What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-07 compared with 2025-08-11 · 260 added, 420 removed, 278 unchanged (71% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended June 30,

(in thousands, except number of shares)

Three Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 16,319 $ 2,773

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

$ ( 4,649 ) $ 9,065

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

Depreciation and amortization 4,187 3,569

6 unchanged sentences

Gain on insurance ( 141 ) ( 1,150 )

Doubtful accounts expense on notes receivable 27 22

Changes in operating assets and liabilities, net of business acquisitions:

Credit loss expense on notes receivable 75 —

Premium on stock repurchase

Changes in operating assets and liabilities:

Receivables ( 354 ) 2,373

8 unchanged sentences

Payments for property and equipment and intangible assets ( 2,331 ) ( 5,754 )

Acquisition of businesses, net of cash acquired ( 13,000 ) —

Net cash used in investing activities ( 1,543 ) ( 4,404 )

2 unchanged sentences

Payments on debt obligations ( 4,952 ) ( 5,694 )

Payment of loan origination costs ( 40 ) —

Purchase of treasury stock ( 9,831 ) ( 3,218 )

Payment of dividends ( 545 ) ( 623 )

Payment of loan origination costs ( 80 ) ( 290 )

Investment from noncontrolling partner 1,800 —

Payments to noncontrolling interests ( 36 ) —

Net cash used in financing activities ( 11,351 ) ( 6,572 )

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

( 2,753 ) 13,924

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD 32,350 21,023

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD $ 29,597 $ 34,947

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 5,078 ) 2,368

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 33,709 32,350

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 28,631 $ 34,718

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except per share and number of share data)

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

2025 2024 2025 2024

Three Months Ended December 31,

Sales of alcoholic beverages $ 30,139 $ 32,188

12 unchanged sentences

Depreciation and amortization 4,187 3,569

Impairments and other charges, net 2,349 18,260 2,232 26,452

Impairments and other charges (gains), net

217 ( 2,244 )

Total operating expenses 59,792 57,577

Income (loss) from operations 8,713 ( 2,536 ) 30,790 15,286

Income from operations 11,036 13,906

Other income (expenses)

1 unchanged sentence

Interest income 99 179

Gain on lease termination and other ( 5 ) — 974 —

Premium on stock repurchase ( 9,885 ) —

Gain on lease termination — 979

Income (loss) before income taxes

Income tax expense (benefit) 733 ( 1,426 ) 3,648 378

( 3,100 ) 10,912

Income tax expense 1,549 1,847

Net income (loss)

( 4,649 ) 9,065

Net income attributable to noncontrolling interests ( 85 ) ( 41 )

Net income (loss) attributable to RCIHH common stockholders

$ ( 4,734 ) $ 9,024

Earnings (loss) per share

20 unchanged sentences

Stock-based compensation — — 392 — — — — 392

Net income — — — 9,024 — — 41 9,065

Balance at December 31, 2024 8,889,000 89 58,731 210,160 — — ( 209 ) 268,771

Purchase of treasury shares — — — — ( 56,875 ) ( 2,896 ) — ( 2,896 )

Canceled treasury shares ( 56,875 ) ( 1 ) ( 2,895 ) — 56,875 2,896 — —

Excise tax on stock repurchases — — ( 29 ) — — — — ( 29 )

Payment of dividends ($ 0.07 per share)

— — — ( 619 ) — — — ( 619 )

Stock-based compensation — — 118 — — — — 118

Investment from noncontrolling partner — — — ( 790 ) — — 2,590 1,800

Payments to noncontrolling interests — — — — — — ( 36 ) ( 36 )

Net income (loss)

Balance at March 31, 2025 8,832,125 88 55,925 212,772 — — ( 246 ) 268,539

Purchase of treasury shares — — — — ( 75,325 ) ( 3,044 ) — ( 3,044 )

Canceled treasury shares ( 75,325 ) ( 1 ) ( 3,043 ) — 75,325 3,044 — —

Excise tax on stock repurchases — — ( 30 ) — — — — ( 30 )

Payment of dividends ($ 0.07 per share)

— — — ( 4,734 ) — — 85 ( 4,649 )

Stock-based compensation — — 392 — — — — 392

— — — 4,058 — — 2 4,060

Balance at June 30, 2025

Balance at December 31, 2025

7,789,000 $ 78 $ 29,144 $ 204,037 — $ — $ 2,417 $ 235,676

9 unchanged sentences

Balance at December 31, 2024

Purchase of treasury shares — — — — ( 27,265 ) ( 1,530 ) — ( 1,530 )

Canceled treasury shares ( 27,265 ) ( 1 ) ( 1,529 ) — 27,265 1,530 — —

Excise tax on stock repurchases — — ( 15 ) — — — — ( 15 )

Payment of dividends ($ 0.06 per share)

8,889,000 $ 89 $ 58,731 $ 210,160 — $ — $ ( 209 ) $ 268,771

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

Net income (loss) — — — 774 — — ( 25 ) 749

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

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

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

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

Payment of dividends ($ 0.06 per share)

— — — ( 552 ) — — — ( 552 )

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

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

Balance at June 30, 2024

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

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Current assets

30 unchanged sentences

20,000,000 shares authorized;

8,756,800 and 8,955,000 shares issued and outstanding as of June 30, 2025, and September 30, 2024, respectively

7,789,000 and 8,684,061 shares issued and outstanding as of December 31, 2025, and September 30, 2025, respectively

Additional paid-in capital 29,144 50,908

12 unchanged sentences

They do not include all information and footnotes required by GAAP for complete financial statements.

The consolidated balance sheet data as of September 30, 2024, were derived from audited financial statements but do not include all disclosures required by GAAP.

