krus-10q_20200229.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-39012

 

KURA SUSHI USA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

26-3808434

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

17932 Sky Park Circle, Suite H

Irvine, California

92614

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (657) 333-4100

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

 

KRUS

 

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  

As of April 10, 2020, the registrant had 7,341,320 shares of Class A common stock, $0.001 par value per share, outstanding and 1,000,050 shares of Class B common stock, $0.001 par value per share, outstanding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Stockholders’ Equity

3

 

Condensed Statements of Cash Flows

4

 

Notes to Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

27

PART II.

OTHER INFORMATION

28

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)

 

 

 

February 29, 2020

 

 

August 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,986

 

 

$

38,044

 

Accounts receivable

 

 

1,365

 

 

 

948

 

Inventories

 

 

449

 

 

 

539

 

Due from affiliate

 

 

12

 

 

 

226

 

Prepaid expenses and other current assets

 

 

1,699

 

 

 

1,744

 

Total current assets

 

 

33,511

 

 

 

41,501

 

Non-current assets:

 

 

 

 

 

 

 

 

Property and equipment - net

 

 

37,984

 

 

 

31,917

 

Operating lease right-of-use assets

 

 

50,965

 

 

 

 

Deposits and other assets

 

 

1,432

 

 

 

1,865

 

Deferred tax assets

 

 

1,132

 

 

 

1,127

 

Total assets

 

$

125,024

 

 

$

76,410

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,569

 

 

$

3,684

 

Accrued expenses and other current liabilities

 

 

1,061

 

 

 

1,635

 

Salaries and wages payable

 

 

1,478

 

 

 

1,348

 

Finance leases - current

 

 

1,010

 

 

 

994

 

Operating lease liabilities - current

 

 

4,545

 

 

 

 

Due to affiliate

 

 

277

 

 

 

83

 

Sales tax payable

 

 

545

 

 

 

547

 

Total current liabilities

 

 

11,485

 

 

 

8,291

 

Non-current liabilities:

 

 

 

 

 

 

 

 

Finance leases - non-current

 

 

1,975

 

 

 

2,424

 

Operating lease liabilities - non-current

 

 

50,074

 

 

 

 

Deferred rent

 

 

 

 

 

2,188

 

Tenant allowances

 

 

 

 

 

1,089

 

Other liabilities

 

 

319

 

 

 

237

 

Total liabilities

 

 

63,853

 

 

 

14,229

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Class A common stock, $0.001 par value; 20,000 authorized, 7,338 and 7,335 issued and outstanding as of February 29, 2020 and August 31, 2019, respectively

 

 

7

 

 

 

7

 

Class B common stock, $0.001 par value; 10,000 authorized, 1,000 issued and outstanding as of February 29, 2020 and August 31, 2019

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

59,789

 

 

 

59,442

 

Retained earnings

 

 

1,374

 

 

 

2,731

 

Total stockholders' equity

 

 

61,171

 

 

 

62,181

 

Total liabilities and stockholders' equity

 

$

125,024

 

 

$

76,410

 

 

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

1


 

Kura Sushi USA, Inc.

Condensed Statements of Operations

(amounts in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

February 29,

2020

 

 

February 28,

2019

 

 

February 29,

2020

 

 

February 28,

2019

 

Sales

 

$

19,388

 

 

$

15,117

 

 

$

36,828

 

 

$

28,537

 

Restaurant operating costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage costs

 

 

6,106

 

 

 

4,853

 

 

 

11,799

 

 

 

9,371

 

Labor and related costs

 

 

6,144

 

 

 

4,869

 

 

 

11,785

 

 

 

9,007

 

Occupancy and related expenses

 

 

1,637

 

 

 

1,075

 

 

 

3,076

 

 

 

1,995

 

Depreciation and amortization expenses

 

 

712

 

 

 

492

 

 

 

1,375

 

 

 

940

 

Other costs

 

 

2,210

 

 

 

1,701

 

 

 

4,257

 

 

 

3,346

 

Total restaurant operating costs

 

 

16,809

 

 

 

12,990

 

 

 

32,292

 

 

 

24,659

 

