What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-13 · 91 added, 75 removed, 171 unchanged (49% of the section changed)

15 unchanged sentences

In the second quarter of 2025, the Landlord stated publicly that it had selected a new operator for the Bryant Park Grill & Café and The Porch at Bryant Park .

However, to the best of our knowledge, no agreements between the Landlord and the selected operator have received the approvals of either the City of New York Department of Parks & Recreation or the New York Public Library, both of which are required before any new lease can become effective.

However, to the best of our knowledge, no agreements between the Landlord and the selected operator have received the approvals of either the City of New York Department of Parks & Recreation or the New York Public Library, of which both approvals are required before any new lease can become effective.

Management has been working with outside advisors in assisting with our efforts to obtain the extensions by ensuring the RFP awards process was both fair and transparent.

On March 28, 2025, we filed a complaint in New York State Supreme Court (the "Court"), alleging among other things, that the bid process conducted by the Landlord was defective, failed to comply with the provisions of the agreements underlying the Landlord’s right to operate Bryant Park and violated applicable law;

On March 28, 2025, we filed a complaint in New York State Supreme Court (the "New York Action"), alleging among other things, that the bid process conducted by the Landlord was defective, failed to comply with the provisions of the agreements underlying the Landlord’s right to operate Bryant Park and violated applicable law;

that a lease was being awarded to a lower bidder with a limited, unsuccessful track record in the hospitality business;

and that the award of the Cafe lease violated our right of first lease under our lease agreements.

As part of the relief sought, we are requesting that the Court declare that, under the circumstances presented, the Landlord was required to accept—and should have accepted —our submitted bids.

As part of the relief sought in the New York Action, we are requesting that the Court declare that, under the circumstances presented, the Landlord was required to accept—and should have accepted —our submitted bids.

In addition, on March 28, 2025, we also filed a motion for a preliminary injunction in Court to enjoin the Landlord from commencing legal proceedings to evict the Company from the Bryant Park Grill & Café and The Porch at Bryant Park premises.

3 unchanged sentences

That motion is now pending.

While the Company has received a “notice to quit” the premises, no lawsuit has been commenced against the Company to terminate its tenancy.

The Company has received from the Landlord a “notice to quit” the premises and for the Company to terminate its tenancy.

On June 16, 2025, the Company filed an amended complaint in the New York Action, adding a cause of action for age discrimination by the Landlord in its selection of a new operator for the Bryant Park Grill & Café and The Porch at Bryant Park .

On June 26, 2025, the Landlord filed counterclaims against the Company in the New York Action seeking, among other things, to eject the Company from the Bryant Park Grill & Café and The Porch at Bryant Park premises.

The Company has continued to make all required use and occupancy payments for the Bryant Park Grill & Café and The Porch at Bryant Park , and will continue to make such payments.

As of the date of this filing, we continue to operate the above properties as a holdover tenant and intend to do so until we are either awarded the lease extensions or ordered to vacate the premises.

The underlying lawsuit filed by the Company to protect its right continues, and we will pursue all available options to protect the Company's interests.

The underlying lawsuit filed by the Company to protect its rights continues, and we will pursue all available options to protect the Company's interests.

Management, after consultation with legal counsel, is unable to predict the outcome of this matter at this time.

While the outcome of these proceedings cannot be predicted with certainty, The Bryant Park Grill & Cafe and The Porch at Bryant Park , collectively, accounted for $12.7 million and $13.6 million of our total revenues for the 26 weeks ended March 28, 2025 and March 29, 2024, respectively, which represented approximately 15.0% and 15.1% of our total revenue for such periods, respectively.

The Company’s inability to extend or renew these leases on favorable terms, if at all, could have a material adverse effect on our business, financial condition, and results of operations.

While the outcome of these proceedings cannot be predicted with certainty, the Bryant Park Grill & Cafe and The Porch at Bryant Park , collectively, accounted for $19.7 million and $23.3 million of our total revenues for the 39 weeks ended June 28, 2025 and June 29, 2024,

respectively, which represented approximately 15.4% and 16.7% of our total revenue for such periods, respectively.

If the Company is unable to prevail in the above actions and/or is unable to extend or renew these leases on favorable terms, if at all, it could have a material adverse effect on our business, financial condition, and results of operations.

Inflation and Other Matters

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

As of March 29, 2025, the Company owned and operated 16 restaurants and bars, 12 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 June 28, 2025, the Company owned and operated 16 restaurants and bars, 12 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 components into a single operating segment in accordance with applicable accounting guidance.

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Under this method certain years will contain 53 weeks.

The periods ended March 29, 2025 and March 30, 2024 each included 13 and 26 weeks.

The periods ended June 28, 2025 and June 29, 2024 each included 13 and 39 weeks.

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

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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.

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

Results of Operations

The Company's operating loss for the 13 weeks ended March 29, 2025 (which includes a gain on the closure of El Rio Grande of $140,000 and a goodwill impairment charge of $3,440,000) increased 284.1% as compared to an operating loss in the same period of the prior year.

Excluding the El Rio Grande closure gain and the goodwill impairment charge, the operating loss of $1,317,000 for the 13 weeks ended March 29, 2025 increased 9.6% as compared to an operating loss in the same period of the prior year.

The Company's operating income for the 26 weeks ended March 29, 2025 (which includes a loss on the closure of El Rio Grande of $5,000, a gain on the termination of our Tampa Food Court lease of $5,235,000, and a goodwill impairment charge of $3,440,000) increased 167.6% as compared to the same period of the prior year.

Excluding the El Rio Grande closure loss, the Tampa Food Court lease termination gain, and the goodwill impairment charge, the operating loss of $717,000 for the 26 weeks ended March 29, 2025 compared to operating income of $401,000 for March 30, 2024, decreased of 278.8%.

The following table summarizes the significant components of the Company’s operating results for the 13- and 26-week periods ended March 29, 2025 and March 30, 2024:

The Company's operating loss for the 13 weeks ended June 28, 2025 (which includes impairment charges of $2,940,000 and $1,760,000 related to Sequoia's ROU and long-lived assets, respectively, and a gain on the closure of El Rio Grande of $178,000) decreased 514.4% as compared to operating income in the same period of the prior year (which includes impairment charges of $1,561,000 and $939,000 related to Sequoia's ROU and long-lived assets, respectively).

Excluding the above items in the current and prior periods, adjusted operating income of $1,107,000 for the 13 weeks ended June 28, 2025 decreased 66.7% as compared to adjusted operating income of $3,324,000 for the 39 weeks ended June 29, 2024.

The Company's operating income for the 39 weeks ended June 28, 2025 (which includes:

(i) a gain on the closure of El Rio Grande of $173,000, (ii) a gain on the termination of our Tampa Food Court lease of $5,235,000, (iii) impairment charges of $2,940,000 and $1,760,000 related to Sequoia's ROU and long-lived assets, respectively, and (iv) a goodwill impairment charge of $3,440,000) decreased 291.2% as compared to the same period of the prior year (which includes impairment charges of $1,561,000 and $939,000 related to Sequoia's ROU assets and long-lived assets, respectively).

Excluding the above items in the current and prior periods, adjusted operating income of $390,000 for the 39 weeks ended June 28, 2025 decreased 89.5% compared to adjusted operating income of $3,725,000 for the 39 weeks ended June 29, 2024.

The following table summarizes the significant components of the Company’s operating results for the 13- and 39-week periods ended June 28, 2025 and June 29, 2024:

13 Weeks Ended Variance 39 Weeks Ended Variance

2025 March 30,

2024 $ % March 29,

2025 March 30,

2025 June 29,

2024 $ % June 28,

2025 June 29,

(in thousands) (in thousands)

11 unchanged sentences

Depreciation and amortization 964 1,033 (69) -6.7 % 2,443 3,181 (738) -23.2 %

(Gain) Loss on closure of El Rio

Gain on closure of El Rio

(178) — (178) N/A (173) — (173) N/A

1 unchanged sentence

— — — N/A (5,235) — (5,235) N/A

Impairment losses on right-of

use and long-lived assets 4,700 2,500 2,200 N/A 4,700 2,500 2,200 N/A

Goodwill impairment — — — N/A 3,440 — 3,440 N/A

1 unchanged sentence

OPERATING INCOME (LOSS) $ (3,415) $ 824 $ (4,239) -514.4 % $ (2,342) $ 1,225 $ (3,567) -291.2 %

During the 13- and 26-week periods ended March 29, 2025, revenues decreased 6.0% and 5.6%, respectively, as compared to revenues for the 13- and 26-week periods ended March 30, 2024.

During the 13- and 39-week periods ended June 28, 2025, revenues decreased 13.3% and 8.4%, respectively, as compared to revenues for the 13- and 39-week periods ended June 29, 2024.

We attribute this decrease primarily to the decreases in same-store sales discussed below and the closures of El Rio Grande and the Tampa Food Court .

Food and Beverage Same-Store Sales

On a Company-wide basis, same-store sales increased 0.4% during the 13 weeks ended March 29, 2025 as compared to the same period of last year as follows:

On a Company-wide basis, same-store sales decreased 7.4% during the 13 weeks ended June 28, 2025 as compared to the same period of last year as follows:

13 Weeks Ended Variance

2025 March 30,

2025 June 29,

(in thousands)

9 unchanged sentences

Food and beverage sales $ 42,937 $ 49,176

Same-store sales in Las Vegas increased 1.3% which we attribute primarily to an increase in our event business at the New York-New York Hotel and Casino.

Same-store sales in New York decreased 8.1% which we attribute primarily to a decrease in revenue from our event business.

Same-store sales in Las Vegas decreased 2.3% as a result of lower than expected headcounts from competition at Yolos located in Planet Hollywood Resort & Casino.

Same-store sales in New York decreased 20.9% which we attribute primarily to decreases in both catering and a la carte revenue at the Bryant Park Grill as a result of the negative publicity related to our dispute with the landlord.

Same-store sales in Washington, D.C.

decreased 4.2% which we attribute primarily to lower headcounts.

decreased 20.9% which we attribute primarily to lower headcounts as a result of challenging conditions associated with hybrid work schedules, government layoffs and elevated crime rates.

Same-store sales in Atlantic City, NJ decreased 18.9% which we attribute primarily to lower than expected customer traffic at the property where we are located.

Same-store sales in Alabama decreased 3.2% which we attribute primarily lower customer traffic as a result of inclement weather.

Same-store sales in Alabama decreased 6.3% which we attribute primarily to lower customer traffic as a result of economic pressures on the customers who frequent our properties.

Same-store sales in Florida increased 1.8% which we attribute primarily to increased headcounts.

Other food and beverage sales consist of sales related to properties that were closed and other fees.

On a Company-wide basis, same-store sales decreased 1.0% during the 26 weeks ended March 29, 2025 as compared to the same period of last year as follows:

Other food and beverage sales consist of sales related to properties that were closed ( El Rio Grande and the Tampa Food Court) and other fees.

On a Company-wide basis, same-store sales decreased 3.3% during the 39 weeks ended June 28, 2025 as compared to the same period of last year as follows:

39 Weeks Ended Variance

2025 March 30,

2025 June 29,

(in thousands)

9 unchanged sentences

Food and beverage sales $ 126,503 $ 136,994

Same-store sales in Las Vegas decreased 1.4% which we attribute primarily to lower customer traffic at the New York-New York Hotel and Casino.

Same-store sales in New York decreased 3.4% which we attribute primarily to a decrease in revenue from our event business.

Same-store sales in Las Vegas decreased 1.7% as a result of lower than expected headcounts from competition at Yolos located in Planet Hollywood Resort & Casino.

Same-store sales in New York decreased 10.4% which we attribute primarily to decreases in both catering and a la carte revenue at the Bryant Park Grill as a result of the negative publicity related to our dispute with the landlord.

Same-store sales in Washington, D.C.

decreased 13.0% which we attribute primarily to lower headcounts, especially during lunch and after-work hours, which we attribute to continued hybrid work schedules in the first half of the period.

decreased 16.6% which we attribute primarily to lower headcounts as a result of challenging conditions in the area associated with hybrid work schedules, government layoffs and elevated crime rates.

Same-store sales in Atlantic City, NJ decreased 11.1% which we attribute primarily to lower than expected customer traffic at the property where we are located.

Same-store sales in Alabama increased 1.5% which we attribute primarily to better-than-expected customer traffic combined with targeted menu price increases first half of the period partially offset by lower customer traffic in the second half of the period as a result of inclement weather.

Same-store sales in Alabama decreased 2.1% which we attribute primarily to lower customer traffic in the second half of the period as a result of inclement weather and economic pressures on the customers who frequent our properties, partially offset by targeted menu price increases in the first quarter.

Same-store sales in Florida increased 2.0% which we attribute primarily to increased headcounts.

Other food and beverage sales consist of sales related to properties that were closed and other fees.

Other food and beverage sales consist of sales related to properties that were closed ( El Rio Grande and the Tampa Food Court) and other fees.

Costs and Expenses

Costs and expenses for the 13 and 26 weeks ended March 29, 2025 and March 30, 2024 were as follows (in thousands):

Costs and expenses for the 13 and 39 weeks ended June 28, 2025 and June 29, 2024 were as follows (in thousands):

13 Weeks Ended

Revenues 13 Weeks Ended

March 30, 2024 %

June 29, 2024 %

Revenues Increase

1 unchanged sentence

Revenues 39 Weeks Ended

March 30, 2024 %

June 29, 2024 %

Revenues Increase

9 unchanged sentences

amortization 964 2.2 % 1,033 2.0 % (69) -6.7 % 2,443 1.9 % 3,181 2.3 % (738) -23.2 %

(Gain) loss on closure of El Rio Grande (140) -0.4 % — — % (140) N/A 5 — % — — % 5 N/A

Gain on closure of El Rio Grande (178) -0.4 % — — % (178) N/A (173) -0.1 % — — % (173) N/A

Gain on termination of Tampa Food Court lease — — % — — % — N/A (5,235) -4.1 % — — % (5,235) N/A

Impairment losses on right-of-use and long-lived assets 4,700 10.8 % 2,500 5.0 % 2,200 N/A 4,700 3.7 % 2,500 1.8 % 2,200 N/A

Goodwill impairment — — % — — % — N/A 3,440 2.7 % — — % 3,440 N/A

Total costs and expenses $ 47,130 $ 49,572 $ (2,442) $ 130,770 $ 138,914 $ (8,144)

Food and beverage costs as a percentage of total revenues for the 13 weeks ended March 29, 2025 as compared with the same period of last year increased marginally.

Food and beverage costs as a percentage of total revenues for the 26 weeks ended March 29, 2025 as compared with the same period of last year increased as a result of increases in commodity prices, which had been easing for several quarters, combined with a weaker event business in New York City in the first quarter of the current year compared to the prior year.

Payroll expenses as a percentage of total revenues for the 13 weeks ended March 29, 2025 as compared with the same period of last year decreased as a result of better management of overtime hours.

Payroll expense as a percentage of total revenue for the 26 weeks ended March 29, 2025 as compared with the same period of last year increased marginally as a result of increasing minimum wages in the states where we operate partially offset by better management of overtime hours.

Occupancy expenses as a percentage of total revenues for the 13 and 26 weeks ended March 29, 2025 increased marginally as compared with the same period of last year primarily as a result of increases in base rents and increases in property and liability insurance premiums.

Other operating costs and expenses as a percentage of total revenues for the 13 and 26 weeks ended March 29, 2025 as compared to the same period of last year increased marginally primarily as a result of inflation.

General and administrative expenses (which relate solely to the corporate office in New York City) for the 13 and 26 weeks ended March 29, 2025 increased as compared to the same periods of last year primarily as a result of increased legal and consulting fees related to the Bryant Park Grill & Café and The Porch at Bryant Park leases partially offset by lower bonus accruals in the current period.

Depreciation and amortization expense for the 13 and 26 weeks ended March 29, 2025 decreased slightly as compared to the same period of last year primarily as a result of certain assets becoming fully depreciated and the removal of assets associated with El Rio Grande and the Tampa Food Court .

Food and beverage costs as a percentage of total revenues for the 13 and 39 weeks ended June 28, 2025 increased as compared with the same periods of last year as a result of increases in commodity prices, which had been easing for several quarters, combined with a weaker event business in New York City and Washington, D.C.

in the first and third quarters of the current year compared to the prior year.

Payroll expenses as a percentage of total revenues for the 13 and 39 weeks ended June 28, 2025 increased marginally as compared with the same periods of last year as a result of increasing minimum wages in the states where we operate partially offset by better management of overtime hours.

Occupancy expenses as a percentage of total revenues for the 13 and 39 weeks ended June 28, 2025 increased marginally as compared with the same period of last year primarily as a result of increases in base rents and increases in property and liability insurance premiums partially offset by lower percentage rents as a result of the sales decreases discussed above.

Other operating costs and expenses as a percentage of total revenues for the 13 and 39 weeks ended June 28, 2025 increased as compared to the same period of last year primarily as a result of inflation and restaurant-level legal fees incurred in connection with the Bryant Park Grill & Café and The Porch at Bryant Park dispute with the landlord.

General and administrative expenses (which relate solely to the corporate office in New York City) for the 13 and 39 weeks ended June 28, 2025 increased as compared to the same periods of last year primarily as a result of increased consulting fees partially offset by lower bonus accruals in the current period.

Depreciation and amortization expense for the 13 and 39 weeks ended June 28, 2025 decreased as compared to the same periods of last year primarily as a result of certain assets becoming fully depreciated and the removal of assets associated with El Rio Grande and the Tampa Food Court .

(Gain) Loss on Closure of El Rio Grande

2 unchanged sentences

The property closed permanently on January 3, 2025 and was vacated and delivered to the landlord on April 30, 2025.

During the 13 weeks ended March 29, 2025, the Company recognized a gain of $140,000 as a result of refinements of estimates related to final negotiations with the landlord.

During the 26 weeks ended March 29, 2025, the Company recognized a loss in the amount of $5,000 as a result of additional operating losses during the 13 weeks ended December 28, 2024 in the amount of $145,000 offset by the above refinements of estimates related to final negotiations with the landlord.

During the 13 weeks ended June 28, 2025, the Company recognized a gain of $178,000 as a result of refinements of estimates.

During the 39 weeks ended June 28, 2025, the Company recognized a gain in the amount of $173,000 as a result of additional operating losses by the above refinements of estimates.

Gain on Termination of Tampa Food Court Lease

2 unchanged sentences

During the 13 weeks ended March 29, 2025, Ark Hollywood/Tampa Investment LLC distributed approximately $1,710,000 of the net proceeds, after expenses, to the other equity holders of Ark Hollywood/Tampa Investment LLC.

Impairment Losses on Right-of-Use and Long-lived Assets

During the 13 weeks ended June 29, 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 and long-lived assets, respectively.

The Company continued to monitor the performance of Sequoia throughout fiscal 2025 and, as a result of lower than expected operating results we tested the recoverability of its ROU and long-lived assets as of June 28, 2025.

Based on a discounted cash flow analysis, we recognized additional impairment charges of $2,940,000 and $1,760,000 during the 13 weeks ended June 28, 2025 related to Sequoia's ROU and long-lived assets, respectively.

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 Impairment

3 unchanged sentences

As a result, the Company performed an interim quantitative impairment test and based on the results of the assessment, the fair value of our equity was determined to be less than its carrying amount.

Accordingly, the Company recognized a non-cash impairment charge of the remaining balance of its goodwill in the amount of $3,440,000 in our consolidated

condensed statements of operations for the 13 and 26 weeks ended March 29, 2025.

The Company did not record any impairment to its goodwill during the 13 and 26 weeks ended March 30, 2024.

Accordingly, the Company recognized a non-cash impairment charge of the remaining balance of its goodwill in the amount of $3,440,000 in our consolidated condensed statements of operations for the 39 weeks ended June 28, 2025.

The Company did not record any impairment to its goodwill during the 13 and 39 weeks ended June 29, 2024.

Gain on Sale of Condominiums

During the 13 weeks ended June 28, 2025, the Company sold two of the 14 condominium units it owns at the Island Beach Resort in Jensen Beach, FL which is adjacent to our Shuckers restaurant.

In connection with the sales, the Company received net proceeds of $839,000 and recorded a gain of $391,000.

The Company intends to sell all of these units subject to market forces.

Liquidity and Capital Resources

4 unchanged sentences

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

As of March 29, 2025, we had a cash and cash equivalents balance of $11,124,000.

The Company had a working capital deficit of $6,787,000 at March 29, 2025 as compared with a working capital deficit of $10,659,000 at March 30, 2024.

This decrease in the deficit is primarily the result of the payment received in connection with the termination of the Tampa Food Court lease.

As of June 28, 2025, we had a cash and cash equivalents balance of $12,325,000.

The Company had a working capital deficit of $2,767,000 at June 28, 2025 as compared with a working capital deficit of $10,659,000 at June 29, 2024.

This decrease in the deficit is primarily the result of the payment received in connection with the termination of the Tampa Food Court lease, amendments to the due dates of our notes payable and proceeds from the sales of the two condominiums.

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the cost of food and other raw materials, labor, energy and other supplies and services.

6 unchanged sentences

There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns.

Cash Flows for 26 Weeks Ended March 29, 2025 and March 30, 2024

Net cash used in operating activities for the 26 weeks ended March 29, 2025 was $734,000 as compared to net cash provided by operating activities of $766,000 in the same period as last year.

This decrease resulted primarily from a decrease in operating income, excluding a gain in the amount of $5,235,000 on the termination of our Tampa Food Court lease and a goodwill impairment charge in the amount of $3,440,000.

Net cash provided by investing activities for the 26 weeks ended March 29, 2025 was $4,626,000 as compared to cash used in investing activities of $596,000 in the same period as last year.

This increase resulted primarily from the payment received in connection with the termination of our Tampa Food Court lease.

Net cash used in financing activities for the 26 weeks ended March 29, 2025 and March 30, 2024 was $3,041,000 and $3,173,000, respectively, and resulted primarily from principal payments on notes payable and the payment of distributions to non-controlling interests and in the prior year the payment of dividends.

Cash Flows for 39 Weeks Ended June 28, 2025 and June 29, 2024

Net cash provided by operating activities for the 39 weeks ended June 28, 2025 was $1,119,000 as compared to $3,926,000 in the same period as last year.

This decrease resulted primarily from a decrease in operating income, excluding:

(i) a loss on the closure of El Rio Grande of $173,000 in fiscal 2025, (ii) a gain on the termination of our Tampa Food Court lease of $5,235,000 in fiscal 2025, (iii) impairment charges related to Sequoia's ROU and long-lived assets of $4,700,000 and 2,500,000 in fiscal 2025 and fiscal 2024, respectively, and (iv) a goodwill impairment charge of $3,440,000 in fiscal 2025.

Net cash provided by investing activities for the 39 weeks ended June 28, 2025 was $4,662,000 as compared to cash used in investing activities of $1,204,000 in the same period as last year.

This increase resulted primarily from the payment received in connection with the termination of our Tampa Food Court lease and the proceeds received from the sales of condominiums.

Net cash used in financing activities for the 39 weeks ended June 28, 2025 and June 29, 2024 was $3,729,000 and $4,670,000, respectively, and resulted primarily from principal payments on notes payable and the payment of distributions to non-controlling interests and in the prior year the payment of dividends.

Credit Facility

On March 30, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), with its lender, Bank Hapoalim B.M.

This facility, which matures on June 1, 2025, replaced our revolving credit facility which was entered into in June 1, 2018 (the “Prior Credit Agreement”).

Under the terms of the Credit Agreement:

(i) a promissory note under the Prior Credit Agreement in the amount of $6,666,000 was repaid, (ii) BHBM established a new revolving credit facility in the amount of $10,000,000 with a commitment termination date of May 31, 2025, (iii) the Company may use the revolving commitments of BHBM to obtain letters of credit up to a sublimit thereunder of $1,000,000, and (iv) the LIBOR rate option for all borrowings was replaced with the secured overnight financing rate for U.S.

Government Securities (“SOFR”).

Advances under the Credit Agreement bear interest, at the Company's election at the time of the advance, at either BHBM's prime rate of interest plus a 0.45% spread or SOFR plus a 3.65% spread.

In addition, there is a 0.30% per annum fee for any unused portion of the $10,000,000 revolving facility.

As of March 29, 2025, no advances were outstanding under the Credit

As of March 29, 2025, the weighted average interest on the outstanding BHBM indebtedness was approximately 8.0%.

The Company is currently working with its lender on a new credit agreement;

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

(“BHBM”) which originally matured on June 1, 2025.

On May 29, 2025, the Company entered into an Omnibus Amendment to the Credit Agreement which:

(i) extended the maturity date of the Credit Agreement to June 1, 2028, (ii) amended the terms of the outstanding promissory notes, (iii) reduced the maximum permitted obligations outstanding under the Credit Agreement from $30,000,000 to $20,000,000 (including the outstanding promissory notes), (iv) increased the minimum tangible net worth covenant from $22,000,000 to $28,000,000, and (v) removed the annual net income covenant.

Advances and loans under the Credit Agreement bear interest, at the Company's election at the time of the advance, at either BHBM's prime rate of interest plus a 0.45% spread or SOFR plus a 3.65% spread.

In addition, there is a 0.30% per annum fee for any unused portion of the facility.

As of June 28, 2025, no advances were outstanding under the Credit Agreement.

As of June 28, 2025, the weighted average interest on the outstanding BHBM indebtedness was approximately 8.0%.

Borrowings and all other obligations under the Credit Agreement, which include the promissory notes as discussed in Note 7 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.

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.

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

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.

9 unchanged sentences

As of the date of this filing, we continue to operate the above properties as a holdover tenant and intend to do so until we are either awarded the lease extensions or ordered to vacate the premises.

The underlying lawsuit filed by the Company to protect its right continues, and we will pursue all available options to protect the Company's interests.

The underlying lawsuit filed by the Company to protect its rights continues, and we will pursue all available options to protect the Company's interests.

Management, after consultation with legal counsel, is unable to predict the outcome of this matter at this time.

The Company’s inability to extend or renew these leases on favorable terms, if at all, could have a material adverse effect on our business, financial condition, and results of operations.

4 unchanged sentences

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 critical accounting estimates underlying the Company’s consolidated condensed financial statements include projected cash flows for fixed asset impairments, 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 long-lived assets, such as property and intangibles, fair values of financial instruments, the realizable value of its tax assets and other matters.

The critical accounting estimates underlying the Company’s consolidated condensed financial statements include projected cash flows for fixed asset impairments, 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 long-lived assets, such as property and intangibles, fair values of financial instruments, 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.

4 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