##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended March 31, 2010
 or
 o
    
    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 001-34082
 
 Kona Grill, Inc.
 (Exact Name of Registrant as Specified in Its Charter)
 Delaware
    
    20-0216690(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 7150 East Camelback Road, Suite 220
Scottsdale, Arizona 85251
(480) 922-8100  (Address, including zip code, and telephone number, including area code, of principal executive offices)
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



KONA GRILL, INC
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial StatementsConsolidated Balance Sheets as of March 31, 2010 (Unaudited) and December 31, 2009
    
    
    2Unaudited Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009
    
    
    3Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. (Removed and Reserved)
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    22Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements
 KONA GRILL, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share data)
 March 31,
    
    
    December 31,2010
    
    
    2009(Unaudited)
    
    
    (Note 1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,422
    
    
    $
    2,404Investments
    
    
    6,285
    
    
    
    6,282Receivables
    
    
    294
    
    
    
    308Other current assets
    
    
    919
    
    
    
    1,111Total current assets
    
    
    9,920
    
    
    
    10,105Other assets
    
    
    658
    
    
    
    668Property and equipment, net
    
    
    37,854
    
    
    
    39,190Total assets
    
    $
    48,432
    
    
    $
    49,963LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,249
    
    
    $
    2,922Accrued expenses
    
    
    6,115
    
    
    
    5,753Current portion of notes payable
    
    
    653
    
    
    
    684Line of credit
    
    
    5,798
    
    
    
    5,800Total current liabilities
    
    
    14,815
    
    
    
    15,159Notes payable
    
    
    479
    
    
    
    636Deferred rent
    
    
    15,925
    
    
    
    16,185Total liabilities
    
    
    31,219
    
    
    
    31,980Commitments and contingencies (Note 9)Stockholders equity:Preferred stock, $0.01 par value, 2,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 15,000,000 shares authorized, 9,278,624 shares
issued and 9,162,424 shares outstanding at March 31, 2010 and 9,262,895 shares
issued and 9,146,695 shares outstanding at December 31, 2009
    
    
    93
    
    
    
    93Additional paid-in capital
    
    
    57,786
    
    
    
    57,649Accumulated deficit
    
    
    (39,666
    )
    
    
    (38,759
    )Treasury stock, at cost, 116,200 shares at March 31, 2010 and December 31, 2009
    
    
    (1,000
    )
    
    
    (1,000
    )Total stockholders equity
    
    
    17,213
    
    
    
    17,983Total liabilities and stockholders equity
    
    $
    48,432
    
    
    $
    49,963
   2




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##### Table of Contents



KONA GRILL, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 Three Months Ended March 31,2010
    
    
    2009Restaurant sales
    
    $
    21,052
    
    
    $
    19,455Costs and expenses:Cost of sales
    
    
    5,575
    
    
    
    5,097Labor
    
    
    7,583
    
    
    
    6,749Occupancy
    
    
    1,781
    
    
    
    1,520Restaurant operating expenses
    
    
    3,456
    
    
    
    3,030General and administrative
    
    
    2,137
    
    
    
    1,887Preopening expense
    
    
    8
    
    
    
    500Depreciation and amortization
    
    
    1,399
    
    
    
    1,741Total costs and expenses
    
    
    21,939
    
    
    
    20,524Loss from operations
    
    
    (887
    )
    
    
    (1,069
    )Nonoperating income (expense):Interest income and other, net
    
    
    22
    
    
    
    48Interest expense
    
    
    (42
    )
    
    
    (32
    )Loss from continuing operations before provision for income taxes
    
    
    (907
    )
    
    
    (1,053
    )Provision for income taxes
    
    
    
    
    
    
    30Loss from continuing operations
    
    
    (907
    )
    
    
    (1,083
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (13
    )Net loss
    
    $
    (907
    )
    
    $
    (1,096
    )Net loss per sharebasic and diluted (Note 5):Continuing operations
    
    $
    (0.10
    )
    
    $
    (0.14
    )Discontinued operations
    
    
    
    
    
    
    Net loss
    
    $
    (0.10
    )
    
    $
    (0.14
    )Weighted average shares used in computation (Note 5):Basic
    
    
    9,155
    
    
    
    8,016Diluted
    
    
    9,155
    
    
    
    8,016
   3




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##### Table of Contents



KONA GRILL, INC.
 
