The ONE Group Hospitality, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Summary of Business and Significant Accounting Policies (Policies)

Summary of Business and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 28, 2025

Summary of Business and Significant Accounting Policies

The accompanying condensed consolidated balance sheet as of December 31, 2024, 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 U.S. (“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, 2024.

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.

Immaterial Prior Period Restatement

Immaterial Prior Period Restatement

As disclosed in the Form 10-Q for the three periods ended March 30, 2025, subsequent to the issuance of the Company’s Consolidated Financial statements filed on Form 10-K for the period ended December 31, 2024, the Company identified an error in its calculation and recognition of non-cash rent expense for Benihana and RA Sushi from the date of its acquisitions through December 31, 2024, which resulted in the Company understating net loss by $1.3 million. The Company has evaluated the impact of the error and determined that it was not material to the 2024 interim or annual financial statements. However, the cumulative effect of the error in the first quarter of 2025 would have had a material effect on the results of operations for the period. Therefore, the Company has made these immaterial corrections in the comparative prior period within the Condensed Consolidated Financial Statements and related footnotes. The Company has corrected previously reported financial information for related immaterial errors in this Form 10-Q, as applicable.

The following table reflects the correction on the affected line items in the Company’s previously reported Condensed Consolidated Balance Sheet for the year ended December 31, 2024.


	As of December 31, 2024
	Previously				As
	Reported		Adjustment		Corrected
Operating lease right-of-use assets	$	260,204	$	127	$	260,331
Deferred income taxes, net		53,682		600		54,282
Total assets		959,353		727		960,080
Current portion of operating lease liabilities		14,998		296		15,294
Total current liabilities		131,095		296		131,391
Operating lease liabilities, net of current portion		291,785		1,705		293,490
Total liabilities		756,748		2,001		758,749
Additional paid-in capital		68,392		(1,274)		67,118
Total stockholders’ equity		47,165		(1,274)		45,891
Total equity		44,520		(1,274)		43,246
Total liabilities, Series A preferred stock and stockholders' equity		959,353		727		960,080

The following table reflects the correction on the affected line items in the Company’s previously reported Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2024.


Condensed Consolidated Statement of Operations
	For the three months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Owned restaurant operating expenses	$	125,634	$	589	$	126,223
Total owned operating expenses		165,514		589		166,103
General and administrative		12,785		29		12,814
Pre-opening expenses		2,110		8		2,118
Total costs and expenses		196,995		626		197,621
Operating income		(3,020)		(626)		(3,646)
Loss before benefit for income taxes		(13,699)		(626)		(14,325)
Benefit for income taxes		(4,644)		(212)		(4,856)
Net loss		(9,055)		(414)		(9,469)
Net loss attributable to The ONE Group Hospitality, Inc.		(8,890)		(414)		(9,304)
Net loss available to common stockholders		(16,015)		(414)		(16,429)
Basic net loss per common share		(0.52)		(0.01)		(0.53)
Diluted net loss per common share		(0.52)		(0.01)		(0.53)


	For the nine months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Owned restaurant operating expenses	$	278,464	$	1,169	$	279,633
Total owned operating expenses		372,935		1,169		374,104
General and administrative		30,941		41		30,982
Pre-opening expenses		7,528		20		7,548
Total costs and expenses		453,450		1,230		454,680
Operating income		(1,986)		(1,230)		(3,216)
Loss before benefit for income taxes		(26,757)		(1,230)		(27,987)
Benefit for income taxes		(8,180)		(403)		(8,583)
Net loss		(18,577)		(827)		(19,404)
Net loss attributable to The ONE Group Hospitality, Inc.		(17,888)		(827)		(18,715)
Net loss available to common stockholders		(29,551)		(827)		(30,378)
Basic net loss per common share		(0.95)		(0.03)		(0.97)
Diluted net loss per common share		(0.95)		(0.03)		(0.97)


Condensed Consolidated Statement of Comprehensive Income (Loss)
	For the three months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Net loss	$	(9,055)	$	(414)	$	(9,469)
Comprehensive loss		(8,981)		(414)		(9,395)
Comprehensive loss attributable to The ONE Group Hospitality, Inc.		(8,816)		(414)		(9,230)
Comprehensive loss attributable to common stockholders		(15,941)		(414)		(16,355)


	For the nine months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Net loss	$	(18,577)	$	(827)	$	(19,404)
Comprehensive loss		(18,560)		(827)		(19,387)
Comprehensive loss attributable to The ONE Group Hospitality, Inc.		(17,871)		(827)		(18,698)
Comprehensive loss attributable to common stockholders		(29,534)		(827)		(30,361)


Condensed Consolidated Statement of Stockholders' Equity and Series A Preferred Stock
	For the three months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Additional paid-in capital	$	72,554	$	(827)	$	71,727
Stockholders' equity		51,442		(827)		50,615
Total equity		48,937		(827)		48,110


Condensed Consolidated Statement of Cash Flows
	For the nine months ended September 30, 2024
	Previously				As
	Reported		Adjustment		Corrected
Net loss	$	(18,577)	$	(827)	$	(19,404)
Deferred taxes		(8,376)		(403)		(8,779)
Operating lease liabilities and right-of-use assets		5,172		1,230		6,402

Prior Period Reclassifications

Prior Period Reclassifications

The Company reclassified $0.5 million from transaction and exit costs on the Condensed Consolidated Statements of Operations to lease termination and exit costs related to a Kona Grill location closed in 2024 to conform to current year presentation.

Certain reclassifications were made to conform the prior period segment reporting to the current year presentation. Refer to Note 15 – Segment Reporting for additional information regarding the Company’s reportable operating segments.

Goodwill

Goodwill. Goodwill consists of goodwill associated with the Benihana Acquisition (as definited below). Goodwill is not amortized and is tested for impairment annually as of the last day of our tenth fiscal period or on an interim basis whenever events or changes in circumstances indicate a potential impairment.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires detailed qualitative and quantitative disclosures for certain costs and expenses on the income statement. The amendment is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is evaluating the impact of adopting this ASU on its disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company will adopt this ASU in the 2025 Form 10-K.