The ONE Group Hospitality, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events

6 Months Ended

Jun. 30, 2020

Note 16 – Subsequent Events

On August 10, 2020, Goldman Sachs Bank USA (“GSB”), as administrative agent, collateral agent and lead arranger under the Credit and Guaranty Agreement dated October 4, 2019 between The ONE Group Hospitality, Inc. and certain of its subsidiaries, the lenders from time to time party thereto and GSB (as amended by the First Amendment, dated May 8, 2020) (the “Credit Agreement”) entered into a second amendment to the Credit Agreement that:

Eliminates testing of the fixed charge coverage ratio for the balance of 2020 and 2021;

Eliminates testing the “Leverage Ratio” for the quarter ending June 30, 2020;

For the purpose of testing, replaces maximum “Leverage Ratio” with maximum “Net Leverage Ratio”. The maximum Net Leverage Ratio of (i) 2.85 to 1.00 as of the fiscal quarter ending September 30, 2020, (ii) 3.60 to 1.00 as of the fiscal quarter ending December 31, 2020, (iii) 3.10 to 1.00 as of the fiscal quarter ending March 31, 2021, (iv) 2.10 to 1.00 as of the fiscal quarters ending June 30, 2021 and September 30, 2021, and (v) 1.90 to 1.00 as of the fiscal quarter ending December 31, 2021. The agreement provides for a pro forma adjustment to reflect one full year of Kona Grill operations;

Reduces the maximum consolidated capital expenditures to $7,000,000 for 2020 and $7,000,000 for 2021; and

Requires minimum “Consolidated Liquidity” to be $4,000,000 for the balance of 2020 and 2021 (from $1,500,000 for 2021).