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months Ended March 31,2010
    
    
    2009Operating activitiesNet loss
    
    $
    (907
    )
    
    $
    (1,096
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    1,399
    
    
    
    1,741Stock-based compensation expense
    
    
    101
    
    
    
    127Amortization of debt discount
    
    
    
    
    
    
    10Change in operating assets and liabilities:Receivables
    
    
    14
    
    
    
    558Other current assets
    
    
    192
    
    
    
    22Accounts payable
    
    
    (108
    )
    
    
    (152
    )Accrued expenses
    
    
    362
    
    
    
    71Deferred rent
    
    
    (260
    )
    
    
    225Net cash provided by operating activities
    
    
    793
    
    
    
    1,506Investing activitiesPurchase of property and equipment
    
    
    (628
    )
    
    
    (4,283
    )Decrease in other assets
    
    
    10
    
    
    
    6Net purchases and sales of investments
    
    
    (3
    )
    
    
    (338
    )Net cash used in investing activities
    
    
    (621
    )
    
    
    (4,615
    )Financing activitiesNet (repayment) borrowings on line of credit
    
    
    (2
    )
    
    
    2,086Proceeds from bridge loan
    
    
    
    
    
    
    1,200Repayments of notes payable
    
    
    (188
    )
    
    
    (174
    )Proceeds from issuance of common stock under the Employee Stock Purchase Plan and exercise
of stock options and warrants
    
    
    36
    
    
    
    13Net cash (used in) provided by financing activities
    
    
    (154
    )
    
    
    3,125Net increase in cash and cash equivalents
    
    
    18
    
    
    
    16Cash and cash equivalents at the beginning of the period
    
    
    2,404
    
    
    
    2,477Cash and cash equivalents at the end of the period
    
    $
    2,422
    
    
    $
    2,493Supplemental disclosure of cash flow informationCash paid for interest, net of capitalization
    
    $
    42
    
    
    $
    32Noncash investing activitiesDecrease in accounts payable related to property and equipment
    
    $
    (565
    )
    
    $
    (693
    )
   4




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##### Table of Contents



KONA GRILL, INC.
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of Presentation
    Recent Accounting Pronouncements
 Fair Value
Measurements and Disclosures
 2. Discontinued Operations
   Balance at December 31, 2009
    
    $
    181Cash payments
    
    
    (90
    )Non-cash activity
    
    
    Balance at March 31, 2010
    
    $
    91
  5




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3. Investments
  GrossAdjusted
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Losses
    
    
    Fair ValueMarch 31, 2010Short-term investments:Certificates of deposit
    
    $
    173
    
    
    $
    
    
    
    $
    173Money market securities
    
    
    314
    
    
    
    
    
    
    
    314Auction rate securities
    
    
    5,468
    
    
    
    
    
    
    
    5,468Put option on auction rate securities
    
    
    330
    
    
    
    
    
    
    
    330Total investments
    
    $
    6,285
    
    
    $
    
    
    
    $
    6,285December 31, 2009Short-term investments:Certificates of deposit
    
    $
    172
    
    
    $
    
    
    
    $
    172Money market securities
    
    
    314
    
    
    
    
    
    
    
    314Auction rate securities
    
    
    5,433
    
    
    
    
    
    
    
    5,433Put option on auction rate securities
    
    
    363
    
    
    
    
    
    
    
    363Total investments
    
    $
    6,282
    
    
    $
    
    
    
    $
    6,282
    6




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##### Table of Contents



4. Fair Value Measurements
  Level 1:
    
    Fair values determined by quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access.Level 2:
    
    Fair values utilize inputs other than quoted prices that are observable for the asset or
liability, and may include quoted prices for similar assets and liabilities in active markets,
and inputs other than quoted prices that are observable for the asset or liability.Level 3:
    
    Fair values determined by unobservable inputs that are not corroborated by market data
and may reflect the reporting entitys own assumptions market participants would use in
pricing the asset or liability.
    Fair Value Measurements at Reporting Date UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsDescription
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    March 31, 2010Certificates of deposit
    
    $
    173
    
    
    $
    
    
    
    $
    
    
    
    $
    173Money market securities
    
    
    314
    
    
    
    
    
    
    
    
    
    
    
    314Auction rate securities
    
    
    
    
    
    
    
    
    
    
    5,468
    
    
    
    5,468Put option on auction rate securities
    
    
    
    
    
    
    
    
    
    
    330
    
    
    
    330$
    487
    
    
    $
    
    
    
    $
    5,798
    
    
    $
    6,285
  7




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##### Table of Contents



Put option onAuction rate
    
    
    auction rateSecurities
    
    
    securitiesBalance at December 31, 2009
    
    $
    5,433
    
    
    $
    363Transfer to Level 3
    
    
    
