What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-08 compared with 2025-01-07 · 163 added, 69 removed, 199 unchanged (54% of the section changed)

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Business Trends

During the three months ended November 30, 2024, we opened six restaurants and expanded our restaurant base to 70 restaurants in twenty states and Washington, DC.

During the six months ended February 28, 2025, we opened nine restaurants and expanded our restaurant base to 73 restaurants in twenty states and Washington, DC.

Subsequent to February 28, 2025, we opened two additional restaurants totaling 75 restaurants.

We expect to open a total of 14 new restaurants in fiscal year 2025 and therefore, we expect our revenue and restaurant operating costs to increase in fiscal year 2025.

We also expect our general and administrative expenses to increase on a dollar basis in fiscal 2025 to support the growth of the company.

We have evaluated and will continue to evaluate the impact of import laws and tariffs on our operations.

As of February 28, 2025, there was no material impact on our business, financial condition, results of operations or cash flows.

However, we expect tariffs may impact our operations in certain areas, such as food and beverage costs, construction and equipment costs and other restaurant operating costs, for the remainder of fiscal 2025.

Key Financial Definitions

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Interest income.

Interest income includes income earned on our money market funds.

Interest income includes income earned on our money market funds and investments.

Income tax expense (benefit).

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Results of Operations

The following tables present selected comparative results of operations for the three months ended November 30, 2024 and 2023.

The following tables present selected comparative results of operations for the three and six months ended February 28, 2025 and February 29, 2024.

Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods.

Certain totals for the tables below may not recalculate or sum to 100% due to rounding.

Three Months Ended November 30,

Three Months Ended

February 28, 2025

February 29, 2024

(dollar amounts in thousands)

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Income tax expense

Three Months Ended November 30,

Six Months Ended

February 28, 2025

February 29, 2024

(dollar amounts in thousands)

Restaurant operating costs

Food and beverage costs

Labor and related costs

Occupancy and related expenses

Depreciation and amortization expenses

Total restaurant operating costs

General and administrative expenses

Depreciation and amortization expenses

Total operating expenses

Operating loss

Other expense (income):

Interest expense

Interest income

Loss before income taxes

Income tax expense

Three Months Ended

Six Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(as a percentage of sales)

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Income tax expense

Three Months Ended November 30, 2024 Compared to Three Months Ended November 30, 2023

Sales were $64.5 million for the three months ended November 30, 2024 compared to $51.5 million for the three months ended November 30, 2023, representing an increase of $13.0 million, or 25.2%.

The increase in sales was primarily driven by the sales resulting from sixteen new restaurants opened subsequent to November 30, 2023, as well as increases in menu prices during the same period.

Comparable restaurant sales increased 1.8% for the three months ended November 30, 2024, as compared to the three months ended November 30, 2023.

Three Months Ended February 28, 2025 Compared to Three Months Ended February 29, 2024

Sales were $64.9 million for the three months ended February 28, 2025 compared to $57.3 million for the three months ended February 29, 2024, representing an increase of $7.6 million, or 13.3%.

The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 29, 2024, as well as increases in menu prices during the same period.

Comparable restaurant sales decreased 5.3% for the three months ended February 28, 2025, as compared to the three months ended February 29, 2024 primarily due to a reduction in traffic.

Food and beverage costs.

Food and beverage costs were $18.7 million for the three months ended November 30, 2024 compared to $15.4 million for the three months ended November 30, 2023, representing an increase of $3.3 million, or 21.5%.

The increase in food and beverage costs was primarily driven by costs associated with sales from sixteen new restaurants opened subsequent to November 30, 2023.

As a percentage of sales, food and beverage costs decreased to 29.0% in the three months ended November 30, 2024 as compared to 29.8% in the three months ended November 30, 2023, primarily due to increases in menu prices, which was partially offset by food cost inflation.

Food and beverage costs were $18.6 million for the three months ended February 28, 2025 compared to $16.9 million for the three months ended February 29, 2024, representing an increase of $1.7 million, or 10.0%.

The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, food and beverage costs decreased to 28.7% in the three months ended February 28, 2025 as compared to 29.6% in the three months ended February 29, 2024, primarily due to increases in menu prices and supply chain initiatives, which was partially offset by food cost inflation.

Labor and related costs.

