What changed in this filing

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Item 1. Financial Statements

2022-04-07 compared with 2022-01-06 · 72 added, 49 removed, 325 unchanged (27% of the section changed)

3 unchanged sentences

(amounts in thousands, except par value)

November 30, 2021

February 28, 2022

August 31, 2021

31 unchanged sentences

50,000 shares authorized,

8,713 and 8,700 shares issued and outstanding as of November 30, 2021

8,716 and 8,700 shares issued and outstanding as of February 28, 2022

and August 31, 2021, respectively

1 unchanged sentence

10,000 shares authorized,

1,000 shares issued and outstanding as of November 30, 2021

1,000 shares issued and outstanding as of February 28, 2022

and August 31, 2021

7 unchanged sentences

(amounts in thousands, except per share data)

Three Months Ended November 30,

Three Months Ended February 28,

Six Months Ended February 28,

Restaurant operating costs:

24 unchanged sentences

Balances as of November 30, 2021

Stock-based compensation

Employee stock plan

Taxes paid on vested restricted stock awards

Balances as of February 28, 2022

Stockholders'

1 unchanged sentence

Stock-based compensation

Employee stock plan

Exercise of stock options

Balances as of November 30, 2020

Stock-based compensation

Exercise of stock options

Balances as of February 28, 2021

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,

Cash flows from operating activities

24 unchanged sentences

Repayment of principal on finance leases

Taxes paid on vested restricted stock awards

Proceeds from exercise of stock options

Net cash (used in) provided by financing activities

Increase (decrease) in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

3 unchanged sentences

Noncash investing activities

Acquisition of finance leases

Amounts unpaid for purchases of property and equipment

15 unchanged sentences

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

During the three months ended November 30, 2021, the Company opened one new restaurant in San Francisco, California, and was able to operate all of its 33 restaurants with no government restrictions on indoor dining capacity.

Subsequent to November 30, 2021, the Company opened two new restaurants in Phoenix, Arizona and Chandler, Arizona.

During the three months ended February 28, 2022, the Company opened three new restaurants in Phoenix, Arizona, Chandler, Arizona, and San Antonio, Texas, and was able to operate all of its 36 restaurants with no government restrictions on indoor dining capacity.

Subsequent to February 28, 2022, the Company opened one new restaurant in Watertown, MA.

As of the filing date of this Quarterly Report on Form 10-Q, all of the Company’s 37 restaurants were operating with no government restrictions on indoor dining capacity.

3 unchanged sentences

Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020, and the subsequent extension of the CARES Act, the Company was eligible for refundable employee retention credits subject to certain criteria through the fiscal year ended August 31, 2021.

The Company has filed for refunds of the employee retention credits and during the three months ended November 30, 2021, and as of the date of this Quarterly Report on Form 10-Q, has received $ 8.0 million in refunds and cannot reasonably estimate when it will receive any or all of the remaining $ 4.1 million in refunds.

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

As of August 31, 2021, the Company had recognized and filed for refunds of the amount of $ 12.1 million employee retention credits.

During the six months ended February 28, 2022, and as of the date of this Quarterly Report on Form 10-Q, the Company has received $ 8.0 million in refunds, and cannot reasonably estimate when it will receive any or all of the remaining $ 4.1 million in refunds.

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

The future sales levels of the Company’s restaurants and its ability to implement its growth strategy, however, remain highly uncertain, as the full impact and duration of the COVID-19 pandemic continues to evolve as of the filing date of this Quarterly Report on Form 10-Q, including the recent acceleration of the spread of the Delta and Omicron variants of COVID-19.

It is possible that renewed outbreaks, increases in cases and/or new variants of the disease, either as part of a national trend or on a more localized basis, could result in additional COVID-19 related restrictions including capacity restrictions, or otherwise limit the Company’s dine-in services, or negatively affect consumer demand.

Basis of Presentation

5 unchanged sentences

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 year ending August 31, 2022 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 2022” and “fiscal year 2021” refer to the Company’s fiscal years ending August 31, 2022 and August 31, 2021, respectively.

The results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending August 31, 202 2 or for any other future annual or interim period .

Use of Estimates

14 unchanged sentences

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740):

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

3 unchanged sentences

Accounts and Other Receivables

November 30, 2021

February 28, 2022

August 31, 2021

5 unchanged sentences

Prepaid Expenses and Other Current Assets

November 30, 2021

February 28, 2022

August 31, 2021

5 unchanged sentences

Property and Equipment - net

November 30, 2021

February 28, 2022

August 31, 2021

7 unchanged sentences

Total property and equipment – net

Depreciation and amortization expense for property and equipment was approximately $ 1.3 million and $ 1.0 million for the three months ended November 30, 2021 and November 30, 2020, respectively.

Depreciation and amortization expense for property and equipment was $ 1.4 million and $ 1.1 million for the three months ended February 28, 2022 and February 28, 2021, respectively, and was $ 2.6 million and $ 2.1 million for the six months ended February 28, 2022 and February 28, 2021, respectively.

The Company has operating and finance leases for its corporate office, restaurant locations, office equipment, kitchen equipment and automobiles.

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 statements of operations for the three months ended November 30, 2021 and 2020 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, 2022 and February 28, 2021 are as follows:

Three Months Ended February 28,

Six Months Ended February 28,

(amounts in thousands)

6 unchanged sentences

Total finance lease cost

Three Months Ended November 30,

Three Months Ended February 28,

Six Months Ended February 28,

(amounts in thousands)

8 unchanged sentences

Operating Leases

November 30, 2021

February 28, 2022

August 31, 2021

5 unchanged sentences

Finance Lease Assets – net

November 30, 2021

February 28, 2022

August 31, 2021

4 unchanged sentences

Finance Leases Liabilities

November 30, 2021

February 28, 2022

August 31, 2021

3 unchanged sentences

Total finance lease liabilities

Three months ended November 30,

Six months ended February 28,

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,

(amounts in thousands)

1 unchanged sentence

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

As of November 30, 2021, the Company had additional operating lease liabilities related to restaurants of which the Company has not yet taken possession of $ 30.8 million.

As of February 28, 2022, the Company had additional operating lease liabilities of $ 28.6 million related to restaurants of which the Company has not yet taken possession.

These operating leases are expected to commence in fiscal years 2022 and 2023, with lease terms of 20 years.

Subsequent to November 30, 2021, the Company entered into additional operating leases related to restaurants of which the Company has not yet taken possession.

Subsequent to February 28, 2022, the Company entered into additional operating leases related to restaurants for which the Company has not yet taken possession.

The lease liabilities associated with these leases are $ 12.4 million.

The operating leases are expected to commence in fiscal years 2022 and 2023, with lease terms of 15 years.

Maturities of lease liabilities, net of lease receivables, were as follows as of November 30, 2021:

The operating leases are expected to commence in fiscal year 2023, with lease terms of 20 years.

Maturities of lease liabilities, net of lease receivables, were as follows as of February 28, 2022:

Operating Leases

21 unchanged sentences

For additional information, see “Note 6.

Balances with Kura Japan as of November 30, 2021 and August 31, 2021 are as follows:

November 30, 2021

Balances with Kura Japan as of February 28, 2022 and August 31, 2021 are as follows:

February 28, 2022

August 31, 2021

2 unchanged sentences

Due to affiliate

Reimbursements and other payments by the Company to Kura Japan for the three months ended November 30, 2021 and 2020 were as follows:

Three Months Ended November 30,

Reimbursements and other payments by the Company to Kura Japan for the three and six months ended February 28, 2022 and February 28, 2021 were as follows:

Three Months Ended February 28,

Six Months Ended February 28,

(amounts in thousands)

5 unchanged sentences

Purchases of equipment

Interest expense

Total related party transactions

Reimbursements by Kura Japan to the Company were $ 17 thousand and $ 5 thousand for the three months ended November 30, 2021 and November 30, 2020, respectively.

Reimbursements by Kura Japan to the Company were $ 11 thousand and $ 20 thousand for the three months ended February 28, 2022 and February 28, 2021, respectively, and were $ 28 thousand and $ 25 thousand for the six months ended February 28, 2022 and February 28, 2021, respectively.

The reimbursements were for travel and other administrative expenses.

11 unchanged sentences

Outstanding — November 30, 2021

During the three months ended November 30, 2021, nine thousand restricted stock awards were issued, in addition to the option grants stated above, for which the Company incurred an expense of $ 38 thousand for the three months ended November 30, 2021.

Stock-based compensation for stock options issued under the Stock Incentive Plan was $ 0.4 million and $ 0.3 million for the three months ended November 30, 2021 and November 30, 2020, respectively.

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,

Options granted

Options exercised

Options canceled/forfeited

Outstanding — February 28, 2022

During the six months ended February 28, 2022, nine thousand restricted stock awards were issued under the Stock Incentive Plan, in addition to the option grants stated above, for which the Company incurred stock-based compensation of $ 17 thousand and $ 55 thousand for the three and six months ended February 28, 2022, respectively.

Stock-based compensation for stock options issued under the Stock Incentive Plan was $ 0.6 million and $ 0.3 million for the three months ended February 28, 2022 and February 28, 2021, respectively, and was $ 1.0 million and $ 0.6 million for the six months ended February 28, 2022 and February 28, 2021, respectively.

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

Three Months Ended February 28,

Six Months Ended February 28,

(amounts in thousands)

6 unchanged sentences

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

As of November 30, 2021, the Company had no outstanding balance and $ 45.0 million of availability remaining under the Revolving Credit Agreement.

As of February 28, 2022, the Company had no outstanding balance and $ 45.0 million of availability remaining under the Revolving Credit Agreement.

During the three and six months ended February 28, 2021 , the Company had borrowed $ 9.0 million and $ 12.0 million, respectively, 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.

For additional information, see “Note 4.

1 unchanged sentence

Loss Per Share

The net loss per share attributable to common stockholder is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the year has been distributed.

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 income for the year has 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,

Three Months Ended February 28,

Six Months Ended February 28,

(amounts in thousands, except per share data)

1 unchanged sentence

Weighted average common shares outstanding – basic

Net loss per share attributable to common stockholders – basic

Net loss attributable to common stockholders – diluted

Weighted average common shares outstanding – basic

Dilutive effect of stock-based awards

Weighted average common shares outstanding – diluted

Net loss per share attributable to common stockholders – basic

Net loss per share attributable to common stockholders – diluted

1 unchanged sentence

Potentially dilutive common shares include dilutive outstanding employee stock options.

For the three months ended November 30, 2021 and November 30, 2020, there were 623 thousand and 506 thousand shares of common stock subject to outstanding employee stock options that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

For the three and six months ended February 28, 2022 and February 28, 2021, there were 762 thousand and 600 thousand shares of common stock subject to outstanding employee stock options that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

Commitments and Contingencies

11 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 $ 12 thousand and $ 29 thousand for the three months ended November 30, 2021 and November 30, 2020, respectively.

The Company’s effective tax rates for the three months ended November 30, 2021 substantially differed from the federal statutory tax rate of 21 % primarily due to a valuation allowance for the Company’s deferred tax assets.

The Company recorded income tax expense of $ 3 thousand and $ 29 thousand for the three months ended February 28, 2022 and February 28, 2021, respectively, and of $ 15 thousand and $ 58 thousand for the six months ended February 28, 2022 and February 28, 2021, respectively.

The Company’s effective tax rates for the three and six months ended February 28, 2022 substantially differed from the federal statutory tax rate of 21 % 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, 2021 was appropriate.

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, 2022 was appropriate.

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