However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended September 30, 2024, included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on December 16, 2024.

The September 30, 2025 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP.

However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended September 30, 2025, included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 19, 2026.

The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K.

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

Operating results for the nine months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the year ending September 30, 2025.

Operating results for the three months ended December 31, 2025, are not necessarily indicative of the results that may be expected for the year ending September 30, 2026.

Recent Accounting Standards and Pronouncements

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The amendments in this ASU clarify that an entity should measure the fair value of an equity security subject to contractual sale restriction the same way it measures an identical equity security that is not subject to such a restriction.

The FASB said the contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, should not affect its fair value.

The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted.

We adopted ASU 2022-03 on October 1, 2024.

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):

Common Control Arrangements, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control.

The ASU requires all companies to amortize leasehold improvements associated with common control leases over the asset's useful life to the common control group regardless of the lease term.

It also allows private and certain not-for-profit entities to use the written terms and conditions of an agreement to account for common control leases without further assessing the legal enforceability of those terms.

The guidance is effective for all entities in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance.

We adopted ASU 2023-01 on October 1, 2024.

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):

Recognition and Initial Measurement , which addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture's separate financial statements.

The objectives of the ASU are to (1) provide decision-useful information to investors and other allocators of capital in a joint venture's financial statements and (2) reduce diversity in practice.

The FASB decided to require a joint venture to apply a new basis of accounting upon formation that will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance).

The amendments of this ASU are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

Additionally, a joint venture that was formed before January 1, 2025 may elect to apply the amendments retrospectively if it has sufficient information.

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.

We adopted the provisions of ASU 2023-05 on October 1, 2024, and will apply them on future joint ventures.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Standards and Pronouncements — continued

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments in the ASU enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The purpose of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows.

The ASU applies to all public entities that are required to report segment information in accordance with ASC 280, and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

We are evaluating the impact of this ASU on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

Under the ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate.

The amendments of the ASU are effective for public business entities for annual periods beginning after December 15, 2024.

Entities are permitted to early adopt the standard for annual financial statements that have not been issued or made available for issuance.

We are enhancing our income tax reporting system to be able to capture the required disclosures of this ASU.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which expands disclosures about income statement expenses.

3 unchanged sentences

We are currently evaluating the impact of this guidance on our financial statement disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which intended to improve the navigability of the guidance in Accounting Standards Codification ("ASC") Topic 270 and clarify when it applies.

Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP.

The ASU also addresses the form and content of such financial statements, adds list to ASC 270 of the interim disclosures required by all other ASC topics, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

The amendments are not intended to change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather to reflect the effects of the SEC's form and content requirements related to interim reporting.

The amendments of this ASU are effective to us for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

This ASU may be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

We are currently evaluating the impact of this ASU on our interim reporting financial statement disclosures.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

Sales of alcoholic beverages $ 26,338 $ 4,442 $ — $ 30,780 $ 27,413 $ 7,029 $ — $ 34,442

Sales of food and merchandise 5,914 4,123 — 10,037 5,904 5,832 — 11,736

Service revenues 25,166 3 — 25,169 25,103 165 — 25,268

Other revenues 4,918 41 200 5,159 4,403 113 218 4,734

$ 62,336 $ 8,609 $ 200 $ 71,145 $ 62,823 $ 13,139 $ 218 $ 76,180

Recognized at a point in time $ 61,524 $ 8,573 $ 200 $ 70,297 $ 62,411 $ 13,137 $ 218 $ 75,766

Recognized over time 812 * 36 — 848 412 * 2 — 414

Supplemental Disclosure of Cash Flow Information

The following table sets forth certain cash and noncash activities (in thousands), as follows:

Three Months Ended December 31,

Cash paid during the period for:

Interest, net of amounts capitalized $ 4,086 $ 4,080

Income taxes, net of refunds of $ 17 and $ 0 , respectively

Noncash investing and financing transactions:

Debt incurred in connection with stock repurchases $ 22,000 $ —

Unpaid excise tax on stock repurchases $ 219 $ 33

Unpaid liabilities on capital expenditures $ 278 $ 2,451

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 (see Note 7 ).

Subsequent to the balance sheet date through May 1, 2026, we repurchased 137,500 shares of our common stock at an average price of $ 23.96 per share.

Segment Information

The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars.

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.

There are no major distinctions in geographical areas served as all operations are in the United States.

The Company's chief operating decision maker ("CODM") is its chief executive officer.

The Company measures segment profit (loss) as income (loss) from operations.

Segment assets are those assets controlled by each reportable segment.

The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements.

In adopting ASU 2023-07, we recast one of our shared-services subsidiary from Other to Corporate.

We also recast three previously planned and previously reported casino-related subsidiaries classified in Other to Nightclubs and Bombshells.

We reclassified certain prior year segment disclosures to conform to current year presentation.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information — continued

Below is the financial information (in thousands) related to the Company’s reportable segments as provided to the CODM:

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Nightclubs Bombshells Total Nightclubs Bombshells Total

Third party $ 62,309 $ 8,381 $ 70,690 $ 61,724 $ 9,587 $ 71,311

Intersegment 1,323 — 1,323 1,019 — 1,019

63,632 8,381 72,013 62,743 9,587 72,330

Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

Reconciliation of revenue

Other revenues, including intersegment 211 244

Elimination of intersegment revenues ( 1,396 ) ( 1,091 )

Total consolidated revenues 70,828 71,483

Cost of goods sold, including intersegment 7,162 1,987 9,149 7,124 2,292 9,416

Salaries and wages 14,742 2,876 17,618 13,930 2,807 16,737

Selling, general, and administrative, including intersegment 18,002 4,329 22,331 17,668 4,369 22,037

Depreciation and amortization 3,500 415 3,915 2,971 331 3,302

Impairments and other charges (gains), net 181 29 210 ( 822 ) ( 1,330 ) ( 2,152 )

Other segment items — — — — ( 979 ) ( 979 )

Segment income (loss) 20,045 ( 1,255 ) 18,790 21,872 2,097 23,969

Reconciliation of segment income (loss)

Other loss ( 130 ) ( 80 )

Interest expense, net ( 4,251 ) ( 3,973 )

Elimination of intersegment income ( 35 ) ( 34 )

Unallocated corporate overhead ( 17,474 ) ( 8,970 )

Consolidated income (loss) before income taxes $ ( 3,100 ) $ 10,912

Segment capital expenditures $ 584 $ 1,270 $ 1,854 $ 1,554 $ 3,919 $ 5,473

Reconciliation to consolidated capital expenditures

Other operating segments 1 85

Unallocated corporate 476 196

Consolidated capital expenditures $ 2,331 $ 5,754

December 31, 2025 September 30, 2025

Nightclubs Bombshells Total Nightclubs Bombshells Total

Segment assets $ 477,077 $ 78,388 $ 555,465 $ 478,516 $ 78,877 $ 557,393

Reconciliation to consolidated total assets

Other operating segments 3,363 3,775

Unallocated corporate 31,434 35,767

Consolidated total assets $ 590,262 $ 596,935

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.

Management considers these to be non-allocable costs for segment purposes.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended December 31, 2025 Three Months Ended December 31, 2024

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

9 unchanged sentences

All other revenues are covered by ASC 606.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenues — continued

The Company does not have contract assets with customers.

3 unchanged sentences

Net Consideration

Recognized in

Revenue Balance at June 30, 2025

Received/Recognized Recognized in

Revenue Balance at December 31, 2025

Ad revenue $ 45 $ 98 $ ( 113 ) $ 30

Expo revenue 1 50 — 51

Franchise fees and other 67 372 ( 409 ) 30

$ 99 $ 1,058 $ ( 706 ) $ 451

Contract liabilities with customers are included in accrued liabilities as unearned revenues in our unaudited condensed consolidated balance sheets (see also Note 5 ), while the revenues associated with these contract liabilities are included in other revenues in our unaudited condensed consolidated statements of income.

Certain VIP cards to be issued as part of a settlement agreement (see Note 9 ) will be reclassified to unearned revenues upon issuance of the VIP cards.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information

The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars.

The Company has identified such segments based on management responsibility and the nature of the Company’s products, services, and costs.

There are no major distinctions in geographical areas served as all operations are in the United States.

The Company measures segment profit (loss) as income (loss) from operations.

Segment assets are those assets controlled by each reportable segment.

The Other category below includes our media and energy drink divisions that are not significant to the unaudited condensed consolidated financial statements.

Below is the financial information related to the Company’s segments (in thousands):

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Revenues (from external customers)

Nightclubs $ 62,336 $ 62,823 $ 181,601 $ 183,228

Bombshells 8,609 13,139 26,425 38,641

Other 200 218 478 501

$ 71,145 $ 76,180 $ 208,504 $ 222,370

Income (loss) from operations

Nightclubs $ 17,761 $ 13,640 $ 53,246 $ 45,030

Bombshells 87 ( 8,914 ) 1,831 ( 8,129 )

Other ( 441 ) ( 108 ) ( 1,292 ) ( 581 )

Corporate ( 8,694 ) ( 7,154 ) ( 22,995 ) ( 21,034 )

$ 8,713 $ ( 2,536 ) $ 30,790 $ 15,286

Depreciation and amortization

Nightclubs $ 3,311 $ 2,996 $ 9,440 $ 8,828

Bombshells 302 615 961 1,908

Other 13 3 40 7

Corporate 266 287 796 895

$ 3,892 $ 3,901 $ 11,237 $ 11,638

Capital expenditures

Nightclubs $ 1,972 $ 2,424 $ 4,218 $ 6,655

Bombshells 1,278 1,684 6,924 5,127

VIP cards — 585 ( 115 ) 470

Other 31 2 ( 29 ) 4

Corporate 106 21 385 1,446

$ 77 $ 735 $ ( 257 ) $ 555

Contract liabilities with customers are included in accrued liabilities as unearned revenues in our unaudited condensed consolidated balance sheets (see also Note 6 ), while the revenues associated with these contract liabilities are included in other revenues in our unaudited condensed consolidated statements of income.

In relation to the Illinois BIPA settlement (see Notes 6 and 9 ), VIP card claims processed during the first quarter of fiscal 2026 amounting to $ 470,000 were recorded in unearned revenues and subsequently ratably recognized in revenues with no actual cash received.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information — continued

June 30, 2025 September 30, 2024

Nightclubs $ 477,731 $ 454,892

Bombshells 77,071 79,091

Other 9,407 14,197

Corporate 33,203 36,184

$ 597,412 $ 584,364

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs, Other, and Corporate segments for the three months ended June 30, 2025, amounting to $ 4.9 million, $ 45,000 , and $ 0 , respectively, and for the nine months ended June 30, 2025, amounting to $ 14.5 million, $ 90,000 , and $ 385,000 , respectively;

and intercompany sales of Robust Energy Drink included in Other segment for the three and nine months ended June 30, 2025, amounting to $ 58,000 and $ 195,000 , respectively.

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs, Other, and Corporate segments for the three months ended June 30, 2024, amounting to $ 4.7 million, $ 0 , and $ 21,000 , respectively, and for the nine months ended June 30, 2024, amounting to $ 13.8 million, $ 0 , and $ 269,000 , respectively;

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

These intercompany revenue amounts are eliminated upon consolidation.

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, unallocated self-insurance reserve, depreciation and other corporate costs such as automobile and travel costs.

Management considers these to be non-allocable costs for segment purposes.

Certain real estate assets previously wholly assigned to Bombshells have been subdivided and allocated to other future development or investment projects.

Accordingly, those asset costs have been transferred out of the Bombshells segment.

Selected Account Information

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Credit card receivables $ 2,183 $ 1,637

1 unchanged sentence

ATM in-transit 730 374

Insurance claims receivable 30 —

Current portion of notes receivable 247 320

2 unchanged sentences

Notes receivable consist primarily of secured promissory notes executed between the Company and various buyers of our businesses and assets with interest rates ranging from 6 % to 9 % per annum and having original terms ranging from 1 to 20 years.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Selected Account Information — continued

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Prepaid insurance $ 6,619 $ 3,367

5 unchanged sentences

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Legal fees $ 8,167 $ 9,366

Insurance 4,855 1,600

Sales and liquor taxes 2,215 2,440

Payroll and related costs 4,475 4,930

Property taxes 3,862 3,501

Interest 553 568

Patron tax 893 1,024

Unearned revenues 451 99

Sales and liquor taxes 2,266 2,303

Lawsuit settlement 2,726 4,173

Construction in progress — 1,012

Estimated self-insurance liability 2,555 2,555

Construction in progress 233 464

Patron tax 1,120 1,078

Income taxes 482 —

Interest 651 524

Unearned revenues 555 77

Other 1,981 2,036

Total accrued liabilities $ 33,928 $ 32,607

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Selected Account Information — continued

The components of other long-term liabilities are as follows (in thousands):

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Estimated self-insurance liability

$ 7,008 $ 7,008

Advances from creditors — 1,250

Other 1,206 1,251

Total other long-term liabilities $ 8,214 $ 9,509

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.

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.

See also tables of accrued liabilities (above) and selling, general and administrative expenses (below).

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Selected Account Information — continued

The components of selling, general and administrative expenses are as follows (in thousands):

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Three Months Ended December 31,

Taxes and permits $ 3,593 $ 3,828

12 unchanged sentences

Total selling, general and administrative expenses $ 24,704 $ 26,207

The components of impairments and other charges, net are as follows (in thousands):

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

The components of impairments and other charges (gains), net are as follows (in thousands):

Three Months Ended December 31,

Impairment of assets $ 1,163 $ —

Settlement of lawsuits 3,281 141 3,587 308

Settlement of lawsuits, net of recoveries ( Notes 5 and 9 )

Loss (gain) on sale of businesses and assets 33 ( 1,406 )

Gain on insurance ( 177 ) ( 1,017 )

Total impairments and other charges, net $ 2,349 $ 18,260 $ 2,232 $ 26,452

During the second quarter ended March 31, 2025, we recorded $ 1.8 million in SOB license impairment related to four clubs.

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

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

During the third quarter ended June 30, 2025, we recorded $ 2.95 million for a class action settlement agreement to resolve claims under the Illinois Biometric Information Privacy Act.

During the first quarter ended December 31, 2024, we sold Bombshells Austin for a gain of $ 1.3 million.

See Note 13 .

During the first quarter ended December 31, 2024, we received insurance recovery amounting to $ 1.15 million for a club razed by fire in a prior period.

Total impairments and other charges (gains), net

$ 217 $ ( 2,244 )

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The old loan had a remaining principal balance of $ 2.4 million.

The new construction loan has maximum principal limit of $ 6.3 million and has a term of 204 months.

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.

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.

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

On January 21, 2025, in relation to a club acquisition (see Note 13 ), the Company executed a promissory note for $ 5.0 million with the seller.

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.

On February 26, 2025, the Company extended its line-of-credit facility with a lender bank for a maximum availability of $ 5.0 million to mature on March 9, 2027.

All other terms and conditions in the original line-of-credit remain unchanged.

On April 7, 2025, in relation to a club acquisition (see Note 13 ), the Company executed a seller-financed promissory note for $ 2.5 million bearing an interest of 7 % per annum.

The promissory note matures in five years and is payable in equal monthly installments of $ 49,503 in principal and interest.

On June 7, 2025, in relation to a club acquisition (see Note 13 ), the Company executed a seller-financed promissory note for $ 500,000 bearing an interest of 7 % per annum.

The promissory note matures in five years and is payable in equal monthly installments of $ 9,901 in principal and interest.

Future maturities of debt obligations as of June 30, 2025, are as follows (in thousands):

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.

Two new investors joined with a combined $ 2.1 million and two existing investors increased their participation by a combined $ 250,000 .

The promissory notes continue to bear a 12 % annual interest rate with interest-only monthly installments until full balance at maturity.

On November 21, 2025, in connection with a stock repurchase transaction (see Note 3 ), the Company executed a two-year $ 22.0 million unsecured promissory note bearing a 12 % annual interest rate.

The note is payable in monthly payments of principal and interest of $ 1.0 million for 23 months with the remaining balance paid at maturity.

Future maturities of debt obligations as of December 31, 2025, are as follows (in thousands):

Regular Amortization Balloon Payments Total Payments

July 2025 - June 2026 $ 19,117 $ — $ 19,117

July 2026 - June 2027 16,008 15,676 31,684

July 2027 - June 2028 16,458 11,207 27,665

July 2028 - June 2029 16,927 — 16,927

July 2029 - June 2030 15,481 2,524 18,005

January - December 2026 $ 30,969 $ 3,950 $ 34,919

January - December 2027 26,282 10,493 36,775

January - December 2028 17,388 9,451 26,839

January - December 2029 17,167 — 17,167

January - December 2030 15,290 2,524 17,814

Thereafter 44,969 80,259 125,228

$ 152,065 $ 106,677 $ 258,742

Stock-based Compensation

On February 7, 2022, our board of directors approved the 2022 Stock Option Plan (the “2022 Plan”).

The board’s adoption of the 2022 Plan was approved by the shareholders during the annual stockholders' meeting on August 23, 2022.

The 2022 Plan provides that the maximum aggregate number of shares of common stock underlying options that may be granted under the 2022 Plan is 300,000 .

The options granted under the 2022 Plan may be either incentive stock options or non-qualified options.

The 2022 Plan is administered by the compensation committee of the board of directors.

The compensation committee has the exclusive power to select individuals to receive grants, to establish the terms of the options granted to each participant, provided that all options granted shall be granted at an exercise price not less than the fair market value of the common stock covered by the option on the grant date, and to make all determinations necessary or advisable under the 2022 Plan.

On February 9, 2022, the board of directors approved a grant of 50,000 stock options each to six members of management subject to the approval of the 2022 Plan.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-based Compensation — continued

Stock-based compensation, which is included in corporate segment selling, general and administrative expenses amounted to $ 392,000 and $ 980,000 during the three and nine months ended June 30, 2025, respectively, and $ 471,000 and $ 1.4 million during the three and nine months ended June 30, 2024, respectively.

As of June 30, 2025, we had unrecognized compensation cost amounting to $ 981,000 related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 0.6 years.

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

All of the options will expire, if not exercised, at the end of five years .

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

The following table summarizes information about stock option activity during the nine months ended June 30, 2025, under the 2022 Plan:

Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands)

Outstanding at September 30, 2024 300,000

Forfeited ( 50,000 ) $ 100.00

Outstanding at June 30, 2025 250,000 $ 100.00 1.6 $ —

Exercisable at June 30, 2025 200,000 $ 100.00 1.6 $ —

For the three and nine months ended June 30, 2025, and 2024, we excluded the impact of 300,000 stock options from the calculation of diluted earnings per share because their effect was anti-dilutive.

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

Income taxes were an expense of $ 733,000 and $ 3.6 million during the three and nine months ended June 30, 2025, respectively, and a benefit of $ 1.4 million and an expense of $ 378,000 during the three and nine months ended June 30, 2024, respectively.

The effective income tax rate was 15.3 % and 18.3 % for the three and nine months ended June 30, 2025, respectively, and 21.5 % and 12.0 % for the three and nine months ended June 30, 2024, respectively.

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

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

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Amount % Amount %

Federal statutory income tax expense (benefit) $ 1,006 21.0 % $ ( 1,395 ) 21.0 %

State income taxes, net of federal benefit 145 3.0 % ( 214 ) 3.2 %

Permanent differences 83 1.7 % 22 ( 0.3 ) %

Tax credits ( 509 ) ( 10.6 ) % 152 ( 2.3 ) %

Other 8 0.2 % 9 ( 0.1 ) %

Total income tax expense (benefit) $ 733 15.3 % $ ( 1,426 ) 21.5 %

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes — continued

Nine Months Ended June 30, 2025 Nine Months Ended June 30, 2024

Amount % Amount %

Federal statutory income tax expense $ 4,193 21.0 % $ 662 21.0 %

State income taxes, net of federal benefit 561 2.8 % 135 4.3 %

Permanent differences 210 1.1 % 100 3.2 %

Tax credits ( 1,488 ) ( 7.5 ) % ( 528 ) ( 16.8 ) %

Other 172 0.9 % 9 0.3 %

Total income tax expense $ 3,648 18.3 % $ 378 12.0 %

Income tax expense was $ 1.5 million and $ 1.8 million during the three months ended December 31, 2025, and 2024, respectively.

The effective income tax rate was ( 50.0 )% and 16.9 % for the three months ended December 31, 2025, and 2024, respectively.

Our effective income tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both periods, and the pretax loss and the nondeductible premium on stock repurchase in the current quarter.

The Company or one of its subsidiaries files income tax returns in the U.S.

2 unchanged sentences

The Company ordinarily goes through various federal and state reviews and examinations for various tax matters.

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.

14" (the "Act") and commonly referred to as the One Big Beautiful Bill Act.

Among other things, the Act extends certain expiring, and in some cases expired, provisions of the 2017 Tax Cuts and Jobs Act.

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.

The Company has reviewed the changes from the Act and determined that any impact would be immaterial.

Commitments and Contingencies

Legal Matters

Indemnity Insurance Corporation

As previously reported, the Company and its subsidiaries were insured under a liability policy issued by Indemnity Insurance Corporation, RRG (“IIC”) through October 25, 2013.

On that date, the Company transitioned to a new insurance provider and has since obtained general liability coverage from other insurers to cover claims arising from actions occurring after October 25, 2013.

On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (the “Rehabilitation Order”) declaring IIC impaired, insolvent, and in an unsafe financial condition.

The Court placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (the “Commissioner”), as receiver.

The Rehabilitation Order authorized the Commissioner to rehabilitate IIC by, among other things, gathering and marshaling assets.

The order also stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014.

On April 10, 2014, the Court entered a Liquidation and Injunction Order With Bar Date (the “Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies issued by IIC.

The Liquidation Order established a claims bar date of January 16, 2015, and further stayed or abated pending lawsuits involving IIC through October 7, 2014.

As a result of this order, the Company no longer had insurance coverage under the IIC policy for any claims.

The Company retained counsel to defend and evaluate affected claims and lawsuits and has funded 100 % of the associated litigation costs.

The Company timely filed claims with the Receiver and has continued to provide information and updates as requested;

however, there is no assurance that any recovery will be received from the IIC estate.

The ultimate financial impact of this uncertainty remains unknown.

New York Indictment and Related Matters

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

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

The Company cooperated with the NY AG during its investigation.

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

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;

Bribery in the Second Degree in violation of Penal Law §200.03, a class C felony;

Criminal Tax Fraud in the Second Degree in violation of Tax Law §1805, a class C felony;

Criminal Tax Fraud in the Third Degree in violation of Tax Law §1804, a class D felony;

Criminal Tax Fraud in the Fourth Degree in violation of Tax Law §1803, a class E felony;

Conspiracy in the Fourth Degree in violation of Penal Law §105.10, a class E felony;

and Offering a False Instrument for Filing in the First Degree in violation of Penal Law §175.35(1).

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."

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.

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.

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.

On January 29, 2026, Mr.

Langan stepped down as Chairman of the Company’s board of directors.

Langan was replaced by Mr.

Reese as Chairman.

Langan remains a member of the board of directors.

The non-executive corporate employee mentioned above continues to be on administrative leave during the pendency of the indictment.

The defendants entered a plea of not guilty to all of the charges and are vigorously defending themselves against the charges in court.

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.

On or about May 20, 2025, the Company received a subpoena from the U.S.

Securities and Exchange Commission ("SEC") seeking certain documents and information related to the NY AG investigation and NY DTF issues.

The Company is cooperating with the SEC and its investigation.

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.

RCI HOSPITALITY HOLDINGS, INC.

1 unchanged sentence

Commitments and Contingencies — continued

As of June 30, 2025, only 1 claim remains unresolved out of the original 71 claims associated with IIC.

The sole remaining matter is the Dupray case, as described below, involving a traffic accident allegedly caused by a third party after being served alcohol at a JAI Phoenix location.

The Company continues to vigorously defend this matter and pursue all available rights to potential reimbursement through the IIC liquidation process.

Shareholder Class and Derivative Actions

In September 2025, a putative securities class action was filed against RCI Hospitality Holdings, Inc.

and certain of its officers in the Southern District of Texas, Houston Division.

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.

The complaints seek unspecified damages, costs, and attorneys’ fees.

This lawsuit is captioned Hernandez v.

RCI Hospitality Holdings, Inc., et al.

(filed September 21, 2025, naming the Company, Eric S.

Langan, and Bradley Chhay).

On April 14, 2026, the court entered an order appointing the lead plaintiff and the respective lead and liaison counsel for the purported class.

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.

The Company intends to continue to vigorously defend against this action.

This action is in its early stage, and a potential loss cannot yet be estimated.

On November 17, 2025, a shareholder derivative action was filed in Harris County District Court against officers and directors Eric S.

Langan, Yura Barabash, Bradley Chhay, Luke Lirot, Elaine J.

Martin, Arthur A.

Priaulx, Travis Reese, and RCI Hospitality Holdings, Inc., as nominal defendant.

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.

The action asserts claims for breach of fiduciary duty and unjust enrichment.

The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees.

The case, Ayers v.

RCI Hospitality Holdings, Inc., et al.

, is in its early stage, and a potential loss cannot yet be estimated.

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.

Langan, Yura Barabash, Bradley Chhay, Luke Lirot, Elaine J.

Martin, Arthur A.

Priaulx, Travis Reese, and Ahmed Anakar.

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.

The action asserts claims for breaches of fiduciary duties respectively owed by the directors and officers.

The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees.

The case, Taylor v.

Langan, et al.

, is in its early stage, and a potential loss cannot yet be estimated.

Illinois BIPA Matter

On April 14, 2025, the Company's subsidiaries, RCI Management Services, Inc., Pooh Bah Enterprises, Inc., and RCI Dining Services (Harvey), Inc.

(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.

The settlement resolves two consolidated cases:

RCI Management Services, Inc.

22LA0884 (St.

Clair County, Illinois) and Loera v.

Pooh Bah Enterprises, Inc.

2021CH04759 (Cook County, Illinois).

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.

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.

Any unclaimed funds remaining after payment of valid claims, fees, and costs will revert to the Defendants.

The cash settlement was paid in full in July 2025 and the VIP cards were issued in December 2025, with unclaimed VIP cards amounting to $ 1.23 million.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies — continued

On June 23, 2014, Mark H.

14 unchanged sentences

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.

The adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees.

While we take steps to ensure that our adult entertainers are deemed independent contractors, from time to time, we are named in lawsuits related to the alleged misclassification of entertainers.

Claims are brought under both federal and where applicable, state law.

Based on the industry standard, the manner in which the independent contractor entertainers are treated at the clubs, and the entertainer license agreements governing the entertainer’s work at the clubs, the Company believes that these lawsuits are without merit.

Lawsuits are handled by attorneys with an expertise in the relevant law and are defended vigorously.

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.

2 unchanged sentences

We recorded this latter assessment during the fiscal year ended September 30, 2023.

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

The investigation appears to be related to the Company’s New York State tax filings, audits thereof, and entertainment benefits provided to a former NY DTF employee.

On or about July 2, 2025, the Company received a second subpoena from the NY AG requesting additional documents and information related to the same issues.

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

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

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

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies — continued

On or about May 20, 2025, the Company received a subpoena from the U.S.

Securities and Exchange Commission ("SEC") seeking certain documents and information related to the NY AG investigation and NY DTF issues.

The Company is cooperating with the SEC and its investigation.

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.

On April 14, 2025, the Company's subsidiaries, RCI Management Services, Inc., Pooh Bah Enterprises, Inc., and RCI Dining Services (Harvey), Inc.

The settlement resolves two consolidated cases:

RCI Management Services, Inc.

22LA0884 (St, Clair County, Illinois) and Loera v.

Pooh Bah Enterprises, Inc.

2021CH04759 (Cook County, Illinois).

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.

Any unclaimed funds remaining after payment of valid claims, fees, and costs will revert to the Defendants.

The Company denies all allegations of wrongdoing.

The settlement remains subject to final court approval.

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.

While we take steps to ensure that our adult entertainers are deemed independent contractors, from time to time, we are named in lawsuits related to the alleged misclassification of entertainers.

Claims are brought under both federal and where applicable, state law.

Lawsuits are handled by attorneys with an expertise in the relevant law and are defended vigorously.

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

3 unchanged sentences

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

The Company recorded lawsuit settlements incurred amounting to $ 3.3 million and $ 3.6 million for the three and nine months ended June 30, 2025, respectively, and $ 141,000 and $ 308,000 for the three and nine months ended June 30, 2024, respectively.

As of June 30, 2025, and September 30, 2024, the Company has accrued $ 5.2 million and $ 2.0 million, respectively, related to settlement of lawsuits, which is included in accrued liabilities in our unaudited condensed consolidated balance sheets.

Self-insurance Liability

We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on historical experience.

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.

Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.

We recorded estimated self-insurance expense amounting to $ 4.0 million and $ 9.4 million during the three and nine months ended June 30, 2025.

As of June 30, 2025, the Company has self-insurance liability amounting to $ 9.4 million.

The Company recorded lawsuit settlements incurred, net of recoveries, amounting to $ 802,000 net recoveries and $ 179,000 net settlements for the three months ended December 31, 2025, and 2024, respectively.

As of December 31, 2025, and September 30, 2025, the Company has accrued $ 2.7 million and $ 4.2 million, respectively, related to settlement of lawsuits, which is included in accrued liabilities in our unaudited condensed consolidated balance sheets.

RCI HOSPITALITY HOLDINGS, INC.

1 unchanged sentence

Related Party Transactions

Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company.

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.

The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of June 30, 2025, and September 30, 2024, was $ 136.9 million and $ 135.3 million, respectively.

Included in the debt balance as of June 30, 2025, and September 30, 2024, are notes borrowed from related parties—one note for $ 500,000 (from Ed Anakar, an employee of the Company and brother of our former director Nourdean Anakar) and another note for $ 150,000 (from a brother of Company CFO, Bradley Chhay) in which the terms of the notes are the same as the rest of the lender group.

We used the services of Tall Oak Custom Furniture, and previously Nottingham Creations, both furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance.

Tall Oak Custom Furniture is owned by a brother of Eric Langan (as was Nottingham Creations).

Amounts billed to us for goods and services provided by Tall Oak Custom Furniture and Nottingham Creations were $ 12,344 and $ 19,098 during the three and nine months ended June 30, 2025, respectively, and $ 0 and $ 344,798 during the three and nine months ended June 30, 2024, respectively.

As of June 30, 2025, and September 30, 2024, we owed Tall Oak Custom Furniture and Nottingham Creations $ 3,312 and $ 18,700 , respectively, in unpaid billings.

The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of December 31, 2025, and September 30, 2025, was $ 138.2 million and $ 139.6 million, respectively.

Included in the debt balance as of December 31, 2025, and September 30, 2025, is a note borrowed from a related party for $ 350,000 and $ 150,000 , respectively, from a brother of the Company's former CFO, Bradley Chhay, in which the terms of the note is the same as the rest of the lender group.

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.

Tall Oak Custom Furniture and Nottingham Barrels and Furniture are owned by a brother of Eric Langan (as was Nottingham Creations).

Amounts billed to us for goods and services provided by Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations were $ 0 and $ 2,780 during the three months ended December 31, 2025, and 2024, respectively.

As of December 31, 2025, and September 30, 2025, we owed Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations $ 3,312 and $ 3,312 , respectively, in unpaid billings.

TW Mechanical LLC provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2026 and 2025.

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

Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 0 for the three and nine months ended June 30, 2025, respectively, and $ 0 and $ 0 for the three and nine months ended June 30, 2024, respectively.

Amounts billed directly to the Company were $ 455 and $ 1,856 for the three and nine months ended June 30, 2025, respectively, and $ 0 and $ 3,160 for the three and nine months ended June 30, 2024, respectively.

As of June 30, 2025, and September 30, 2024, the Company owed TW Mechanical $ 0 and $ 0 , respectively, in unpaid direct billings.

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three and nine months ended June 30, 2025, and 2024 is as follows (dollars in thousands):

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

2025 2024 2025 2024

Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 0 for the three months ended December 31, 2025, and 2024, respectively.

Amounts billed directly to the Company were $ 0 and $ 720 for the three months ended December 31, 2025, and 2024, respectively.

As of December 31, 2025, and September 30, 2025, the Company owed TW Mechanical $ 0 and $ 0 , respectively, in unpaid direct billings.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three months ended December 31, 2025, and 2024 is as follows (in thousands):

Three Months Ended December 31,

Operating lease expense – fixed payments $ 1,156 $ 1,109

Variable lease expense 404 395

Short-term and other lease expense (includes $ 103 and $ 117 recorded in advertising and marketing for the three months ended June 30, 2025, and 2024, respectively, and $ 294 and $ 342 for the nine months ended June 30, 2025, and 2024, respectively;

and $ 140 and $ 159 recorded in repairs and maintenance for the three months ended June 30, 2025, and 2024, respectively, and $ 415 and $ 447 for the nine months ended June 30, 2025, and 2024, respectively;

337 365 995 1,042

Short-term and other lease expense (includes $ 94 and $ 102 recorded in advertising and marketing for the three months ended December 31, 2025, and 2024, respectively;

and $ 153 and $ 142 recorded in repairs and maintenance for the three months ended December 31, 2025, and 2024, respectively;

Sublease income — —

4 unchanged sentences

Weighted average discount rate – operating leases 5.8 % 5.7 %

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Leases — continued

Future maturities of operating lease liabilities as of June 30, 2025, are as follows (in thousands):

Future maturities of operating lease liabilities as of December 31, 2025, are as follows (in thousands):

Principal Payments Interest Payments Total Payments

July 2025 - June 2026 $ 3,249 $ 1,661 $ 4,910

July 2026 - June 2027 3,370 1,466 4,836

July 2027 - June 2028 2,865 1,281 4,146

July 2028 - June 2029 2,851 1,112 3,963

July 2029 - June 2030 2,535 947 3,482

January - December 2026 $ 3,386 $ 1,565 $ 4,951

January - December 2027 3,143 1,370 4,513

January - December 2028 2,778 1,197 3,975

January - December 2029 2,781 1,026 3,807

January - December 2030 2,425 876 3,301

Thereafter 15,315 2,264 17,579

$ 29,828 $ 8,298 $ 38,126

Supplemental Disclosure of Cash Flow Information

The following table sets forth certain cash and noncash activities (in thousands), as follows:

Nine Months Ended June 30,

Cash paid for interest, net of amounts capitalized $ 11,827 $ 12,015

Cash paid for income taxes $ 4,361 $ 3,861

Restricted cash, included in other assets (at end of period) $ 250 $ —

Noncash investing and financing transactions:

Debt incurred in connection with acquisition of businesses $ 8,000 $ —

Note receivable from sale of businesses and assets $ 60 $ —

Unpaid excise tax on stock repurchases $ 91 $ 127

Unpaid liabilities on capital expenditures $ 1,005 $ 524

Restricted cash pertains to the minimum capitalization held by our captive insurance subsidiary, as required by state insurance regulations.

Subsequent to the balance sheet date through August 8, 2025, we repurchased 36,339 shares of our common stock at an average price of $ 38.09 per share.

Acquisitions and Dispositions

Sale of Bombshells Austin

On November 14, 2024, the Company sold Bombshells Austin for $ 70,000 in cash and $ 60,000 in a 6 % 12-month promissory note.

The Company recognized a $ 1.3 million gain on the sale.

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 6 ) for the club, and $ 3.0 million in cash for the associated real estate.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Acquisitions and Dispositions — continued

The preliminary fair value of the consideration is as follows (in thousands):

Note payable 5,000

Total fair value of consideration $ 11,000

We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values in our Nightclubs reportable segment.

We have not finalized our valuation of the tangible and identifiable intangible assets acquired in this transaction.

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.

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 .

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.

Goodwill will not be amortized but will be tested at least annually for impairment.

Approximately $ 613,000 of the recognized goodwill will be deductible for income tax purposes.

The following is our preliminary allocation of the fair value of the acquisition price (in thousands) as of January 21, 2025:

Current assets $ 73

Property and equipment 3,305

Licenses 5,928

Tradename 1,081

Total net assets acquired 10,387

Total fair value of net assets acquired $ 11,000

Licenses and tradename will not be amortized but will be tested at least annually for impairment.

In connection with this acquisition, we incurred approximately $ 0 and $ 141,000 in acquisition-related expenses during the three and nine months ended June 30, 2025, respectively, which are included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

From the date of acquisition until June 30, 2025, the acquired club contributed the following, which are included in our unaudited condensed consolidated statements of income (in thousands):

Three Months Ended

June 30, 2025 Nine Months Ended

June 30, 2025

Revenues $ 1,149 $ 1,830

Income from operations $ 414 $ 598

We have not yet received the fiscal 2024 financial statements from the seller, therefore, we could not provide supplemental pro forma information for the combined entities.

Sale of Aurora CO Property

On March 31, 2025, the Company sold a real estate property in Aurora, Colorado, for $ 825,000 .

The Company recognized a loss of $ 153,000 on the sale, net of closing costs.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Acquisitions and Dispositions — continued

Platinum West and Platinum Plus

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 6 ) for the club, and $ 1.75 million cash for the associated real estate.

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 6 ).

The Allentown club transaction was completed several weeks after the West Columbia club due to delays in the issuance of licenses.

As of the filing of this report, we have not completed our valuation and do not have estimates of fair value for the acquired assets and any assumed liability, if any.

In connection with this combined acquisition, we incurred approximately $ 52,000 and $ 103,000 in acquisition-related expenses during the three and nine months ended June 30, 2025, respectively, which are included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

From the date of acquisition until June 30, 2025, the acquired clubs contributed the following, which are included in our unaudited condensed consolidated statements of income (in thousands):

Three Months Ended

June 30, 2025 Nine Months Ended

June 30, 2025

Revenues $ 1,116 $ 1,116

Income from operations $ 397 $ 394

We have not yet received the fiscal 2024 financial statements from the seller, therefore, we could not provide supplemental pro forma information for the combined entities.

On October 7, 2025, the Company sold 100 % of the common stock of a club subsidiary located in Harlingen, Texas, for $ 600,000 .

The sale did not included the real estate where the club is located.

The Company recognized a loss of approximately $ 17,000 on the sale.

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.

Proceeds from the sale were used to pay down certain related debt.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements