1265572--3/16/2007--KONA_GRILL

related topics

{acquisition, growth, future}

{competitive, industry, competition}

{financial, litigation, operation}

{stock, price, operating}

{stock, price, share}

{control, financial, internal}

{cost, contract, operation}

{cost, regulation, environmental}

{condition, economic, financial}

{cost, operation, labor}

{operation, natural, condition}

{loan, real, estate}

{customer, product, revenue}

{product, market, service}

We have a history of losses and we may never achieve profitability. Our future operating results may fluctuate significantly due to our limited number of existing restaurants and the expenses required to open new restaurants. Our growth may strain our infrastructure and resources, which could slow our development of new restaurants and adversely affect our ability to manage our existing restaurants. If we do not successfully expand our restaurant operations, our growth and results of operations could be harmed significantly. Unexpected expenses and low market acceptance of our restaurant concept could adversely affect the profitability of restaurants that we open in new markets. Our restaurants are subject to natural disasters and other events which are beyond our control and for which we may not be able to obtain insurance at reasonable rates. Our expansion in existing markets may cause sales in some of our existing restaurants to decline. If our distributors or suppliers do not provide food and beverages to us in a timely fashion, we may experience short-term supply shortages and increased food and beverage costs. Our failure to protect our trademarks, service marks, or trade secrets could negatively affect our competitive position and the value of the Kona Grill brand. We may require additional capital in the future as a result of changes in our restaurant operations or growth plans, and our inability to raise such capital could harm our operations and restrict our growth. The successful management of our restaurant operations and growth may suffer because our senior management team has a limited history of working together. Risks Related To The Restaurant Industry Negative publicity surrounding our restaurants or the consumption of beef, seafood, poultry, or produce generally, or shifts in consumer tastes, could negatively impact the popularity of our restaurants, our sales, and our results of operations. Increases in the prices of, or reductions in the availability of, seafood, poultry, beef, or produce could reduce our operating margins and adversely affect our operating results. A decline in visitors to any of the retail centers, shopping malls, or entertainment centers where our restaurants are located could negatively affect our restaurant sales. Regulations affecting the operation of our restaurants could increase our operating costs and restrict our growth. Litigation concerning our food quality, our employment practices, liquor liability, and other issues could result in significant expenses to us and could divert resources from our operations. Labor shortages or increases in labor costs could slow our growth or adversely affect our results of operations. If general economic and political conditions deteriorate, consumer spending may decline, which would adversely affect our sales and results of operations. Risks Related To Ownership Of Our Common Stock The market price for our common stock may be volatile. Our current principal stockholders own a large percentage of our voting stock, which allows them to control substantially all matters requiring stockholder approval. The large number of shares eligible for public sale could depress the market price of our common stock. We have incurred increased costs as a result of being a public company, which may divert management attention from our business and impair our financial results. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our ability to produce accurate financial statements and on our stock price.

Full 10-K form ▸

1265572--3/16/2007--KONA_GRILL_INC