Labor and related costs were $21.2 million for the three months ended November 30, 2024 compared to $16.4 million for the three months ended November 30, 2023, representing an increase of $4.8 million, or 29.4%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from sixteen new restaurants opened subsequent to November 30, 2023.

As a percentage of sales, labor and related costs increased to 32.9% in the three months ended November 30, 2024 as compared to 31.9% in the three months ended November 30, 2023.

The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to November 30, 2023.

Labor and related costs were $22.6 million for the three months ended February 28, 2025 compared to $18.9 million for the three months ended February 29, 2024, representing an increase of $3.7 million, or 19.4%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, labor and related costs increased to 34.8% in the three months ended February 28, 2025 as compared to 33.0% in the three months ended February 29, 2024.

The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to February 29, 2024.

Occupancy and related expenses.

Occupancy and related expenses were $4.8 million for the three months ended November 30, 2024 compared to $3.9 million for the three months ended November 30, 2023, representing an increase of $0.9 million, or 21.6%.

The increase was primarily a result of additional lease expense related to the opening of sixteen new restaurants subsequent to November 30, 2023.

As a percentage of sales, occupancy and related expenses decreased to 7.4% in the three months ended November 30, 2024 as compared to 7.6% in the three months ended November 30, 2023, primarily driven by lower pre-opening lease expenses related to restaurants not yet open.

Occupancy and related expenses were $5.1 million for the three months ended February 28, 2025 compared to $4.0 million for the three months ended February 29, 2024, representing an increase of $1.1 million, or 29.0%.

The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants subsequent to February 29, 2024.

As a percentage of sales, occupancy and related expenses increased to 7.9% in the three months ended February 28, 2025 as compared to 6.9% in the three months ended February 29, 2024, primarily driven by sales deleverage.

Depreciation and amortization expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $3.1 million for the three months ended November 30, 2024 compared to $2.5 million for the three months ended November 30, 2023, representing an increase of $0.6 million, or 24.8%.

The increase consists of depreciation of property and equipment related to the sixteen new restaurants that opened subsequent to November 30, 2023.

As a percentage of sales, depreciation and amortization expenses at the restaurant level was 4.8% for the three months ended November 30, 2024 and November 30, 2023.

Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended November 30, 2024 and November 30, 2023, and as a percentage of sales were both 0.2%, respectively.

Other costs were $9.3 million for the three months ended November 30, 2024 compared to $7.4 million for the three months ended November 30, 2023, representing an increase of $1.9 million, or 25.5%.

The increase was primarily driven by an increase in costs related to the sixteen new restaurants that opened subsequent to November 30, 2023.

As a percentage of sales, other costs remained consistent at 14.5% in the three months ended November 30, 2024 and November 30, 2023.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $3.3 million for the three months ended February 28, 2025 compared to $2.7 million for the three months ended February 29, 2024, representing an increase of $0.6 million, or 22.0%.

The increase consists of depreciation of property and equipment related to the fourteen new restaurants that opened subsequent to February 29, 2024.

As a percentage of sales, depreciation and amortization expenses at the restaurant level was 5.1% for the three months ended February 28, 2025 as compared to 4.7% in the three months ended February 29, 2024.

Depreciation and amortization expenses incurred at the corporate level were $0.1 million for both the three months ended February 28, 2025 and February 29, 2024, and as a percentage of sales were both 0.2%, respectively.

Other costs were $8.8 million for the three months ended February 28, 2025 compared to $8.2 million for the three months ended February 29, 2024, representing an increase of $0.6 million, or 7.1%.

The increase was primarily driven by an increase in costs related to the fourteen new restaurants that opened subsequent to February 29, 2024.

As a percentage of sales, other costs decreased to 13.5% in the three months ended February 28, 2025 as compared to 14.3% in the three months ended February 29, 2024, primarily driven by lower marketing, recruiting and travel expenses.

General and administrative expenses.

General and administrative expenses were $8.7 million for the three months ended November 30, 2024 compared to $8.6 million for the three months ended November 30, 2023, representing an increase of $0.1 million, or 1.4%.

The increase in general and administrative expenses was primarily due to compensation-related costs of $0.4 million due to additional headcount, which was partially offset by decreases of $0.2 million in professional fees and $0.2 million in litigation expenses.

As a percentage of sales, general and administrative expenses decreased to 13.5% in the three months ended November 30, 2024 as compared to 16.7% in the three months ended November 30, 2023, primarily driven by leveraged benefits from the increase in sales.

General and administrative expenses were $11.0 million for the three months ended February 28, 2025 compared to $8.2 million for the three months ended February 29, 2024, representing an increase of $2.8 million, or 34.5%.

This increase was primarily due to the litigation settlement of $2.1 million, compensation-related costs of $0.5 million and $0.2 million in other net increases.

As a percentage of sales, general and administrative expenses increased to 16.9% in the three months ended February 28, 2025 as compared to 14.3% in the three months ended February 29, 2024, primarily due to the $2.1 million litigation settlement expense, partially offset with sales leverage.

Interest expense.

Interest expense was $13 thousand for the three months ended November 30, 2024 compared to $8 thousand for the three months ended November 30, 2023, respectively.

Interest expense was $13 thousand for the three months ended February 28, 2025 compared to $12 thousand for the three months ended February 29, 2024, respectively.

Interest income.

Interest income was $565 thousand for the three months ended November 30, 2024 compared to $840 thousand for the three months ended November 30, 2023 due to lower invested cash during the three months ended November 30, 2024.

Interest income was $859 thousand for the three months ended February 28, 2025 compared to $754 thousand for the three months ended February 29, 2024.

The increase was primarily driven by investing incremental cash from our follow-on offering completed in November 2024 into money market funds and long-term investments, partially offset by lower interest rates.

Income tax expense.

Income tax expense was $39 thousand for the three months ended November 30, 2024 compared to an income tax expense of $38 thousand for the three months ended November 30, 2023.

Income tax expense was $38 thousand for the three months ended February 28, 2025 compared to an income tax expense of $50 thousand for the three months ended February 29, 2024.

For further discussion of our income taxes, see “Note 9.

Income Taxes” in the Notes to Condensed Financial Statements.

Six Months Ended February 28, 2025 Compared to Six Months Ended February 29, 2024

Sales were $129.4 million for the six months ended February 28, 2025 compared to $108.8 million for the six months ended February 29, 2024, representing an increase of $20.6 million, or 18.9%.

The increase in sales was primarily driven by the sales resulting from fourteen new restaurants opened subsequent to February 29, 2024, as well as increases in menu prices during the same period.

Comparable restaurant sales decreased 1.6% for the six months ended February 28, 2025, as compared to the six months ended February 29, 2024, primarily due to a reduction in traffic.

Food and beverage costs.

Food and beverage costs were $37.3 million for the six months ended February 28, 2025 compared to $32.3 million for the six months ended February 29, 2024, representing an increase of $5.0 million, or 15.5%.

The increase in food and beverage costs was primarily driven by costs associated with sales from fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, food and beverage costs decreased to 28.8% in the six months ended February 28, 2025 as compared to 29.7% in the six months ended February 29, 2024, primarily due to increases in menu prices and supply chain initiatives, which was partially offset by food cost inflation.

Labor and related costs.

Labor and related costs were $43.8 million for the six months ended February 28, 2025 compared to $35.3 million for the six months ended February 29, 2024, representing an increase of $8.5 million, or 24.0%.

This increase in labor and related costs was primarily driven by additional labor costs incurred from fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, labor and related costs increased to 33.9% in the six months ended February 28, 2025 as compared to 32.5% in the six months ended February 29, 2024.

The increase in cost as a percentage of sales was primarily due to increases in wage rates subsequent to February 29, 2024.

Occupancy and related expenses.

Occupancy and related expenses were $9.9 million for the six months ended February 28, 2025 compared to $7.9 million for the six months ended February 29, 2024, representing an increase of $2.0 million, or 25.3%.

The increase was primarily a result of additional lease expense related to the opening of fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, occupancy and related expenses increased to 7.6% in the six months ended February 28, 2025, compared to 7.2% in the six months ended February 29, 2024, primarily driven by sales deleverage.

Depreciation and amortization expenses.

Depreciation and amortization expenses incurred as part of restaurant operating costs were $6.4 million for the six months ended February 28, 2025 compared to $5.2 million for the six months ended February 29, 2024, representing an increase of $1.2 million, or 23.3%.

The increase consists of depreciation of property and equipment related to fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, depreciation and amortization expenses at the restaurant level remained reasonably consistent at 4.9% for the six months ended February 28, 2025 as compared to 4.8% for the six months ended February 29, 2024.

Depreciation and amortization expenses incurred at the corporate level were $0.2 million for both the six months ended February 28, 2025 and February 29, 2024, and as a percentage of sales were both 0.2%, respectively.

Other costs were $18.1 million for the six months ended February 28, 2025 compared to $15.6 million for the six months ended February 29, 2024, representing an increase of $2.5 million, or 15.8%.

The increase was primarily driven by an increase in costs related to fourteen new restaurants opened subsequent to February 29, 2024.

As a percentage of sales, other costs decreased to 14.0% in the six months ended February 28, 2025 from 14.4% in the six months ended February 29, 2024, primarily driven by lower marketing, recruiting and travel expenses.

General and administrative expenses.

General and administrative expenses were $19.7 million for the six months ended February 28, 2025 compared to $16.8 million for the six months ended February 29, 2024, representing an increase of $2.9 million, or 17.5%.

This increase was primarily due to the litigation settlement of $2.1 million and compensation-related costs of $1.1 million partially offset by $0.3 million decrease in professional fees.

As a percentage of sales, general and administrative expenses decreased to 15.2% in the six months ended February 28, 2025 from 15.4% in the six months ended February 29, 2024, primarily driven by sales leverage, partially offset by the $2.1 million litigation settlement expense.

Interest expense.

Interest expense was $26 thousand for the six months ended February 28, 2025 compared to $20 thousand for the six months ended February 29, 2024.

Interest income.

Interest income was $1.4 million for the six months ended February 28, 2025 compared to $1.6 million for the six months ended February 29, 2024.

The decrease was primarily driven by lower interest rates.

Income tax expense.

Income tax expense was $77 thousand for the six months ended February 28, 2025 compared to $88 thousand for the six months ended February 29, 2024.

For further discussion of our income taxes, see “Note 9.

Income Taxes” in the Notes to Condensed Financial Statements.

Key Performance Indicators

In assessing the performance of our business, we consider a variety of financial and performance measures.

The key measures for determining how our business is performing include sales, EBITDA, Adjusted EBITDA, Restaurant-level Operating Profit, Restaurant-level Operating Profit margin, comparable restaurant sales performance, and the number of restaurant openings.

Sales represents sales of food and beverages in restaurants, as shown on our condensed statements of operations and comprehensive loss.

Several factors affect our restaurant sales in any given period, including the number of restaurants in operation, guest traffic and average check.

EBITDA and Adjusted EBITDA

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In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Our computation of Adjusted EBITDA and Adjusted EBITDA margin

may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA and Adjusted EBITDA margin in the same fashion.

Our computation of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA and Adjusted EBITDA margin in the same fashion.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

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The following table reconciles net loss to EBITDA and Adjusted EBITDA:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(amounts in thousands)

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Adjusted EBITDA margin

(a) Stock-based compensation expense includes non-cash stock-based compensation, which is comprised of restaurant-level stock-based compensation included in labor and related costs and of corporate-level stock-based compensation included in general and administrative expenses in the statements of operations and comprehensive loss.

For further details of stock-based compensation, see “Note 5.

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We believe that Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results, as this measure depicts normal, recurring cash operating expenses essential to supporting the development and operations of our restaurants.

However, these measures may not provide a complete understanding of the operating results of the Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results.

However, these measures may not provide a complete understanding of the operating results of the

Company as a whole and such measures should be reviewed in conjunction with our GAAP financial results.

We expect Restaurant-level Operating Profit (Loss) to increase in proportion to the number of new restaurants we open and our comparable restaurant sales growth.

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Restaurant-level Operating Profit (Loss) margin allows us to evaluate the level of Restaurant-level Operating Profit (Loss) generated from sales.

and Restaurant-level Operating Profit (Loss) margin do not accrue directly to the benefit of stockholders because of corporate-level expenses excluded from such measures.

However, you should be aware that Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin are financial measures that are not indicative of overall results for the Company, and Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin do not accrue directly to the benefit of stockholders because of corporate-level expenses excluded from such measures.

In addition, when evaluating Restaurant-level Operating Profit (Loss) and Restaurant-level Operating Profit (Loss) margin, you should be aware that in the future we may incur expenses similar to those excluded when calculating these measures.

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The following table reconciles operating loss to Restaurant-level Operating Profit and Restaurant-level Operating Profit margin:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(amounts in thousands)

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Restaurant-level operating profit margin

For further details of stock-based compensation, see “Note 5.

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We include restaurants in the comparable restaurant base that have been in operation for at least 18 full calendar months prior to the start of the accounting period presented due to new restaurants experiencing a period of higher sales upon opening.

For restaurants that were temporarily closed for consecutive days, which primarily occurs during renovations, the comparative period was also adjusted.

For restaurants that were temporarily closed the comparative period was also adjusted.

Measuring our comparable restaurant sales performance allows us to evaluate the performance of our existing restaurant base.

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The following table shows the comparable restaurant sales performance:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Comparable restaurant sales performance (%)

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The following table shows the growth in our restaurant base:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Restaurant activity:

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Liquidity and Capital Resources

Our primary sources of liquidity and cash flows are cash and cash equivalents on hand and cash provided by operating activities.

Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant fixtures.

The significant components of our working capital are liquid assets such as cash, cash equivalents and receivables reduced by accounts payable and accrued expenses.

Our working capital position benefits from the fact that we generally collect cash from sales to guests the same day or, in the case of credit or debit card transactions, within several days of the related sale, while we typically have longer payment terms with our vendors.

We believe that cash provided by operating activities, cash, and cash equivalents on hand will be sufficient to fund our lease obligations, capital expenditures and working capital needs for at least the next 12 months.

We also maintain a Revolving Credit

Agreement with Kura Japan, of which the maturity date has been extended to April 10, 2028 pursuant to the Third Amendment to Revolving Credit Agreement with Kura Japan.

During the six months ended February 28, 2025, we had no borrowings under the Revolving Credit Agreement and have $45.0 million of availability remaining.

As of February 28, 2025, we did not have any material off-balance sheet arrangements.

On November 13, 2024, we completed an underwritten public offering of common stock pursuant to our universal shelf registration statement on Form S-3, selling an aggregate of 800,328 shares of Class A common stock, including the exercise in full of the underwriters’ option to purchase 104,390 additional shares, at the price of $85.00 per share less an underwriting discount of $4.25 per share.

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No payments were made by us to directors, officers or persons owning 10% or more of the our common stock or to their associates, or to our affiliates.

During the three months ended November 30, 2024, we had no borrowings under the Revolving Credit Agreement and have $45.0 million of availability remaining.

As of November 30, 2024, we did not have any material off-balance sheet arrangements.

The significant components of our working capital are liquid assets such as cash, cash equivalents, and receivables reduced by accounts payable and accrued expenses.

We also maintain a Revolving Credit Agreement with Kura Japan, which is currently set to expire on April 10, 2025.

Summary of Cash Flows

Our primary sources of liquidity and cash flows are operating cash flows, cash and cash equivalents on hand and short-term investments.

We use this to fund investing expenditures for new restaurant openings, reinvest in our existing restaurants, and our working capital.

Our working capital position benefits from the fact that we generally collect cash from sales to guests the same day, or in the case of credit or debit card transactions, within several days of the related sale, and we typically have at least 30 days to pay our vendors.

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

Three Months Ended November 30,

Six Months Ended

February 28, 2025

February 29, 2024

Statement of Cash Flow data:

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Cash Flows Provided by Operating Activities

Net cash provided by operating activities during the three months ended November 30, 2024 was $4.4 million, primarily due to a net loss of $1.0 million, non-cash charges of $3.2 million for depreciation and amortization, $1.1 million for stock-based compensation, and $1.3 million in non-cash lease expense, and net cash outflows of $0.3 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the three months ended November 30, 2023 was $2.4 million, primarily due to a net loss of $2.0 million, non-cash charges of $2.6 million for depreciation and amortization, $1.0 million for stock-based compensation, and $1.1 million in non-cash lease expense, and net cash outflows of $0.2 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the six months ended February 28, 2025 was $8.6 million, primarily due to a net loss of $4.7 million, non-cash charges of $6.6 million for depreciation and amortization, $2.2 million for stock-based compensation, and net cash outflows of $4.4 million from changes in operating assets and liabilities.

Net cash provided by operating activities during the six months ended February 29, 2024 was $6.2 million, primarily due to a net loss of $3.0 million, non-cash charges of $5.4 million for depreciation and amortization, $2.0 million for stock-based compensation and net cash outflows of $1.9 million from changes in operating assets and liabilities.

Cash Flows Used in Investing Activities

Net cash used in investing activities during the three months ended November 30, 2024 was $12.5 million, primarily due to $11.6 million in purchases of property and equipment and $0.8 million in purchases of liquor licenses.

The increase in purchases of property and equipment in the three months ended November 30, 2024 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the three months ended November 30, 2023 was $8.0 million, primarily due to $3.0 million in purchases of short-term investments, $9.4 million in purchases of property and equipment and $0.1 million in purchases of liquor licenses offset by $4.5 million of redemption of short-term investments.

The increase in purchases of property and equipment in the three months ended November 30, 2023 is primarily related to capital expenditures for current and future restaurant openings and renovations, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the six months ended February 28, 2025 was $39.4 million, primarily due to $25.3 million in purchases of long-term investments, $23.1 million in purchases of property and equipment and $0.9 million in purchases of liquor licenses offset by $10.0 million of redemptions of long-term investments.

The increase in purchases of property and equipment in the six months ended February 28, 2025 is primarily related to capital expenditures for future restaurant openings, maintaining our existing restaurants and other projects.

Net cash used in investing activities during the six months ended February 29, 2024 was $20.6 million, primarily due to $3.5 million in purchases of short-term investments, $22.8 million in purchases of property and equipment and $0.1 million in purchases of liquor licenses offset by $5.9 million of redemption of short-term investments.

The increase in purchases of property and equipment in the six months ended February 29, 2024 is primarily related to capital expenditures for future restaurant openings, maintaining our existing restaurants and other projects.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities during the three months ended November 30, 2024 was $64.8 million and is primarily due to aggregate net proceeds from the issuance of stock of $64.4 million after deducting the underwriting discounts and commissions and offering expenses payable and $0.5 million of proceeds from exercise of stock options.

Net cash provided by financing activities during the three months ended November 30, 2023 was $56 thousand and is primarily due to $110 thousand of proceeds from exercise of stock options offset by $54 thousand in repayments of principal on finance leases.

Net cash provided by financing activities during the six months ended February 28, 2025 was $65.0 million and is primarily due to aggregate net proceeds from the issuance of stock of $64.4 million after deducting the underwriting discounts and commissions and offering expenses, $0.9 million of proceeds from exercise of stock options offset by $0.3 million in taxes paid on vested RSUs.

Net cash provided by financing activities during the six months ended February 29, 2024 was $1.5 million and is primarily due to $1.9 million of proceeds from exercise of stock options offset by $0.4 million in taxes paid on vested RSUs.

Material Cash Requirements

As of November 30, 2024, we had $9.7 million in contractual obligations relating to the construction of new restaurants and purchase commitments for goods related to restaurant operations.

All contractual obligations are expected to be paid during the next 12 months utilizing cash and cash equivalents on hand and provided by operations.

For operating and finance lease obligations, see “Note 3.

As of February 28, 2025, we had $7.8 million in contractual obligations relating to the construction of new restaurants and purchase commitments for goods related to restaurant operations.

All contractual obligations are expected to be paid during the next 12 months utilizing cash and cash equivalents on hand and provided by operating activities.

For operating lease obligations, see “Note 3.

Leases” in the Notes to Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncement

For a description of our recently adopted accounting pronouncement, including the respective date of adoption and expected effect on our results of operations and financial condition, see “Part I, Item 1, Note 1.

Recent Accounting Pronouncements

For a description of our recently issued or adopted accounting pronouncements, including the respective date of adoption and expected effect on our results of operations and financial condition, see “Part I, Item 1, Note 1.

Organization and Basis of Presentation” of the Notes to Condensed Financial Statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

Critical Accounting Estimates

Our discussion and analysis of operating results and financial condition are based on our financial statements.

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Quantitative and Qualitati ve Disclosures About Market Risk.

There have been no material changes to our market risk during the three months ended November 30, 2024.

There have been no material changes to our market risk during the six months ended February 28, 2025.

For a discussion of our exposure to market risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our 2024 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis