Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BULSdjb7iVapPfIItySeURbCBGCByWhEIHJeTvmc4bcl8GAV+ulKJHGaPoOFldXw Wbq//6HFW0LqvnwKDyXZUA== 0001193125-08-141459.txt : 20080626 0001193125-08-141459.hdr.sgml : 20080626 20080626164620 ACCESSION NUMBER: 0001193125-08-141459 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20080626 DATE AS OF CHANGE: 20080626 GROUP MEMBERS: CHARLES M. B. GOLDMAN GROUP MEMBERS: MILL ROAD CAPITAL GP LLC GROUP MEMBERS: SCOTT P. SCHARFMAN GROUP MEMBERS: THOMAS E. LYNCH SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KONA GRILL INC CENTRAL INDEX KEY: 0001265572 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 200216690 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-81402 FILM NUMBER: 08919826 BUSINESS ADDRESS: STREET 1: 7150 EAST CAMELBACK ROAD STREET 2: SUITE 220 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 4809228100 MAIL ADDRESS: STREET 1: 7150 EAST CAMELBACK ROAD STREET 2: SUITE 220 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Mill Road Capital, L.P. CENTRAL INDEX KEY: 0001435260 IRS NUMBER: 205432103 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: TWO SOUND VIEW DRIVE STREET 2: SUITE 300 CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 203-987-3500 MAIL ADDRESS: STREET 1: TWO SOUND VIEW DRIVE STREET 2: SUITE 300 CITY: GREENWICH STATE: CT ZIP: 06830 SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D


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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. )*

Kona Grill, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

50047H201

(CUSIP Number)

Mill Road Capital, L.P.

Attn: Thomas E. Lynch

Two Sound View Drive

Suite 300

Greenwich, CT 06830

203-987-3501

With a copy to:

Peter M. Rosenblum, Esq.

Foley Hoag LLP

155 Seaport Blvd.

Boston, MA 02210

617-832-1151

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 16, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are sent.

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 50047H201		13D		Page 2 of 12 Pages


1.		Names of Reporting Persons. Thomas E. Lynch
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
3.		SEC Use Only
4.		Source of Funds (See Instructions) OO
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ¨
6.		Citizenship or Place of Organization USA


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power
		8. Shared Voting Power 544,227
		9. Sole Dispositive Power
		10. Shared Dispositive Power 544,227


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 544,227
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨
13.		Percent of Class Represented by Amount in Row (11) 8.2%
14.		Type of Reporting Person (See Instructions) IN; HC


CUSIP No. 50047H201		13D		Page 3 of 12 Pages


1.		Names of Reporting Persons. Charles M. B. Goldman
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
3.		SEC Use Only
4.		Source of Funds (See Instructions) OO
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ¨
6.		Citizenship or Place of Organization USA


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power
		8. Shared Voting Power 544,227
		9. Sole Dispositive Power
		10. Shared Dispositive Power 544,227


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 544,227
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨
13.		Percent of Class Represented by Amount in Row (11) 8.2%
14.		Type of Reporting Person (See Instructions) IN; HC


CUSIP No. 50047H201		13D		Page 4 of 12 Pages


1.		Names of Reporting Persons. Scott P. Scharfman
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
3.		SEC Use Only
4.		Source of Funds (See Instructions) OO
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ¨
6.		Citizenship or Place of Organization USA


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power
		8. Shared Voting Power 544,227
		9. Sole Dispositive Power
		10. Shared Dispositive Power 544,227


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 544,227
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨
13.		Percent of Class Represented by Amount in Row (11) 8.2%
14.		Type of Reporting Person (See Instructions) IN; HC


CUSIP No. 50047H201		13D		Page 5 of 12 Pages


1.		Names of Reporting Persons Mill Road Capital GP LLC
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
3.		SEC Use Only
4.		Source of Funds (See Instructions) OO
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ¨
6.		Citizenship or Place of Organization Delaware


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power 544,227
		8. Shared Voting Power
		9. Sole Dispositive Power 544,227
		10. Shared Dispositive Power


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 544,227
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨
13.		Percent of Class Represented by Amount in Row (11) 8.2%
14.		Type of Reporting Person (See Instructions) OO; HC


CUSIP No. 50047H201		13D		Page 6 of 12 Pages


1.		Names of Reporting Persons. Mill Road Capital, L.P.
2.		Check the Appropriate Box if a Member of a Group (See Instructions) (a) ¨ (b) ¨
3.		SEC Use Only
4.		Source of Funds (See Instructions) WC
5.		Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) ¨
6.		Citizenship or Place of Organization Delaware


Number of Shares Beneficially Owned by Each Reporting Person With		7. Sole Voting Power 544,227
		8. Shared Voting Power
		9. Sole Dispositive Power 544,227
		10. Shared Dispositive Power


11.		Aggregate Amount Beneficially Owned by Each Reporting Person 544,227
12.		Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨
13.		Percent of Class Represented by Amount in Row (11) 8.2%
14.		Type of Reporting Person (See Instructions) PN


CUSIP No. 50047H201		Page 7 of 12 Pages

Item 1.

Security and Issuer

This joint statement on Schedule 13D relates to the common stock, par value $0.01 per share (the “Common Stock”), of Kona Grill, Inc., a Delaware corporation (the “Issuer”). The address of the Issuer’s principal executive offices is 7150 East Camelback Road, Suite 220, Scottsdale, Arizona 85251.

Item 2.

Identity and Background

(a) This joint statement on Schedule 13D is being filed by Thomas E. Lynch, Charles M. B. Goldman, Scott P. Scharfman, Mill Road Capital GP LLC, a Delaware limited liability company (the “GP”), and Mill Road Capital, L.P., a Delaware limited partnership (the “Fund”). Each of the foregoing is referred to as a “Reporting Person” and, collectively, as the “Reporting Persons.” Messrs. Lynch, Goldman and Scharfman (each, a “Manager” and, collectively, the “Managers”) are the management committee directors of the GP, which is the sole general partner of the Fund. By virtue of their positions, each of the Managers has shared power to vote and dispose of the shares of Common Stock reported in this joint statement Schedule 13D on behalf of the Fund.

(b) The business address of each of the Managers, and the address of the principal business and the principal office of the GP and the Fund, is Two Sound View Drive, Suite 300, Greenwich, CT 06830.

(c) The principal business of the GP is acting as the sole general partner of the Fund. The principal business of the Fund is investing in securities. The present principal occupation or employment of each Manager is as a management committee director of the GP and of Mill Road Capital Management LLC, a Delaware limited liability company (the “Management Company”), which provides advisory and administrative services to the GP and is located at Two Sound View Drive, Suite 300, Greenwich, CT 06830.

(d) None of the Managers, the GP and the Fund has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) None of the Managers, the GP and the Fund was, during the last five years, a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order (1) enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws, or (2) finding any violation with respect to such laws.

(f) Each Manager is a citizen of the United States.

Item 3.

Source and Amount of Funds or Other Consideration

The Reporting Persons acquired beneficial ownership of an aggregate of 544,227 shares of Common Stock for $4,814,718.20 using working capital from the Fund and the proceeds of margin loans under margin loan facilities maintained in the ordinary course of business by the Fund with a broker on customary terms and conditions.


CUSIP No. 50047H201		Page 8 of 12 Pages

Item 4.

Purpose of Transaction

The Reporting Persons acquired shares of the Common Stock based on their belief that the Common Stock represents an attractive investment opportunity. The Reporting Persons further believe that the Issuer would be better able to realize its full value as a private entity. Accordingly, on March 28, 2008, the Fund transmitted a letter to the Issuer, attached hereto as Exhibit 5, in which it submitted a non-binding offer to acquire all of the Issuer’s capital stock at a cash price of $10.75 per share. The Issuer responded, in a letter to the Fund dated April 18, 2008 and attached hereto as Exhibit 6, indicating that the Fund’s letter had been distributed to the Issuer’s Board of Directors for discussion at its next regularly scheduled meeting. On May 1, 2008, the Issuer orally responded to the Fund, indicating that it was not currently interested in pursuing such transaction.

The Reporting Persons intend to review continuously their equity interest in the Issuer and may wish to engage in a constructive dialogue with management and the Board of Directors of the Issuer. Depending upon their evaluation of the factors described below, one or more of the Reporting Persons may from time to time purchase additional securities of the Issuer, dispose of all or a portion of the securities then held by such Reporting Person, or cease buying or selling such securities. Any such additional purchases or sales of securities of the Issuer may be in the open market or privately negotiated transactions or otherwise. The factors that the Reporting Persons may consider in evaluating their equity interest in the Issuer’s business include the following: (i) the Issuer’s business and prospects; (ii) the performance of the Common Stock and the availability of the Common Stock for purchase at particular price levels; (iii) the availability and nature of opportunities to dispose of the Reporting Persons’ interests; (iv) general economic conditions; (v) stock market conditions; (vi) other business and investment opportunities available to the Reporting Persons; and (vii) other plans and requirements of the Reporting Persons.

Depending on their assessment of the foregoing factors, the Reporting Persons may, from time to time, modify their present intention as stated in this Item 4.

