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Non-Tech : Kona Grill Restaurants -- Ignore unavailable to you. Want to Upgrade?

To: Tom Caruthers who wrote (16)	11/3/2005 11:19:36 PM
From: Tom Caruthers	Read Replies (1) \| Respond to of 62

Listening to the conf call. Plan to double restaurants by 2007 (perhaps a bit more) New restaurants doing well. Sugarland soft, but expected. New mall expansion in Sugarland area in 2006 will drive traffic. Cost of sales, labor, etc at established restaurants older than 12 months tend to track with revenues New restaurants take 3 months to operate efficiently and results can be lumpy. After 2006, expect G&A costs to decrease compared to revenue as achieve economies of scale. May face some margin pressure for food transportation costs if fuel costs rise again. Improving restaurant operating margin - one of the highest in industry. Construction costs have risen 20% and will remain high. Bulk of pre-opening costs of Sugarland and San Antonio were expensed in the quarter. Last year, was expensed in the previous quarter. $400k restaurant pre-opening expense (an increase of $100k non-cash charge due to an accounting change) Net cash was $2.2M from operations in past quarter. Has $27.4M in cash. Full 36-37M for 2005. Net loss of $400k-$700K or $0.13-0.23 per share. Could breakeven in Q4 or loss of $300k. 9.6-10.6M in rev Next year, 53-55M and net loss of $1.5-2M This includes $500K in non-cash charges for pre-opening expenses Expect to be GAAP profitable in fiscal 2007. In terms of expansion: No planned franchisees. Already have 4 locations (2 leases signed, 2 in process), and LOI for 5th. New markets (two in Chicago, one in Dallas and another in Naples) and existing markets (Houston: reduce pre-opening expenses). First unit will open in April (est) in Dallas. Expect $4.5M in 12 months from open of new restaurant. Expect return on cash of 35% and think can exceed this return. Strategy: Open restaurants in high profile sites with office/retail and entertainment centers. 2.5% of restaurant sales on marketing.