What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-12-19 compared with 2023-12-21 · 210 added, 207 removed, 800 unchanged (34% of the section changed)

2 unchanged sentences

As of September 28, 2024 (the end of the period covered by this report), management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended).

periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, at the end of such period, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.

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Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of fiscal 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, other than changes to certain restaurant-level procedures with respect to approval limits and reconciliation procedures.

Limitations of the Effectiveness of Internal Control

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Other Information

Insider Trading Arrangements

During the 2024 fiscal year, none of our directors or executive officers adopted Rule 10b5-1 trading plans and none of our directors or executive officers terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in item 408(c) of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

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Code of Ethics

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.

We have adopted a code of ethics (which includes our insider trading policy ) that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.

A copy is available free of charge through our Internet website, www.arkrestaurants.com, under the “Investors-Corporate Governance” caption.

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(a) (1) Financial Statements:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - at September 30, 2023 and October 1, 2022

Consolidated Statements of Operations - years ended September 30, 2023 and October 1, 2022

Consolidated Statements of Changes in Equity - years ended September 30, 2023 and October 1, 2022

Consolidated Statements of Cash Flows - years ended September 30, 2023 and October 1, 2022

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets - at September 28, 2024 and September 30, 2023

Consolidated Statements of Operations - years ended September 28, 2024 and September 30, 2023

Consolidated Statements of Changes in Equity - years ended September 28, 2024 and September 30, 2023

Consolidated Statements of Cash Flows - years ended September 28, 2024 and September 30, 2023

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Ark Restaurants Corp.

and Subsidiaries (the “Company”) as of September 30, 2023 and October 1, 2022, and the related consolidated statements of operations, changes in equity, and cash flows for each of the two years in the period ended September 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and October 1, 2022 and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United States of America.

and Subsidiaries (the “Company”) as of September 28, 2024 and September 30, 2023, and the related consolidated statements of operations, changes in equity, and cash flows for each of the two years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 28, 2024 and September 30, 2023 and the results of its operations and its cash flows for each of the two years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Various factors including estimated future sales growth and estimated profit margins are included in this analysis.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s undiscounted cash flows for the last 12 months are less than a minimum threshold or if projected levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the

restaurant’s assets.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.

Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than current lease payments.

If the Company concludes that the carrying value of certain long-lived assets and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value.

If the Company concludes that the carrying value of certain long-lived assets and ROU assets will not be recovered

based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value.

The Company recorded impairment charges for its location in Washington, DC of $2,500,000 and for one of its locations in New York City of $876,000 during the year ended September 28, 2024.

Significant judgment is exercised by the Company in performing their long-lived asset and right-of-use asset impairment analysis specifically surrounding the development of undiscounted cash flow forecasts.

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• We evaluated the reasonableness of undiscounted future cash flows utilized in the impairment analysis for the restaurants by comparing forecasted undiscounted cash flows to historical cash flows from each restaurant location, and evaluating management's future operating forecasts.

• We evaluated the reasonableness of management's estimate that no impairment charges were appropriate during the year.

• We evaluated the reasonableness of management's estimate that no impairment charges were appropriate during the year other than what was recorded.

Goodwill Valuation (Note 7 to the Consolidated Financial Statements)

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September 28,

2023 October 1,

2024 September 30,

CURRENT ASSETS:

Cash and cash equivalents (includes $ 292 at September 28, 2024 and $ 564 at

October 1, 2022 related to VIEs)

September 30, 2023 related to VIEs)

$ 10,273 $ 13,415

Certificate of deposit, plus accrued interest — 5,021

Accounts receivable (includes $ 169 at September 30, 2023 and $ 140 at October 1, 2022

Accounts receivable (includes $ 44 at September 28, 2024 and $ 169 at September 30, 2023

related to VIEs)

Employee receivables 255 328

Inventories (includes $ 47 at September 30, 2023 and $ 38 at October 1, 2022 related to

Inventories (includes $ 40 at September 28, 2024 and $ 47 at September 30, 2023 related to

Prepaid and refundable income taxes (includes $ 0 at September 28, 2024 and $ 204

October 1, 2022 related to VIEs)

September 30, 2023 related to VIEs)

Prepaid expenses and other current assets (includes $ 29 at September 28, 2024 and $ 31 at

October 1, 2022 related to VIEs)

September 30, 2023 related to VIEs)

Total current assets 18,225 21,930

FIXED ASSETS - Net (includes $ 216 at September 30, 2023 and $ 212 at October 1, 2022

related to VIEs)

FIXED ASSETS - Net (includes $ 0 at September 28, 2024 and $ 216 at September 30, 2023 related to VIEs)

31,569 34,314

OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $ 0 at

September 30, 2023 and $ 2,076 at October 1, 2022 related to VIEs)

September 28, 2024 and $ 1,796 at September 30, 2023 related to VIEs)

84,977 96,459

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INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK 6,550 6,507

OTHER ASSETS (includes $ 11 at September 30, 2023 and October 1, 2022 related to VIEs)

OTHER ASSETS (includes $ 11 at September 28, 2024 and September 30, 2023 related to VIEs)

TOTAL ASSETS $ 156,041 $ 176,956

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CURRENT LIABILITIES:

Accounts payable - trade (includes $ 93 at September 30, 2023 and $ 135 at October 1, 2022

related to VIEs)

Accounts payable - trade (includes $ 86 at September 28, 2024 and $ 93 at

September 30, 2023 related to VIEs)

$ 4,547 $ 4,058

Accrued expenses and other current liabilities (includes $ 794 at September 28, 2024 and

$ 417 at October 1, 2022 related to VIEs)

$ 331 at September 30, 2023 related to VIEs)

12,045 13,829

Current portion of operating lease liabilities (includes $ 0 at September 28, 2024 and $ 298

at October 1, 2022 related to VIEs)

at September 30, 2023 related to VIEs)

Current portion of notes payable 5,193 1,987

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OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $ 0 at

September 30, 2023 and $ 1,921 at October 1, 2022 related to VIEs)

September 28, 2024 and $ 1,623 at September 30, 2023 related to VIEs)

83,516 92,232

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Common stock, par value $ 0.01 per share - authorized, 10,000 shares;

outstanding, 3,604 shares at September 30, 2023 and 3,600 shares at October 1, 2022

outstanding, 3,604 shares at September 28, 2024 and September 30, 2023

Additional paid-in capital 13,934 14,161

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September 28,

2023 October 1,

2024 September 30,

Food and beverage sales $ 179,110 $ 180,820

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General and administrative expenses 12,263 12,407

Goodwill impairment 10,000 —

Depreciation and amortization 4,090 4,310

Loss on closure of El Rio Grande 876 —

Impairment losses on right-of-use and long-lived assets 2,500 —

Goodwill impairment 4,000 10,000

Total costs and expenses 187,839 189,633

OPERATING INCOME (LOSS) ( 4,840 ) 9,864

OPERATING LOSS ( 4,294 ) ( 4,840 )

OTHER (INCOME) EXPENSE:

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Total other (income) expense, net 266 582

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES ( 5,422 ) 11,622

Provision (benefit) for income taxes ( 64 ) 1,448

CONSOLIDATED NET INCOME (LOSS) ( 5,358 ) 10,174

LOSS BEFORE BENEFIT FOR INCOME TAXES ( 4,560 ) ( 5,422 )

Benefit for income taxes ( 815 ) ( 64 )

CONSOLIDATED NET LOSS ( 3,745 ) ( 5,358 )

Net income attributable to non-controlling interests ( 151 ) ( 570 )

NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.