Except as set forth above, including the Reporting Persons’ efforts with respect to the Fund’s interest in making an offer to acquire all of the outstanding shares of the Issuer, the Reporting Persons intend to continuously review their options but do not have at this time any specific plans that would result in (a) the acquisition of additional securities of the Issuer or the disposition of securities of the Issuer; (b) any extraordinary corporate transactions such as a merger, reorganization or liquidation involving the Issuer or any of its subsidiaries; (c) any sale or transfer of a material amount of the assets of the Issuer or of any of its subsidiaries; (d) any change in the present management or Board of Directors of the Issuer, including any plans or proposals to change the number of term of directors or to fill any existing vacancies on the Issuer’s Board of Directors; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) any change in the Issuer’s charter or by-laws that may impede the acquisition of control of the Issuer by any person; (h) the Issuer’s Common Stock being delisted from a national securities exchange or ceasing to be authorized to be quoted in an inter-dealer quotation system or a registered national securities association; (i) causing a class of equity securities of the Issuer to become eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action similar to those enumerated above.


CUSIP No. 50047H201		Page 9 of 12 Pages

Item 5.

Interest in Securities of the Issuer

(a) In the aggregate, the Reporting Persons beneficially own, as of June 25, 2008, 544,227 shares of the Common Stock, representing approximately 8.2% of such class of securities. The Fund, the GP, as the sole general partner of the Fund, and each Manager, as a management committee director of the GP, each beneficially owns, as of June 25, 2008, 544,227 shares of the Common Stock, representing approximately 8.2% of such class of securities. These percentages of beneficial ownership are based on a total of 6,612,148 shares of the Common Stock outstanding as of April 30, 2008, as reported in the most recent quarterly report of the Issuer on Form 10-Q for the fiscal quarter ended March 31, 2008.

(b) By virtue of their positions as management committee directors of the GP, each of the Managers has the shared authority to vote and dispose of the shares of Common Stock reported in this joint statement Schedule 13D on behalf of the Fund.

(c) No Reporting Person, other than the Fund as set forth in the table below, effected any transaction in shares of the Common Stock from April 17, 2008 (the date 60 days prior to the event which requires the filing of this statement) to June 25, 2008:


Date of Purchase / Sale	Shares Purchased / (Sold) (#)	Avg. Purchase / Sale Price per Share ($)
06/11/08	2,500	$	6.9998
06/16/08	143,858		6.2058
06/17/08	12,518		7.0178
06/18/08	15,100		6.9907
06/19/08	1,400		7.0264
06/20/08	16,100		7.1794
06/23/08	15,500		7.2304
06/24/08	4,000		7.2029
06/25/08	8,191		7.4385

Each of the above listed transactions was conducted in the ordinary course of business on the open market for cash. Purchases and sales have been aggregated daily, and purchase and sale prices do not reflect brokerage commissions paid.

(d) No person other than the Reporting Persons is known to have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of shares of the Common Stock.

(e) Not applicable.


CUSIP No. 50047H201		Page 10 of 12 Pages

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Except as otherwise described in this Schedule 13D, including the Exhibits attached hereto, there are no contracts, arrangements, understandings, or relationships (legal or otherwise) among the Reporting Persons, or between any Reporting Person(s) and any third party, with respect to any securities of the Issuer, including, but not limited to, those involving the transfer or voting any of the securities, finder’s fees, joint ventures, loan or option arrangements, put or calls, guarantees of profits, division of profits or losses, or the giving or withholding of proxies.

Item 7.

Material to be Filed as Exhibits

Exhibit 1 Joint Filing Agreement by and among Thomas E. Lynch, Charles M. B. Goldman, Scott P. Scharfman, Mill Road Capital GP LLC and Mill Road Capital, L.P. dated as of June 26, 2008.

Exhibit 2 Confirming Statement of Thomas E. Lynch dated June 26, 2008.

Exhibit 3 Confirming Statement of Charles M. B. Goldman dated June 26, 2008.

Exhibit 4 Confirming Statement of Scott P. Scharfman dated June 26, 2008.

Exhibit 5 Letter from Mill Road Capital, L.P. to Kona Grill, Inc. dated March 28, 2008.

Exhibit 6 Letter from Kona Grill, Inc. to Mill Road Capital, L.P. dated April 18, 2008.

[signature pages follow]


CUSIP No. 50047H201		Page 11 of 12 Pages

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


DATE: June 26, 2008

MILL ROAD CAPITAL, L.P.

By:		Mill Road Capital GP LLC,
		its General Partner

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch
		Management Committee Director and Chairman

MILL ROAD CAPITAL GP LLC

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch
		Management Committee Director and Chairman


CUSIP No. 50047H201		Page 12 of 12 Pages

THOMAS E. LYNCH

/s/ Thomas E. Lynch

Thomas E. Lynch

CHARLES M. B. GOLDMAN

/s/ Charles M. B. Goldman

Charles M. B. Goldman

SCOTT P. SCHARFMAN

/s/ Scott P. Scharfman

Scott P. Scharfman

EX-99.1 2 dex991.htm JOINT FILING AGREEMENT Joint Filing Agreement


CUSIP No. 50047H201		Page 1 of 2 Pages

Exhibit 1

JOINT FILING AGREEMENT

Pursuant to Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree, as of June 26, 2008, that only one statement containing the information required by Schedule 13D, and each amendment thereto, need be filed with respect to the ownership by each of the undersigned of shares of common stock of Kona Grill, Inc., a Delaware corporation, and such statement to which this Joint Filing Agreement is attached as Exhibit 1 is filed on behalf of each of the undersigned.


MILL ROAD CAPITAL, L.P.

By:		Mill Road Capital GP LLC,
		its General Partner

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch
		Management Committee Director and Chairman

MILL ROAD CAPITAL GP LLC

By:		/s/ Thomas E. Lynch
		Thomas E. Lynch
		Management Committee Director and Chairman


CUSIP No. 50047H201		Page 2 of 2 Pages

THOMAS E. LYNCH

/s/ Thomas E. Lynch

Thomas E. Lynch

CHARLES M. B. GOLDMAN

/s/ Charles M. B. Goldman

Charles M. B. Goldman

SCOTT P. SCHARFMAN

/s/ Scott P. Scharfman

Scott P. Scharfman

EX-99.2 3 dex992.htm CONFIRMING STATEMENT OF THOMAS E. LYNCH Confirming Statement of Thomas E. Lynch


CUSIP No. 50047H201		Page 1 of 1 Page

Exhibit 2

CONFIRMING STATEMENT

This Statement confirms that the undersigned has authorized and designated Charles M. B. Goldman and Scott P. Scharfman, each acting singly, to execute and file on the undersigned’s behalf all Forms 3, 4 and 5 and Schedule 13D (including any amendments thereto) that the undersigned may be required to file with the U.S. Securities and Exchange Commission as a result of the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. The authority of Charles M. B. Goldman and Scott P. Scharfman under this Statement shall continue until the undersigned is no longer required to file any of Forms 3, 4 and 5 and Schedule 13D with regard to the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. unless earlier revoked in writing. The undersigned acknowledges that Charles M. B. Goldman and Scott P. Scharfman are not assuming any of the undersigned’s responsibilities to comply with Section 16 or Section 13 of the Securities Exchange Act of 1934.


Dated: June 26, 2008		/s/ Thomas E. Lynch
		Thomas E. Lynch

EX-99.3 4 dex993.htm CONFIRMING STATEMENT OF CHARLES M. B. GOLDMAN Confirming Statement of Charles M. B. Goldman


CUSIP No. 50047H201		Page 1 of 1 Page

Exhibit 3

CONFIRMING STATEMENT

This Statement confirms that the undersigned has authorized and designated Thomas E. Lynch and Scott P. Scharfman, each acting singly, to execute and file on the undersigned’s behalf all Forms 3, 4 and 5 and Schedule 13D (including any amendments thereto) that the undersigned may be required to file with the U.S. Securities and Exchange Commission as a result of the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. The authority of Thomas E. Lynch and Scott P. Scharfman under this Statement shall continue until the undersigned is no longer required to file any of Forms 3, 4 and 5 and Schedule 13D with regard to the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. unless earlier revoked in writing. The undersigned acknowledges that Thomas E. Lynch and Scott P. Scharfman are not assuming any of the undersigned’s responsibilities to comply with Section 16 or Section 13 of the Securities Exchange Act of 1934.


