What changed in this filing

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Item 1. Financial Statements

2026-05-28 compared with 2026-05-07 · 157 added, 76 removed, 462 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except number of shares)

Three Months Ended December 31,

Six Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss) $ ( 4,868 ) $ 12,259

$ ( 4,649 ) $ 9,065

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

7 unchanged sentences

Gain on insurance ( 187 ) ( 1,150 )

Credit loss expense on notes receivable 75 —

Credit loss reversal on notes receivable ( 11 ) —

Premium on stock repurchase 9,885 —

Changes in operating assets and liabilities:

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

Receivables 745 1,714

8 unchanged sentences

Payments for property and equipment and intangible assets ( 4,199 ) ( 8,608 )

Acquisition of businesses, net of cash acquired — ( 6,000 )

Net cash used in investing activities ( 2,233 ) ( 12,226 )

15 unchanged sentences

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

Three Months Ended December 31,

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

2026 2025 2026 2025

Sales of alcoholic beverages $ 28,817 $ 28,866 $ 58,956 $ 61,054

19 unchanged sentences

Interest income 82 139 181 318

Premium on stock repurchase ( 9,885 ) —

Gain on lease termination — 979

Non-operating gains (losses), net 4 — ( 9,881 ) 979

Income (loss) before income taxes ( 617 ) 4,262 ( 3,717 ) 15,174

( 3,100 ) 10,912

Income tax expense 1,549 1,847

Income tax expense (benefit) ( 398 ) 1,068 1,151 2,915

Net income (loss) ( 219 ) 3,194 ( 4,868 ) 12,259

( 4,649 ) 9,065

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

Net loss (income) attributable to noncontrolling interests ( 107 ) 37 ( 192 ) ( 4 )

Net income (loss) attributable to RCIHH common stockholders $ ( 326 ) $ 3,231 $ ( 5,060 ) $ 12,255

$ ( 4,734 ) $ 9,024

Earnings (loss) per share

Basic and diluted $ ( 0.04 ) $ 0.36 $ ( 0.63 ) $ 1.38

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

Weighted average shares used in computing earnings per share

Basic and diluted 7,741,522 8,861,854 8,021,747 8,891,638

20 unchanged sentences

Net income (loss) — — — ( 4,734 ) — — 85 ( 4,649 )

— — — ( 4,734 ) — — 85 ( 4,649 )

Balance at December 31, 2025 7,789,000 78 29,144 204,037 — — 2,417 235,676

Purchase of treasury shares — — — — ( 103,000 ) ( 2,438 ) — ( 2,438 )

Canceled treasury shares ( 103,000 ) ( 1 ) ( 2,437 ) — 103,000 2,438 — —

Excise tax on stock repurchases — — ( 24 ) — — — — ( 24 )

Payment of dividends ($ 0.08 per share)

— — — ( 617 ) — — — ( 617 )

Stock-based compensation — — 197 — — — — 197

Payments to noncontrolling interests — — — — — — ( 44 ) ( 44 )

Net income (loss) — — — ( 326 ) — — 107 ( 219 )

Balance at March 31, 2026

7,686,000 $ 77 $ 26,880 $ 203,094 — $ — $ 2,480 $ 232,531

Balance at September 30, 2024

8 unchanged sentences

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

Net income (loss) — — — 3,231 — — ( 37 ) 3,194

Balance at March 31, 2025

8,832,125 $ 88 $ 55,925 $ 212,772 — $ — $ ( 246 ) $ 268,539

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

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

December 31, 2025 September 30, 2025

March 31, 2026 September 30, 2025

Current assets

6 unchanged sentences

Property and equipment, net 278,069 279,027

Operating lease right-of-use assets, net 25,053 25,781

Operating lease right-of-use assets 24,311 25,781

Notes receivable, net of current portion 4,326 3,849

21 unchanged sentences

20,000,000 shares authorized;

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

7,686,000 and 8,684,061 shares issued and outstanding as of March 31, 2026, and September 30, 2025, respectively

Additional paid-in capital 26,880 50,908

16 unchanged sentences

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

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

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

Recent Accounting Standards and Pronouncements

5 unchanged sentences

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.