    
    
    
    Total gains or losses (realized and unrealized)Included in earnings
    
    
    35
    
    
    
    (33
    )Included in other comprehensive loss
    
    
    
    
    
    
    Net settlements
    
    
    
    
    
    
    Balance at March 31, 2010
    
    $
    5,468
    
    
    $
    330
 5. Net Loss Per Share
   Three Months EndedMarch 31,2010
    
    
    2009(In thousands, except per share data)Numerator:Loss from continuing operations
    
    $
    (907
    )
    
    $
    (1,083
    )Loss from discontinued operations
    
    
    
    
    
    
    (13
    )Net loss
    
    $
    (907
    )
    
    $
    (1,096
    )Denominator:Weighted average shares  Basic
    
    
    9,155
    
    
    
    8,016Effect of dilutive stock options and warrants
    
    
    
    
    
    
    Weighted average shares  Diluted
    
    
    9,155
    
    
    
    8,016Basic and diluted net loss per share:Loss from continuing operations
    
    $
    (0.10
    )
    
    $
    (0.14
    )Loss from discontinued operations
    
    
    
    
    
    
    Net loss
    
    $
    (0.10
    )
    
    $
    (0.14
    )
    8




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##### Table of Contents



6. Accrued Expenses
  March 31,
    
    
    December 31,2010
    
    
    2009Accrued payroll
    
    $
    2,279
    
    
    $
    1,875Sales taxes
    
    
    738
    
    
    
    686Business and income taxes
    
    
    700
    
    
    
    739Gift cards
    
    
    685
    
    
    
    859Accrued occupancy
    
    
    205
    
    
    
    192Lease termination accrual
    
    
    91
    
    
    
    181Other
    
    
    1,417
    
    
    
    1,221$
    6,115
    
    
    $
    5,753
 7. Debt and Credit Agreements
 Credit Facility
  Equipment Loans
  8. Stock-Based Compensation
   9




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Three Months EndedMarch 31,2010
    
    
    2009Expected volatility
    
    
    64.3
    %
    
    
    50.2
    %Risk-free interest rate
    
    
    1.7
    %
    
    
    1.7
    %Expected option life (in years)
    
    
    3.7
    
    
    
    4.0Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Weighted average fair value per option granted
    
    $
    1.64
    
    
    $
    0.78
  Shares
    
    
    Weighted
    
    
    Weighted AverageUnder
    
    
    Average
    
    
    Remaining
    
    
    AggregateOption
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    Intrinsic ValueOutstanding options at December 31, 2009
    
    
    854,856
    
    
    $
    7.67Granted
    
    
    223,750
    
    
    
    3.41Forfeited
    
    
    (143,550
    )
    
    
    9.97Exercised
    
    
    (13,750
    )
    
    
    2.10Outstanding options at March 31, 2010
    
    
    921,306
    
    
    $
    6.36
    
    
    3.8 years
    
    $
    467,000Exercisable at March 31, 2010
    
    
    389,235
    
    
    $
    9.25
    
    
    3.0 years
    
    $
    109,000
  9. Commitments and Contingencies
   10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
       11




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Key Measures We Use to Evaluate Our Company
  Number of Restaurant Openings.
 Same-Store Sales Percentage Change.
 Average Weekly Sales.
 Average Unit Volume.
 Sales Per Square Foot.
 Restaurant Operating Profit.
 Key Financial Definitions
 Restaurant Sales.
 Cost of Sales.
 Labor.
  12




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##### Table of Contents



Occupancy.
 Restaurant Operating Expenses.
 General and Administrative.
 Preopening Expense.
 Depreciation and Amortization
 Interest Income and Other, Net.
 Interest Expense.
 Financial Performance Overview
  Three Months Ended March 31,2010
    
    
    2009Restaurant sales growth
    
    
    8.2
    %
    
    
    7.5
    %Same-store sales percentage change (1)
    
    
    (2.5
    )%
    
    
    (9.6
    )%Average weekly sales  comparable restaurant base (2)
    
    $
    70,182
    
    
    $
    71,997Average weekly sales  non-comparable restaurant base (3)
    
    $
    60,650
    
    
    $
    66,331Average unit volume (in thousands) (2)
    
    $
    912
    
    
    $
    954Sales per square foot (2)
    
    $
    129
    
    
    $
    136Restaurant operating profit (in thousands) (4)
    
    $
    2,657
    
    
    $
    3,059Restaurant operating profit as a percentage of sales (4)
    
    
    12.6
    %
    
    
    15.7
    %
 (1)
    
    Same-store sales percentage change reflects the periodic change in restaurant sales for
the comparable restaurant base. In calculating the percentage change for same-store sales,
we include a restaurant in the comparable restaurant base after it has been in operation for
more than 18 months.(2)
    
    Includes only those restaurants in the comparable restaurant base.  13




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(3)
    
    Includes only those restaurants that are not in the comparable restaurant base
that were open for the entire period.(4)
    
    Restaurant operating profit is not a financial measurement determined in accordance with
U.S. generally accepted accounting principles and should not be considered in isolation or as
an alternative to income (loss) from operations. Restaurant operating profit may not be
comparable to the same or similarly titled measures computed by other companies.  Three Months Ended March 31,2010
    
    
    2009(In thousands)Restaurant sales
    
    $
    21,052
    
    
    $
    19,455Costs and expenses:Cost of sales
    
    
    5,575
    
    
    
    5,097Labor
    
    
    7,583
    
    
    
    6,749Occupancy
    
    
    1,781
    
    
    
    1,520Restaurant operating expenses
    
    
    3,456
    
    
    
    3,030Restaurant operating profit
    
    
    2,657
    
    
    
    3,059Deduct  other costs and expensesGeneral and administrative
    
    
    2,137
    
    
    
    1,887Preopening expense
    
    
    8
    
    
    
    500Depreciation and amortization
    
    
    1,399
    
    
    
    1,741Loss from operations
    
    $
    (887
    )
    
    $
    (1,069
    )
 Percentage of Restaurant SalesThree Months Ended March 31,2010
    
    
    2009Restaurant sales
    
    
    100.0
    %
    
    
    100.0
    %Costs and expenses:Cost of sales
    
    
    26.5
    
    
    
    26.2Labor
    
    
    36.0
    
    
    
    34.7Occupancy
    
    
    8.5
    
    
    
    7.8Restaurant operating expenses
    
    
    16.4
    
    
    
    15.6Restaurant operating profit
    
    
    12.6
    
    
    
    15.7Deduct  other costs and expensesGeneral and administrative
    
    
    10.2
    
    
    
    9.7Preopening expense
    
    
    0.0
    
    
    
    2.6Depreciation and amortization
    
    
    6.6
    
    
    
    8.9Loss from operations
    
    
    (4.2
    )%
    
    
    (5.5
    )%
  Three Months Ended
    
    
    Year EndedMarch 31, 2010
    
    
    December 31, 2009Beginning of period
    
    
    24
    
    
    
    20Openings
    
    
    
    
    
    
    4Closings
    
    
    
    
    
    
    End of period
    
    
    24
    
    
    
    24
  14




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Results of Operations
  Three Months Ended March 31,2010
    
    
    2009Restaurant sales
    
    
    100.0
    %
    
    
    100.0
    %Costs and expenses:Cost of sales
    
    
    26.5
    
    
    
    26.2Labor
    
    
    36.0
    
    
    
    34.7Occupancy
    
    
    8.5
    
    
    
    7.8Restaurant operating expenses
    
    
    16.4
    
    
    
    15.6General and administrative
    
    
    10.2
    
    
    
    9.7Preopening expense
    
    
    0.0
    
    
    
    2.6Depreciation and amortization
    
    
    6.6
    
    
    
    8.9Total costs and expenses
    
    
    104.2
    
    
    
    105.5Loss from operations
    
    
    (4.2
    )
    
    
    (5.5
    )Nonoperating income (expense):Interest income and other, net
    
    
    0.1
    
    
    
    0.2Interest expense
    
    
    (0.2
    )
    
    
    (0.2
    )Loss from continuing operations before
provision for income taxes
    
    
    (4.3
    )
    
    
    (5.5
    )Provision for income taxes
    
    
    
    
    
    
    0.1Loss from continuing operations
    
    
    (4.3
    )
    
    
    (5.6
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    Net loss
    
    
    (4.3
    )%
    
    
    (5.6
    )%
 Three Months Ended March 31, 2010 Compared with Three Months Ended March 31, 2009
 Restaurant Sales.
 Cost of Sales
 Labor
  15




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Occupancy
 Restaurant Operating Expenses
 General and Administrative
 Preopening Expense
 Depreciation and Amortization
 Interest Income and Other, Net.
 Interest Expense.
 Provision for Income Taxes
  16




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
    
    timing of new restaurant openings and related expenses;
    
    restaurant operating costs and preopening costs for our newly-opened restaurants, which
are often materially greater during the first several months of operation than thereafter;
    
    labor availability and costs for hourly and management personnel;
    
    profitability of our restaurants, especially in new markets;
    
    increases and decreases in comparable restaurant sales;
    
    impairment of long-lived assets and any loss on restaurant closures;
    
    changes in borrowings and interest rates;
    
    general economic conditions;
    
    weather conditions or natural disasters;
    
    timing of certain holidays;
    
    changes in government regulations;
    
    outside shareholder activities;
    
    settlements, damages and legal costs associated with litigation;
    
    new or revised regulatory requirements and accounting pronouncements;
    
    changes in consumer preferences and competitive conditions; and
    
    fluctuations in commodity prices.
  Liquidity and Capital Resources
   17




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March 31,
    
    
    December 31,2010
    
    
    2009Cash and short-term investments(1)
    
    $
    2,909
    
    
    $
    2,890Net working capital (deficit)(2)
    
    
    (4,895
    )
    
    
    (5,054
    )
 (1)
    
    At March 31, 2010 and December 31, 2009, cash and short-term investments
exclude $5.8 million in auction rate securities that are used as collateral
for the line of credit. Proceeds from the sale of auction rate securities
are used to reduce the outstanding balance on the line of credit.(2)
    
    The working capital deficit at March 31, 2010 and December 31, 2009, is
primarily attributable to accruals for payroll, legal, and professional fees. Three Months Ended March 31,2010
    
    
    2009Cash provided by operating activities
    
    $
    793
    
    
    $
    1,506Capital expenditures
    
    
    628
    
    
    
    4,283
 Future Capital Requirements
   Equipment Loans
  Credit Facility
   18




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Cash Flows
  Three Months Ended March 31,2010
    
    
    2009Net cash provided by (used in):Operating activities
    
    $
    793
    
    
    $
    1,506Investing activities
    
    
    (621
    )
    
    
    (4,615
    )Financing activities
    
    
    (154
    )
    
    
    3,125Net increase in cash and cash equivalents
    
    $
    18
    
    
    $
    16
 Operating Activities.
 Investing Activities.
 Financing Activities.
 Critical Accounting Policies
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   19




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##### Table of Contents



Primary Market Risk Exposures
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
    20




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##### Table of Contents



Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. (Removed and Reserved).
 
 Item 5. Other Information
   21




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Exhibit3.1
    
    
    Amended and Restated Certificate of Incorporation of the Registrant (1)3.3
    
    
    Amended and Restated Bylaws of Kona Grill, Inc., as of October 30, 2007 (3)3.4
    
    
    Certificate of Designations, Preferences, and Rights of Series A Junior Participating
Preferred Stock of Kona Grill, Inc. (4)4.1
    
    
    Form of Common Stock Certificate (2)4.2
    
    
    Kona Grill, Inc. Stockholders Agreement, dated August 29, 2003 (2)4.3
    
    
    Kona Grill, Inc. Series A Investor Rights Agreement, dated August 29, 2003 (2)4.4
    
    
    Amendment No. 1 to Kona Grill, Inc. Series A Investor Rights Agreement, dated May 31, 2005 (2)4.9
    
    
    Form of First Amended and Restated Promissory Note, dated April 7, 2009, among Kona Grill,
Inc. and the investor parties thereto (5)4.10
    
    
    Form of Warrant (6)31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
promulgated under the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a),
promulgated under the Securities Exchange Act of 1934, as amended.32.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Incorporated by reference to Amendment No. 1 to the Registrants Registration
Statement on Form S-1 (Registration No. 333-125506), as filed on July 8, 2005.(2)
    
    Incorporated by reference to Amendment No. 2 to the Registrants Registration Statement
on Form S-1 (Registration No. 333-125506), as filed on July 21, 2005.(3)
    
    Incorporated by reference to the Registrants Form 8-K filed on November 5, 2007.(4)
    
    Incorporated by reference to the Registrants Form 8-K filed on May 28, 2008.(5)
    
    Incorporated by reference to the Registrants Form 8-K filed on April 10, 2009.(6)
    
    Incorporated by reference to the Registrants Form 10-K filed on March 4, 2010.  22




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##### Table of Contents



SIGNATURES
  Kona Grill, Inc./s/ Marc A. Buehler

Marc A. BuehlerPresident and Chief Executive Officer/s/ Mark S. Robinow

Mark S. RobinowExecutive Vice President, Chief
Financial Officer, and Secretary(Principal Accounting and Financial Officer)
   23