10-Q
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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, 2023

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.)

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

 

The Nasdaq Stock Market LLC

 

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.

 

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 March 30, 2023, the registrant had 8,822,098 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

13

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

25

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26

Signatures

27

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kura Sushi USA, Inc.

Condensed Balance Sheets

(amounts in thousands, except par value)

(Unaudited)

 

 

 

February 28, 2023

 

 

August 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,294

 

 

$

35,782

 

Accounts and other receivables

 

 

3,644

 

 

 

2,486

 

Inventories

 

 

1,436

 

 

 

1,120

 

Due from affiliate

 

 

7

 

 

 

156

 

Prepaid expenses and other current assets

 

 

3,450

 

 

 

2,852

 

Total current assets

 

 

30,831

 

 

 

42,396

 

Non-current assets:

 

 

 

 

 

 

Property and equipment – net

 

 

87,791

 

 

 

75,590

 

Operating lease right-of-use assets

 

 

90,129

 

 

 

79,990

 

Deposits and other assets

 

 

3,966

 

 

 

3,380

 

Total assets

 

$

212,717

 

 

$

201,356

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,810

 

 

$

5,559

 

Accrued expenses and other current liabilities

 

 

2,356

 

 

 

3,731

 

Salaries and wages payable

 

 

5,800

 

 

 

5,955

 

Finance leases – current

 

 

179

 

 

 

507

 

Operating lease liabilities – current

 

 

8,538

 

 

 

7,992

 

Due to affiliate

 

 

439

 

 

 

285

 

Sales tax payable

 

 

1,341

 

 

 

1,240

 

Total current liabilities

 

 

25,463

 

 

 

25,269

 

Non-current liabilities:

 

 

 

 

 

 

Finance leases – non-current

 

 

16

 

 

 

30

 

Operating lease liabilities – non-current

 

 

94,329

 

 

 

82,280

 

Other liabilities

 

 

539

 

 

 

483

 

Total liabilities

 

 

120,347

 

 

 

108,062

 

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,
8,819 and 8,788 shares issued and outstanding as of February 28, 2023
and August 31, 2022, 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, 2023
and August 31, 2022

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

121,149

 

 

 

118,970

 

Accumulated deficit

 

 

(28,789

)

 

 

(25,686

)

Total stockholders' equity

 

 

92,370

 

 

 

93,294

 

Total liabilities and stockholders' equity

 

$

212,717

 

 

$

201,356

 

 

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 February 28,

 

 

Six Months Ended February 28,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

$

43,944

 

 

$

31,290

 

 

$

83,262

 

 

$

61,122

 

Restaurant operating costs:

 

 

 

 

 

 

 

 

 

 

 

 

Food and beverage costs

 

 

13,240

 

 

 

9,376

 

 

 

25,670

 

 

 

18,333

 

Labor and related costs

 

 

13,854

 

 

 

10,342

 

 

 

26,389

 

 

 

20,052

 

Occupancy and related expenses

 

 

3,065

 

 

 

2,302

 

 

 

5,950

 

 

 

4,502

 

Depreciation and amortization expenses

 

 

1,758

 

 

 

1,267

 

 

 

3,334

 

 

 

2,438

 

Other costs

 

 

5,866

 

 

 

4,344

 

 

 

11,187

 

 

 

7,954

 

Total restaurant operating costs

 

 

37,783

 

 

 

27,631

 

 

 

72,530

 

 

 

53,279

 

General and administrative expenses

 

 

7,122

 

 

 

5,454

 

 

 

13,764

 

 

 

10,814

 

Depreciation and amortization expenses

 

 

88

 

 

 

83

 

 

 

173

 

 

 

171

 

Total operating expenses

 

 

44,993

 

 

 

33,168

 

 

 

86,467

 

 

 

64,264

 

Operating loss

 

 

(1,049

)

 

 

(1,878

)

 

 

(3,205

)

 

 

(3,142

)

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

14

 

 

 

22

 

 

 

30

 

 

 

47

 

Interest income

 

