What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-12-18 compared with 2024-12-19 · 154 added, 153 removed, 204 unchanged (60% of the section changed)

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Please see the discussion of forward-looking statements at the beginning of this annual report under "Special Note Regarding Forward-Looking Statements".

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.

In recent years, 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 2025.

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.

If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as 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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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 warmer 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 Grill & Caf é and The Porch at Bryant Park in New York and Sequoia in Washington, D.C.

(our largest restaurants) and our outdoor cafes.

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Recent Developments

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.

The Bryant Park Grill & Cafe and The Porch at Bryant Park, collectively, accounted for $31.1 million and $30.4 million of our total revenues in fiscal 2024 and 2023, respectively, which represented approximately 17.35% and 16.78% 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.

Bryant Park Grill

The Company's agreements with the Bryant Park Corporation (the “Landlord”) (a private non-profit corporation that operates and maintains Bryant Park under agreements with the City of New York Department of Parks & Recreation), for the Bryant Park Grill & Café expired on April 30, 2025 and for The Porch at Bryant Park expired on March 31, 2025.

In July of 2023 (for the Bryant Park Grill & Café ) and September of 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 were for new 10-year agreements, with one five-year renewal option.

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, of which both approvals are required before any new lease can become effective.

Management has been working with outside advisors to assist our efforts to ensure that the RFP awards process was both fair and transparent and to enforce the Company's right of first lease under our lease agreements, and otherwise to protect the Company’s rights with respect to these matters.

For a discussion of the related claims filed by the Company, please see Note 10 - Commitments and Contingencies to the Consolidated Financial Statements.

As of the date of this filing, we continue to operate the above properties 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 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 & Caf é and The Porch at Bryant Park , collectively, accounted for $25.5 million and $31.1 million of our total revenues for the years ended September 27, 2025 and September 28, 2024, respectively, which represented approximately 15.4% and 17.4% of our total revenue for such periods, respectively.

The uncertainty related to this dispute has had a material adverse impact on our business, financial condition, and results of operations and will continue to do so while the dispute is litigated and if we are unable to prevail in the above actions and/or are unable to extend or renew these leases on favorable terms, if at all.

Investment in and Receivable From New Meadowlands Racetrack LLC

Since March 12, 2013, the Company has made investments in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of membership interests in Meadowlands Newmark, LLC, an existing member of NMR.

As of the date of this report, the Company has made a total investment of $5,256,000.

See Note 4 - Investment in and Receivable from New Meadowlands Racetrack to the Consolidated Financial Statements for a discussion of our investment in NMR and our rights relating to operating the food and beverage concessions at a future gaming facility at the Meadowlands Racetrack.

For several years, New York State has been conducting a bidding process to award up to three downstate casino licenses and on December 1, 2025, the New York State Gaming Facility Location Board approved three applications for casino gaming licenses.

The New York State Gaming Commission is expected to issue licenses for the three approved applications by December 31, 2025.

Concurrent with the New York process, NMR has been actively pursuing a full casino license to supplement its existing horse racing and sports betting operations.

Any gaming license in the state of New Jersey outside of Atlantic City, including at the Meadowlands Racetrack, requires ratification of an amendment to the State of New Jersey constitution, followed by issuance of a license by the New Jersey Casino Control Commission.

In May 2025, a Senate Concurrent Resolution was introduced proposing a ballot referendum to authorize casinos at both the Monmouth Park and Meadowlands Racetracks.

It requires a three-fifths vote in both legislative chambers to reach the ballot in November 2026.

If the referendum passes, NMR aims for a temporary facility potentially opening in 2027 and a permanent one by 2028.

In conjunction with such referendum, NMR will need to raise substantial capital to fund a marketing campaign to support the passage of the referendum.

To the extent the Company does not contribute to this effort, or if NMR raises outside capital, our interests will be diluted.

There can be no assurances that above referendum will be included in the November 2026 election ballot or that it will pass if it is included.

