KURA SUSHI USA, INC. 10-Q

Item 1. Financial Statements. Kura Sushi USA, Inc. Condensed Balance Sheets (amounts in thousands, except for par value) (Unaudited) November 30, 2025 August 31, 2025 Assets Current assets: Cash and cash equivalents $ 35,365 $ 47,498 Short-term investments 15,336 14,964 Accounts and other receivables 6,333 6,410 Inventories 2,453 2,141 Due from affiliate 73 126 Prepaid expenses and other current assets 5,203 4,308 Total current assets 64,763 75,447 Non-current assets: Property and equipment – net 181,921 171,190 Operating lease right-of-use assets 161,811 146,416 Long-term investments 27,846 29,542 Deposits and other assets 7,170 8,347 Total assets $ 443,511 $ 430,942 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 9,574 $ 11,533 Accrued expenses and other current liabilities 4,853 4,116 Salaries and wages payable 8,215 10,310 Operating lease liabilities – current 14,778 14,083 Due to affiliate 819 525 Sales tax payable 2,087 2,213 Total current liabilities 40,326 42,780 Non-current liabilities: Operating lease liabilities – non-current 172,634 155,932 Other liabilities 1,350 1,160 Total liabilities 214,310 199,872 Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock, $ 0.001 par value; 1,000 shares authorized, no shares issued or outstanding — — Class A common stock, $ 0.001 par value; 50,000 shares authorized, 11,111 shares issued and outstanding as of November 30, 2025 and August 31, 2025 11 11 Class B common stock, $ 0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of November 30, 2025 and August 31, 2025 1 1 Additional paid-in capital 267,124 265,973 Accumulated deficit ( 37,952 ) ( 34,892 ) Accumulated other comprehensive income (loss) 17 ( 23 ) Total stockholders' equity 229,201 231,070 Total liabilities and stockholders' equity $ 443,511 $ 430,942 The accompanying notes are an integral part of these condensed financial statements. 1 Kura Sushi USA, Inc. Condensed Statements of Operations and Comprehensive Loss (amounts in thousands, except for per share data) (Unaudited) Three months ended November 30, 2025 2024 Sales $ 73,455 $ 64,456 Restaurant operating costs: Food and beverage costs 21,934 18,667 Labor and related costs 23,898 21,235 Occupancy and related expenses 5,838 4,754 Depreciation and amortization expenses 3,980 3,091 Other costs 11,805 9,341 Total restaurant operating costs 67,455 57,088 General and administrative expenses 9,551 8,733 Depreciation and amortization expenses 129 109 Total operating expenses 77,135 65,930 Operating loss ( 3,680 ) ( 1,474 ) Other expense (income): Interest expense 18 13 Interest income ( 674 ) ( 565 ) Loss before income taxes ( 3,024 ) ( 922 ) Income tax expense 36 39 Net loss $ ( 3,060 ) $ ( 961 ) Net loss per Class A and Class B shares Basic $ ( 0.25 ) $ ( 0.08 ) Diluted $ ( 0.25 ) $ ( 0.08 ) Weighted average Class A and Class B shares outstanding Basic 12,111 11,416 Diluted 12,111 11,416 Other comprehensive loss: Unrealized gain on short-term investments $ 40 $ — Comprehensive loss $ ( 3,020 ) $ ( 961 ) The accompanying notes are an integral part of these condensed financial statements. 2 Kura Sushi USA, Inc. Condensed Statements of Stockholders’ Equity (amounts in thousands) (Unaudited) Common Stock Class A Class B Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders' Shares Amount Shares Amount Capital Deficit Income/(Loss) Equity Balances as of August 31, 2025 11,111 $ 11 1,000 $ 1 $ 265,973 $ ( 34,892 ) $ ( 23 ) $ 231,070 Stock-based compensation — — — — 1,128 — — 1,128 Employee stock plan — — — — 23 — — 23 Net loss — — — — — ( 3,060 ) — ( 3,060 ) Other comprehensive income — — — — — — 40 40 Balances as of November 30, 2025 11,111 $ 11 1,000 $ 1 267,124 $ ( 37,952 ) $ 17 $ 229,201 Common Stock Class A Class B Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders' Shares Amount Shares Amount Capital Deficit Income/(Loss) Equity Balances as of August 31, 2024 10,253 $ 10 1,000 $ 1 $ 195,515 $ ( 32,988 ) $ — $ 162,538 Stock-based compensation — — — — 1,152 — — 1,152 Employee stock plan 11 — — — 493 — — 493 Issuance of common stock in connection with follow-on public offering, net of underwriter discounts and issuance costs 800 1 — — 64,354 — — 64,355 Net loss — — — — — ( 961 ) — ( 961 ) Balances as of November 30, 2024 11,064 $ 11 1,000 $ 1 $ 261,514 $ ( 33,949 ) $ — $ 227,577 The accompanying notes are an integral part of these condensed financial statements. 