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, 2023

	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, 2023: 31,273,343

Table of Contents

TABLE OF CONTENTS


	Page
PART I – Financial Information
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29

PART II – Other Information
Item 1. Legal Proceedings	30
Item 1A Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6. Exhibits	31

Signatures	32

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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,
	2023		2022
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	22,137	$	55,121
Accounts receivable		11,478		15,220
Inventory		5,923		5,728
Other current assets		2,093		2,091
Due from related parties		376		376
Total current assets		42,007		78,536

Property and equipment, net		125,408		94,087
Operating lease right-of-use assets		93,366		85,161
Deferred tax assets, net		13,320		12,323
Intangibles, net		15,310		15,290
Other assets		4,752		4,774
Security deposits		853		853
Total assets	$	295,016	$	291,024

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,751	$	13,055
Accrued expenses		24,197		22,409
Deferred gift card revenue and other		1,254		2,115
Current portion of operating lease liabilities		6,629		6,336
Current portion of long-term debt		1,375		1,500
Other current liabilities		259		256
Total current liabilities		45,465		45,671


Operating lease liabilities, net of current portion		115,999		105,247
Long-term debt, net of current portion		70,881		70,544
Other long-term liabilities		907		972
Total liabilities		233,252		222,434

Commitments and contingencies (Note 15)

Stockholders’ equity:
Common stock, $0.0001 par value, 75,000,000 shares authorized; 33,514,057 issued and 31,273,343 outstanding at September 30, 2023 and 32,829,995 issued and 31,735,423 outstanding at December 31, 2022		3		3
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		—		—
Treasury stock, 2,240,714 and 1,094,572 shares at cost at September 30, 2023 and December 31, 2022, respectively		(14,858)		(7,169)
Additional paid-in capital		57,083		55,583
Retained earnings		24,242		24,166
Accumulated other comprehensive loss		(2,999)		(2,869)
Total stockholders’ equity		63,471		69,714
Noncontrolling interests		(1,707)		(1,124)
Total equity		61,764		68,590
Total liabilities and equity	$	295,016	$	291,024

See notes to the condensed consolidated financial statements.

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THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(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,
	2023		2022		2023		2022
Revenues:
Owned restaurant net revenue	$	73,700	$	69,538	$	232,202	$	216,984
Management, license and incentive fee revenue		3,184		3,482		10,631		11,342
Total revenues		76,884		73,020		242,833		228,326
Cost and expenses:
Owned operating expenses:
Owned restaurant cost of sales		18,230		17,281		56,300		55,231
Owned restaurant operating expenses		46,372		43,136		141,983		126,818
Total owned operating expenses		64,602		60,417		198,283		182,049
General and administrative (including stock-based compensation of $1,244, $1,001, $3,798, $2,791 for the three and nine months ended September 30, 2023 and 2022, respectively)		7,280		6,447		22,803		20,587
Depreciation and amortization		3,732		2,930		10,894		8,571
Pre-opening expenses		3,097		2,684		6,005		3,833
COVID-19 related expenses		—		—		—		2,534
Lease termination expenses		—		—		—		255
Other expenses		128		51		480		51
Total costs and expenses		78,839		72,529		238,465		217,880
Operating (loss) income		(1,955)		491		4,368		10,446
Other expenses, net:
Interest expense, net of interest income		1,673		435		5,102		1,387
Total other expenses, net		1,673		435		5,102		1,387
(Loss) Income before provision for income taxes		(3,628)		56		(734)		9,059
(Benefit) provision for income taxes		(375)		(321)		(227)		721
Net (loss) income		(3,253)		377		(507)		8,338
Less: net loss attributable to noncontrolling interest		(155)		(105)		(583)		(117)
Net (loss) income attributable to The ONE Group Hospitality, Inc.	$	(3,098)	$	482	$	76	$	8,455
Currency translation loss		(112)		(87)		(130)		(348)
Comprehensive (loss) income attributable to The ONE Group Hospitality, Inc.	$	(3,210)	$	395	$	(54)	$	8,107

Net (loss) income attributable to The ONE Group Hospitality, Inc. per share:
Basic net (loss) income per share	$	(0.10)	$	0.01	$	—	$	0.26
Diluted net (loss) income per share	$	(0.10)	$	0.01	$	—	$	0.25

Shares used in computing basic (loss) income per share		31,515,011		32,663,549		31,657,761		32,496,780
Shares used in computing diluted (loss) income per share		31,515,011		33,921,498		32,537,572		34,062,661

See notes to the condensed consolidated financial statements.

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THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share information)


										Accumulated
						Additional				other
	Common stock			Treasury		paid-in		Retained		comprehensive		Stockholders’		Noncontrolling
	Shares	Par value		stock		capital		Earnings		loss		equity		interests		Total
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


Balance at December 31, 2021	32,125,762	$	3	$	(37)	$	53,481	$	10,632	$	(2,645)	$	61,434	$	(909)	$	60,525
Stock-based compensation	7,162		—		—		879		—		—		879		—		879
Issuance of vested restricted shares, net of tax withholding	127,413		—		—		(314)		—		—		(314)		—		(314)
Loss on foreign currency translation, net	—		—		—		—		—		(92)		(92)		—		(92)
Net income (loss)	—		—		—		—		3,670		—		3,670		(149)		3,521
Balance at March 31, 2022	32,260,337	$	3	$	(37)	$	54,046	$	14,302	$	(2,737)	$	65,577	$	(1,058)	$	64,519
Stock-based compensation	10,214		—		—		911		—		—		911		—		911
Exercise of stock options	13,261		—		—		28		—		—		28		—		28
Issuance of vested restricted shares, net of tax withholding	365,589		—		—		(1,242)		—		—		(1,242)		—		(1,242)
Loss on foreign currency translation, net	—		—		—		—		—		(169)		(169)		—		(169)
Net income	—		—		—		—		4,303		—		4,303		137		4,440
Balance at June 30, 2022	32,649,401	$	3	$	(37)	$	53,743	$	18,605	$	(2,906)	$	69,408	$	(921)	$	68,487
Stock-based compensation	11,293		—		—		1,001		—		—		1,001		—		1,001
Issuance of vested restricted shares, net of tax withholding	71,034		—		—		(397)		—		—		(397)		—		(397)
Purchase of treasury stock	(500,000)		—		(3,503)		—		—		—		(3,503)		—		(3,503)
Loss on foreign currency translation, net	—		—		—		—		—		(87)		(87)		—		(87)
Net income (loss)	—		—		—		—		482		—		482		(105)		377
Balance at September 30, 2022	32,231,728	$	3	$	(3,540)	$	54,347	$	19,087	$	(2,993)	$	66,904	$	(1,026)	$	65,878

See notes to the condensed consolidated financial statements.

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THE ONE GROUP HOSPITALITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	For the nine months ended September 30,
	2023		2022
Operating activities:
Net (loss) income	$	(507)	$	8,338
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,894		8,571
Stock-based compensation		3,798		2,791
Amortization of debt issuance costs		558		279
Deferred taxes		(997)		217
Changes in operating assets and liabilities:
Accounts receivable		3,730		2,971
Inventory		(195)		(1,073)
Other current assets		56		1,380
Security deposits		—		48
Other assets		(403)		(494)
Accounts payable		(1,720)		(841)
Accrued expenses		(2,067)		(7,784)
Operating lease liabilities and right-of-use assets		2,840		2,607
Other liabilities		(759)		(674)
Net cash provided by operating activities		15,228		16,336

Investing activities:
Purchase of property and equipment		(38,411)		(21,309)
Net cash used in investing activities		(38,411)		(21,309)

Financing activities:
Borrowings of long-term debt		—		5,000
Repayments of long-term debt and financing lease liabilities		(458)		(375)
Exercise of stock options and warrants		301		28
Tax-withholding obligation on stock-based compensation		(1,835)		(1,953)
Purchase of treasury stock		(7,689)		(3,503)
Net cash used in financing activities		(9,681)		(803)
Effect of exchange rate changes on cash		(120)		(361)
Net decrease in cash and cash equivalents		(32,984)		(6,137)
Cash and cash equivalents, beginning of period		55,121		23,614
Cash and cash equivalents, end of period	$	22,137	$	17,477
Supplemental disclosure of cash flow data:
Interest paid, net of capitalized interest	$	5,051	$	1,056
Income taxes paid	$	312	$	293
Accrued purchases of property and equipment	$	8,684	$	4,355

See notes to the condensed consolidated financial statements.

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THE ONE GROUP HOSPITALITY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Summary of Business and Significant Accounting Policies

Summary of Business

The ONE Group Hospitality, Inc. and its subsidiaries (collectively, the “Company”) is an international restaurant company that develops, owns and operates, manages and licenses upscale and polished casual, high-energy restaurants and lounges and provides turn-key food and beverage (“F&B”) services and consulting services for hospitality venues including hotels, casinos and other high-end locations. Turn-key F&B services are food and beverage services that can be scaled, customized and implemented by the Company at a particular hospitality venue and customized for the client. The Company’s primary restaurant brands are STK, a multi-unit steakhouse concept that combines a high-energy, social atmosphere with the quality and service of a traditional upscale steakhouse, and Kona Grill, a polished casual bar-centric grill concept featuring American favorites, award-winning sushi, and specialty cocktails in a polished casual atmosphere.

As of September 30, 2023, the Company owned, operated, managed, or licensed 64 venues, including 25 STKs and 26 Kona Grills in major metropolitan cities in North America, Europe and the Middle East and 13 F&B venues in seven hotels and casinos in the United States and Europe. For those restaurants and venues that are managed or licensed, the Company generates management fees based on top-line revenues and incentive fee revenue based on a percentage of the location’s revenues and profits.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of December 31, 2022, which has been derived from audited financial statements, and the accompanying unaudited interim condensed consolidated financial statements (“condensed consolidated financial statements”) of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures normally included in annual audited financial statements have been omitted pursuant to SEC rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

In the Company’s opinion, the accompanying unaudited interim financial statements reflect all adjustments (consisting only of normal recurring accruals and adjustments) necessary for a fair presentation of the results for the interim periods presented. The results of operations for any interim period are not necessarily indicative of the results expected for the full year. Additionally, the Company believes that the disclosures are sufficient for interim financial reporting purposes.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB “) issued Accounting Standards Update (“ASU“) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to estimate credit losses. ASU 2016-13 is effective for smaller reporting companies for fiscal years beginning after December 15, 2022. Effective, January 1, 2023, the Company implemented ASU 2016-13. The implementation did not have a material impact on the Company’s financial statements.

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Note 2 – Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):


	September 30,		December 31,
	2023		2022
Furniture, fixtures and equipment	$	39,844	$	33,372
Leasehold improvements		99,562		89,121
Less: accumulated depreciation		(56,371)		(47,528)
Subtotal		83,035		74,965
Construction in progress		39,482		16,276
Restaurant smallwares		2,891		2,846
Total	$	125,408	$	94,087

Depreciation related to property and equipment was $3.6 million and $2.9 million for the three months ended September 30, 2023 and 2022, respectively, and $10.6 million and $8.3 for the nine months ended September 30, 2023 and 2022, respectively. The Company depreciates construction in progress upon such assets being placed into service.

Note 3 – Intangibles, Net

Intangibles, net consists of the following (in thousands):


	September 30,		December 31,
	2023		2022
Indefinite-lived intangible assets
Kona Grill trade name	$	17,400	$	17,400
Finite-lived intangible assets		101		75
Less: accumulated amortization		(2,191)		(2,185)
Total intangibles, net	$	15,310	$	15,290

Finite-lived intangible assets are amortized using the straight-line method over their estimated useful life of 10 years. Amortization expense was nominal for both the three months ended September 30, 2023 and 2022. Amortization expense was nominal and $0.2 million for the nine months ended September 30, 2023 and 2022, respectively. The Company’s estimated aggregate amortization expense for each of the five succeeding fiscal years is a nominal amount annually.

Note 4 – Accrued Expenses

Accrued expenses consist of the following (in thousands):


	September 30,		December 31,
	2023		2022
Payroll and related	$	4,702	$	5,249
Construction on new restaurants		4,773		1,903
VAT and sales taxes		3,503		4,118
Amounts due to landlords		2,404		2,949
Legal, professional and other services		767		626
Insurance		462		742
Income taxes and related		637		156
Interest		777		268
Other ⁽¹⁾		6,172		6,398
Total	$	24,197	$	22,409

(1)	Amount primarily relates to recurring restaurant operating expenses.

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Note 5 – Long-Term Debt

Long-term debt consists of the following (in thousands):


	September 30,		December 31,
	2023		2022
Term loan agreements	$	24,000	$	24,250
Revolving credit facility		—		—
Delayed draw term facility		50,000		50,000
Total long-term debt		74,000		74,250
Less: current portion of long-term debt		(1,375)		(1,500)
Less: debt issuance costs		(1,744)		(2,206)
Total long-term debt, net of current portion	$	70,881	$	70,544

Interest expense, net for the Company’s debt arrangements, excluding the amortization of debt issuance costs and fees, was $1.8 million and $0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $5.6 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively. Capitalized interest was $0.5 million and $1.1 million for the three and nine months ended September 30, 2023, respectively. Capitalized interest was $0.1 million and $0.2 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, the Company had $1.4 million in standby letters of credit outstanding for certain restaurants and $10.6 million available in its revolving credit facility, subject to certain conditions.

Credit and Guaranty Agreement

On October 4, 2019, in conjunction with the acquisition of Kona Grill, the Company entered into a credit agreement with Goldman Sachs Bank USA (the “Credit Agreement”). On August 6, 2021, the Company entered into the Third Amendment to the Credit Agreement to extend the maturity date for both the term loan and revolving credit facility to August 2026, to eliminate all financial covenants except a maximum net leverage ratio of 2.00 to 1.00, and to eliminate restrictions on the maximum amount of capital expenditures, the maximum number of Company-owned new locations, and credit extensions under the revolving credit facility. As amended, the Credit Agreement provides for a secured revolving credit facility of $12.0 million and a $25.0 million term loan (reduced from $48.0 million). The term loan is payable in quarterly installments of $0.1 million, with the final payment due in August 2026.

On December 13, 2022, the Company entered into the Fourth Amendment to the Credit Agreement that:

●

Allows for a new $50.0 million delayed draw term facility, available to draw for twelve months and subject to a 1.75x Net Leverage Ratio incurrence test (as defined in the Credit Agreement) for permitted acquisitions, stock repurchases and new restaurant capital expenditures;

●

Allows the Company to redeem, repurchase or otherwise acquire its own capital stock in an aggregate amount of up to $50 million subject to a 1.75x Net Leverage Ratio incurrence test and no default or event of default; and

●

Changed the interest rate from London Interbank Offered Rate (“LIBOR“) plus a margin to Secured Overnight Financing Rate (“SOFR”) plus an applicable margin.

The Company borrowed $50.0 million on the delayed draw term facility on December 28, 2022. The delayed draw term loan is payable in quarterly installments of $0.25 million beginning March 31, 2024, with the final payment due in August 2026.

Loans under the amended Credit Agreement bear interest at a rate per annum using the SOFR rate subject to a 1.00% floor plus an interest rate margin of 6.50%.

The Company’s weighted average interest rate on the borrowings under the amended Credit Agreement as of September 30, 2023 and December 31, 2022 was 12.40% and 10.31%, respectively.

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The Credit Agreement contains customary representations, warranties and conditions to borrowing including customary affirmative and negative covenants that limit or restrict the Company’s ability to incur indebtedness and other obligations, grant liens to secure obligations, make investments, merge or consolidate, alter the organizational structure of the Company and its subsidiaries, and dispose of assets outside the ordinary course of business, in each case subject to customary exceptions for credit facilities of this size and type.

