(Mark One) | |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended June 30, 2016 |
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. |
Delaware | 14-1961545 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
411 W. 14th Street, 2nd Floor, New York, New York | 10014 | |
(Address of principal executive offices) | Zip Code |
646-624-2400 |
(Registrant’s telephone number, including area code) |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company x |
(do not check if a smaller reporting company) |
Page | ||
Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015 | ||
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited) | ||
Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2016 (unaudited) | 6 | |
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited) | 7 | |
8 | ||
21 | ||
39 | ||
39 | ||
40 | ||
June 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,399,001 | $ | 1,841,872 | |||
Accounts receivable, net | 4,151,675 | 4,063,516 | |||||
Inventory | 1,144,729 | 1,152,119 | |||||
Other current assets | 2,799,572 | 3,559,053 | |||||
Due from related parties, net | 705,294 | 1,232,356 | |||||
Total current assets | 11,200,271 | 11,848,916 | |||||
Property and equipment, net | 33,179,801 | 27,952,327 | |||||
Investments | 3,039,699 | 2,910,362 | |||||
Deferred tax assets | 10,219,534 | 10,093,672 | |||||
Other assets | 622,167 | 691,551 | |||||
Security deposits | 2,492,194 | 2,444,482 | |||||
Total assets | $ | 60,753,666 | $ | 55,941,310 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Cash overdraft | $ | 620,221 | $ | 973,754 | |||
Long term debt, current portion | 3,026,324 | 2,680,116 | |||||
Accounts payable | 3,189,503 | 2,396,622 | |||||
Accrued expenses | 5,436,718 | 4,635,584 | |||||
Derivative liability | — | 100,000 | |||||
Deferred revenue | 457,431 | 204,033 | |||||
Total current liabilities | 12,730,197 | 10,990,109 | |||||
Deferred license revenue, long-term | 1,224,570 | 1,099,570 | |||||
Long term debt, net of current portion | 9,588,207 | 9,956,647 | |||||
Deferred rent payable | 15,320,662 | 14,290,010 | |||||
Total liabilities | 38,863,636 | 36,336,336 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.0001 par value, 75,000,000 shares authorized; 24,989,560 and 24,972,515 shares issued and outstanding at June 30, 2016 (unaudited) and December 31, 2015, respectively | 2,499 | 2,497 | |||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2016 (unaudited) and December 31, 2015, respectively | — | — | |||||
Additional paid-in capital | 36,146,182 | 31,778,266 | |||||
Accumulated deficit | (13,091,882 | ) | (11,074,708 | ) | |||
Accumulated other comprehensive loss | (438,763 | ) | (420,383 | ) | |||
Total stockholders’ equity | 22,618,036 | 20,285,672 | |||||
Noncontrolling interest | (728,006 | ) | (680,698 | ) | |||
Total stockholders’ equity including noncontrolling interest | 21,890,030 | 19,604,974 | |||||
Total Liabilities and Stockholders’ Equity | $ | 60,753,666 | $ | 55,941,310 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Owned unit net revenues | $ | 15,282,704 | $ | 12,778,925 | $ | 29,662,634 | $ | 22,504,226 | |||||||
Management and incentive fee revenue | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 | |||||||||||
Total revenue | 17,226,656 | 14,900,902 | 33,620,637 | 26,677,479 | |||||||||||
Cost and expenses: | |||||||||||||||
Owned operating expenses: | |||||||||||||||
Food and beverage costs | 3,778,797 | 3,238,175 | 7,307,550 | 5,735,390 | |||||||||||
Unit operating expenses | 9,509,838 | 8,081,687 | 18,757,493 | 15,090,851 | |||||||||||
General and administrative | 2,813,056 | 2,592,464 | 5,496,752 | 5,036,990 | |||||||||||
Depreciation and amortization | 547,438 | 569,637 | 1,070,077 | 989,760 | |||||||||||
Management and royalty fees | — | 21,895 | — | 46,649 | |||||||||||
Pre-opening expenses | 1,545,417 | 1,690,308 | 2,445,603 | 2,765,021 | |||||||||||
Transaction costs | — | 100,334 | — | 100,334 | |||||||||||
Equity in income of investee companies | (231,203 | ) | (354,261 | ) | (313,788 | ) | (523,231 | ) | |||||||
Derivative income | — | (3,392,000 | ) | (100,000 | ) | (2,778,000 | ) | ||||||||
Interest expense, net of interest income | 99,314 | 39 | 197,483 | (5,190 | ) | ||||||||||
Other expense (income) | 61,766 | (275,621 | ) | 286,800 | (604,624 | ) | |||||||||
Total costs and expenses | 18,124,423 | 12,272,657 | 35,147,970 | 25,853,950 | |||||||||||
Income (loss) from continuing operations before provision for income taxes | (897,767 | ) | 2,628,245 | (1,527,333 | ) | 823,529 | |||||||||
Provision (benefit) for income taxes | 545,613 | (5,931,436 | ) | 479,662 | (6,541,931 | ) | |||||||||
Income (loss) from continuing operations | (1,443,380 | ) | 8,559,681 | (2,006,995 | ) | 7,365,460 | |||||||||
Income (loss) from discontinued operations, net of taxes | (237 | ) | (35,434 | ) | 1,598 | (38,572 | ) | ||||||||
Net income (loss) | (1,443,617 | ) | 8,524,247 | (2,005,397 | ) | 7,326,888 | |||||||||
Less: net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 | |||||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Amounts attributable to The ONE Group Hospitality, Inc.: | |||||||||||||||
Income (loss) from continuing operations | $ | (1,560,034 | ) | $ | 8,425,601 | $ | (2,018,772 | ) | $ | 7,338,119 | |||||
Income (loss) from discontinued operations, net of taxes | (237 | ) | (35,434 | ) | 1,598 | (38,572 | ) | ||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Other comprehensive income (loss) | |||||||||||||||
Currency translation adjustment | 3,025 | (102,023 | ) | (18,380 | ) | (230,843 | ) | ||||||||
Comprehensive income (loss) | $ | (1,557,246 | ) | $ | 8,288,144 | $ | (2,035,554 | ) | $ | 7,068,704 | |||||
Basic and diluted loss per share: | |||||||||||||||
Continuing operations | $ | (0.06 | ) | $ | 0.34 | $ | (0.08 | ) | $ | 0.29 | |||||
Discontinued operations | $ | — | $ | — | $ | — | $ | — | |||||||
Net income (loss) per share attributable to The ONE Group Hospitality, Inc. | $ | (0.06 | ) | $ | 0.34 | $ | (0.08 | ) | $ | 0.29 | |||||
Shares used in computing basic and diluted loss per share | 24,989,560 | 24,955,467 | 25,119,992 | 24,947,873 |
Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Total stockholders' (loss) income equity | Noncontrolling interest | Total stockholders' equity including noncontrolling interest | ||||||||||||||||||||||||
Shares | Par value | |||||||||||||||||||||||||||||
Balance at December 31, 2015 | 24,972,515 | $ | 2,497 | $ | 31,778,266 | $ | (11,074,708 | ) | $ | (420,383 | ) | $ | 20,285,672 | $ | (680,698 | ) | $ | 19,604,974 | ||||||||||||
Stock based compensation expense | 379,928 | 379,928 | 379,928 | |||||||||||||||||||||||||||
Cancellation of shares upon expiration of warrants | (1,437,500 | ) | (143 | ) | 143 | — | — | |||||||||||||||||||||||
Rights Offering | 1,454,545 | 145 | 3,862,845 | 3,862,990 | 3,862,990 | |||||||||||||||||||||||||
Issuance of detachable warrants | 125,000 | 125,000 | 125,000 | |||||||||||||||||||||||||||
Distributions to noncontrolling interest | — | (59,085 | ) | (59,085 | ) | |||||||||||||||||||||||||
Loss on foreign currency translation, net | (18,380 | ) | (18,380 | ) | (18,380 | ) | ||||||||||||||||||||||||
Net income (loss) | (2,017,174 | ) | (2,017,174 | ) | 11,777 | (2,005,397 | ) | |||||||||||||||||||||||
Balance at June 30, 2016 | 24,989,560 | $ | 2,499 | $ | 36,146,182 | $ | (13,091,882 | ) | $ | (438,763 | ) | $ | 22,618,036 | $ | (728,006 | ) | $ | 21,890,030 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net income (loss) | $ | (2,005,397 | ) | $ | 7,326,888 | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,070,077 | 989,760 | |||||
Deferred rent payable | 1,030,652 | 1,711,923 | |||||
Deferred taxes | (125,862 | ) | (7,329,564 | ) | |||
Equity in income of investee companies | (313,788 | ) | (523,231 | ) | |||
Derivative income | (100,000 | ) | (2,778,000 | ) | |||
Stock-based compensation | 379,928 | 504,400 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (88,159 | ) | (747,743 | ) | |||
Inventory | 7,390 | 70,164 | |||||
Prepaid expenses and other current assets | 759,479 | (889,963 | ) | ||||
Due from related parties, net | 632,062 | (343,563 | ) | ||||
Security deposits | (47,712 | ) | 12,587 | ||||
Other assets | 69,384 | 112,381 | |||||
Accounts payable | 687,881 | (970,536 | ) | ||||
Accrued expenses | 802,317 | 2,379,783 | |||||
Deferred revenue | 378,198 | 29,447 | |||||
Net cash provided by (used in) operating activities | 3,136,450 | (445,267 | ) | ||||
Investing activities: | |||||||
Purchase of property and equipment | (6,018,596 | ) | (4,510,551 | ) | |||
Distributions from equity investees | 184,450 | 321,131 | |||||
Net cash used in investing activities | (5,834,146 | ) | (4,189,420 | ) | |||
Financing activities: | |||||||
Cash overdraft | (353,533 | ) | 151,118 | ||||
Proceeds from term loan | — | 600,000 | |||||
Proceeds from promissory note | 1,000,000 | — | |||||
Repayment of term loan | (1,080,833 | ) | (747,500 | ) | |||
Repayment of equipment financing agreement | (95,151 | ) | — | ||||
Proceeds from rights offering | 3,862,990 | — | |||||
Distributions to noncontrolling interest | (59,085 | ) | (194,815 | ) | |||
Net cash provided by (used in) financing activities | 3,274,388 | (191,197 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (19,563 | ) | (230,843 | ) | |||
Net increase (decrease) in cash and cash equivalents | 557,129 | (5,056,727 | ) | ||||
Cash and cash equivalents, beginning of period | 1,841,872 | 7,905,004 | |||||
Cash and cash equivalents, end of period | $ | 2,399,001 | $ | 2,848,277 | |||
Supplemental disclosure of cash flow data: | |||||||
Interest paid | $ | 330,959 | $ | 157,252 | |||
Income taxes paid | $ | 228,353 | $ | 301,165 | |||
Noncash investing and financing activities: | |||||||
Noncash property and equipment additions | $ | 278,955 | $ | 502,548 | |||
Noncash loan discount attributable to issuance of warrant | $ | 125,000 | $ | — |
At June 30, 2016 | At December 31, 2015 | ||||||
Food | $ | 203,596 | $ | 208,452 | |||
Beverages | 941,133 | 943,667 | |||||
Totals | $ | 1,144,729 | $ | 1,152,119 |
At June 30, | At December 31, | ||||||
2016 | 2015 | ||||||
Prepaid taxes | $ | 1,283,786 | $ | 706,650 | |||
Landlord receivable | 678,604 | 1,476,502 | |||||
Prepaid expenses | 763,966 | 1,171,488 | |||||
Other | 73,216 | 204,413 | |||||
Totals | $ | 2,799,572 | $ | 3,559,053 |
At June 30, 2016 | At December 31, 2015 | ||||||
Furniture, fixtures and equipment | $ | 8,310,351 | $ | 8,053,787 | |||
Leasehold improvements | 36,270,774 | 26,175,472 | |||||
Less accumulated depreciation and amortization | 14,241,478 | 15,476,430 | |||||
30,339,647 | 18,752,829 | ||||||
Construction in progress | 1,507,633 | 7,967,181 | |||||
Restaurant supplies | 1,332,521 | 1,232,317 | |||||
Total | $ | 33,179,801 | $ | 27,952,327 |
At June 30, 2016 | At December 31, 2015 | ||||||
Sales tax payable | $ | 1,141,212 | $ | 1,045,195 | |||
Payroll and related | 1,678,247 | 661,761 | |||||
Due to hotels | 963,916 | 1,396,776 | |||||
Income taxes payable | 880,172 | — | |||||
Legal | — | 947,054 | |||||
Other | 773,171 | 584,798 | |||||
Totals | $ | 5,436,718 | $ | 4,635,584 |
June 30, 2016 | December 31, 2015 | ||||||
Term Loan Agreements | $ | 10,899,167 | $ | 11,980,000 | |||
Equipment Financing Agreement | 840,364 | 656,763 | |||||
Promissory note, net | 875,000 | ||||||
12,614,531 | 12,636,763 | ||||||
Less: Current portion of Long Term Debt | 3,026,324 | 2,680,116 | |||||
Long Term Debt, net of Current Portion | $ | 9,588,207 | $ | 9,956,647 | |||
Future minimum loan payments: | |||||||
2016 | $ | 1,505,893 | |||||
2017 | 3,022,920 | ||||||
2018 | 3,032,876 | ||||||
2019 | 3,043,342 | ||||||
2020 | 1,134,500 | ||||||
Thereafter | 875,000 | ||||||
Total | $ | 12,614,531 |
At June 30, 2016 | At December 31, 2015 | ||||||
Bagatelle NY LA Investors, LLC ("Bagatelle Investors") | $ | 2,154 | $ | 7,364 | |||
Bagatelle Little West 12th, LLC ( "Bagatelle NY") | 2,492,474 | 2,357,927 | |||||
Bagatelle La Cienega, LLC ("Bagatelle LA") | — | — | |||||
One 29 Park, LLC ("One 29 Park") | 545,071 | 545,071 | |||||
Totals | $ | 3,039,699 | $ | 2,910,362 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Equity in income of investee companies | $ | 231,203 | $ | 354,261 | $ | 313,788 | $ | 523,231 |
Year Ending December 31, | Expense | Income | Net Amount | |||||||||
2016 | $ | 4,215,293 | $ | (482,916 | ) | $ | 3,732,377 | |||||
2017 | 7,448,494 | (691,015 | ) | 6,757,479 | ||||||||
2018 | 7,518,230 | (690,980 | ) | 6,827,250 | ||||||||
2019 | 7,576,312 | (706,235 | ) | 6,870,077 | ||||||||
2020 | 7,815,884 | (675,768 | ) | 7,140,116 | ||||||||
Thereafter | 96,023,115 | (121,656 | ) | 95,901,459 | ||||||||
Total | $ | 130,597,328 | $ | (3,368,570 | ) | $ | 127,228,758 |
June 30, 2016 | December 31, 2015 | ||||||
Other current assets | $ | 47,556 | $ | 48,163 | |||
Assets of discontinued operations - current | 47,556 | 48,163 | |||||
Security deposits | 75,000 | 75,000 | |||||
Assets of discontinued operations - long term | 75,000 | 75,000 | |||||
Accounts payable and accrued liabilities | 484,030 | 409,108 | |||||
Liabilities of discontinued operations - current | 484,030 | 409,108 | |||||
Net assets | $ | (361,474 | ) | $ | (285,945 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | |||||||
Costs and Expenses | 237 | 35,434 | (1,598 | ) | 38,572 | ||||||||||
Net income (loss) from discontinued operations, net of taxes | $ | (237 | ) | $ | (35,434 | ) | $ | 1,598 | $ | (38,572 | ) |
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Intrinsic Value | |||||||||
Outstanding at December 31, 2015 | 1,672,578 | $ | 5.01 | |||||||||
Granted | 1,250,000 | $ | 2.75 | |||||||||
Cancelled, expired, or forfeited | (296,066 | ) | $ | 4.88 | ||||||||
Outstanding at June 30, 2016 | 2,626,512 | $ | 4.06 | 7.96 | $ | — | ||||||
Exercisable at June 30, 2016 | 749,205 | $ | 4.87 | 6.91 | $ | — |
Expected volatility | 37 | % | |
Risk-free rate of return | 1.16 | % | |
Expected life (in years) | 6.51 years | ||
Dividend yield | — | ||
Weighted-average fair value per share at date of grant | $ | 1.07 |
Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding at December 31, 2015 | — | |||||
Granted | 787,500 | $ | 2.73 | |||
Cancelled, expired, or forfeited | (26,250 | ) | $ | 2.73 | ||
Outstanding at June 30, 2016 | 761,250 | $ | 2.73 | |||
Exercisable at June 30, 2016 | — | |||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
STKs | $ | 15,282,704 | $ | 12,757,574 | $ | 28,963,134 | $ | 22,121,012 | |||||||
F&B | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 | |||||||||||
Other | — | 21,351 | 699,500 | 383,214 | |||||||||||
$ | 17,226,656 | $ | 14,900,902 | $ | 33,620,637 | $ | 26,677,479 | ||||||||
Segment Profits (loss): | |||||||||||||||
STKs | $ | 1,983,811 | $ | 1,466,957 | $ | 3,172,474 | $ | 1,602,484 | |||||||
F&B | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 | |||||||||||
Other | 10,258 | (7,894 | ) | 425,117 | 75,501 | ||||||||||
Total segment profit | 3,938,021 | 3,581,040 | 7,555,594 | 5,851,238 | |||||||||||
General and administrative | 2,813,056 | 2,592,464 | 5,496,752 | 5,036,990 | |||||||||||
Depreciation and amortization | 547,438 | 569,637 | 1,070,077 | 989,760 | |||||||||||
Interest expense, net of interest income | 99,314 | 39 | 197,483 | (5,190 | ) | ||||||||||
Other | 1,375,980 | (2,209,345 | ) | 2,318,615 | (993,851 | ) | |||||||||
(Income) loss from continuing operations before provision for income taxes | $ | (897,767 | ) | $ | 2,628,245 | $ | (1,527,333 | ) | $ | 823,529 |
June 30, 2016 | December 31, 2015 | ||||||
Property & equipment, net: | |||||||
STKs | $ | 32,793,674 | $ | 27,678,010 | |||
F&B | 329,752 | 217,942 | |||||
Other | 56,375 | 56,375 | |||||
Total | $ | 33,179,801 | $ | 27,952,327 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
United States: | |||||||||||||||
Revenues - owned units | $ | 15,282,704 | $ | 12,778,925 | $ | 29,662,634 | $ | 22,504,226 | |||||||
Management, incentive and royalty fee revenue | 1,338,349 | 1,496,474 | 2,794,167 | 3,000,548 | |||||||||||
Foreign: | |||||||||||||||
Revenues - owned units | $ | — | $ | — | $ | — | $ | — | |||||||
Management and development fee revenue | 605,603 | 625,503 | 1,163,836 | 1,172,705 |
June 30, 2016 | December 31, 2015 | ||||||
United States: | |||||||
Net assets | $ | 18,247,819 | $ | 15,167,639 | |||
Foreign: | |||||||
Net assets | $ | 3,642,211 | $ | 4,437,332 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 | |||||||||||
Net income (loss) | (1,443,617 | ) | 8,524,247 | (2,005,397 | ) | 7,326,888 | |||||||||
Interest expense, net of interest income | 99,314 | 39 | 197,483 | (5,190 | ) | ||||||||||
Provision (benefit) for income taxes | 545,613 | (5,931,436 | ) | 479,662 | (6,541,931 | ) | |||||||||
Depreciation and amortization | 547,438 | 569,637 | 1,070,077 | 989,760 | |||||||||||
EBITDA | (251,252 | ) | 3,162,487 | (258,175 | ) | 1,769,527 | |||||||||
Deferred rent (1) | (191,262 | ) | (51,155 | ) | (131,047 | ) | 160,419 | ||||||||
Pre-opening expenses | 1,545,417 | 1,690,308 | 2,445,603 | 2,765,021 | |||||||||||
Transaction costs | — | 100,334 | — | 100,334 | |||||||||||
Loss (income) from discontinued operations, net of taxes | 237 | 35,434 | (1,598 | ) | 38,572 | ||||||||||
Derivative income | — | (3,392,000 | ) | (100,000 | ) | (2,778,000 | ) | ||||||||
Stock based compensation | 235,961 | 326,400 | 379,928 | 504,400 | |||||||||||
Adjusted EBITDA | 1,339,101 | 1,871,808 | 2,334,711 | 2,560,273 | |||||||||||
Adjusted EBITDA attributable to noncontrolling interest | 244,902 | 240,911 | 173,350 | 167,657 | |||||||||||
Adjusted EBITDA attributable to The ONE Group Hospitality, Inc. | $ | 1,094,199 | $ | 1,630,897 | $ | 2,161,361 | $ | 2,392,616 |
(1) | Deferred rent is included in unit operating expenses on the statement of income. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 | |||||||||||
Net income (loss) | (1,443,617 | ) | 8,524,247 | (2,005,397 | ) | 7,326,888 | |||||||||
Transaction costs | — | 100,334 | — | 100,334 | |||||||||||
Loss (income) from discontinued operations, net of taxes | 237 | 35,434 | (1,598 | ) | 38,572 | ||||||||||
Derivative income | — | (3,392,000 | ) | (100,000 | ) | (2,778,000 | ) | ||||||||
Stock based compensation | 235,961 | 326,400 | 379,928 | 504,400 | |||||||||||
Deferred tax allowance reversal, net | — | (6,181,642 | ) | — | (6,181,642 | ) | |||||||||
Adjusted net loss | (1,207,419 | ) | (587,227 | ) | (1,727,067 | ) | (989,448 | ) | |||||||
Adjusted net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 | |||||||||||
Adjusted net loss attributable to The ONE Group Hospitality, Inc. | $ | (1,324,073 | ) | $ | (721,307 | ) | $ | (1,738,844 | ) | $ | (1,016,789 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Owned unit net revenues | $ | 15,282,704 | $ | 12,778,925 | $ | 29,662,634 | $ | 22,504,226 | |||||||
Management and incentive fee revenue (1) | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 | |||||||||||
Total revenue | 17,226,656 | 14,900,902 | 33,620,637 | 26,677,479 | |||||||||||
Cost and expenses: | |||||||||||||||
Owned operating expenses: | |||||||||||||||
Food and beverage costs | 3,778,797 | 3,238,175 | 7,307,550 | 5,735,390 | |||||||||||
Unit operating expenses | 9,509,838 | 8,081,687 | 18,757,493 | 15,090,851 | |||||||||||
General and administrative | 2,813,056 | 2,592,464 | 5,496,752 | 5,036,990 | |||||||||||
Depreciation and amortization | 547,438 | 569,637 | 1,070,077 | 989,760 | |||||||||||
Management and royalty fees | — | 21,895 | — | 46,649 | |||||||||||
Pre-opening expenses | 1,545,417 | 1,690,308 | 2,445,603 | 2,765,021 | |||||||||||
Transaction costs | — | 100,334 | — | 100,334 | |||||||||||
Equity in income of investee companies | (231,203 | ) | (354,261 | ) | (313,788 | ) | (523,231 | ) | |||||||
Derivative income | — | (3,392,000 | ) | (100,000 | ) | (2,778,000 | ) | ||||||||
Interest expense, net of interest income | 99,314 | 39 | 197,483 | (5,190 | ) | ||||||||||
Other expense (income) | 61,766 | (275,621 | ) | 286,800 | (604,624 | ) | |||||||||
Total costs and expenses | 18,124,423 | 12,272,657 | 35,147,970 | 25,853,950 | |||||||||||
Loss (income) from continuing operations before provision for income taxes | (897,767 | ) | 2,628,245 | (1,527,333 | ) | 823,529 | |||||||||
Provision (benefit) for income taxes | 545,613 | (5,931,436 | ) | 479,662 | (6,541,931 | ) | |||||||||
Income (loss) from continuing operations | (1,443,380 | ) | 8,559,681 | (2,006,995 | ) | 7,365,460 | |||||||||
Income (loss) from discontinued operations, net of taxes | (237 | ) | (35,434 | ) | 1,598 | (38,572 | ) | ||||||||
Net income (loss) | (1,443,617 | ) | 8,524,247 | (2,005,397 | ) | 7,326,888 | |||||||||
Less: net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 | |||||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Amounts attributable to The ONE Group Hospitality, Inc.: | |||||||||||||||
Income (loss) from continuing operations | $ | (1,560,034 | ) | $ | 8,425,601 | $ | (2,018,772 | ) | $ | 7,338,119 | |||||
Income (loss) from discontinued operations, net of taxes | (237 | ) | (35,434 | ) | 1,598 | (38,572 | ) | ||||||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | $ | (1,560,271 | ) | $ | 8,390,167 | $ | (2,017,174 | ) | $ | 7,299,547 | |||||
Other comprehensive income (loss) | |||||||||||||||
Currency translation adjustment | 3,025 | (102,023 | ) | (18,380 | ) | (230,843 | ) | ||||||||
Comprehensive income (loss) | $ | (1,557,246 | ) | $ | 8,288,144 | $ | (2,035,554 | ) | $ | 7,068,704 |
(1) | Such management and incentive fee revenue is based on a percentage of aggregate food and beverage sales at managed units which totaled $43,928,429 and $44,158,562 for the six months ended June 30, 2016 and 2015, respectively and $23,082,213 and $23,839,367 for the three months ended June 30, 2016 and 2015, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||
Revenues: | |||||||||||
Owned unit net revenues | 88.7 | % | 85.8 | % | 88.2 | % | 84.4 | % | |||
Management and incentive fee revenue | 11.3 | % | 14.2 | % | 11.8 | % | 15.6 | % | |||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost and expenses: | |||||||||||
Owned operating expenses: | |||||||||||
Food and beverage costs (1) | 24.7 | % | 25.3 | % | 24.6 | % | 25.5 | % | |||
Unit operating expenses (1) | 62.2 | % | 63.2 | % | 63.2 | % | 67.1 | % | |||
General and administrative | 16.3 | % | 17.4 | % | 16.3 | % | 18.9 | % | |||
Depreciation and amortization | 3.2 | % | 3.8 | % | 3.2 | % | 3.7 | % | |||
Management and royalty fees | — | % | 0.1 | % | — | % | 0.2 | % | |||
Pre-opening expenses | 9.0 | % | 11.3 | % | 7.3 | % | 10.4 | % | |||
Transaction costs | — | % | 0.7 | % | — | % | 0.4 | % | |||
Equity in income of investee companies | (1.3 | )% | (2.4 | )% | (0.9 | )% | (2.0 | )% | |||
Derivative income | — | % | (22.8 | )% | (0.3 | )% | (10.4 | )% | |||
Interest expense, net of interest income | 0.6 | % | — | % | 0.6 | % | — | % | |||
Other expense (income) | 0.4 | % | (1.8 | )% | 0.9 | % | (2.3 | )% | |||
Total costs and expenses | 105.2 | % | 82.4 | % | 104.5 | % | 96.9 | % | |||
Loss (income) from continuing operations before provision for income taxes | (5.2 | )% | 17.6 | % | (4.5 | )% | 3.1 | % | |||
Provision (benefit) for income taxes | 3.2 | % | (39.8 | )% | 1.4 | % | (24.5 | )% | |||
Income (loss) from continuing operations | (8.4 | )% | 57.4 | % | (6.0 | )% | 27.6 | % | |||
Income (loss) from discontinued operations, net of taxes | — | % | (0.2 | )% | — | % | (0.1 | )% | |||
Net income (loss) | (8.4 | )% | 57.2 | % | (6.0 | )% | 27.5 | % | |||
Less: net income attributable to noncontrolling interest | 0.7 | % | 0.9 | % | — | % | 0.1 | % | |||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | (9.1 | )% | 56.3 | % | (6.0 | )% | 27.4 | % | |||
Amounts attributable to The ONE Group Hospitality, Inc.: | |||||||||||
Income (loss) from continuing operations | (9.1 | )% | 56.5 | % | (6.0 | )% | 27.5 | % | |||
Income (loss) from discontinued operations, net of taxes | — | % | (0.2 | )% | — | % | (0.1 | )% | |||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | (9.1 | )% | 56.3 | % | (6.0 | )% | 27.4 | % | |||
Net income (loss) attributable to The ONE Group Hospitality, Inc. | (9.1 | )% | 56.3 | % | (6.0 | )% | 27.4 | % | |||
Other comprehensive income (loss) | |||||||||||
Currency translation adjustment | — | % | (0.7 | )% | (0.1 | )% | (0.9 | )% | |||
Comprehensive income (loss) | (9.0 | )% | 55.6 | % | (6.1 | )% | 26.5 | % |
(1) | These expenses are being shown as a percentage of owned unit net revenues. |
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | ||||||||||||||||||||||||||||||
STKS | F&B | OTHER | TOTAL | STKS | F&B | OTHER | TOTAL | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Owned unit net revenues | $ | 15,282,704 | $ | — | $ | 15,282,704 | $ | 12,757,574 | $ | 21,351 | $ | 12,778,925 | |||||||||||||||||||
Management and incentive fee revenue | $ | 1,943,952 | 1,943,952 | $ | 2,121,977 | 2,121,977 | |||||||||||||||||||||||||
Total revenue | 15,282,704 | 1,943,952 | — | 17,226,656 | 12,757,574 | 2,121,977 | 21,351 | 14,900,902 | |||||||||||||||||||||||
Cost and expenses: | |||||||||||||||||||||||||||||||
Owned operating expenses: | |||||||||||||||||||||||||||||||
Food and beverage costs | 3,778,797 | — | 3,778,797 | 3,231,536 | 6,639 | 3,238,175 | |||||||||||||||||||||||||
Unit operating expenses | 9,520,096 | (10,258 | ) | 9,509,838 | 8,059,081 | 22,606 | 8,081,687 | ||||||||||||||||||||||||
Total costs and expenses | 13,298,893 | — | (10,258 | ) | 13,288,635 | 11,290,617 | — | 29,245 | 11,319,862 | ||||||||||||||||||||||
Income (loss) from restaurant and hospitality operations | $ | 1,983,811 | $ | 1,943,952 | $ | 10,258 | 3,938,021 | $ | 1,466,957 | $ | 2,121,977 | $ | (7,894 | ) | 3,581,040 | ||||||||||||||||
General and administrative | 2,813,056 | 2,592,464 | |||||||||||||||||||||||||||||
Transaction costs | — | 100,334 | |||||||||||||||||||||||||||||
Depreciation and amortization | 547,438 | 569,637 | |||||||||||||||||||||||||||||
Management and royalty fees | — | 21,895 | |||||||||||||||||||||||||||||
Pre-opening expenses | 1,545,417 | 1,690,308 | |||||||||||||||||||||||||||||
Equity in income of investee companies | (231,203 | ) | (354,261 | ) | |||||||||||||||||||||||||||
Derivative income | — | (3,392,000 | ) | ||||||||||||||||||||||||||||
Interest expense, net of interest income | 99,314 | 39 | |||||||||||||||||||||||||||||
Other expense (income) | 61,766 | (275,621 | ) | ||||||||||||||||||||||||||||
Total costs and expenses | 4,835,788 | 952,795 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes | $ | (897,767 | ) | $ | 2,628,245 |
Six Months Ended June 30, 2016 | Six Months Ended June 30, 2015 | ||||||||||||||||||||||||||||||
STKS | F&B | OTHER | TOTAL | STKS | F&B | OTHER | TOTAL | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Owned unit net revenues | $ | 28,963,134 | $ | 699,500 | $ | 29,662,634 | $ | 22,121,012 | $ | 383,214 | $ | 22,504,226 | |||||||||||||||||||
Management and incentive fee revenue | $ | 3,958,003 | 3,958,003 | $ | 4,173,253 | $ | 4,173,253 | ||||||||||||||||||||||||
Total revenue | 28,963,134 | 3,958,003 | 699,500 | 33,620,637 | 22,121,012 | 4,173,253 | 383,214 | 26,677,479 | |||||||||||||||||||||||
Cost and expenses: | |||||||||||||||||||||||||||||||
Owned operating expenses: | |||||||||||||||||||||||||||||||
Food and beverage costs | 7,167,650 | 139,900 | 7,307,550 | 5,642,359 | 93,031 | 5,735,390 | |||||||||||||||||||||||||
Unit operating expenses | 18,623,010 | 134,483 | 18,757,493 | 14,876,169 | 214,682 | 15,090,851 | |||||||||||||||||||||||||
Total costs and expenses | 25,790,660 | — | 274,383 | 26,065,043 | 20,518,528 | — | 307,713 | 20,826,241 | |||||||||||||||||||||||
Income from restaurant and hospitality operations | $ | 3,172,474 | $ | 3,958,003 | $ | 425,117 | 7,555,594 | $ | 1,602,484 | $ | 4,173,253 | $ | 75,501 | 5,851,238 | |||||||||||||||||
General and administrative | 5,496,752 | 5,036,990 | |||||||||||||||||||||||||||||
Transaction costs | — | 100,334 | |||||||||||||||||||||||||||||
Depreciation and amortization | 1,070,077 | 989,760 | |||||||||||||||||||||||||||||
Management and royalty fees | — | 46,649 | |||||||||||||||||||||||||||||
Pre-opening expenses | 2,445,603 | 2,765,021 | |||||||||||||||||||||||||||||
Equity in income of investee companies | (313,788 | ) | (523,231 | ) | |||||||||||||||||||||||||||
Derivative income | (100,000 | ) | (2,778,000 | ) | |||||||||||||||||||||||||||
Interest expense, net of interest income | 197,483 | (5,190 | ) | ||||||||||||||||||||||||||||
Other expense (income) | 286,800 | (604,624 | ) | ||||||||||||||||||||||||||||
Total costs and expenses | 9,082,927 | 5,027,709 | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes | $ | (1,527,333 | ) | $ | 823,529 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
(in thousands) | |||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 3,136 | $ | (445 | ) | ||
Investing activities | (5,834 | ) | (4,189 | ) | |||
Financing activities | 3,274 | (191 | ) | ||||
Effect of exchange rate changes on cash | (20 | ) | (231 | ) | |||
Net increase (decrease) in cash and cash equivalents | $ | 556 | $ | (5,056 | ) |
Exhibit | Description | |
31.1 | Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. | |
31.2 | Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. | |
32 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.1 | The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 formatted in XBRL: (i) Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015; (ii) Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015 (unaudited); (iii) Statement of Stockholders’ Equity (Deficit) for Six Months Ended June 30, 2016 and 2015; (iv) Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (unaudited) and (v) Notes to Financial Statements (unaudited). |
THE ONE GROUP HOSPITALITY, INC. | ||
By: | /s/ SAMUEL GOLDFINGER | |
Samuel Goldfinger | ||
Chief Financial Officer |
/s/ Jonathan Segal | |
Jonathan Segal | |
Title: Chief Executive Officer |
/s/ Samuel Goldfinger | |
Samuel Goldfinger | |
Title: Chief Financial Officer |
Date: | August 15, 2016 | By: | /s/ Jonathan Segal |
Jonathan Segal | |||
Chief Executive Officer and President | |||
(Principal Executive Officer) |
Date: | August 15, 2016 | By: | /s/ Samuel Goldfinger |
Samuel Goldfinger | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 15, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ONE Group Hospitality, Inc. | |
Entity Central Index Key | 0001399520 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding (in shares) | 24,989,560 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 24,989,560 | 24,972,515 |
Common stock, shares outstanding (in shares) | 24,989,560 | 24,972,515 |
Preferred stock, par value per share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenues: | ||||
Owned unit net revenues | $ 15,282,704 | $ 12,778,925 | $ 29,662,634 | $ 22,504,226 |
Management and incentive fee revenue | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 |
Total revenue | 17,226,656 | 14,900,902 | 33,620,637 | 26,677,479 |
Owned operating expenses: | ||||
Food and beverage costs | 3,778,797 | 3,238,175 | 7,307,550 | 5,735,390 |
Unit operating expenses | 9,509,838 | 8,081,687 | 18,757,493 | 15,090,851 |
General and administrative | 2,813,056 | 2,592,464 | 5,496,752 | 5,036,990 |
Depreciation and amortization | 547,438 | 569,637 | 1,070,077 | 989,760 |
Management and royalty fees | 0 | 21,895 | 0 | 46,649 |
Pre-opening expenses | 1,545,417 | 1,690,308 | 2,445,603 | 2,765,021 |
Transaction costs | 0 | 100,334 | 0 | 100,334 |
Equity in income of investee companies | (231,203) | (354,261) | (313,788) | (523,231) |
Derivative income | 0 | (3,392,000) | (100,000) | (2,778,000) |
Interest expense, net of interest income | 99,314 | 39 | 197,483 | (5,190) |
Other expense (income) | 61,766 | (275,621) | 286,800 | (604,624) |
Total costs and expenses | 18,124,423 | 12,272,657 | 35,147,970 | 25,853,950 |
Income (loss) from continuing operations before provision for income taxes | (897,767) | 2,628,245 | (1,527,333) | 823,529 |
Provision (benefit) for income taxes | 545,613 | (5,931,436) | 479,662 | (6,541,931) |
Income (loss) from continuing operations | (1,443,380) | 8,559,681 | (2,006,995) | 7,365,460 |
Income (loss) from discontinued operations, net of taxes | (237) | (35,434) | 1,598 | (38,572) |
Net income (loss) | (1,443,617) | 8,524,247 | (2,005,397) | 7,326,888 |
Less: net income attributable to noncontrolling interest | 116,654 | 134,080 | 11,777 | 27,341 |
Net income (loss) attributable to The ONE Group Hospitality, Inc. | (1,560,271) | 8,390,167 | (2,017,174) | 7,299,547 |
Amounts attributable to The ONE Group Hospitality, Inc.: | ||||
Income (loss) from continuing operations | (1,560,034) | 8,425,601 | (2,018,772) | 7,338,119 |
Income (loss) from discontinued operations, net of taxes | (237) | (35,434) | 1,598 | (38,572) |
Net income (loss) attributable to The ONE Group Hospitality, Inc. | (1,560,271) | 8,390,167 | (2,017,174) | 7,299,547 |
Other comprehensive income (loss) | ||||
Currency translation adjustment | 3,025 | (102,023) | (18,380) | (230,843) |
Comprehensive income (loss) | $ (1,557,246) | $ 8,288,144 | $ (2,035,554) | $ 7,068,704 |
Basic and diluted loss per share: | ||||
Continuing operations (in dollars per share) | $ (0.06) | $ 0.34 | $ (0.08) | $ 0.29 |
Discontinued operations (in dollars per share) | 0.00 | 0.00 | 0.00 | 0.00 |
Net loss per share attributable to The ONE Group Hospitality, Inc. (in dollars per share) | $ (0.06) | $ 0.34 | $ (0.08) | $ 0.29 |
Shares used in computing basic and diluted loss per share (in shares) | 24,989,560 | 24,955,467 | 25,119,992 | 24,947,873 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited) - 6 months ended Jun. 30, 2016 - USD ($) |
Total |
Common stock |
Additional paid-in capital |
Accumulated deficit |
Accumulated other comprehensive (loss) income |
Total stockholders' (loss) income equity |
Noncontrolling interest |
---|---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2015 | 24,972,515 | 24,972,515 | |||||
Beginning balance at Dec. 31, 2015 | $ 19,604,974 | $ 2,497 | $ 31,778,266 | $ (11,074,708) | $ (420,383) | $ 20,285,672 | $ (680,698) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation expense | 379,928 | 379,928 | 379,928 | ||||
Cancellation of shares upon expiration of warrants (in shares) | (1,437,500) | ||||||
Cancellation of shares upon expiration of warrants | $ (143) | 143 | |||||
Rights Offering (in shares) | 1,454,545 | ||||||
Rights Offering | 3,862,990 | $ 145 | 3,862,845 | 3,862,990 | |||
Adjustments to Additional Paid in Capital, Warrant Issued | 125,000 | 125,000 | 125,000 | ||||
Distributions to noncontrolling interest | (59,085) | (59,085) | |||||
Loss on foreign currency translation, net | (18,380) | (18,380) | (18,380) | ||||
Net income (loss) | $ (2,005,397) | (2,017,174) | (2,017,174) | 11,777 | |||
Ending balance (in shares) at Jun. 30, 2016 | 24,989,560 | 24,989,560 | |||||
Ending balance at Jun. 30, 2016 | $ 21,890,030 | $ 2,499 | $ 36,146,182 | $ (13,091,882) | $ (438,763) | $ 22,618,036 | $ (728,006) |
