SEC Filing | Kura Sushi USA

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krus-10q_20220228.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 28, 2022

☐	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.)
17461 Derian Avenue, Suite 200 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, a 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.

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 4, 2022, the registrant had 8,719,421 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	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
Signatures		29

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)

	February 28, 2022			August 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	36,350		$	40,430
Accounts and other receivables		2,522			2,019
Inventories		880			733
Due from affiliate		11			329
Prepaid expenses and other current assets		6,278			13,957
Total current assets		46,041			57,468
Non-current assets:
Property and equipment – net		62,867			53,885
Operating lease right-of-use assets		72,341			64,158
Deposits and other assets		2,799			2,158
Total assets	$	184,048		$	177,669
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,770		$	4,920
Accrued expenses and other current liabilities		2,402			2,820
Salaries and wages payable		4,973			4,612
Finance leases – current		768			932
Operating lease liabilities – current		6,830			5,650
Due to affiliate		98			244
Sales tax payable		917			869
Total current liabilities		20,758			20,047
Non-current liabilities:
Finance leases – non-current		221			546
Operating lease liabilities – non-current		74,001			65,834
Other liabilities		445			398
Total liabilities		95,425			86,825
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, 8,716 and 8,700 shares issued and outstanding as of February 28, 2022 and August 31, 2021, respectively		9			9
Class B common stock, $0.001 par value; 10,000 shares authorized, 1,000 shares issued and outstanding as of February 28, 2022 and August 31, 2021		1			1
Additional paid-in capital		116,689			115,756
Accumulated deficit		(28,076	)		(24,922	)
Total stockholders' equity		88,623			90,844
Total liabilities and stockholders' equity	$	184,048		$	177,669

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

Kura Sushi USA, Inc.

Condensed Statements of Operations

(amounts in thousands, except per share data)

(Unaudited)

	Three Months Ended February 28,						Six Months Ended February 28,
	2022			2021			2022			2021
Sales	$	31,290		$	9,082		$	61,122		$	18,496
Restaurant operating costs:
Food and beverage costs		9,376			3,175			18,333			6,228
Labor and related costs		10,342			2,061			20,052			6,421
Occupancy and related expenses		2,302			1,627			4,502			3,317
Depreciation and amortization expenses		1,267			1,002			2,438			1,929
Other costs		4,344			2,051			7,954			4,130
Total restaurant operating costs		27,631			9,916			53,279			22,025
General and administrative expenses		5,454			2,874			10,814			6,395
Depreciation and amortization expenses		83			94			171			169
Total operating expenses		33,168			12,884			64,264			28,589
Operating loss		(1,878	)		(3,802	)		(3,142	)		(10,093	)
Other expense (income):
Interest expense		22			53			47			87
Interest income		(24	)		(3	)		(50	)		(7	)
Loss before income taxes		(1,876	)		(3,852	)		(3,139	)		(10,173	)
Income tax expense		3			29			15			58
Net loss	$	(1,879	)	$	(3,881	)	$	(3,154	)	$	(10,231	)
Net loss per Class A and Class B shares
Basic	$	(0.19	)	$	(0.46	)	$	(0.32	)	$	(1.22	)
Diluted	$	(0.19	)	$	(0.46	)	$	(0.32	)	$	(1.22	)
Weighted average Class A and Class B shares outstanding
Basic		9,712			8,379			9,711			8,363
Diluted		9,712			8,379			9,711			8,363

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

Kura Sushi USA, Inc.

Condensed Statements of Stockholders’ Equity

(amounts in thousands)

(Unaudited)

	Common Stock									Additional						Total
	Class A					Class B				Paid-in			Accumulated			Stockholders'
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balances as of August 31, 2021		8,700		$	9		1,000	$	1	$	115,756		$	(24,922	)	$	90,844
Stock-based compensation		—			—		—		—		443			—			443
Employee stock plan		13			—		—		—		19			—			19
Net loss		—			—		—		—		—			(1,275	)		(1,275	)
Balances as of November 30, 2021		8,713		$	9		1,000	$	1	$	116,218		$	(26,197	)	$	90,031
Stock-based compensation		—			—		—		—		596			—			596
Employee stock plan		5			—		—		—		29			—			29
Taxes paid on vested restricted stock awards		(2	)		—		—		—		(154	)		—			(154	)
Net loss		—			—		—		—		—			(1,879	)		(1,879	)
Balances as of February 28, 2022		8,716		$	9		1,000	$	1	$	116,689		$	(28,076	)	$	88,623





	Common Stock									Additional						Total
	Class A					Class B				Paid-in			Accumulated			Stockholders'
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balances as of August 31, 2020		7,342		$	7		1,000	$	1	$	60,332		$	(14,627	)	$	45,713
Stock-based compensation		—			—		—		—		266			—			266
Exercise of stock options		22			—		—		—		94			—			94
Net loss		—			—		—		—		—			(6,350	)		(6,350	)
Balances as of November 30, 2020		7,364			7		1,000		1		60,692			(20,977	)		39,723
Stock-based compensation		—			—		—		—		309			—			309
Exercise of stock options		49			—		—		—		272			—			272
Net loss		—			—		—		—		—			(3,881	)		(3,881	)
Balances as of February 28, 2021		7,413		$	7		1,000	$	1	$	61,273		$	(24,858	)	$	36,423

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

Kura Sushi USA, Inc.

Condensed Statements of Cash Flows

(amounts in thousands)

(Unaudited)

	Six Months Ended February 28,
	2022			2021
Cash flows from operating activities
Net loss	$	(3,154	)	$	(10,231	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		2,609			2,098
Stock-based compensation		1,039			575
Loss on disposal of property and equipment		—			29
Non-cash lease expense		1,420			1,380
Changes in operating assets and liabilities:
Accounts and other receivables		(224	)		(408	)
Inventories		(147	)		(60	)
Due from affiliate		318			(227	)
Prepaid expenses and other current assets		7,679			(2,872	)
Deposits and other assets		(81	)		53
Accounts payable		201			(67	)
Accrued expenses and other current liabilities		(123	)		240
Salaries and wages payable		361			906
Operating lease liabilities		(221	)		(646	)
Due to affiliate		(3	)		192
Sales tax payable		48			106
Net cash provided by (used in) operating activities		9,722			(8,932	)
Cash flows from investing activities
Payments for property and equipment		(12,298	)		(9,793	)
Payments for initial direct costs		(315	)		—
Payments for purchases of liquor licenses		(559	)		(111	)
Net cash used in investing activities		(13,172	)		(9,904	)
Cash flows from financing activities
Proceeds from loan from affiliate		—			12,000
Repayment of principal on finance leases		(524	)		(518	)
Taxes paid on vested restricted stock awards		(154	)		—
Proceeds from exercise of stock options		48			366
Net cash (used in) provided by financing activities		(630	)		11,848
Decrease in cash and cash equivalents		(4,080	)		(6,988	)
Cash and cash equivalents, beginning of period		40,430			9,259
Cash and cash equivalents, end of period	$	36,350		$	2,271
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	88		$	—
Noncash investing activities
Acquisition of finance leases	$	34