Financial Performance - Total revenue increased by $39.5 million, or 14.2%, to $316.6 million for 2022 compared to $277.2 million for 2021[137] - Net income attributable to The ONE Group Hospitality, Inc. was $13.5 million in 2022, down from $31.3 million in 2021[142] - Adjusted EBITDA for 2022 was $41,324, slightly down from $43,194 in 2021, reflecting a decrease of 4.3%[178] - Restaurant Operating Profit was $50,805, down from $52,407 in 2021, resulting in a margin of 16.9% compared to 19.8% the previous year[179] - Owned restaurant net revenue increased to $300,859, up from $264,404 in 2021, representing a growth of 13.8%[174] - Management and license fee revenues increased by $3.0 million, or 23.5%, to $15.8 million in 2022, attributed to strong performance at managed restaurants in North America[184] Sales and Growth - Same store sales increased by 10.8% in 2022 compared to 2021, with STK same store sales up by 17.1% and Kona Grill same store sales up by 2.5%[137] - Same store sales for STK increased by 69.1% and for Kona Grill by 26.3% on a three-year basis compared to 2019[140] - The company plans to open 8 to 12 new venues in 2023, including a Kona Grill in Columbus, Ohio, which opened in January 2023[132] - The company expects to expand STK to 200 restaurants globally, with plans to open 5 to 6 STKs annually[143] - Kona Grill is projected to grow to 200 restaurants, with 3 to 5 openings annually, including two under construction in Riverton, Utah, and Phoenix, Arizona[145] Expenses and Costs - Pre-opening expenses increased significantly to $5,519 from $1,037 in 2021, indicating a rise of 431.5%[174] - Owned restaurant cost of sales as a percentage of owned restaurant net revenue decreased to 25.0% from 25.5%[175] - Owned restaurant operating expenses increased by $30.2 million, or 20.9%, to $174.7 million in 2022, with operating costs as a percentage of net revenue rising to 58.1%[186] - Food and beverage costs for owned restaurants rose by $7.9 million, or 11.7%, to $75.4 million in 2022, with cost of sales as a percentage of revenues decreasing to 25.0%[185] - General and administrative costs increased by $3.5 million, or 13.7%, to $29.1 million in 2022, maintaining a consistent percentage of revenues at 9.2%[187] Cash Flow and Financing - Net cash provided by operating activities was $25.3 million for 2022, a decrease from $31.0 million in 2021, primarily due to payments on accrued expenses[215] - Net cash used in investing activities for 2022 was $32.7 million, mainly for the construction of new restaurants compared to $11.5 million in 2021[216] - Net cash provided by financing activities was $39.1 million for 2022, compared to a net cash used of $20.3 million in 2021, driven by a $50.0 million borrowing under the amended Credit Agreement[217] - As of December 31, 2022, the company had cash and cash equivalents of $55.1 million and long-term debt of $74.3 million[197] - The company entered into a Fourth Amendment to the Credit Agreement, allowing for a new $50.0 million delayed draw term facility for acquisitions and capital expenditures[202] Market and Economic Conditions - The company experienced inflationary pressures in 2022, impacting labor, food, and occupancy costs, with a strategy to maintain operating margins through menu price increases and cost controls[237] - The company is exposed to market price fluctuations in food product prices, which can materially impact food and beverage costs[236] - The company is exposed to market risk from changes in interest rates, with borrowings under the Credit Agreement subject to SOFR plus a 6.5% margin[238] - The company faces foreign currency exchange rate risk in operations across the UK, Italy, Canada, Mexico, and the Middle East[239] - The company currently does not use financial instruments to hedge against foreign currency exchange rate changes[239]

THEONE OF GROWTH +550 bps 17.3% 11.8% FY 2019 Q3 2022 TTM -Fine Dining Steak Index STK 81.9% - 70.6% 63.0% 62 5% 00.0% 64.3% 26.2% 20.4% 17.8% 14.7% 10.4% 8.1% 1.9% (17,35) Adjusted G&A % of GAAP Revenue STK Same Store Sales Growth vs. 2019 11.5% 2018 Kona Grill Same Store Sales Growth vs. 2019 Total Venues Count Potential Historical Venue Growth 63 24 12:21:0017 Current | --- | --- | |----------------------------|---------------| | | | | SELECT 2023 Expected Units | | | STK | Kona Grill | | Charlotte, NC | ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $73 million, an increase of 1.6% from $71.9 million in Q3 2021 [19] - Owned restaurant net revenue increased to $69.5 million, up 2.3% from $68 million in the same quarter last year [19] - Adjusted EBITDA for Q3 2022 was $7.1 million, compared to $10 million in Q3 2021 [25] - Net income attributable to the ONE Group was $0.4 million or $0.01 per share, down from $11.6 million or $0.34 per share in Q3 2021 [24] Business Line Data and Key Metrics Changes - STK comparable sales increased by 3.5% compared to Q3 2021, while Kona Grill saw a decrease of 3.6% [20] - STK's average weekly sales were $290,000, while Kona Grill's were $95,000 [6] - Restaurant operating profit at STK was 18.5%, while Kona Grill's was 6.4% [21] Market Data and Key Metrics Changes - Consolidated comparable sales increased by 0.5% for the quarter compared to 2021 [19] - Compared to 2019, consolidated comparable sales increased by 45.6%, with STK up 70.6% and Kona Grill up 22.3% [20] Company Strategy and Development Direction - The company plans to open 7 new units in the second to fourth quarters of 2022, including 3 company-owned STKs and 3 company-owned Kona Grills [15] - The company is focusing on high-volume, high-margin brands with compelling returns, targeting a total addressable market of at least 400 restaurants [17] - The company is confident in its pricing power and plans to implement further price increases in Q4 2022 [12] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures outpaced price increases during Q3, but they expect margins to improve in Q4 due to pricing adjustments [13][49] - The company is optimistic about the upcoming holiday season and sees an increase in corporate event bookings [51] - Management highlighted the strong performance of the new STK San Francisco location, which is exceeding revenue expectations [64] Other Important Information - Hurricane Ian negatively impacted sales, particularly in Florida, which accounts for 14% of the sales base [8][44] - The company repurchased 500,000 shares of common stock during Q3 2022 [26] Q&A Session Summary Question: Insights on Kona Grill's performance - Management indicated that Kona Grill's comparable sales were down 3%, with traffic down 7-8%, but check sizes increased due to higher steak sales [30] Question: Impact on Kona Grill's operating profit - Management attributed margin pressure primarily to inflation and labor costs, with pricing adjustments planned for Q4 [31] Question: Staffing levels in preparation for Q4 - Management confirmed they were fully staffed in Q3 to prepare for the busy Q4 season [35] Question: Real estate opportunities - Management noted significant availability of real estate and a strong pipeline for new openings [37] Question: Corporate event business recovery - Management reported an increase in corporate event bookings, particularly for full venue buyouts, which are profitable [51] Question: Commodity costs and supply chain - Management observed stabilization in labor costs but continued pressure on core commodities like beef and seafood [43][58] Question: Financial outlook for Q4 and beyond - Management expressed optimism about returning to growth in EBITDA in Q4, supported by new store openings and pricing adjustments [66]

THE ONE GROUP HOSPITALITY, INC. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 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 September 30, 2022 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 001-37379 If an emerging growth company, indicate by a check mark if the regi ...

One Group Hospitality, Inc. (NASDAQ:STKS) Q2 2022 Earnings Conference Call August 4, 2022 4:30 PM ET Company Participants Tyler Loy - CFO Emanuel Hilario - President, CEO & Director Conference Call Participants Nicole Miller - Piper Sandler & Co. Nerses Setyan - Wedbush Securities Mark Smith - Lake Street Capital Markets Operator Greetings, and welcome to the ONE Group Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I'd now like t ...

Revenue Performance - Total revenues increased by $10.4 million, or 14.6%, to $81.1 million for the three months ended June 30, 2022, compared to $70.8 million for the same period in 2021[88]. - Total revenues increased by $34.1 million, or 28.1%, to $155.3 million for the six months ended June 30, 2022, compared to $121.2 million for the same period in 2021[90]. - Total revenues for the three months ended June 30, 2022, reached $81.125 million, compared to $70.760 million for the same period in 2021, reflecting a significant growth[96]. Same Store Sales - Same store sales increased by 12.8% in Q2 2022 compared to Q2 2021, with STK same store sales up by 19.8% and Kona Grill same store sales up by 3.7%[88]. - Comparable restaurant sales increased by 12.8% for the second quarter of 2022 compared to the second quarter of 2021, indicating strong sales performance[103]. - Comparable restaurant sales increased by 26.3% in the first half of 2022[114]. Operating Profit and Income - Restaurant operating profit decreased by $2.6 million, or 16.7%, to $12.8 million for the three months ended June 30, 2022, compared to $15.3 million for the same period in 2021[89]. - Operating income for the three months ended June 30, 2022, was $5.753 million, down from $7.756 million in the same period of 2021[100]. - Operating income for the six months ended June 30, 2022, was $10.0 million, compared to $8.6 million for the same period in 2021[90]. Net Income and EBITDA - Net income attributable to The One Group Hospitality, Inc. was $4.303 million for the three months ended June 30, 2022, compared to $13.836 million for the same period in 2021[99]. - Adjusted EBITDA for the three months ended June 30, 2022, was $10.561 million, compared to $13.205 million for the same period in 2021[99]. Expenses and Costs - Food and beverage costs for owned restaurants increased by $8.8 million, or 30.0%, to $38.0 million for the six months ended June 30, 2022, from $29.2 million for the same period in 2021[116]. - Owned restaurant operating expenses increased by $20.5 million to $83.7 million for the six months ended June 30, 2022, from $63.2 million for the same period in 2021[117]. - General and administrative costs increased by $2.8 million, or 25.0%, to $14.1 million for the six months ended June 30, 2022, compared to $11.3 million for the same period in 2021[118]. Cash Flow and Financing - Net cash provided by operating activities was $14.9 million for the six months ended June 30, 2022, compared to $19.8 million for the same period in 2021[136]. - Net cash used in financing activities for the six months ended June 30, 2022, was $1.8 million, with $1.4 million allocated to employee taxes for shares withheld upon vesting of restricted stock units[138]. - Net cash provided by financing activities for the six months ended June 30, 2021, was $2.6 million, primarily from proceeds of stock options and warrants[138]. Future Plans and Growth Strategy - The company plans to open at least nine new venues in 2022, including two STK and two Kona Grill restaurants, and three licensed units in Texas for takeout and delivery[83]. - The company aims to increase same store sales and improve operating efficiency as part of its growth strategy[86]. COVID-19 Impact - COVID-19 related expenses were $0.2 million for Q2 2022, down from $1.1 million in Q2 2021, reflecting improved operational conditions[84]. - COVID-19 related expenses decreased to $2.5 million for the six months ended June 30, 2022, from $2.6 million in the prior year period[121]. Assets and Capital Expenditures - Total assets as of June 30, 2022, amounted to $235.227 million, an increase from $229.835 million as of December 31, 2021[96]. - Capital asset additions for the three months ended June 30, 2022, totaled $7.641 million, compared to $2.758 million for the same period in 2021[96]. - Capital expenditures were $12.1 million for the six months ended June 30, 2022, primarily for the construction of new STK and Kona Grill restaurants[126]. Accounting and Impairment Testing - The company has added a critical accounting estimate regarding indefinite-lived intangible assets, which are tested for impairment annually or on an interim basis[141]. - Qualitative factors considered for impairment testing include historical financial performance, expected future cash flows, and macroeconomic conditions[142]. - Quantitative assessments for impairment require estimates on future cash flows, including projected revenue growth and operating expenses[143]. - Changes in economic conditions and operating performance may affect the company's ability to realize future cash flows[143]. - The company does not expect recent accounting pronouncements to significantly impact its consolidated financial position or results of operations[140]. - As a "smaller reporting company," the company is not required to provide detailed market risk disclosures[144].

The ONE Group Hospitality Inc. (NASDAQ:STKS) Q1 2022 Earnings Conference Call May 6, 2022 8:00 AM ET Company Participants Tyler Loy - CFO Manny Hilario - President & CEO Conference Call Participants Nicole Miller - Piper Sandler Nick Setyan - Wedbush Securities Mark Smith - Lake Street Capital Markets Operator Good morning, everyone. And welcome to The ONE Group First Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, ...

PART I – Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2022 show total assets of **$236.6 million**, net income of **$3.7 million**, and cash of **$28.6 million** - The company operates and licenses **59 venues** as of March 31, 2022, including **22 STK restaurants**, **24 Kona Grills**, and **13 other F&B venues**, with STK and Kona Grill as primary brands[19](index=19&type=chunk)[20](index=20&type=chunk) - COVID-19 related expenses were **$2.3 million** for Q1 2022, primarily for sanitation, supplies, and safety measures, with all restaurants currently open for in-person dining[21](index=21&type=chunk) Condensed Consolidated Balance Sheet (in thousands) | Account | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $44,800 | $42,927 | | **Total Assets** | **$236,574** | **$229,835** | | **Total Current Liabilities** | $42,836 | $42,264 | | **Total Liabilities** | $172,055 | $169,310 | | **Total Stockholders' Equity** | $65,577 | $61,434 | | **Total Liabilities and Equity** | **$236,574** | **$229,835** | Condensed Consolidated Statement of Operations (in thousands) | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | **Total Revenues** | **$74,181** | **$50,482** | | Owned restaurant net revenue | $70,516 | $49,168 | | Management, license and incentive fee revenue | $3,665 | $1,314 | | **Operating Income** | **$4,202** | **$857** | | **Net Income Attributable to The One Group** | **$3,670** | **$70** | | **Diluted Net Income Per Share** | **$0.11** | **$0.00** | Condensed Consolidated Statement of Cash Flows (in thousands) | Activity | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $9,823 | $6,986 | | Net cash used in investing activities | ($4,450) | ($2,615) | | Net cash used in financing activities | ($253) | ($304) | | **Net increase in cash and cash equivalents** | **$5,030** | **$4,050** | | **Cash and cash equivalents, end of period** | **$28,644** | **$28,435** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong Q1 2022 financial performance, driven by **46.9% revenue growth** and **45.1% same-store sales increase**, with **Adjusted EBITDA reaching $10.8 million** and ongoing growth strategies - The company's growth strategy focuses on expanding STK and Kona Grill restaurants, pursuing new F&B hospitality projects, increasing same-store sales, and potential acquisitions, with plans to open at least **nine new venues in 2022**[81](index=81&type=chunk)[85](index=85&type=chunk) Q1 2022 vs Q1 2021 Performance Highlights | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $74.2M | $50.5M | +46.9% | | Same-Store Sales (YoY) | +45.1% | N/A | N/A | | - STK SSS | +66.5% | N/A | N/A | | - Kona Grill SSS | +21.9% | N/A | N/A | | Operating Income | $4.2M | $0.9M | +$3.3M | | Restaurant Operating Profit | $13.0M | $9.3M | +40.8% | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Q1 2022 (in thousands) | Q1 2021 (in thousands) | | :--- | :--- | :--- | | Net income (loss) | $3,521 | ($60) | | EBITDA | $6,917 | $3,556 | | **Adjusted EBITDA** | **$10,678** | **$6,446** | | **Adjusted EBITDA attributable to The ONE Group** | **$10,756** | **$6,499** | - As of March 31, 2022, the company had **$28.6 million in cash and cash equivalents** and **$24.6 million in long-term debt**, with **$10.6 million available** on its revolving credit facility[110](index=110&type=chunk) - Capital expenditures in Q1 2022 totaled **$4.5 million**, comprising **$1.7 million** for new restaurant construction (STK and Kona Grill) and **$2.8 million** for existing restaurants and technology initiatives[111](index=111&type=chunk)[124](index=124&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' the company is not required to provide quantitative and qualitative disclosures about market risk - As a 'smaller reporting company,' the company is not required to provide quantitative and qualitative disclosures about market risk[127](index=127&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of March 31, 2022, due to two material weaknesses in internal control over financial reporting, with ongoing remediation efforts - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of March 31, 2022[129](index=129&type=chunk) - The ineffectiveness stems from two material weaknesses in internal control over financial reporting previously identified in the 2021 Form 10-K, which did not result in a material misstatement[129](index=129&type=chunk) - Remediation efforts to address the material weaknesses are ongoing, and the weaknesses cannot be considered remediated until controls have operated effectively for a sufficient period[130](index=130&type=chunk)[131](index=131&type=chunk) PART II – Other Information [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal claims common in the hospitality industry, with management believing their ultimate resolution will not materially adversely affect financial position or results - The company is subject to claims common to the restaurant industry, such as those regarding compliance with labor laws and regulations[133](index=133&type=chunk) - Management does not believe the ultimate resolution of current legal matters will have a material adverse effect on the company's consolidated financial statements[133](index=133&type=chunk)[135](index=135&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - There have been no material changes to the risk factors as disclosed in the Form 10-K for the year ended December 31, 2021[136](index=136&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[137](index=137&type=chunk) [Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents and required CEO and CFO certifications - The report includes required exhibits such as CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL data files[138](index=138&type=chunk)

Part I [Business](index=5&type=section&id=Item%201.%20Business) The ONE Group operates upscale restaurants and provides F&B services globally, with 60 venues across its STK, Kona Grill, and ONE Hospitality brands, employing a capital-light growth strategy - The company aims to be a market leader in 'Vibe Dining,' integrating high-quality service, ambiance, energy, and cuisine[12](index=12&type=chunk) Venue Count by Brand and Type (as of Dec 31, 2021) | | STK | Kona Grill | ONE Hospitality | Total | | :--- | :--- | :--- | :--- | :--- | | **Domestic** | | | | | | Owned | 11 | 24 | 2 | 37 | | Managed | 2 | — | 1 | 3 | | Licensed | 1 | — | — | 1 | | **Total domestic** | **14** | **24** | **3** | **41** | | **International** | | | | | | Managed | 4 | — | 10 | 14 | | Licensed | 5 | — | — | 5 | | **Total international** | **9** | **—** | **10** | **19** | | **Total venues** | **23** | **24** | **13** | **60** | - The company utilizes a 'capital light strategy' for expansion, prioritizing licensed and managed restaurants to minimize capital outlay[18](index=18&type=chunk) 2021 Key Brand Performance Metrics | Brand | Avg. Domestic Restaurant Revenues (Comparable Stores) | Avg. Domestic Check Per Person | | :--- | :--- | :--- | | STK | $14.8 million | $114 | | Kona Grill | $5.1 million | $33 | - Global growth potential is identified for up to **200** restaurants across both STK and Kona Grill brands[23](index=23&type=chunk)[25](index=25&type=chunk) - As of December 31, 2021, the company employed approximately **64** corporate staff and managed approximately **3,364** direct and **420** indirect personnel globally[40](index=40&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from health and safety, economic sensitivity, intense competition, growth strategy execution, labor law changes, supply chain reliance, cybersecurity, and internal control weaknesses - The COVID-19 pandemic remains a significant risk, incurring **$5.8 million** in costs in 2021 and **$5.5 million** in 2020[50](index=50&type=chunk)[52](index=52&type=chunk) - Business operations are highly dependent on consumer discretionary spending and business travel, sensitive to economic downturns[57](index=57&type=chunk) - The growth strategy of opening **7-12** new locations annually via a 'capital light' model faces risks in partner and location suitability, cost management, and venue profitability[69](index=69&type=chunk)[70](index=70&type=chunk) - Changes to labor laws, especially minimum wage for tipped employees (**32%** of workforce), could significantly increase labor costs, with FICA tip credit elimination posing further financial risk[77](index=77&type=chunk)[78](index=78&type=chunk) - Beef purchases constitute approximately **22%** of food and beverage costs, exposing the company to commodity price volatility[91](index=91&type=chunk) - Approximately **80%** of sales via credit/debit cards expose the company to security breaches and fraudulent transaction liability, particularly with the EMV liability shift[102](index=102&type=chunk) - Non-compliance with debt covenants could accelerate debt repayment, negatively impacting business operations[110](index=110&type=chunk) - Management identified material weaknesses in internal control over financial reporting, potentially hindering accurate financial reporting and eroding investor confidence[112](index=112&type=chunk)[113](index=113&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[120](index=120&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) The company operates all its STK, Kona Grill, and ONE Hospitality venues in leased premises, owning no real property - The company does not own any real property, operating all venues in leased premises[121](index=121&type=chunk) - As of December 31, 2021, there were **23** STK, **24** Kona Grill, and **13** ONE Hospitality venues across North America, Europe, and the Middle East[122](index=122&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) [Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) The company faces ordinary course legal claims, primarily labor-related, with management believing current accruals are adequate and resolutions will not materially impact financial position - The company is subject to ordinary course claims, including labor law-related class action lawsuits[127](index=127&type=chunk) - Management believes current legal accruals are adequate, anticipating no material adverse effect on financial statements from resolutions[127](index=127&type=chunk) [Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[129](index=129&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under 'STKS', with no cash dividends paid or planned, as earnings are retained for growth - Common stock trades on the NASDAQ Capital Market under the symbol **'STKS'**[131](index=131&type=chunk) - The company has not paid and does not intend to pay cash dividends, preferring to retain earnings for growth[132](index=132&type=chunk) [Reserved](index=40&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, total revenues surged **95.3%** to **$277.2 million**, driven by strong same-store sales and COVID-19 recovery, resulting in **$31.3 million** net income and robust cash from operations 2021 vs 2020 Financial Highlights | Metric | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $277.2M | $141.9M | +$135.3M | +95.3% | | Restaurant Operating Profit | $52.4M | $15.6M | +$36.8M | +235.9% | | Operating Income (Loss) | $19.4M | ($13.7M) | +$33.1M | - | | Net Income (Loss) Attributable | $31.3M | ($12.8M) | +$44.1M | - | Same Store Sales (SSS) Growth | Period | Total SSS vs Prior Year | STK SSS vs Prior Year | Kona Grill SSS vs Prior Year | | :--- | :--- | :--- | :--- | | **2021 vs 2020** | +92.8% | +131.9% | +57.7% | | **2021 vs 2019 (Two-Year)** | +34.2% | +45.1% | +23.2% | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | For the year ended December 31, | | :--- | :--- | :--- | | | **2021** | **2020** | | Net income (loss) | $31,948 | ($13,623) | | EBITDA | $48,104 | ($3,580) | | Gain on CARES Act Loan forgiveness | ($18,529) | — | | COVID-19 related expenses | $5,821 | $5,492 | | Stock-based compensation | $3,618 | $1,773 | | **Adjusted EBITDA** | **$43,194** | **$9,039** | Restaurant Operating Profit by Brand (in thousands) | Brand | 2021 Profit | 2021 Margin | 2020 Profit | 2020 Margin | | :--- | :--- | :--- | :--- | :--- | | STK (Company owned) | $34,598 | 24.7% | $7,347 | 13.1% | | Kona Grill | $17,785 | 14.4% | $8,175 | 10.4% | - In 2021, the company recognized an **$18.5 million** gain from the forgiveness of CARES Act PPP loans[212](index=212&type=chunk) Summary of Cash Flows (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by Operating activities | $30,966 | $431 | | Net cash used in Investing activities | ($11,467) | ($5,787) | | Net cash (used in) provided by Financing activities | ($20,275) | $17,424 | [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity price fluctuations, inflationary pressures on labor and food costs, and foreign currency exchange rates from international operations - The company faces commodity price risk, particularly for beef, seafood, and produce, without current hedging through financial instruments[237](index=237&type=chunk) - Inflation poses a risk to labor, food, and occupancy costs, mitigated by price increases, cost controls, and efficient purchasing[238](index=238&type=chunk) - Foreign currency exchange risk exists from international operations, though currently unhedged[239](index=239&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's audited Consolidated Financial Statements, located in Item 15 of the Annual Report on Form 10-K - The Consolidated Financial Statements are located in Item 15 of the report[240](index=240&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=67&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure during the period - None[241](index=241&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2021, due to material weaknesses in internal control over financial reporting, leading to an adverse auditor opinion, with remediation efforts underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2021[244](index=244&type=chunk) - Two material weaknesses were identified: lack of segregation of duties for journal entry review, and aggregate deficiencies in control design, IT user access, and technical accounting application[247](index=247&type=chunk)[254](index=254&type=chunk) - Deloitte & Touche LLP issued an adverse opinion on the company's internal control over financial reporting as of December 31, 2021[258](index=258&type=chunk)[265](index=265&type=chunk) - Remediation efforts include modifying journal entry review, enhancing control design, and providing further technical accounting education and resources[251](index=251&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk) [Other Information](index=77&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[269](index=269&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=77&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This disclosure is not applicable to the company - None[270](index=270&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=77&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the Company's 2022 Proxy Statement[272](index=272&type=chunk) [Executive Compensation](index=77&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the Company's 2022 Proxy Statement[273](index=273&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=77&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the Company's 2022 Proxy Statement[274](index=274&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=77&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the Company's 2022 Proxy Statement[275](index=275&type=chunk) [Principal Accounting Fees and Services](index=77&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference from the Company's 2022 Proxy Statement[276](index=276&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=78&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section contains the financial statements and a list of all exhibits filed as part of the Annual Report on Form 10-K - This item includes the financial statements and the exhibit list for the Form 10-K[279](index=279&type=chunk)[281](index=281&type=chunk) [Form 10-K Summary](index=78&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary was provided - None[280](index=280&type=chunk)

Financial Data and Key Metrics Changes - The company reported record total GAAP revenues of $84.1 million for Q4 2021, an increase of 86.8% from $45 million in Q4 2020 [33] - Adjusted EBITDA for Q4 2021 was $13.3 million, compared to $4.1 million in Q4 2020, reflecting a significant improvement in profitability [42] - Net income attributable to The ONE Group was $5.8 million or $0.17 per share, compared to a net loss of $4.5 million or $0.15 per share in Q4 2020 [41] Business Line Data and Key Metrics Changes - Consolidated restaurant margins improved to 20.4%, up 440 basis points from 16% in Q4 2020, driven by strong sales initiatives and disciplined cost management [10][37] - Comparable sales increased by 49.8% compared to 2019, with STK seeing a 60% increase and Kona Grill a 38.2% increase [34] - Average weekly sales for STK reached $338,000, compared to $215,000 in the same period in 2019, while Kona Grill's average weekly sales were $108,000, up from $78,000 [12] Market Data and Key Metrics Changes - The management license and incentive fee revenues were $4.6 million, a 262% increase from $1.3 million in Q4 2020, attributed to the recovery from the pandemic and new openings [35] - The company added seven new venues in 2021, including three managed F&B units and two managed STKs, contributing to its growth strategy [23] Company Strategy and Development Direction - The company plans to open at least nine new units in 2022, including two company-owned STKs and three company-owned Kona Grills, indicating a robust development pipeline [24] - The focus remains on maintaining a strong employee base to ensure high-quality service and operational excellence, which is seen as a competitive advantage [29][30] - The company is targeting a total addressable market of at least 400 restaurants, with plans for significant growth in both STK and Kona Grill brands [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing challenges in the macro environment but emphasized the positive impact of their brunch and happy hour initiatives on sales [48] - The company is cautious about providing long-term guidance due to macroeconomic uncertainties but remains optimistic about short-term performance [50] - Management highlighted the importance of flexibility in menu management and supply chain to navigate inflationary pressures [53][54] Other Important Information - The company reported $23.6 million in cash and cash equivalents as of December 31, indicating strong liquidity [42] - Direct costs related to COVID-19 during Q4 amounted to approximately $2 million, reflecting ongoing health and safety measures [38] Q&A Session Summary Question: Insights on Q1 revenue momentum - Management noted that brunch and happy hour initiatives have driven incremental interest and sales, contributing to positive performance despite macro challenges [48] Question: Confidence in surpassing previous quarterly numbers - Management expressed positivity about current performance but emphasized a focus on short-term guidance due to macroeconomic uncertainties [50] Question: Thoughts on inflation and pricing strategy - Management highlighted the need for flexibility in menu management and maintaining competitive pricing while being open to necessary price adjustments [53][54] Question: Labor investments and growth pipeline - Management confirmed a healthy pipeline of talent and emphasized the importance of maintaining staffing levels to support growth [56] Question: Management license and incentive fee revenue outlook - Management indicated that growth in this area reflects their growth strategy and expects continued progress as more properties come online [59] Question: Commodity contracts and supply management - Management confirmed short-term contracts for beef and a healthy supply of shellfish, emphasizing flexibility in menu offerings to mitigate supply chain issues [61] Question: Off-premise sales quantification - Management reported that takeout and delivery sales account for 5% to 8% of STK's sales and 13% to 17% for Kona Grill, with brunch expected to grow significantly [64]