Dated: June 26, 2008		/s/ Charles M. B. Goldman
		Charles M. B. Goldman

EX-99.4 5 dex994.htm CONFIRMING STATEMENT OF SCOTT P. SCHARFMAN Confirming Statement of Scott P. Scharfman


CUSIP No. 50047H201		Page 1 of 1 Page

Exhibit 4

CONFIRMING STATEMENT

This Statement confirms that the undersigned has authorized and designated Thomas E. Lynch and Charles M. B. Goldman, each acting singly, to execute and file on the undersigned’s behalf all Forms 3, 4 and 5 and Schedule 13D (including any amendments thereto) that the undersigned may be required to file with the U.S. Securities and Exchange Commission as a result of the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. The authority of Thomas E. Lynch and Charles M. B. Goldman under this Statement shall continue until the undersigned is no longer required to file any of Forms 3, 4 and 5 and Schedule 13D with regard to the undersigned’s ownership of or transactions in securities of Kona Grill, Inc. unless earlier revoked in writing. The undersigned acknowledges that Thomas E. Lynch and Charles M. B. Goldman are not assuming any of the undersigned’s responsibilities to comply with Section 16 or Section 13 of the Securities Exchange Act of 1934.


Dated: June 26, 2008		/s/ Scott P. Scharfman
		Scott P. Scharfman

EX-99.5 6 dex995.htm LETTER FROM MILL ROAD CAPITAL, L.P. TO KONA GRILL, INC. Letter from Mill Road Capital, L.P. to Kona Grill, Inc.


CUSIP No. 50047H201		Page 1 of 2 Pages

Exhibit 5

March 28, 2008

Board of Directors

Kona Grill, Inc.

7150 East Camelback Road

Suite 220

Scottsdale, AZ 85251

Attention: Chairman

Re:	Notice of Acquisition Proposal

Ladies and Gentlemen:

Mill Road Capital, L.P. (“Mill Road”) is a substantial shareholder of Kona Grill, Inc. (“Kona” or the “Company”), currently owning approximately 325,000 shares or 4.9% of the Company. Mill Road has closely followed Kona since 2006, and we are extremely impressed with management and the Company. We believe that the public market does not adequately value small companies such as Kona, and by staying public, the Company will continue to be subject to undue regulatory burdens and pressure to maximize short-term results at the expense of long-term performance. We believe Kona will be better able to realize its full potential value as a private entity and are, therefore, making an offer to acquire all of the outstanding shares of the Company.

Mill Road is pleased to submit a non-binding offer to acquire all shares of the Company’s stock at a cash price of $10.75 per share. This represents a 23% premium to the closing price of $8.76 as of March 27, 2008. We would anticipate that the transaction would be accomplished through a merger of a company organized by Mill Road with and into the Company, as a result of which all stockholders of the Company would be entitled to this cash consideration.

Mill Road is a Greenwich, Connecticut based investment firm with approximately $250 million of committed equity capital. Our limited partners include a prominent and highly respected group of state pension funds, foundations, endowments and insurance companies. The investment professionals of Mill Road are a core group of former Blackstone professionals who have successfully completed more than 20 control transactions in which more than $600 million of equity capital was deployed with total transaction value of several billion dollars. Additionally, we have significant industry experience as a substantial investor in many public restaurant companies and through my position on the Board of Directors of Panera Bread Co. (NASDAQ: PNRA) from 2003 to 2006.

Our industry and transaction experience will allow us to quickly complete due diligence and definitive documentation. Considering the amount of our investable capital, Mill Road can readily fund the entire transaction contemplated by this acquisition proposal.


CUSIP No. 50047H201		Page 2 of 2 Pages

We are prepared to commence negotiations immediately with respect to this acquisition proposal and wish to close this transaction as soon as possible. We look forward to the opportunity to discuss our proposal in more detail with the Board of Directors and management. It would be our pleasure to meet in person at a location of your choice.

You may contact me directly at (203) 987-3501. I look forward to discussing our proposal at your earliest convenience.


Sincerely,

Mill Road Capital L.P.

By:		Mill Road Capital GP LLC
		Its General Partner

By:		/s/ Thomas E. Lynch
		Thomas Lynch
		Senior Managing Director

EX-99.6 7 dex996.htm LETTER FROM KONA GRILL, INC. TO MILL ROAD CAPITAL, L.P. Letter from Kona Grill, Inc. to Mill Road Capital, L.P.


CUSIP No. 50047H201		Page 1 of 1 Page

Exhibit 6

April 18, 2008

Thomas Lynch

Senior Managing Director

Mill Road Capital

Two Soundview Drive, Suite 300

Greenwich, CT 06830

Re:	Acquisition Proposal

Dear Mr. Lynch:

Thank you for your interest in Kona Grill (the “Company”) and for your expression of interest letter dated March 28, 2008. As you know, the Company is always receptive to communications with its stockholders and will always entertain expressions of interest that are in the best interests of its stockholders. The Company has distributed your letter to the entire Board of Directors (including all independent directors) for discussion at our next regularly scheduled Board meeting.

Thank you for your interest.

Sincerely,

/s/ Marcus Jundt

Marcus Jundt

Chairman of the Board

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