Annual report pursuant to Section 13 and 15(d)

Business Combination

v3.20.1
Business Combination
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Business Combination

Note 3 – Business Combination 

On October 4, 2019, the Company acquired substantially all of the assets of Kona Grill Inc. and its affiliates comprising 24 domestic restaurants. The Company purchased the assets for a contractual price of $25.0 million plus $1.5 million of consideration paid primarily for the apportionment of rent and utilities. The Company also assumed approximately $7.7 million in current liabilities. The Company believes that Kona Grill is complementary and will enable the Company to capture market share in the Vibe Dining segment.

Kona Grill Inc. and its affiliates were purchased pursuant to a Chapter 11 bankruptcy. As a result, the Company recognized a bargain purchase gain of approximately $11.0 million in the consolidated statements of income and comprehensive income for the year ended December 31, 2019, which represents the excess of the aggregate fair value of net assets acquired and liabilities assumed over the purchase price.

The purchase accounting is preliminary and represents estimates and assumptions that are subject to change during the measurement period (up to one year from the acquisition date). The following table summarizes the preliminary fair value of identified assets acquired and liabilities assumed as of the acquisition date (amounts in thousands):

 

 

 

 

Net assets acquired:

    

 

 

Cash

 

$

450

Current assets, excluding cash

 

 

2,830

Property and equipment

 

 

31,781

Operating lease right-of-use assets

 

 

42,398

Intangible assets

 

 

17,400

Other assets

 

 

692

Current liabilities

 

 

(7,690)

Deferred tax liability

 

 

(4,044)

Operating lease liabilities

 

 

(46,364)

Total net assets acquired

 

$

37,453

 

 

 

 

Purchase consideration:

 

 

 

Contractual purchase price

 

 

25,000

Apportionment of rent and utilities

 

 

775

Assumption of real estate lease consultant contract

 

 

465

Escrow deposit

 

 

250

Consideration paid

 

$

26,490

 

 

 

 

Bargain purchase gain attributable to Kona Grill acquisition

 

$

10,963

 

Pro Forma Results of Operations (unaudited)

The following pro forma results of operations for the years ended December 31, 2019 and 2018, have been prepared as though the acquisition occurred as of January 1, 2018 and 2019. The pro forma financial information is not indicative of the results of operations that the Company would have attained had the acquisition occurred at the beginning of the periods presented, nor is the pro forma financial information indicative of the results of operations that may occur in the future. Amounts are in thousands, except earnings per share related data.

 

 

 

 

 

 

 

 

 

For the years ended

 

 

December 31, 

 

December 31, 

 

    

2019

    

2018

Total revenues

 

$

196,906

 

$

188,053

Net income attributable to The ONE Group Hospitality, Inc.

 

$

10,789

 

$

1,569

Net income attributable to The ONE Group Hospitality, Inc. per share:

 

 

 

 

 

 

Basic net income per share

 

$

0.38

 

$

0.06

Diluted net income per share

 

$

0.36

 

$

0.06