If either of these do not occur, the Company’s investment in NMR will be evaluated based on the existing horse racing and sports betting operations and may be subject to substantial impairment.

Results of Operations

The Company’s operating loss for the year ended September 28, 2024 (which includes a goodwill impairment charge of $4,000,000, a loss on the closure of El Rio Grande of $876,000 and impairment losses on right-of-use and long-lived assets in the amount of $2,500,000 related to Sequoia ) was $4,294,000, down 11.3% as compared to an operating loss for the year ended September 30, 2023 (which includes a goodwill impairment charge of $10,000,000) of $4,840,000 for the year ended September 30, 2023.

Excluding the goodwill impairment charges of $4,000,000 and $10,000,000, respectively, for the fiscal years ended 2024 and 2023 and the loss on the closure of El Rio Grande of $876,000 and the impairment losses on right-of-use and long-lived assets of $2,500,000 related to Sequoia for fiscal year ended 2024, operating income for the year ended September 28, 2024 decreased 40.3% to $3,082,000 as compared to $5,160,000 for the year ended September 30, 2023.

We attribute this decrease primarily to a decrease in same store sales as discussed below combined with increased base rents and inflationary pressures related to non-commodity items partially offset by the reversal of stock-based compensation expenses relating to forfeitures in the amount of $1,156,000 combined with the negative impact on the prior period of the temporary closure of Gallagher's Steakhouse for renovation on February 5, 2023 (which reopened on April 28, 2023).

The Company’s operating loss for the year ended September 27, 2025 (which includes a gain on the closure of El Rio Grande of $173,000, a gain on the termination of our Tampa Food Court lease of $5,235,000, impairment losses on right-of-use and long-lived assets in the amount of $4,700,000 related to Sequoia and a goodwill impairment charge of $3,440,000) was $4,064,000, down 5.4% as compared to an operating loss of $4,294,000 for the year ended September 28, 2024 (which includes a loss on the closure of El Rio Grande of $876,000, impairment losses on right-of-use and long-lived assets in the amount of $2,500,000 related to Sequoia and a goodwill impairment charge of $4,000,000).

Excluding the above items in the current and prior periods, our adjusted operating loss for the year ended September 27, 2025 decreased 143.2% to $1,331,000 as compared to operating income of $3,082,000 for the year ended September 28, 2024.

The following table summarizes the significant components of the Company’s operating results for the years ended September 27, 2025 and September 28, 2024, respectively:

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Depreciation and amortization 3,138 4,090 (952) -23.3 %

Loss on closure of El Rio Grande 876 — 876 N/A

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

Goodwill impairment 4,000 10,000 (6,000) N/A

(Gain) loss on closure of El Rio Grande (173) 876 (1,049) -119.7 %

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

Impairment losses on right-of-use and long-lived assets 4,700 2,500 2,200 88.0 %

Goodwill impairment 3,440 4,000 (560) -14.0 %

Total costs and expenses 169,815 187,839 (18,024) -9.6 %

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During the year ended September 27, 2025, revenues decreased 9.7% as compared to revenues for the year ended September 28, 2024.

We attribute this small decrease primarily to the changes in same-store sales discussed below.

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

Food and Beverage Same-Store Sales

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Food and beverage sales $ 163,312 $ 179,110

Same-store sales in Las Vegas increased marginally which we primarily attribute to the negative impact to the prior period as a result of the temporary closure of Gallagher's Steakhouse for renovation from February 5, 2023 to April 27, 2023, partially offset by a decrease in customer traffic in the current year.

Same-store sales in New York increased marginally which we primarily attribute to targeted menu price increases.

Same-store sales in Las Vegas decreased 3.7% as a result of lower customer traffic.

Same-store sales in New York decreased 10.8% 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 13.8% which we primarily attribute to

lower headcounts, especially during lunch and after-work hours, which we attribute to continued hybrid work schedules as well as the closure of the property from Monday through lunch on Thursdays during winter months.

decreased 14.9% 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 10.2% which we primarily attribute to lower customer traffic at the property where we are located.