Business and basis of presentation |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and basis of presentation | Business and basis of presentation: Principles of consolidation: The accompanying consolidated financial statements of The ONE Group Hospitality, Inc. and its subsidiaries include the accounts of The ONE Group, LLC ("ONE Group") and its subsidiaries, Little West 12th LLC (“Little West 12th” ), One-LA, L.P. (“One LA”), Bridge Hospitality, LLC (“Bridge”), STK-LA, LLC (“STK-LA”), WSATOG (Miami), LLC (“WSATOG”), STK Miami Service, LLC (“Miami Services”), STK Miami, LLC (“STK Miami Beach”), Basement Manager, LLC (“Basement Manager”), JEC II, LLC (“JEC II”), One Marks, LLC (“One Marks”), MPD Space Events LLC (“MPD”), One 29 Park Management, LLC (“One 29 Park Management”), STK Midtown Holdings, LLC (“Midtown Holdings”), STK Midtown, LLC (“STK Midtown”), STKOUT Midtown, LLC (“STKOUT Midtown”), STK Atlanta, LLC (“STK Atlanta”), STK-Las Vegas, LLC (“STK Vegas”), Asellina Marks LLC (“Asellina Marks”), Heraea Vegas, LLC (“Heraea”), Xi Shi Las Vegas, LLC (“Xi Shi Las Vegas”), T.O.G. (UK) Limited (“TOG UK”), Hip Hospitality Limited (“Hip Hospitality UK”), T.O.G. (Aldwych) Limited (“TOG Aldwych”), CA Aldwych Limited (“CA Aldwych"), T.O.G. (Milan) S.r.l. ("TOG Milan"), BBCLV, LLC (“BBCLV”), STK DC, LLC (“STK DC”), STK Orlando, LLC ("STK Orlando"), STK Chicago, LLC ("STK Chicago"), TOG Biscayne, LLC ("TOG Biscayne"), STK Westwood, LLC ("STK Westwood"), STK Denver, LLC ("STK Denver"), STK Texas Holdings, LLC ("Texas Holdings"), STK Texas Holdings II, LLC ("Texas Holdings II"), STK Dallas, LLC ("STK Dallas"), STK Austin, LLC ("STK Austin"), STK San Diego, LLC ("STK San Diego"), STK Rooftop San Diego, LLC ("STK Rooftop San Diego"), 9401415 Canada Ltd. ("STK Toronto"), STK (Edinburgh) Limited ("STK Edinburgh"), STK Ibiza, LLC ("STK Ibiza"), Seaport Rebel Restaurant LLC ("STK Boston") and The ONE Group - STKPR, LLC ("STK Puerto Rico"). The entities are collectively referred to herein as the “Company” and are consolidated on the basis of common ownership and control. All significant intercompany balances and transactions have been eliminated in consolidation. Net Income (Loss) Per Common Share Basic net income (loss) per common share is based upon the weighted-average common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock. At June 30, 2016, there are 3,487,762 securities that can potentially dilute basic EPS in the future (including stock issuable under contingent stock agreements). These securities were not included in the computation of diluted EPS because they would have had an antidilutive effect on EPS for the periods presented. Fair value measurements The carrying amounts of cash, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying value of the long term debt approximates its fair value since the components of long term debt have been recently negotiated. Reclassifications: Certain prior year amounts have been reclassified to conform to current year presentation in the consolidated financial statements. Nature of business: The Company is a global hospitality company that develops, owns and operates upscale, high-energy restaurants and lounges and provides turn-key food and beverage ("F&B") services for hospitality venues including hotels, casinos and other high-end locations globally. We opened our first restaurant in January 2004 in New York City and as of August 15, 2016, we owned and operated (under lease agreements) 13 and managed (under management agreements) 17 restaurants and lounges globally, including 12 STKs in major metropolitan cities in the United States and Europe (of which eight are owned and four managed). In addition, we provide F&B services in six hotels and casinos, one of which is under a lease agreement and five of which are under separate management agreements. We generate management and incentive fee revenue from those restaurants and lounges that we manage on behalf of our F&B hospitality clients. Unaudited interim financial information: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any other interim period or other future year. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes for the fiscal year ended December 31, 2015 included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2016. |
Recent accounting pronouncements |
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Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Recent accounting pronouncements | Recent accounting pronouncements: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). ASU 2014-09 addresses the reporting of revenue by most entities and will replace most existing revenue recognition guidance in GAAP when it becomes effective. This update is effective in fiscal periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016. The impact on our financial statements of adopting ASU 2014-09 is currently being assessed by management and management will make its determination of the impact in fiscal 2017. In August 2014, the FASB issued ASU No. 2014-15 “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The impact on our financial statements of adopting ASU 2014-15 is currently being assessed by management. In February 2015, the FASB issued ASC 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The impact on our financial statements of adopting ASU 2015-02 is currently being assessed by management. In April 2015, the FASB issued ASU 2015-03, “Interest- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update is effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. This standard is subsequently updated by ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which codifies an SEC staff announcement relative to debt issuance costs for line-of-credit arrangements. The Company does not expect these updates to have a significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory." The update states that inventory should be measured at the lower of cost and “net realizable value.” Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The amendment is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. The Company does not expect this standard to have a significant impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, "Income taxes - Balance Sheet Classification of Deferred Taxes (Subtopic 740)." This ASU requires all deferred tax assets and liabilities to be classified as non-current in the statement of financial position. The provisions of ASU 2015-17 are effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company has elected, as permitted by the standard, to early adopt ASU 2015-17 as of December 31, 2015. The adoption did not have a material effect on the consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)." ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The provisions of ASU 2016-01 are effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. In February 2016, the FASB ASU 2016-02 "Leases (Topic 842)." ASU 2016-02 will require an entity to recognize assets and liabilities arising from a lease. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend primarily on its classification as a finance or operating lease. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. The provisions of ASU 2016-02 are effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and includes an option for entities to early adopt. The guidance requires a retrospective cumulative adjustment to retained earnings in the period of initial adoption. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This standard simplifies several aspects of the accounting for employee share-based payment transactions including the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. The transition method is either prospective, retrospective or modified retrospective, depending on the area covered in this update. The Company is still in the process of analyzing the effects of this new standard to determine the impact on the Company's consolidated financial position, results of operations, cash flows, and related disclosures. In April 2016, the FASB issued ASC 2016-10, “Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing.” These amendments clarify the identification of performance obligations and the licensing implementation guidance. These amendments affect the guidance in ASU 2014-09, which is not yet effective. The effective date and transition requirements for ASU 2016-10 are the same as the effective date and transition requirements of ASU 2014-09, as updated by ASU 2015-14. The impact on our financial statements of adopting ASU 2016-10 is currently being assessed by management and management will make its determination of the impact in fiscal 2017. |
Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory: Inventory consisted of the following:
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Other current assets |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other current assets | Other current assets: Other current assets consisted of the following:
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Property and equipment, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net: Property and equipment, net consisted of the following:
Depreciation and amortization related to property and equipment included in continuing operations amounted to $547,438 and $569,637 in the three months ended June 30, 2016 and 2015, respectively, and $1,070,077 and $989,760 in the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2016, the Company wrote off fully depreciated furniture, fixtures and equipment and leasehold improvements of approximately $670,000 and $1.6 million, respectively, and corresponding accumulated depreciation. |
Accrued expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses | Accrued expenses: Accrued expenses consisted of the following:
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Long term debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long term debt | Long term debt: Long term debt consisted of the following:
On December 17, 2014, the Company entered into a Term Loan Agreement with BankUnited, N.A. in the amount of $7,475,000 maturing December 1, 2019 (the "Term Loan Agreement"). The Term Loan Agreement replaced the existing credit agreement which was terminated and the aggregate principal amount of the existing loans outstanding of $6,395,071 was converted into the Term Loan Agreement. Commencing on January 1, 2015, the Company made the first of sixty (60) consecutive monthly installments of $124,583 plus interest that accrues at an annual rate of 5.0%. Our obligations under the Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Term Loan Agreement at June 30, 2016 and December 31, 2015 was $5,232,500 and $5,980,000, respectively. On June 2, 2015, the Company entered into a second term loan agreement (the "Second Term Loan Agreement") with BankUnited, N.A., wherein BankUnited, N.A. agreed to make multiple advances to the Company in the aggregate principal amount of up to $6,000,000. On April 1, 2016 the Company commenced payment of fifty-four (54) consecutive equal monthly installments, with each such installment to be in the principal amount of $111,111 or such lesser amount as shall be equal to the quotient of (x) the outstanding principal amount of all advances on June 30, 2016, divided by (y) fifty-four (54); provided, however, that the final principal installment shall be in an amount equal to the aggregate principal amount of all advances outstanding on September 1, 2020, or such earlier date on which all outstanding advances shall become due and payable, whether by acceleration or otherwise. This second term loan bears interest at a rate per annum equal to 5.0%. Our obligations under the Second Term Loan Agreement are secured by substantially all of our assets. The outstanding balance under the Second Term Loan Agreement at June 30, 2016 and December 31, 2015 was $5,666,667 and $6,000,000, respectively. The Term Loan Agreement and the Second Term Loan Agreement contain certain affirmative and negative covenants, including negative covenants that limit or restrict, among other things, liens and encumbrances, indebtedness, mergers, asset sales, investments, assumptions and guaranties of indebtedness of other persons, change in nature of operations, changes in fiscal year and other matters customarily restricted in such agreements. The financial covenants contained in these agreements require the borrowers to maintain a certain adjusted tangible net worth and a debt service coverage ratio. The Company was in compliance with all of its financial covenants under the Term Loan Agreement and Second Term Loan Agreement as of June 30, 2016 and the Company believes based on current projections that the Company will continue to comply with such covenants through the remainder of 2016. On June 5, 2015, the Company entered into a $1,000,000 Equipment Finance Agreement (the "Agreement") with Sterling National Bank. The Agreement covers certain equipment in our STKs that are under construction in Orlando and Chicago. At June 30, 2016, a deposit of $840,364 had been made on the equipment with the remainder to be financed once the equipment has been installed. This Agreement bears interest at a rate per annum equal to 5.0%. Our obligations under the Agreement are secured by the equipment purchased with proceeds of the Agreement. The Agreement calls for sixty (60) monthly payments of $19,686 including interest commencing July 1, 2015. On June 27, 2016 the Company entered into a $1,000,000 Loan Agreement with 2235570 Ontario Limited (the "Noteholder") though an unsecured promissory note (the "Note"). In consideration of the loan amount, the Noteholder received a warrant (the "Warrant") to purchase 100,000 shares of common stock of the Company at an exercise price of $2.61. The Warrant is exercisable at any time through June 27, 2026, in whole or in part. The Note bears interest at a rate of 10% per annum, payable quarterly commencing on September 30, 2016. The entire balance of the Note is due on its maturity date of June 27, 2021. The fair value of the warrant of $125,000 is treated as a reduction of the principal balance of the Note and is amortized in interest expense over the term of the Note. The Company used the Black-Scholes option pricing model to calculate the fair value of the warrant as of the grant date. Interest paid amounted to $155,945 and $89,164 for the three months ended June 30, 2016 and 2015, respectively, and $330,959 and $157,252 for the six months ended June 30, 2016 and 2015, respectively. Capitalized interest amounted to $62,310 and $89,164 for the three months ended June 30, 2016 and 2015, respectively, and $212,236 and $157,252 for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, the issued letters of credit in the total amount of approximately $1.5 million for our STK locations in Orlando, Florida, Chicago, Illinois and Westwood, California remain outstanding for security deposits. |
Nonconsolidated variable interest entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonconsolidated variable interest entities | Nonconsolidated variable interest entities: GAAP provides a framework for identifying variable interest entities (VIEs) and determining when a company should include the assets, liabilities, noncontrolling interests, and results of activities of a VIE in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited-liability corporation, trust, or any other legal structure used to conduct activities or hold assets that (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to direct the activities of the entity that most significantly impact its economic performance, or (3) has a group of equity owners that do not have the obligation to absorb losses of the entity or the right to receive returns of the entity. A VIE should be consolidated if a party with an ownership, contractual, or other financial interest in the VIE that is considered a variable interest (a variable interest holder) has the power to direct the VIE’s most significant activities and the obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities, and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. At June 30, 2016 and December 31, 2015, the Company held investments that were evaluated against the criteria for consolidation and determined that it is not the primary beneficiary of the investments because the Company lacks the power to direct the activities of the VIEs that most significantly impact their economic performance. Therefore, consolidation in the Company’s financial statements is not required. At June 30, 2016 and December 31, 2015, the Company held the following equity investments:
Bagatelle Investors is a holding company that has interests in two operating restaurant companies, Bagatelle NY and Bagatelle LA. All three entities were formed in 2011. The Company holds interests in all three entities. The Company holds a 31.24% ownership over Bagatelle Investors as of June 30, 2016 and December 31, 2015. The Company holds a 5.23% direct ownership over Bagatelle NY and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 45.90% for a total effective ownership of 51.13% as of June 30, 2016 and December 31, 2015. The Company holds a 5.23% direct ownership over Bagatelle LA and has indirect ownership through Bagatelle Investors as well as one of its subsidiaries of 38.10% for a total effective ownership of 43.33% as of June 30, 2016 and December 31, 2015. The Company holds a 10% direct ownership over One 29 Park as of June 30, 2016 and December 31, 2015. The Company accounts for its investment in One 29 Park under the equity method since it has ability to exercise significant influence over the entity. During the quarter and year ended June 30, 2016 and December 31, 2015, respectively, the Company provided no explicit or implicit financial or other support to these VIEs that were not previously contractually required. In addition to the amounts presented above, receivables included in due from related parties, net on the balance sheet of $724,410, represent the Company's maximum exposure to loss. |
Related party transactions |
6 Months Ended |
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Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions: Due from related parties consists of amounts related to the Company and its related entities which arose from noninterest bearing cash advances and are expected to be repaid within the next twelve months. As of June 30, 2016 and December 31, 2015, these advances aggregated to a total of $1,234,454 and $1,337,356, respectively. The Company incurred approximately $57,000 and $90,000 for the three months ended June 30, 2016 and 2015, respectively, and $57,000 and $183,750 for the six months ended June 30, 2016 and 2015, respectively, for design services at various restaurants to an entity owned by one of the Company’s shareholders. Included in due from related parties, net at June 30, 2016 and December 31, 2015 is a balance due to this entity of approximately $22,000 and $0, respectively. The Company incurred approximately $128,000 and $118,000 for the three months ended June 30, 2016 and 2015, respectively, and $212,000 and $163,000 for the six months ended June 30, 2016 and 2015, respectively, for legal fees to an entity owned by one of the Company’s shareholders. Included in due from related parties, net at June 30, 2016 and December 31, 2015 is a balance due to this entity of approximately $22,000 and $105,000, respectively. Included in other current assets are construction related deposits paid to this entity amounting to $250,000 as of June 30, 2016 and December 31, 2015. The Company also received rental income for an office space sublease to this entity of $47,000 and $43,000 for the three months ended June 30, 2016 and 2015, respectively, and $93,000 and $72,000, for the six months ended June 30, 2016 and 2015, respectively, and there were no receivables outstanding at June 30, 2016 and December 31, 2015. The Company incurred approximately $603,000 and $1.7 million for the three months ended June 30, 2016 and 2015, respectively, and $2.8 million and $3.2 million for the six months ended June 30, 2016 and 2015, respectively, for construction services to an entity owned by one of the Company’s shareholders. Included in due from related parties, net at June 30, 2016 and December 31, 2015 is a balance due to this entity of approximately $450,000 and $0, respectively. The Chief Executive Officer of the Company is a limited personal guarantor of the leases for the STK Miami Beach premises with respect to certain covenants under the lease relating to construction of the new premises and helping the landlord obtain a new liquor license for the premises in the event of termination of the lease. The Chief Executive Officer is also a limited personal guarantor of the leases for the Bagatelle New York premises with respect to JEC II, LLC’s payment and performance under the lease. Pursuant to its amended and restated operating agreement executed in June 2007, Bridge Hospitality, LLC ("Bridge") is obligated to pay management fees equal to 2% of revenues to a member for the life of the agreement. Bridge ceased operations in 2015. Management fees amounted to $38,875 for the six months ended June 30, 2015. Included in accounts payable at December 31, 2015 are amounts due for management fees of $542. |
Derivative liability |
6 Months Ended |
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Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liability | Derivative liability: On October 16, 2013, the Company, formerly known as Committed Capital Acquisition Corporation ("Committed Capital"), closed a merger transaction (the “Merger”) with The ONE Group, LLC, a privately held Delaware limited liability company (“ONE Group”), pursuant to an Agreement and Plan of Merger, dated as of October 16, 2013 (the “Merger Agreement”), by and among the Company, CCAC Acquisition Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of Committed Capital (“Merger Sub”), ONE Group and Samuel Goldfinger as ONE Group Representative. Pursuant to the Merger Agreement, ONE Group became a wholly-owned subsidiary of Committed Capital through a merger of Merger Sub with and into ONE Group, and the former members of ONE Group received shares of Committed Capital that constituted a majority of the outstanding shares of Committed Capital. The Merger provided for up to an additional $14,100,000 of payments to the former holders of ONE Group membership interests (the "TOG Members") and to a liquidating trust (the "Liquidating Trust") established for the benefit of the TOG Members and the holders of warrants to acquire membership interests of ONE Group based on a formula as described in the Merger Agreement and which is contingent upon the exercise of outstanding Company warrants to purchase 5,750,000 shares of common stock at an exercise price of $5.00 per share (the “Public Warrants”). The Company was required to make any payments on a monthly basis. Additionally, certain ONE Group employees were entitled to receive a contingent sign-on bonus of an aggregate of approximately $900,000 upon the exercise of the Public Warrants. Any Public Warrants that were unexercised were set to expire on the date that is the earlier of (i) February 27, 2016 or (ii) the forty-fifth (45th) day following the date that the Company’s common stock closes at or above $6.25 per share for 20 out of 30 trading days commencing on February 27, 2014. The Company estimated the fair value of the derivative liability at each reporting period based on the period of time between the balance sheet date, the exercise date and the possibility of exercise. The Public Warrants expired on February 27, 2016 and the remaining balance of $100,000 as of December 31, 2015, was written off on that date. |
Commitments and contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies | Commitments and contingencies: Operating leases: The Company is obligated under several operating leases for the restaurants, equipment and office space, expiring in various years through 2031, which provide for minimum annual rentals, escalations, percentage rent, common area expenses or increases in real estate taxes. Future minimum rental commitments under the leases and minimum future rental income per the sublease in five years subsequent to June 30, 2016 and thereafter are as follows:
Rent expense (including percentage rent of $103,657 and $88,058 for the three months ended June 30, 2016 and 2015, respectively, and $187,430 and $167,776 for the six months ended June 30, 2016 and 2015, respectively), included in continuing operations, amounted to $1,302,263 and $1,677,646 for the three months ended June 30, 2016 and 2015, respectively, and $2,758,886 and $2,529,165 for the six months ended June 30, 2016 and 2015, respectively. Rent expense included in continuing operations has been reported in the consolidated statements of operations and comprehensive income (loss) net of rental income of $212,049 and $205,417 for the three months ended June 30, 2016 and 2015, respectively, and $426,235 and $388,498 for the six months ended June 30, 2016 and 2015, respectively, related to subleases with related and unrelated parties which expire through 2025. License and management fees: Pursuant to its amended and restated operating agreement executed in June 2007, Bridge (a consolidated entity) is obligated to pay management fees equal to 2% of revenues to a member for the life of the agreement. Bridge ceased operations in 2015. Management fees amounted to $38,875 for the six months ended June 30, 2015. Included in accounts payable at December 31, 2015 are amounts due for management fees of $542. In January 2010, STK Vegas entered into a management agreement with a third party for a term of 10 years, with two five-year option periods. Under this agreement, STK Vegas shall receive a management fee equal to 5% of gross sales, as defined (“gross sales fee”) plus 20% of net profits prior to the investment breakeven point date and 43% of net profits thereafter (“incentive fee”). In addition, STK Vegas is entitled to receive a development fee equal to $200,000. The Company has elected to receive a credit against a portion of its obligation (estimated at approximately $387,000) to fund the build-out in lieu of receiving the $200,000. Management fees amounted to $1,127,497 and $1,514,042 for the three months ended June 30, 2016 and 2015, respectively, and $2,404,481 and $2,574,035 for the six months ended June 30, 2016 and 2015, respectively. In July 2009, One 29 Park Management (a related party) entered into an agreement with a third party. Under this agreement, One 29 Park Management shall receive a management fee equal to 5% of gross revenues, as defined, from the restaurant, banquets, room service and rooftop sales and 50% of the base beverage fee, as defined, for the life of the management agreement which expires in 2025. Management fees amounted to $138,547 and $164,095 for the three months ended June 30, 2016 and 2015, respectively, and $245,707 and $276,948 for the six months ended June 30, 2016 and 2015, respectively. In July 2010, Hip Hospitality UK entered into a management agreement with a third party to manage and operate the F&B operations in the Hippodrome Casino in London. Under this agreement, Hip Hospitality UK shall receive a management fee equal to 5.5% of total revenue, as defined, as well as an incentive fee if certain conditions are met, for the life of the management agreement which expires in 2022. Management fees amounted to $129,194 and $155,805 for the three months ended June 30, 2016 and 2015, respectively, and $286,346 and $328,417 for the six months ended June 30, 2016 and 2015, respectively. Included in accounts receivable and other assets at June 30, 2016 and December 31, 2015 are amounts due for management fees and reimbursable expenses of $193,403 and $443,989, respectively. In December 2011, TOG Aldwych entered into a management agreement with a third party to operate a restaurant, bar and lounges in the ME Hotel in London. Under this agreement, TOG Aldwych shall receive a management fee equal to 5% of receipts received from F&B operations. In addition, TOG Aldwych is entitled to receive a monthly marketing fee equal to 1.5% of receipts received from F&B operations and an additional fee equal to 65% of net operating profits, as defined, for the life of the management agreement which expires in 2032. Management fees amounted to $308,621 and $327,034 for the three months ended June 30, 2016 and 2015, respectively, and $550,113 and $594,549 for the six months ended June 30, 2016 and 2015, respectively. Included in accounts receivable at June 30, 2016 and December 31, 2015 are amounts due for management fees of $497,837 and $449,874, respectively. In May 2013, CA Aldwych entered into a management agreement with a third party to operate a restaurant in the ME Hotel in London. Under this agreement, CA Aldwych shall receive a management fee equal to 5% of receipts received from F&B operations. In addition, CA Aldwych is entitled to receive a monthly marketing fee equal to 1.5% of receipts received F&B operations. Management fees amounted to $1,962 and $19,905 for the three months ended June 30, 2016 and 2015, respectively, and $20,492 and $40,635 for the six months ended June 30, 2016 and 2015, respectively. Included in accounts receivable at June 30, 2016 and December 31, 2015 are amounts due for management fees of $6,737 and $74,546, respectively. In June 2014, TOG (Milan) S.R.L. entered into a management agreement with Sol Melia Italia S.R.L. to operate a restaurant, rooftop bar and F&B services at the ME Milan Il Duca hotel in Milan, Italy. TOG (Milan) S.R.L. shall receive a management fee equal to 5% of operating revenue, as defined, and an additional fee equal to 65% of net operating revenue, as defined, for the life of the management agreement which expires in 2025, TOG Milan commenced operations in May 2015. In addition, TOG (Milan) S.L.R. is entitled to receive a monthly marketing fee equal to 1.5% of operating revenues. Management fees amounted to $128,507 and $58,084 for the three months ended June 30, 2016 and 2015, respectively, and $214,613 and $58,084 for the six months ended June 30, 2016 and 2015, respectively. Included in accounts receivable and other assets at June 30, 2016 and December 31, 2015 are amounts due for management fees of $215,723 and $116,342, respectively. |
Discontinued operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | Discontinued operations: Management decided to cease operations for the following entities: One Atlantic City (2012), STKOUT Midtown (2013), BBCLV (2013), Heraea (2013), Miami Services (2014) and Tenjune (2014). The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company's consolidated balance sheets as of June 30, 2016 and December 31, 2015:
Summarized operating results related to these entities are included in discontinued operations in the accompanying consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015:
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Litigation |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation: The Company is party to claims in lawsuits incidental to its business. In the opinion of management, the ultimate outcome of such matters, individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial position or results of operations. |
Stockholders' equity |
6 Months Ended |
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Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' equity | Stockholders’ equity: The Company is authorized by its amended and restated certificate of incorporation to issue up to 75,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. As of June 30, 2016 and December 31, 2015, there were 24,989,560 and 24,972,515, outstanding shares of common stock, respectively, and no outstanding shares of preferred stock. As a result of the expiration of the Public Warrants in February 2016, an aggregate of 1,437,500 shares of common stock were forfeited by the Company's initial shareholders that held shares prior to the Company's initial public offering and such shares were canceled. On January 19, 2016, the Company commenced a rights offering (the “Rights Offering”) of non-transferable subscription rights to holders of record of its common stock as of January 15, 2016 to purchase up to 1,454,545 shares of common stock. The Company granted holders of its common stock non-transferable subscription rights to purchase one share of common stock at a subscription price of $2.75 per share. Each holder received one subscription right for each 17.16861 shares of common stock owned on January 15, 2016. Each subscription right entitled its holder to purchase one share of common stock at the subscription price. The Rights Offering which closed on February 9, 2016, generated approximately $4 million in gross proceeds. The Company issued a total of 1,454,545 shares of common stock at $2.75 per share, including 632,582 shares issued to holders upon exercise of their basic subscription rights. The Company received net proceeds of approximately $3.8 million following the deduction of expenses. The Company expects to utilize the net proceeds of the Rights Offering to primarily fund the planned development of future STK restaurants. |
Stock-based compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | Stock-based compensation: In October 2013, the board of directors approved the 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan”) pursuant to which the Company may issue options, warrants, restricted stock or other stock-based awards to directors, officers, key employees and other key individuals performing services for the Company. The 2013 Plan has reserved 4,773,992 shares of common stock for issuance. All awards will be approved by the board of directors or a committee of the board of directors to be established for such purpose. The Company’s outstanding stock options and restricted stock have maximum contractual terms of up to ten years, principally vest on a quarterly basis ratably over five years and are granted at exercise prices equal to the market price of the Company’s common stock on the date of grant. All equity awards immediately vest upon a liquidation or a change in control event. The Company’s outstanding stock options and restricted stock are exercisable into shares of the Company’s common stock. The Company measures the cost of employee services received in exchange for an award of equity instruments, including grants of employee stock options and restricted stock awards, based on the fair value of the award at the date of grant in accordance with the modified prospective method. The Company uses the Black-Scholes model for purposes of determining the fair value of stock options granted and recognizes compensation costs ratably over the requisite service period, net of estimated forfeitures. For restricted stock awards, the grant-date fair value is the quoted market price of the stock. As of June 30, 2016, all 2,626,512 options and 761,250 shares of restricted stock outstanding, respectively, were excluded from the calculation of dilutive earnings per share as their effect would have been anti-dilutive as the exercise price of these grants are above the average market price. For the three months ended June 30, 2016 and 2015, the Company recognized $235,961 and $326,400, respectively, and for the six months ended June 30, 2016 and 2015, the Company recognized $379,928 and $504,400, respectively, of non-cash stock-based compensation expense related to options and restricted stock awards in general and administrative expense in the consolidated statements of operations. As of June 30, 2016, there was approximately $2.3 million of total unrecognized compensation cost related to unvested share-based option compensation grants, which is expected to be amortized over a weighted-average period of 3.9 years. A summary of the status of stock option awards and changes during the six months ended June 30, 2016 are presented below:
The weighted-average grant-date fair value of option awards vested and non-vested during the three months ended June 30, 2016 was $1.38. A summary of the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted in the six months ended June 30, 2016 are presented below:
A summary of the status of restricted stock awards and changes during the six months ended June 30, 2016 are presented below:
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Segment reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment reporting | Segment reporting: The Company operates in three segments: owned STK units ("STKs"), F&B hospitality management agreements ("F&B") and Other concepts ("Other"). We believe STKs, F&B and Other to be our reportable segments as they do not have similar economic or other characteristics to be aggregated into a single reportable segment. Our STKs segment consists of leased restaurant locations and competes in the full service dining industry. Our F&B segment consists of management agreements in which the Company operates the food and beverage services in hotels or casinos and could include an STK, which we refer to as managed STK units. We refer to owned STK units and managed STK units together as “STK units.” These management agreements generate management and incentive fees on net revenue at each location. Our Other segment includes owned non-STK leased locations.
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Geographic information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic information | Geographic information: The following table contains certain financial information by geographic location for the three and six months ended June 30, 2016 and 2015 (the Company's foreign operations are mainly based in the United Kingdom and Italy):
The following table contains certain financial information by geographic location at June 30, 2016 and December 31, 2015:
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Income taxes |
6 Months Ended |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes: In June 2015, the Company made the decision to release the valuation allowance amounting to $7.7 million against its deferred tax assets net of deferred tax liabilities. Recent profitable quarters and projected future pretax income are sources of positive evidence that led the Company to conclude that it is more likely than not that it will realize its net deferred tax assets. We estimate our annual effective income tax rate at the end of each quarterly period. This estimate takes into account the mix of expected income (loss) before income taxes by tax jurisdiction and enacted changes in tax laws. Our quarterly tax provision and quarterly estimate of the annual effective tax rate is subject to significant volatility due to several factors including, but not limited to, having to forecast income (loss) before income taxes by jurisdictions for the full year prior to the completion of the full year, changes in non-deductible expenses, jurisdictional mix of our income, non-recurring and impairment charges, as well as the actual amount of income (loss) before income taxes. For example, the impact of non-deductible expenses on our effective tax rate is greater when income (loss) before income taxes is lower. To the extent there are fluctuations in any of these variables during any given period, the provision for income taxes will vary accordingly. The Company recognized income tax expense of $545,613 for the three months ended June 30, 2016, compared to income tax benefit of $5.9 million for the three months ended June 30, 2015. The Company’s effective tax rate was approximately (60.8)% for the three months ended June 30, 2016, compared to (225.7)% for the three months ended June 30, 2015. The change in the effective tax rate for the three months ended June 30, 2016, compared to the same period in 2015, was due to the actual amount of income before income taxes being low in the three months ended June 30, 2016, changes in the jurisdictional mix of where income was earned or loss was generated and the release of the valuation allowance on the deferred taxes in 2015. The Company recognized income tax expense of $479,662 for the six months ended June 30, 2016, compared to income tax benefit of $6,541,931 for the six months ended June 30, 2015. The Company’s effective tax rate, exclusive of the discrete tax expense or benefit, was approximately (6.6)% for the six months ended June 30, 2016, compared to (43.8)% for the six months ended June 30, 2015. The change in the effective tax rate for the six months ended June 30, 2016, compared to the same period in 2015, was due to the actual amount of income before income taxes being low in the six months ended June 30, 2016, the changes in the jurisdictional mix of where income was earned or loss was generated and the release of the valuation allowance on the deferred taxes in 2015. |
Subsequent events |
6 Months Ended |
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Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events: On August 11, 2016, the Company entered into a $3,000,000 loan agreement (the “Loan Agreement”) with Anson Investments Master Fund LP (the “Investor”) through an unsecured promissory note (the “Note”). In consideration of the loan amount the Company also issued to the Investor a Common Stock Purchase Warrant (the “Warrant”) to purchase 300,000 shares of the Company’s common stock at an exercise price of $2.61 per share. The Warrant is exercisable at any time through August 11, 2026, in whole or in part. The Warrant contains limitations that prevent the Investor from acquiring shares of the Company’s common stock upon exercise of the Warrant that would result in the number of shares beneficially owned by it and its affiliates exceeding 4.99%, or 9.99% upon notice to the Company, of the total number of shares of the Company’s common stock then issued and outstanding. The Note bears interest at a rate of 10% per annum, payable quarterly commencing September 30, 2016. The entire balance of the Note is due on its maturity date of August 11, 2021. On August 11, 2016 the Company announced the opening of its second STK restaurant in Miami, Florida, in the new ME Miami hotel. The Company began operating food and beverage services at the hotel in July 2016. On July 19, 2016, the Company announced the opening of STK Ibiza, in Ibiza, Spain. The Company received an upfront license fee of $1.1 million in December 2015 to develop the restaurant. The license fee will be recognized over the 10 year life of the license agreement. The Company will also receive a royalty based on a percentage of the restaurant's revenue. |
Business and basis of presentation (Policies) |
6 Months Ended |
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Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of consolidation | Principles of consolidation: The accompanying consolidated financial statements of The ONE Group Hospitality, Inc. and its subsidiaries include the accounts of The ONE Group, LLC ("ONE Group") and its subsidiaries, Little West 12th LLC (“Little West 12th” ), One-LA, L.P. (“One LA”), Bridge Hospitality, LLC (“Bridge”), STK-LA, LLC (“STK-LA”), WSATOG (Miami), LLC (“WSATOG”), STK Miami Service, LLC (“Miami Services”), STK Miami, LLC (“STK Miami Beach”), Basement Manager, LLC (“Basement Manager”), JEC II, LLC (“JEC II”), One Marks, LLC (“One Marks”), MPD Space Events LLC (“MPD”), One 29 Park Management, LLC (“One 29 Park Management”), STK Midtown Holdings, LLC (“Midtown Holdings”), STK Midtown, LLC (“STK Midtown”), STKOUT Midtown, LLC (“STKOUT Midtown”), STK Atlanta, LLC (“STK Atlanta”), STK-Las Vegas, LLC (“STK Vegas”), Asellina Marks LLC (“Asellina Marks”), Heraea Vegas, LLC (“Heraea”), Xi Shi Las Vegas, LLC (“Xi Shi Las Vegas”), T.O.G. (UK) Limited (“TOG UK”), Hip Hospitality Limited (“Hip Hospitality UK”), T.O.G. (Aldwych) Limited (“TOG Aldwych”), CA Aldwych Limited (“CA Aldwych"), T.O.G. (Milan) S.r.l. ("TOG Milan"), BBCLV, LLC (“BBCLV”), STK DC, LLC (“STK DC”), STK Orlando, LLC ("STK Orlando"), STK Chicago, LLC ("STK Chicago"), TOG Biscayne, LLC ("TOG Biscayne"), STK Westwood, LLC ("STK Westwood"), STK Denver, LLC ("STK Denver"), STK Texas Holdings, LLC ("Texas Holdings"), STK Texas Holdings II, LLC ("Texas Holdings II"), STK Dallas, LLC ("STK Dallas"), STK Austin, LLC ("STK Austin"), STK San Diego, LLC ("STK San Diego"), STK Rooftop San Diego, LLC ("STK Rooftop San Diego"), 9401415 Canada Ltd. ("STK Toronto"), STK (Edinburgh) Limited ("STK Edinburgh"), STK Ibiza, LLC ("STK Ibiza"), Seaport Rebel Restaurant LLC ("STK Boston") and The ONE Group - STKPR, LLC ("STK Puerto Rico"). The entities are collectively referred to herein as the “Company” and are consolidated on the basis of common ownership and control. All significant intercompany balances and transactions have been eliminated in consolidation. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic net income (loss) per common share is based upon the weighted-average common shares outstanding during the period. Diluted net income (loss) per common share reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock. At June 30, 2016, there are 3,487,762 securities that can potentially dilute basic EPS in the future (including stock issuable under contingent stock agreements). These securities were not included in the computation of diluted EPS because they would have had an antidilutive effect on EPS for the periods presented. |
Fair value measurements | Fair value measurements The carrying amounts of cash, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The carrying value of the long term debt approximates its fair value since the components of long term debt have been recently negotiated. |
Reclassifications | Reclassifications: Certain prior year amounts have been reclassified to conform to current year presentation in the consolidated financial statements. |
Nature of business | Nature of business: The Company is a global hospitality company that develops, owns and operates upscale, high-energy restaurants and lounges and provides turn-key food and beverage ("F&B") services for hospitality venues including hotels, casinos and other high-end locations globally. We opened our first restaurant in January 2004 in New York City and as of August 15, 2016, we owned and operated (under lease agreements) 13 and managed (under management agreements) 17 restaurants and lounges globally, including 12 STKs in major metropolitan cities in the United States and Europe (of which eight are owned and four managed). In addition, we provide F&B services in six hotels and casinos, one of which is under a lease agreement and five of which are under separate management agreements. We generate management and incentive fee revenue from those restaurants and lounges that we manage on behalf of our F&B hospitality clients. |
Unaudited interim financial information | Unaudited interim financial information: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by GAAP for complete financial statements. Operating results for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or for any other interim period or other future year. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes for the fiscal year ended December 31, 2015 included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2016. |
Recent accounting pronouncements | Recent accounting pronouncements: In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). ASU 2014-09 addresses the reporting of revenue by most entities and will replace most existing revenue recognition guidance in GAAP when it becomes effective. This update is effective in fiscal periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016. The impact on our financial statements of adopting ASU 2014-09 is currently being assessed by management and management will make its determination of the impact in fiscal 2017. In August 2014, the FASB issued ASU No. 2014-15 “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern. The update is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The impact on our financial statements of adopting ASU 2014-15 is currently being assessed by management. In February 2015, the FASB issued ASC 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The impact on our financial statements of adopting ASU 2015-02 is currently being assessed by management. In April 2015, the FASB issued ASU 2015-03, “Interest- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update is effective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. Early adoption is permitted. This standard is subsequently updated by ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which codifies an SEC staff announcement relative to debt issuance costs for line-of-credit arrangements. The Company does not expect these updates to have a significant impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory." The update states that inventory should be measured at the lower of cost and “net realizable value.” Net realizable value is defined as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” ASU 2015-11 eliminates the guidance that entities consider replacement cost or net realizable value less an approximately normal profit margin in the subsequent measurement of inventory when cost is determined on a first-in, first-out or average cost basis. The amendment is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. The Company does not expect this standard to have a significant impact on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, "Income taxes - Balance Sheet Classification of Deferred Taxes (Subtopic 740)." This ASU requires all deferred tax assets and liabilities to be classified as non-current in the statement of financial position. The provisions of ASU 2015-17 are effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period. The Company has elected, as permitted by the standard, to early adopt ASU 2015-17 as of December 31, 2015. The adoption did not have a material effect on the consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)." ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments and requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The provisions of ASU 2016-01 are effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. In February 2016, the FASB ASU 2016-02 "Leases (Topic 842)." ASU 2016-02 will require an entity to recognize assets and liabilities arising from a lease. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease will depend primarily on its classification as a finance or operating lease. The guidance also requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. The provisions of ASU 2016-02 are effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and includes an option for entities to early adopt. The guidance requires a retrospective cumulative adjustment to retained earnings in the period of initial adoption. The Company is currently evaluating the impact that the standard will have on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This standard simplifies several aspects of the accounting for employee share-based payment transactions including the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification, and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. The transition method is either prospective, retrospective or modified retrospective, depending on the area covered in this update. The Company is still in the process of analyzing the effects of this new standard to determine the impact on the Company's consolidated financial position, results of operations, cash flows, and related disclosures. In April 2016, the FASB issued ASC 2016-10, “Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing.” These amendments clarify the identification of performance obligations and the licensing implementation guidance. These amendments affect the guidance in ASU 2014-09, which is not yet effective. The effective date and transition requirements for ASU 2016-10 are the same as the effective date and transition requirements of ASU 2014-09, as updated by ASU 2015-14. The impact on our financial statements of adopting ASU 2016-10 is currently being assessed by management and management will make its determination of the impact in fiscal 2017. |
Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventory consisted of the following:
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Other current assets (Tables) |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Assets | Other current assets consisted of the following:
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Property and equipment, net (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment, net consisted of the following:
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Accrued expenses (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses | Accrued expenses consisted of the following:
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Long term debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long Term Debt | Long term debt consisted of the following:
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Schedule of Maturities of Long-term Debt |
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Nonconsolidated variable interest entities (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Investments | At June 30, 2016 and December 31, 2015, the Company held the following equity investments:
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Commitments and contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Commitments and Minimum Future Rental Income | Future minimum rental commitments under the leases and minimum future rental income per the sublease in five years subsequent to June 30, 2016 and thereafter are as follows:
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Discontinued operations (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Information about Discontinued Operations | The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company's consolidated balance sheets as of June 30, 2016 and December 31, 2015:
Summarized operating results related to these entities are included in discontinued operations in the accompanying consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2016 and 2015:
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Stock-based compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Status of Stock Option Awards | A summary of the status of stock option awards and changes during the six months ended June 30, 2016 are presented below:
A summary of the status of restricted stock awards and changes during the six months ended June 30, 2016 are presented below:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | A summary of the weighted-average assumptions utilized in the Black-Scholes option-pricing model to value the stock options granted in the six months ended June 30, 2016 are presented below:
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Segment reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information |
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Geographic information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information by Geographic Location | The following table contains certain financial information by geographic location for the three and six months ended June 30, 2016 and 2015 (the Company's foreign operations are mainly based in the United Kingdom and Italy):
The following table contains certain financial information by geographic location at June 30, 2016 and December 31, 2015:
|
Inventory (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Inventory [Line Items] | ||
Inventory | $ 1,144,729 | $ 1,152,119 |
Food | ||
Inventory [Line Items] | ||
Inventory | 203,596 | 208,452 |
Beverages | ||
Inventory [Line Items] | ||
Inventory | $ 941,133 | $ 943,667 |
Other current assets (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid taxes | $ 1,283,786 | $ 706,650 |
Landlord receivable | 678,604 | 1,476,502 |
Prepaid expenses | 763,966 | 1,171,488 |
Other | 73,216 | 204,413 |
Totals | $ 2,799,572 | $ 3,559,053 |
Accrued expenses (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Payables and Accruals [Abstract] | ||
Sales tax payable | $ 1,141,212 | $ 1,045,195 |
Payroll and related | 1,678,247 | 661,761 |
Due to hotels | 963,916 | 1,396,776 |
Income taxes payable | 880,172 | 0 |
Legal | 0 | 947,054 |
Other | 773,171 | 584,798 |
Totals | $ 5,436,718 | $ 4,635,584 |
Long term debt - Schedule of Debt and Maturities (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Total long term debt | $ 12,614,531 | $ 12,636,763 |
Less: Current portion of Long Term Debt | 3,026,324 | 2,680,116 |
Long Term Debt, net of Current Portion | 9,588,207 | 9,956,647 |
Future minimum loan payments: | ||
2016 | 1,505,893 | |
2017 | 3,022,920 | |
2018 | 3,032,876 | |
2019 | 3,043,342 | |
2020 | 1,134,500 | |
Thereafter | 875,000 | |
Total long term debt | 12,614,531 | 12,636,763 |
Medium-term Notes | Term Loan Agreements | ||
Debt Instrument [Line Items] | ||
Total long term debt | 10,899,167 | 11,980,000 |
Future minimum loan payments: | ||
Total long term debt | 10,899,167 | 11,980,000 |
Construction Loans | Equipment Financing Agreement | ||
Debt Instrument [Line Items] | ||
Total long term debt | 840,364 | 656,763 |
Future minimum loan payments: | ||
Total long term debt | 840,364 | $ 656,763 |
Unsecured Debt | Promissory note, net | ||
Debt Instrument [Line Items] | ||
Total long term debt | 875,000 | |
Future minimum loan payments: | ||
Total long term debt | $ 875,000 |
Nonconsolidated variable interest entities - Information of Equity Investments (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | $ 3,039,699 | $ 3,039,699 | $ 2,910,362 | ||
Equity in income of investee companies | 231,203 | $ 354,261 | 313,788 | $ 523,231 | |
Bagatelle NY LA Investors, LLC (Bagatelle Investors) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | 2,154 | 2,154 | 7,364 | ||
Bagatelle Little West 12th, LLC ( Bagatelle NY) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | 2,492,474 | 2,492,474 | 2,357,927 | ||
Bagatelle La Cienega, LLC (Bagatelle LA) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | 0 | 0 | 0 | ||
One 29 Park, LLC (One 29 Park) | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | $ 545,071 | $ 545,071 | $ 545,071 |
Derivative liability (Details) - The One Group - USD ($) |
12 Months Ended | |
---|---|---|
Oct. 16, 2013 |
Dec. 31, 2015 |
|
Fair Value Measurements [Line Items] | ||
Additional payments to TOG Members | $ 14,100,000 | |
Shares required for additional payments to TOG Members (in shares) | 5,750,000 | |
Exercise price of warrants (in dollars per share) | $ 5.00 | |
Aggregate contingent sign-on bonus | $ 900,000 | |
Minimum price per share per agreement (in dollars per share) | $ 6.25 | |
Threshold number of days above minimum stock price during measurement period | 20 days | |
Number of days in measurement period | 30 days | |
Write off of Expired Public Warrants | $ 100,000 |
Commitments and contingencies - Operating Leases (Details) - Operating Leases - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Expense | ||||
2016 | $ 4,215,293 | $ 4,215,293 | ||
2017 | 7,448,494 | 7,448,494 | ||
2018 | 7,518,230 | 7,518,230 | ||
2019 | 7,576,312 | 7,576,312 | ||
2020 | 7,815,884 | 7,815,884 | ||
Thereafter | 96,023,115 | 96,023,115 | ||
Total | 130,597,328 | 130,597,328 | ||
Income | ||||
2016 | (482,916) | (482,916) | ||
2017 | (691,015) | (691,015) | ||
2018 | (690,980) | (690,980) | ||
2019 | (706,235) | (706,235) | ||
2020 | (675,768) | (675,768) | ||
Thereafter | (121,656) | (121,656) | ||
Total | (3,368,570) | (3,368,570) | ||
Net Amount | ||||
2016 | 3,732,377 | 3,732,377 | ||
2017 | 6,757,479 | 6,757,479 | ||
2018 | 6,827,250 | 6,827,250 | ||
2019 | 6,870,077 | 6,870,077 | ||
2020 | 7,140,116 | 7,140,116 | ||
Thereafter | 95,901,459 | 95,901,459 | ||
Total | 127,228,758 | 127,228,758 | ||
Percentage rent | 103,657 | $ 88,058 | 187,430 | $ 167,776 |
Rent expense | 1,302,263 | 1,677,646 | 2,758,886 | 2,529,165 |
Rental income related to subleases | $ 212,049 | $ 205,417 | $ 426,235 | $ 388,498 |
Stock-based compensation - Valuation Assumptions (Details) - Employee Stock Option - $ / shares |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 37.00% | |
Risk-free rate of return | 1.16% | |
Expected life (in years) | 6 years 6 months 2 days | |
Dividend yield | 0.00% | |
Weighted-average fair value per share at date of grant (in dollars per share) | $ 1.38 | $ 1.07 |
Geographic information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | $ 15,282,704 | $ 12,778,925 | $ 29,662,634 | $ 22,504,226 | |
Management, incentive and royalty fee revenue | 1,943,952 | 2,121,977 | 3,958,003 | 4,173,253 | |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | 15,282,704 | 12,778,925 | 29,662,634 | 22,504,226 | |
Management, incentive and royalty fee revenue | 1,338,349 | 1,496,474 | 2,794,167 | 3,000,548 | |
Net assets | 18,247,819 | 18,247,819 | $ 15,167,639 | ||
Foreign | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues - owned units | 0 | 0 | 0 | 0 | |
Management, incentive and royalty fee revenue | 605,603 | $ 625,503 | 1,163,836 | $ 1,172,705 | |
Net assets | $ 3,642,211 | $ 3,642,211 | $ 4,437,332 |
Income taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 13 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
|
Income Tax Disclosure [Abstract] | |||||
Release of valuation allowance | $ 7,700,000 | ||||
Provision (benefit) for income taxes | $ 545,613 | $ (5,931,436) | $ 479,662 | $ (6,541,931) | |
Effective income tax rate | (60.80%) | (225.70%) | (6.60%) | (43.80%) |
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