General and administrative expenses

 

 

2,783

 

 

 

1,817

 

 

 

6,109

 

 

 

3,965

 

Depreciation and amortization expenses

 

 

36

 

 

 

28

 

 

 

58

 

 

 

51

 

Total operating expenses

 

 

19,628

 

 

 

14,835

 

 

 

38,459

 

 

 

28,675

 

Operating income (loss)

 

 

(240

)

 

 

282

 

 

 

(1,631

)

 

 

(138

)

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

33

 

 

 

40

 

 

 

67

 

 

 

81

 

Interest income

 

 

(170

)

 

 

(5

)

 

 

(367

)

 

 

(10

)

Income (loss) before income taxes

 

 

(103

)

 

 

247

 

 

 

(1,331

)

 

 

(209

)

Income tax expense (benefit)

 

 

30

 

 

 

35

 

 

 

26

 

 

 

(30

)

Net income (loss)

 

$

(133

)

 

$

212

 

 

$

(1,357

)

 

$

(179

)

Net income (loss) per Class A and Class B shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.02

)

 

$

0.04

 

 

$

(0.16

)

 

$

(0.04

)

Diluted

 

$

(0.02

)

 

$

0.04

 

 

$

(0.16

)

 

$

(0.04

)

Weighted average Class A and Class B shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

8,336

 

 

 

5,000

 

 

 

8,335

 

 

 

5,000

 

Diluted

 

 

8,336

 

 

 

5,105

 

 

 

8,335

 

 

 

5,000

 

 

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

 

 

Retained

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Equity

 

Balances as of August 31, 2019

 

 

7,335

 

 

$

7

 

 

 

1,000

 

 

$

1

 

 

$

59,442

 

 

$

2,731

 

 

$

62,181

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121

 

 

 

 

 

 

121

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,224

)

 

 

(1,224

)

Balances as of November 30, 2019

 

 

7,335

 

 

$

7

 

 

 

1,000

 

 

$

1

 

 

$

59,563

 

 

$

1,507

 

 

$

61,078

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

211

 

 

 

 

 

 

211

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(133

)

 

 

(133

)

Exercise of stock options

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Balances as of February 29, 2020

 

 

7,338

 

 

$

7

 

 

 

1,000

 

 

$

1

 

 

$

59,789

 

 

$

1,374

 

 

$

61,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class B

 

 

Additional

Paid-in

 

 

Retained

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Equity

 

Balances as of August 31, 2018

 

 

4,000

 

 

$

4

 

 

 

1,000

 

 

$

1

 

 

$

20,225

 

 

$

1,275

 

 

$

21,505

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

160

 

 

 

 

 

 

160

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(391

)

 

 

(391

)

Balances as of November 30, 2018

 

 

4,000

 

 

$

4

 

 

 

1,000

 

 

$

1

 

 

$

20,385

 

 

$

884

 

 

$

21,274

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

 

 

 

 

 

161

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

212

 

 

 

212

 

Balances as of February 28, 2019

 

 

4,000

 

 

$

4

 

 

 

1,000

 

 

$

1

 

 

$

20,546

 

 

$

1,096

 

 

$

21,647

 

 

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

3


 

Kura Sushi USA, Inc.

Condensed Statements of Cash Flows

(amounts in thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

February 29,

2020

 

 

February 28,

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(1,357

)

 

$

(179

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,433

 

 

 

991

 

Stock-based compensation

 

 

332

 

 

 

321

 

Loss on disposal of property and equipment

 

 

4

 

 

 

 

Deferred income taxes

 

 

(5

)

 

 

(30

)

Noncash lease expense

 

 

1,067

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

131

 

 

 

(12

)

Inventories

 

 

90

 

 

 

29

 

Due from affiliate

 

 

214

 

 

 

(4

)

Prepaid expenses and other current assets

 

 

(9

)

 

 

(469

)

Deposits and other assets

 

 

(39

)

 

 

(87

)

Accounts payable

 

 

(1,245

)

 

 

(62

)

Accrued expenses and other current liabilities

 

 

(478

)

 

 

(61

)

Sales tax payable

 

 

(2

)

 

 