Same-store sales in Alabama increased 4.1% which we primarily attribute to better than expected customer traffic and targeted menu price increases.

Same-store sales in Florida decreased 3.1% which we primarily attribute to lower headcounts as compared to the comparable prior period, which benefited from outsized volumes as a result of the population increase in Southeast Florida as a result of the migration of people during the pandemic partially offset by targeted menu price increases.

Other food and beverage sales consist of administrative fees and other charges related to catered events.

Same-store sales in Alabama decreased 2.4% 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 1.6% which we attribute primarily to menu price increases.

Our restaurants generally do not achieve substantial increases in revenue from year to year, which we consider to be typical of the restaurant industry.

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Other Revenues

Included in other revenues are purchase service fees which represent commissions earned by a subsidiary of the Company for providing purchasing services to other restaurant groups, as well as merchandise sales, license fees, property management fees and other rentals.

The increase in other revenues for the year ended September 28, 2024 as compared to the year ended September 30, 2023 is primarily due to an increase in purchase service fees.

Included in other revenues are food and beverage sales related to properties that were closed during the respective period, merchandise sales, rental income, property management fees and other rentals as well as, in 2024, purchase service fees related to an affiliate that the Company no longer has an interest in, which represent commissions earned for providing services to other restaurant groups.

The decrease in other revenues for the year ended September 27, 2025, as compared to the year ended September 28, 2024, is primarily due to the sales related to El Rio Grande and the Tampa Food Court ( which were closed in December 2024) and purchase service fees in the amount of $1,337,000 in the prior year.

Costs and Expenses

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Depreciation and amortization 3,138 1.9 % 4,090 2.2 % (952) -23.3 %

Loss on closure of El Rio Grande 876 0.5 % — — % 876 N/A

Impairment losses on right-of-use and long-lived assets 2,500 1.4 % — — % 2,500 N/A

Goodwill impairment 4,000 2.2 % 10,000 5.4 % (6,000) N/A

(Gain) loss on closure of El Rio Grande (173) -0.1 % 876 0.5 % (1,049) -119.7 %

Gain on termination of Tampa Food Court lease (5,235) -3.2 % — — % (5,235) N/A

Impairment losses on right-of-use and long-lived assets 4,700 2.8 % 2,500 1.4 % 2,200 88.0 %

Goodwill impairment 3,440 2.1 % 4,000 2.2 % (560) -14.0 %

Total costs and expenses $ 169,815 $ 187,839 $ (18,024) -9.6 %

Food and beverage costs as a percentage of total revenues for the year ended September 28, 2024 were consistent with last year which we attribute to stabilized commodity prices.

Payroll expenses as a percentage of total revenues for the year ended September 28, 2024 were consistent with last year, which we attribute primarily to increased minimum wages in the states where we operate offset by better shift management and related overtime hours.

Occupancy expenses as a percentage of total revenues for the year ended September 28, 2024 increased as compared to last year, which we attribute primarily to 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 year ended September 28, 2024 increased as compared to last year primarily as a result of inflation.

General and administrative expenses (which relate solely to the corporate office in New York City) for the year ended September 28, 2024 decreased as compared to the same period of last year primarily as a result of the reversal of compensation

expense in the amount of $1,134,000 related to options that expired or were cancelled unexercised partially offset by increased legal and consulting expenses and annual merit increases.

Depreciation and amortization expense for the year ended September 28, 2024 decreased slightly as compared to the same period of last year, which we attribute primarily to certain assets becoming fully depreciated.

Loss on Closure of El Rio Grande

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.

Food and beverage costs as a percentage of total revenues for the year ended September 27, 2025 increased as compared to 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 current year compared to the prior year.

Payroll expenses as a percentage of total revenues for the year ended September 27, 2025 increased marginally as compared to last year as a result of increasing minimum wages in the states where we operate partially offset by better shift management and related overtime hours.

