercisable at end of period | $ | $ 0 |
Segment reporting (Details)
Segment reporting (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
Segment reporting | |||||
Number of reportable segments | segment | 3 | ||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
Revenues | $ 15,253,883 | $ 12,390,184 | $ 41,931,362 | $ 34,930,444 | |
General and administrative | 2,610,599 | 1,922,482 | 7,647,589 | 6,024,364 | |
Depreciation and amortization | 630,249 | 327,810 | 1,620,009 | 1,000,464 | |
Interest expense, net of interest income | 1,210 | (6,268) | (3,980) | 52,220 | |
Income from continuing operations before provision for income taxes | (966,345) | 1,312,816 | (142,816) | 5,039,255 | |
Segment Reporting Information, Additional Information [Abstract] | |||||
Property and equipment, net | 26,199,351 | 26,199,351 | $ 18,815,625 | ||
Operating segment | |||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
Revenues | 15,253,883 | 12,390,184 | 41,931,362 | 34,930,444 | |
Total segment profit | 3,099,410 | 3,332,761 | 8,950,648 | 9,786,518 | |
Segment Reporting Information, Additional Information [Abstract] | |||||
Property and equipment, net | 26,199,351 | 26,199,351 | 18,815,625 | ||
Segment reconciling items | |||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
General and administrative | 2,610,599 | 1,922,482 | 7,647,589 | 6,024,364 | |
Depreciation and amortization | 630,249 | 327,810 | 1,620,009 | 1,000,464 | |
Interest expense, net of interest income | 1,210 | (6,268) | (3,980) | 52,220 | |
Other | 823,697 | (224,079) | (170,154) | 2,329,785 | |
STKs | Operating segment | |||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
Revenues | 13,304,698 | 10,375,136 | 35,425,710 | 27,807,365 | |
Total segment profit | 1,200,787 | 1,564,275 | 2,803,271 | 3,488,507 | |
Segment Reporting Information, Additional Information [Abstract] | |||||
Property and equipment, net | 25,604,325 | 25,604,325 | 17,456,993 | ||
F&B | Operating segment | |||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
Revenues | 1,939,376 | 1,945,363 | 6,112,629 | 6,207,523 | |
Total segment profit | 1,939,376 | 1,945,363 | 6,112,629 | 6,207,523 | |
Segment Reporting Information, Additional Information [Abstract] | |||||
Property and equipment, net | 364,755 | 364,755 | 229,771 | ||
Other | Operating segment | |||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||
Revenues | 9,809 | 69,685 | 393,023 | 915,556 | |
Total segment profit | (40,753) | $ (176,877) | 34,748 | $ 90,488 | |
Segment Reporting Information, Additional Information [Abstract] | |||||
Property and equipment, net | $ 230,271 | $ 230,271 | $ 1,128,861 |
Geographic information (Details
Geographic information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | $ 13,314,507 | $ 10,444,821 | $ 35,818,733 | $ 28,722,921 | |
Management, incentive and royalty fee revenue | 1,939,376 | 1,945,363 | 6,112,629 | 6,207,523 | |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | 13,314,507 | 10,444,821 | 35,818,733 | 28,709,010 | |
Management, incentive and royalty fee revenue | 1,384,556 | 1,360,148 | 4,385,104 | 4,346,117 | |
Net assets | 12,815,249 | 12,815,249 | $ 6,290,470 | ||
Foreign | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | 0 | 0 | 0 | 13,911 | |
Management, incentive and royalty fee revenue | 554,820 | $ 585,216 | 1,727,525 | $ 1,861,407 | |
Net assets | $ 4,683,427 | $ 4,683,427 | $ 890,464 |
Income taxes (Details)
Income taxes (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | |||||
Release of valuation allowance | $ 7,700,000 | $ 1,500,000 | $ 2,200,000 | ||
Provision (benefit) for income taxes | $ 922,427 | $ 462,898 | $ (5,619,504) | $ 813,580 | |
Effective income tax rate percent | (123.69%) | 35.26% | (129.31%) | 59.90% |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | Oct. 07, 2015 | Nov. 16, 2015 | Mar. 13, 2015 |
Subsequent Event [Line Items] | |||
Estimated loss of property damage | $ 500,000 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Payment received from property damage | $ 67,680 | $ 443,000 |