Business Context and Reporting Period
Company: ONE Group Hospitality, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 30, 2019
Event: Entry into a Material Definitive Agreement to acquire assets of Kona Grill, Inc.
Key Financial Metrics
This filing reports on a specific transaction rather than periodic financial performance. Consequently, standard metrics such as revenue, profit, cash flow, margins, and liquidity for the reporting period are not provided in this document.
| Transaction Component | Value |
|---|---|
| Cash Purchase Price | $25 million |
| Assumed Working Capital Liabilities | Approximately $11 million |
| Escrow Deposit | $250,000 |
Material Changes and Transaction Details
On August 30, 2019, Kona Grill Acquisition LLC, a wholly owned subsidiary of the Company, entered into an asset purchase agreement to acquire substantially all assets of Kona Grill, Inc. and affiliated entities. The acquisition includes:
- 24 domestic restaurants.
- Two international franchise agreements.
The assets are being purchased "as is" with no representations or warranties, as Kona Grill is selling pursuant to its Chapter 11 bankruptcy proceedings.
Guidance, Outlook, Risks, and Contingencies
Conditions Precedent: Completion of the agreement is conditioned on:
- Bankruptcy court approval.
- The Company obtaining financing to fund the purchase.
Termination Rights: The Company may terminate the agreement without penalty on or before September 16, 2019, if:
- It is dissatisfied with its due diligence investigation of Kona's business and operations.
- It notifies Kona that it has not obtained financing to complete the transaction.
Risks: The $250,000 escrow deposit may be forfeited to Kona as liquidated damages if the Company fails to complete the acquisition in specified circumstances.
Investor Verification Checklist
- Verify the status of bankruptcy court approval for the asset sale.
- Confirm whether the Company has secured the necessary financing to fund the $25 million cash purchase and assumed liabilities.
- Review the due diligence findings to assess the risk of termination prior to September 16, 2019.
- Examine the specific terms of the "as is" purchase regarding potential undisclosed liabilities or asset conditions.