NET LOSS ATTRIBUTABLE TO ARK RESTAURANTS CORP.

$ ( 3,896 ) $ ( 5,928 )

NET INCOME (LOSS) PER ARK RESTAURANTS CORP.

NET LOSS PER ARK RESTAURANTS CORP.

COMMON SHARE:

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022

FOR THE YEARS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

(In Thousands, Except Per Share Amounts)

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BALANCE - October 1, 2022 3,600 $ 36 $ 15,493 $ 44,271 $ 59,800 $ 318 $ 60,118

Net income — — — 9,281 9,281 893 10,174

Net income (loss) — — — ( 5,928 ) ( 5,928 ) 570 ( 5,358 )

Elimination of non-controlling

interest upon dissolution of

subsidiary — — ( 1,685 ) — ( 1,685 ) 1,685 —

Exercise of stock options 4 — 39 — 39 — 39

Stock-based compensation — — 298 — 298 — 298

Stock-based compensation activity — — 314 — 314 — 314

Distributions to non-controlling

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— — — ( 2,252 ) ( 2,252 ) — ( 2,252 )

BALANCE - October 1, 2022 3,600 36 15,493 44,271 59,800 318 60,118

BALANCE - September 30, 2023 3,604 36 14,161 36,091 50,288 1,434 51,722

Net income (loss) — — — ( 3,896 ) ( 3,896 ) 151 ( 3,745 )

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subsidiary — — 692 — 692 ( 692 ) —

Exercise of stock options 4 — 39 — 39 — 39

Stock-based compensation — — 314 — 314 — 314

Stock-based compensation activity — — ( 919 ) — ( 919 ) — ( 919 )

Distributions to non-controlling

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September 28,

2023 October 1,

2024 September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Consolidated net income (loss) $ ( 5,358 ) $ 10,174

Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:

Stock-based compensation 314 298

Consolidated net loss $ ( 3,745 ) $ ( 5,358 )

Adjustments to reconcile consolidated net loss to net cash provided by operating activities:

Stock-based compensation activity ( 919 ) 314

Gain on forgiveness of PPP Loans — ( 272 )

Deferred income taxes ( 1,061 ) ( 620 )

Accrued interest on Certificate of Deposit — ( 21 )

Accrued interest on note receivable from NMR ( 43 ) ( 42 )

Loss on closure of El Rio Grande 876 —

Impairment losses on right-of-use and long-lived assets 2,500 —

Goodwill impairment 4,000 10,000

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Payments received on employee receivables 119 183

Purchase of certificate of deposit — ( 5,000 )

Proceeds from maturity of Certificate of Deposit — 5,021

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Net cash used in financing activities ( 5,404 ) ( 19,686 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 10,024 ) 4,268

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 3,142 ) ( 10,024 )

CASH AND CASH EQUIVALENTS, Beginning of year 13,415 23,439

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In Alabama, the Company operates two Original Oyster Houses , one in Gulf Shores and one in Spanish Fort.

COVID-19 Pandemic and Inflation — Recent global events, including the COVID-19 pandemic ("COVID-19"), have adversely affected global economies, disrupted global supply chains and labor force participation and created significant volatility and disruption of financial markets.

As a result, we experienced significant and variable disruptions to our business as federal, state and local restrictions were mandated, among other remedial measures, to mitigate the spread of the COVID-19 virus.

While restrictions on the type of permitted operating model and occupancy capacity may continue to change, during fiscal 2022 all of our restaurants operated with no restrictions, other than in New York City where customers were required to show proof of vaccination through November 1, 2022.

In addition to the associated impacts of COVID-19, our operating results have been impacted by geopolitical and other macroeconomic factors, leading to increased commodity and wage inflation and other increased costs.

The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events, could lead to further government mandates, including but not limited to capacity restrictions, shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation and disruptions in our supply chain.

If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as suspending dividends, increasing borrowings or modifying our operating strategies.

Inflation — Beginning in 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

While we have seen improvements in many of these areas, some of these factors continued to impact our operating results in fiscal 2024.

The ongoing impact of these events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in our supply chain and delays in opening and acquiring new restaurants.

If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as continued suspension of dividends, increasing borrowings or modifying our operating strategies.

Some of these measures may have an adverse impact on our business, including possible impairments of assets.

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Accounting Period — The Company's fiscal year ends on the Saturday nearest September 30.

The fiscal years ended September 30, 2023 and October 1, 2022 both included 52 weeks.

The fiscal years ended September 28, 2024 and September 30, 2023 both included 52 weeks.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates are used for, but are not limited to:

(i) projected cash flows related to asset impairments, including goodwill and intangibles, (ii) income tax valuation allowances for deferred tax assets, (iii) allowances for potential bad debts on receivables, (iv) assumptions regarding discount rates related to lease accounting, (v) the useful lives and recoverability of our long-lived assets, such as fixed assets and intangibles, (vi) fair values of financial instruments, (vii) share-based compensation, (viii) estimates made in connection with acquisition purchase price allocations, (ix) uncertain tax positions, and (x) determining when investment impairments are other-than-temporary.

(i) projected cash flows related to asset impairments, including goodwill and intangibles, (ii) income tax valuation allowances for deferred tax assets, (iii) allowances for potential credit losses on receivables, (iv) assumptions regarding discount rates related to lease accounting, (v) the useful lives and recoverability of our long-lived assets, such as fixed assets and intangibles, (vi) fair values of financial instruments, (vii) share-based compensation, (viii) estimates made in connection with acquisition purchase price allocations, (ix) uncertain tax positions, and (x) determining when investment impairments are other-than-temporary.

The Company’s accounting estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty.

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Seasonality — 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 this risk.

Although our business is highly seasonal, our broader geographical reach as a result of prior acquisitions mitigates some of this 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 (January, February and March), is the poorest performing quarter;

however, in recent years this has been partially offset by our locations in Florida as they experience increased results in the winter months.

We generally achieve our best results during the warm weather, attributable to our extensive outdoor dining availability, particularly at Bryant Park in New York and Sequoia in Washington, D.C.

We generally achieve our best results during the warmer weather, attributable to our extensive outdoor dining availability, particularly at Bryant Park in New York and Sequoia in Washington, D.C.

(our largest restaurants) and our outdoor cafes.

However, even during summer months these facilities can be adversely affected by unusually cool or rainy weather conditions.

Our facilities in Las Vegas are indoor and generally operate on a more consistent basis throughout the year.

Fair Value of Financial Instruments — Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Fair value is estimated by applying a fair value hierarchy, which requires maximizing the use of observable inputs when measuring fair value.

The three levels of inputs are:

Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable or can be corroborated by observable market data.

Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments.

Our facilities in Las Vegas are indoor and generally operate on a more consistent basis throughout the year, although in recent years the summer months have seen lower traffic.

Fair Value of Financial Instruments — The carrying amount of cash and cash equivalents, receivables, accounts payable and approximate fair value due to the immediate or short-term maturity of these financial instruments.

The fair values of notes receivable and payable are determined using current applicable rates for similar instruments as of the balance sheet date and approximate the carrying value of such debt instruments.

Certificates of deposit, which are considered Level 2 assets, are valued at original cost plus accrued interest, which approximates fair value.

Cash and Cash Equivalents — Cash and cash equivalents include cash on hand, deposits with banks, highly liquid investments and certificates of deposit with original maturities of three months or less.

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The concentration of credit risk with respect to accounts receivable is generally limited due to the short payment terms extended by the Company and the number of customers comprising the Company’s customer base.

As of September 30, 2023, the Company had accounts receivable balances due from one hotel operator totaling 52 % of total accounts receivable.

As of October 1, 2022, the Company had accounts receivable balances due from two hotel operators totaling 54 % of total accounts receivable.

For the years ended September 30, 2023 and October 1, 2022, the Company made purchases from two vendors that accounted for 22 % and 20 % of total purchases, respectively.

As of September 28, 2024 and September 30, 2023, the Company had accounts receivable balances due from one hotel operator totaling 52 % of total accounts receivable.

For the years ended September 28, 2024 and September 30, 2023, the Company made purchases from two vendors that accounted for 22 % of total purchases.

As of September 28, 2024, all debt outstanding, other than the note payable to the sellers of The Blue Moon Fish Company , is with one lender (see Note 10 – Notes Payable).

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If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

Based on the results of this analysis, no impairment charges were recognized related to long-lived assets and ROU assets during the year ended September 30, 2023 and October 1, 2022.

Given the inherent uncertainty in projecting results of restaurants under the current circumstances, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.

For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

(see Note 6 - Fixed Assets).

Intangible Assets — Intangible assets consist principally of purchased leasehold rights, operating rights and covenants not to compete.

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We assess the potential impairment of goodwill and trademarks annually (at the end of our fourth quarter) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

If we determine

through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated statements of operations.

If we determine through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated statements of operations.

With respect to goodwill, the Company assesses qualitative factors to determine whether it is necessary to perform a more detailed quantitative impairment test.

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When performing the quantitative test, an impairment loss is recognized if the carrying value of our equity, including goodwill, exceeds its fair value.

Due to the volatility of the Company's stock price in the fourth quarter of fiscal 2023, the upcoming expiration of the Bryant Park Grill & Cafe and The Porch at Bryant Park leases on April 30, 2025 and the related requests for proposals from the landlord received in July 2023 and September 2023, respectively (see Note 11 - Commitments and Contingencies), the Company determined that there were indicators of potential impairment of its goodwill during the years ended September 30, 2023.

As such, the Company performed a qualitative and quantitative assessment for its goodwill.

The Company determined the income approach using a discounted cash flow model was appropriate and recorded a pre-tax noncash goodwill impairment charge of $ 10,000,000 in the fourth quarter of 2023.

(see Note 7 - Goodwill, Trademarks and Intangible Assets)

Given the relatively low volume of shares traded and the lack of reliable market data as of September 30, 2023, the Company determined the income approach provided the best approximation of fair value.

The Company did no t record any impairment to its goodwill during the year ended October 1, 2022.

Our impairment analysis for trademarks consists of a comparison of the fair value to the carrying value of the assets.

This comparison is made based on a review of historical, current and forecasted sales and profit levels, as well as a review of any factors that may indicate potential impairment.

For the years ended September 30, 2023 and October 1, 2022, our impairment analysis did not result in any other charges related to trademarks.

For the years ended September 28, 2024 and September 30, 2023, our impairment analysis did not result in any other charges related to trademarks.

Investments – Each reporting period, the Company reviews its investments in equity and debt securities, except for those classified as trading, to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of such investment.

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Revenues from catered events are recognized in income upon satisfaction of the performance obligation (the date the event is held).

All customer payments, including

nonrefundable upfront deposits, are deferred as a liability until such time.

The Company recognized $ 14,775,000 and $ 11,812,000 in catering services revenue for the years ended September 30, 2023 and October 1, 2022, respectively.

Unearned revenue which is included in accrued expenses and other current liabilities on the consolidated balance sheets as of September 30, 2023 and October 1, 2022 was $ 5,962,000 and $ 5,534,000 , respectively.

All customer payments, including nonrefundable upfront deposits, are deferred as a liability until such time.

The Company recognized $ 16,147,000 and $ 14,775,000 in catering services revenue for the years ended September 28, 2024 and September 30, 2023, respectively.

Unearned revenue which is included in accrued expenses and other current liabilities on the consolidated balance sheets as of September 28, 2024 and September 30, 2023 was $ 4,382,000 and $ 5,962,000 , respectively.

Revenues from gift cards are deferred and recognized upon redemption.

Deferrals are not reduced for potential non-use as we generally have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions in which they are sold.

As of September 30, 2023 and October 1, 2022, the total liability for gift cards in the amounts of approximately $ 340,000 and $ 309,000 , respectively, are included in accrued expenses and other current liabilities in the consolidated balance sheets.

As of September 28, 2024 and September 30, 2023, the total liability for gift cards in the amounts of approximately $ 401,000 and $ 340,000 , respectively, are included in accrued expenses and other current liabilities in the consolidated balance sheets.

Other revenues include purchase service fees which represent commissions earned by a subsidiary of the Company for providing services to other restaurant groups, as well as license fees, property management fees and other rentals.

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Company contributions to the Plan are at the discretion of the Board of Directors.

During the years ended September 30, 2023 and October 1, 2022, the Company did not make any contributions to the Plan.

During the years ended September 28, 2024 and September 30, 2023, the Company did not make any contributions to the Plan.

Income Taxes — Income taxes are accounted for under the asset and liability method whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to the temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

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Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company has recorded a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return.

It is the Company’s policy to recognize interest and penalties related to uncertain tax positions as a component of income tax expense.

Uncertain tax positions are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions.

The Company may recognize tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

The Company re-evaluates uncertain tax positions and considers factors, including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken on tax returns, and changes in circumstances related to a tax position.

Non-controlling interests relating to the income or loss of consolidated partnerships includes no provision for income taxes as any tax liability related thereto is the responsibility of the individual minority investors.

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Stock-Based Compensation — Stock-based compensation represents the cost related to stock-based awards granted to employees and non-employee directors.

The Company measures stock-based compensation at the grant date based on the estimated fair value of the award and recognize the cost (net of estimated forfeitures) as compensation expense on a straight-line basis over the requisite service period.

The Company measures stock-based compensation at the grant date based on the estimated fair value of the award and recognizes the cost (net of estimated forfeitures) as compensation expense on a straight-line basis over the requisite service period.

Upon exercise of options, all excess tax benefits and tax deficiencies resulting from the difference between the deduction for tax purposes and the stock-based compensation cost recognized for financial reporting purposes are included as a component of income tax expense.

Effect of Accounting Pronouncements Adopted in 2023 and Those to be Adopted in Future Periods — We reviewed the accounting pronouncements adopted in 2023, as well as all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.

Recently Adopted Accounting Principles — On October 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No.

2016-13, Measurement of Credit Losses on Financial Instruments , issued by the Financial Accounting Standards Board (“FASB”) and its related amendments using the prospective method.

The new standard changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments, including credit card receivables and receivables from hotel operators where the Company has a location, from an incurred loss model to an expected loss model and adds certain new required disclosures.

Under the expected loss model, entities recognize credit losses to be incurred over the entire contractual term of the instrument rather than delaying recognition of credit losses until it is probable the loss has been incurred.

In accordance with this guidance, the Company evaluates certain criteria, including aging and historical write-offs, current economic conditions of specific customers and future economic conditions to determine the appropriate allowance for credit losses.

The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements — In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) which enhances transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid and to improve the effectiveness of income tax disclosures.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, which is for our fiscal year 2026 and interim periods beginning in the first quarter of our fiscal 2027, with early adoption permitted.

The amendments may be applied prospectively or retrospectively with early adoption permitted.

We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for public entities for fiscal years beginning after December 15, 2023, which is for our fiscal year 2025 and interim periods beginning in the first quarter of our fiscal 2026, with early adoption permitted.

The adoption of this guidance is not expected to have a material impact to our consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses, requiring public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements.

This aims to improve investor insights into company performance.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2024, which is our fiscal year 2026 and interim periods beginning in the first quarter of our fiscal 2027, with early adoption permitted.

The Company is currently evaluating the impact, if any, adoption will have on its consolidated financial statements and disclosures.

No other new accounting pronouncements issued or effective as of September 28, 2024 have had or are expected to have a material impact on our consolidated financial statements.

CONSOLIDATION OF VARIABLE INTEREST ENTITIES

8 unchanged sentences

September 28,

2023 October 1,

2024 September 30,

(in thousands)

4 unchanged sentences

Prepaid expenses and other current assets 29 31

Due from Ark Restaurants Corp.

Due from (to) Ark Restaurants Corp.

and affiliates (1) ( 124 ) 58

12 unchanged sentences

and affiliates are eliminated upon consolidation.

The liabilities of $ 2,345,000 and $ 2,745,000 at September 30, 2023 and October 1, 2022, respectively, recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets and creditors of the VIEs do not have recourse to the general credit of the Company;

The liabilities of $ 880,000 and $ 2,345,000 at September 28, 2024 and September 30, 2023, respectively, recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets and creditors of the VIEs do not have recourse to the general credit of the Company;

rather, they represent claims against the specific assets of the consolidated VIEs.

Conversely, the assets of $ 3,096,000 and $ 4,006,000 at September 30, 2023 and October 1, 2022, respectively, recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets;

rather, these assets can be used only to settle obligations of the three VIEs.

Conversely, the assets of $ 292,000 and $ 3,096,000 at September 28, 2024 and September 30, 2023, respectively, recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets;

rather, these assets can be used only to settle obligations of the three VIEs (see Note 4 - Recent Restaurant Dispositions).

RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

4 unchanged sentences

On June 24, 2022, the Company extended its lease for America at the New York-New York Hotel and Casino in Las Vegas, NV through December 31, 2033.

In connection with the extension, the Company has agreed to spend a minimum of $ 4,000,000 to materially refresh the premises by December 31, 2024, subject to various extensions as set out in the agreement.

No amounts have been expended to date related to this refresh.

In connection with the extension, the Company has agreed to spend a minimum of $ 4,000,000 to materially refresh the premises by December 31, 2025 (as extended from December 31, 2024), subject to further extension as set out in the agreement.

To date approximately $ 100,000 has been spent on this refresh.

On July 21, 2022, the Company extended its lease for the Village Eateries at the New York-New York Hotel and Casino in Las Vegas, NV through December 31, 2034.

As part of this extension, the Broadway Burger Bar and Grill and Gonzalez y Gonzalez , were carved out of the Village Eateries footprint and the extended date for those two locations is December 31, 2033.

In connection with the extension, the Company has agreed to spend a minimum of $ 3,500,000 to materially refresh all three of these premises by March 31, 2024 (as extended from June 30, 2023), subject to various extensions as set out in the agreement.

In connection with the extension, the Company has agreed to spend a minimum of $ 3,500,000 to materially refresh all three of these premises by December 31, 2025 (as extended from June 30, 2023), subject to further extension as set out in the agreement.

To date approximately $ 950,000 has been spent on this refresh.

6 unchanged sentences

RECENT RESTAURANT DISPOSITIONS

On July 5, 2022, the Company terminated its lease for Lucky 7 at the Foxwoods Resort Casino.

The closure did not result in a material change to the Company's operations.

During the 26 weeks ended April 1, 2023, the Company dissolved the entity which owned Clyde Frazier's Wine and Dine , which was closed in September of 2021.

During the year ended September 28, 2024, the Company dissolved the entity which owned Lucky 7 at the Foxwoods Resort and Casino, which was closed in July of 2022.

In connection with the dissolution, the Company reclassified the remaining non-controlling interest balance to additional paid-in capital.

During the year ended September 28, 2024, the Company dissolved the entity which owned Clyde Frazier's Wine and Dine , which was closed in September of 2021.

In connection with the dissolution, the Company reclassified the remaining non-controlling interest balance to additional paid-in capital.

The Company advised the landlord of El Rio Grande (a consolidated VIE) we would be terminating the lease and closing the property permanently on or around January 1, 2025.

In connection with this notification, the Company recorded a loss of $ 876,000 during the year ended September 28, 2024 consisting of:

(i) rent and other costs incurred in accordance with the termination provisions of the lease in the amount of $ 398,000 , (ii) accrued severance and other costs in the amount of $ 94,000 , (iii) an impairment charge related to long-lived assets in the amount of $ 269,000 and (iv) the write-off of our security deposit in the amount of $ 238,000 , all partially offset by a gain related to the write-off of ROU assets and related lease liabilities in the net amount of $ 123,000 .

INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK

2 unchanged sentences

In 2015, the Company invested an additional $ 222,000 in NMR and on February 7, 2017, the Company invested an additional $ 222,000 in NMR, both as a result of capital calls, bringing its total investment to $ 5,108,000 with no change in ownership.

The Company accounts for this investment at cost, less impairment, adjusted for subsequent observable price changes in accordance with Accounting Standards Update ("ASU") No.

The Company accounts for this investment at cost, less impairment, adjusted for subsequent observable price changes in accordance with ASU No.

There are no observable prices for this investment.

During the years ended September 30, 2023 and October 1, 2022, the Company received distributions from NMR in the amounts of $ 52,000 and $ 421,000 , respectively, which are included in other income in the consolidated statements of operations for the years then ended.

During the years ended September 28, 2024 and September 30, 2023, the Company received distributions from NMR in the amounts of $ 26,000 and $ 52,000 , respectively, which are included in other income in the consolidated statements of operations for the years then ended.

The Company evaluated its investment in NMR for impairment and concluded that its fair value exceeds the carrying value.

Accordingly, the Company did not record any impairment during the year ended September 30, 2023 and October 1, 2022.

Accordingly, the Company did not record any impairment during the years ended September 28, 2024 and September 30, 2023.

Any future changes in the carrying value of our investment in NMR will be reflected in earnings.

6 unchanged sentences

The Company’s maximum exposure to loss as a result of its involvement with AM VIE is limited to a receivable from AM VIE’s primary beneficiary (NMR, a related party).

As of September 30, 2023 and October 1, 2022, $ 11,000 and $ 22,000 were due AM VIE by NMR.

As of September 28, 2024 and September 30, 2023, $ 16,000 and $ 11,000 were due AM VIE by NMR.

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 bears interest at 3 %, compounded monthly and added to the principal, and is due in its entirety on June 30, 2029.

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

The principal and accrued interest related to this note in the amounts of $ 1,399,000 and $ 1,357,000 , are included in Investment In and Receivable From New Meadowlands Racetrack in the consolidated balance sheets at September 30, 2023 and October 1, 2022, respectively.

On April 30, 2023, the due date of the note was extended to June 30, 2029.

The principal and accrued interest related to this note in the amounts of $ 1,442,000 and $ 1,399,000 , are included in Investment In and Receivable From New Meadowlands Racetrack in the consolidated balance sheets at September 28, 2024 and September 30, 2023, respectively.

Fixed assets consist of the following:

September 28,

2023 October 1,

2024 September 30,

(in thousands)

6 unchanged sentences

Fixed Assets - Net $ 31,569 $ 34,314

Depreciation and amortization expense related to fixed assets for the years ended September 30, 2023 and October 1, 2022 was $ 4,225,000 and $ 4,193,000 , respectively.

Depreciation and amortization expense related to fixed assets for the years ended September 28, 2024 and September 30, 2023 was $ 4,001,000 and $ 4,225,000 , respectively.

Management continually evaluates unfavorable cash flows, if any, related to underperforming restaurants.

2 unchanged sentences

Estimated fair values of impaired properties are based on comparable valuations, cash flows and/or management judgment.

During the year ended September 28, 2024, impairment indicators were identified at our Sequoia property located in Washington, D.C.

due to lower-than-expected operating results.

Accordingly, the Company tested the recoverability of Sequoia's ROU and long-lived assets and concluded they were not recoverable.

Based on a discounted cash flow analysis, the Company recognized impairment charges of $ 1,561,000 and $ 939,000 related to Sequoia's ROU assets and long-lived assets , respectively.

No impairment charges were recognized related to long-lived assets or ROU assets during the year ended September 30, 2023.

Given the inherent uncertainty in projecting results of restaurants, the Company will continue to monitor the recoverability of the carrying value of the assets of Sequoia and several other restaurants on an ongoing basis.

If expected performance is not realized, further impairment charges may be recognized in future periods, and such charges could be material.

GOODWILL, TRADEMARKS AND INTANGIBLE ASSETS

5 unchanged sentences

Due to the volatility of the Company's stock price in the fourth quarter of fiscal 2023, the upcoming expiration of the current Bryant Park Grill & Cafe and The Porch at Bryant Park leases on April 30, 2025 and the related requests for proposals from the landlord for both locations received in July 2023 and September 2023, respectively (see Note 11 - Commitments and Contingencies to the Consolidated Financial Statements), the Company determined that there were indicators of potential impairment of its goodwill as of September 30, 2023.

As such, the Company performed a qualitative and quantitative assessment for its goodwill.

As of September 28, 2024, there had been a lack of communication from the landlord regarding our proposals.

In August 2024, the Company became aware that the landlord was in discussions with another operator.

Accordingly, the Company performed qualitative and quantitative assessments for its goodwill as of September 28, 2024 and September 30, 2023.

The fair value of the equity was determined using the income approach.

In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected future after-tax cash flows generated and then discounting those cash flows to present value, reflecting the relevant risks associated with the achievement of projected cash flows, the possibility that the Bryant Park Grill & Cafe and The Porch at Bryant Park leases may not be renewed beyond their expirations on April 30, 2025 (see Note 11 - Commitments and Contingencies), and the time value of money.

Given the relatively low volume of shares traded as of September 28, 2024 and September 30, 2023, the Company determined the income approach provided the best approximation of fair value.

This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted cash flows from operations, and discount rates that reflect the risk inherent in the future cash flows.

Based on the impairment analysis, the carrying amount of our equity exceeded its estimated fair value, which indicated an impairment of the carrying value of our goodwill.

Accordingly, during the fourth quarter of fiscal 2023, the Company recorded a goodwill impairment charge of $ 10,000,000 , of which $ 8,000,000 was deductible for tax purposes and resulted in a deferred income tax benefit of $ 2,300,000 .

Such impairment has been attributed to factors such as, but not limited to, a decrease in the market price of the Company's common stock and lower than expected profitability in the fourth quarter of fiscal 2023.

The changes in the carrying amount of goodwill and trademarks for the years ended September 30, 2023 and October 1, 2022 are as follows:

Based on the impairment analysis, the carrying amount of our equity exceeded its estimated fair value, which indicated an impairment of the carrying value of our goodwill at September 28, 2024 and September 30, 2023.

Accordingly, during the fourth quarters of fiscal 2024 and 2023, the Company recorded goodwill impairment charges of $ 4,000,000 and $ 10,000,000 , respectively, of which $ 4,000,000 and $ 8,000,000 , respectively, was deductible for tax purposes and resulted in a deferred income tax benefit of $ 1,074,000 and $ 2,300,000 , respectively.

Such impairments have been attributed to factors such as, but not limited to, a decrease in the market price of the Company's common stock and lower than expected profitability.

The changes in the carrying amount of goodwill and trademarks for the years ended September 28, 2024 and September 30, 2023 are as follows:

Goodwill Trademarks

2 unchanged sentences

Acquired during the year — —

Balance as of October 1, 2022 17,440 4,220

Impairment charge (1) ( 10,000 ) —

Balance as of September 30, 2023 7,440 4,220

Acquired during the year — —

1 unchanged sentence

Balance as of September 28, 2024 $ 3,440 $ 4,220

(1) Accumulated impairment losses as of September 30, 2023 and October 1, 2022 were $ 10,000,000 and $ 0 , respectively.

(1) Accumulated impairment losses as of September 28, 2024 and September 30, 2023 were $ 14,000,000 and $ 10,000,000 , respectively.

Intangible assets consist of the following:

September 28,

2023 October 1,

2024 September 30,

(in thousands)

4 unchanged sentences

(a) Purchased leasehold rights arose from acquiring leases and subleases of various restaurants.

Amortization expense related to intangible assets for the years ended September 30, 2023 and October 1, 2022 was $ 85,000 and $ 104,000 , respectively.

Amortization expense is expected to be $ 85,000 for fiscal 2024 and 2025 and $ 17,000 for fiscal 2026.

Amortization expense related to intangible assets for the years ended September 28, 2024 and September 30, 2023 was $ 89,000 and $ 85,000 , respectively.

Amortization expense is expected to be $ 85,000 for fiscal 2025 and $ 14,000 for fiscal 2026 and 2027.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

1 unchanged sentence

September 28,

2023 October 1,

2024 September 30,

(in thousands)

9 unchanged sentences

All of our real estate leases are classified as operating leases.

We do not have any finance leases as of September 30, 2023 or October 1, 2022.

We do not have any finance leases as of September 28, 2024 or September 30, 2023.

Generally, our real estate leases have initial terms ranging from 10 to 25 years and typically include renewal options.

8 unchanged sentences

The components of lease expense in the consolidated statements of operations are as follows:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

(in thousands)

7 unchanged sentences

Supplemental cash flow information related to leases is as follows:

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

(in thousands)

10 unchanged sentences

September 27, 2025 12,477

September 27, 2025 12,881

October 3, 2026 11,729

1 unchanged sentence

September 30, 2028 11,622

September 29, 2029 11,274

Thereafter 67,864

5 unchanged sentences

September 28,

2023 October 1,

2024 September 30,

(in thousands)

Promissory Note - Rustic Inn purchase

Promissory Note - Shuckers purchase — 3,655

Promissory Note - Oyster House purchase — 2,873

$ 2,617 $ 2,902

Promissory Note - JB's on the Beach purchase

Promissory Note - Sequoia renovation

Promissory Note - Revolving Facility — 7,166

Promissory Note - Blue Moon Fish Company

Paycheck Protection Program Loans — 797

Current maturities ( 5,193 ) ( 1,987 )

12 unchanged sentences

The replacement of LIBOR with SOFR as a reference rate in our debt agreements did not have a material adverse effect on our financial position or materially affect our interest expense.

The Company is currently working with its lender on a new credit agreement which we expect to be completed in the second fiscal quarter of 2025;

however, there can be no assurances that this agreement will be completed.

The Credit Agreement 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.

Agreement 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.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2023 except for the minimum annual net income requirement (as a result of the non-cash goodwill impairment).

The Credit Agreement 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.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 28, 2024 except for the minimum annual net income requirement.

On December 11, 2024, BHBM agreed to waive applicability of this covenant (and any breach arising therefrom) as of September 28, 2024.

2 unchanged sentences

• Promissory Note – Rustic Inn purchase – The principal amount of $ 4,400,000 , which is secured by a mortgage on the Rustic Inn real estate, is payable in 27 equal quarterly installments of $ 71,333 , commencing on September 1, 2018, with a balloon payment of $ 2,474,000 on June 1, 2025, and commencing on the Notes Amendment Effective Date, bears interest at SOFR plus 3.65 % per annum.

• Promissory Note – Shuckers purchase – The principal amount of $ 5,100,000 , which is secured by a mortgage on the Shuckers real estate, is payable in 27 equal quarterly installments of $ 85,000 , commencing on September 1, 2018, with a balloon payment of $ 2,805,000 on June 1, 2025, and commencing on the Notes Amendment Effective Date, bears interest at SOFR plus 3.65 % per annum.

This note was paid in full on April 4, 2023.

• Promissory Note – Oyster House purchase – In connection with the a prior refinancing, this note was amended and restated and separated into two notes.

The first note, in the principal amount of $ 3,300,000 , is secured by a mortgage on the Oyster House Gulf Shores real estate, is payable in 19 equal quarterly installments of $ 117,857 , commencing on September 1, 2018, with a balloon payment of $ 1,060,716 on June 1, 2023, and commencing on the Notes Amendment Effective Date, bears interest at SOFR plus 3.65 % per annum.

The second note, in the principal amount of $ 2,200,000 , is secured by a mortgage on the Oyster House Spanish Fort real estate, is payable in 27 equal quarterly installments of $ 36,667 , commencing on September 1, 2018, with a balloon payment of $ 1,210,000 on June 1, 2025, and commencing on the Notes Amendment Effective Date, bears interest at SOFR plus 3.65 % per annum.

These notes were paid in full on April 4, 2023.

• Promissory Note - JB's on the Beach purchase – On May 15, 2019, the Company issued a promissory note under a prior revolving facility to BHBM for $ 7,000,000 which is payable in 23 equal quarterly installments of $ 250,000 , commencing on September 1, 2019, with a balloon payment of $ 1,250,000 on June 1, 2025 and, commencing on the Notes Amendment Effective Date, bears interest at SOFR plus 3.65 % per annum.

4 unchanged sentences

Paycheck Protection Program Loans

During the year ended October 3, 2020, subsidiaries and consolidated VIEs (the “Borrowers”) of the Company received loan proceeds from several banks (the “Lenders”) in the aggregate amount of $ 14,995,000 (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020.

In addition, during the 13 weeks ended April 3, 2021, one of our consolidated VIEs received a second draw PPP Loan in the amount of $ 111,000 .

The PPP Loans were evidenced by individual promissory notes of each of the Borrowers (together, the “Notes”) in favor of the

Lender, which Notes bore interest at the rate of 1.00% per annum.

Funds from the PPP Loans were to be used only for payroll and related costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred by a Borrower prior to February 15, 2020 (the “Qualifying Expenses”).

Prior to fiscal 2023, the Company received loan proceeds from several banks in the aggregate amount of $ 15,106,000 (the “PPP Loans”) under the Paycheck Protection Program of the CARES Act, which was enacted March 27, 2020.

Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, were to be forgiven if they were used for Qualifying Expenses as described in and in compliance with the CARES Act.

During the years ended September 30, 2023 and October 1, 2022, $ 272,000 and $ 2,420,000 of PPP Loans, respectively (including $ 6,000 and $ 65,000 of accrued interest, respectively), were forgiven.

During the years ended September 30, 2023 and October 1, 2022, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $ 531,000 and $ 1,571,000 , respectively.

As of September 30, 2023, no PPP Loans were outstanding;

During the year ended September 30, 2023, $ 272,000 of PPP Loans (including $ 6,000 of accrued interest), were forgiven.

During the year ended September 30, 2023, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $ 531,000 .

As of September 28, 2024 and September 30, 2023, no PPP Loans were outstanding;

however, the Company was denied forgiveness of one PPP Loan in fiscal 2023 in the amount of $ 285,000 and accordingly such amount was repaid.

The Company filed an appeal concurrent with the repayment, which was granted and the amount was forgiven and refunded to the Company in November 2023.

Such amount is included in other income in the consolidated statement of operations for the year ended September 28, 2024.

Deferred Financing Costs

Deferred financing costs incurred in the amount of $ 304,000 are being amortized over the life of the agreements using the effective interest rate method and included in interest expense.

Amortization expense of $ 63,000 and $ 48,000 is included in interest expense for the years ended September 30, 2023 and October 1, 2022, respectively.

As of September 30, 2023, the aggregate amounts of notes payable maturities are as follows (in thousands):

BHBM Blue Moon Note Total

2024 $ 1,742 $ 244 $ 1,986

2025 5,167 69 5,236

$ 6,909 $ 313 $ 7,222

Amortization expense of $ 53,000 and $ 63,000 is included in interest expense for the years ended September 28, 2024 and September 30, 2023, respectively.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Most of the leases provide for the payment of base rents plus real estate taxes, insurance and other expenses and, in certain instances, for the payment of a percentage of the restaurant’s sales in excess of stipulated amounts at such facility and in one instance based on profits.

In connection with one of our leases, the Company obtained and delivered an irrevocable letter of credit in the amount of approximately $ 542,000 as a security deposit under such lease.

The Company's leases for the Bryant Park Grill & Cafe and The Porch at Bryant Park expire on April 30, 2025.

During July 2023 (for Bryant Park Grill & Cafe) and September 2023 (for The Porch at Bryant Park) , the Company received requests for proposals (the "RFPs") from the landlord which we responded to on October 25, 2023.

The RFPs for both locations are for new 10-year agreements with one five-year renewal option.

The landlord has not indicated when they will be making decisions as to the successful bidder(s).

In connection with two of our leases, the Company obtained and delivered irrevocable letters of credit in the aggregate amount of approximately $ 562,000 as security deposits under such leases.

The Company's agreements with the Bryant Park Corporation (the “Landlord”), (a private non-profit entity that manages Bryant Park under agreements with the New York City Department of Parks & Recreation) for the Bryant Park Grill & Cafe and The Porch at Bryant Park expire on April 30, 2025.

During July 2023 (for the Bryant Park Grill & Cafe ) and September 2023 (for The Porch at Bryant Park) , the Company received requests for proposals (the "RFPs") from the Landlord to which we responded on October 26, 2023.

The agreements offered under the RFPs for both locations are for new 10-year agreements, with one five-year renewal option.

Any operator awarded the agreements must be approved by both the New York City Department of Parks & Recreation and the New York Public Library.

To date, the landlord has not announced the selection of a successful bidder;

however, the landlord has made public statements of its intention to select an operator other than the Company.

In response to these public statements and other information obtained by the Company, management has engaged outside advisors who have been assisting with our efforts to obtain the extensions by ensuring the RFP awards process is both fair and transparent.

We intend to pursue all available options to protect our interests.

Legal Proceedings — In the ordinary course its business, the Company is a party to various lawsuits arising from accidents at its restaurants and workers’ compensation claims, which are generally handled by the Company’s insurance carriers.

The employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of different restaurants has resulted in the institution, from time to time, of litigation alleging violation by the Company of employment discrimination laws.

employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of different restaurants has resulted in the institution, from time to time, of litigation alleging violation by the Company of employment discrimination laws.

Management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the Company and certain subsidiaries as well as certain officers of the Company (the “Defendants”).

Plaintiffs alleged, on behalf of themselves and the putative class, that the Company violated certain of the New York State Labor Laws and related regulations.

In December 2020, the parties reached a settlement agreement resolving all issues alleged in the Complaint, which received final approval by the New York State Supreme Court in October 2022, for approximately $ 600,000 , which was previously accrued on the October 1, 2022 consolidated balance sheet.

Under the terms of the court approved settlement agreement, settlement proceeds were distributed to the Plaintiffs in the first quarter of fiscal 2023.

STOCK OPTIONS

8 unchanged sentences

The options expire ten years after the date of grant.

During the year ended September 30, 2023, no options to purchase shares of common stock were issued by the Company.

During the year ended October 1, 2022, options to purchase 22,500 shares of common stock at an exercise price of $ 17.80 per share were granted to employees and directors of the Company (the "2022 Grant").

Such options are exercisable as to 25 % of the shares commencing on the first anniversary of the date of grant and 25 % each year thereafter.

On January 18, 2024, options to purchase 107,500 shares of common stock at an exercise price of $ 14.80 per share were granted to officers and directors of the Company under the 2022 Stock Option Plan (the "2024 Grant").

Such options are exercisable as to 25 % of the shares commencing on the first anniversary of the date of grant and as to an additional 25 % on each yearly anniversary thereafter.

The grant date fair value of these stock options was $ 4.39 per share and totaled approximately $ 472,000 .

During the year ended September 28, 2023, no options to purchase shares of common stock were issued by the Company.

The Company generally issues new shares upon the exercise of employee stock options.

8 unchanged sentences

Outstanding, beginning of

period 544,125 $ 19.63 6.1 years 596,476 $ 19.21

year 471,250 $ 19.57 5.2 years 544,125 $ 19.63

Granted 107,500 $ 14.80 —

2 unchanged sentences

Outstanding and expected to

vest, end of period 471,250 $ 19.57 5.2 years $ 413,000 544,125 $ 19.63 $ 840,000

Exercisable, end of period 310,125 $ 20.21 4.4 years $ 207,000 302,125 $ 21.98 $ —

vest, end of year 415,750 $ 17.89 6.3 years $ 83,000 471,250 $ 19.57 $ 413,000

Exercisable, end of year 276,875 $ 19.92 5.4 years $ 41,000 310,125 $ 20.21 $ 207,000

Shares available for future

grant 370,000 477,500

Compensation cost charged to operations for the years ended September 30, 2023 and October 1, 2022 for share-based compensation programs was approximately $ 314,000 and $ 298,000 , respectively.

The compensation cost recognized is classified as a general and administrative expense in the consolidated statements of operations.

Compensation cost charged to operations for the years ended September 28, 2024 and September 30, 2023 for stock-based compensation programs was approximately $ 237,000 and $ 314,000 , respectively, and total stock-based compensation activity for the year ended September 28, 2024 was ($ 919,000 ) which includes reversal of stock-based compensation expense relating

to forfeitures in the amount of $ 1,156,000 .

Compensation cost recognized is classified as a general and administrative expense in the consolidated statements of operations.

As of September 28, 2024, there was approximately $ 532,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 2.5 years.

16 unchanged sentences

Under the Section 162(m) Cash Bonus Plan, compensation paid in excess of $ 1,000,000 to any employee who is the chief executive officer, or one of the three highest paid executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) is not tax deductible.

The Inflation Reduction Act of 2022 (the “Act”) was signed into U.S.

law on August 16, 2022.

The Act includes various tax provisions, including an excise tax on stock repurchases, expanded tax credits for clean energy incentives, and a corporate alternative minimum tax that generally applies to U.S.

corporations with average adjusted financial statement income over a three-year period in excess of $1 billion.

The Company does not expect the Act to materially impact its financial statements.

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.

During the years ended September 30, 2023 and October 1, 2022, the Company recorded income of $ 272,000 and $ 2,420,000 , respectively (including $ 6,000 and $ 65,000 of accrued interest, respectively), for financial reporting purposes related to the forgiveness of its PPP Loans.

During the years ended September 28, 2024 and September 30, 2023, the Company recorded income of $ 285,000 and $ 272,000 , respectively, for financial reporting purposes related to the forgiveness of its PPP Loans.

The forgiveness of these amounts is not taxable.

The provision for income taxes consists of the following:

The benefit for income taxes consists of the following:

September 28,

2023 October 1,

2024 September 30,

(in thousands)

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( 1,061 ) ( 620 )

$ ( 815 ) $ ( 64 )

The effective tax rate differs from the U.S.

1 unchanged sentence

September 28,

2023 October 1,

2024 September 30,

(in thousands)

4 unchanged sentences

Tax credits ( 943 ) ( 961 )

Income (loss) attributable to non-controlling interest ( 120 ) ( 188 )

Loss attributable to non-controlling interest ( 32 ) ( 120 )

Changes in tax rates 5 49

5 unchanged sentences

September 28,

2023 October 1,

2024 September 30,

(in thousands)

17 unchanged sentences

In the assessment of the valuation allowance, appropriate consideration was given to all positive and negative evidence including reversal of existing taxable temporary differences, forecasts of future earnings and the duration of statutory carryforward periods.

The Company recorded a valuation allowance of $ 3,273,000 and $ 1,407,000 as of September 30, 2023 and October 1, 2022, respectively, attributable to certain federal tax credits and state and local net operating loss carryforwards which are not realizable on a more-likely-than-not basis.

During the year ended September 30, 2023, the Company’s valuation allowance increased by approximately $ 1,803,000 related to certain general business credit carryforwards that are not expected to be realized on a more-likely-than-not basis.

During the year ended October 1, 2022, the Company’s valuation allowance increased by approximately $ 149,000 as the Company determined that certain state net operating losses became unrealizable on a more-likely-than-not basis due to certain restaurant closures in the related period.

The Company recorded a valuation allowance of $ 4,236,000 and $ 3,273,000 as of September 28, 2024 and September 30, 2023, respectively, attributable to certain federal tax credits and state and local net operating loss carryforwards which are not realizable on a more-likely-than-not basis.

During the years ended September 28, 2024 and September 30, 2023, the Company’s valuation allowance increased by approximately $ 963,000 and $ 1,866,000 , respectively, primarily related to certain general business credit carryforwards that are not expected to be realized on a more-likely-than-not basis.

As of September 28, 2024, the Company had General Business Credit carryforwards of approximately $ 3,376,000 which expire through fiscal 2044.

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September 28,

2023 October 1,

2024 September 30,

(in thousands)

4 unchanged sentences

The entire amount of unrecognized tax benefits if recognized would reduce our annual effective tax rate.

For the years ended September 30, 2023 and October 1, 2022, there are no amounts accrued for the payment of interest and penalties.

For the years ended September 28, 2024 and September 30, 2023, there are no amounts accrued for the payment of interest and penalties.

The Company does not expect a significant change to its unrecognized tax benefits within the next 12 months.

8 unchanged sentences

September 28,

2023 October 1,

2024 September 30,

(in thousands)

4 unchanged sentences

For the year ended September 28, 2024, the dilutive effect of options to purchase 328,250 shares of common stock at exercise prices ranging from $ 10.65 per share to $ 22.30 per share were not included in diluted earnings per share as their impact would have been anti-dilutive.

For the year ended October 1, 2022, the dilutive effect of options to purchase 329,125 shares of common stock at exercise prices ranging from $ 20.18 per share to $ 22.50 per share were not included in diluted earnings per share as their impact would have been anti-dilutive.

On November 9, 2022, February 9, 2023, May 9, 2023 and August 8, 2023, the Board of Directors of the Company (the "Board") declared quarterly cash dividends of $ 0.125 , $ 0.125 , $ 0.1875 and $ 0.1875 , respectively, per share, which were paid on December 13, 2022, March 14, 2023, June 13, 2023 and September 13, 2023 to the stockholders of record of the Company's common stock at the close of business on November 30, 2022, February 28, 2023, May 31, 2023 and August 31, 2023.

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.

For the year ended September 30, 2023, the dilutive effect of options to purchase 471,250 shares of common stock at exercise prices ranging from $ 10.65 per share to $ 22.50 per share were not included in diluted earnings per share as their impact would have been anti-dilutive.

On November 8, 2023, February 6, 2024, and May 7, 2024, the Board of Directors of the Company (the "Board") declared quarterly cash dividends of $ 0.1875 , $ 0.1875 , and $ 0.1875 , respectively, per share, which were paid on December 13, 2023, March 13, 2024, and June 12, 2024, respectively, to the stockholders of record of the Company's common stock at the close of business on November 30, 2023, February 29, 2024, and May 31, 2024, respectively.

The Board has not declared any dividends since May 7, 2024.

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

RELATED PARTY TRANSACTIONS

Employee receivables totaled approximately $ 328,000 and $ 440,000 at September 30, 2023 and October 1, 2022, respectively.

Such amounts consist of loans that are payable on demand, bear interest at the minimum statutory rate ( 5.12 % at September 30, 2023 and 3.05 % at October 1, 2022), and are net of reserves for collectability.

Employee receivables totaled approximately $ 255,000 and $ 328,000 at September 28, 2024 and September 30, 2023, respectively.

Such amounts consist of loans that are payable on demand, bear interest at the minimum statutory rate ( 4.57 % at September 28, 2024 and 5.12 % at September 30, 2023), and are net of reserves for collectability.

During the year ended September 28, 2024, the Company made payments totaling $ 43,000 to the mother of Samuel Weinstein, the Co-Chief Operating Officer, for design services.

SUBSEQUENT EVENTS

On November 8, 2023, the Board of Directors declared a quarterly cash dividend of $ 0.1875 per share to be paid on December 13, 2023 to shareholders of record of the Company's common stock at the close of business on November 30, 2023.

On November 26, 2024, the Company agreed to terminate its lease for the food court at The Hard Rock Hotel and Casino in Tampa, FL.

The termination agreement is subject to the approval of the United States Department of the Interior, Bureau of Indian Affairs.

In exchange for vacating the premises sometime in late December 2024, Ark Hollywood/Tampa Investment LLC, a subsidiary of the Company, (in which we own a 65 % interest) will receive a termination payment in the amount of $ 5,500,000 and all obligations under the lease will cease.

The Company expects to record a gain related to the termination payment and it is expected that Ark Hollywood/Tampa Investment LLC will distribute approximately 35 % of the net proceeds, after expenses, to the other equity holders of Ark Hollywood/Tampa Investment LLC.

Exhibits Index

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*97.1 Incentive-Based Compensation Clawback Policy.

97.10 Incentive-Based Compensation Clawback Policy, incorporated by reference to Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023

*101.INS XBRL Instance Document

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(Michael Weinstein)

/s/ Vincent Pascal Senior Vice President and Director December 21, 2023

(Vincent Pascal)

/s/ Anthony J.

11 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-K

Item 9A. Controls and Procedures