What changed in this filing

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Item 1. Financial Statements

2021-04-13 compared with 2021-01-11 · 164 added, 73 removed, 300 unchanged (44% of the section changed)

3 unchanged sentences

(amounts in thousands, except par value)

November 30, 2020

February 28, 2021

August 31, 2020

32 unchanged sentences

50,000 shares authorized,

7,364 and 7,342 shares issued and outstanding as of November 30, 2020

7,413 and 7,342 shares issued and outstanding as of February 28, 2021

and August 31, 2020, respectively

1 unchanged sentence

10,000 shares authorized,

1,000 shares issued and outstanding as of November 30, 2020

1,000 shares issued and outstanding as of February 28, 2021

and August 31, 2020

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Restaurant operating costs:

12 unchanged sentences

Loss before income taxes

Income tax expense (benefit)

Income tax expense

Net loss per Class A and Class B shares

9 unchanged sentences

Balances as of November 30, 2020

Stock-based compensation

Exercise of stock options

Balances as of February 28, 2021

Stockholders'

2 unchanged sentences

Balances as of November 30, 2019

Stock-based compensation

Exercise of stock options

Balances as of February 29, 2020

The accompanying notes are an integral part of these condensed financial statements.

2 unchanged sentences

(amounts in thousands)

Three Months Ended November 30,

Six Months Ended

February 28, 2021

February 29, 2020

Cash flows from operating activities

4 unchanged sentences

Deferred income taxes

Noncash lease expense

Non-cash lease expense

Changes in operating assets and liabilities:

12 unchanged sentences

Payments for property and equipment

Payments for purchases of liquor licenses

Payments for initial direct costs

Payments for purchase of liquor license

Net cash used in investing activities

4 unchanged sentences

Net cash provided by (used in) financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Noncash investing activities

Amounts unpaid for purchases of property and equipment

Amounts included in accounts payable for purchases of property and equipment

Reconciliation of cash, cash equivalents and restricted cash within the condensed balance sheets to the amounts shown in the statements of cash flows above:

Cash and cash equivalents

Restricted cash included in prepaid expenses and other current assets

Total cash, cash equivalents and restricted cash

The accompanying notes are an integral part of these condensed financial statements.

12 unchanged sentences

COVID-19 and the government measures taken to control it have caused a significant disruption to the Company’s business operation.

As of November 30, 2020, the Company had 27 of its 28 restaurants open in some capacity:

As of February 28, 2021, the Company had 28 of its 30 restaurants open in some capacity:

indoor dining, outdoor dining or takeout only.

Subsequent to November 30, 2020, the Company opened one new restaurant in Aventura, Florida and as of the filing date of this Quarterly Report on Form 10-Q, the Company had all 29 restaurants open, with 16 of them in California and Washington DC only providing takeout, one restaurant in Illinois providing outdoor dining only and the remaining 12 restaurants operating at reduced indoor capacities of 25% to 75% depending on local requirements.

In April 2021, the Company opened one new restaurant in Sherman Oaks, California.

As of the filing date of this Quarterly Report on Form 10-Q, the Company had all 31 restaurants operating at indoor capacities ranging from 25% to 100%, depending on local requirements.

In response to the ongoing COVID-19 pandemic, the Company has prioritized taking steps to protect the health and safety of its employees and customers.

The Company has increased cleaning and sanitizing protocols of its restaurants and has implemented additional training and operational manuals for its restaurant employees, as well as increased handwashing procedures.

The Company has maintained its cleaning and sanitizing protocols of its restaurants and has implemented additional training and operational manuals for its restaurant employees, as well as increased handwashing procedures.

The Company also provides each restaurant employee with face masks and gloves, and requires each employee to pass a health screening process, which includes a temperature check, before the start of each shift.

The reduced capacities at open restaurants and the temporary closure of one restaurant have caused a substantial decline in the Company’s sales in the most recent fiscal quarter compared to the same quarter last year.

In response to the challenges posed by the COVID-19 pandemic, the Company is focused on maximizing its in-restaurant dining capacity as permitted by the jurisdictions where it operates, mobile ordering and takeout, continuing to provide a safe environment for its employees and customers, maintaining its operational efficiencies as much as possible and preserving its liquidity.

The reduced capacities at open restaurants and the temporary closure of two restaurants during the quarter have caused a substantial decline in the Company’s sales in the most recently completed fiscal quarter and year-to-date period compared to the same quarter and year-to-date period last year.

In response to the ongoing challenges posed by the COVID-19 pandemic, the Company is focused on maximizing its in-restaurant dining capacity as permitted by the jurisdictions where it operates, emphasizing mobile ordering and takeout, continuing to provide a safe environment for its employees and customers, maintaining its operational efficiencies as much as possible and preserving its liquidity.

In line with the Company’s long-term growth strategy, it expects to continue to open new restaurants at locations where it believes the restaurants have the potential to achieve profitability.

2 unchanged sentences

On April 10, 2020, the Company and Kura Sushi, Inc.

(“Kura Japan”), a majority stockholder, entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) establishing a $20 million revolving credit line.

(“Kura Japan”), the majority stockholder of the Company, entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) whereby Kura Japan agreed to make available to the Company loans on a revolving credit basis in the principal amount of up to $20 million as evidenced by that certain Promissory Note dated as of the same date with the Company as maker and made payable to Kura Japan (the “Revolving Credit Note”).

On September 2, 2020, the Company and Kura Japan entered into a First Amendment to Revolving Credit Agreement (the “First Amendment”) to (i) increase the maximum credit amount under the credit line from $20 million to $35 million, (ii) extend the maturity date for each advance from 12 months to 60 months from the date of disbursement and (iii) extend the last day of the period of availability for the advances under the credit line from March 31, 2024 to April 10, 2025.

In connection with the First Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment.

On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit Agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million.

For additional information, s ee “Note 4.

Related Party Transactions” and “Note 6.

The Company has received rent concessions from its landlords for certain of its restaurants in the form of rent abatements and rent deferrals which were immaterial for the three months ended November 30, 2020.

The Company continues to have discussions with its landlords regarding potential future rent concessions.

Due to the ongoing impact of COVID-19, the Company assessed its long-lived assets for potential impairment, which resulted in no impairment charges recorded as of November 30, 2020.

Under the provisions of the extension of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the United States Congress and signed by the President, the Company is eligible for a refundable employee retention credit subject to certain criteria.

The Company recognized a $2.6 million employee retention credit during the three months ended February 28, 2021, of which $2.2 million is included in labor and related costs and $0.4 million is included in general and administrative expenses in the statements of operations.

The Company has received rent concessions from its landlords for certain of its restaurants in the form of rent abatements and rent deferrals which were immaterial for the three and six months ended February 28, 2021.

Due to the ongoing impact of COVID-19, the Company assessed its long-lived assets for potential impairment, which resulted in no impairment charges recorded as of February 28 , 202 1 .

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.

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, 2020.

3 unchanged sentences

The results of operations for interim periods are not necessarily indicative of results to be expected for the year ending August 31, 2021 or for any other future annual or interim period.

The Company’s fiscal year begins on September 1 and ends on August 31 and references made to “fiscal year 2021,” “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal years ending August 31, 2021, and ended August 31, 2020 and August 31, 2019, respectively.

The Company’s fiscal year begins on September 1 and ends on August 31 and references made to “fiscal year 2021,” “fiscal year 2020” and “fiscal year 2019” refer to the Company’s fiscal year ending August 31, 2021, and fiscal years ended August 31, 2020 and August 31, 2019, respectively.

Use of Estimates

15 unchanged sentences

Accounts Receivable

February 28, 2021

August 31, 2020

(amounts in thousands)

3 unchanged sentences

Total accounts receivable

Prepaid Expenses and Other Current Assets

February 28, 2021

August 31, 2020

(amounts in thousands)

Employee retention credit

Prepaid expenses

Restricted cash (a)

Other current assets

Total prepaid expenses and other current assets

The restricted cash was pledged as a collateral for a standby letter of credit with Mizuho Bank, Ltd.

related to one of the Company’s leased properties.

For additional information, see “Note 4.

Related Party Transactions.”

Property and Equipment - net

February 28, 2021

August 31, 2020

(amounts in thousands)

6 unchanged sentences

Total property and equipment – net

Depreciation and amortization expense for property and equipment was approximately $ 1.0 million and $ 0.7 million for the three months ended November 30, 2020 and November 30, 2019, respectively.

Depreciation and amortization expense for property and equipment was approximately $1.1 million and $0.7 million for the three months ended February 28, 2021 and February 29, 2020, respectively, and was approximately $2.1 million and $1.4 million for the six months ended February 28, 2021 and February 29, 2020, respectively.

Accrued Expenses and Other Current Liabilities

February 28, 2021

August 31, 2020

(amounts in thousands)

Credit card payable

Income taxes payable

Other current liabilities

Total accrued expenses and other current liabilities

At inception of a contract, the Company assesses whether the contract is a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

4 unchanged sentences

For leases with renewal periods at the Company’s option, the Company determines the expected lease period based on whether the renewal of any options is reasonably assured at the inception of the lease.

Operating leases are accounted for on the balance sheet within the right-of-use (“ROU”) assets and lease liabilities recognized in “Operating lease right-of-use assets,” “Operating lease liabilities - current" and "Operating lease liabilities – non-current," respectively.

Finance leases are accounted for on the balance sheet within ROU assets and lease liabilities recognized in "Property and equipment - net”, “Finance lease - current" and "Finance lease – non-current," respectively.

Operating leases are accounted for on the balance sheet with in the r ight-of- u se (“ROU”) assets and lease liabilities recognized in “Operating lease right-of-use assets , ” “Operating lease liabilities – current ” and “ O perating lease liabilities – non - current , ” respectively.

Finance leases are accounted for on the balance sheet with in ROU assets and lease liabilities recognized in “ Property and equipment – net , ” “Finance lease – current ” and “ Finance lease – non - current , ” respectively.

Lease assets and liabilities are recognized at the lease commencement date.

3 unchanged sentences

The operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for initial direct costs, prepaid or accrued lease payments, and lease incentives.

Depreciation of the finance lease ROU assets are subsequently calculated using the straight-line method over the shorter of the estimated useful lives or the expected lease terms and recorded in "Depreciation and amortization expense" on the statement of operations.

Depreciation of the finance lease ROU assets are subsequently calculated using the straight-line method over the shorter of the estimated useful lives or the expected lease terms and recorded in “Depreciation and amortization expense” on the statements of operations.

The Company recognizes expense for these leases on a straight-line basis over the lease term.

1 unchanged sentence

Additionally, contingent rental payments based on sales thresholds for certain of the Company’s restaurants are accrued based on estimated sales.

Lease related costs recognized in the statements of operations for the three months ended November 30, 2020 and November 30, 2019 are as follows:

Three months ended November 30,

Lease related costs recognized in the statements of operations for the three and six months ended February 28, 2021 and February 29, 2020 are as follows:

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

(amounts in thousands)

Finance lease cost

5 unchanged sentences

Total finance lease cost

Three months ended November 30,

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

(amounts in thousands)

Operating lease cost

7 unchanged sentences

Operating Leases

November 30, 2020

February 28, 2021

August 31, 2020

5 unchanged sentences

Finance Lease Assets – net

November 30, 2020

February 28, 2021

August 31, 2020

4 unchanged sentences

Finance Leases Liabilities

November 30, 2020

February 28, 2021

August 31, 2020

3 unchanged sentences

Total finance lease liabilities

February 28, 2021

February 29, 2020

Weighted Average Remaining Lease Term (Years)

5 unchanged sentences

Supplemental disclosures of cash flow information related to leases are as follows:

Three months ended November 30,

Six Months Ended

February 28, 2021

February 29, 2020

(amounts in thousands)

1 unchanged sentence

Operating right-of-use assets obtained in exchange for new operating lease liabilities

As of November 30, 2020, the Company has additional operating lease liabilities related to restaurants of which the Company has not yet taken possession of $13.7 million.

These operating leases are expected to commence in fiscal year 2021 with lease terms of 20 years.

Maturities of lease liabilities were as follows as of November 30, 2020:

As of February 28, 2021, the Company had additional operating leases liabilities related to restaurants of which the Company has not yet taken possession of $16.6 million.

These operating leases are expected to commence in fiscal years 2021 and 2022 with lease terms of 20 years.

Subsequent to February 28, 2021, the Company has entered into an additional operating lease related to a restaurant of which the Company has not yet taken possession.

The lease liabilities associated with the lease are $2.9 million.

The operating lease is expected to commence in fiscal year 2021 with a lease term of 20 years.

Maturities of lease liabilities were as follows as of February 28, 2021:

Operating Leases

10 unchanged sentences

In addition, the Company has agreed to continue to provide Kura Japan with certain translational support services and market research analyses.

In exchange for such services, supplies, parts and equipment, the parties will 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.

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 net settles transactions as needed.

Purchases of administrative supplies, expatriate salaries and travel and other administrative expenses from Kura Japan are included in general and administrative expenses in the accompanying statements of operations.

1 unchanged sentence

In August 2019, the Company entered into an Amended and Restated Exclusive License Agreement (the “License Agreement”) with Kura Japan.

Pursuant to the Lice nse 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 use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks “Kura Sushi” and “Kura Revolving Sushi Bar,” and patents for a food management system and the Mr.

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 use of certain of Kura Japan’s intellectual property rights, including, but not limited to, Kura Japan’s trademarks “Kura Sushi” 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 statements of operations.

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, which was subsequently amended on September 2, 2020, to provide the Company a credit line of $35 million.

On April 10, 2020, the Company and Kura Japan entered into a Revolving Credit Agreement, which was subsequently amended on September 2, 2020 and April 9, 2021, to provide the Company a credit line of $45 million.

For additional information, see “Note 6.

Balances with Kura Japan as of November 30, 2020 and August 31, 2020 are as follows:

Balances with Kura Japan as of February 28, 2021 and August 31, 2020 are as follows:

February 28, 2021

August 31, 2020

(amounts in thousands)

2 unchanged sentences

Loan from affiliate

Reimbursements by the Company to Kura Japan for the three months ended November 30, 2020 and November 30, 2019 were as follows:

Three Months Ended November 30,

Reimbursements by the Company to Kura Japan for the three and six months ended February 28, 2021 and February 29, 2020 were as follows:

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

(amounts in thousands)

Related party transactions:

4 unchanged sentences

Purchases of equipment

Interest expense

Total related party transactions

Reimbursements by Kura Japan to the Company for the three months ended November 30, 2020 and November 30, 2019 were $5 thousand and $34 thousand, respectively.

The reimbursements were for travel and translation expenses.

Reimbursements by Kura Japan to the Company were $20 thousand and $35 thousand for the three months ended February 28, 2021 and February 29, 2020, respectively, and were $25 thousand and $69 thousand for the six months ended February 28, 2021 and February 29, 2020, respectively.

The reimbursements were for travel and audit expenses.

As of February 28, 2021, the Company had $0.5 million of restricted cash included in prepaid expenses and other current assets on the condensed balance sheet pledged as collateral for a standby letter of credit with Mizuho Bank, Ltd.

related to one of the Company’s leased properties.

Subsequent to February 28, 2021 and as of the filing date of this Quarterly Report on Form 10-Q, Mizuho Bank, Ltd.

entered into an agreement with Kura Japan, pursuant to which Kura Japan provided a guaranty on the standby letter of credit, which released the restricted cash.

Stock-based Compensation

The following table summarizes the stock option activity under the Company’s 2018 Incentive Compensation Plan (the “Stock Incentive Plan”) for the period from August 31, 2020 through November 30, 2020:

The following table summarizes the stock option activity under the Company’s 2018 Incentive Compensation Plan, as amended and restated (the “Stock Incentive Plan”) for the period from August 31, 2020 through February 28, 2021:

Options Outstanding

4 unchanged sentences

Outstanding—August 31, 2020

Options granted

Options exercised

Options canceled/forfeited

Outstanding—November 30, 2020

Subsequent to November 30, 2020 and as of the filing date of this Quarterly Report on Form 10-Q, the Company granted 50 thousand options and 7 thousand restricted stock awards.

Stock-based compensation for stock options issued under the Stock Incentive Plan was $0.3 million and $0.1 million for the three months ended November 30, 2020 and November 30, 2019 respectively.

Outstanding—February 28, 2021

The Company issued seven thousand restricted stock awards during the three and six months ended February 28, 2021 in addition to the option awards stated below, amounting to an expense of $28 thousand for the three and six months ended February 28, 2021.

No restricted stock awards were issued during the three and six months ended February 29, 2020.

The total stock-based compensation expense recognized under the Stock Incentive Plan in the statements of operations is as follows:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

(amounts in thousands)

Restaurant-level stock-based compensation included in other costs

3 unchanged sentences

In connection with the First Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment.

On April 9, 2021, the Company and Kura Japan entered into a Second Amendment to Revolving Credit agreement (the “Second Amendment”) to increase the maximum credit amount under the credit line from $35 million to $45 million.