The Company and certain operating subsidiaries of the Company guarantee the obligations under the amended Credit Agreement, which also are secured by liens on substantially all of the assets of the Company and its subsidiaries.

As of September 30, 2023, the Company had $1.7 million of debt issuance costs related to the amended Credit Agreement, which were capitalized and are recorded as a direct deduction to long-term debt and $0.4 million in debt issuance costs recorded in Other Assets on the condensed consolidated balance sheets. As of September 30, 2023, the Company was in compliance with the financial covenants required by the Credit Agreement.

Note 6 – Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued expenses are carried at cost, which approximates fair value. Long-lived assets are measured and disclosed at fair value on a nonrecurring basis if an impairment is identified. There were no long-lived assets measured at fair value as of September 30, 2023.

The Company’s long-term debt, including the current portion, is carried at cost on the condensed consolidated balance sheets. Fair value of long-term debt, including the current portion, is valued using Level 2 inputs including current applicable rates for similar instruments and approximates the carrying value of such obligations.

Note 7 – Income Taxes

Income taxes are recorded at the Company’s estimated annual effective income tax rate, subject to adjustments for discrete events, should they occur. The Company recorded a benefit for income taxes of $0.2 million for the nine months ended September 30, 2023 compared to income tax expense of $0.7 million for the nine months ended September 30, 2022. The Company’s effective income tax rate including discrete events was 30.9% for the nine months ended September 30, 2023 compared to 8.0% for the nine months ended September 30, 2022. The increase in the effective income tax rate is primarily the result of discrete items in comparison to lower pre-tax book income for the period. The Company’s projected annual effective tax rate for fiscal year 2023 is expected to be approximately 5.0%. The Company’s projected annual effective tax rate differs from the statutory U.S. tax rate of 21% primarily due to the following: (i) tax credits for FICA taxes on certain employees’ tips (ii) taxes owed in foreign jurisdictions with tax rates that differ from the U.S. statutory rate; (iii) taxes owed in state and local jurisdictions; and (iv) the tax effect of non-deductible compensation. The income tax (benefit) provision recorded for the nine months ended September 30, 2023 and 2022 included the discrete period tax benefits resulting from the vesting of restricted stock units.

The Company is subject to U.S. federal, state, local and various foreign income taxes for the jurisdictions in which it operates. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In the normal course of business, the Company is subject to examination by the federal, state, local and foreign taxing authorities. There are no ongoing federal, state, local, or foreign tax examinations as of September 30, 2023.

Note 8 – Revenue from Contracts with Customers

The following table provides information about liabilities from contracts with customers, which include deferred license revenue, deferred gift card revenue, the Konavore rewards program and deposits from customers for future events (in thousands):


	September 30,		December 31,
	2023		2022
Deferred license revenue ⁽¹⁾	$	238	$	297
Deferred gift card and gift certificate revenue ⁽²⁾	$	791	$	1,680
Advanced party deposits ⁽²⁾	$	463	$	435
Konavore rewards program ⁽³⁾	$	170	$	163

(1)	Includes the current and long-term portion of deferred license revenue.

(2)	Deferred gift card revenue and advance party deposits on goods and services yet to be provided are included in deferred gift card revenue and other on the condensed consolidated balance sheets.

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(3)	Konavore rewards program is included in accrued expenses on the condensed consolidated balance sheets.

Revenue recognized during the period from contract liabilities as of the preceding fiscal year end date is as follows (in thousands):


	September 30,		September 30,
	2023		2022
Revenue recognized from deferred license revenue	$	60	$	60
Revenue recognized from deferred gift card revenue	$	1,121	$	1,126
Revenue recognized from advanced party deposits	$	278	$	243

The estimated deferred license revenue to be recognized in the future related to performance obligations that are unsatisfied as of September 30, 2023 were as follows for each year ending (in thousands):


2023, three months remaining	$	19
2024		45
2025		44
2026		37
2027		34
Thereafter		59
Total future estimated deferred license revenue	$	238