8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

April 30, 2014

Date of Report (Date of earliest event reported)

KONA GRILL, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-34082	20-0216690
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

7150 E. Camelback Road, Suite 220

Scottsdale, Arizona 85251

(Address of principal executive offices) (Zip Code)

(480) 922-8100

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02     Results of Operations and Financial Condition.

On April 30, 2014, Kona Grill issued a press release reporting financial results for the first quarter ended March 31, 2014. A copy of this press release, including information concerning forward looking statements and factors that may affect our future results, is attached hereto as Exhibit 99.1 and is hereby incorporated by reference in this Item 2.02.

The information in this Report on Form 8-K (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

The registrant does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the registrant’s expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based.

Item 9.01     Financial Statements and Exhibits.

(d)     Exhibits.

                99.1   Press release from Kona Grill, Inc. dated April 30, 2014 titled, “Kona Grill Reports First Quarter 2014 Results”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 30, 2014	KONA GRILL, INC.
	By:	/s/ Christi Hing
		Christi Hing Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release from Kona Grill, Inc. dated April 30, 2014 titled, “Kona Grill Reports First Quarter 2014 Results”

EX-99

Exhibit 99.1

Kona Grill Reports First Quarter 2014 Results

- Increases 2014 New Unit Guidance to Five Openings -

- New Leases Announced for Columbus, Ohio; Fairfax, Virginia and Plano, Texas -

SCOTTSDALE, AZ, April 30, 2014—Kona Grill, Inc. (NASDAQ: KONA), an American grill and sushi bar, reported financial results for the first quarter ended March 31, 2014.

First Quarter 2014 Highlights vs. Year-Ago Quarter

● Restaurant sales increased 17.5% to $27.6 million

● Same-store sales increased 6.2%

● Restaurant operating profit margin was 18.1%, which included a 120 basis point impact from new restaurant inefficiencies, compared to 18.7%

● Opened a new restaurant in Fort Worth, Texas

Management Commentary

“The first quarter of 2014 marks our fourth consecutive quarter—and 14 out of 15 quarters—of same-store sales growth,” said Berke Bakay, President and CEO of Kona Grill. “This growth was primarily driven by a 4.2% increase in guest frequency which also contributed to our strong sales performance relative to our polished casual dining peer group and further validates Kona Grill’s unique, multi-daypart concept."

Bakay continued, “Our growth strategy is well underway, and guests’ response to the updated look and feel of our newest locations and remodels has been very positive. We are pleased to report that first quarter sales volumes from our newest locations in Boise, The Woodlands and Fort Worth, which opened in February, are meeting our internal expectations.

“Our development pipeline has never been stronger. We are excited to announce leases for three new restaurants: Columbus, Ohio; Fairfax, Virginia and Plano, Texas. Looking towards the rest of 2014, we anticipate opening El Paso this summer and three other openings in the fourth quarter.”

First Quarter 2014 Financial Results

Restaurant sales in the first quarter of 2014 increased 17.5% to $27.6 million compared to $23.5 million in the first quarter of 2013. Same-store sales increased 6.2% compared to a 2.6% decrease in comparable sales in the first quarter of 2013, with first quarter 2014 customer traffic increasing 4.2% and average check rising 2.0%. The contribution from new restaurants to first quarter sales was $2.7 million, reflecting 33 additional operating weeks.

Net income in the first quarter of 2014 was $0.3 million, or $0.03 per share, compared to net income of $1.0 million, or $0.12 per share, in the year-ago quarter. Net income in the first quarter of 2014 included $0.13 per share in costs related to opening and initial operation of new restaurants, incremental corporate infrastructure investments, and a shift in the Company’s annual general manager and executive chef conference into the first quarter.

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At March 31, 2014, cash and cash equivalents totaled $4.9 million compared to $5.9 million at December 31, 2013. The Company has drawn $3.5 million against its line of credit as of March 31, 2014, which represents the Company’s total outstanding debt. This amount is unchanged from December 31, 2013.

Financial Guidance

For the second quarter of 2014, the company expects restaurant sales of $29.7 million, compared to $25.8 million in the same year-ago quarter, driven by a 3.0% same-store sales increase and a 13.0% operating week growth assumption. The company expects net income of $1.0 million, or $0.11 per share, which includes approximately $0.08 to $0.10 per share in costs associated with preopening and new unit inefficiencies.

Conference Call

Kona Grill will hold a conference call today at 5:00 p.m. ET to discuss its financial results for the first quarter ended March 31, 2014. The company’s President and CEO Berke Bakay and CFO Christi Hing will host the call, followed by a question and answer session.

Date: Wednesday, April 30, 2014

Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)

Toll-free dial-in number: 1-877-941-8418

International dial-in number: 1-480-629-9809

Conference ID: 4679235

The conference call will be broadcast simultaneously and available for replay via the investors section of the company's website at www.konagrill.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 8:00 p.m. Eastern time on the same day through May 30, 2014.

Toll-free replay number: 1-877-870-5176

International replay number: 1-858-384-5517

Replay ID: 4679235

About Kona Grill

Kona Grill (NASDAQ: KONA) features American favorites with an international influence and award-winning sushi in a casually elegant atmosphere. Kona Grill owns and operates 26 restaurants, guided by a passion for quality food and personal service. Restaurants are currently located in 17 states: Arizona (Chandler, Gilbert, Phoenix, Scottsdale); Colorado (Denver); Connecticut (Stamford); Florida (Tampa); Idaho (Boise); Illinois (Lincolnshire, Oak Brook); Indiana (Carmel); Louisiana (Baton Rouge); Maryland (Baltimore); Michigan (Troy); Minnesota (Eden Prairie); Missouri (Kansas City); Nebraska (Omaha); New Jersey (Woodbridge); Nevada (Las Vegas); Texas (Austin, Dallas, Fort Worth, Houston, San Antonio, The Woodlands); Virginia (Richmond). For more information, visit www.konagrill.com.

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Forward-Looking Statements

Various remarks we make about future expectations, plans, and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, or performance and underlying assumptions and other statements that are not purely historical. These statements relate to our future financial performance and growth goals for 2014, including but not limited to those relating to our sales trends and projected earnings for the second quarter of 2014 and expectations of new store openings in 2014 and beyond. We have attempted to identify these statements by using forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “believes,” “intends,” “should,” or comparable terms. All forward-looking statements included in this press release are based on information available to us on the date of this release and we assume no obligation to update these forward-looking statements for any reason. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements and the discussion of risk factors contained in the company's filings with the Securities and Exchange Commission.

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 KONA GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

		March 31,		December 31,
		2014		2013
		(Unaudited)
ASSETS
	Cash and cash equivalents	$	4,945	$	5,881
	Other current assets		1,607		2,521
	Other assets		1,124		1,114
	Property and equipment, net		41,428		40,352
	Total assets	$	49,104	$	49,868
LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities	$	9,350	$	14,878
	Long-term obligations		16,900		12,632
	Stockholders’ equity		22,854		22,358
	Total liabilities and stockholders’ equity	$	49,104	$	49,868

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KONA GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, except per share data)    

		Three Months Ended March 31,
		2014			2013
		(Unaudited)
Restaurant sales		$	27,616		$	23,496
Costs and expenses:
	Cost of sales		7,510			6,453
	Labor		9,426			7,866
	Occupancy		1,843			1,615
	Restaurant operating expenses		3,848			3,171
	General and administrative		2,576			1,875
	Preopening expense		390			-
	Depreciation and amortization		1,687			1,429
Total costs and expenses			27,280			22,409
Income from operations			336			1,087
Interest expense, net			(60	)		(3	)
Income before income taxes			276			1,084
Provision for income taxes			25			80
Net income		$	251		$	1,004
Net income per share
	Basic	$	0.03		$	0.12
	Diluted	$	0.03		$	0.12
Weighted average shares outstanding:
	Basic		8,609			8,543
	Diluted		8,882			8,643
Comprehensive income		$	251		$	1,004

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Reconciliation of Restaurant Operating Profit to Income from Operations

The Company defines restaurant operating profit to be restaurant sales minus cost of sales, labor, occupancy, and restaurant operating expenses. Restaurant operating profit does not include general and administrative expenses, preopening expenses and depreciation and amortization. The Company believes restaurant operating profit is an important component of financial results because it is a widely used metric within the restaurant industry to evaluate restaurant-level productivity, efficiency, and performance. The Company uses restaurant operating profit as a key metric to evaluate its restaurants' financial performance compared with its competitors. Restaurant operating profit is not a financial measurement determined in accordance with generally accepted accounting principles ("GAAP") and should not be considered in isolation or as an alternative to income from operations. Restaurant operating profit may not be comparable to the same or similarly titled measures computed by other companies. The table below sets forth the Company's calculation of restaurant operating profit and a reconciliation to income from operations, the most comparable GAAP measure (in thousands).

		Three Months Ended March 31,
		2014		2013
Restaurant sales		$	27,616	$	23,496
Costs and expenses:
	Cost of sales		7,510		6,453
	Labor		9,426		7,866
	Occupancy		1,843		1,615
	Restaurant operating expenses		3,848		3,171
Restaurant operating profit			4,989		4,391
Deduct - other costs and expenses:
	General and administrative		2,576		1,875
	Preopening expense		390		-
	Depreciation and amortization		1,687		1,429
Income from operations		$	336	$	1,087

		Percentage of Restaurant Sales
		Three Months Ended March 31,
		2014			2013
Restaurant sales			100.0	%		100.0	%
Costs and expenses:
	Cost of sales		27.2			27.5
	Labor		34.1			33.5
	Occupancy		6.7			6.9
	Restaurant operating expenses		13.9			13.5
Restaurant operating profit			18.1			18.7
Deduct - other costs and expenses:
	General and administrative		9.3			8.0
	Preopening expense		1.4			-
	Depreciation and amortization		6.1			6.1
Income from operations			1.2	%		4.6	%

Certain amounts do not sum to total due to rounding

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KONA GRILL, INC.

Selected Supplemental Operating Information

($ amounts in thousands)

		Three Months Ended March 31,
		2014			2013
Restaurants opened during the period			1			-
Restaurants open at the end of the period			26			23
Comparable restaurants:
	Restaurants open at end of period		23			23
	Operating weeks		296			296
	Average weekly sales	$	85		$	79
	Average unit volume	$	1,090		$	1,026
	Comparable restaurant sales percentage change		6.2	%		-2.6	%
Non-comparable restaurants:
	Restaurants open at end of period		3			-
	Operating weeks		33			-
	Average weekly sales	$	80		$	-

Investor Relations Contact:

Liolios Group, Inc.

Cody Slach

Tel 1-949-574-3860

KONA@liolios.com

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