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

We are currently evaluating the impact of ASU 2024-03 on our financial statement disclosures.

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

5 unchanged sentences

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.

We are currently evaluating the impact of ASU 2025-11 on our interim reporting financial statement disclosures.

RCI HOSPITALITY HOLDINGS, INC.

2 unchanged sentences

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

Three Months Ended December 31,

Six Months Ended March 31,

Cash paid during the period for:

1 unchanged sentence

Income taxes, net of refunds of $ 17 and $ 51 , respectively

$ 1,628 $ 1,568

Noncash investing and financing transactions:

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

Debt incurred in connection with acquisition of businesses $ — $ 5,000

Note receivable from sale of business $ — $ 60

Unpaid excise tax on stock repurchases $ 243 $ 62

3 unchanged sentences

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.

The Company, through its subsidiaries, 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.

10 unchanged sentences

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

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Nightclubs Bombshells Total Nightclubs Bombshells Total

16 unchanged sentences

Interest expense, net ( 4,433 ) ( 3,909 )

Elimination of intersegment income ( 35 ) ( 34 )

Elimination of intersegment loss 36 11

Unallocated corporate overhead ( 6,755 ) ( 6,137 )

5 unchanged sentences

Consolidated capital expenditures $ 1,868 $ 2,854

December 31, 2025 September 30, 2025

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment Information — continued

Six Months Ended March 31, 2026 Six Months Ended March 31, 2025

Nightclubs Bombshells Total Nightclubs Bombshells Total

Third party $ 122,584 $ 16,740 $ 139,324 $ 119,265 $ 17,816 $ 137,081

Intersegment 2,646 — 2,646 2,133 — 2,133

125,230 16,740 141,970 121,398 17,816 139,214

Reconciliation of revenue

Other revenues, including intersegment 398 415

Elimination of intersegment revenues ( 2,818 ) ( 2,270 )

Total consolidated revenues 139,550 137,359

Cost of goods sold, including intersegment 13,895 4,051 17,946 13,636 4,174 17,810

Salaries and wages 29,307 5,693 35,000 28,021 5,598 33,619

Selling, general, and administrative, including intersegment 35,242 8,785 44,027 34,946 8,567 43,513

Depreciation and amortization 6,895 753 7,648 6,129 682 6,811

Impairments and other charges (gains), net 7,765 96 7,861 1,148 ( 1,171 ) ( 23 )

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

Segment income (loss) 32,126 ( 2,638 ) 29,488 37,518 945 38,463

Reconciliation of segment income (loss)

Other loss ( 293 ) ( 277 )

Interest expense, net ( 8,684 ) ( 7,882 )

Elimination of intersegment loss (income) 1 ( 23 )

Unallocated corporate overhead ( 24,229 ) ( 15,107 )

Consolidated income (loss) before income taxes $ ( 3,717 ) $ 15,174

Segment capital expenditures $ 1,933 $ 1,657 $ 3,590 $ 2,246 $ 5,646 $ 7,892

Reconciliation to consolidated capital expenditures

Other operating segments 4 437

Unallocated corporate 605 279

Consolidated capital expenditures $ 4,199 $ 8,608

March 31, 2026 September 30, 2025

Nightclubs Bombshells Total Nightclubs Bombshells Total

Segment assets $ 460,111 $ 78,138 $ 538,249 $ 478,516 $ 78,877 $ 557,393

3 unchanged sentences

Consolidated total assets $ 574,392 $ 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.

General corporate overhead includes 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.

2 unchanged sentences

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

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

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

7 unchanged sentences

$ 60,275 $ 8,359 $ 88 $ 68,722 $ 57,541 $ 8,229 $ 106 $ 65,876

* Lease revenue (included in Other Revenues) as covered by ASC 842.

Six Months Ended March 31, 2026 Six Months Ended March 31, 2025

Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total

Sales of alcoholic beverages $ 50,149 $ 8,807 $ — $ 58,956 $ 51,610 $ 9,444 $ — $ 61,054

Sales of food and merchandise 11,593 7,912 — 19,505 11,255 8,262 — 19,517

Service revenues 51,254 5 — 51,259 47,048 45 — 47,093

Other revenues 9,588 16 226 9,830 9,352 65 278 9,695

$ 122,584 $ 16,740 $ 226 $ 139,550 $ 119,265 $ 17,816 $ 278 $ 137,359

Recognized at a point in time $ 121,364 $ 16,740 $ 226 $ 138,330 $ 118,440 $ 17,814 $ 278 $ 136,532

Recognized over time* 1,220 — — 1,220 825 2 — 827

$ 122,584 $ 16,740 $ 226 $ 139,550 $ 119,265 $ 17,816 $ 278 $ 137,359

* Lease revenue (included in Other Revenues in Nightclubs segment) as covered by ASC 842.

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.

The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net in our unaudited condensed consolidated balance sheet.

The Company’s unconditional right to consideration for goods and services transferred to the customer is included in receivable, net in our unaudited condensed consolidated balance sheets.

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

2 unchanged sentences

Received/Recognized Recognized in

Revenue Balance at December 31, 2025

Revenue Balance at March 31, 2026

Ad revenue $ 45 $ 203 $ ( 172 ) $ 76

5 unchanged sentences

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

Selected Account Information

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

December 31, 2025 September 30, 2025

2026 September 30,

Credit card receivables $ 1,564 $ 1,637

5 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):

December 31, 2025 September 30, 2025

2026 September 30,

Prepaid insurance $ 4,411 $ 3,367

5 unchanged sentences

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

December 31, 2025 September 30, 2025

2026 September 30,

Legal fees $ 6,922 $ 9,366

12 unchanged sentences

Total accrued liabilities $ 30,242 $ 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):

December 31, 2025 September 30, 2025

2026 September 30,

Estimated self-insurance liability

3 unchanged sentences

Total other long-term liabilities $ 8,167 $ 9,509

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 December 31,

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

2026 2025 2026 2025

Taxes and permits $ 3,623 $ 3,418 $ 7,216 $ 7,246

13 unchanged sentences

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

Three Months Ended December 31,

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

2026 2025 2026 2025

Impairment of assets $ 7,270 $ 1,780 $ 8,433 $ 1,780

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

207 127 ( 595 ) 306

Loss (gain) on sale of businesses and assets 218 220 251 ( 1,186 )

2 unchanged sentences

$ 7,649 $ 2,127 $ 7,866 $ ( 117 )

The components of non-operating gains (losses), net are as follows (in thousands):

Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

Premium on stock repurchase $ — $ — $ ( 9,885 ) $ —

Gain on lease termination — — — 979

Other 4 — 4 —

Non-operating gains (losses), net $ 4 $ — $ ( 9,881 ) $ 979

RCI HOSPITALITY HOLDINGS, INC.

5 unchanged sentences

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):

Future maturities of debt obligations as of March 31, 2026, are as follows (in thousands):

Regular Amortization Balloon Payments Total Payments

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

April 2026 - March 2027 $ 27,374 $ 6,500 $ 33,874

April 2027 - March 2028 23,694 10,548 34,242

April 2028 - March 2029 17,645 9,451 27,096

April 2029 - March 2030 19,043 — 19,043

April 2030 - March 2031 15,306 — 15,306

Thereafter 35,288 86,060 121,348

$ 138,350 $ 112,559 $ 250,909

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

On May 15, 2026, in relation to eleven 12 % unsecured promissory notes included in the above-mentioned debt modification on October 1, 2025, the Company extended several notes and added one new investor note to mature in October 2028, which total principal amount to $ 2.55 million.

Several of those notes did not extend and were paid off amounting to $ 1.6 million.

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

Income tax was a $ 398,000 benefit and a $ 1.1 million expense during the three months ended March 31, 2026, and 2025, respectively.

The effective income tax rate was approximately 64.5 % and 25.1 % for the three months ended March 31, 2026, and 2025, respectively.

Income tax expense was $ 1.2 million and $ 2.9 million during the six months ended March 31, 2026, and 2025, respectively.

The effective income tax rate was approximately 31.0 % and 19.2 % for the six months ended March 31, 2026, and 2025, respectively.

Our effective income tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both years, and the impact of the nondeductible premium on stock repurchase on a pretax loss during the current year, particularly a low pretax loss 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.

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Commitments and Contingencies

94 unchanged sentences

Based on the jury’s allocation of fault, JAI Phoenix is responsible for $ 332,884 of the total award.

Under applicable law, plaintiffs retain the right to appeal;

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.

Plaintiffs have filed an appeal in May 2026.

The Company intends to vigorously defend against this action.

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.

12 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, 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.

The Company recorded lawsuit settlements incurred, net of recoveries, amounting to net settlements of $ 207,000 and net recoveries of $ 595,000 for the three and six months ended March 31, 2026, respectively, and net settlements of $ 127,000 and $ 306,000 for the three and six months ended March 31, 2025, respectively.

As of March 31, 2026, and September 30, 2025, the Company has accrued $ 2.8 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.

3 unchanged sentences

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 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.

The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of March 31, 2026, and September 30, 2025, was $ 135.2 million and $ 139.6 million, respectively.

Included in the debt balance as of March 31, 2026, 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.

Amounts billed to us for goods and services provided by Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations were $ 0 and $ 3,974 during the three months ended March 31, 2026, and 2025, respectively, and $ 0 and $ 6,754 during the six months ended March 31, 2026, and 2025 , respectively.

As of March 31, 2026, and September 30, 2025, we owed Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations $ 0 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 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.

Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 0 for the three months ended March 31, 2026, and 2025, respectively, and $ 0 and $ 0 for the six months ended March 31, 2026, and 2025, respectively.

Amounts billed directly to the Company were $ 7,550 and $ 681 for the three months ended March 31, 2026, and 2025, respectively, and $ 7,550 and $ 1,401 for the six months ended March 31, 2026, and 2025.

As of March 31, 2026, and September 30, 2025, the Company owed TW Mechanical $ 6,565 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,

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three and six months ended March 31, 2026, and 2025 is as follows (in thousands):

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

2026 2025 2026 2025

Operating lease expense – fixed payments $ 1,154 $ 1,079 $ 2,310 $ 2,188

Variable lease expense 351 364 755 759

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 — —

Short-term and other lease expense (includes $ 89 and $ 89 recorded in advertising and marketing for the three months ended March 31, 2026, and 2025, respectively, and $ 183 and $ 191 for the six months ended March 31, 2026, and 2025, respectively;

and $ 190 and $ 133 recorded in repairs and maintenance for the three months ended March 31, 2026, and 2025, respectively, and $ 343 and $ 275 for the six months ended March 31, 2026, and 2025, respectively;

364 316 702 658

Total lease expense, net $ 1,869 $ 1,759 $ 3,767 $ 3,605

3 unchanged sentences

Weighted average discount rate – operating leases 5.8 % 5.7 %

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

Future maturities of operating lease liabilities as of March 31, 2026, are as follows (in thousands):

Principal Payments Interest Payments Total Payments

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

April 2026 - March 2027 $ 3,379 $ 1,516 $ 4,895

April 2027 - March 2028 3,003 1,325 4,328

April 2028 - March 2029 2,814 1,155 3,969

April 2029 - March 2030 2,659 985 3,644

April 2030 - March 2031 2,469 841 3,310

Thereafter 14,683 2,067 16,750

1 unchanged sentence

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 sale did not include the real estate where the club is located.

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

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements