FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
−Removed: The information required by this Item begins on page 51.
+Added: The information required by this Item begins on the next page.
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Reports of Independent Registered Public Accounting Firms ( Marcum LLP , Firm ID:
−Removed: Friedman LLP , Firm ID:
+Added: Reports of Independent Registered Public Accounting Firms ( CBIZ CPAs P.C.
+Added: Marcum LLP, Firm ID:
Consolidated Financial Statements:
−Removed: Consolidated Balance Sheets at September 30, 2024 and 2023
+Added: Consolidated Statements of Cash Flows for the years ended September 30, 202 5 , 202 4 , and 202 3
Consolidated Statements of Income for the years ended September 30, 202 5 , 202 4 , and 202 3
Consolidated Statements of Changes in Equity for the years ended September 30, 202 5 , 202 4 , and 202 3
−Removed: Consolidated Statements of Cash Flows for the years ended September 30, 2024, 2023, and 2022
+Added: Consolidated Balance Sheets at September 30, 202 5 , and 202 4
Notes to Consolidated Financial Statements
3 unchanged sentences
Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheets of RCI Hospitality Holdings, Inc.
−Removed: (the “Company”) as of September 30, 2024 and 2023, the related consolidated statements of income, changes in equity, and cash flows for each of the years in the two-year period ended September 30, 2024, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of September 30, 2024, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated December 16, 2024, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.
+Added: We have audited the accompanying consolidated balance sheet of RCI Hospitality Holdings, Inc.
+Added: (the “Company”) as of September 30, 2025, the related consolidated statements of income, changes in equity and cash flows for the year ended September 30, 2025, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025, and the results of its operations and its cash flows for the year ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of September 30, 2025, based on the criteria established in internal control - integrated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 19, 2026 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: We believe that our audit provides a reasonable basis for our opinion.
+Added: Emphasis of a Matter
+Added: As discussed in Note 11 of the consolidated financial statements, the Company was indicted and is currently subject to an ongoing regulatory investigation.
+Added: The outcome and potential financial impact of this uncertainty is not estimable at this time, but could be material.
+Added: Our opinion is not modified with respect to this matter.
Critical Audit Matters
2 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Impairment of Goodwill, Indefinite-lived Intangible Assets, and Long-lived Assets
+Added: Impairment of Goodwill and Indefinite-lived Intangible Assets
As discussed in Note 2 to the consolidated financial statements, the Company reviews goodwill and indefinite-lived intangible assets on an annual basis for impairment, or when events and circumstances indicate that the asset might be impaired.
−Removed: Additionally, the Company reviews long-lived assets, such as property and equipment, intangible assets subject to amortization, and right-of-use assets on operating leases for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value, and impairment of indefinite-lived intangible assets is recognized in the amount by which the carrying value of the assets exceed their fair value.
−Removed: Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the
−Removed: asset groups to the future undiscounted cash flows expected to be generated by the asset groups.
If these assets are determined to be impaired, the amount of impairment recognized is the amount by which the carrying amount of the assets exceeds their fair value.
−Removed: Fair value is generally determined using forecasted cash flows discounted by an estimated weighted average cost of capital or using a market approach that utilizes market multiples derived from a set of comparable assets.
+Added: Fair value is generally determined using forecasted cash flows discounted using an estimated weighted average cost of capital.
As of September 30, 2025, the Company had goodwill of approximately $62.6 million, and indefinite-lived intangible assets of approximately $153.2 million.
−Removed: Long-lived assets consisted of property and equipment, right-of-use assets, and intangible assets subject to amortization totaling approximately $326.2 million.
During the year ended September 30, 2025 the Company recorded an impairment of these assets of approximately $3.8 million.
−Removed: We identified the evaluation of the impairment analysis of goodwill, indefinite-lived intangible assets, and long-lived assets as a critical audit matter.
+Added: We identified the evaluation of the impairment analysis of goodwill and indefinite-lived intangible assets as a critical audit matter.
There was a high degree of subjective auditor judgment in evaluating the estimated undiscounted future cash flows used to test operating locations for recoverability and the determination of fair value of the relevant assets when required.
1 unchanged sentence
The following are the primary procedures we performed to address this critical audit matter.
−Removed: We evaluated the design of certain internal controls related to the Company’s goodwill, indefinite-lived intangible asset, and long-lived asset impairment process, including controls over the identification of relevant assets at risk of impairment, the determination of estimated undiscounted future cash flows and the fair value of individual reporting unit or asset, as necessary, and controls over the key assumptions as noted above.
−Removed: These procedures also included, among others, (1) testing management’s process for developing the fair value estimates of the reporting units or assets;
+Added: We evaluated the design of certain internal controls related to the Company’s goodwill and indefinite-lived intangible asset impairment process, including controls over the identification of relevant assets at risk of impairment, the determination of estimated undiscounted future cash flows and the fair value of individual reporting unit or asset, as necessary, and controls over the key assumptions as noted above.
+Added: These procedures also included, among others, (1) testing management’s process for developing the fair value estimates of the reporting unit or assets;
(2) evaluating the appropriateness of the underlying discounted and undiscounted cash flow models;
1 unchanged sentence
and (4) evaluating the reasonableness of the significant assumptions used by management, including the future cash flows, growth rates and discount rates.
−Removed: Evaluating management’s significant assumptions related to future cash flows, growth rates, and the discount rates involved, with the assistance of valuation specialists, evaluating whether the assumptions used by management were reasonable considering (1) the historical performance of the reporting unit or asset group;
+Added: Evaluating management’s significant assumptions related to future cash flows, growth rates and the discount rates involved, with the assistance of valuation specialists, evaluating whether the assumptions used by management were reasonable considering (1) the historical performance of the reporting unit;
(2) the consistency with external market data;
and (3) sensitivities over significant inputs and assumptions, including the development of a point estimate.
−Removed: /s/ Marcum LLP
−Removed: We have served as the Company’s auditor since 2019 (such date takes into account the acquisition of Friedman LLP by Marcum LLP effective September 1, 2022).
+Added: /s/ CBIZ CPAs P.C.
+Added: CBIZ CPAs P.C.
+Added: We have served as the Company’s auditor since 2019 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C.
+Added: effective November 1, 2024).
Marlton, New Jersey
−Removed: December 16, 2024
+Added: March 19, 2026
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
2 unchanged sentences
Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated statements of income, changes in equity and cash flows of RCI Hospitality Holdings, Inc.
−Removed: (the "Company") for the year ended September 30, 2022, and the related notes and schedule as of and for the year ended September 30, 2022 (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company's operations and its cash flows for the year ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheet of RCI Hospitality Holdings, Inc.
+Added: (the “Company”) as of September 30, 2024, the related consolidated statements of income, changes in equity and cash flows for each of the years in the two-year period ended September 30, 2024, and the related notes and schedule (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ Friedman LLP
−Removed: We have served as the Company’s auditor from 2019 to 2023 .
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
+Added: /s/ Marcum LLP
+Added: We served as the Company’s auditor from 2019 to 2025.
Marlton, New Jersey
−Removed: December 14, 2022
+Added: December 16, 2024, except for the effect of the adoption of ASU 2023-07 and ASU 2023-09 described in Note 2, Note 4, and Note 10 to the financial statements, as to which the date is March 19, 2026
RCI HOSPITALITY HOLDINGS, INC.
−Removed: CONSOLIDATED BALANCE SHEETS
−Removed: (in thousands, except par value and number of shares)
−Removed: September 30,
−Removed: Current assets
−Removed: Cash and cash equivalents $ 32,350 $ 21,023
−Removed: Receivables, net 5,563 9,846
−Removed: Current portion of notes receivable 269 249
+Added: CONSOLIDATED STATEMENTS OF CASH FLOWS
+Added: (in thousands)
+Added: Years Ended September 30,
+Added: 2025 2024 2023
+Added: CASH FLOWS FROM OPERATING ACTIVITIES
+Added: Net income $ 10,839 $ 3,018 $ 29,100
+Added: Adjustments to reconcile net income to net cash provided by operating activities:
+Added: Depreciation and amortization 15,078 15,395 15,151
+Added: Deferred income tax benefit ( 1,004 ) ( 6,450 ) ( 1,781 )
+Added: Gain on sale of businesses and assets ( 1,032 ) ( 2,215 ) ( 870 )
+Added: Impairment of assets 5,340 38,517 12,629
+Added: Amortization and writeoff of debt discount and issuance costs 549 608 615
+Added: Credit loss expense on notes receivable 42 — —
+Added: Gain on insurance ( 2,087 ) ( 522 ) ( 77 )
+Added: Noncash lease expense 2,726 2,980 2,978
+Added: Stock-based compensation expense 1,373 1,882 2,588
+Added: Changes in operating assets and liabilities, net of business acquisitions:
+Added: Receivables 1,943 4,283 ( 2,383 )
Inventories ( 20 ) ( 309 ) 177
−Removed: Prepaid expenses and other current assets 4,427 1,943
−Removed: Total current assets 47,285 37,473
−Removed: Property and equipment, net 280,075 282,705
−Removed: Operating lease right-of-use assets, net 26,231 34,931
−Removed: Notes receivable, net of current portion 4,174 4,443
−Removed: Goodwill 61,911 70,772
−Removed: Intangibles, net 163,461 179,145
−Removed: Other assets 1,227 1,415
−Removed: Total assets $ 584,364 $ 610,884
−Removed: LIABILITIES AND EQUITY
−Removed: Current liabilities
−Removed: Accounts payable $ 5,637 $ 6,111
−Removed: Accrued liabilities 20,280 16,051
−Removed: Current portion of debt obligations, net 18,871 22,843
−Removed: Current portion of operating lease liabilities 3,290 2,977
−Removed: Total current liabilities 48,078 47,982
−Removed: Deferred tax liability, net 22,693 29,143
−Removed: Debt, net of current portion and debt discount and issuance costs 219,326 216,908
−Removed: Operating lease liabilities, net of current portion 30,759 35,175
−Removed: Other long-term liabilities 398 352
−Removed: Total liabilities 321,254 329,560
−Removed: Commitments and contingencies ( Note 10 )
−Removed: Preferred stock, $ 0.10 par value per share;
−Removed: 1,000,000 shares authorized;
−Removed: none issued and outstanding
−Removed: Common stock, $ 0.01 par value per share;
−Removed: 20,000,000 shares authorized;
−Removed: 8,955,000 shares and 9,397,639 shares issued and outstanding as of September 30, 2024 and 2023, respectively
−Removed: Additional paid-in capital 61,511 80,437
−Removed: Retained earnings 201,759 201,050
−Removed: Total RCIHH stockholders’ equity 263,360 281,581
−Removed: Noncontrolling interests ( 250 ) ( 257 )
−Removed: Total equity 263,110 281,324
−Removed: Total liabilities and equity $ 584,364 $ 610,884
+Added: Prepaid expenses, other current, and other assets ( 1,241 ) ( 2,421 ) ( 366 )
+Added: Accounts payable, accrued, and other liabilities 16,912 1,118 1,369
+Added: Net cash provided by operating activities 49,418 55,884 59,130
+Added: CASH FLOWS FROM INVESTING ACTIVITIES
+Added: Proceeds from sale of businesses and assets 1,093 1,969 4,245
+Added: Proceeds from notes receivable 292 249 229
+Added: Proceeds from insurance 2,101 1,367 86
+Added: Payments for property and equipment and intangible assets ( 14,527 ) ( 24,600 ) ( 40,384 )
+Added: Acquisition of businesses, net of cash acquired ( 13,000 ) — ( 29,000 )
+Added: Net cash used in investing activities ( 24,041 ) ( 21,015 ) ( 64,824 )
+Added: CASH FLOWS FROM FINANCING ACTIVITIES
+Added: Proceeds from debt obligations, including related party proceeds of $ 200 , $ 0 , and $ 0 , respectively
+Added: 10,888 22,657 11,595
+Added: Payments on debt obligations, including related party payments of $ 500 , $ 0 , and $ 0 , respectively
+Added: ( 20,502 ) ( 23,001 ) ( 15,650 )
+Added: Purchase of treasury stock ( 11,860 ) ( 20,606 ) ( 2,223 )
+Added: Payment of dividends ( 2,464 ) ( 2,302 ) ( 2,146 )
+Added: Payment of loan origination costs ( 80 ) ( 290 ) ( 239 )
+Added: Share in return of investment by noncontrolling partner — — ( 600 )
+Added: Net cash used in financing activities ( 24,018 ) ( 23,542 ) ( 9,263 )
+Added: NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,359 11,327 ( 14,957 )
+Added: CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 32,350 21,023 35,980
+Added: CASH AND CASH EQUIVALENTS AT END OF YEAR $ 33,709 $ 32,350 $ 21,023
See accompanying notes to consolidated financial statements.
24 unchanged sentences
Interest income 565 482 388
−Removed: Non-operating gains, net — — 211
+Added: Gain on lease termination and other, net 968 — —
Income before income taxes 15,448 2,608 35,946
25 unchanged sentences
Stock-based compensation — — 2,588 — — — — 2,588
−Removed: Investment from noncontrolling partner — — — — — — 1,070 1,070
−Removed: Net income — — — 46,041 — — 19 46,060
+Added: Share in return of investment by noncontrolling partner — — — — — — ( 600 ) ( 600 )
+Added: Net income (loss)
+Added: — — — 29,246 — — ( 146 ) 29,100
Balance at September 30, 2023 9,397,639 94 80,437 201,050 — — ( 257 ) 281,324
−Removed: Issuance of common shares for business combination 200,000 2 12,845 — — — — 12,847
Purchase of treasury shares — — — — ( 442,639 ) ( 20,606 ) — ( 20,606 )
Canceled treasury shares ( 442,639 ) ( 4 ) ( 20,602 ) — 442,639 20,606 — —
+Added: Excise tax on stock repurchases — — ( 206 ) — — — — ( 206 )
Payment of dividends ($ 0.25 per share)
1 unchanged sentence
Stock-based compensation — — 1,882 — — — — 1,882
−Removed: Share in return of investment by noncontrolling partner — — — — — — ( 600 ) ( 600 )
−Removed: Net income (loss) — — — 29,246 — — ( 146 ) 29,100
+Added: — — — 3,011 — — 7 3,018
Balance at September 30, 2024 8,955,000 90 61,511 201,759 — — ( 250 ) 263,110
9 unchanged sentences
RCI HOSPITALITY HOLDINGS, INC.
−Removed: CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: (in thousands)
−Removed: Years Ended September 30,
−Removed: 2024 2023 2022
−Removed: CASH FLOWS FROM OPERATING ACTIVITIES
−Removed: Net income $ 3,018 $ 29,100 $ 46,060
−Removed: Adjustments to reconcile net income to net cash provided by operating activities:
−Removed: Depreciation and amortization 15,395 15,151 12,391
−Removed: Deferred tax expense (benefit) ( 6,450 ) ( 1,781 ) 3,080
−Removed: Gain on sale of businesses and assets ( 2,215 ) ( 870 ) ( 2,970 )
−Removed: Impairment of assets 38,517 12,629 1,888
−Removed: Amortization and writeoff of debt discount and issuance costs 608 615 314
−Removed: Doubtful accounts expense on notes receivable — — 753
−Removed: Gain on insurance ( 522 ) ( 77 ) ( 463 )
−Removed: Noncash lease expense 2,980 2,978 2,607
−Removed: Stock-based compensation expense 1,882 2,588 2,353
−Removed: Gain on debt extinguishment — — ( 83 )
−Removed: Changes in operating assets and liabilities, net of business acquisitions:
−Removed: Receivables 4,283 ( 2,383 ) ( 175 )
+Added: CONSOLIDATED BALANCE SHEETS
+Added: (in thousands, except par value and number of shares)
+Added: September 30,
+Added: Current assets
+Added: Cash and cash equivalents $ 33,709 $ 32,350
+Added: Receivables, net 3,940 5,832
Inventories 4,857 4,676
−Removed: Prepaid expenses, other current, and other assets ( 2,421 ) ( 366 ) 387
−Removed: Accounts payable, accrued, and other liabilities 1,118 1,369 ( 1,079 )
−Removed: Net cash provided by operating activities 55,884 59,130 64,509
−Removed: CASH FLOWS FROM INVESTING ACTIVITIES
−Removed: Proceeds from sale of businesses and assets 1,969 4,245 10,669
−Removed: Proceeds from notes receivable 249 229 182
−Removed: Proceeds from insurance 1,367 86 648
−Removed: Payments for property and equipment and intangible assets ( 24,600 ) ( 40,384 ) ( 24,003 )
−Removed: Acquisition of businesses, net of cash acquired — ( 29,000 ) ( 55,293 )
−Removed: Net cash used in investing activities ( 21,015 ) ( 64,824 ) ( 67,797 )
−Removed: CASH FLOWS FROM FINANCING ACTIVITIES
−Removed: Proceeds from debt obligations, including related party proceeds of $ 0 , $ 0 , and $ 650 , respectively
−Removed: 22,657 11,595 35,820
−Removed: Payments on debt obligations ( 23,001 ) ( 15,650 ) ( 14,894 )
−Removed: Purchase of treasury stock ( 20,606 ) ( 2,223 ) ( 15,097 )
−Removed: Payment of dividends ( 2,302 ) ( 2,146 ) ( 1,784 )
−Removed: Payment of loan origination costs ( 290 ) ( 239 ) ( 463 )
−Removed: Share in return of investment by noncontrolling partner — ( 600 ) —
−Removed: Net cash provided by (used in) financing activities ( 23,542 ) ( 9,263 ) 3,582
−Removed: NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,327 ( 14,957 ) 294
−Removed: CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 21,023 35,980 35,686
−Removed: CASH AND CASH EQUIVALENTS AT END OF YEAR $ 32,350 $ 21,023 $ 35,980
−Removed: Years Ended September 30,
−Removed: 2024 2023 2022
−Removed: CASH PAID DURING THE YEAR FOR:
−Removed: Interest paid, net of amounts capitalized $ 16,157 $ 15,156 $ 11,227
−Removed: Income taxes paid (net of refunds of $ 173 , $ 1,656 , and $ 2,256 in 2024, 2023, and 2022, respectively)
−Removed: $ 5,068 $ 8,636 $ 9,500
−Removed: Non-cash investing and financing transactions:
−Removed: Debt incurred in connection with acquisition of businesses $ — $ 30,405 $ 49,000
−Removed: Debt incurred in connection with purchase of property and equipment $ — $ 10,476 $ 9,201
−Removed: Debt exchanged in connection with the sale of a restaurant location $ 1,471 $ — $ —
−Removed: Notes receivable received as proceeds from sale of assets $ — $ — $ 2,700
−Removed: Investment from noncontrolling partner in connection with purchase of property $ — $ — $ 1,070
−Removed: Issuance of shares of common stock for acquisition of business:
−Removed: Number of shares — 200,000 500,000
−Removed: Fair value at acquisition date $ — $ 12,847 $ 29,933
−Removed: Adjustment to operating lease right-of-use assets related to new and renewed leases $ 760 $ 1,864 $ 21,424
−Removed: Adjustment to operating lease liabilities related to new and renewed leases $ 760 $ 2,163 $ 21,424
−Removed: Unpaid excise tax on stock repurchases $ 206 $ — $ —
−Removed: Unpaid liabilities on capital expenditures $ 1,474 $ 1,967 $ 1,503
−Removed: Receivable on eminent domain disposition $ — $ — $ 1,047
+Added: Prepaid expenses and other current assets 4,968 4,427
+Added: Assets held for sale 3,394 —
+Added: Total current assets 50,868 47,285
+Added: Property and equipment, net 279,027 280,075
+Added: Operating lease right-of-use assets, net 25,781 26,231
+Added: Notes receivable, net of current portion 3,849 4,174
+Added: Goodwill 62,725 61,911
+Added: Intangibles, net 171,948 163,461
+Added: Other assets 2,737 1,227
+Added: Total assets $ 596,935 $ 584,364
+Added: LIABILITIES AND EQUITY
+Added: Current liabilities
+Added: Accounts payable $ 5,836 $ 5,637
+Added: Accrued liabilities 32,607 20,280
+Added: Current portion of debt obligations, net 21,198 18,871
+Added: Current portion of operating lease liabilities 3,314 3,290
+Added: Total current liabilities 62,955 48,078
+Added: Deferred tax liability, net 21,689 22,693
+Added: Debt, net of current portion and debt discount and issuance costs 214,583 219,326
+Added: Operating lease liabilities, net of current portion 27,320 30,759
+Added: Other long-term liabilities 9,509 398
+Added: Total liabilities 336,056 321,254
+Added: Commitments and contingencies ( Note 11 )
+Added: Preferred stock, $ 0.10 par value per share;
+Added: 1,000,000 shares authorized;
+Added: none issued and outstanding
+Added: Common stock, $ 0.01 par value per share;
+Added: 20,000,000 shares authorized;
+Added: 8,684,061 shares and 8,955,000 shares issued and outstanding as of September 30, 2025, and 2024, respectively
+Added: Additional paid-in capital 50,908 61,511
+Added: Retained earnings 210,106 201,759
+Added: Total RCIHH stockholders’ equity 261,101 263,360
+Added: Noncontrolling interests ( 222 ) ( 250 )
+Added: Total equity 260,879 263,110
+Added: Total liabilities and equity $ 596,935 $ 584,364
See accompanying notes to consolidated financial statements.
4 unchanged sentences
(the “Company,” “we,” “us,” or “our”) is a holding company incorporated in Texas in 1994.
−Removed: Through its subsidiaries, the Company currently owns and operates establishments that offer live adult entertainment, restaurant, and/or bar operations.
−Removed: These establishments are located in Houston, Austin, San Antonio, Dallas, Fort Worth, Tomball, Katy, Pearland, Dickinson, Odessa, Lubbock, Longview, Tye, Round Rock, Edinburg, El Paso, Harlingen, Arlington, Beaumont, and Stafford, Texas, as well as Denver, Colorado;
+Added: Our subsidiaries own and operate establishments that offer live adult entertainment, restaurant, and/or bar operations.
+Added: These establishments are located in Houston, Austin, San Antonio, Dallas, Fort Worth, Tomball, Katy, Pearland, Dickinson, Odessa, Lubbock, Longview, Tye, Round Rock, Edinburg, El Paso, Harlingen, Arlington, Beaumont, and Stafford, Texas, as well as Central City and Denver, Colorado;
+Added: Inkster, Michigan;
Minneapolis, Minnesota;
−Removed: Pittsburgh, Pennsylvania;
+Added: Pittsburgh and Allentown, Pennsylvania;
Charlotte and Raleigh, North Carolina;
6 unchanged sentences
Indianapolis, Indiana;
−Removed: and Chicago, Washington Park, Sauget, and Kappa, Illinois.
+Added: Chicago, Washington Park, Sauget, and Kappa, Illinois;
+Added: and West Columbia, South Carolina.
The Company also owns and operates media businesses for the adult industry.
13 unchanged sentences
GAAP requires management to make estimates and assumptions that affect certain reported amounts in the consolidated financial statements and accompanying notes.
−Removed: Estimates and assumptions are based on historical experience, forecasted future events, and various other assumptions that we believe to be reasonable under the circumstances.
+Added: Estimates and assumptions are based on historical experience, forecasted future events, and various other inputs that we believe to be reasonable under the circumstances.
Estimates and assumptions may vary under different circumstances and conditions.
15 unchanged sentences
Allowance for doubtful accounts balance related to operating receivables was $ 91,000 and $ 42,000 as of September 30, 2025 and 2024, respectively (see Note 6 ).
−Removed: Allowance for doubtful accounts balance related to notes receivable was $ 0 and $ 0 as of September 30, 2024 and 2023, respectively.
+Added: Allowance for credit losses balance related to notes receivable was $ 42,000 and $ 0 as of September 30, 2025 and 2024, respectively.
Inventories include alcoholic beverages, energy drinks, food, and Company merchandise.
25 unchanged sentences
We recognize goodwill impairment in the amount that the carrying value of the reporting unit exceeds the fair value of the reporting unit, not to exceed the amount of goodwill allocated to the reporting unit, based on the results of our Step 1 analysis.
−Removed: For the year ended September 30, 2024, we identified four reporting units that were impaired and recognized a goodwill impairment loss totaling $ 8.9 million.
−Removed: For the year ended September 30, 2023, we identified four reporting unit that were impaired and recognized a goodwill impairment loss totaling $ 4.2 million.
−Removed: For the year ended September 30, 2022, we identified one reporting units that was impaired and recognized a goodwill impairment loss of $ 566,000 .
+Added: For the year ended September 30, 2025, we did not identify any goodwill impairment for the reporting unit.
+Added: For the year ended September 30, 2024, we recognized goodwill impairment loss totaling $ 8.9 million.
+Added: For the year ended September 30, 2023, we recognized goodwill impairment loss of $ 4.2 million.
For indefinite-lived intangibles, specifically sexually-oriented business ("SOB") licenses, we determine fair value by estimating the multiperiod excess earnings of the asset.
1 unchanged sentence
The fair value is then compared to the carrying value and an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset.
−Removed: We recorded impairment charges for SOB licenses amounting to $ 11.8 million in 2024 related to seven clubs, $ 6.5 million in 2023 related to eight clubs, $ 293,000 in 2022 related to one club, which are included in impairments and other charges, net in the consolidated statements of income.
+Added: We recorded impairment charges for SOB licenses amounting to $ 3.8 million in 2025 related to six clubs, $ 11.8 million in 2024 related to seven clubs, $ 6.5 million in 2023 related to eight clubs, which are included in impairments and other charges, net in the consolidated statements of income.
Impairment of Long-Lived Assets
7 unchanged sentences
The assets and liabilities of a disposal group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.
+Added: During fiscal 2025, the Company impaired one location operated by Bombshells for property and equipment for $ 1.6 million.
During fiscal 2024, the Company impaired four clubs and nine Bombshells for property and equipment totaling $ 10.6 million and five Bombshells locations for operating lease right-of-use assets totaling $ 6.5 million.
During fiscal 2023, the Company impaired one club for operating lease right-of-use assets amounting to $ 1.0 million and property and equipment amounting to $ 58,000 , and two venture projects for software totaling $ 814,000 .
−Removed: During fiscal 2022, the Company impaired one club and one Bombshells for property and equipment totaling $ 1.0 million.
See Notes 6 , 7 , and 12 .
44 unchanged sentences
During the years ended September 30, 2025, 2024, and 2023, the Company did not have any adjustment items to reconcile the numerator and the denominator in the calculation of basic and diluted earnings per share.
−Removed: For all fiscals presented, we excluded 300,000 stock options from the calculation of diluted earnings per share because the effect was anti-dilutive.
+Added: For all fiscals presented, we excluded the impact of 300,000 stock options from the calculation of diluted earnings per share because the effect was anti-dilutive.
Business Combinations
8 unchanged sentences
Stock-based Compensation
−Removed: The Company recognizes all employee stock-based compensation in selling, general and administrative expenses in our consolidated statements of operations.
+Added: The Company recognizes all employee stock-based compensation in selling, general and administrative expenses in our consolidated statements of income.
Equity-classified awards are measured at the grant date fair value of the award and recognized as expense over their requisite service period.
The Company estimates grant date fair value of stock options using the Black-Scholes option-pricing model.
−Removed: The following table provides the significant assumptions used in determining the estimated grant date fair value of the stock options granted in fiscal 2022.
−Removed: No grants were awarded in fiscal 2024 and 2023.
−Removed: Expected term (in years) 4.45
−Removed: Expected volatility 64.42 %
−Removed: Expected dividend yield 0.20 %
−Removed: Risk-free rate 3.23 %
RCI HOSPITALITY HOLDINGS, INC.
11 unchanged sentences
In the opinion of management, there was not at least a reasonable possibility that we may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims.
−Removed: The Company recognizes legal fees and expenses, including those related to legal contingencies, as incurred.
−Removed: Generally, the Company recognizes gain contingencies when they are realized or when all related contingencies have been resolved.
The Company maintains insurance that covers claims arising from risks associated with the Company’s business including claims for workers’ compensation, general liability, property, auto, and business interruption coverage.
The Company has historically carried substantial insurance to cover such risks with large deductibles, with such policies being structured to limit our per-occurrence exposure.
−Removed: As of October 1, 2024, however, we discontinued general liability and liquor insurance coverage in a number of establishments due to increasingly prohibitive costs of such coverage, and we are currently in the process of establishing self-insurance for the claims for which third-party insurance coverage is financially prohibitive.
+Added: During fiscal 2025, however, we self-insured certain general liability and liquor insurance coverage in a number of establishments due to increasingly prohibitive costs of such coverage.
However, we still carry at least the minimum insurance coverage where it is required by law for licensing requirements.
+Added: We record a liability for unresolved claims and for an estimate of incurred but not reported claims including legal costs based on historical experience.
+Added: The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims development history, and settlement practices.
+Added: Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.
The Company believes, and the Company’s experience has been, that such insurance policies have been sufficient to cover such risks.
+Added: Generally, the Company recognizes gain contingencies when they are realized or when all related contingencies have been resolved.
Fair Value Measurement
8 unchanged sentences
The Company classifies its marketable securities as available-for-sale, which are reported at fair value.
−Removed: Realized gains and losses (including unrealized holding gains and losses) from securities classified as available-for-sale are included in comprehensive income.
−Removed: The Company measures the fair value of its marketable securities based on quoted prices for identical securities in active markets, or Level 1 inputs.
+Added: Realized gains and losses (including unrealized holding gains and losses) from securities classified as available-for-sale are included in
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Summary of Significant Accounting Policies - continued
+Added: comprehensive income.
+Added: The Company measures the fair value of its marketable securities based on quoted prices for identical securities in active markets, or Level 1 inputs.
In accordance with U.S.
14 unchanged sentences
Indefinite-lived intangibles 9,713 — — 9,713
−Removed: Definite-lived intangibles** 1,682 — — 1,682
Fair Value at Reporting Date Using
5 unchanged sentences
Indefinite-lived intangibles 16,575 — — 16,575
−Removed: Indefinite-lived intangibles** 2,996 — — 2,996
Definite-lived intangibles 1,682 — — 1,682
−Removed: Goodwill* 6,881 — — 6,881
−Removed: Goodwill** 1,084 — — 1,084
−Removed: Current assets* 696 — — 696
−Removed: * Certain assets and liabilities measured at the acquisition dates.
−Removed: ** Measured at year-end impairment testing.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Summary of Significant Accounting Policies - continued
Unrealized Gain (Loss/Impairments†) Recognized
8 unchanged sentences
† Cumulative annual impairments based on interim and year-end testing.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Summary of Significant Accounting Policies - continued
The significant unobservable inputs used in our level 3 fair value measurements are as follows:
1 unchanged sentence
Areas Valuation Techniques Unobservable Input 2025 2024 2023
−Removed: Property and equipment Discounted cash flow Long-term revenue/EBITDA growth rate
−Removed: - 2.3 % - 1.6 % ( 0.9 %)
−Removed: 0 % - 2.5 % ( 1.25 %)
−Removed: 0 % - 2.5 % ( 1.5 %)
−Removed: Weighted average cost of capital 9.6 % ( 9.6 %)
−Removed: 12.5 % ( 12.5 %)
−Removed: Goodwill Discounted cash flow EBITDA multiple 1 x - 13 x ( 13 x)
+Added: Goodwill Discounted cash flow EBITDA multiple 12 x ( 12 x)
1 x - 13 x ( 13 x)
5 unchanged sentences
9.6 % ( 9.6 %)
+Added: 11.0 % ( 11.0 %)
SOB licenses Multiperiod excess earnings Long-term revenue/EBITDA growth rate 2.3 % ( 2.3 %)
3 unchanged sentences
9.6 % ( 9.6 %)
+Added: 11.0 % ( 11.0 %)
Contributory asset charges rate 6.5 % - 16.2 % ( 15.1 %)
9 unchanged sentences
9.6 % ( 9.6 %)
−Removed: Operating lease right-of-use assets Discounted cash flow Long-term EBITDA growth rate - 2.3 % - 1.6 % ( 0.9 %)
11.0 % ( 11.0 %)
−Removed: 0 % - 2.5 % ( 1.5 %)
−Removed: Weighted average cost of capital 9.6 % ( 9.6 %)
−Removed: 12.5 % ( 12.5 %)
−Removed: Business combinations Various* Growth rate None 0 % - 11 % ( 5.5 %)
+Added: Operating lease right-of-use assets Discounted cash flow Long-term EBITDA growth rate None ( 2.3 )% - 1.6 % ( 0.9 %)
1.5 % - 2.5 % ( 2.3 %)
1 unchanged sentence
11.0 % ( 11.0 %)
−Removed: Internal rate of return None 16.5 % - 30 % ( 22.4 %)
−Removed: 15 % - 21.5 % ( 19.4 %)
−Removed: Contributory asset charges rate None 15.6 % - 21.5 % ( 16.3 %)
−Removed: 8.5 % - 10.2 % ( 9.3 %)
−Removed: * Includes all of the valuation techniques for each of the fair valued assets above as of each acquisition date.
RCI HOSPITALITY HOLDINGS, INC.
2 unchanged sentences
Impact of Recently Issued Accounting Standards
−Removed: In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.
−Removed: 2021-08, Business Combinations (Topic 805):
−Removed: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .
−Removed: This ASU amends Accounting Standards Codification ("ASC") Topic 805 to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in business combinations.
−Removed: The ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
−Removed: We adopted ASU 2021-08 on October 1, 2023.
−Removed: Our adoption of this ASU did not have a significant impact on our consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):
4 unchanged sentences
Early adoption is permitted.
−Removed: We are evaluating the impact of this ASU and we believe that the adoption of this guidance will not have a significant impact on our consolidated financial statements.
+Added: We adopted ASU 2022-03 on October 1, 2024.
+Added: Our adoption of this ASU did not have a significant impact on our consolidated financial statements.
In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842):
4 unchanged sentences
Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance.
−Removed: We are still evaluating the impact of this ASU but we believe that the adoption of this guidance will not have a significant impact on our consolidated financial statements.
+Added: We adopted ASU 2023-01 on October 1, 2024.
+Added: Our adoption of this ASU did not have a significant impact on our consolidated financial statements.
In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60):
5 unchanged sentences
early adoptions is permitted in any interim or annual period in which financial statements have not yet been issued (or made available for issuance), either prospectively or retrospectively.
−Removed: We are still evaluating the impact of this ASU on our consolidated financial statements.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Summary of Significant Accounting Policies - continued
+Added: We adopted the provisions of ASU 2023-05 on October 1, 2024, and will apply them on future joint ventures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):
4 unchanged sentences
Early adoption is permitted.
−Removed: We are evaluating the impact of this ASU on our consolidated financial statements.
+Added: We initially adopted the disclosure requirements of ASU 2023-07 during the annual reporting period ended September 30, 2025.
+Added: Due to certain changes in the composition of reportable segments, we recast prior year information to conform to current year classification, as allowed by ASU 2023-07.
+Added: Our adoption of this ASU did not have a significant impact on our consolidated financial statements.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Summary of Significant Accounting Policies - continued
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
3 unchanged sentences
Entities are permitted to early adopt the standard for annual financial statements that have not been issued or made available for issuance.
−Removed: We are enhancing our income tax reporting system to be able to capture the required disclosures of this ASU.
+Added: We initially adopted the disclosure requirements of ASU 2023-09 during the annual reporting period ended September 30, 2025, on a retrospective basis.
+Added: See Note 10 .
+Added: In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):
+Added: Disaggregation of Income Statement Expenses , which expands disclosures about income statement expenses.
+Added: The guidance requires disaggregation of certain costs and expenses included in each relevant expense caption on our consolidated statements of income in a separate note to the financial statements at each interim and annual reporting period, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization.
+Added: The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, as clarified by ASU 2025-01, with early adoption permitted.
+Added: The amendments in this ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of the ASU or (2) retrospectively to any or all prior periods presented in the financial statements.
+Added: We are currently evaluating the impact of this guidance on our financial statement disclosures.
+Added: Supplemental Disclosure of Cash Flow Information
+Added: Presented below are supplemental cash flow information (in thousands).
+Added: Years Ended September 30,
+Added: 2025 2024 2023
+Added: CASH PAID DURING THE YEAR FOR:
+Added: Interest paid, net of amounts capitalized $ 15,847 $ 16,157 $ 15,156
+Added: Income taxes paid (net of refunds of $ 51 , $ 173 , and $ 1,656 in 2025, 2024, and 2023, respectively) ( Note 10 )
+Added: $ 4,547 $ 5,068 $ 8,636
+Added: Non-cash investing and financing transactions:
+Added: Debt incurred in connection with acquisition of businesses $ 8,000 $ — $ 30,405
+Added: Debt incurred in connection with purchase of property and equipment $ — $ — $ 10,476
+Added: Debt exchanged in connection with the sale of a restaurant location $ — $ 1,471 $ —
+Added: Notes receivable received as proceeds from sale of assets $ 60 $ — $ —
+Added: Issuance of shares of common stock for acquisition of business:
+Added: Number of shares — — 200,000
+Added: Fair value at acquisition date $ — $ — $ 12,847
+Added: Adjustment to operating lease right-of-use assets related to new and renewed leases $ — $ 760 $ 1,864
+Added: Adjustment to operating lease liabilities related to new and renewed leases $ — $ 760 $ 2,163
+Added: Unpaid excise tax on stock repurchases $ 119 $ 206 $ —
+Added: Unpaid liabilities on capital expenditures $ 1,005 $ 1,474 $ 1,967
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Segment Information
+Added: The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars.
+Added: The Company has identified such segments based on how the chief operating decision maker assigns management responsibility, how financial information is regularly reviewed, the nature of the Company’s products, services and costs, regulatory environments, and how resources are allocated.
+Added: There are no major distinctions in geographical areas served as all operations are in the United States.
+Added: The Company's chief operating decision maker is its chief executive officer.
+Added: The Company measures segment profit (loss) as income (loss) from operations.
+Added: Segment assets are those assets controlled by each reportable segment.
+Added: The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements.
+Added: Below is the financial information related to the Company’s reportable segments (in thousands):
+Added: 2025 2024 2023
+Added: Nightclubs Bombshells Total Nightclubs Bombshells Total Nightclubs Bombshells Total
+Added: Third party $ 242,501 $ 35,810 $ 278,311 $ 243,864 $ 50,578 $ 294,442 $ 236,748 $ 55,723 $ 292,471
+Added: Intersegment 4,610 — 4,610 4,049 — 4,049 3,355 — 3,355
+Added: 247,111 35,810 282,921 247,913 50,578 298,491 240,103 55,723 295,826
+Added: Reconciliation of revenue
+Added: Other revenues, including intersegment 1,383 1,432 1,573
+Added: Elimination of intersegment revenues ( 4,870 ) ( 4,319 ) ( 3,609 )
+Added: Total consolidated revenues 279,434 295,604 293,790
+Added: Cost of goods sold, including intersegment 27,722 8,572 36,294 28,411 12,212 40,623 26,266 12,486 38,752
+Added: Salaries and wages 56,969 11,636 68,605 54,217 14,643 68,860 50,489 14,949 65,438
+Added: Selling, general, and administrative, including intersegment 69,994 17,418 87,412 68,728 21,846 90,574 61,363 21,665 83,028
+Added: Depreciation and amortization 12,662 1,344 14,006 11,823 2,399 14,222 10,871 2,574 13,445
+Added: Impairment and other charges, net 5,585 460 6,045 22,773 13,529 36,302 14,585 284 14,869
+Added: Other segment items — ( 979 ) ( 979 ) — — — — — —
+Added: Segment income (loss) 74,179 ( 2,641 ) 71,538 61,961 ( 14,051 ) 47,910 76,529 3,765 80,294
+Added: Reconciliation of segment income (loss)
+Added: Other income (loss) ( 218 ) ( 179 ) ( 1,427 )
+Added: Interest income (expense), net ( 15,787 ) ( 16,197 ) ( 15,538 )
+Added: Elimination of intersegment income ( 6 ) — —
+Added: Unallocated corporate overhead ( 40,079 ) ( 28,926 ) ( 27,383 )
+Added: Consolidated income before income taxes 15,448 2,608 35,946
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Segment Information – continued
+Added: 2025 2024 2023
+Added: Nightclubs Bombshells Total Nightclubs Bombshells Total Nightclubs Bombshells Total
+Added: Segment capital expenditures 5,054 8,460 13,514 9,922 8,080 18,002 11,840 16,578 28,418
+Added: Reconciliation to consolidated capital expenditures
+Added: Other operating segments 548 5,114 8,400
+Added: Unallocated corporate 465 1,484 3,566
+Added: Consolidated capital expenditures 14,527 24,600 40,384
+Added: Segment assets - end of year 477,644 75,582 553,226 455,756 79,410 535,166 483,563 85,215 568,778
+Added: Reconciliation to consolidated total assets
+Added: Other operating segments 7,942 12,984 6,936
+Added: Unallocated corporate 35,767 36,214 35,170
+Added: Consolidated total assets 596,935 584,364 610,884
+Added: General corporate overhead include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, unallocated self-insurance reserve, depreciation and other corporate costs such as automobile and travel costs.
+Added: Management considers these to be non-allocable costs for segment purposes.
+Added: Certain real estate assets previously wholly assigned to Bombshells have been subdivided and allocated to other future development or investment projects.
+Added: Accordingly, those asset costs have been transferred out of the Bombshells segment.
+Added: In adopting ASU 2023-07, we recast one of our shared-services subsidiary from Other to Corporate.
+Added: We also recast three previously planned and previously reported casino-related subsidiaries classified in Other to Nightclubs and Bombshells .
Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 4 ), are shown below (in thousands).
8 unchanged sentences
$ 242,501 $ 35,810 $ 1,123 $ 279,434
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Revenues - continued
Nightclubs Bombshells Other Total
7 unchanged sentences
$ 243,864 $ 50,578 $ 1,162 $ 295,604
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Revenues - continued
Nightclubs Bombshells Other Total
16 unchanged sentences
Contract liabilities with customers are included in accrued liabilities as unearned revenues in our consolidated balance sheets (see also Note 6 ), while the revenues associated with these contract liabilities are included in other revenues in our consolidated statements of income.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Revenues - continued
On December 22, 2020, the Company signed a franchise development agreement with a group of private investors to open three Bombshells locations in San Antonio, Texas over a period of five years , and the right of first refusal for three more locations in Corpus Christi, New Braunfels, and San Marcos, all in Texas.
5 unchanged sentences
See Note 16 .
−Removed: Segment Information
−Removed: The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars.
−Removed: The Company has identified such segments based on management responsibility and the nature of the Company’s products, services and costs.
−Removed: There are no major distinctions in geographical areas served as all operations are in the United States.
−Removed: The Company measures segment profit (loss) as income (loss) from operations.
−Removed: Segment assets are those assets controlled by each reportable segment.
−Removed: The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Segment Information – continued
−Removed: Below is the financial information related to the Company’s reportable segments (in thousands):
−Removed: 2024 2023 2022
−Removed: Revenues (from external customers)
−Removed: Nightclubs $ 243,864 $ 236,748 $ 206,251
−Removed: Bombshells 50,578 55,723 59,925
−Removed: Other 1,162 1,319 1,444
−Removed: $ 295,604 $ 293,790 $ 267,620
−Removed: Income (loss) from operations
−Removed: Nightclubs $ 58,094 $ 73,187 $ 82,798
−Removed: Bombshells ( 10,646 ) 6,502 11,504
−Removed: Other ( 523 ) ( 1,446 ) 57
−Removed: Corporate ( 28,120 ) ( 26,759 ) ( 22,900 )
−Removed: $ 18,805 $ 51,484 $ 71,459
−Removed: Capital expenditures
−Removed: Nightclubs $ 9,106 $ 11,840 $ 17,477
−Removed: Bombshells 7,760 16,578 3,586
−Removed: Other 6,250 8,400 841
−Removed: Corporate 1,484 3,566 2,099
−Removed: $ 24,600 $ 40,384 $ 24,003
−Removed: Depreciation and amortization
−Removed: Nightclubs $ 11,823 $ 10,871 $ 9,604
−Removed: Bombshells 2,365 2,574 1,783
−Removed: Other 43 495 85
−Removed: Corporate 1,164 1,211 919
−Removed: $ 15,395 $ 15,151 $ 12,391
−Removed: September 30, 2024 September 30, 2023
−Removed: Nightclubs $ 454,892 $ 483,563
−Removed: Bombshells 79,091 85,215
−Removed: Other 14,197 6,936
−Removed: Corporate 36,184 35,170
−Removed: $ 584,364 $ 610,884
−Removed: Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs segment amounting to $ 18.8 million, $ 16.6 million, and $ 14.0 million for 2024, 2023, and 2022, respectively, and intercompany sales of Robust Energy Drink of Other segment amounting to $ 270,000 , $ 254,000 , and $ 261,000 for the same respective years.
−Removed: These intercompany revenue amounts are eliminated upon consolidation.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Segment Information – continued
−Removed: General corporate expenses include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, depreciation and other corporate costs such as automobile and travel costs.
−Removed: Management considers these to be non-allocable costs for segment purposes.
−Removed: Certain real estate assets previously wholly assigned to Bombshells have been subdivided and allocated to other future development or investment projects.
−Removed: Accordingly, those asset costs have been transferred out of the Bombshells segment.
Selected Account Information
4 unchanged sentences
ATM in-transit 374 877
+Added: Current portion of notes receivable 320 269
Other (net of allowance for doubtful accounts of $ 91 and $ 42 , respectively)
18 unchanged sentences
Insurance 1,600 2,390
+Added: Legal fees 9,366 28
Interest 524 568
2 unchanged sentences
Construction in progress 464 1,012
+Added: Estimated self-insurance liability 2,555 —
Unearned revenues 77 99
1 unchanged sentence
Total accrued liabilities $ 32,607 $ 20,280
+Added: The components of other long-term liabilities are as follows (in thousands):
+Added: September 30,
+Added: Estimated self-insurance liability $ 7,008 $ —
+Added: Advances from creditors 1,250 —
+Added: Other 1,251 398
+Added: Total other long-term liabilities $ 9,509 $ 398
The components of selling, general and administrative expenses are as follows (in thousands):
14 unchanged sentences
Total selling, general, and administrative expenses $ 107,839 $ 99,672 $ 93,024
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Selected Account Information - continued
The components of impairments and other charges, net are as follows (in thousands):
5 unchanged sentences
Total impairments and other charges, net $ 5,948 $ 36,570 $ 15,629
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
Property and Equipment
10 unchanged sentences
Depreciation expense was approximately $ 12.7 million, $ 12.9 million, and $ 11.6 million for fiscal years 2025, 2024, and 2023, respectively.
−Removed: Impairment loss for property and equipment, including those later reclassified to assets held for sale, was $ 10.6 million, $ 58,000 , and $ 1.0 million for fiscal 2024, 2023, and 2022, respectively.
+Added: Impairment loss for property and equipment, including those later reclassified to assets held for sale, was $ 1.6 million, $ 10.6 million, and $ 58,000 for fiscal 2025, 2024, and 2023, respectively.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
Goodwill and Other Intangible Assets
5 unchanged sentences
Tradename and domain name 20,872 19,118
−Removed: 205,521 226,318
+Added: Total goodwill and other intangibles with indefinite lives 215,889 205,521
Amortization Period
5 unchanged sentences
Leases acquired in-place Lease term 3 16
−Removed: 19,851 23,599
+Added: Total other intangibles with definite lives 18,784 19,851
Total goodwill and other intangible assets $ 234,673 $ 225,372
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Goodwill and Other Intangible Assets - continued
Substantially all of our goodwill and other intangible assets belong to our Nightclubs segment.
6 unchanged sentences
Ending balance $ 18,784 $ 153,164 $ 62,725 $ 19,851 $ 143,610 $ 61,911
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Goodwill and Other Intangible Assets - continued
Definite-lived intangible assets consist of the following (in thousands):
22 unchanged sentences
The discounted cash flow of the income approach method was used in calculating the value of these licenses in a business combination, while the relief-from-royalty method was used in calculating the value of tradenames.
+Added: During the fiscal year ended September 30, 2025, the Company recognized a $ 3.8 million impairment related to the SOB licenses of six clubs.
During the fiscal year ended September 30, 2024, the Company recognized a $ 11.8 million impairment related to the SOB licenses of seven clubs, a $ 8.9 million impairment related to goodwill of four reporting units, and a $ 693,000 impairment related to tradename of one club.
−Removed: During the fiscal year ended September 30, 2023, the Company recognized a $ 6.5 million impairment related to the SOB licenses of eight club and a $ 4.2 million impairment related to goodwill of four reporting unit.
−Removed: During the fiscal year ended September 30, 2022, the Company recognized a $ 293,000 impairment related to one club's SOB licenses and a $ 566,000 impairment related to the goodwill of one reporting unit.
+Added: During the fiscal year ended September 30, 2023, the Company recognized a $ 6.5 million impairment related to the SOB licenses of eight clubs and a $ 4.2 million impairment related to the goodwill of four reporting units.
RCI HOSPITALITY HOLDINGS, INC.
8 unchanged sentences
(c) (2) 4,521 4,950
−Removed: Note payable at 5.49 %, paid in June 2024
−Removed: (c)(3) — 1,937
Note payable at 5.25 %, matures September 2031
24 unchanged sentences
(b)(10) 5,000 5,000
−Removed: Note payable at 5 %, paid in November 2023
−Removed: *(a)(12) — 2,195
Note payable at 6 % matures July 2029
8 unchanged sentences
(c)(14) 2,550 2,644
−Removed: Note payable initially at 6 % matures October 2024
+Added: Note payable initially at 6 % matured October 2024
*(a)(15) — 2,247
5 unchanged sentences
*(a)(18) 3,192 3,250
−Removed: Notes payable at 7 %, forgiven in September 2024
−Removed: (b)(21) — 1,801
Notes payable at 7 % matures March 2033
8 unchanged sentences
(a)(24) 19,447 19,847
+Added: Note payable at 6.99 % matures October 2041
+Added: *(a)(25) 5,336 —
+Added: Note payable at 8 % matures January 2030
+Added: (b)(26) 4,718 —
+Added: Notes payable at 7 % mature June 2030
+Added: (b)(28)(29) 2,803 —
Total debt 238,192 241,054
2 unchanged sentences
Total long-term portion of debt, net $ 214,583 $ 219,326
−Removed: * These commercial bank debts are guaranteed by the Company’s CEO.
+Added: * These commercial bank debts are guaranteed by the Company’s former CEO.
See Note 18 .
17 unchanged sentences
In March 2020, this loan was extended to September 2033.
−Removed: (3) On December 11, 2018, the Company purchased an aircraft for $ 2.8 million with a $ 554,000 down payment and financed for the remaining $ 2.2 million with a 5.49 % promissory note payable in 20 years with monthly payments of $ 15,118 , including interest.
−Removed: Certain principal and interest payments during the quarter ended June 30, 2020 were deferred until maturity date.
−Removed: This promissory note was fully paid in June 2024 upon sale of the aircraft (see Note 14 ).
−Removed: (4) On September 30, 2021, we entered into a $ 99.1 million term loan refinancing $ 85.7 million of existing bank and seller-financed real estate debt and to provide $ 12.3 million in cash that will be used to pay off existing high-interest unsecured debt (“September 2021 Refinancing Note”), enabling those creditors to provide financing for the acquisition of 11 clubs and related real estate (see Note 1 4 ).
+Added: (3) On September 30, 2021, we entered into a $ 99.1 million term loan refinancing $ 85.7 million of existing bank and seller-financed real estate debt and to provide $ 12.3 million in cash that will be used to pay off existing high-interest unsecured debt (“September 2021 Refinancing Note”), enabling those creditors to provide financing for the acquisition of 11 clubs and related real estate in fiscal 2022.
The $ 99.1 million note has a term of 10 years with an initial interest rate of 5.25 % per annum for the first five years , then adjusted to a rate equal to the then weekly average yield of U.S.
3 unchanged sentences
We also paid approximately $ 1.0 million in loan costs, approximately $ 567,000 of which is capitalized and will be amortized together with the remaining unamortized debt issuance costs of some of the existing refinanced debts for the term of the new note using the effective interest method.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
(4) On October 12, 2021, the Company amended the $ 5.0 million short-term note payable related to the Scarlett’s acquisition in May 2017, which had a balance of $ 3.0 million as of the amendment date, extending the maturity date to October 1, 2027.
3 unchanged sentences
The remaining amount of the financing is $ 7.5 million in promissory notes, payable in monthly payments of principal and interest based on a 10-year amortization period, with the balance of the entire principal amount together with all accrued and unpaid interest due and payable in full on October 12, 2024.
−Removed: Included in the $ 17.0 million borrowing are two notes for $ 500,000 and $ 150,000 borrowed from related parties (see Note 1 6 ) and two notes for $ 500,000 and $ 300,000 borrowed from two non-officer employees
+Added: Included in the $ 17.0 million borrowing are two notes for $ 500,000 and $ 150,000 borrowed from related parties (see Note 18 ) and two notes for $ 500,000 and $ 300,000 borrowed from two non-officer employees in which the terms of the notes are the same as the rest of the lender group.
+Added: See the October 25, 2023 extension of the term of the promissory notes, below.
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Debt - continued
−Removed: in which the terms of the notes are the same as the rest of the lender group.
−Removed: See the October 25, 2023 extension of the term of the promissory notes, below.
−Removed: (7) On October 18, 2021, in relation to an acquisition (see Note 1 4 ), the Company executed four seller-financed promissory notes.
+Added: (6) On October 18, 2021, in relation to an acquisition in fiscal 2022, the Company executed four seller-financed promissory notes.
The first promissory note was a 10-year $ 11.0 million 6 % note payable in 120 equal monthly payments of $ 122,123 in principal and interest.
2 unchanged sentences
The fourth note was a 20-year $ 1.0 million 6 % note payable in 240 equal monthly payments of $ 7,215 in principal and interest.
−Removed: (8) On November 8, 2021, in relation to an acquisition (see Note 1 4 ), the Company executed a $ 1.0 million 7-year promissory note with an interest rate of 4.0 % per annum.
+Added: (7) On November 8, 2021, in relation to an acquisition in fiscal 2022, the Company executed a $ 1.0 million 7-year promissory note with an interest rate of 4.0 % per annum.
The note is payable $ 13,669 per month, including principal and interest.
2 unchanged sentences
The note is payable in monthly payments of $ 126,265 in principal and interest to be adjusted after five years .
−Removed: The promissory note is secured by eleven real estate properties and is personally guaranteed by the Company CEO, Eric Langan (see Note 17 ).
+Added: The promissory note is secured by eleven real estate properties and is personally guaranteed by the Company's former CEO, Eric Langan (see Note 18 ).
After the 10-year term, the remaining balance of principal and interest are payable at maturity date.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
−Removed: (10) On March 1, 2022, the Company borrowed $ 2.6 million from a bank lender in relation to a purchase of real estate (see Note 14 ).
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
+Added: (9) On March 1, 2022, the Company borrowed $ 2.6 million from a bank lender in relation to a purchase of real estate in fiscal 2022.
The 21-year promissory note has an initial interest rate of 4.25 % per annum, repriced after five years and then again annually to prime plus 1 % with a floor rate of 4.25 %.
3 unchanged sentences
with the balance of principal and interest payable at the 252nd month.
−Removed: (11) On May 2, 2022, in relation to a club acquisition (see Note 1 4 ), the Company executed two seller-financed notes totaling $ 11.0 million, comprised of (1) $ 6.0 million under a 10 % three-year promissory note payable in 35 equal monthly payments of $ 79,290 in principal and interest based on a ten-year amortization schedule, with a balloon payment for the remaining principal plus accrued interest due at maturity and (2) $ 5.0 million under a 10 % ten-year interest-only promissory note payable in 119 equal monthly payments of $ 41,667 in interest, with a balloon payment of the total $ 5.0 million in principal plus accrued interest due at maturity.
−Removed: (12) On May 23, 2022, the Company borrowed $ 2.2 million from a bank lender in relation to a purchase of real estate (see Note 1 4 ).
−Removed: The 18-month promissory note has an initial interest rate of 4.5 % per annum to be adjusted daily to a rate equal to the Wall Street Journal prime rate plus 1 % with a floor of 4.5 %.
−Removed: The promissory note is payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity.
−Removed: The Company paid loan costs amounting to $ 25,000 for this note.
−Removed: This promissory note was fully paid in connection with a construction loan entered into in November 2023.
−Removed: (13) On July 21, 2022, the Company executed an $ 800,000 6 % seller-financed promissory note in relation to an acquisition of a club in Odessa, Texas (see Note 1 4 ).
+Added: (10) On May 2, 2022, in relation to a club acquisition in fiscal 2022, the Company executed two seller-financed notes totaling $ 11.0 million, comprised of (1) $ 6.0 million under a 10 % three-year promissory note payable in 35 equal monthly payments of $ 79,290 in principal and interest based on a ten-year amortization schedule, with a balloon payment for the remaining principal plus accrued interest due at maturity and (2) $ 5.0 million under a 10 % ten-year interest-only promissory note payable in 119 equal monthly payments of $ 41,667 in interest, with a balloon payment of the total $ 5.0 million in principal plus accrued interest due at maturity.
+Added: (11) On July 21, 2022, the Company executed an $ 800,000 6 % seller-financed promissory note in relation to an acquisition of a club in Odessa, Texas, in fiscal 2022.
The promissory note matures in July 2029 and is payable in 84 equal monthly installments of $ 11,687 of principal and interest.
−Removed: (14) On July 27, 2022, in relation to an acquisition of a club in Hallandale Beach, Florida (see Note 1 5 ), the Company executed two seller-financed promissory notes:
+Added: (12) On July 27, 2022, in relation to an acquisition of a club in Hallandale Beach, Florida, in fiscal 2022, the Company executed two seller-financed promissory notes:
(1) $ 10.0 million 6 % ten-year promissory note payable in 120 equal monthly payments of $ 111,020 in principal and interest, and (2) $ 5.0 million 6 % ten-year promissory note payable in 120 equal monthly payments of $ 55,510 in principal and interest.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Debt - continued
−Removed: (15) On August 18, 2022, in relation to a purchase of real estate for a future Bombshells location amounting to $ 2.1 million (see Note 1 5 ), the Company borrowed $ 1.6 million from a bank lender.
+Added: (13) On August 18, 2022, in relation to a purchase of real estate for a future Bombshells location amounting to $ 2.1 million in fiscal 2022, the Company borrowed $ 1.6 million from a bank lender.
The 5.25 % mortgage note is payable interest-only for eleven months and on its August 18, 2023 maturity date payable with the entire principal balance plus accrued interest.
1 unchanged sentence
The fixed 7.79 % interest for the first five years will then be adjusted annually to Wall Street Journal prime plus 0.25 %.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
−Removed: (16) On September 23, 2022, in connection with the purchase of an aircraft worth $ 3.5 million (see Note 1 4 ), the Company entered into a financing transaction for $ 2.8 million.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Debt - continued
+Added: (14) On September 23, 2022, in connection with the purchase of an aircraft worth $ 3.5 million in fiscal 2022, the Company entered into a financing transaction for $ 2.8 million.
The financing agreement bears an interest of 4.79 % per annum and payable in 240 monthly installments of principal and interest amounting to $ 18,298 .
(15) On October 10, 2022, in relation to a real estate purchase (see Note 16 ), the Company borrowed $ 2.3 million from a bank lender.
−Removed: The 18-month promissory note bears an initial interest rate of 6 % per annum adjusted daily to a rate equal to the Wall Street Journal prime rate plus 0.5 % with a floor of 6 %.
−Removed: The promissory note is payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity.
+Added: The 18-month promissory note bore an initial interest rate of 6 % per annum adjusted daily to a rate equal to the Wall Street Journal prime rate plus 0.5 % with a floor of 6 %.
+Added: The promissory note was payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity.
The Company paid approximately $ 26,000 in debt issuance cost at closing.
−Removed: This promissory note is secured by the purchased real estate property.
+Added: This promissory note was secured by the purchased real estate property.
(16) On October 26, 2022, in relation to a club acquisition (see Note 16 ), the Company executed a promissory note for $ 5.0 million with the seller.
7 unchanged sentences
The fixed 7.79 % interest for the first five years will then be adjusted annually to Wall Street Journal prime plus 0.25 %.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
(18) On December 20, 2022, the Company executed a promissory note for $ 3.3 million with a bank lender in relation to a purchase of a food hall property (see Note 16 ).
The 6.67 % five-year promissory note is payable in 59 equal monthly installments of $ 22,805 in principal and interest, with the balance of principal and accrued interest payable at maturity.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
−Removed: (21) On February 7, 2023, in relation to the acquisition of a franchised Bombshells location in San Antonio, Texas (see Note 1 4 ), the Company entered into six separate seller-financing promissory notes totaling $ 2.0 million.
−Removed: Each of the promissory notes has an interest rate of 7 % per annum, has a term of 24 months, and is payable in monthly installments totaling $ 39,602 of principal and interest for the first 23 months based on a 60-month amortization schedule with the remaining unpaid principal and interest paid at maturity.
−Removed: These promissory notes were forgiven as part of the sale of Bombshells San Antonio (see Note 14 ).
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
(19) On March 9, 2023, the Company closed a $ 10.0 million line-of-credit facility with a lender bank evidenced by a revolving promissory note, with an initial draw of $ 10.0 million at closing.
3 unchanged sentences
The Company paid $ 115,000 in debt issuance costs, which is recorded as deferred charges to be amortized on a straight-line basis over 24 months.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan, including a compensating balance requirement of $ 3.0 million and a minimum
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Debt - continued
−Removed: tangible net worth requirement of $ 20.0 million.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan, including a compensating balance requirement of $ 3.0 million and a minimum tangible net worth requirement of $ 20.0 million.
The compensating balance requirement does not contractually or legally restrict the withdrawal or use of cash.
2 unchanged sentences
The holder of the $ 5.0 million promissory note related to the real estate properties may call due from the Company a principal payment of $ 1.0 million once in every calendar year.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Debt - continued
(21) On June 18, 2023, in relation to a purchase of a retail parcel in a condominium property (see Note 16 ), the Company executed a promissory note for $ 2.9 million with a bank lender.
The 7.12 % five-year promissory note is payable in monthly installments of $ 20,654 in principal and interest, with the balance of principal and accrued interest payable at maturity.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
(22) On October 25, 2023, the Company entered into a debt modification transaction under which 26 investors holding a total principal amount of $ 15.7 million in unsecured promissory notes agreed to extend the maturity dates of such notes, with no other changes to the terms and conditions of the original promissory notes, which original promissory notes were issued in October 2021 and had original maturity dates in October 2024.
6 unchanged sentences
The original promissory notes that were returned and cancelled as consideration for the issuance of the $ 6.6 million in new amended promissory notes had an original principal amount of $ 7.5 million in October 2021.
+Added: One promissory note with principal amounting to $ 500,000 was paid off on September 30, 2025 (see Note 18 ).
+Added: The remaining promissory notes were extended on October 1, 2025 (see Note 19 ).
(23) On November 17, 2023, the Company closed on a construction loan agreement with a bank lender for a total amount of $ 7.2 million bearing an interest rate of 8.5 % per annum for the construction of a Bombshells restaurant in Rowlett, Texas.
1 unchanged sentence
The succeeding 101 monthly payments will be payable in equal installments of $ 63,022 in principal and interest, and the remaining balance in principal and accrued interest payable on the 120th month.
−Removed: There are certain financial covenants with which the Company is to be in compliance related to this loan.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
(24) On April 30, 2024, the Company entered into a term loan with a bank lender for $ 20.0 million for additional working capital.
3 unchanged sentences
The Company paid $ 356,000 in debt issuance costs at the time of closing.
−Removed: 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.
+Added: There are certain financial and non-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.
+Added: (25) On November 26, 2024, the Company converted a bank loan secured on October 10, 2022 to purchase real property into a construction loan with the same bank lender.
+Added: The old loan had a remaining principal balance of $ 2.4 million.
+Added: The new construction loan has maximum principal limit of $ 6.3 million and has a term of 204 months.
+Added: The loan bears an interest rate of 6.99 % per annum for the first five years after which it will adjust annually to a new rate equal to the then-current Wall Street Journal Prime Rate plus 0.25 % per annum, with a floor of 6.99 % per annum.
+Added: The loan is payable interest-only during the first 24 months, then payable for the next 36 months in equal installments of $ 60,162 in principal and interest, after which will be payable based on the adjusted interest rate for the next 143 months, with the remaining principal and accrued interest payable at maturity.
+Added: There are certain financial and non-financial covenants with which the Company is to be in compliance related to this loan.
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Debt - continued
+Added: (26) On January 21, 2025, in relation to a club acquisition (see Note 1 6 ), the Company executed a promissory note for $ 5.0 million with the seller.
+Added: The 8 % promissory note is payable in 59 monthly installments of $ 67,718 in principal and interest, with the balance of principal and accrued interest payable at maturity.
+Added: (27) On February 26, 2025, the Company extended its line-of-credit facility (see March 9, 2023, transaction above) with a lender bank for a maximum availability of $ 5.0 million to mature on March 9, 2027.
+Added: All other terms and conditions in the original line-of-credit remain unchanged.
+Added: (28) On April 7, 2025, in relation to a club acquisition (see Note 1 6 ), the Company executed a seller-financed promissory note for $ 2.5 million bearing an interest of 7 % per annum.
+Added: The promissory note matures in five years and is payable in equal monthly installments of $ 49,503 in principal and interest.
+Added: The promissory note is secured by the assets included in the club acquisition.
+Added: (29) On June 7, 2025, in relation to a club acquisition (see Note 1 6 ), the Company executed a seller-financed promissory note for $ 500,000 bearing an interest of 7 % per annum.
+Added: The promissory note matures in five years and is payable in equal monthly installments of $ 9,901 in principal and interest.
+Added: The promissory note is secured by the assets included in the club acquisition.
Future maturities of debt obligations as of September 30, 2025, consist of the following (in thousands):
17 unchanged sentences
The Company and its subsidiaries do not operate in tax jurisdictions outside of the United States.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Income Taxes - continued
Income tax expense (benefit) differs from the “expected” income tax expense computed by applying the U.S.
−Removed: federal statutory rate to earnings before income taxes for the years ended September 30 as a result of the following (in thousands):
+Added: federal statutory rate to earnings before income taxes for the years ended September 30 as a result of the following (dollars in thousands):
2025 2024 2023
1 unchanged sentence
Federal statutory income tax expense $ 3,244 21.0 % $ 547 21.0 % $ 7,549 21.0 %
−Removed: State income taxes, net of federal benefit 223 8.6 % 1,620 4.5 % 1,801 3.0 %
−Removed: Permanent differences 487 18.7 % 605 1.7 % 96 0.2 %
−Removed: Change in tax rates ( 109 ) ( 4.2 ) % ( 255 ) ( 0.7 ) % 896 1.5 %
+Added: State and local income taxes, net of federal benefit (1)
+Added: 1,574 10.2 % 209 8.0 % 1,189 3.3 %
+Added: Nontaxable or nondeductible items
+Added: Goodwill impairment — — % 204 7.8 % 288 0.8 %
+Added: Section 162(m) excess compensation 204 1.3 % 170 6.5 % 177 0.5 %
+Added: Meals and entertainment 100 0.6 % 98 3.8 % 97 0.3 %
+Added: Loss (gain) on sale of subsidiary stock 131 0.8 % — — % — — %
+Added: Other nontaxable or nondeductible items 15 0.1 % 14 0.5 % 42 0.1 %
Change in valuation allowance 89 0.6 % 48 1.8 % — — %
−Removed: Tax credits ( 2,291 ) ( 87.8 ) % ( 2,131 ) ( 5.9 ) % ( 1,796 ) ( 3.0 ) %
−Removed: Other 590 22.6 % ( 366 ) ( 1.0 ) % 103 0.2 %
+Added: FICA tip credit ( 1,605 ) ( 10.4 ) % ( 1,652 ) ( 63.3 ) % ( 1,754 ) ( 4.9 ) %
+Added: Work Opportunity Tax credits ( 178 ) ( 1.2 ) % ( 639 ) ( 24.5 ) % ( 377 ) ( 1.0 ) %
+Added: Expiration of capital loss carryforwards 471 3.0 % — — % — — %
+Added: Stock-based compensation forfeiture 198 1.3 % — — % — — %
+Added: Return-to-provision and prior-period adjustments 286 1.9 % 591 22.7 % ( 371 ) ( 1.0 ) %
+Added: 80 0.5 % — — % 6 0.0 %
Total income tax expense (benefit) $ 4,609 29.8 % $ ( 410 ) ( 15.7 ) % $ 6,846 19.0 %
+Added: (1) State taxes in New York, Florida, and Texas make up the majority of the tax effect in this category.
+Added: (2) For 2024, due to the low pretax income, insignificant dollar amounts appear to present greater than threshold percentages.
+Added: (3) Includes items that individually fail to meet the 5% of federal rate threshold.
+Added: The effective income tax rate difference from the statutory federal corporate tax rate of 21% comes from offsetting impact of state income tax, net of federal benefit, nontaxable and nondeductible items, changes in the deferred tax asset valuation allowance, tax credits, and return-to-provision adjustments (which are included in the related reconciling items previously mentioned).
+Added: The effective income tax rate for fiscal 2024 was also affected by the low pretax income that caused a high offsetting rate for tax credits, whose dollar value does not change based on pretax income.
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Income Taxes - continued
−Removed: The effective income tax rate difference from the statutory federal corporate tax rate of 21% comes from offsetting impact of state income tax, net of federal benefit, changes in the deferred tax asset valuation allowance, and tax credits that are mostly FICA tip credits.
−Removed: The effective income tax rate for fiscal 2024 was also affected by the low pretax income that caused a high offsetting rate for tax credits, whose dollar value does not change based on pretax income.
+Added: Total income taxes paid, net of refunds, for the fiscal years ended September 30, in the following jurisdictions are presented below (in thousands):
+Added: 2025 2024 2023
+Added: Federal $ 3,400 $ 3,700 $ 6,160
+Added: State and local
+Added: Texas 298 347 321
+Added: New York 347 68 504
+Added: Florida — 343 633
+Added: Illinois 112 188 332
+Added: Colorado 52 122 158
+Added: Other* 338 300 528
+Added: Total income taxes paid, net of refunds $ 4,547 $ 5,068 $ 8,636
+Added: * Includes tax jurisdictions that individually fail to meet the 5% threshold in all periods presented.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
4 unchanged sentences
Capital loss carryforwards — 535
−Removed: Right-of-use assets 2,096 946
+Added: Operating lease right-of-use assets 1,401 2,096
Accrued expenses 3,107 733
+Added: Self-insurance reserve 2,307 —
Stock-based compensation 1,750 1,629
Valuation allowance ( 1,015 ) ( 951 )
+Added: Total deferred tax assets 9,339 5,030
Deferred tax liabilities:
2 unchanged sentences
Prepaid expenses ( 313 ) ( 291 )
−Removed: ( 27,723 ) ( 32,815 )
−Removed: $ ( 22,693 ) $ ( 29,143 )
+Added: Total deferred tax liabilities ( 31,028 ) ( 27,723 )
+Added: Net deferred tax liability $ ( 21,689 ) $ ( 22,693 )
+Added: At September 30, 2025, we had net operating loss carryforwards of $ 137,000 for federal income tax and $ 13,000 for state income tax with indefinite carryforward periods.
+Added: We also had net operating loss carryforwards of $ 912,000 for state and local income taxes with a 20-year carryforward period.
+Added: The state and local tax net operating loss carryforwards will begin to expire in 2028 if unused prior to that time.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Income Taxes - continued
The Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
3 unchanged sentences
The full balance of uncertain tax positions, if recognized, would affect the Company’s annual effective tax rate, net of any federal tax benefits.
−Removed: As of September 30, 2024, and 2023, the Company does not have any uncertain tax position.
−Removed: The Company does not expect any changes that will significantly impact its uncertain tax positions within the next twelve months.
+Added: The Company does not have any uncertain tax position as of September 30, 2025, and 2024.
The Company or one of its subsidiaries files income tax returns in the U.S.
2 unchanged sentences
Fiscal year ended September 30, 2022, and subsequent years remain open to federal tax examination.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Income Taxes - continued
−Removed: On March 27, 2020, former President Trump signed the CARES Act into law.
−Removed: As a result of this, additional avenues of relief were available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration.
−Removed: The CARES Act included, among other items, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property.
−Removed: The CARES Act also established a Paycheck Protection Program ("PPP"), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs.
−Removed: The loan may be forgiven if the funds are used for payroll and other qualified expenses.
−Removed: The Company submitted its application for a PPP loan and on May 8, 2020 received approval and funding for its restaurants, shared service entity and lounge.
−Removed: Ten of our restaurant subsidiaries received amounts ranging from $ 271,000 to $ 579,000 for an aggregate amount of $ 4.2 million;
−Removed: our shared-services subsidiary received $ 1.1 million;
−Removed: and one of our lounges received $ 124,000 .
−Removed: None of our adult nightclub and other non-core business subsidiaries received funding under the PPP.
−Removed: The Company believes it used the entire loan amount for qualifying expenses.
−Removed: Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.
−Removed: The Company utilized all of the PPP funds and submitted its forgiveness applications.
−Removed: During fiscal 2022, we received 11 Notices of PPP Forgiveness Payment from the Small Business Administration out of the 12 of our PPP loans granted.
−Removed: All of the notices received forgave 100 % of each of the 11 PPP loans totaling the amount of $ 5.3 million in principal and interest and were included in non-operating gains (losses), net in our consolidated statement of income for the fiscal year ended September 30, 2022.
−Removed: In November 2021, we received a partial forgiveness of the remaining $ 124,000 PPP loan for $ 85,000 in principal and interest.
−Removed: The remaining unforgiven portion of approximately $ 41,000 in principal was fully paid as debt plus accrued interest in fiscal 2022.
+Added: On July 4, 2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H.
+Added: 14" (the "Act") and commonly referred to as the One Big Beautiful Bill Act.
+Added: Among other things, the Act extends certain expiring, and in some cases expired, provisions of the 2017 Tax Cuts and Jobs Act.
+Added: The Act also adjusted a number of provisions affecting businesses that were subject to sunsets, phase-outs, or phase-ins that would have taken effect in the absence of action by Congress or that have already taken effect.
+Added: The Company has reviewed the changes from the Act and determined that any impact would be immaterial.
Commitments and Contingencies
Legal Matters
−Removed: Texas Patron Tax
−Removed: A declaratory judgment action was brought by five operating subsidiaries of the Company to challenge a Texas Comptroller administrative rule related to the $ 5 per customer Patron Tax Fee assessed against Sexually Oriented Businesses.
−Removed: An administrative rule attempted to expand the fee to cover venues featuring dancers using latex cover as well as traditional nude entertainment.
−Removed: The administrative rule was challenged on both constitutional and statutory grounds.
−Removed: On November 19, 2018, the Court issued an order that a key aspect of the administrative rule is invalid based on it exceeding the scope of the Comptroller’s authority.
−Removed: On March 6, 2020, the U.S.
−Removed: District Court for the Western District of Texas, Austin Division, ruled that the Texas Patron Tax is unconstitutional as it has been applied and enforced by the Comptroller.
−Removed: The State of Texas appealed to the Fifth Circuit Court of Appeals, who affirmed that the Texas Patron Fee is unconstitutional as applied.
−Removed: The State of Texas next sought review from the Supreme Court, but the high court declined to take the case and in doing so exhausted the State's rights to appeal the judgment.
−Removed: The lawsuit was sent back to the trial court for post-trial proceedings, which resulted in the award of attorneys' fees to the operating subsidiaries.
−Removed: Pursuant to the rulings, the Texas Patron Fee is unconstitutional as applied to clubs featuring dancers using latex cover.
Indemnity Insurance Corporation
4 unchanged sentences
Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Commitments and Contingencies - continued
On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC.
6 unchanged sentences
It is unknown at this time what effect this uncertainty will have on the Company.
−Removed: As of September 30, 2024, we had 1 remaining unresolved claim out of the original 71 claims.
−Removed: Shareholder Derivative Action
−Removed: On January 21, 2022, Shiva Stein and Kevin McCarty filed a shareholder derivative action in the Southern District of Texas, Houston Division against former director Nourdean Anakar, Yura Barabash, former director Steven L.
−Removed: Jenkins, Eric Langan, Luke Lirot, former CFO Phillip K.
−Removed: Marshall, Elaine J.
−Removed: Martin, Allan Priaulx, and Travis Reese as defendants, as well as against RCI Hospitality Holdings, Inc.
−Removed: as nominal defendant.
−Removed: The action, styled Stein v.
−Removed: Anakar, et al., No.
−Removed: 4:22-mc-00149 (S.D.
−Removed: Tex.), alleges claims for breach of fiduciary duty based on alleged dissemination of inaccurate information and failure to maintain internal controls.
−Removed: These allegations are substantively similar to claims asserted in a prior securities class action that was settled in August of 2022 and a prior derivative action that was dismissed in June of 2021.
−Removed: On July 24, 2023, the parties reached an agreement in principle to resolve the action.
−Removed: On October 10, 2023, the parties submitted an agreement to settle the action to the Court for the Court's preliminary approval.
−Removed: On July 19 2024, the Court approved the settlement.
−Removed: On July 30, 2024, the final order of settlement was entered by the Court.
−Removed: The case is now closed.
+Added: As of September 30, 2025, we have no remaining unresolved claims out of the original 71 claims.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Commitments and Contingencies - continued
+Added: New York Indictment and Related Matters
+Added: 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”).
+Added: 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.
+Added: The Company cooperated with the NY AG during its investigation.
+Added: As a result of this investigation, a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process.
+Added: On or about September 16, 2025, the Company, three subsidiaries, and five employees, including two executive officers, were arraigned in connection with an indictment filed by the NY AG in which the defendants were variously charged with committing the crimes of Criminal Tax Fraud in the First Degree in violation of Tax Law §1806, a class B felony;
+Added: Bribery in the Second Degree in violation of Penal Law §200.03, a class C felony;
+Added: Criminal Tax Fraud in the Second Degree in violation of Tax Law §1805, a class C felony;
+Added: Criminal Tax Fraud in the Third Degree in violation of Tax Law §1804, a class D felony;
+Added: Criminal Tax Fraud in the Fourth Degree in violation of Tax Law §1803, a class E felony;
+Added: Conspiracy in the Fourth Degree in violation of Penal Law §105.10, a class E felony;
+Added: and Offering a False Instrument for Filing in the First Degree in violation of Penal Law §175.35(1).
+Added: According to the NY AG, "an investigation by the Office of the Attorney General revealed that RCI executives bribed an auditor with the NY DTF to avoid paying over $ 8 million in sales taxes to New York City and the state from 2010 to 2024."
+Added: On November 25, 2025, the board of directors convened and approved a resolution for Eric Langan and Bradley Chhay to step down as CEO and CFO of the Company, respectively, effective November 28, 2025.
+Added: In the same meeting, the board nominated and approved the appointment of Travis Reese and Albert Molina as Interim President and CEO and Interim CFO, respectively.
+Added: Langan and Chhay remain employed with the Company and will be focusing on operational improvement and strategic efforts as Head of M&A and Head of Corporate Development, respectively.
+Added: On January 29, 2026, Mr.
+Added: Langan stepped down as Chairman of the Company’s board of directors.
+Added: Langan was replaced by Mr.
+Added: Reese as Chairman.
+Added: Langan remains a member of the board of directors.
+Added: The non-executive corporate employee mentioned above continues to be on administrative leave during the pendency of the indictment.
+Added: The defendants entered a plea of not guilty to all of the charges and are vigorously defending themselves against the charges in court.
+Added: 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 indictment.
+Added: On or about May 20, 2025, the Company received a subpoena from the U.S.
+Added: Securities and Exchange Commission ("SEC") seeking certain documents and information related to the NY AG investigation and NY DTF issues.
+Added: The Company is cooperating with the SEC and its investigation.
+Added: 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 SEC investigation.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Commitments and Contingencies - continued
+Added: Shareholder Class and Derivative Actions
+Added: In September 2025, a putative securities class action was filed against RCI Hospitality Holdings, Inc.
+Added: and certain of its officers in the Southern District of Texas, Houston Division.
+Added: The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and 10b-5 promulgated thereunder based on alleged materially false and misleading statements made in the Company’s SEC filings and disclosures as they relate to the indictment filed by the NY AG and other related issues.
+Added: The complaints seek unspecified damages, costs, and attorneys’ fees.
+Added: This lawsuit is captioned Hernandez v.
+Added: RCI Hospitality Holdings, Inc., et al.
+Added: (filed September 21, 2025, naming the Company, Eric S.
+Added: Langan, and Bradley Chhay).
+Added: The various plaintiffs sought an order for the appointment of a lead plaintiff and to consolidate the purported class actions.
+Added: An order has not yet been entered appointing a lead plaintiff or consolidating.
+Added: The Company has not yet answered or otherwise responded to the complaint, but intends on moving to dismiss the operative pleading for failure to state a claim upon which relief can be granted.
+Added: The Company intends to continue to vigorously defend against this action.
+Added: This action is in its early stage, and a potential loss cannot yet be estimated.
+Added: On November 17, 2025, a shareholder derivative action was filed in Harris County District Court against officers and directors Eric S.
+Added: Langan, Yura Barabash, Bradley Chhay, Luke Lirot, Elaine J.
+Added: Martin, Arthur A.
+Added: Priaulx, Travis Reese, and RCI Hospitality Holdings, Inc., as nominal defendant.
+Added: The action alleges that the individual officers and directors made or caused the Company to make a series of materially false and/or misleading statements and omissions related to the indictment filed by the NY AG and other related issues and engaged in or caused the Company to, inter alia , fail to maintain internal controls over its business and financial reporting sufficient to ensure the accuracy of its public filings.
+Added: The action asserts claims for breach of fiduciary duty and unjust enrichment.
+Added: The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees.
+Added: The case, Ayers v.
+Added: Langan, et al.
+Added: , is in its early stage, and a potential loss cannot yet be estimated.
+Added: On March 2, 2026, a shareholder derivative action was filed in the Eleventh Division of the Texas Business Court against officers and directors Eric S.
+Added: Langan, Yura Barabash, Bradley Chhay, Luke Lirot, Elaine J.
+Added: Martin, Arthur A.
+Added: Priaulx, Travis Reese, and Ahmed Anakar.
+Added: The action alleges that the individual officers and directors breached their fiduciary duties by failing to adequately monitor issues related to the indictment filed by the NY AG and other related issues.
+Added: The action asserts claims for breaches of fiduciary duties respectively owed by the directors and officers.
+Added: The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees.
+Added: The case, Taylor v.
+Added: Langan, et al.
+Added: , is in its early stage, and a potential loss cannot yet be estimated.
+Added: Illinois BIPA Matter
+Added: On April 14, 2025, the Company's subsidiaries, RCI Management Services, Inc., Pooh Bah Enterprises, Inc., and RCI Dining Services (Harvey), Inc.
+Added: (collectively, "Defendants") entered into a class action settlement agreement to resolve claims under the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seg., arising from the alleged collection of customer fingerprints at Rick's Cabaret in Chicago and Scarlett's Cabaret in Washington Park, Illinois.
+Added: The settlement resolves two consolidated cases:
+Added: RCI Management Services, Inc.
+Added: 22LA0884 (St.
+Added: Clair County, Illinois) and Loera v.
+Added: Pooh Bah Enterprises, Inc.
+Added: 2021CH04759 (Cook County, Illinois).
+Added: Under the terms of the agreement, and without admitting any liability, Defendants will provide a settlement fund valued at approximately $ 2.95 million, consisting of $ 1.25 million in cash and $ 1.7 million in VIP cards.
+Added: The settlement includes payments to class members submitting valid claims, attorneys' fees of up to 40 % of the fund, incentive awards to named plaintiffs, and administrative costs.
+Added: Any unclaimed funds remaining after payment of valid claims, fees, and costs will revert to the Defendants.
+Added: The Company denies all allegations of wrongdoing.
+Added: The settlement remains subject to final court approval.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Commitments and Contingencies - continued
On June 23, 2014, Mark H.
1 unchanged sentence
(“JAI Phoenix”), in the Superior Court of Arizona for Maricopa County.
−Removed: The suit alleged that Mr.
+Added: The complaint alleged that Mr.
Panameno injured Mr.
−Removed: Dupray in a traffic accident after being served alcohol at an establishment operated by JAI Phoenix.
−Removed: The suit alleged that JAI Phoenix was liable under theories of common law dram shop negligence and dram shop negligence per se.
−Removed: After a jury trial proceeded to a verdict in favor of the plaintiffs against both defendants, in April 2017 the Court entered a judgment under which JAI Phoenix’s share of compensatory damages is approximately $ 1.4 million and its share of punitive damages is $ 4 million.
−Removed: In May 2017, JAI Phoenix filed a motion for judgment as a matter of law or, in the alternative, motion for new trial.
−Removed: The Court denied this motion in August 2017.
−Removed: In September 2017, JAI Phoenix filed a notice of appeal.
−Removed: In June 2018, the matter was heard by the Arizona Court of Appeals.
−Removed: On November 15, 2018 the Court of Appeals vacated the jury’s verdict and remanded the case to the trial court.
−Removed: A new trial has been set for June 2025.
−Removed: JAI Phoenix will continue to vigorously defend itself.
+Added: Dupray in a traffic accident after being served alcohol at an establishment operated by JAI Phoenix and asserted claims against JAI Phoenix under theories of common law dram shop negligence and dram shop negligence per se.
+Added: Following a jury trial, in April 2017, the court entered judgment in favor of the plaintiffs and awarded compensatory and punitive damages, allocating approximately $ 1.4 million in compensatory damages and $ 4.0 million in punitive damages to JAI Phoenix.
+Added: JAI Phoenix filed post-trial motions, which were denied in August 2017, and subsequently filed a notice of appeal in September 2017.
+Added: In June 2018, the Arizona Court of Appeals heard the matter and, on November 15, 2018, issued a decision vacating the jury’s verdict and remanding the case for a new trial.
+Added: The retrial was held in June 2025.
+Added: The jury found Mr.
+Added: Panameno 94 % responsible and JAI Phoenix 6 % responsible.
+Added: The jury awarded total damages of $ 5.1 million and punitive damages of $ 125,000 .
+Added: Based on the jury’s allocation of fault, JAI Phoenix is responsible for $ 332,884 of the total award.
+Added: Under applicable law, plaintiffs retain the right to appeal;
+Added: however, it is not known at this time whether an appeal will be filed, but if an appeal is filed, the Company will vigorously defend.
+Added: In March 2023, the New York State Department of Labor assessed a final judgment against one of our subsidiaries in a state unemployment tax matter for the years 2009-2022.
+Added: The assessment of $ 2.8 million, which was recorded by the Company during the quarter ended March 31, 2023, was issued in final notice by the NY DOL after several appeals were denied by the Supreme Court of the State of New York, Appellate Division, Third Department (see Note 6 ).
+Added: In September 2023, the NY DOL assessed another of our subsidiaries for approximately $ 280,000 on the same matter for the period January 2015 through June 2022.
+Added: We recorded this latter assessment during the quarter ended September 30, 2023.
As set forth in the risk factors as disclosed in this report, the adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees.
3 unchanged sentences
Lawsuits are handled by attorneys with an expertise in the relevant law and are defended vigorously.
−Removed: In March 2023, the New York State Department of Labor assessed a final judgment against one of our subsidiaries in a state unemployment tax matter for the years 2009-2022.
−Removed: The assessment of $ 2.8 million, which was recorded by the Company during the quarter ended March 31, 2023, was issued in final notice by the NY DOL after several appeals were denied by the Supreme Court of the State of New York, Appellate Division, Third Department (see Note 5 ).
−Removed: In September 2023, the NY DOL assessed another of our subsidiaries for approximately $ 280,000 on the same matter for the period January 2015 through June 2022.
−Removed: We recorded this latter assessment during the quarter ended September 30, 2023.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Commitments and Contingencies - continued
−Removed: 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”).
−Removed: 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.
−Removed: The investigation appears to be related to the Company’s New York State tax filings and possible entertainment benefits provided to NY DTF personnel.
−Removed: The Company is cooperating with the NY AG and its investigation.
−Removed: As a result of this investigation, a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process.
−Removed: 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.
5 unchanged sentences
As of September 30, 2025 and 2024, the Company has accrued $ 4.2 million and $ 2.0 million in accrued liabilities, respectively, related to settlement of lawsuits.
−Removed: See Note 1 7 for lease commitments.
+Added: Lease Commitments
+Added: See Note 1 2 .
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Commitments and Contingencies - continued
+Added: Self-insurance Liability
+Added: In fiscal 2025, the Company started self-insuring a significant portion of expected losses under its general liability and liquor insurance programs due to increasingly prohibitive costs of such coverage from third-party insurers.
+Added: The Company continues to purchase insurance for workers' compensation, property, auto, and business interruption, as well as the minimum insurance coverage where it is required by law for licensing requirements.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Commitments and Contingencies - continued
+Added: We record a liability for unresolved claims and for an estimate of incurred but not reported claims including legal costs based on historical experience.
+Added: The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims development history, and settlement practices.
+Added: Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.
+Added: We recorded estimated self-insurance expense amounting to $ 9.6 million during the fiscal year ended September 30, 2025.
+Added: As of September 30, 2025, the Company has self-insurance liability amounting to $ 9.6 million.
+Added: The Company leases certain facilities and equipment under operating leases per ASC 842.
+Added: These leases include renewal or termination options for varying periods which we deemed reasonably certain to exercise.
+Added: This determination is based on our consideration of certain economic, strategic and other factors that we evaluate at lease commencement date and reevaluate throughout the lease term.
+Added: Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments and additional lease payments contingent on sales.
+Added: The variable portion of lease payments is not included in our right-of-use assets or lease liabilities.
+Added: Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling, general and administrative expenses in our consolidated statement of income.
+Added: We have elected to apply the short-term lease exception for all underlying asset classes, which mainly includes equipment leases.
+Added: That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term.
+Added: We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases.
+Added: Future maturities of operating lease liabilities as of September 30, 2025 are as follows (in thousands):
+Added: Portion Interest
+Added: Portion Total
+Added: October 2025 - September 2026 $ 3,314 $ 1,613 $ 4,927
+Added: October 2026 - September 2027 3,320 1,418 4,738
+Added: October 2027 - September 2028 2,765 1,239 4,004
+Added: October 2028 - September 2029 2,859 1,068 3,927
+Added: October 2029 - September 2030 2,438 911 3,349
+Added: Thereafter 15,938 2,470 18,408
+Added: $ 30,634 $ 8,719 $ 39,353
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Leases – continued
+Added: Total lease expense under ASC 842 is included in selling, general and administrative expenses in our consolidated statement of income, except for sublease income which is included in other revenue, for the years ended September 30, 2025, 2024, and 2023 as follows (in thousands, except years and percentages):
+Added: 2025 2024 2023
+Added: Operating lease expense – fixed payments $ 4,423 $ 5,029 $ 5,166
+Added: Variable lease expense 1,612 1,707 1,629
+Added: Short-term equipment and other lease expense (includes $ 390 , $ 448 and $ 357 recorded in advertising and marketing for fiscal 2025, 2024, and 2023, respectively, and $ 568 , $ 605 and $ 557 recorded in repairs and maintenance, respectively;
+Added: 1,329 1,416 1,325
+Added: Total lease expense, net $ 7,364 $ 8,152 $ 8,120
+Added: Other information:
+Added: Operating cash outflows from operating leases $ 7,665 $ 8,154 $ 7,949
+Added: Weighted average remaining lease term 8.9 years 9.4 years 10.5 years
+Added: Weighted average discount rate 5.8 % 5.7 % 5.8 %
+Added: In relation to certain rent concessions that we received from certain of our lessors in view of the COVID-19 pandemic, we accounted for those rent concessions as deferral of payments as if the lease is unchanged.
+Added: Any reduction in total lease expense during the period caused by either an extension of the lease term or a forgiveness of certain lease payments is accounted for as variable lease payment adjustments.
+Added: We recorded impairment charges of operating lease right-of-use assets amounting to $ 0 , $ 6.5 million, and $ 1.0 million during fiscal years 2025, 2024, and 2023, respectively.
+Added: We recorded third-party operating lease revenue under ASC 842 amounting to $ 1.7 million, $ 1.7 million, and $ 1.8 million for fiscal 2025, 2024, and 2023, respectively.
+Added: Minimum future base rentals are as follows:
+Added: $ 1.5 million for 2026, $ 1.2 million for 2027, $ 1.0 million for 2028, $ 1.0 million for 2029, $ 423,000 for 2030, and $ 240,000 thereafter.
Stock-based Compensation
7 unchanged sentences
Stock-based compensation expense for fiscal 2025, 2024, and 2023, which is included in corporate segment selling, general and administrative expenses, amounted to $ 1.4 million, $ 1.9 million, and $ 2.6 million, respectively, with related tax benefit amounting to $ 121,000 , $ 444,000 , and $ 616,000 , respectively.
−Removed: As of September 30, 2024, we had unrecognized compensation cost amounting to $ 2.6 million related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 1.4 years.
+Added: As of September 30, 2025, we had unrecognized compensation cost amounting to $ 589,000 related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of approximately four months .
RCI HOSPITALITY HOLDINGS, INC.
8 unchanged sentences
Outstanding at September 30, 2024 300,000
+Added: Forfeited ( 50,000 ) $ 100.00
Outstanding at September 30, 2025 250,000 $ 100.00 1.4 $ —
5 unchanged sentences
Insurance Recoveries
−Removed: One of our clubs in Washington Park, Illinois, was temporarily closed due to a fire during the third quarter of 2019, and another club in Fort Worth, Texas, sustained weather-related damage toward the end of fiscal 2019.
−Removed: Both of these casualties received insurance recoveries in subsequent fiscal years.
−Removed: During the fourth quarter of 2022, one club in Sulphur, Louisiana, incurred damage from a hurricane.
−Removed: We also partially recovered and recognized a $ 327,000 gain related to a fire in one of our clubs in Fort Worth, Texas, during the fourth quarter of 2024.
+Added: We partially recovered and recognized a $ 327,000 gain related to a fire in one of our clubs in Fort Worth, Texas, during the fourth quarter of 2024.
We wrote off the net carrying value of the assets destroyed in the said events and recorded corresponding recovery of losses or gains in as much as the insurers have paid us or where contingencies relating to the insurance claims have been resolved.
1 unchanged sentence
Included in 2025 2024 2023
−Removed: Consolidated balance sheets (period end)
−Removed: Insurance receivable Receivables, net $ — $ — $ —
Consolidated statements of income – gain
+Added: Business interruption Impairments and other charges, net $ ( 413 ) $ — $ —
Property Impairments and other charges, net $ ( 1,945 ) $ ( 327 ) $ ( 77 )
8 unchanged sentences
2023 Acquisitions
−Removed: Big Sky Clubs
−Removed: On October 18, 2021, we and certain of our subsidiaries completed our acquisition of eleven gentlemen’s clubs, six related real estate properties, and associated intellectual property for a total agreed acquisition price of $ 88.0 million (with a total consideration fair value of $ 87.9 million based on the Company’s stock price at acquisition date and discounted due to the lock-up period, with interest rates on promissory notes reflective of market yields).
−Removed: We used the Finnerty Model to estimate the discount on stock marketability.
−Removed: The acquisition was structured by entering into nine asset purchase agreements, which allowed the Company to acquire from each club all of the tangible and intangible assets and personal property in that business except certain excluded assets, and two stock purchase agreements, where a newly formed subsidiary purchased 100 % of the capital stock of two club-owning entities.
−Removed: Along with the asset and stock purchase agreements, the Company also entered into a real estate purchase and sale agreement for six real estate properties, and an intellectual property purchase agreement for substantially all of the intellectual property used in the adult entertainment establishment business owned and operated by the sellers.
−Removed: The acquisition gives the Company presence in four additional states.
−Removed: We paid for the acquisition with $ 36.8 million in cash, $ 21.2 million in four seller-financed notes (see Note 8 ), and 500,000 shares of our common stock.
−Removed: The fair value of the consideration transferred is as follows (in thousands):
−Removed: Cash $ 36,800
−Removed: Notes payable 21,200
−Removed: Common stock 29,933
−Removed: Total consideration fair value $ 87,933
−Removed: We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment.
−Removed: Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated at $ 15.4 million.
−Removed: Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities.
−Removed: Goodwill will not be amortized but will be tested at least annually for impairment.
−Removed: Approximately $ 7.1 million of the recognized goodwill for this transaction will be deductible for tax purposes.
−Removed: The following is our allocation of the fair value of the acquisition price (in thousands) as of October 18, 2021:
−Removed: Current assets $ 386
−Removed: Property and equipment 19,273
−Removed: Licenses 47,390
−Removed: Tradenames 6,934
−Removed: Leases acquired in-place 261
−Removed: Deferred tax liability ( 1,741 )
−Removed: Total net assets acquired 72,503
−Removed: Goodwill 15,430
−Removed: Acquisition price fair value $ 87,933
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
−Removed: Licenses and tradenames, except for those associated with certain leased locations, will not be amortized but will be tested at least annually for impairment.
−Removed: The Company entered into leases with third parties for certain acquired clubs where the real estate was not part of the acquisition.
−Removed: In connection with this acquisition, we incurred acquisition-related expenses of approximately $ 414,000 , of which $ 173,000 was recognized in fiscal 2021 and $ 241,000 was recognized in fiscal 2022, and in both periods included in selling, general and administrative expenses in our consolidated statements of income.
−Removed: We recorded $ 1.8 million in measurement period adjustments related to amortization of definite-lived intangibles and debt discount during fiscal 2022.
−Removed: During fiscal 2024, 2023, and 2022 (from the date of acquisition), the eleven acquired clubs contributed the following, which are included in our consolidated statements of income (in thousands):
−Removed: 2024 2023 2022
−Removed: Revenues $ 39,383 $ 40,563 $ 35,437
−Removed: Income from operations $ 8,662 $ 11,372 $ 12,525
−Removed: The following table presents the unaudited pro forma combined results of operations of the Company and the eleven acquired clubs and related assets as though the acquisition occurred at the beginning of fiscal 2021 (in thousands, except per share amounts and number of shares):
−Removed: 2024 2023 2022
−Removed: Pro forma revenues $ 295,604 $ 293,790 $ 269,347
−Removed: Pro forma net income attributable to RCIHH common stockholders $ 3,011 $ 29,246 $ 45,623
−Removed: Pro forma earnings per share - basic and diluted $ 0.33 $ 3.13 $ 4.86
−Removed: Pro forma weighted average number of common shares outstanding - basic and diluted 9,250,245 9,335,983 9,383,445
−Removed: 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 2021.
−Removed: 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.
−Removed: Since we do not have a final valuation of the assets that we acquired yet, the unaudited pro forma financial information only includes preliminary adjustments related to changes in recognized expenses caused by the fair value of assets acquired, such as depreciation and amortization and related tax effects.
−Removed: Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the 28 private lender group notes and 4 seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2021.
−Removed: Pro forma weighted average number of common shares outstanding includes the impact of 500,000 shares of our common stock issued as partial consideration for the acquisition.
−Removed: Since the results of operations during fiscal 2024 and 2023 were subsequent to the fiscal year of acquisition and that those years fully include the results of operations of the eleven acquired clubs and related assets, the amounts presented for fiscal 2024 and 2023 above do not reflect any pro forma adjustments.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
−Removed: On November 8, 2021, the Company acquired a club and related real estate in Newburgh, New York for a total acquisition price of $ 3.5 million, of which $ 2.5 million was paid in cash at closing and $ 1.0 million through a seller-financed 7-year promissory note with an interest rate of 4.0 % per annum.
−Removed: The $ 3.5 million acquisition price was allocated $ 2.1 million to real estate, $ 200,000 to tangible assets, and $ 1.2 million to goodwill, which is deductible for tax purposes.
−Removed: The note is payable $ 13,669 per month, including principal and interest.
−Removed: The Company incurred approximately $ 21,000 of acquisition-related costs for this acquisition, of which $ 11,000 was incurred in fiscal 2021 and $ 10,000 was incurred in fiscal 2022, both of which were included in selling, general and administrative expenses in our consolidated statements of income.
−Removed: On December 30, 2021, the Company acquired the real estate of one of its clubs in South Florida, which the Company previously leased, for $ 7.0 million in an all-cash purchase.
−Removed: At closing, the Company wrote off the balance of its operating lease right-of-use assets and corresponding operating lease liability related to the discontinued lease, both of which amounted to $ 5.9 million.
−Removed: Stafford TX Property
−Removed: On March 1, 2022, the Company acquired real estate in Stafford, Texas for $ 3.5 million for a future Bombshells location.
−Removed: The Company secured a $ 2.6 million loan in relation to the purchase.
−Removed: Lubbock TX Club Property
−Removed: On March 1, 2022, the Company acquired real estate in Lubbock, Texas for $ 400,000 to move one of our existing clubs due to eminent domain on the current location.
−Removed: See 2023 Disposition below.
−Removed: Playmates Club
−Removed: On May 2, 2022, the Company completed an acquisition of a club in Miami, Florida for a total acquisition price of $ 16.0 million.
−Removed: The acquisition price includes $ 3.0 million for the real estate property covered in a stock purchase agreement payable in cash at closing, and $ 13.0 million for the adult entertainment business covered in a separate stock purchase agreement payable as follows:
−Removed: (1) $ 2.0 million in cash at closing;
−Removed: (2) $ 6.0 million under a 10 % three-year promissory note payable in 35 equal monthly payments of $ 79,290 in principal and interest based on a ten-year amortization schedule, with a balloon payment for the remaining principal plus accrued interest due at maturity;
−Removed: and (3) $ 5.0 million under a 10 % ten-year interest-only promissory note payable in 119 equal monthly payments of $ 41,667 in interest, with a balloon payment of the total $ 5.0 million in principal plus accrued interest due at maturity.
−Removed: The Company acquired 100 % of the capital stock of the acquired companies in each of the stock purchase agreements mentioned above.
−Removed: The $ 5.0 million promissory note may be earlier canceled if there are any regulatory changes that would prohibit the business from operating as an adult entertainment establishment within ten years of the closing date of the stock purchase agreement.
−Removed: Based on recent renewals of licenses of similar businesses in the region where the club operates, the Company believes that the probability of any changes to the regulatory environment is low as of the reporting date and would not materially impact the fair value of the debt.
−Removed: We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment.
−Removed: Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated to be $ 6.8 million.
−Removed: Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities.
−Removed: Goodwill will not be amortized but will be tested at least annually for impairment.
−Removed: The recognized goodwill will not be deductible for tax purposes.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
−Removed: The following is our allocation of the fair value of the acquisition price (in thousands) as of May 2, 2022:
−Removed: Current assets $ 172
−Removed: Property and equipment 5,336
−Removed: Licenses 4,900
−Removed: Tradenames 1,460
−Removed: Deferred tax liability ( 2,627 )
−Removed: Total net assets acquired 9,241
−Removed: Goodwill 6,759
−Removed: Acquisition price fair value $ 16,000
−Removed: Licenses and tradenames will not be amortized but will be tested at least annually for impairment.
−Removed: In connection with the acquisition, we incurred acquisition-related expenses of approximately $ 28,000 , which is included in selling, general and administrative expenses in our consolidated statement of income for the year ended September 30, 2022.
−Removed: Rowlett TX Property
−Removed: On May 23, 2022, the Company acquired real estate in Rowlett, Texas for $ 3.3 million for a future Bombshells location.
−Removed: The Company secured a $ 2.2 million loan in relation to the purchase.
−Removed: Odessa TX Club
−Removed: On July 21, 2022, the Company acquired a club in Odessa, Texas for a total acquisition price of $ 1.8 million, of which $ 1.0 million was for the real estate and $ 800,000 for the adult entertainment business.
−Removed: The Company paid $ 1.0 million in cash at closing for the real estate and executed an $ 800,000 6 % seller-financed promissory note for the business.
−Removed: The promissory note matures in seven years and is payable in 84 equal monthly installments of $ 11,687 of principal and interest.
−Removed: The $ 1.8 million acquisition price was allocated $ 11,000 to current assets, $ 1.1 million to property and equipment, and $ 684,000 to licenses.
−Removed: Cheetah Gentlemen's Club
−Removed: On July 27, 2022, the Company completed the acquisition of a club in Hallandale Beach, Florida for a total acquisition price of $ 25.0 million.
−Removed: The acquisition includes (1) $ 20.0 million for the adult entertainment business covered in a stock purchase agreement paid $ 10.0 million in cash at closing and $ 10.0 million under a 6 % ten-year promissory note payable in 120 equal monthly payments of $ 111,020 in principal and interest, and (2) $ 5.0 million for the real estate property covered in an asset purchase agreement payable under a 6 % ten-year promissory note payable in 120 equal monthly payments of $ 55,510 in principal and interest.
−Removed: In the stock purchase agreement, the Company acquired 100 % of the capital stock of the company which owned the adult entertainment business.
−Removed: The total fair value of the consideration transferred is $ 23.4 million, which includes a discount on the $ 10.0 million promissory note to reflect market participant yield expectations.
−Removed: We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment.
−Removed: Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated to be $ 5.6 million.
−Removed: Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities.
−Removed: Goodwill will not be amortized but will be tested at least annually for impairment.
−Removed: The recognized goodwill will not be deductible for tax purposes.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
−Removed: The following is our allocation of the fair value of the acquisition price (in thousands) as of July 27, 2022:
−Removed: Current assets $ 71
−Removed: Property and equipment 4,921
−Removed: Licenses 16,810
−Removed: Deferred tax liability ( 3,979 )
−Removed: Total net assets acquired 17,823
−Removed: Goodwill 5,577
−Removed: Acquisition price fair value $ 23,400
−Removed: On August 18, 2022, the Company purchased real estate in Huntsville, Alabama amounting to $ 2.1 million for a future Bombshells location.
−Removed: The Company paid $ 525,000 in cash at closing and entered into a bank financing for the $ 1.6 million remainder (see Note 8 ).
−Removed: On September 12, 2022, the Company entered into a joint venture with a private investment company to acquire real estate in Austin, Texas amounting to $ 2.2 million for a future Bombshells location.
−Removed: The Company has a 51 % interest in the joint venture and paid its $ 1.1 million share for the real estate purchase while the investment of the private investment company was recorded as noncontrolling interest in our consolidated balance sheet.
−Removed: 2022 Dispositions
−Removed: On October 8, 2021, the Company sold one of its clubs in South Houston for $ 300,000 .
−Removed: On July 12, 2022, the Company received $ 6.0 million from the Philadelphia Regional Port Authority for one of the Company's rental properties, with a carrying value of $ 4.9 million, due to eminent domain.
−Removed: The Company paid the current lessee a termination fee of $ 250,000 , which is included in impairments and other charges, net in our consolidated statement of income.
−Removed: The Company used $ 2.1 million of the proceeds to pay down a loan related to the property.
−Removed: 2023 Acquisitions
Lubbock Property
2 unchanged sentences
The site includes extra land that will be listed for sale once the Bombshells unit is completed.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
Heartbreakers Gentlemen's Club
21 unchanged sentences
On November 8, 2022, the Company purchased real estate in Aurora, Colorado amounting to $ 850,000 in cash for a future Bombshells location.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Acquisitions and Dispositions - continued
Central City CO Casino Properties
4 unchanged sentences
The property has two buildings, one of which the Company is leasing out to an existing tenant and the other building the Company is remodeling for future adult club operations.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
Grange Food Hall
18 unchanged sentences
Total consideration fair value $ 63,347
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Acquisitions and Dispositions - continued
We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclub reportable segment.
5 unchanged sentences
Approximately $ 4.3 million of the recognized goodwill will be deductible for tax purposes.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Acquisitions and Dispositions - continued
The following is our allocation of the fair value of the acquisition price (in thousands) as of March 16, 2023:
10 unchanged sentences
During fiscal 2025, 2024, and 2023 (from the date of acquisition), the five acquired clubs contributed the following, which are included in our consolidated statements of income (in thousands):
+Added: 2025 2024 2023
Revenues $ 31,645 $ 34,781 $ 16,132
8 unchanged sentences
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.
−Removed: The unaudited pro forma financial information includes adjustments related to changes in recognized expenses caused by the fair value of assets acquired, such as depreciation and amortization and related tax effects.
−Removed: Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the $ 10.0 million line-of-credit facility (see Note 8 ) and the nine seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2022.
−Removed: Pro forma weighted average number of common shares outstanding includes the impact of 200,000 shares of our common stock issued as partial consideration for the acquisition.
−Removed: Since the results of operations during fiscal 2024 were subsequent to the fiscal year of acquisition and that fiscal 2024 fully includes the results of operations of the five acquired clubs, the amounts presented for fiscal 2024 above do not reflect any pro forma adjustments.
+Added: The unaudited pro forma financial information includes adjustments related to changes in recognized expenses caused by the fair value of
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Acquisitions and Dispositions - continued
+Added: assets acquired, such as depreciation and amortization and related tax effects.
+Added: Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the $ 10.0 million line-of-credit facility (see Note 9 ) and the nine seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2022.
+Added: Pro forma weighted average number of common shares outstanding includes the impact of 200,000 shares of our common stock issued as partial consideration for the acquisition.
+Added: Since the results of operations during fiscal 2025 and 2024 were subsequent to the fiscal year of acquisition and that fiscal 2024 fully includes the results of operations of the five acquired clubs, the amounts presented for fiscal 2025 and 2024 above do not reflect any pro forma adjustments.
Arapahoe Street, Denver CO Property
17 unchanged sentences
The Company paid approximately $ 9,500 in closing costs related to the transaction.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Acquisitions and Dispositions - continued
On June 6, 2024, the Company sold an aircraft with a carrying value of approximately $ 2.0 million for $ 1.8 million in cash.
4 unchanged sentences
The transaction resulted in a $ 2.3 million gain, which is included in impairments and other charges, net in our consolidated statements of income.
+Added: 2025 Acquisitions
+Added: On January 21, 2025, the Company completed the acquisition of a club in the Detroit, Michigan, market for a total agreed acquisition price of $ 11.0 million, consisting of $ 3.0 million in cash and $ 5.0 million in a seller-financed 8.0 % promissory note (see Note 9 ) for the club, and $ 3.0 million in cash for the associated real estate through asset purchase agreements.
+Added: The preliminary fair value of the consideration is as follows (in thousands):
+Added: Note payable 5,000
+Added: Total fair value of consideration $ 11,000
+Added: We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values in our Nightclubs reportable segment.
+Added: We have not finalized our valuation of the tangible and identifiable intangible assets acquired in this transaction.
+Added: As of the release of this report, the fair value of the acquired tangible and identifiable intangible assets are provisional pending the completion of the final valuations for those assets.
+Added: Based on the allocation of the preliminary fair value of the acquisition price and subject to any working capital adjustments, the amount of goodwill is estimated at $ 613,000 .
+Added: Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired, which is essentially the forward earnings potential of the acquired club and our entry into a new market.
+Added: Goodwill will not be amortized but will be tested at least annually for impairment.
+Added: Approximately $ 613,000 of the recognized goodwill will be deductible for income tax purposes.
+Added: The following is our preliminary allocation of the fair value of the acquisition price (in thousands) as of January 21, 2025:
+Added: Current assets $ 73
+Added: Property and equipment 3,305
+Added: Licenses 5,928
+Added: Tradename 1,081
+Added: Total net assets acquired 10,387
+Added: Total fair value of net assets acquired $ 11,000
+Added: Licenses and tradename will not be amortized but will be tested at least annually for impairment.
+Added: In connection with this acquisition, we incurred approximately $ 141,000 in acquisition-related expenses in fiscal 2025, which are included in selling, general and administrative expenses in our consolidated statements of income.
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
+Added: Acquisitions and Dispositions - continued
+Added: From the date of acquisition until September 30, 2025, the acquired club contributed the following, which are included in our consolidated statements of income (in thousands):
+Added: Revenues $ 3,047
+Added: Income from operations $ 1,123
+Added: The seller has not provided the fiscal 2024 financial statements, therefore, we could not provide supplemental pro forma information for the combined entities.
+Added: Platinum West and Platinum Plus
+Added: On April 7, 2025, the Company completed the acquisition of a club in West Columbia, South Carolina, for a total purchase price of $ 8.0 million, consisting of $ 3.75 million cash and $ 2.5 million in a seller-financed 7 % promissory note (see Note 9 ) for the club, and $ 1.75 million cash for the associated real estate.
+Added: On June 13, 2025, the Company completed the acquisition of a club in Allentown, Pennsylvania, for a total purchase price of $ 2.0 million, consisting of $ 1.5 million cash and $ 500,000 in seller-financed 7 % promissory note (see Note 9 ).
+Added: The acquisitions were completed through asset purchase agreements.
+Added: The Allentown club transaction was completed several weeks after the West Columbia club due to delays in the issuance of licenses.
+Added: The preliminary fair value of the consideration is as follows (in thousands):
+Added: Notes payable 3,000
+Added: Total fair value of consideration $ 10,000
+Added: We recognized the assets and liabilities for this combined acquisition based on our estimates of their acquisition date fair values in our Nightclubs reportable segment.
+Added: We have not finalized our valuation of the tangible and identifiable intangible assets acquired in this transaction.
+Added: As of the release of this report, the fair value of the acquired tangible and identifiable intangible assets are provisional pending the completion of the final valuations for those assets.
+Added: Based on the allocation of the preliminary fair value of the acquisition price and subject to any working capital adjustments, the amount of goodwill is estimated at $ 201,000 .
+Added: Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired, which is essentially the forward earnings potential of the acquired club and our entry into a new market.
+Added: Goodwill will not be amortized but will be tested at least annually for impairment.
+Added: Approximately $ 201,000 of the recognized goodwill will be deductible for income tax purposes.
+Added: The following is our preliminary allocation of the fair value of the acquisition price (in thousands) as of acquisition date:
+Added: Current assets $ 128
+Added: Property and equipment 2,026
+Added: Licenses 6,972
+Added: Tradename 674
+Added: Operating lease right-of-use asset 2,276
+Added: Favorable lease asset 135
+Added: Lease liability ( 2,412 )
+Added: Total net assets acquired 9,799
+Added: Total fair value of net assets acquired $ 10,000
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
+Added: Acquisitions and Dispositions - continued
+Added: Licenses and tradename will not be amortized but will be tested at least annually for impairment.
+Added: In connection with this combined acquisition, we incurred approximately $ 103,000 in acquisition-related expenses in fiscal 2025, which are included in selling, general and administrative expenses in our consolidated statements of income.
+Added: From the date of acquisition until September 30, 2025, the acquired clubs contributed the following, which are included in our consolidated statements of income (in thousands):
+Added: Revenues $ 2,839
+Added: Income from operations $ 866
+Added: The seller has not provided the fiscal 2024 financial statements, therefore, we could not provide supplemental pro forma information for the combined entities.
+Added: 2025 Dispositions
+Added: Sale of Bombshells Austin
+Added: On November 14, 2024, the Company sold Bombshells Austin for $ 70,000 in cash and $ 60,000 in a 6 % 12-month promissory note (see Note 9 ).
+Added: The Company recognized a $ 1.3 million gain on the sale due in part to an impairment of its operating lease right-of-use asset in a prior year.
+Added: Sale of Aurora CO Property
+Added: On March 31, 2025, the Company sold a real estate property in Aurora, Colorado, for $ 825,000 .
+Added: The Company recognized a loss of $ 153,000 on the sale, net of closing costs.
+Added: RCI HOSPITALITY HOLDINGS, INC.
+Added: Notes to Consolidated Financial Statements
Quarterly Results of Operations (Unaudited)
11 unchanged sentences
Basic and diluted $ 1.01 $ 0.36 $ 0.46 $ ( 0.63 )
−Removed: Weighted average number of common shares outstanding
+Added: Weighted average shares used in computing earnings (loss) per share
Basic and diluted 8,920,774 8,861,854 8,793,809 8,715,129
5 unchanged sentences
$ 73,907 $ 72,283 $ 76,180 $ 73,234
−Removed: Income from operations (2)
+Added: Income (loss) from operations (2)
$ 13,165 $ 4,657 $ ( 2,536 ) $ 3,519
−Removed: Net income attributable to RCIHH stockholders (2)
+Added: Net income (loss) attributable to RCIHH stockholders (2)
$ 7,226 $ 774 $ ( 5,233 ) $ 244
−Removed: Earnings per share (2)
+Added: Earnings (loss) per share (2)
Basic and diluted $ 0.77 $ 0.08 $ ( 0.56 ) $ 0.03
−Removed: Weighted average number of common shares outstanding
+Added: Weighted average shares used in computing earnings (loss) per share
Basic and diluted 9,367,151 9,350,292 9,278,921 9,006,014
14 unchanged sentences
Basic and diluted $ 1.11 $ 0.83 $ 0.96 $ 0.23
−Removed: Weighted average number of common shares outstanding
+Added: Weighted average shares used in computing earnings per share
Basic and diluted 9,230,258 9,265,781 9,430,225 9,417,166
Dividends per share declared and paid $ 0.05 $ 0.06 $ 0.06 $ 0.06
+Added: (1) Fiscal year 2025 results of operations were mainly impacted by $ 5.3 million in asset impairments ($ 1.8 million in the second quarter and $ 3.6 million in the fourth quarter);
+Added: $ 3.9 million in lawsuit settlements ($ 179,000 in the first quarter, $ 127,000 in the second quarter, $ 3.3 million in the third quarter, and $ 361,000 in the fourth quarter);
+Added: $ 9.0 million in legal fees accrual in the fourth quarter;
+Added: and $ 2.4 million in gain on insurance ($ 1.0 million in the first quarter, $ 1.1 million in the third quarter, and $ 207,000 in the fourth quarter).
+Added: Quarterly effective income tax rate was 16.9 %, 25.1 %, 15.3 %, and ( 21.3 )% from first to fourth quarter, respectively.
(2) Fiscal year 2024 results of operations were mainly impacted by $ 38.5 million in asset impairments ($ 8.0 million in the second quarter, $ 17.9 million in the third quarter, and $ 12.6 million in the fourth quarter).
3 unchanged sentences
Quarterly effective income tax expense (benefit) rate was 22.8 %, 21.8 %, 20.1 %, and ( 39.6 )% from first to fourth quarter, respectively, including the impact of the release of a $ 176,000 deferred tax asset valuation allowance and the pretax loss in the fourth quarter.
−Removed: (3) Fiscal year 2022 results of operations were significantly higher than prior year due to the fifteen acquired clubs and one new Bombshells.
−Removed: Net income attributable to RCIHH stockholders and earnings per share were impacted by $ 1.9 million in asset impairments ($ 1.7 million in the third quarter and $ 166,000 in the fourth quarter) and $ 2.4 million gain on sale or disposition of businesses and assets ($ 342,000 in the first quarter, $ 58,000 in the second quarter, $ 266,000 in the third quarter, and $ 1.7 million in the fourth quarter).
−Removed: Quarterly effective income tax expense rate was 21.7 %, 23.4 %, 21.3 %, and 27.5 % from first to fourth quarter, respectively, including the impact of the $ 343,000 deferred tax asset valuation allowance in the fourth quarter.
Our nightclub operations are normally affected by seasonal factors.
2 unchanged sentences
Related Party Transactions
−Removed: Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company.
+Added: Presently, our director and former Chairman, President, and CEO, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company.
Langan receives no compensation or other direct financial benefit for any of the guarantees.
1 unchanged sentence
Included in the $ 17.0 million borrowing on October 12, 2021 (see Note 9 ) are notes borrowed from related parties—one note for $ 500,000 (Ed Anakar, President of RCI Management Services, Inc.
−Removed: and our Director of Operations) and another note for $ 150,000 (from a brother of Company CFO, Bradley Chhay, see above) in which the terms of the notes are the same as the rest of the lender group.
+Added: and our Director of Operations) and another note for $ 150,000 (from a brother of the Company's former CFO, Bradley Chhay, see above) in which the terms of the notes are the same as the rest of the lender group.
Refer to Note 9 for October 2023 extension of term of promissory notes.
+Added: As of September 30, 2025, the amount borrowed from Ed Anakar has been fully paid.
RCI HOSPITALITY HOLDINGS, INC.
1 unchanged sentence
Related Party Transactions – continued
−Removed: We used the services of Nottingham Creations, and previously Sherwood Forest Creations, LLC, both furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance.
−Removed: Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest).
−Removed: Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were approximately $ 350,000 in fiscal 2024, $ 195,000 in fiscal 2023, and $ 207,000 in fiscal 2022.
−Removed: As of September 30, 2024 and 2023, we owed Nottingham Creations and Sherwood Forest $ 18,700 and $ 10,700 , respectively, in unpaid billings.
+Added: We used the services of Tall Oak Custom Furniture and Nottingham Barrels and Furniture, previously Nottingham Creations, all furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance.
+Added: Tall Oak Custom Furniture and Nottingham Barrels and Furniture are owned by a brother of Eric Langan (as was Nottingham Creations).
+Added: Amounts billed to us for goods and services provided by Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations were approximately $ 19,477 in fiscal 2025, $ 350,000 in fiscal 2024, and $ 195,000 in fiscal 2023.
+Added: As of September 30, 2025, 2024, and 2023, we owed Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations $ 3,312 , $ 18,700 , and $ 10,700 respectively, in unpaid billings.
TW Mechanical LLC (“TW Mechanical”) 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 2025, 2024, and 2023.
3 unchanged sentences
As of September 30, 2025, 2024, and 2023, the Company owed TW Mechanical approximately $ 0 , $ 0 , and $ 0 respectively, in unpaid direct billings.
−Removed: The Company leases certain facilities and equipment under operating leases per ASC 842.
−Removed: These leases include renewal or termination options for varying periods which we deemed reasonably certain to exercise.
−Removed: This determination is based on our consideration of certain economic, strategic and other factors that we evaluate at lease commencement date and reevaluate throughout the lease term.
−Removed: Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments and additional lease payments contingent on sales.
−Removed: The variable portion of lease payments is not included in our right-of-use assets or lease liabilities.
−Removed: Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling, general and administrative expenses in our consolidated statement of income.
−Removed: We have elected to apply the short-term lease exception for all underlying asset classes, which mainly includes equipment leases.
−Removed: That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term.
−Removed: We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases.
−Removed: Future maturities of operating lease liabilities as of September 30, 2024 are as follows (in thousands):
−Removed: Portion Interest
−Removed: Portion Total
−Removed: October 2024 - September 2025 $ 3,290 $ 1,790 $ 5,080
−Removed: October 2025 - September 2026 3,572 1,591 5,163
−Removed: October 2026 - September 2027 3,590 1,381 4,971
−Removed: October 2027 - September 2028 3,047 1,187 4,234
−Removed: October 2028 - September 2029 3,127 1,001 4,128
−Removed: Thereafter 17,423 3,025 20,448
−Removed: $ 34,049 $ 9,975 $ 44,024
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
−Removed: Leases – continued
−Removed: Total lease expense under ASC 842 is included in selling, general and administrative expenses in our consolidated statement of income, except for sublease income which is included in other revenue, for the years ended September 30, 2024, 2023, and 2022 as follows (in thousands):
−Removed: 2024 2023 2022
−Removed: Operating lease expense – fixed payments $ 5,029 $ 5,166 $ 4,738
−Removed: Variable lease expense 1,707 1,629 1,397
−Removed: Short-term equipment and other lease expense (includes $ 448 , $ 357 and $ 258 recorded in advertising and marketing for fiscal 2024, 2023, and 2022, respectively, and $ 605 , $ 557 and $ 435 recorded in repairs and maintenance, respectively;
−Removed: 1,416 1,325 1,264
−Removed: Sublease income — — ( 4 )
−Removed: Total lease expense, net $ 8,152 $ 8,120 $ 7,395
−Removed: Other information:
−Removed: Operating cash outflows from operating leases $ 8,154 $ 7,949 $ 7,200
−Removed: Weighted average remaining lease term 9.4 years 10.5 years 11.0 years
−Removed: Weighted average discount rate 5.7 % 5.8 % 5.6 %
−Removed: In relation to certain rent concessions that we received from certain of our lessors in view of the COVID-19 pandemic, we accounted for those rent concessions as deferral of payments as if the lease is unchanged.
−Removed: Any reduction in total lease expense during the period caused by either an extension of the lease term or a forgiveness of certain lease payments is accounted for as variable lease payment adjustments.
−Removed: We recorded impairment charges of operating lease right-of-use assets amounting to $ 6.5 million, $ 1.0 million, and $ 0 during fiscal years 2024, 2023, and 2022, respectively.
−Removed: We recorded third-party operating lease revenue under ASC 842 amounting to $ 1.7 million, $ 1.8 million, and $ 1.6 million for fiscal 2024, 2023, and 2022, respectively.
−Removed: Minimum future base rentals are as follows:
−Removed: $ 2.4 million for 2025, $ 1.6 million for 2026, $ 1.5 million for 2027, $ 1.4 million for 2028, $ 1.3 million for 2029, and $ 5.1 million thereafter.
−Removed: RCI HOSPITALITY HOLDINGS, INC.
−Removed: Notes to Consolidated Financial Statements
Subsequent Events
Share Repurchase
−Removed: Subsequent to September 30, 2023 through the filing date of this report, we purchased 55,000 shares of the Company's common stock at a cost of $ 2.6 million.
+Added: Subsequent to September 30, 2025, through March 13, 2026, we purchased 153,061 shares of the Company's common stock pursuant to our share repurchase plan, excluding the November 21, 2025, repurchase below, at a cost of $ 3.7 million.
These shares were subsequently retired.
−Removed: Closure/ Disposition of Bombshells Locations
−Removed: In November 2024, the Company closed two underperforming Bombshells location in Spring, Texas, and in South Houston, Texas.
−Removed: The assets of these Bombshells locations were fully impaired as of September 30, 2024.
−Removed: On November 14, 2024, the Company sold a Bombshells location in Austin, Texas, for $ 130,000 , of which $ 70,000 was in cash at signing and $ 60,000 in a 6 % promissory note maturing in a year.
−Removed: The Company assigned the lease on the property to the buyer at the date of closing.
+Added: On November 21, 2025, the Company repurchased 821,000 shares of its own common stock from a single stockholder for $ 30.0 million, paid $ 8.0 million in cash and $ 22.0 million under a two-year 12 % unsecured promissory note.
+Added: On October 1, 2025, the Company entered into a debt modification transaction with 22 investors by extending their promissory notes' maturity date to October 2028.
+Added: Two new investors joined with a combined $ 2.1 million and two existing investors increased their participation by a combined $ 250,000 .
+Added: The promissory notes continue to bear a 12 % annual interest rate with interest-only monthly installments until full balance at maturity.
+Added: On October 7, 2025, the Company sold 100 % of the common stock of a club subsidiary located in Harlingen, Texas, for $ 600,000 .
+Added: The sale did not include the real estate where the club is located.
+Added: The Company recognized a loss of approximately $ 17,000 on the sale.
+Added: On February 6, 2026, the Company sold a club located in Edinburg, Texas, for $ 1.1 million recognizing a $ 219,000 loss on the sale.
+Added: Proceeds from the sale were used to pay down certain related debt.
+Added: On November 17, 2025, the Company entered into a strategic partnership with an adult club entrepreneur by accepting a 49 % interest in one of our clubs in Austin, Texas, for $ 1.8 million in cash.
+Added: This partnership will strengthen our Austin club with more local management and marketing expertise.
RCI HOSPITALITY HOLDINGS, INC.
8 unchanged sentences
Fiscal 2025 $ 42 $ 73 $ ( 24 ) $ 91
−Removed: Allowance for doubtful notes receivable
+Added: Allowance for credit losses on notes receivable
Fiscal 2023 $ — $ — $ — $ —
5 unchanged sentences
Fiscal 2025 $ 951 $ 63 $ — $ 1,014
−Removed: (1) Charged to bad debts expense (under other selling, general and administrative expenses) in the consolidated statements of income.
+Added: (1) Charged to bad debts or credit losses expense (under other selling, general and administrative expenses) in the consolidated statements of income.
(2) Write off of gross amount against allowance.
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.