3 Kura Sushi USA, Inc. Condensed Stateme nts of Cash Flows (amounts in thousands) (Unaudited) Three months ended November 30, 2025 2024 Cash flows from operating activities Net loss $ ( 3,060 ) $ ( 961 ) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 4,109 3,200 Stock-based compensation, net of amounts capitalized 1,099 1,126 Bond premium amortization 62 — Changes in operating assets and liabilities: Accounts and other receivables 663 ( 426 ) Inventories ( 312 ) 112 Due from affiliate 53 130 Prepaid expenses and other current assets ( 706 ) ( 181 ) Deposits and other assets 207 135 Accounts payable ( 1,437 ) 1,190 Accrued expenses and other current liabilities 666 ( 909 ) Salaries and wages payable ( 2,095 ) ( 582 ) Operating lease liabilities and assets 1,499 1,823 Due to affiliate ( 46 ) ( 143 ) Sales tax payable ( 173 ) ( 152 ) Net cash provided by operating activities 529 4,362 Cash flows from investing activities Payments for property and equipment ( 13,826 ) ( 11,555 ) Payments for initial direct costs ( 83 ) ( 135 ) Purchases of liquor licenses ( 55 ) ( 810 ) Purchases of investments ( 18,399 ) — Maturities and redemptions of investments 19,700 — Net cash used in investing activities ( 12,663 ) ( 12,500 ) Cash flows from financing activities Repayment of principal on finance leases ( 22 ) ( 18 ) Proceeds from exercise of stock options 23 493 Proceeds from the follow-on public offering, net of discounts and commissions — 64,626 Payments of costs related to the follow-on offering — ( 272 ) Net cash provided by financing activities 1 64,829 Increase (decrease) in cash and cash equivalents ( 12,133 ) 56,691 Cash and cash equivalents, beginning of period 47,498 50,986 Cash and cash equivalents, end of period $ 35,365 $ 107,677 Supplemental disclosures of cash flow information Cash paid for income taxes $ 21 $ — Noncash investing activities Acquisition of finance leases $ 22 $ 78 Amounts unpaid for purchases of property and equipment $ 3,114 $ 1,943 Stock-based compensation capitalized to property and equipment, net $ 29 $ 26 The accompanying notes are an integral part of these condensed financial statements. 4 Kura Sushi USA, Inc. Notes to Conden sed Financial Statements (Unaudited) Note 1. Organization and Basis of Presentation Kura Sushi USA, Inc. is a technology-enabled Japanese restaurant concept that provides guests with a distinctive dining experience by serving authentic Japanese cuisine through an engaging revolving sushi service model, which the Company refers to as the “Kura Experience.” Kura Sushi encourages healthy lifestyles by serving freshly prepared Japanese cuisine using high-quality ingredients that are free from artificial seasonings, sweeteners, colorings, and preservatives. Kura Sushi aims to make quality Japanese cuisine accessible to its guests across the United States through affordable prices and an inviting atmosphere. “Kura Sushi USA,” “Kura Sushi,” “Kura,” “our” and the “Company” refer to Kura Sushi USA, Inc. unless expressly indicated or the context otherwise requires. Basis of Presentation The accompanying unaudited condensed financial statements (the “Condensed Financial Statements”) have been prepared by the Company in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. As such, these Condensed Financial Statements should be read in conjunction with the Company’s audited financial statements and accompanying notes included in its Annual Report on Form 10-K for the fiscal year ended August 31, 2025. The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Financial Statements included in the Company’s Annual Report on Form 10‑K for the fiscal year ended August 31, 2025. In the opinion of management, all adjustments necessary to fairly state the Condensed Financial Statements have been made. All such adjustments are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending August 31, 2026 or for any other future annual or interim period. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Fiscal Year The Company’s fiscal year begins on September 1 and ends on August 31, and references made to “fiscal year 2026” and “fiscal year 2025” refer to the Company’s fiscal years ending August 31, 2026 and ended August 31, 2025, respectively. Use of Estimates Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Significant items subject to such estimates include asset retirement obligations, stock-based compensation, the useful lives of assets, the assessment of the recoverability of long-lived assets, and income taxes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions. Investments The Company invests in securities, including certificates of deposit, Treasury notes, and U.S. Government Agency debt securities. Investment classification is determined based on the accounting guidance as available for sale or held to maturity. Certificates of deposit and Treasury notes are classified as available-for-sale debt securities and measured at fair value, with unrealized gains or losses recorded in other comprehensive income (loss). U.S. Government Agency debt securities are classified as held-to-maturity and measured at amortized cost. Realized gains or losses are determined on a specific identification basis. The classification of these investments as either short-term or long-term is based on their original maturity dates, with short-term 5 investments having maturities greater than three months but less than one year, and long-term investments having maturities greater than one year. Recently Issued Accounting Pronouncements Subsequent to November 30, 2025, in December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Narrow-Scope Improvements (Topic 270): Interim Reporting. This update makes targeted, narrow-scope improvements to the interim reporting guidance in Topic 270 to clarify application and improve consistency in practice. The amendments do not change the underlying principles of interim reporting. The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company expects to adopt the guidance in its Form 10-Q for the interim period ending November 30, 2028. The Company is currently evaluating the effects of this pronouncement on its consolidated financial statements and does not expect the adoption of this ASU to have a material effect on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which modernizes guidance for internal-use software costs. The amendments in this update improve the operability of the guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. This update is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years, though early adoption is permitted. The Company expects to adopt the guidance in its annual report on Form 10-K for the fiscal year ending August 31, 2029. The Company is currently evaluating the effects of this pronouncement on its financial statements and does not expect the update to have a material effect on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses”, which requires public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. In January 2025, the FASB issued ASU 2025-01 “Income Statement-Reporting Comprehensive Income- Expense Disaggregation Disclosures- Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company expects to adopt the guidance in its annual report on Form 10-K for the fiscal year ending August 31, 2028. The Company is currently evaluating the effects of this pronouncement on its financial statements and expects the update to result in additional disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid and effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company expects to adopt the guidance in its annual report on Form 10-K for the fiscal year ending August 31, 2026. The Company is currently evaluating the effects of this pronouncement on its financial statements and expects the update to result in additional disclosures. Note 2. Balance Sheet Components Accounts and Other Receivables November 30, 2025 August 31, 2025 (amounts in thousands) Lease receivables $ 2,036 $ 1,450 Credit card and other receivables 4,297 4,960 Total accounts and other receivables $ 6,333 $ 6,410 6 Property and Equipment - net November 30, 2025 August 31, 2025 (amounts in thousands) Leasehold improvements $ 138,168 $ 129,909 Furniture and fixtures 82,471 76,714 Computer equipment 4,802 4,632 Vehicles 232 342 Software 1,017 1,017 Construction in progress 11,886 11,203 Property and equipment – gross 238,576 223,817 Less: accumulated depreciation and amortization ( 56,655 ) ( 52,627 ) Total property and equipment – net $ 181,921 $ 171,190 Depreciation and amortization expense for property and equipment was $ 4.1 million and $ 3.2 million for the three months ended November 30, 2025 and November 30, 2024 , respectively. Note 3. Leases The Company has operating and finance leases for its corporate offices, restaurant locations, warehouse, office equipment, kitchen equipment and automobiles. The Company’s finance leases are immaterial. The Company’s leases have remaining lease terms of less than 1 year to 20 years, some of which include options to extend the leases. Lease related costs recognized in the condensed statements of operations and comprehensive loss are as follows: Three months ended November 30, 2025 2024 (amounts in thousands) Operating lease cost Classification Operating lease cost Occupancy and related expenses, other costs and general and administrative expenses $ 4,580 $ 3,804 Variable lease cost Occupancy and related expenses, and general and administrative expenses 1,177 991 Total operating lease cost $ 5,757 $ 4,795 Supplemental disclosures of cash flow information related to leases are as follows: Three months ended November 30, 2025 2024 (amounts in thousands) Operating cash flows paid for operating lease liabilities $ 3,956 $ 3,166 Operating right-of-use assets obtained in exchange for new operating lease liabilities $ 16,674 $ 11,016 As of November 30, 2025, the Company had an additional $ 54.9 million o f operating lease liabilities related to restaurants for which the Company had not yet taken possession. 7 Note 4. Related Party Transactions Kura Sushi, Inc. (“Kura Japan”) is the majority stockholder of the Company and is incorporated and headquartered in Japan. In August 2019, the Company entered into a Shared Services Agreement with Kura Japan, pursuant to which Kura Japan provides the Company with certain strategic, operational and other support services, including assigning certain employees to work for the Company as expatriates to provide support to the Company’s operations, sending its employees to the Company on a short-term basis to provide support for the opening of new restaurants or renovation of existing restaurants, and providing the Company with certain supplies, parts and equipment for use in the Company’s restaurants. In addition, the Company has agreed to continue to provide Kura Japan with certain translational support services and market research. In exchange for such services, supplies, parts and equipment, the parties pay fees to each other as set forth under the Shared Services Agreement. A right of setoff is not required; however, from time to time, either party will net settle transactions as needed. Purchases of administrative supplies, expatriate salaries and travel and other administrative expenses payable to Kura Japan are included in general and administrative expenses in the accompanying statements of operations and comprehensive loss. Purchases of equipment from Kura Japan are included in property and equipment in the accompanying balance sheets. In August 2019, the Company entered into an Amended and Restated Exclusive License Agreement (the “License Agreement”) with Kura Japan. Pursuant to the License Agreement, the Company pays Kura Japan a royalty fee of 0.5 % of the Company’s net sales in exchange for an exclusive, royalty-bearing license for the use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks for “Kura Sushi,” “Mr. Fresh” and “Kura Revolving Sushi Bar,” and patents for a food management system and the Mr. Fresh protective dome, among other intellectual property rights necessary to continue operation of the Company’s restaurants. Royalty payments to Kura Japan are included in other costs at the restaurant level in the accompanying condensed statements of operations and comprehensive income loss. On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, as amended, to provide the Company a revolving credit line of $ 45.0 million (as amended, the “Revolving Credit Agreement”). For additional information, see “Note 6. Debt.” Balances with Kura Japan are as follows: November 30, 2025 August 31, 2025 (amounts in thousands) Due from affiliate $ 73 $ 126 Due to affiliate $ 819 $ 525 Reimbursements and other payments by the Company to Kura Japan were as follows: Three months ended November 30, 2025 2024 (amounts in thousands) Related party transactions: Expatriate salaries expense $ 35 $ 29 Royalty payments 368 322 Travel and other administrative expenses 4 42.00 Purchases of equipment 1,853 1,264 Total related party transactions $ 2,260 $ 1,657 Reimbursements by Kura Japan to the Company were $ 209 thousand and $ 187 thousand for the three months ended November 30, 2025 and November 30, 2024, respectively. The reimbursements were primarily fo r travel, professional fees and other administrative expenses. 8 Note 5. Stock-based Compensation The following table summarizes the stock option activity under the Company’s 2018 Incentive Compensation Plan, as amended and restated (the “Stock Incentive Plan”): Options Outstanding Number of Shares Underlying Outstanding Options Weighted Average Exercise Price Per Share Outstanding — August 31, 2025 591,421 $ 44.02 Granted 6,791 $ 66.90 Exercised ( 685 ) $ 31.55 Cancelled/forfeited ( 3,688 ) $ 70.13 Outstanding — November 30, 2025 593,839 $ 44.14 The following table summarizes the restricted stock unit (“RSU”) activity under the Stock Incentive Plan: Number of Shares Underlying Outstanding RSU Weighted Average Grant Date Fair Value Outstanding — August 31, 2025 50,425 $ 81.02 Granted — — Vested — — Cancelled/forfeited ( 1,576 ) $ 82.08 Outstanding — November 30, 2025 48,849 $ 80.99 As of November 30, 2025, the Company has 8,724 performance restricted stock units (“PSUs”) outstanding with a three-year performance vesting period and a weighted average grant date fair value of $ 80.00 . The total stock-based compensation recognized under the Stock Incentive Plan in the condensed statements of operations and comprehensive loss is as follows: Three months ended November 30, 2025 2024 (amounts in thousands) Restaurant-level stock-based compensation included in labor and related costs $ 181 $ 179 Corporate-level stock-based compensation included in general and administrative expenses 918 947 Stock-based compensation, net of amounts capitalized 1,099 1,126 Amount capitalized to property and equipment - net 29 26 Total stock-based compensation $ 1,128 $ 1,152 Note 6. Debt On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, as amended, establishing a $ 45.0 million revolving credit line for the Company. The maturity date for each advance is 60 months from the date of disbursement and the last day of the period of availability for advances is April 10, 2025. The Revolving Credit Note under the Revolving Credit Agreement has an interest rate for advances (made on or after April 10, 2021) fixed at 130 % of the Annual Compounding Long-Term Applicable Federal Rate on the date such advance is made. There are no financial covenants under the Revolving Credit Agreement with which the Company must comply. On April 4, 2025, the Company and Kura Japan entered into a Third Amendment to Revolving Credit Agreement (the “Third Amendment”) to extend the last day of the period of availability for the advances under the credit line from April 10, 2025 to April 10, 2028. In connection with the Third Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the Third Amendment. As of November 30, 2025 and August 31, 2025, the Company had no o utstanding balance and $ 45.0 million of availability remaining under the Revolving Credit Agreement. For additional information, see “Note 4. Related Party Transactions.” 9 Note 7 . Loss Per Share The net loss per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the loss for the year had been distributed. As the liquidation and dividend rights for Class A and Class B common stock are identical, the net loss attributable to all common stockholders is allocated on a proportionate basis. The following table sets forth the computation of the Company’s basic and diluted net loss per share: Three months ended November 30, 2025 2024 Class A Class B Class A Class B (amounts in thousands, except per share data) Net loss attributable to common stockholders $ ( 2,807 ) $ ( 253 ) $ ( 877 ) $ ( 84 ) Weighted average common shares outstanding – basic 11,111 1,000 10,416 1,000 Dilutive effect of stock-based awards — — — — Weighted average common shares outstanding – diluted 11,111 1,000 10,416 1,000 Net loss per share attributable to common stockholders – basic $ ( 0.25 ) $ ( 0.25 ) $ ( 0.08 ) $ ( 0.08 ) Net loss per share attributable to common stockholders – diluted $ ( 0.25 ) $ ( 0.25 ) $ ( 0.08 ) $ ( 0.08 ) The Company computes basic loss per common share using net loss and the weighted average number of common shares outstanding during the period, and computes diluted loss per common share using net loss and the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include dilutive outstanding employee stock options, RSUs and PSUs. For the three months ended November 30, 2025 and November 30, 2024, there were 651 thousand and 631 thousand , respectively, shares of common stock subject to outstanding employee stock options, RSUs and PSUs that were excluded from the calculation of diluted income per share because their inclusion would have been anti-dilutive. Note 8. Commitments and Contingencies Purchase Obligations We enter into various purchase obligations in the ordinary course of business, generally of a short-term nature. As of November 30, 2025 , we had an aggregate of approximately $ 25.7 million in contractual obligations which consisted of $ 13.5 million in purchase commitments for food related to restaurant operations and $ 12.2 million related to the construction of new restaurants. Legal Matters On December 9, 2024, a former employee filed a putative class action complaint in the Superior Court of California in Los Angeles, individually and on behalf of others similarly situated, against the Company alleging certain violations of California labor laws. The complaint alleges various wage and hour violations under the California Labor Code and related statutes. Plaintiff has also served a Private Attorneys General Act (“PAGA”) notice for the same alleged wage and hour violations. The Company will continue to vigorously defend its position in this matter. The Company is currently unable to estimate the range of possible losses associated with this proceeding. The Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions, including acquisitions and divestitures. In the opinion of management, the Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse effect on its business, financial position, results of operations or cash flows. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims, including the putative class action referenced 10 above, could materially and adversely affect its business, financial condition, results of operations or cash flows. The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated. Note 9. Income Taxes The Company recorded an income tax expense of $ 36 thousand and $ 39 thousand for the three months ended November 30, 2025 and November 30, 2024, respectively. The Company’s effective tax rates for the three months ended November 30, 2025 substantially differed from the federal statutory tax rate of 21 % primarily due to a valuation allowance for the Company’s deferred tax assets and permanent differences related to the tax credit for a portion of the Social Security and Medicare taxes (FICA taxes) paid on employer tips. The Company continually monitors and performs an assessment of the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets using a “more likely than not” standard. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at November 30, 2025 was appropriate. On July 4, 2025, the President signed into law, the reconciliation tax bill, commonly known as the "One Big Beautiful Bill Act" (OBBA). Notable corporate provisions include the restoration of 100% bonus depreciation; the creation of Section 174A, which reinstates expensing for domestic research and experimental (R&E) expenditures; modifications to Section 163(j) interest limitations; updates to the rules for global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII); amendments to the rules for energy credits; and the expansion of Section 162(m) aggregation requirements. OBBA did not have a material impact on the Company’s effective t ax rate or income tax expense for the three months ended November 30, 2025. 11 Note 10. Fair Value Measurements The following table sets forth the Company’s assets measured at fair value on a recurring basis as of November 30, 2025. Level 1 Level 2 Level 3 Total (amounts in thousands) Assets: Certificate of Deposit $ — $ 524 $ — $ 524 Treasury bills 20,652 — — 20,652 U.S. Government Agency debt securities — 21,919 — 21,919 Total assets at fair value $ 20,652 $ 22,443 $ — $ 43,095 The Company’s financial statements include cash and cash equivalents, accounts and other receivables, accounts payable, accrued expenses and other current liabilities, and salaries and wages payable for which the carrying amounts approximate fair value due to their short-term maturity. The fair value of our Treasury notes are valued using Level 1 inputs of the fair value hierarchy. The fair value of our Certificate of Deposit and U.S. Government Agency debt securities are valued using Level 2 inputs of the fair value hierarchy. Level 2 inputs are based on market data that include factors such as interest rates, market and pricing activity and other market-based valuation techniques. The fair value of payments due to or from Kura Japan is not determinable due to its related-party nature. Note 11—Segment Information The Company operates as one reportable segment: company-owned restaurants and in one geographic area: the United States of America. The Company does not have intra-entity sales or transfers. Sales represent sales of food and beverages in restaurants. The Chief Executive Officer , who serves as the Chief Operating Decision Maker (“CODM”), evaluates performance and allocates resources based on sales and operating income (loss). The CODM does not review segment assets at a level different than what is reported in the Company’s Consolidated Balance Sheet. Reported segment sales and expenses are presented below: Three months ended November 30, 2025 2024 (amounts in thousands) Sales $ 73,455 $ 64,456 Restaurant operating costs: Food and beverage costs 21,934 18,667 Labor and related costs 23,898 21,235 Occupancy and related expenses 5,838 4,754 Depreciation and amortization expenses 3,980 3,091 Other costs 11,805 9,341 Total restaurant operating costs 67,455 57,088 General and administrative expenses 9,551 8,733 Depreciation and amortization expenses 129 109 Total operating expenses 77,135 65,930 Operating loss ( 3,680 ) ( 1,474 ) Reconciliation to net loss: Other expense (income): Interest expense 18 13 Interest income ( 674 ) ( 565 ) Loss before income taxes ( 3,024 ) ( 922 ) Income tax expense 36 39 Net loss $ ( 3,060 ) $ ( 961 ) 12 Note 12—Investments As of November 30, 2025 and August 31, 2025 , the Company’s investments are summarized below. The Company has one c ertificate of deposit of $ 0.5 million, which is restricted to funding a collateral account relating to a standby letter of credit. Based on the evaluation of credit risk factors guaranteed by the U.S. government, the Company has concluded that an allowance for credit losses is unnecessary for its investments. November 30, 2025 Amortized cost basis Unrealized holding gains Unrealized holding losses Aggregate fair value (amounts in thousands) Current Available-for-sale: Treasury notes $ 14,795 $ 17 $ — $ 14,812 Certificate of deposit 524 — — 524 Total Current $ 15,319 $ 17 $ — $ 15,336 Non-Current Available-for-sale: Treasury notes $ 5,840 $ — $ — $ 5,840 Held to maturity: U.S. Government Agency debt securities 22,006 — ( 87 ) $ 21,919 Total Non-Current $ 27,846 $ — $ ( 87 ) $ 27,759 August 31, 2025 Amortized cost basis Unrealized holding gains Unrealized holding losses Aggregate fair value (amounts in thousands) Current Available-for-sale: Treasury notes $ 14,463 $ — $ ( 23 ) $ 14,440 Certificate of deposit 524 — — 524 Total Current $ 14,987 $ — $ ( 23 ) $ 14,964 Non-Current Available-for-sale: Treasury notes $ 1,468 $ — $ — $ 1,468 Held to maturity: U.S. Government Agency debt securities 28,074 — ( 69 ) 28,005 Total Non-Current $ 29,542 $ — $ ( 69 ) $ 29,473 The following table sets forth the maturities of the Company’s investments as of November 30, 2025 and August 31, 2025. November 30, 2025 August 31, 2025 Carrying amount Fair value Carrying amount Fair value (amounts in thousands) (amounts in thousands) Available-for-sale: Due within one year $ 15,336 $ 15,336 $ 14,964 $ 14,964 Due within one year through five years 5,840 5,840 1,468 1,468 $ 21,176 $ 21,176 $ 16,432 $ 16,432 Held to maturity: Due within one year through five years $ 22,006 $ 21,919 $ 28,074 $ 28,005 13 Note 13—Subsequent Event On December 29, 2025, the Company filed a universal shelf registration statement on Form S-3 (the “Registration Statement”) with the SEC in accordance with the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement registers Class A common stock, preferred stock, depositary shares, warrants, subscription rights, share purchase contracts, share purchase units, and any combination of the foregoing, for a maximum aggregate offering price of up to $ 100.0 million, which may be sold from time to time, subject to the Registration Statement being declared effective by the SEC. The terms of any securities offered under the Registration Statement and intended use of proceeds will be established at the times of the offerings and will be described in prospectus supplements filed with the SEC at the times of the offerings. The Registration Statement has a three-year term once declared effective by the SEC. 14