 

(63

)

 

 

(24

)

 

 

(157

)

 

 

(50

)

Loss before income taxes

 

 

(1,000

)

 

 

(1,876

)

 

 

(3,078

)

 

 

(3,139

)

Income tax expense

 

 

15

 

 

 

3

 

 

 

25

 

 

 

15

 

Net loss

 

$

(1,015

)

 

$

(1,879

)

 

$

(3,103

)

 

$

(3,154

)

Net loss per Class A and Class B shares

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

(0.19

)

 

$

(0.32

)

 

$

(0.32

)

Diluted

 

$

(0.10

)

 

$

(0.19

)

 

$

(0.32

)

 

$

(0.32

)

Weighted average Class A and Class B shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,801

 

 

 

9,712

 

 

 

9,795

 

 

 

9,711

 

Diluted

 

 

9,801

 

 

 

9,712

 

 

 

9,795

 

 

 

9,711

 

 

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

 

 

Additional

 

 

 

 

 

Total

 

 

 

Class A

 

 

Class B

 

 

Paid-in

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balances as of August 31, 2022

 

 

8,788

 

 

$

9

 

 

 

1,000

 

 

$

1

 

 

$

118,970

 

 

$

(25,686

)

 

$

93,294

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

650

 

 

 

 

 

 

650

 

Employee stock plan

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

51

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,088

)

 

 

(2,088

)

Balances as of November 30, 2022

 

 

8,791

 

 

$

9

 

 

 

1,000

 

 

$

1

 

 

$

119,671

 

 

$

(27,774

)

 

$

91,907

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

945

 

 

 

 

 

 

945

 

Employee stock plan

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

533

 

 

 

 

 

 

533

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,015

)

 

 

(1,015

)

Balances as of February 28, 2023

 

 

8,819

 

 

$

9

 

 

 

1,000

 

 

$

1

 

 

$

121,149

 

 

$

(28,789

)

 

$

92,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

)

 

 

0

 

 

 

(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

 

 

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 28,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(3,103

)

 

$

(3,154

)

Adjustments to reconcile net loss to net cash provided by operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

3,507

 

 

 

2,609

 

Stock-based compensation

 

 

1,595

 

 

 

1,039

 

Loss on disposal of property and equipment

 

 

50

 

 

 

 

Non-cash lease expense

 

 

1,825

 

 

 

1,420

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts and other receivables

 

 

(11

)

 

 

(224

)

Inventories

 

 

(316

)

 

 

(147

)

Due from affiliate

 

 

149

 

 

 

318

 

Prepaid expenses and other current assets

 

 

(177

)

 

 

7,679

 

Deposits and other assets

 

 

245

 

 

 

(81

)

Accounts payable

 

 

(797

)

 

 

201

 

Accrued expenses and other current liabilities

 

 

(598

)

 

 

(123

)

Salaries and wages payable

 

 

(155

)

 

 

361

 

Operating lease liabilities

 

 

(242

)

 

 

(221

)

Due to affiliate

 

 

(278

)

 

 

(3

)

Sales tax payable

 

 

(17

)

 

 

48

 

Net cash provided by operating activities

 

 

1,677

 

 

 

9,722

 

Cash flows from investing activities

 

 

 

 

 

 

Payments for property and equipment

 

 

(14,302

)

 

 

(12,298

)

Payments for initial direct costs

 

 

(275

)

 

 

(315

)

Payments for purchases of liquor licenses

 

 

(831

)

 

 

(559

)

Net cash used in investing activities

 

 

(15,408

)

 

 

(13,172

)

Cash flows from financing activities

 

 

 

 

 

 

Repayment of principal on finance leases

 

 

(341

)

 

 

(524

)

Taxes paid on vested restricted stock awards

 

 

 

 

 

(154

)

Proceeds from exercise of stock options

 

 

584

 

 

 

48

 

Net cash provided by (used in) financing activities

 

 

243

 

 

 

(630

)

Decrease in cash and cash equivalents

 

 

(