What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-17 compared with 2022-02-15 · 67 added, 74 removed, 143 unchanged (50% of the section changed)

12 unchanged sentences

We experienced significant disruptions to our business as suggested and mandated social distancing and shelter-in-place orders led to the temporary closure of all of our restaurants.

In the third quarter of fiscal 2020, certain jurisdictions began allowing the reopening of restaurant dining rooms, and we began to reopen dining rooms.

While restrictions on the type of permitted operating model and occupancy capacity may continue to change, all of our restaurants are operating with no indoor dining restrictions other than in New York City where customers are required to show proof of vaccination.

While restrictions on the type of permitted operating model and occupancy capacity may continue to change, all of our restaurants are currently operating with no dining restrictions.

We cannot predict how long the COVID-19 pandemic will last, whether vaccines will be effective at eliminating or slowing the spread of the virus or variants, whether it will reoccur or whether variants will spike, what additional restrictions may be enacted, to what extent we can maintain sales volumes during or following any resumption of mandated social distancing protocols or vaccination or mask mandates and what long-lasting effects the COVID-19 pandemic may have on the restaurant industry as a whole.

The ongoing effects of the COVID-19 pandemic, including, but not limited to, labor-related impacts, supply chain disruption and consumer behavior, will determine the continued significance of the impact of the COVID-19 pandemic to our operating results and financial position.

As of January 1, 2022, the Company owned and operated 17 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and service, class of customer and distribution methods.

As of April 2, 2022, the Company owned and operated 17 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and service, class of customer and distribution methods.

The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

The consolidated condensed statements of operations for the 13 weeks ended January 1, 2022 include revenues and income of approximately $1,982,000 and $356,000, respectively, related to Blue Moon Fish Company , which was acquired on December 1, 2020.

Accounting Period

3 unchanged sentences

Under this method certain years will contain 53 weeks.

The periods ended January 1, 2022 and January 2, 2021 each included 13.

The periods ended April 2, 2022 and April 3, 2021 each included 13 and 26 weeks.

The Company has substantial fixed costs that do not decline proportionally with sales.

Although our business is highly seasonal, our broader geographical reach as a result of recent acquisitions mitigates some of the risk.

For instance, the second quarter of

our fiscal year, consisting of the non-holiday portion of the cold weather season in New York and Washington, D.C.

For instance, the second quarter of our fiscal year, consisting of the non-holiday portion of the cold weather season in New York and Washington, D.C.

(January, February and March), is the poorest performing quarter;

5 unchanged sentences

Results of Operations

The Company’s operating income for the 13 weeks ended January 1, 2022 was $2,791,000, as compared to an operating loss of $(3,307,000) for the 13 weeks ended January 2, 2021.

This increase resulted primarily from all of our restaurants operating with no indoor dining restrictions, other than in New York City where customers are required to show proof of vaccination, in the current period in comparison to the prior period as a result of government mandates in connection with the COVID-19 pandemic combined with a modest recovery in our event business in Washington, D.C.

The Company’s operating income (as set out below) for the 13 and 26 weeks ended April 2, 2022, as compared to the same periods of April 3, 2021 increased primarily as a result of all of our restaurants operating with no dining restrictions in the current period in comparison to the prior period as a result of government mandates in connection with the COVID-19 pandemic combined with a modest recovery in our event business in Washington, D.C.

and New York City in the current period.

The following table summarizes the significant components of the Company’s operating results for the 13-week periods ended January 1, 2022 and January 2, 2021:

13 Weeks Ended Variance

2022 January 2,

(in thousands)

The following table summarizes the significant components of the Company’s operating results for the 13- and 26-week periods ended April 2, 2022 and April 3, 2021:

13 Weeks Ended Variance 26 Weeks Ended Variance

2022 April 3,

2021 $ % April 2,

2022 April 3,

(in thousands) (in thousands)

Food and beverage sales $ 38,822 $ 25,181 $ 13,641 54.2 % $ 82,058 $ 45,070 $ 36,988 82.1 %

10 unchanged sentences

OPERATING INCOME (LOSS) $ 227 $ (1,497) $ 1,724 115.2 % $ 3,018 $ (4,803) $ 7,821 162.8 %

During the 13-week period ended January 1, 2022, revenues increased 116.7% as compared to revenues in the 13-week period ended January 2, 2021.

During the 13-week period ended April 2, 2022, revenues increased 53.6% as compared to revenues in the 13-week period ended April 3, 2021.

This increase resulted primarily from all of our restaurants operating with no dining restrictions in the current period in comparison to the prior period as a result of government mandates in connection with the COVID-19 pandemic.

During the 26-week period ended April 2, 2022, revenues increased 81.4% as compared to revenues in the 26-week period ended April 3, 2021.

This increase also resulted primarily from all of our restaurants operating with no dining restrictions in the current period in comparison to the prior period as a result of government mandates in connection with the COVID-19 pandemic.

Food and Beverage Same-Store Sales

On a Company-wide basis, same-store sales increased 112.8% during the first fiscal quarter of 2022 as compared to the same period last year as follows:

On a Company-wide basis, same-store sales increased 54.0% during the 13 weeks ended April 2, 2022 as compared to the same period of last year as follows:

13 Weeks Ended Variance

2022 January 2,

2022 April 3,

(in thousands)

10 unchanged sentences

Food and beverage sales $ 38,822 $ 25,181

The increase in company-wide same-store sales was driven primarily by increased customer traffic as a result of the impact of the COVID-19 pandemic on the prior period combined with targeted increases in menu pricing and a modest recovery in our event business in Washington, D.C.

On a Company-wide basis, same-store sales increased 79.6% during the 26 weeks ended April 2, 2022 as compared to the same period of last year as follows:

26 Weeks Ended Variance

2022 April 3,

(in thousands)

Las Vegas $ 26,721 $ 12,556 $ 14,165 112.8 %

New York 11,912 3,209 8,703 271.2 %

Washington, D.C.

3,534 1,658 1,876 113.1 %

Atlantic City, NJ 1,568 428 1,140 266.4 %

Connecticut 143 191 (48) -25.1 %

Alabama 6,415 4,690 1,725 36.8 %

Florida 30,201 22,083 8,118 36.8 %

Same-store sales 80,494 44,815 $ 35,679 79.6 %

Other 1,564 255

Food and beverage sales $ 82,058 $ 45,070

The increases in company-wide same-store sales were driven primarily by increased customer traffic as a result of the impact of the COVID-19 pandemic on the prior period combined with targeted increases in menu pricing and a modest recovery in our event business in Washington, D.C.

and New York City in the current period.

Same-store sales in Connecticut decreased 26.2% due to disruption to our business as a result of its relocation within the Foxwoods Resort and Casino where our property is located.

Other food and beverage sales consist of sales related to new restaurants opened or acquired during the applicable period, sales related to properties that were closed ( Clyde Frazier's Wine and Dine, Gallagher's Steakhouse and Gallagher's Burger Bar ) and other adjustments and fees.

Costs and Expenses

Costs and expenses for the 13 weeks ended January 1, 2022 and January 2, 2021 were as follows (in thousands):

Costs and expenses for the 13 and 26 weeks ended April 2, 2022 and April 3, 2021 were as follows (in thousands):

13 Weeks Ended

1 unchanged sentence

Revenues Increase

(Decrease) 26 Weeks

Revenues 26 Weeks

Revenues Increase

Food and beverage cost of sales $ 12,255 31.0 % $ 7,764 30.1 % 4,491 57.8 % $ 24,796 29.7 % $ 13,705 29.8 % 11,091 80.9 %

5 unchanged sentences

Total costs and expenses $ 39,359 $ 27,264 $ 12,095 $ 80,553 $ 50,869 $ 29,684

Food and beverage costs as a percentage of total revenues for the 13 weeks ended January 1, 2022 decreased as compared with the same period of last year primarily as a result of targeted increases in menu pricing and a modest recovery in our event business in Washington, D.C.

Changes in food and beverage costs as a percentage of total revenues for the 13 and 26 weeks ended April 2, 2022 as compared with the same periods of last year reflect increased volumes, targeted increases in menu pricing, changes in menu mix and a modest recovery in our event business in Washington, D.C.

and New York City in the current period, partially offset by increases in costs of seafood and other high-volume items.

Payroll expenses as a percentage of total revenues for the 13 weeks ended January 1, 2022 decreased as compared with the same period of last year primarily as a result of retaining key restaurant management personnel with lower corresponding revenues in the prior period as a result of the government mandated closures and/or capacity restrictions at several of our restaurants in connection with the COVID-19 pandemic.

Occupancy expenses as a percentage of total revenues for the 13 weeks ended January 1, 2022 decreased as compared with the same period of last year primarily as a result of the fixed nature of many of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic.

Other operating costs and expenses as a percentage of total revenues for the 13 weeks ended January 1, 2022 as compared to the same period of last year decreased primarily as a result of the fixed nature of some of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic, decreased maintenance at properties where we are experiencing lower traffic and increased professional fees at the restaurant-level in the prior periods.

General and administrative expenses (which relate solely to the corporate office in New York City) for the 13 weeks ended January 1, 2022 increased as compared with the same period of last year primarily as a result of headcount and salary reductions of corporate personnel in the prior period as a result of the impacts on our business from the COVID-19 pandemic.

Depreciation and amortization expense for the 13 weeks ended January 1, 2022 increased as compared to the same period of last year primarily as a result of assets placed in service since January 1, 2021.

Payroll expenses as a percentage of total revenues for the 13 weeks ended April 2, 2022 increased as compared with the same period of last year primarily as a result of increased labor costs in connection with ongoing COVID-related labor challenges partially offset by increased volumes, targeted increases in menu pricing and changes in menu mix.

Payroll expenses as a percentage of total revenues for the 26 weeks ended April 2, 2022 decreased as compared with the same period of last year primarily as a result of retaining key restaurant management personnel with lower corresponding revenues for several months at the beginning of prior period as a result of the government mandated closures and/or capacity restrictions at several of our restaurants in connection with the COVID-19 pandemic combined with increased labor costs in connection with ongoing COVID-related labor challenges partially offset by increased volumes, targeted increases in menu pricing and changes in menu mix.

Occupancy expenses as a percentage of total revenues for the 13 and 26 weeks ended April 2, 2022 decreased as compared with the same period of last year primarily as a result of the fixed nature of many of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic.

Other operating costs and expenses as a percentage of total revenues for the 13 and 26 weeks ended April 2, 2022 as compared to the same period of last year decreased primarily as a result of the fixed nature of some of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic, decreased maintenance at properties where we are experiencing lower traffic and increased professional fees at the restaurant-level in the prior periods.

General and administrative expenses (which relate solely to the corporate office in New York City) for the 13 weeks ended April 2, 2022 decreased slightly as compared with the same period of last year primarily as a result of headcount reductions of corporate personnel.

General and administrative expenses for the 26 weeks ended April 2, 2022 increased as compared with the same period of last year primarily as a result of headcount and salary reductions of corporate personnel in the prior period as a result of the impacts on our business from the COVID-19 pandemic.

Depreciation and amortization expense for the 13 and 26 weeks ended April 2, 2022 increased as compared to the same period of last year primarily as a result of assets placed in service in the current period.

We calculate our interim income tax provision in accordance with ASC Topic 270, Interim Reporting and ASC Topic 740, Accounting for Income Taxes.

3 unchanged sentences

The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained, or the tax environment changes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted to provide economic relief to those impacted by the COVID-19 pandemic.

In addition to the PPP loans, the CARES Act made various tax law changes including among other things (i) modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 tax years to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes, (ii) enhanced recoverability of AMT tax credit carryforwards, (iii) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest, and (iv) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k).

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”) was enacted and provided clarification on the tax deductibility of expenses funded with PPP loans as fully deductible for tax purposes and therefore, the forgiveness of any PPP loans is not taxable.

Any income recorded for financial reporting purposes is considered an unusual or infrequent event and the tax effect is recorded discretely in the quarter in which the loans were forgiven.

No PPP Loans were forgiven during the 13 weeks ended January 1, 2022 and January 2, 2021.

As a result of the CARES Act and the CAA, the Company carried back taxable losses from fiscal year 2020 and is expected to carryback taxable losses from fiscal 2021 to generate a refund of previously paid income taxes.

For the 13-week period ended January 2, 2021, the Company recorded income tax benefits as the taxable losses from fiscal 2020 and the projected taxable losses from fiscal 2021 are being carried back to tax years in which the Company was subject to a higher federal corporate income tax rate.

The adjustment related to the fiscal 2020 carryback was recorded as a discrete item during the 13-week period ended January 2, 2021 and the carryback of the projected taxable losses from fiscal 2021 was recorded as a component of the estimated annual effective tax rate for the 13-week period ended January 2, 2021.

The provision for income taxes for the 13-week period ended January 1, 2022 was $309,000.

The effective tax rate for the 13-week period ended January 1, 2022 of 11.3% differed from the statutory rate of 21% primarily as a result of the tax benefits

related to the generation of FICA tax credits and operating income attributable to non-controlling interests that is not taxable to the Company.

The income tax benefit for the 13-week period ended January 2, 2021 was $(2,919,000).

The effective tax rate for the 13-week period ended January 2, 2021 of -80.7% differed from the statutory rate of 21% primarily as a result of the tax benefits related to the generation of FICA tax credits, the carryback of the projected fiscal 2021 taxable losses to prior years when the Federal corporate tax rate was 34% and operating income attributable to non-controlling interests that is not taxable to the Company.

The effective tax rate also includes a discrete benefit of $(352,000) primarily related to an adjustment of the estimated fiscal year 2020 carryback claim.

additional forgiveness of PPP Loans and the mix of earnings by state taxing jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations.

The Company’s overall effective tax rate in the future will be affected by factors such as changes in tax law, the utilization of state and local net operating loss carryforwards, the generation of FICA tax credits, additional forgiveness of PPP Loans and the mix of earnings by state taxing jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations.

The final annual tax rate cannot be determined until the end of the fiscal year;

6 unchanged sentences

We believe that our operating lease arrangements provide appropriate leverage of our capital structure in a financially efficient manner.

As of January 1, 2022, we had a cash and cash equivalents balance of $20,167,000.

As of April 2, 2022, we had a cash and cash equivalents balance of $18,542,000.

Due to the fluidity of the COVID-19 pandemic, management cannot determine the ultimate impact that it will have on the Company’s consolidated financial condition, liquidity, future results of operations, suppliers, industry, and workforce and therefore any prediction as to the ultimate material adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain.

2 unchanged sentences

The extent of such negative impact will be determined, in part, by the longevity and severity of the pandemic.

Cash Flows for 13 Weeks Ended January 1, 2022 and January 2, 2021

Net cash provided by operating activities for the 13 weeks ended January 1, 2022 increased to $3,852,000 as compared to $(2,985,000) used in operations in the same period of last year.

Cash Flows for 26 Weeks Ended April 2, 2022 and April 3, 2021

Net cash provided by operating activities for the 26 weeks ended April 2, 2022 increased to $4,963,000 as compared to $(1,644,000) used in operations in the same period of last year.

This increase was attributable to an increase in operating income as a result of the continued recovery from the COVID-19 pandemic and changes in net working capital primarily related to accounts receivable, inventory and accounts payable and accrued expenses.

Net cash used in investing activities for the 13 weeks ended January 1, 2022 and January 2, 2021 was $(408,000) and $(2,413,000), respectively, and resulted primarily from purchases of fixed assets at existing restaurants and, in the prior period, the cash portion of the purchase price of the Blue Moon Fish Company acquisition.

Net cash used in financing activities for the 13 weeks ended January 1, 2022 of $(2,448,000) resulted primarily from principal payments on notes payable and the payment of distributions to non-controlling interests.

Net cash used in financing activities for the 13 weeks ended January 2, 2021 of $(675,000) resulted primarily from principal payments on notes payable.

Net cash used in investing activities for the 26 weeks ended April 2, 2022 and April 3, 2021 was $(1,090,000) and $(2,926,000), respectively, and resulted primarily from purchases of fixed assets at existing restaurants and, in the prior period, the cash portion of the purchase price of the Blue Moon Fish Company acquisition.

Net cash used in financing activities for the 26 weeks ended April 2, 2022 of $(4,502,000) resulted primarily from principal payments on notes payable and the payment of distributions to non-controlling interests.

Net cash used in financing activities for the 26 weeks ended April 3, 2021 of $(918,000) resulted primarily from principal payments on notes payable partially offset by proceeds from the exercise of stock options.

Recent Restaurant Expansions and Other Developments

4 unchanged sentences

Rent payments under the lease are approximately $360,000 per year and increase by approximately 15% as each option is exercised.

On January 26, 2021, the Company exercised its right-of-first-refusal to acquire the land, building and parking lot associated with JB’s on the Beach and immediately contributed such rights and interest to an unrelated entity ("Sandcastle 1, LLC") that

purchased the properties on March 22, 2021.

In exchange, the Company received a 5% interest in Sandcastle 1, LLC, which plans future development of the sites.

7 unchanged sentences

The closure of these properties occurred on January 2, 2021 and did not result in a material charge to the Company’s operations.

As of January 2, 2021, the Company determined that, given the current situation, it will not reopen Thunder Grill in Washington, D.C.

As of January 2, 2021, the Company determined that, given the then-current situation regarding the COVID-19 pandemic, it will not reopen Thunder Grill in Washington, D.C.

which has been closed since March 20, 2020.

4 unchanged sentences

Included in the consolidated condensed statement of operations for the 13 weeks ended January 2, 2021 are revenues and net operating losses of approximately $172,000 and $(709,000) related to the above properties.

Investment in and Receivable from New Meadowlands Racetrack

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a then 63.7% ownership interest.

On November 19, 2013, the Company invested an additional $464,000 in NMR through the purchase of an additional membership interest in Meadowlands Newmark, LLC resulting in a total ownership of 11.6% of Meadowlands Newmark, LLC, and an effective ownership interest in NMR of 7.4%, subject to dilution.

In 2015, the Company invested an additional $222,000 in NMR and in February 2017, the Company invested an additional $222,000 in NMR, both as a result of capital calls with no change in ownership, bringing its total investment to $5,108,000.

During the 13 weeks ended January 1, 2022, the Company received a distribution of $222,000 from NMR which has been recorded as other income in the consolidated condensed statement of operations.

In addition to the Company’s ownership interest in NMR, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

In conjunction with this investment, the Company, through a 97% owned subsidiary, Ark Meadowlands LLC (“AM VIE”), also entered into a long-term agreement with NMR for the exclusive right to operate food and beverage concessions serving the new raceway facilities (the “Racing F&B Concessions”) located in the new raceway grandstand constructed at the Meadowlands Racetrack in northern New Jersey.

Under the agreement, NMR is responsible to pay for the costs and expenses incurred in the operation of the Racing F&B Concessions, and all revenues and profits thereof inure to the benefit of NMR.

AM VIE receives an annual fee equal to 5% of the net profits received by NMR from the Racing F&B Concessions during each calendar year.

On April 25, 2014, the Company loaned $1,500,000 to Meadowlands Newmark, LLC.

The note bears interest at 3%, compounded monthly and added to the principal, and is due in its entirety on January 31, 2024.

The note may be prepaid, in whole or in part, at any time without penalty or premium.

On July 13, 2016, the Company made an additional loan to Meadowlands Newmark, LLC in the amount of $200,000.

Such amount is subject to the same terms and conditions as the original loan as discussed above.

The principal and accrued interest related to this note in the amounts of $1,327,000 and $1,317,000 are included in Investment In and

Receivable from New Meadowlands Racetrack in the consolidated condensed balance sheets at January 1, 2022 and October 2, 2021, respectively.

Notes Payable – Bank

6 unchanged sentences

We do not expect the discontinuation of LIBOR as a reference rate in our debt agreements to have a material adverse effect on our financial position or materially affect our interest expense.

Borrowings under the Revolving Facility, which include the promissory notes as discussed in Note 8 of the consolidated condensed financial statements, are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

intellectual property and deposit accounts) and fixtures of the Company.

The Revolving Facility also requires, among other things, that the Company meet minimum quarterly tangible net worth amounts, maintain a minimum fixed charge coverage ratio and meet minimum annual net income amounts.

The Revolving Facility contains customary representations, warranties and affirmative covenants as well as customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership.

On June 12, 2020 and again on February 15, 2021, as a result of the impact of the COVID-19 pandemic on our business, BHBM agreed to modified financial covenants through fiscal Q2 2022.

The Company was in compliance with all of its financial covenants under the Revolving Facility as of January 1, 2022.

Paycheck Protection Program Loans

7 unchanged sentences

Forgiveness applications can be submitted up to 10 months after the end of the related notes covered period (which is defined as 24 weeks after the date of the loan) (the “Deferral Period”) and the ultimate forgiveness decisions can be made by the Lenders up to 60 days after submitting the applications and possibly longer if forgiveness is fully or partially denied and the Borrower appeals the decision.

While the Company and each Borrower believe that all PPP Loan proceeds were used exclusively for Qualifying Expenses, it is unclear and uncertain whether the conditions for forgiveness of the remaining PPP Loans outstanding at January 1, 2022 will be met under the current guidelines of the CARES Act.

While the Company and each Borrower believe that PPP Loan proceeds were used exclusively for Qualifying Expenses, it is unclear and uncertain whether the conditions for forgiveness of the remaining PPP Loans outstanding at April 2, 2022 will be met under the current guidelines of the CARES Act.

Therefore, we cannot make any assurances that the Company, or any of the Borrowers, will be eligible for forgiveness of the remaining PPP Loans, in whole or in part.

During the 13 weeks ended April 2, 2022 and April 3, 2021, $1,122,000 and $4,124,000 of PPP Loans, respectively (including $20,000 and $27,000 of accrued interest) were forgiven.

To the extent that any of the remaining PPP Loans are not forgiven, beginning one month following expiration of the Deferral Period, and continuing monthly until 24 months from the date of each applicable Note (the “Maturity Date”), each respective Borrower is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Notes, in such equal amounts required to fully amortize the principal amount outstanding on such Notes as of the last day of the applicable Deferral Period by the applicable Maturity Date.

During the 13 weeks ended January 1, 2022, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $666,000.

Accordingly, based on the above, we have classified the PPP Loan amounts expected to be forgiven as long-term in accordance with SEC interpretative guidance and the remaining amounts expected to be repaid in the next 12 months of $892,000 and $2,032,000 as short-term in the consolidated condensed balance sheets as of April 2, 2022 and October 2, 2021, respectively.

During the 26 weeks ended April 2, 2022, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $976,000.

Recent Events

On January 28, 2022, the Board of Directors terminated the Company's 2016 Option Plan and approved the 2022 Stock Option Plan for authorizing the future issuance of options to acquire 500,000 shares of common stock, subject to shareholder approval at our annual meeting to be held on March 15, 2022.

On April 8, 2022, the Company extended its lease for Gallagher's Steakhouse at the New York-New York Hotel and Casino in Las Vegas, NV through December 31, 2032.

In connection with the extension, the Company has agreed to spend a minimum of $1,500,000 to materially refresh the premises by September 30, 2022, subject to various extensions as set out in the agreement.

On May 11, 2022, the Board of Directors (the "Board") of the Company declared a quarterly cash dividend of $0.125 per share which will be paid on June 13, 2022 to the stockholders of record of each share of the Company's common stock at the close of business on May 31, 2022.

Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will depend upon operating performance and other factors.

Critical Accounting Policies

1 unchanged sentence

In the process of preparing its consolidated condensed financial statements, the Company estimates the appropriate carrying value of certain assets and liabilities, which are not readily apparent from other sources.

The primary estimates underlying the Company’s consolidated condensed financial statements include projected cash flows, allowances for potential bad debts on accounts and notes receivable, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments, the realizable value of its tax assets and other matters.

the realizable value of its tax assets and other matters.

Management bases its estimates on certain assumptions, which it believes are reasonable in the circumstances, and actual results could differ from those estimates.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis