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, 2024

	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

THE ONE GROUP HOSPITALITY, INC.

(Exact name of registrant as specified in its charter)


Delaware		14-1961545
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1624 Market Street, Suite 311, Denver, Colorado		80202
(Address of principal executive offices)		Zip Code

646-624-2400

(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	STKS	Nasdaq

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 a 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 ⌧

Number of shares of common stock outstanding as of October 31, 2024: 30,853,668

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share information)


	September 30,		December 31,
	2024		2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	28,185	$	21,047
Credit card receivable		8,013		7,234
Restricted cash and cash equivalents		499		—
Accounts receivable		9,211		10,030
Inventory		9,047		6,184
Other current assets		8,141		1,809
Due from related parties		376		376
Total current assets		63,472		46,680

Operating lease right-of-use assets		267,610		95,075
Property and equipment, net		270,444		139,908
Goodwill		155,331		—
Intangibles, net		133,076		15,306
Deferred tax assets, net		53,124		14,757
Other assets		8,779		4,636
Security deposits		1,635		883
Total assets	$	953,471	$	317,245

LIABILITIES, SERIES A PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	31,110	$	19,089
Accrued expenses		67,014		28,333
Current portion of operating lease liabilities		15,757		6,897
Deferred gift card revenue and other		4,032		2,077
Current portion of long-term debt		4,812		1,500
Other current liabilities		295		266
Total current liabilities		123,020		58,162

Long-term debt, net of current portion, unamortized discount and debt issuance costs		329,489		70,410
Operating lease liabilities, net of current portion		296,163		120,481
Other long-term liabilities		5,256		832
Total liabilities		753,928		249,885

Commitments and contingencies (Note 17)

Series A preferred stock, $0.0001 par value, 160,000 shares authorized; 160,000 issued and outstanding at September 30, 2024 and 0 issued and outstanding at December 31, 2023		150,606		—

Stockholders’ equity:
Common stock, $0.0001 par value, 75,000,000 shares authorized; 33,822,191 issued and 30,802,537 outstanding at September 30, 2024 and 33,560,428 issued and 31,283,975 outstanding at December 31, 2023		3		3
Preferred stock, other than Series A preferred stock, $0.0001 par value, 9,840,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		—		—
Treasury stock, at cost, 3,019,654 shares at September 30, 2024 and 2,276,453 shares at December 31, 2023		(18,202)		(15,051)
Additional paid-in capital		72,554		58,270
Retained earnings		—		28,884
Accumulated other comprehensive loss		(2,913)		(2,930)
Total stockholders’ equity		51,442		69,176
Noncontrolling interests		(2,505)		(1,816)
Total stockholder's equity		48,937		67,360
Total liabilities, Series A preferred stock and stockholders' equity	$	953,471	$	317,245

See notes to the condensed consolidated financial statements.

Table of Contents

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except income per share and related share information)


	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Revenues:
Owned restaurant net revenue	$	190,587	$	73,700	$	441,116	$	232,202
Management, license, franchise and incentive fee revenue		3,388		3,184		10,348		10,631
Total revenues		193,975		76,884		451,464		242,833
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales		39,880		18,230		94,471		56,300
Owned restaurant operating expenses		125,634		46,372		278,464		141,983
Total owned operating expenses		165,514		64,602		372,935		198,283
General and administrative (including stock-based compensation of $1,580, $1,244, $4,433 and $3,798 for the three and nine months ended September 30, 2024 and 2023, respectively)		12,785		7,280		30,941		22,803
Depreciation and amortization		9,416		3,732		22,701		10,894
Transaction and exit costs		850		—		9,199		—
Transition and integration expenses		6,274		—		10,068		—
Pre-opening expenses		2,110		3,097		7,528		6,005
Other expenses		46		128		78		480
Total costs and expenses		196,995		78,839		453,450		238,465
Operating (loss) income		(3,020)		(1,955)		(1,986)		4,368
Other expenses, net:
Interest expense, net of interest income		10,679		1,673		20,622		5,102
Loss on early debt extinguishment		—		—		4,149		—
Total other expenses, net		10,679		1,673		24,771		5,102
Loss before provision for income taxes		(13,699)		(3,628)		(26,757)		(734)
Benefit for income taxes		(4,644)		(375)		(8,180)		(227)
Net loss		(9,055)		(3,253)		(18,577)		(507)
Less: net loss attributable to noncontrolling interest		(165)		(155)		(689)		(583)
Net (loss) income attributable to The ONE Group Hospitality, Inc.	$	(8,890)	$	(3,098)	$	(17,888)	$	76
Series A Preferred Stock paid-in-kind dividend and accretion		(7,125)		—		(11,663)		—
Net (loss) income available to common stockholders	$	(16,015)	$	(3,098)	$	(29,551)	$	76

Net (loss) income per common share:
Basic	$	(0.52)	$	(0.10)	$	(0.95)	$	—
Diluted	$	(0.52)	$	(0.10)	$	(0.95)	$	—

Weighted average common shares outstanding:
Basic		31,008,275		31,515,011		31,256,946		31,657,761
Diluted		31,008,275		31,515,011		31,256,946		32,537,572

See notes to the condensed consolidated financial statements.

Table of Contents

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited, in thousands)


	For the three months ended September 30,				For the nine months ended September 30,
	2024		2023		2024		2023
Net loss	$	(9,055)	$	(3,253)	$	(18,577)	$	(507)
Currency translation gain (loss), net of tax		74		(112)		17		(130)
Comprehensive loss		(8,981)		(3,365)		(18,560)		(637)
Less: comprehensive loss attributable to noncontrolling interest		(165)		(155)		(689)		(583)
Comprehensive loss attributable to The ONE Group Hospitality, Inc.		(8,816)		(3,210)		(17,871)		(54)
Series A Preferred Stock paid-in-kind dividend and accretion		(7,125)		—		(11,663)		—
Comprehensive loss attributable to common stockholders	$	(15,941)	$	(3,210)	$	(29,534)	$	(54)

See notes to the condensed consolidated financial statements.

Table of Contents

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND

SERIES A PREFERRED STOCK

(Unaudited, in thousands, except share information)


													Accumulated
									Additional				other
	Series A Preferred Stock			Common stock			Treasury		paid-in		Retained		comprehensive		Stockholders’		Noncontrolling
	Shares	Amount		Shares	Par value		stock		capital		Earnings		loss		equity		interests		Total
Balance at December 31, 2023	—	$	—	31,283,975	$	3	$	(15,051)	$	58,270	$	28,884	$	(2,930)	$	69,176	$	(1,816)	$	67,360
Stock-based compensation	—		—	—		—		—		1,358		—		—		1,358		—		1,358
Issuance of vested restricted shares, net of tax withholding	—		—	24,521		—		—		(124)		—		—		(124)		—		(124)
Loss on foreign currency translation, net	—		—	—		—		—		—		—		(68)		(68)		—		(68)
Net loss	—		—	—		—		—		—		(2,069)		—		(2,069)		(361)		(2,430)
Balance at March 31, 2024	—	$	—	31,308,496	$	3	$	(15,051)	$	59,504	$	26,815	$	(2,998)	$	68,273	$	(2,177)	$	66,096
Stock-based compensation	—		—	22,905		—		—		1,495		—		—		1,495		—		1,495
Exercise of stock options and warrants	—		—	50,000		—		—		242		—		—		242		—		242
Issuance of vested restricted shares, net of tax withholding	—		—	108,124		—		—		(356)		—		—		(356)		—		(356)
Issuance of warrants	—		—	—		—		—		10,771		—		—		10,771		—		10,771
Purchase of treasury stock	—		—	(192,325)		—		(888)		—		—		—		(888)		—		(888)
Gain on foreign currency translation, net	—		—	—		—		—		—		—		11		11		—		11
Net loss	—		—	—		—		—		—		(6,929)		—		(6,929)		(163)		(7,092)
Series A Preferred Stock issuance	160,000		138,943	—		—		—		—		—		—		—		—		—
Series A Preferred Stock paid-in-kind dividend and accretion	—		4,538	—		—		—		—		(4,538)		—		(4,538)		—		(4,538)
Balance at June 30, 2024	160,000	$	143,481	31,297,200	$	3	$	(15,939)	$	71,656	$	15,348	$	(2,987)	$	68,081	$	(2,340)	$	65,741
Stock-based compensation	—		—	39,114		—		—		1,580		—		—		1,580		—		1,580
Issuance of vested restricted shares, net of tax withholding	—		—	17,099		—		—		(15)		—		—		(15)		—		(15)
Purchase of treasury stock	—		—	(550,876)		—		(2,263)		—		—		—		(2,263)		—		(2,263)
Gain on foreign currency translation, net	—		—	—		—		—		—		—		74		74		—		74
Net loss	—		—	—		—		—		—		(8,890)		—		(8,890)		(165)		(9,055)
Series A Preferred Stock paid-in-kind dividend and accretion	—		7,125	—		—		—		(667)		(6,458)		—		(7,125)		—		(7,125)
Balance at September 30, 2024	160,000	$	150,606	30,802,537	$	3	$	(18,202)	$	72,554	$	—	$	(2,913)	$	51,442	$	(2,505)	$	48,937

Balance at December 31, 2022	—	$	—	31,735,423	$	3	$	(7,169)	$	55,583	$	24,166	$	(2,869)	$	69,714	$	(1,124)	$	68,590
Stock-based compensation	—		—	16,205		—		—		1,320		—		—		1,320		—		1,320
Issuance of vested restricted shares, net of tax withholding	—		—	247,536		—		—		(1,432)		—		—		(1,432)		—		(1,432)
Purchase of treasury stock				(118,085)				(735)		—		—		—		(735)		—		(735)
Loss on foreign currency translation, net	—		—	—		—		—		—		—		(70)		(70)		—		(70)
Net income (loss)	—		—	—		—		—		—		2,606		—		2,606		(276)		2,330
Balance at March 31, 2023	—	$	—	31,881,079	$	3	$	(7,904)	$	55,471	$	26,772	$	(2,939)	$	71,403	$	(1,400)	$	70,003
Stock-based compensation	—		—	17,930		—		—		1,234		—		—		1,234		—		1,234
Exercise of stock options and warrants	—		—	135,500		—		—		226		—		—		226		—		226
Issuance of vested restricted shares, net of tax withholding	—		—	66,717		—		—		(370)		—		—		(370)		—		(370)
Purchase of treasury stock	—		—	(478,992)		—		(3,418)		—		—		—		(3,418)				(3,418)
Gain on foreign currency translation, net	—		—	—		—		—		—		—		52		52		—		52
Net income (loss)	—		—	—		—		—		—		568		—		568		(152)		416
Balance at June 30, 2023	—	$	—	31,622,234	$	3	$	(11,322)	$	56,561	$	27,340	$	(2,887)	$	69,695	$	(1,552)	$	68,143
Stock-based compensation	—		—	23,865		—		—		1,244		—		—		1,244		—		1,244
Exercise of stock options	—		—	22,500		—		—		75		—		—		75		—		75
Issuance of vested restricted shares, net of tax withholding	—		—	153,809		—		—		(797)		—		—		(797)		—		(797)
Purchase of treasury stock	—		—	(549,065)		—		(3,536)		—		—		—		(3,536)		—		(3,536)
Loss on foreign currency translation, net	—		—	—		—		—		—		—		(112)		(112)		—		(112)
Net loss	—		—	—		—		—		—		(3,098)		—		(3,098)		(155)		(3,253)
Balance at September 30, 2023	—	$	—	31,273,343	$	3	$	(14,858)	$	57,083	$	24,242	$	(2,999)	$	63,471	$	(1,707)	$	61,764

See notes to the condensed consolidated financial statements.

Table of Contents

THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	For the nine months ended September 30,
	2024		2023
Operating activities:
Net loss	$	(18,577)	$	(507)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		22,701		10,894
Non-cash exit costs		321		—
Stock-based compensation		4,433		3,798
Amortization of debt issuance costs and debt original issuance discounts		1,723		558
Deferred taxes		(8,376)		(997)
Non-cash loss on early debt extinguishment		1,674		—
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		6,111		3,730
Inventory		1,542		(195)
Other current assets		(1,154)		56
Security deposits		(35)		—
Other assets		(2,596)		(403)
Accounts payable		2,169		(1,720)
Accrued expenses		11,513		(2,067)
Operating lease liabilities and right-of-use assets		5,172		2,840
Other liabilities		(953)		(759)
Net cash provided by operating activities		25,668		15,228

Investing activities:
Purchase of property and equipment		(53,768)		(38,411)
Acquisition related payments, net of cash acquired		(369,838)		—
Net cash used in investing activities		(423,606)		(38,411)


	Page
PART I – Financial Information
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35

PART II – Other Information
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 5. Other Information	37
Item 6. Exhibits	37

Signatures	38