13

 

Salary and wages payable

 

 

131

 

 

 

95

 

Due to affiliate

 

 

46

 

 

 

(63

)

Deferred rent and tenant allowances

 

 

 

 

 

505

 

Operating lease liabilities

 

 

(585

)

 

 

 

Net cash (used in) provided by operating activities

 

 

(272

)

 

 

987

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Payments for property and equipment

 

 

(7,072

)

 

 

(4,867

)

Payments for initial direct costs

 

 

(165

)

 

 

 

Payments for purchases of liquor licenses

 

 

(58

)

 

 

(15

)

Net cash used in investing activities

 

 

(7,295

)

 

 

(4,882

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Repayment of principal on finance leases

 

 

(506

)

 

 

(537

)

Payments of costs related to the initial public offering

 

 

 

 

 

(1,206

)

Proceeds from stock option exercises

 

 

15

 

 

 

 

Net cash used in financing activities

 

 

(491

)

 

 

(1,743

)

Decrease in cash and cash equivalents

 

 

(8,058

)

 

 

(5,638

)

Cash and cash equivalents, beginning of year

 

 

38,044

 

 

 

5,711

 

Cash and cash equivalents, end of year

 

$

29,986

 

 

$

73

 

Noncash investing activities

 

 

 

 

 

 

 

 

Amounts included in accounts payable and due to affiliate for purchases of property and equipment

 

$

483

 

 

$

109

 

 

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

4


 

Kura Sushi USA, Inc.

Notes to Condensed Financial Statements

(Unaudited)

Note 1. Organization and Basis of Presentation

Kura Sushi USA, Inc. is a fast-growing, 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 our guests across the United States through affordable prices and an inviting atmosphere. “Kura Sushi USA,” “Kura Sushi,” “Kura,” 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 the 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, 2019.

The accounting policies followed by the Company are set forth in Part II, Item 8, Note 2, Basis of Presentation and Summary of 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, 2019. 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 year ending August 31, 2020 or for any other future annual or interim period.

Fiscal Year

The Company’s fiscal year begins on September 1 and ends on August 31 and references made to “fiscal year 2020,” “fiscal year 2019” and “fiscal year 2018” refer to the Company’s fiscal years ended August 31, 2020, August 31, 2019 and August 31, 2018, respectively.

Use of Estimates

The preparation of 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.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income is the same as net income for all periods presented. Therefore, a separate statement of comprehensive income is not included in the accompanying financial statements.

Recently Adopted Accounting Pronouncements

On September 1, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842)” (“Topic 842” or “ASC 842”), along with related clarifications and improvements. This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. The Company elected the optional transition method to apply the standard as of the effective date and therefore, prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under previous lease guidance, ASC Topic 840: Leases (Topic 840). The adoption of Topic 842 had a material impact on the balance sheets and an immaterial impact on the statements of operations, statements of equity and statements of cash flows.

5


 

The practical expedients were as follows:

 

Practical expedients

 

The Company has not reassessed whether any expired or existing contracts are, or contain, leases.

 

 

The Company has not reassessed the lease classification for any expired or existing leases.

 

 

The Company has not reassessed initial direct costs for any expired or existing leases.

Hindsight Practical Expedient

 

The Company has elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease assets.

 

The impact on the balance sheet is as follows:

 

 

 

August 31,

2019

 

 

Adjustments Due

to the Adoption

of Topic 842

 

 

September 1,

2019

 

 

 

(amounts in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,044

 

 

$

 

 

$

38,044

 

Accounts receivable

 

 

948

 

 

 

 

 

 

948

 

Inventories

 

 

539

 

 

 

 

 

 

539

 

Due from affiliate

 

 

226

 

 

 

 

 

 

226

 

Prepaid expenses and other current assets(1)

 

 

1,744

 

 

 

(54

)

 

 

1,690

 

Total current assets

 

 

41,501

 

 

 

(54

)

 

 

41,447

 

Non-current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment - net

 

 

31,917

 

 

 

 

 

 

 

31,917

 

Operating lease right-of-use assets

 

 

 

 

 

37,332

 

 

 

37,332

 

Deposits and other assets(1)

 

 

1,865

 

 

 

(530

)

 

 

1,335

 

Deferred tax assets

 

 

1,127

 

 

 

 

 

 

1,127

 

Total assets

 

$

76,410

 

 

$

36,748

 

 

$

113,158

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,684

 

 

$

 

 

$

3,684

 

Accrued expenses and other current liabilities(1)

 

 

1,635

 

 

 

(97

)

 

 

1,538

 

Salaries and wages payable

 

 

1,348

 

 

 

 

 

 

1,348

 

Finance leases - current

 

 

994

 

 

 

 

 

 

994

 

Operating lease liabilities - current

 

 

 

 

 

3,618

 

 

 

3,618

 

Due to affiliate

 

 

83

 

 

 

 

 

 

83

 

Sales tax payable

 

 

547

 

 

 

 

 

 

547

 

Total current liabilities

 

 

8,291

 

 

 

3,521

 

 

 

11,812

 

Non-current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Finance leases - non-current

 

 

2,424

 

 

 

 

 

 

2,424

 

Operating lease liabilities - non-current

 

 

 

 

 

36,504

 

 

 

36,504

 

Deferred rent(1)

 

 

2,188

 

 

 

(2,188

)

 

 

 

Tenant allowances(1)

 

 

1,089

 

 

 

(1,089

)

 

 

 

Other liabilities

 

 

237

 

 

 

 

 

 

237

 

Total liabilities

 

 

14,229

 

 

 

36,748

 

 

 

50,977

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

 

Common stock - Class A

 

 

7

 

 

 

 

 

 

7

 

Common stock - Class B

 

 

1

 

 

 

 

 

 

1

 

Additional paid-in capital

 

 

59,442

 

 

 

 

 

 

59,442

 

Retained earnings

 

 

2,731

 

 

 

 

 

 

2,731

 

Total stockholders' equity

 

 

62,181

 

 

 

 

 

 

62,181

 

Total liabilities and stockholders' equity

 

$

76,410

 

 

$

36,748

 

 

$

113,158

 

 

(1)

Adjustment to reclassify prepaid rent, initial direct costs, deferred rent and tenant allowance to right-of-use assets for operating leases upon the adoption of Topic 842.

6


 

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning in fiscal year 2022. The Company is currently in the process of evaluating the effects of this pronouncement on its financial statements.

Note 2. Balance Sheet Components

 

Accounts Receivable

 

 

 

February 29,

 

 

August 31,

 

 

 

2020

 

 

2019

 

 

 

(amounts in thousands)

 

Tenant allowance receivable

 

$

548

 

 

$

215

 

Credit card receivable

 

 

817

 

 

 

733

 

Total accounts receivable

 

$

1,365

 

 

$

948

 

 

Property and Equipment, net

 

 

 

February 29,

 

 

August 31,

 

 

 

2020

 

 

2019

 

 

 

(amounts in thousands)

 

Leasehold improvements

 

$

27,940

 

 

$

24,926

 

Lease assets

 

 

6,122

 

 

 

6,037

 

Furniture and fixtures

 

 

7,174

 

 

 

5,600

 

Computer equipment

 

 

680

 

 

 

599

 

Vehicles

 

 

75

 

 

 

75

 

Software

 

 

619

 

 

 

428

 

Construction in progress

 

 

3,682

 

 

 

1,127

 

Property and equipment, gross

 

 

46,292

 

 

 

38,792

 

Less: accumulated depreciation and amortization

 

 

(8,308

)

 

 

(6,875

)

Total property and equipment - net

 

$

37,984

 

 

$

31,917

 

 

Depreciation and amortization expense for property and equipment was approximately $0.7 million and $0.5 million for the three months ended February 29, 2020 and February 28, 2019, respectively, and was $1.4 million and $1.0 million for the six months ended February 29, 2020 and February 28, 2019, respectively.

 

Deposits and Other Assets

 

 

 

February 29,

 

 

August 31,

 

 

 

2020

 

 

2019

 

 

 

(amounts in thousands)

 

Liquor license

 

$

696

 

 

$

638

 

Initial direct costs