In connection with the First Amendment and Second Amendment, the Revolving Credit Note under the Revolving Credit Agreement was also amended by incorporating the same amendments as provided under the First Amendment and Second Amendment, and additionally, amending the interest rate for advances disbursed prior to April 10, 2021 to be fixed at 1.1% and the interest rate for advances disbursed on or after April 10, 2021 to be fixed at 130% of the Annual Compounding Long-Term Applicable Federal Rate (“AFR”) on the date such advance is made.

The AFR as of February 28, 2021 was 1.9%.

There are no financial covenants under the Revolving Credit Agreement with which the Company must comply.

As of November 30, 2020, the Company had borrowed $3.0 million under the Revolving Credit Agreement at a fixed interest rate of 1.1%.

Interest expense for the three months ended November 30, 2020 was immaterial.

Subsequent to November 30, 2020 and as of the filing date of this Quarterly Report on Form 10-Q, the Company borrowed an additional $6.0 million and has $26 million of availability remaining under the Revolving Credit Agreement.

As of February 28, 2021, the Company had borrowed $12.0 million under the Revolving Credit Agreement at a fixed interest rate of 1.1%.

Interest expense for the three and six months ended February 28, 2021 was immaterial.

Subsequent to February 28, 2021 and as of the filing date of this Quarterly Report on Form 10-Q, the Company borrowed an additional $2.0 million and has $31.0 million of availability remaining under the Revolving Credit Agreement.

For additional information, see “Note 4.

Related Party Transactions.”

Loss Per Share

2 unchanged sentences

The following table sets forth the computation of the Company’s basic and diluted net loss per share:

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

(amounts in thousands, except per share data)

Net loss attributable to common stockholders - basic

Weighted average common shares outstanding - basic

Net loss per share attributable to common stockholders - basic

Net loss attributable to common stockholders - diluted

Weighted average shares outstanding - basic

Options to purchase common stock

Weighted average shares outstanding - diluted

Net loss per share attributable to common stockholders - diluted

Net loss attributable to common stockholders - basic and diluted

Weighted average common shares outstanding - basic and diluted

Net loss per share attributable to common stockholders - basic and diluted

The Company computes basic loss per common share using net loss and the weighted average number of common shares outstanding during the period.

Diluted loss per common share is computed 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.

For the three months ended November 30, 2020 and November 30, 2019 , there were approximately 506 thousand and 404 thousand shares of common stock subject to outstanding employee stock options , respectively, that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive .

Potentially dilutive common shares include dilutive outstanding employee stock options and restricted stock awards.

For the three months ended February 28, 2021 and February 29, 2020, there were 600 thousand and 241 thousand shares of common stock subject to outstanding employee stock options and restricted stock awards, respectively, that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

For the six months ended February 28, 2021 and February 29, 2020, there were approximately 600 thousand and 208 thousand shares of common stock subject to outstanding employee stock options and restricted stock awards, respectively, that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

Commitments and Contingencies

9 unchanged sentences

The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated.

The Company recorded income tax expense of $29 thousand and income tax benefit of $4 thousand for the three months ended November 30, 2020 and November 30, 2019, respectively.

The Company’s effective tax rate for the three months ended November 30, 2020 substantially differed from the federal statutory tax rate of 21 percent primarily due to a valuation allowance for the Company’s deferred tax assets.

The Company recorded income tax expense of $29 thousand and $30 thousand for the three months ended February 28, 2021 and February 29, 2020, respectively, and of $58 thousand and $26 thousand for the six months ended February 28, 2021 and February 29, 2020, respectively.

The Company’s effective tax rates for the three and six months ended February 28, 2021 and February 29, 2020, substantially differed from the federal statutory tax rate of 21 percent primarily due to a valuation allowance for the Company’s deferred tax assets.

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.

1 unchanged sentence

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, 2020 was appropriate.

On December 27, 2020, Congress passed, and President Trump signed into law, the Consolidated Appropriations Act, 2021 (the “Act”), which includes certain business tax provisions.

The Company does not expect the Act to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

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 February 28, 2021 was appropriate.

On December 27, 2020, Congress passed, and the President signed into law, the Consolidated Appropriations Act, 2021 (the “CAA”), which includes certain business tax provisions.

The Company does not expect the CAA to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

On March 11, 2021, Congress passed, and the President signed into law, the American Rescue Plan Act, 2021 (the “ARP”), which includes certain business tax provisions.

The Company does not expect the ARP to have a material impact on the Company’s effective tax rate or income tax expense for the fiscal year ending August 31, 2021.

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 1. Financial Statements