Occupancy expenses as a percentage of total revenues for the year ended September 27, 2025 increased marginally as compared to 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 year ended September 27, 2025 increased as compared to 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 year ended September 27, 2025 decreased marginally as compared to last year primarily as a result of the reversal of compensation expense in the prior year in the amount of $1,134,000 related to options that expired or were cancelled unexercised partially offset by increased legal and consulting expenses.

Depreciation and amortization expense for the year ended September 27, 2025 decreased compared to 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

In October 2024, the Company advised the landlord of El Rio Grande we would be terminating the lease and closing the property permanently.

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

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

During the year ended September 27, 2025, the Company recognized a gain of $173,000 as a result of refinements of estimates.

Gain on Termination of Tampa Food Court Lease

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 and, accordingly, vacated the premises on December 15, 2024.

In connection with this, Ark Hollywood/Tampa Investment LLC, a subsidiary of the Company, (in which we own a 65% interest) received a termination payment in the amount of $5,500,000, all obligations under the lease ceased and we recorded a gain, primarily net of write-offs of ROU and long-lived assets, in the amount of $5,235,000 during the year ended September 27, 2025 and 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

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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.

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 again and, based on a discounted cash flow analysis, we recognized additional impairment charges of $2,940,000 and $1,760,000 during the year ended September 27, 2025 related to Sequoia's ROU and long-lived assets, respectively.

Goodwill Impairment

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Goodwill is not presently amortized but tested for impairment annually or when the facts or circumstances indicate a possible impairment of goodwill as a result of a continual decline in performance or as a result of fundamental changes in a market.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred.

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 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 of its goodwill as of September 28, 2024 and September 30, 2023.

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

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.

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, and the time value of money.

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 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.

In accordance with ASU 350-20, Intangibles—Goodwill and Other , the Company identified a triggering event during the three months ended March 29, 2025 primarily related to a decline in the Company's stock price during the second quarter of fiscal 2025 and the continued uncertainty related to the expiration of the Bryant Park Grill & Caf é and The Porch at Bryant Park leases (see Note 10 - Commitments and Contingencies).

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 statement of operations for the year ended September 27, 2025.

As of September 28, 2024, the Company performed a qualitative assessment of its goodwill whereby the fair value of the equity was determined using the income approach.

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

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 & Caf é and The Porch at Bryant Park leases may not be renewed beyond their expirations on April 30, 2025, and the time value of money.

This approach required 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 at September 28, 2024.

Accordingly, during the fourth quarter of fiscal 2024, the Company recorded a goodwill impairment charge of $4,000,000, of which $4,000,000 was deductible for tax purposes and resulted in a deferred income tax benefit of $1,074,000.

Such impairment was 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.

Our income tax expense, deferred tax assets and liabilities, and liabilities for uncertain tax positions reflect management’s best estimate of current and future taxes to be paid.

We are subject to income tax in numerous state taxing jurisdictions.

We are subject to income tax in various state taxing jurisdictions.

Significant judgment and estimates are required in the determination of consolidated income tax expense.

The provision for income taxes

reflects federal income taxes calculated on a consolidated basis and state and local income taxes which are calculated on a separate entity basis.

For state and local income tax purposes, certain losses incurred by a subsidiary may only be used to offset that subsidiary’s income, with the exception of the restaurants operating in the District of Columbia.

Accordingly, our overall effective tax rate has varied depending on the level of income and losses incurred at individual subsidiaries.

The provision for income taxes reflects federal and state income taxes.

Deferred income taxes arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future.

In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations.

The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

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

Our overall effective tax rate in the future will be affected by factors such as income earned by our VIEs, generation of FICA TIP credits and the mix of geographical income for state tax purposes as Nevada does not impose an income tax.

As of September 27, 2025, as a result of recent cumulative losses, we have recorded a full valuation allowance against our deferred tax assets.

If these estimates and assumptions change in the future, the Company may be required

to reduce its existing valuation allowance resulting in less income tax expense.

The Company evaluates the likelihood of realizing its deferred tax assets at each interim period based on the weight of available evidence.

On July 4, 2025, President Trump signed H.R.

1, the “One Big Beautiful Bill Act” (“OBBBA”) into law.

The OBBBA makes permanent many of the tax provisions previously enacted as part of the 2017 Tax Cut and Jobs Act that were set to expire at the end of 2025.

The OBBBA also includes (i) the restoration of immediate expensing for domestic research and development expenditures, (ii) the reinstatement of 100% bonus depreciation for qualified property and (iii) favorably modifying the Internal Revenue Code Section 163(j) interest limitation from tax adjusted EBIT to EBITDA.

FASB Topic 740, Income Taxes, requires the tax effects of changes in tax laws or rates be recognized in the period in which the law is enacted.

The enactment of the OBBBA did not have a material impact on the Company’s effective tax rate, or deferred tax balances as of September 27, 2025.

Liquidity and Capital Resources

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

As of September 27, 2025, we had a cash and cash equivalents balance of $11,324,000.

The Company had a working capital deficit of $5,377,000 at September 27, 2025 as compared to working capital deficit of $10,659,000 at September 28, 2024.

This increase in the deficit is primarily the result of all of our note payments becoming current as they mature through May 31, 2025.

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.

We believe that our existing cash balances and current banking facilities will be sufficient to meet our liquidity and capital spending requirements and finance our operating activities for at least the next 12 months.

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.

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

While we have been able to offset inflation and other changes in the costs of key operating resources by targeted increases in menu prices, coupled with more efficient purchasing practices, there can be no assurance that we will be able to continue to do so in the future.

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, partially offset by operating losses and capital expenditures in connection with the renovations at our properties in Las Vegas (see Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Restaurant Expansion and Other Developments).

We believe that our existing cash balances, internal cash-generating capabilities, current banking facilities and ability to secure additional financing, if necessary, are sufficient to finance our capital expenditures, debt maturities and other operating activities for at least the next 12 months and the foreseeable future.

While we have been able to partially offset inflation and other changes in the costs of key operating resources by targeted increases in menu prices, coupled with more efficient purchasing practices, there can be no assurance that we will be able to continue to do so in the future.

From time to time, competitive conditions will limit our menu pricing flexibility.

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Cash Flows for the Years Ended September 27, 2025 and September 28, 2024

Net cash provided by operating activities for the year ended September 28, 2024 decreased to $4,654,000 as compared to $8,386,000 for the year ended September 30, 2023 and resulted primarily from changes in net working capital primarily related to prepaid, refundable and accrued income taxes and accounts payable and accrued expenses.

Net cash used in investing activities for the year ended September 28, 2024 was $2,392,000 compared to net cash provided by investing activities of $1,276,000 for the year ended September 30, 2023.

This decrease resulted primarily from proceeds from the maturity of certificates of deposit in the prior period partially offset by lower purchases of fixed assets at existing restaurants in the current period.

Net cash used in financing activities for the year ended September 28, 2024 was $5,404,000 and resulted primarily from principal payments on notes payable in the amount of $1,987,000, the payment of dividends in the amount of $2,028,000 and the payment of distributions to non-controlling interests in the amount of $1,389,000.

Net cash used in financing activities for the year ended September 30, 2023 was $19,686,000 and resulted primarily from principal payments on notes payable of $16,334,000 (including the prepayment of a promissory note in the amount of $6,666,000 on March 30, 2023 and the prepayment of three promissory notes in the aggregate amount of $6,046,000 on April 4, 2023), the payment of dividends in the amount of $2,252,000 and the payment of distributions to non-controlling interests in the amount of $1,139,000.

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.

Net cash provided by operating activities for the year ended September 27, 2025 decreased to $1,752,000 as compared to $4,654,000 for the year ended September 28, 2024.

This decrease resulted primarily from a decrease in operating income, excluding the previously discussed (i) gain on the termination of our Tampa Food Court lease of $5,235,000 in fiscal 2025, (ii) 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, (iii) goodwill impairment charges of $3,440,000 and $4,000,000 in fiscal 2025 and fiscal 2024, respectively, and (iv) effects of the closure of El Rio Grande in both periods, partially offset by changes in working capital related to accounts receivable and accrued expenses.

Net cash provided by investing activities for the year ended September 27, 2025 was $3,427,000 compared to net cash used in investing activities of $2,392,000 for the year ended September 28, 2024.

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 sale of condominiums partially offset by higher purchases of fixed assets.

Net cash used in financing activities for the years ended September 27, 2025 and September 28, 2024 was $4,128,000 and $5,404,000, 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.

On November 8, 2023, February 6, 2024, and May 7, 2024, 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.

Recent Developments

Bryant Park Grill

As further described above in the “ Overview ” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report, the Company's agreements with the Bryant Park Corporation for the Bryant Park Grill & Café expired on April 30, 2025 and for The Porch at Bryant Park expired on March 31, 2025.

As of the date of this filing, we continue to operate the above properties 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 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.

Investment in and Receivable from New Meadowlands Racetrack LLC

As further described above in in the “Overview” section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report, since March 2013, the Company has made investments in New Meadowlands Racetrack LLC (“NMR”) through its purchase of membership interests in Meadowlands Newmark, LLC, an existing member of NMR.

As of the date of this report, the Company has made a total investment of $5,256,000.

In May 2025, a Senate Concurrent Resolution was introduced proposing a ballot referendum to authorize casinos at both the Monmouth Park and Meadowlands Racetracks.

It requires a three-fifths vote in both legislative chambers to reach the ballot in November 2026.

If the referendum passes, NMR aims for a temporary facility potentially opening in 2027 and a permanent one by 2028.

In conjunction with such referendum, NMR will need to raise substantial capital to fund a marketing campaign to support the passage of the referendum.

To the extent the Company does not contribute to this effort, or if NMR raises outside capital, our interests will be diluted.

There can be no assurances that the above referendum will be included in the November 2026 election ballot or that it will pass if it is included.

If either of these do not occur, the Company’s investment in NMR will be evaluated based on the existing horse racing and sports betting operations and may be subject to substantial impairment.

Restaurant Expansion and Other Developments

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

In connection with the extension, the Company agreed to spend a minimum of $1,500,000 to materially refresh the premises by April 30, 2023 (as extended from September 30, 2022 due to supply chain issues).

Accordingly, the property was substantially closed for renovation on February 5, 2023 and reopened on April 28, 2023.

The total cost of the refresh was approximately $1,900,000.

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, 2025 (as extended from December 31, 2024, subject to further extension as set out in the agreement.

In connection with the extension, the Company has agreed to spend a minimum of $4,000,000 to materially refresh the premises by March 31, 2026, as extended, subject to further extension as set out in the agreement.

To date approximately $1,600,000 has been spent on this refresh.

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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 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.

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.

As part of this refresh, on November 11, 2024, the Company opened a new

concept called Lucky Pig in the Village Eateries at a cost of approximately $850,000.

In addition, the Company has spent an additional $950,000 to date on refreshing Broadway Burger Bar and Grill , Gonzalez y Gonzalez and other areas of the Village Eateries.

We expect to complete all work related to these projects by December 31, 2025.

Each of the above refresh obligations are to be consistent with designs approved by the landlord which shall not be unreasonably withheld.

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Recent Restaurant Dispositions

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:

Investment in and Receivable from New Meadowlands Racetrack LLC

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

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

In 2015, the Company invested an additional $222,000 in NMR with no change in ownership.

In February 2017, the Company funded its proportionate share ($222,000) of a $3,000,000 capital call bringing its total investment to $5,108,000 with no change in ownership.

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.

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

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

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

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

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

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

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

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.

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

In October 2024, the Company advised the landlord of El Rio Grande we would be terminating the lease and closing the property permanently.

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

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

During the year ended September 27, 2025, the Company recognized a gain in the amount of $173,000 as a result of refinements of estimates.

On November 26, 2024, a subsidiary of the Company, in which we own a 65% interest, Ark Hollywood/Tampa Investment LLC agreed to terminate its lease for the food court at The Hard Rock Hotel and Casino in Tampa, FL and, accordingly, vacated the premises on December 15, 2024.

In connection with this agreement all obligations under the lease ceased and Ark Hollywood/Tampa Investment LLC received a termination payment in the amount of $5,500,000.

Accordingly, a gain, primarily net of write-offs of ROU and long-lived assets, in the amount of $5,235,000 was recognized during the year ended September 27, 2025 and 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.

During the year ended September 27, 2025, the Company sold three 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 $1,203,000 and recorded a gain of $594,000.

The Company intends to sell the remaining units subject to market forces.

Notes Payable – Bank

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 on 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.

(“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 as further discussed in Note 9 - Notes Payable to the Consolidated Financial Statements;

(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 September 27, 2025, no advances were outstanding under the Credit Agreement.

As of September 27, 2025, the weighted average interest on the outstanding BHBM indebtedness was approximately 8.0%.

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.

Borrowings under the Credit Agreement, which include the promissory notes as discussed in Note 10 of the consolidated financial statements in the aggregate amount of $5,167,000, 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 loan agreements provide, 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.

Borrowings under the Credit Agreement, which include the promissory notes as discussed in Note 9 of the consolidated financial statements in the aggregate amount of $3,609,000, 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 loan agreements provide, among other things, that the Company meet minimum quarterly tangible net worth amounts and maintain a minimum fixed charge coverage ratio.

The loan agreements also contain 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.

Paycheck Protection Program Loans

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 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.

Critical Accounting Policies and Estimates

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Revenue Recognition

We recognize revenues when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer.

We recognize revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer.

Revenues from restaurant operations are presented net of discounts, coupons, employee meals and complimentary meals and recognized when food, beverage and retail products are sold.

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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 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.

(i) projected cash flows related to asset impairments, including goodwill and intangibles, (ii) income tax valuation allowances for deferred tax assets, (iii) assumptions regarding discount rates related to lease accounting, (iv) the useful lives and recoverability of our long-lived assets, such as fixed assets and intangibles, (v) uncertain tax positions, and (vi) 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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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.

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

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 again and based on a discounted cash flow analysis, we recognized additional impairment charges of $2,940,000 and $1,760,000 during the year ended September 27, 2025 related to Sequoia's ROU and long-lived assets, respectively.

Recoverability of Investment in New Meadowlands Racetrack (“NMR”)

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Furthermore, if management uses different assumptions or if different conditions occur in future periods, future impairment charges could result.

See Note 4 - I nvestment in and Receivable from New Meadowlands Racetrack LLC to the Consolidated Financial Statements for additional discussion.

We determine if an arrangement contains a lease at inception.

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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.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred.

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.

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.

More specifically, the weighted average cost of capital is a sensitive estimate as it reflects the market conditions including the risk that the Bryant Park Grill & Café and The Porch at Bryant Park leases will not be renewed.

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.

As of September 28, 2024, the Company performed a qualitative assessment of its goodwill whereby the fair value of the equity was determined using the income approach.

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

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 & Caf é and The Porch at Bryant Park leases may not be renewed beyond their expirations on April 30, 2025, and the time value of money.

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.

Such impairment was 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.

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

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For the years ended September 27, 2025 and September 28, 2024, our impairment analysis did not result in any other charges related to trademarks.

Stock-Based Compensation

The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognizes it as expense over the applicable vesting period using the straight-line method.

Excess income tax benefits related to share-based compensation expense that must be recognized directly in equity are considered financing rather than operating cash flow activities.

The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk-free interest rate.

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

Recently Adopted and Issued Accounting Standards

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Recent Developments

See Note 17 of the Notes to Consolidated Financial Statements for a description of recent developments that have occurred subsequent to September 28, 2024.

Quantitative and Qualitative Disclosures About Market Risk

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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 7. Management’s Discussion and Analysis