What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 115 added, 86 removed, 518 unchanged (28% of the section changed)

3 unchanged sentences

(in thousands, except par value and number of shares)

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Current assets

4 unchanged sentences

Prepaid expenses and other current assets 5,457 1,943

Assets held for sale 74 —

Total current assets 52,085 37,473

24 unchanged sentences

20,000,000 shares authorized;

9,332,420 and 9,397,639 shares issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

9,129,790 and 9,397,639 shares issued and outstanding as of June 30, 2024, and September 30, 2023, respectively

Additional paid-in capital 68,950 80,437

9 unchanged sentences

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

15 unchanged sentences

Total operating expenses 78,716 61,540 207,084 172,700

Income from operations 4,657 13,427 17,822 30,325

Income (loss) from operations

( 2,536 ) 15,515 15,286 45,840

Other income (expenses)

1 unchanged sentence

Interest income 130 87 320 268

Income before income taxes

754 9,840 9,797 23,142

Income tax expense

5 2,147 1,804 5,178

Net income 749 7,693 7,993 17,964

Net loss attributable to noncontrolling interests 25 39 7 6

Net income attributable to RCIHH common stockholders $ 774 $ 7,732 $ 8,000 $ 17,970

Earnings per share

Income (loss) before income taxes ( 6,646 ) 11,286 3,151 34,428

Income tax expense (benefit) ( 1,426 ) 2,269 378 7,447

Net income (loss) ( 5,220 ) 9,017 2,773 26,981

Net loss (income) attributable to noncontrolling interests ( 13 ) 68 ( 6 ) 74

Net income (loss) attributable to RCIHH common stockholders $ ( 5,233 ) $ 9,085 $ 2,767 $ 27,055

Earnings (loss) per share

Basic and diluted $ ( 0.56 ) $ 0.96 $ 0.30 $ 2.91

Weighted average shares used in computing earnings per share

Weighted average shares used in computing earnings (loss) per share

Basic and diluted 9,278,921 9,430,225 9,332,249 9,308,624

27 unchanged sentences

Balance at March 31, 2024 9,332,420 93 77,742 207,928 — — ( 264 ) 285,499

Purchase of treasury shares — — — — ( 202,630 ) ( 9,173 ) — ( 9,173 )

Canceled treasury shares ( 202,630 ) ( 2 ) ( 9,171 ) — 202,630 9,173 — —

Excise tax on stock repurchases — — ( 92 ) — — — — ( 92 )

Payment of dividends ($ 0.06 per share)

— — — ( 552 ) — — — ( 552 )

Stock-based compensation — — 471 — — — — 471

Net income (loss) — — — ( 5,233 ) — — 13 ( 5,220 )

Balance at June 30, 2024

9,129,790 $ 91 $ 68,950 $ 202,143 — $ — $ ( 251 ) $ 270,933

Balance at September 30, 2022

14 unchanged sentences

Balance at March 31, 2023 9,430,225 94 85,082 190,905 — — ( 117 ) 275,964

Adjustment in fair value of common shares issued for business combination — — ( 3,461 ) — — — — ( 3,461 )

Payment of dividends ($ 0.06 per share)

— — — ( 565 ) — — — ( 565 )

Stock-based compensation — — 470 — — — — 470

Net income (loss) — — — 9,085 — — ( 68 ) 9,017

Balance at June 30, 2023

9,430,225 $ 94 $ 82,091 $ 199,425 — $ — $ ( 185 ) $ 281,425

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except number of shares)

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

30 unchanged sentences

Share in return of investment by noncontrolling partner — ( 600 )

Net cash provided by (used in) financing activities ( 12,833 ) 3,196

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 1,050 ) ( 13,196 )

Net cash used in financing activities ( 9,219 ) ( 2,353 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,924 ( 12,396 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 21,023 35,980

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 34,947 $ 23,584

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

CASH PAID DURING PERIOD FOR:

23 unchanged sentences

In the opinion of management, all adjustments considered necessary for a fair statement of the financial statements, consisting solely of normal recurring adjustments, have been made.

Operating results for the six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending September 30, 2024.

Operating results for the nine months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending September 30, 2024.

Recent Accounting Standards and Pronouncements

47 unchanged sentences

Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 4 ), are shown below (in thousands):

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Three Months Ended June 30, 2024 Three Months Ended June 30, 2023

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

7 unchanged sentences

$ 62,823 $ 13,139 $ 218 $ 76,180 $ 62,449 $ 14,397 $ 209 $ 77,055

Six Months Ended March 31, 2024 Six Months Ended March 31, 2023

Nine Months Ended June 30, 2024 Nine Months Ended June 30, 2023

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

15 unchanged sentences

A reconciliation of contract liabilities with customers is presented below (in thousands):

September 30, 2023

Balance at September 30, 2023

Net Consideration

Received (Refunded) Recognized in

Revenue Balance at

March 31, 2024

Revenue Balance at June 30, 2024

Ad revenue $ 49 $ 333 $ ( 330 ) $ 52

12 unchanged sentences

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

14 unchanged sentences

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

11 unchanged sentences

$ 6,417 $ 9,029 $ 19,219 $ 29,919

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Nightclubs $ 468,704 $ 483,563

3 unchanged sentences

$ 600,989 $ 610,884

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs and Corporate segments for the three months ended March 31, 2024, amounting to $ 4.6 million and $ 21,000 , respectively, and for the six months ended March 31, 2024, amounting to $ 9.1 million and $ 248,000 , respectively;

and intercompany sales of Robust Energy Drink included in Other segment for the three and six months ended March 31, 2024 amounting to $ 89,000 and $ 128,000 , respectively.

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs and Corporate segments for the three months ended March 31, 2023, amounting to $ 3.9 million and $ 31,000 , respectively, and for the six months ended March 31, 2023, amounting to $ 7.6 million and $ 262,000 , respectively;

and intercompany sales of Robust Energy Drink included in Other segment for the three and six months ended March 31, 2023 amounting to $ 78,000 and $ 115,000 , respectively.

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs and Corporate segments for the three months ended June 30, 2024, amounting to $ 4.7 million and $ 21,000 , respectively, and for the nine months ended June 30, 2024, amounting to $ 13.8 million and $ 269,000 , respectively;

and intercompany sales of Robust Energy Drink included in Other segment for the three and nine months ended June 30, 2024 amounting to $ 66,000 and $ 194,000 , respectively.

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs and Corporate segments for the three months ended June 30, 2023, amounting to $ 4.3 million and $ 32,000 , respectively, and for the nine months ended June 30, 2023, amounting to $ 11.9 million and $ 294,000 , respectively;

and intercompany sales of Robust Energy Drink included in Other segment for the three and nine months ended June 30, 2023 amounting to $ 73,000 and $ 188,000 , respectively.

These intercompany revenue amounts are eliminated upon consolidation.

7 unchanged sentences

The components of accounts receivable, net are as follows (in thousands):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Credit card receivables $ 4,102 $ 4,141

5 unchanged sentences

The components of prepaid expenses and other current assets are as follows (in thousands):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Prepaid insurance $ 3,287 $ 375

5 unchanged sentences

The components of accrued liabilities are as follows (in thousands):

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Insurance $ 2,965 $ 9

13 unchanged sentences

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

15 unchanged sentences

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

5 unchanged sentences

$ 18,260 $ 2,589 $ 26,452 $ 5,693

During the quarter ended March 31, 2024, we recorded $ 4.4 million in SOB license impairment related to four clubs, $ 2.9 million in goodwill impairment related to two clubs, and $ 693,000 in tradename impairment related to one club, whereas during the quarter ended March 31, 2023, we recorded $ 662,000 in goodwill impairment related to one club.

During the quarter ended March 31, 2023, we recognized lawsuit settlements of $ 3.1 million, of which $ 2.8 million related to a settlement with the New York Department of Labor related to the assessment by the New York Department of Labor for state unemployment insurance.

During the second quarter ended March 31, 2024, we recorded $ 4.4 million in SOB license impairment related to four clubs, $ 2.9 million in goodwill impairment related to two clubs, and $ 693,000 in tradename impairment related to one club.

During the third quarter ended June 30, 2024, we recorded $ 6.0 million in goodwill impairment related to four clubs, $ 5.7 million in operating lease right-of-use asset impairment related to five Bombshells restaurants, $ 1.4 million in SOB license impairment related to two clubs, and $ 4.8 million in property and equipment impairment related to one club and five restaurants.

During the second quarter ended March 31, 2023, the Company recorded $ 662,000 in goodwill impairment related to one club, and during the third quarter ended June 30, 2023, the Company recorded $ 1.2 million in goodwill impairment related to one club, and related to one club that was closed, we recorded $ 380,000 in SOB license impairment, $ 58,000 in property and equipment impairment, and $ 1.0 million in operating lease right-of-use asset impairment.

During the second quarter ended March 31, 2023, we recognized lawsuit settlements of $ 3.1 million, of which $ 2.8 million related to a settlement with the New York Department of Labor related to the assessment by the New York Department of Labor for state unemployment insurance.

RCI HOSPITALITY HOLDINGS, INC.

13 unchanged sentences

There are certain financial covenants with which the Company is to be in compliance related to this loan.

Future maturities of long-term debt as of March 31, 2024 are as follows:

$ 25.6 million, $ 17.9 million, $ 23.1 million, $ 25.6 million, $ 17.7 million and $ 124.9 million for the twelve months ending March 31, 2025, 2026, 2027, 2028, 2029, and thereafter, respectively.

On April 30, 2024, the Company entered into a term loan with a bank lender for $ 20.0 million for additional working capital.

The loan has a 10 -year term and an interest rate of 8.25 % per annum for the first five years , after which the interest rate is to be adjusted to a rate equal to the then weekly average yield on U.S.

Treasury Securities plus 362 basis points, with a 6.5 % floor.

The promissory note is payable in equal monthly installments of $ 170,408 for principal and interest, based on a 20 -year amortization period, during the first five years , after which the monthly payments shall adjust based on the new interest rate to continue until April 30, 2034, at which time the remaining principal amount and accrued interest shall be paid.

The Company paid $ 356,000 in debt issuance costs at the time of closing.

There are certain financial covenants with which the Company is to be in compliance with related to this loan, including a minimum tangible net worth requirement of $ 25.0 million.

Future maturities of long-term debt as of June 30, 2024 are as follows:

$ 29.4 million, $ 13.6 million, $ 23.7 million, $ 28.7 million, $ 15.5 million and $ 137.4 million for the twelve months ending June 30, 2025, 2026, 2027, 2028, 2029, and thereafter, respectively.

Of the maturity schedule mentioned above, $ 15.3 million, $ 0.0 million, $ 9.1 million, $ 7.9 million, $ 0.2 million and $ 84.9 million, respectively, relate to scheduled balloon payments.

Unamortized debt discount and issuance costs amounted to $ 2.8 million and $ 2.9 million as of March 31, 2024 and September 30, 2023, respectively.

Unamortized debt discount and issuance costs amounted to $ 3.0 million and $ 2.9 million as of June 30, 2024 and September 30, 2023, respectively.

RCI HOSPITALITY HOLDINGS, INC.

8 unchanged sentences

On February 7, 2022, the board of directors approved a grant of 50,000 stock options to each of six members of management subject to the approval of the 2022 Plan.

Stock-based compensation, which is included in corporate segment selling, general and administrative expenses amounted to $ 471,000 and $ 941,000 during the three and six months ended March 31, 2024, respectively, and $ 706,000 and $ 1.6 million during the three and six months ended March 31, 2023, respectively.

As of March 31, 2024, we had unrecognized compensation cost amounting to $ 3.5 million related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 1.9 years.

Stock-based compensation, which is included in corporate segment selling, general and administrative expenses amounted to $ 471,000 and $ 1.4 million during the three and nine months ended June 30, 2024, respectively, and $ 470,000 and $ 2.1 million during the three and nine months ended June 30, 2023, respectively.

As of June 30, 2024, we had unrecognized compensation cost amounting to $ 3.1 million related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 1.6 years.

The February 9, 2022 stock options vest over four years with the first 20 % having vested on the approval of the 2022 Plan at the 2022 annual stockholders' meeting on August 23, 2022, and 20 % vesting on February 9 of each year thereafter, provided however that the options will be subject to earlier vesting under certain events set forth in the Plan, including without limitation a change in control.

1 unchanged sentence

The weighted average grant-date fair value of the stock options was $ 31.37 per share.

No stock options were exercised during the three and six months ended March 31, 2024.

As of March 31, 2024, 180,000 stock options were vested and exercisable.

For the three and six months ended March 31, 2024 and 2023, we excluded 300,000 stock options from the calculation of diluted earnings per share because their effect was anti-dilutive.

No stock options were exercised during the three and nine months ended June 30, 2024.

As of June 30, 2024, 180,000 stock options were vested and exercisable.

For the three and nine months ended June 30, 2024 and 2023, we excluded 300,000 stock options from the calculation of diluted earnings per share because their effect was anti-dilutive.

Aside from the outstanding stock options, there were no other potentially dilutive securities for inclusion in the calculation of diluted earnings per share.

Income tax expense was $ 5,000 and $ 1.8 million during the three and six months ended March 31, 2024, respectively, compared to $ 2.1 million and $ 5.2 million during the three and six months ended and March 31, 2023, respectively.

The effective income tax rate was 0.7 % and 18.4 % for the three and six months ended March 31, 2024 compared to 21.8 % and 22.4 % for the three and six months ended March 31, 2023, respectively.

The disproportionate tax rates during the three months ended March 31, 2024 were caused by the small amount of pre-tax income during the quarter and the reduction of the expected annual effective tax rate.

Our effective income tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both years, as presented below.

Income taxes were a benefit of $ 1.4 million and an expense of $ 378,000 during the three and nine months ended June 30, 2024, respectively, compared to $ 2.3 million and $ 7.4 million during the three and nine months ended and June 30, 2023, respectively.

The effective income tax rate was 21.5 % and 12.0 % for the three and nine months ended June 30, 2024 compared to 20.1 % and 21.6 % for the three and nine months ended June 30, 2023, respectively.

The disproportionate tax rates during the nine months ended June 30, 2024, were caused by the decrease in the expected annual effective tax rate.

Our effective income tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both years, and the pretax loss in the three months ended June 30, 2024, as presented below.

For the Three Months Ended

March 31, For the Six Months Ended

June 30, For the Nine Months Ended

2024 2023 2024 2023

39 unchanged sentences

As previously stated, since October 25, 2013, the Company has obtained general liability coverage from other insurers, which have covered and/or will cover any claims arising from actions after that date.

As of March 31, 2024, we have 1 remaining unresolved claim out of the original 71 claims.

As of June 30, 2024, we have 1 remaining unresolved claim out of the original 71 claims.

RCI HOSPITALITY HOLDINGS, INC.

14 unchanged sentences

On October 10, 2023, the parties submitted an agreement to settle the action to the Court for the Court's preliminary approval.

The Company believes that payments under the settlement agreement will be covered by insurance.

On July 19 2024, the Court approved the settlement.

On July 30, 2024, the final order of settlement was entered by the Court.

The case is now closed, and the Company believes that payments under the settlement agreement will be covered by insurance.

On June 23, 2014, Mark H.

25 unchanged sentences

Commitments and Contingencies - continued

On or about May 29, 2024, search warrants were executed on the Company’s corporate headquarters in Houston, Texas, three separate clubs in New York, New York, and for the mobile phone of three individuals (including two executive officers and a non-executive corporate employee) by the New York State Attorney General (“NY AG”) and the New York State Department of Taxation and Finance (“NY DTF”).

On June 7, 2024, the Company received a subpoena from the NY AG requesting documents and other information with respect to certain clubs in New York and Florida.

The investigation appears to be related to the Company’s New York State tax filings and possible entertainment benefits provided to NY DTF personnel.

The Company is cooperating with the NY AG and its investigation.

As a result of this investigation, a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process.

It is not possible at this time to determine whether the Company will incur (or to reasonably estimate the amount of) any fines, penalties, or liabilities in connection with the investigation.

In the regular course of business affairs and operations, we are subject to possible loss contingencies arising from third-party litigation and federal, state, and local environmental, labor, health and safety laws and regulations.

3 unchanged sentences

In matters where there is insurance coverage, in the event we incur any liability, we believe it is unlikely we would incur losses in connection with these claims in excess of our insurance coverage.

The Company recorded lawsuit settlements incurred amounting to $ 167,000 and $ 167,000 for the three and six months ended March 31, 2024, respectively, and $ 3.1 million and $ 3.1 million for the three and six months ended March 31, 2023, respectively.

As of March 31, 2024, and September 30, 2023, the Company has accrued $ 2.2 million and $ 2.4 million, respectively, related to settlement of lawsuit, which is included in accrued liabilities in our unaudited condensed consolidated balance sheets.

The Company recorded lawsuit settlements incurred amounting to $ 141,000 and $ 308,000 for the three and nine months ended June 30, 2024, respectively, and $ 63,000 and $ 3.2 million for the three and nine months ended June 30, 2023, respectively.

As of June 30, 2024, and September 30, 2023, the Company has accrued $ 2.3 million and $ 2.4 million, respectively, related to settlement of lawsuit, which is included in accrued liabilities in our unaudited condensed consolidated balance sheets.

Related Party Transactions

1 unchanged sentence

Langan receives no compensation or other direct financial benefit for any of the guarantees.

The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of March 31, 2024 and September 30, 2023, was $ 117.6 million and $ 119.2 million, respectively.

The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of June 30, 2024 and September 30, 2023, was $ 136.4 million and $ 119.2 million, respectively.

Included in the October 2023 debt transaction (see Note 6 ) are notes borrowed from related parties—one note for $ 500,000 (Ed Anakar, an employee of the Company and brother of our former director Nourdean Anakar) and another note for $ 150,000 (from a brother of Company CFO, Bradley Chhay) in which the terms of the notes are the same as the rest of the lender group.

1 unchanged sentence

Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest).

Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were $ 202,700 and $ 344,798 during the three and six months ended March 31, 2024, respectively, and $ 188,285 and $ 188,285 during the three and six months ended March 31, 2023, respectively.

As of March 31, 2024 and September 30, 2023, we owed Nottingham Creations and Sherwood Forest $ 84,163 and $ 10,700 , respectively, in unpaid billings.

TW Mechanical LLC provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2024 and 2023.

A son-in-law of Eric Langan owns a 50 % interest in TW Mechanical.

Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 0 for the three and six months ended March 31, 2024, respectively, and $ 18,000 and $ 64,000 for the three and six months ended March 31, 2023, respectively.

Amounts billed directly to the Company were $ 228 and $ 3,160 for the three and six months ended March 31, 2024, respectively, and $ 379 and $ 379 for the three and six months ended March 31, 2023, respectively.

As of March 31, 2024 and September 30, 2023, the Company owed TW Mechanical $ 0 and $ 0 , respectively, in unpaid direct billings.

Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were $ 0 and $ 344,798 during the three and nine months ended June 30, 2024, respectively, and $ 0 and $ 188,285 during the three and nine months ended June 30, 2023, respectively.

As of June 30, 2024 and September 30, 2023, we owed Nottingham Creations and Sherwood Forest $ 24,163 and $ 10,700 , respectively, in unpaid billings.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three and six months ended March 31, 2024 and 2023 is as follows (in thousands):

Three Months Ended March 31, Six Months Ended March 31,

Related Party Transactions - continued

A son-in-law of Eric Langan owns a 50 % interest in TW Mechanical.

Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 0 for the three and nine months ended June 30, 2024, respectively, and $ 171,435 and $ 235,738 for the three and nine months ended June 30, 2023, respectively.

Amounts billed directly to the Company were $ 0 and $ 3,160 for the three and nine months ended June 30, 2024, respectively, and $ 8,823 and $ 9,202 for the three and nine months ended June 30, 2023, respectively.

As of June 30, 2024 and September 30, 2023, the Company owed TW Mechanical $ 0 and $ 0 , respectively, in unpaid direct billings.

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three and nine months ended June 30, 2024 and 2023 is as follows (in thousands):

Three Months Ended June 30, Nine Months Ended June 30,

2024 2023 2024 2023

1 unchanged sentence

Variable lease expense 412 406 1,273 1,192

Short-term and other lease expense (includes $ 118 and $ 63 recorded in advertising and marketing for the three months ended March 31, 2024 and 2023, respectively, and $ 225 and $ 127 for the six months ended March 31, 2024 and 2023, respectively;

and $ 147 and $ 138 recorded in repairs and maintenance for the three months ended March 31, 2024 and 2023, respectively, and $ 288 and $ 265 for the six months ended March 31, 2024 and 2023, respectively;

Short-term and other lease expense (includes $ 117 and $ 116 recorded in advertising and marketing for the three months ended June 30, 2024 and 2023, respectively, and $ 342 and $ 243 for the nine months ended June 30, 2024 and 2023, respectively;

and $ 159 and $ 145 recorded in repairs and maintenance for the three months ended June 30, 2024 and 2023, respectively, and $ 447 and $ 410 for the nine months ended June 30, 2024 and 2023, respectively;

365 364 1,042 950

5 unchanged sentences

Weighted average discount rate – operating leases 5.8 % 5.8 %

Future maturities of operating lease liabilities as of March 31, 2024 are as follows (in thousands):

Future maturities of operating lease liabilities as of June 30, 2024 are as follows (in thousands):

Principal Payments Interest Payments Total Payments

April 2024 - March 2025 $ 3,098 $ 1,970 $ 5,068

April 2025 - March 2026 3,370 1,788 5,158

April 2026 - March 2027 3,588 1,589 5,177

April 2027 - March 2028 3,218 1,390 4,608

April 2028 - March 2029 3,038 1,213 4,251

July 2024 - June 2025 $ 3,161 $ 1,926 $ 5,087

July 2025 - June 2026 3,445 1,740 5,185

July 2026 - June 2027 3,580 1,538 5,118

July 2027 - June 2028 3,081 1,345 4,426

July 2028 - June 2029 3,081 1,168 4,249

Thereafter 19,592 3,771 23,363

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2024 2023 2024 2023

Pro forma revenues $ 76,180 $ 77,055 $ 222,370 $ 231,479

Pro forma net income attributable to RCIHH common stockholders $ 774 $ 8,303 $ 8,000 $ 17,213

Pro forma earnings per share - basic and diluted $ 0.08 $ 0.88 $ 0.85 $ 1.83

Pro forma weighted average shares used in computing earnings per share - basic and diluted 9,350,292 9,430,225 9,358,768 9,430,241

Pro forma net income (loss) attributable to RCIHH common stockholders $ ( 5,233 ) $ 9,085 $ 2,767 $ 26,129

Pro forma earnings (loss) per share - basic and diluted $ ( 0.56 ) $ 0.96 $ 0.30 $ 2.77

Pro forma weighted average shares used in computing earnings (loss) per share - basic and diluted 9,278,921 9,430,225 9,332,249 9,430,236

The above unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2022.

The unaudited pro forma financial information reflects material, nonrecurring adjustments directly attributable to the acquisition, including acquisition-related expenses, interest expense, and any related tax effects.

We incurred approximately $ 280,000 and $ 292,000 in acquisition-related expenses during the three and six months ended March 31, 2023, respectively, which is included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

We incurred approximately $ 0 and $ 292,000 in acquisition-related expenses during the three and nine months ended June 30, 2023, respectively, which is included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to a $ 10.0 million line-of-credit facility and the nine seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2022.

Pro forma weighted average shares used in computing earnings per share include the impact of 200,000 shares of our common stock issued as partial consideration for the acquisition.

Since the results of operations during the three and six months ended March 31, 2024 were in a fiscal year subsequent to the fiscal year of acquisition and that the periods fully include the results of operations of the five acquired clubs, the amounts presented do not reflect any pro forma adjustments.

Since the results of operations during the three and nine months ended June 30, 2024 were in a fiscal year subsequent to the fiscal year of acquisition and that the periods fully include the results of operations of the five acquired clubs, the amounts presented do not reflect any pro forma adjustments.

Subsequent Events

On April 30, 2024, the Company entered into a term loan with a bank lender for $ 20.0 million for additional working capital.

Treasury Securities plus 362 basis points, with a 6.5 % floor.

The Company paid $ 356,000 in debt issuance costs at the time of closing.

There are certain financial covenants with which the Company is to be in compliance with related to this loan, including a minimum tangible net worth requirement of $ 25.0 million.

Subsequent to the balance sheet date through May 6, 2024, we repurchased 7,303 shares of our common stock at an average price of $ 51.29 .

On July 10, one of our clubs in Fort Worth, Texas, was razed by fire.

The insurance claim is still in process and no insurance proceeds have been received or recorded as of the filing of this report.

On July 11, 2024, our Board of Directors approved a $ 25.0 million increase in the Company's share repurchase program.

On July 23, 2024, the Company amended a promissory note related to a club acquisition on May 2, 2022, with a remaining principal balance of $ 5.2 million.

The amendment called for a 16-month extension to the original term of the note.

In turn, the Company paid down $ 1.5 million of the note's principal and a 1 % fee on the remaining principal balance.

The monthly installment payment of $ 79,290 in principal and interest was unchanged in the amended note and the balloon payment at the extended maturity date was adjusted accordingly.

Subsequent to the balance sheet date through August 5, 2024, we repurchased 133,244 shares of our common stock at an average price of $ 44.86 .

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 1. Financial Statements