Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2020 | May 08, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | RCI HOSPITALITY HOLDINGS, INC. | |
Entity Central Index Key | 0000935419 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business Flag | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,125,281 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Sep. 30, 2019 |
Current assets | ||
Cash and cash equivalents | $ 9,825 | $ 14,097 |
Accounts receivable, net | 3,559 | 6,289 |
Current portion of notes receivable | 675 | 954 |
Inventories | 2,735 | 2,598 |
Prepaid insurance | 2,805 | 5,446 |
Other current assets | 2,343 | 2,521 |
Assets held for sale | 4,825 | 2,866 |
Total current assets | 26,767 | 34,771 |
Property and equipment, net | 182,234 | 183,956 |
Operating lease right-of-use assets | 26,485 | |
Notes receivable, net of current portion | 4,087 | 4,211 |
Goodwill | 47,109 | 53,630 |
Intangibles, net | 74,251 | 75,951 |
Other assets | 963 | 1,118 |
Total assets | 361,896 | 353,637 |
Current liabilities | ||
Accounts payable | 2,805 | 3,810 |
Accrued liabilities | 8,671 | 14,644 |
Current portion of long-term debt | 14,771 | 15,754 |
Current portion of operating lease liabilities | 1,552 | |
Total current liabilities | 27,799 | 34,208 |
Deferred tax liability, net | 20,503 | 21,658 |
Long-term debt, net of current portion and debt discount and issuance costs | 125,669 | 127,774 |
Operating lease liabilities, net of current portion | 26,275 | |
Other long-term liabilities | 374 | 1,696 |
Total liabilities | 200,620 | 185,336 |
Commitments and contingencies (Note 10) | ||
Equity | ||
Preferred stock, $0.10 par value per share; 1,000 shares authorized; none issued and outstanding | ||
Common stock, $0.01 par value per share; 20,000 shares authorized; 9,125 and 9,591 shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively | 91 | 96 |
Additional paid-in capital | 52,829 | 61,312 |
Retained earnings | 108,584 | 107,049 |
Total RCIHH stockholders' equity | 161,504 | 168,457 |
Noncontrolling interests | (228) | (156) |
Total equity | 161,276 | 168,301 |
Total liabilities and equity | $ 361,896 | $ 353,637 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,125,000 | 9,591,000 |
Common stock, shares outstanding | 9,125,000 | 9,591,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues | ||||
Total revenues | $ 40,426 | $ 44,826 | $ 88,820 | $ 88,849 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 5,782 | 6,192 | 12,558 | 12,004 |
Salaries and wages | 12,222 | 11,908 | 25,445 | 24,004 |
Selling, general and administrative | 14,450 | 14,341 | 30,981 | 28,368 |
Depreciation and amortization | 2,257 | 2,200 | 4,461 | 4,253 |
Other charges (gains), net | 8,190 | (981) | 8,164 | (2,078) |
Total operating expenses | 42,901 | 33,660 | 81,609 | 66,551 |
Income (loss) from operations | (2,475) | 11,166 | 7,211 | 22,298 |
Other income (expenses) | ||||
Interest expense | (2,459) | (2,645) | (4,944) | (5,166) |
Interest income | 85 | 75 | 183 | 126 |
Unrealized gain (loss) on equity securities | (62) | 77 | (134) | (370) |
Income (loss) before income taxes | (4,911) | 8,673 | 2,316 | 16,888 |
Income tax expense (benefit) | (1,418) | 1,930 | 175 | 3,741 |
Net income (loss) | (3,493) | 6,743 | 2,141 | 13,147 |
Net loss (income) attributable to noncontrolling interests | 41 | (8) | 41 | (68) |
Net income (loss) attributable to RCIHH common stockholders | $ (3,452) | $ 6,735 | $ 2,182 | $ 13,079 |
Earnings (loss) per share | ||||
Basic and diluted | $ (0.37) | $ 0.7 | $ 0.24 | $ 1.35 |
Weighted average number of common shares outstanding | ||||
Basic and diluted | 9,225,000 | 9,679,000 | 9,274,000 | 9,696,000 |
Dividends per share | $ 0.04 | $ 0.03 | $ 0.07 | $ 0.06 |
Sales of Alcoholic Beverages [Member] | ||||
Revenues | ||||
Total revenues | $ 16,919 | $ 18,486 | $ 37,662 | $ 36,796 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 3,435 | 3,790 | 7,581 | 7,526 |
Sales of Food and Merchandise [Member] | ||||
Revenues | ||||
Total revenues | 6,479 | 6,439 | 13,926 | 12,129 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 2,239 | 2,308 | 4,792 | 4,292 |
Service Revenues [Member] | ||||
Revenues | ||||
Total revenues | 14,348 | 16,979 | 31,541 | 34,310 |
Other [Member] | ||||
Revenues | ||||
Total revenues | 2,680 | 2,922 | 5,691 | 5,614 |
Service and Other [Member] | ||||
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | $ 108 | $ 94 | $ 185 | $ 186 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income [Member] | Treasury Stock [Member] | Noncontrolling Interests [Member] | Total |
Beginning Balance at Sep. 30, 2018 | $ 97 | $ 64,212 | $ 88,906 | $ 220 | $ (103) | $ 153,332 | |
Beginning Balance, shares at Sep. 30, 2018 | 9,719,000 | ||||||
Reclassification upon adoption of ASU 2016-01 | 220 | (220) | |||||
Purchase of treasury shares | $ (355) | (355) | |||||
Purchase of treasury shares, shares | (14,000) | ||||||
Canceled treasury shares | (355) | $ 355 | |||||
Canceled treasury shares, shares | (14,000) | 14,000 | |||||
Payment of dividends | (291) | (291) | |||||
Net income loss | 6,344 | 60 | 6,404 | ||||
Ending Balance at Dec. 31, 2018 | $ 97 | 63,857 | 95,179 | (43) | 159,090 | ||
Ending Balance, shares at Dec. 31, 2018 | 9,705,000 | ||||||
Beginning Balance at Sep. 30, 2018 | $ 97 | 64,212 | 88,906 | 220 | (103) | 153,332 | |
Beginning Balance, shares at Sep. 30, 2018 | 9,719,000 | ||||||
Canceled treasury shares | |||||||
Payment of dividends | (582) | ||||||
Net income loss | 13,147 | ||||||
Ending Balance at Mar. 31, 2019 | $ 96 | 62,252 | 101,623 | (35) | 163,936 | ||
Ending Balance, shares at Mar. 31, 2019 | 9,634,000 | ||||||
Beginning Balance at Dec. 31, 2018 | $ 97 | 63,857 | 95,179 | (43) | 159,090 | ||
Beginning Balance, shares at Dec. 31, 2018 | 9,705,000 | ||||||
Purchase of treasury shares | $ (1,606) | (1,606) | |||||
Purchase of treasury shares, shares | (71,000) | ||||||
Canceled treasury shares | $ (1) | (1,605) | $ 1,606 | ||||
Canceled treasury shares, shares | (71,000) | 71,000 | |||||
Payment of dividends | (291) | (291) | |||||
Net income loss | 6,735 | 8 | 6,743 | ||||
Ending Balance at Mar. 31, 2019 | $ 96 | 62,252 | 101,623 | (35) | 163,936 | ||
Ending Balance, shares at Mar. 31, 2019 | 9,634,000 | ||||||
Beginning Balance at Sep. 30, 2019 | $ 96 | 61,312 | 107,049 | (156) | 168,301 | ||
Beginning Balance, shares at Sep. 30, 2019 | 9,591,000 | ||||||
Purchase of treasury shares | $ (6,441) | (6,441) | |||||
Purchase of treasury shares, shares | (333,000) | ||||||
Canceled treasury shares | $ (3) | (6,438) | $ 6,441 | ||||
Canceled treasury shares, shares | (333,000) | 333,000 | |||||
Payment of dividends | (279) | (279) | |||||
Payments to noncontrolling interests | (10) | (10) | |||||
Net income loss | 5,634 | 5,634 | |||||
Ending Balance at Dec. 31, 2019 | $ 93 | 54,874 | 112,404 | (166) | 167,205 | ||
Ending Balance, shares at Dec. 31, 2019 | 9,258,000 | ||||||
Beginning Balance at Sep. 30, 2019 | $ 96 | 61,312 | 107,049 | (156) | 168,301 | ||
Beginning Balance, shares at Sep. 30, 2019 | 9,591,000 | ||||||
Canceled treasury shares | |||||||
Payment of dividends | (279) | ||||||
Net income loss | 2,141 | ||||||
Ending Balance at Mar. 31, 2020 | $ 91 | 52,829 | 108,584 | (228) | 161,276 | ||
Ending Balance, shares at Mar. 31, 2020 | 9,125,000 | ||||||
Beginning Balance at Dec. 31, 2019 | $ 93 | 54,874 | 112,404 | (166) | 167,205 | ||
Beginning Balance, shares at Dec. 31, 2019 | 9,258,000 | ||||||
Purchase of treasury shares | $ (2,047) | (2,047) | |||||
Purchase of treasury shares, shares | (133,000) | ||||||
Canceled treasury shares | $ (2) | (2,045) | $ 2,047 | ||||
Canceled treasury shares, shares | (133,000) | 133,000 | |||||
Payment of dividends | (368) | (368) | |||||
Payments to noncontrolling interests | (21) | (21) | |||||
Net income loss | (3,452) | (41) | (3,493) | ||||
Ending Balance at Mar. 31, 2020 | $ 91 | $ 52,829 | $ 108,584 | $ (228) | $ 161,276 | ||
Ending Balance, shares at Mar. 31, 2020 | 9,125,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 2,141 | $ 13,147 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 4,461 | 4,253 |
Deferred income tax expense (benefit) | (1,155) | 1,131 |
Gain on sale of businesses and assets | (36) | (2,197) |
Impairment of assets | 8,210 | |
Unrealized loss on equity securities | 134 | 370 |
Amortization of debt discount and issuance costs | 129 | 202 |
Deferred rent | 189 | |
Noncash lease expense | 825 | |
Gain on insurance | (33) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,917 | 1,727 |
Inventories | (137) | (182) |
Prepaid insurance, other current and other assets | 2,840 | 3,550 |
Accounts payable, accrued and other liabilities | (7,315) | (1,219) |
Net cash provided by operating activities | 11,981 | 20,971 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of businesses and assets | 105 | 2,866 |
Proceeds from insurance | 945 | |
Proceeds from notes receivable | 403 | 68 |
Issuance of note receivable | (420) | |
Payments for property and equipment and intangible assets | (5,323) | (13,902) |
Acquisition of businesses, net of cash acquired | (13,500) | |
Net cash used in investing activities | (3,870) | (24,888) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from long-term debt | 880 | 10,296 |
Payments on long-term debt | (4,097) | (13,287) |
Purchase of treasury stock | (8,488) | (1,961) |
Payment of dividends | (647) | (582) |
Payment of loan origination costs | (20) | |
Distribution to noncontrolling interests | (31) | |
Net cash used in financing activities | (12,383) | (5,554) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,272) | (9,471) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,097 | 17,726 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 9,825 | 8,255 |
CASH PAID DURING PERIOD FOR: | ||
Interest (net of amounts capitalized of $155 and $324, respectively) | 4,891 | 5,173 |
Income taxes | 2,105 | 319 |
Noncash investing and financing transactions: | ||
Notes receivable received as proceeds from sale of assets | 625 | |
Operating lease right-of-use assets established upon adoption of ASC 842 | 27,310 | |
Deferred rent liabilities reclassified upon adoption of ASC 842 | 1,241 | |
Operating lease liabilities established upon adoption of ASC 842 | 28,551 | |
Unpaid liabilities on capital expenditures | $ 21 | |
Borrowings from certain investors | 2,350 | |
Exchange of notes payable one principal balance | 300 | |
Exchange of notes payable two principal balance | 100 | |
Amount of new notes payable one | 450 | |
Amount of new notes payable two | 200 | |
Entire transaction cash received | 1,950 | |
Total acquisition price of two clubs acquired | 25,500 | |
Payment of two clubs acquired | 13,500 | |
Total amount of executing three-seller financed notes | 12,000 | |
Total sale price of nightclub sold | 1,000 | |
Sale price received as cash | 375 | |
Notes receivable | 625 | |
Proceeds from disposal of assets held for sale | 1,400 | |
Payments to acquire assets held for sale | 163 | |
Property taxes | 87 | |
Notes receivable assets, held for sale | $ 1,150 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Interest amount capitalized | $ 155 | $ 324 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of RCI Hospitality Holdings, Inc. (the “Company or “RCIHH”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The September 30, 2019 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, 2019 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 13, 2020. 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 three and six months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020. |
Recent Accounting Standards and
Recent Accounting Standards and Pronouncements | 6 Months Ended |
Mar. 31, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards and Pronouncements | 2. Recent Accounting Standards and Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Income Statement—Reporting Comprehensive Income In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Liquidity and Impact of COVID-1
Liquidity and Impact of COVID-19 Pandemic | 6 Months Ended |
Mar. 31, 2020 | |
Liquidity And Impact Of Covid-19 Pandemic | |
Liquidity and Impact of COVID-19 Pandemic | 3. Liquidity and Impact of COVID-19 Pandemic In March 2020, President Donald Trump declared the coronavirus disease 2019 (“COVID-19”) pandemic as a national public health emergency. COVID-19 is the disease caused by a novel strain of a coronavirus that originated from Wuhan, China in November 2019. The declaration resulted in a significant reduction in customer traffic in our clubs and restaurants due to changes in consumer behavior as social distancing practices, dining room closures and other restrictions that were mandated or encouraged by federal, state and local governments, and as of March 18, 2020, we temporarily closed all of our clubs and restaurants. The closure of our clubs and restaurants caused by the COVID-19 pandemic has presented operational challenges. Our strategy is to open locations in accordance with local and state guidelines and it is too early to know when and if they will generate positive cash flows for us. Depending on the timing and number of locations we get open, and their ability to generate positive cash flow, we may need to borrow funds to meet our obligations or consider selling certain assets. The COVID-19 pandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 pandemic lasts. To augment an expected decline in operating cash flows caused by the COVID-19 pandemic, we instituted the following measures: ● Arranged for deferment of principal and interest payment on certain of our debts; ● Furloughed employees working at our clubs and restaurants, except for a limited number of managers; ● Pay cut for all remaining salaried and hourly employees and deferral of board of director compensation; ● Deferred or modified certain fixed monthly expenses such as insurance, rent, and taxes, among others; ● Canceled certain non-essential expenses such as advertising, cable, pest control, point-of-sale system support, and investor relations coverage, among others. On May 8, 2020, the Company received approval and funding under the Paycheck Protection Program (“PPP”) of the CARES Act for its restaurants, shared service entity and lounge. See Note 9. Ten of our restaurant subsidiaries received amounts ranging from $271,000 to $579,000 for an aggregate amount of $4.2 million; our shared-services subsidiary received $1.1 million; and one of our lounges received $124,000. None of our adult nightclub and other non-core business subsidiaries received funding under the PPP. As of the release of this report, we do not know the extent and duration of the impact of COVID-19 on our businesses due to the uncertainty about the spread of the virus. Lower sales, as caused by social distancing guidelines, could lead to adverse financial results. However, we will continually monitor and evaluate the situation and will determine any further measures to be instituted. Also as of the release of this report, we have ten locations in Texas that have partially reopened with 25% occupancy requirement. Valuation of Goodwill, Indefinite-Lived Intangibles and Long-Lived tangible Assets We consider the COVID-19 pandemic as a triggering event in the assessment of recoverability of the goodwill, indefinite-lived intangibles and long-lived tangible assets in our clubs and restaurants that are affected. We evaluated forecasted cash flows considering future assumed impact of COVID-19 pandemic on sales. Based on our evaluation, we determined our assets are impaired in a total amount of approximately $8.2 million comprised of $6.5 million in goodwill, $1.4 million in SOB licenses, and $302,000 in property and equipment. |
Revenues
Revenues | 6 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 4. Revenues The Company recognizes revenue from the sale of alcoholic beverages, food and merchandise, service and other revenues at the point-of-sale upon receipt of cash, check, or credit card charge, net of discounts and promotional allowances based on consideration specified in implied contracts with customers. Sales and liquor taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying unaudited condensed consolidated statements of operations. The Company recognizes revenue when it satisfies a performance obligation (point in time of sale) by transferring control over a product or service to a customer. Commission revenues, such as ATM commission, are recognized when the basis for such commission has transpired. Revenues from the sale of magazines and advertising content are recognized when the issue is published and shipped. Revenues and external expenses related to the Company’s annual Expo convention are recognized upon the completion of the convention, which normally occurs during our fiscal fourth quarter. Other lease revenues are recognized when earned (recognized over time) and are more appropriately covered by guidance under ASC Topic 842, Leases Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 12), are shown below (in thousands): Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 11,860 $ 5,059 $ - $ 16,919 $ 14,148 $ 4,338 $ - $ 18,486 Sales of food and merchandise 2,799 3,680 - 6,479 3,293 3,146 - 6,439 Service revenues 14,290 58 - 14,348 16,943 36 - 16,979 Other revenues 2,418 6 256 2,680 2,663 7 252 2,922 $ 31,367 $ 8,803 $ 256 $ 40,426 $ 37,047 $ 7,527 $ 252 $ 44,826 Recognized at a point in time $ 30,977 $ 8,803 $ 252 $ 40,032 $ 36,582 $ 7,527 $ 238 $ 44,347 Recognized over time 390 * - 4 394 465 * - 14 479 $ 31,367 $ 8,803 $ 256 $ 40,426 $ 37,047 $ 7,527 $ 252 $ 44,826 Six Months Ended March 31, 2020 Six Months Ended March 31, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 26,544 $ 11,118 $ - $ 37,662 $ 28,950 $ 7,846 $ - $ 36,796 Sales of food and merchandise 6,063 7,863 - 13,926 6,500 5,629 - 12,129 Service revenues 31,384 157 - 31,541 34,256 54 - 34,310 Other revenues 5,235 15 441 5,691 5,069 11 534 5,614 $ 69,226 $ 19,153 $ 441 $ 88,820 $ 74,775 $ 13,540 $ 534 $ 88,849 Recognized at a point in time $ 68,411 $ 19,153 $ 430 $ 87,994 $ 73,974 $ 13,540 $ 505 $ 88,019 Recognized over time 815 * - 11 826 801 * - 29 830 $ 69,226 $ 19,153 $ 441 $ 88,820 $ 74,775 $ 13,540 $ 534 $ 88,849 * Lease revenue (included in Other Revenues) as covered by ASC Topic 842 in the current year (and ASC Topic 840 in the prior year). All other revenues are covered by ASC Topic 606. 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. A reconciliation of contract liabilities with customers is presented below (in thousands): Balance at September 30, 2019 Consideration Received Recognized in Revenue Balance at March 31, 2020 Ad revenue $ 76 $ 355 $ (303 ) $ 128 Expo revenue - 351 - 351 Other 7 12 (17 ) 2 $ 83 $ 718 $ (320 ) $ 481 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 operations. |
Selected Account Information
Selected Account Information | 6 Months Ended |
Mar. 31, 2020 | |
Selected Account Information | |
Selected Account Information | 5. Selected Account Information The components of accrued liabilities are as follows (in thousands): March 31, 2020 September 30, 2019 Insurance $ 1,700 $ 4,937 Sales and liquor taxes 2,460 3,086 Payroll and related costs 1,372 2,892 Property taxes 829 1,675 Patron tax 480 595 Unearned revenues 481 83 Lawsuit settlement 75 115 Other 1,274 1,261 $ 8,671 $ 14,644 The components of selling, general and administrative expenses are as follows (in thousands): For the Three Months For the Six Months Ended March 31, Ended March 31, 2020 2019 2020 2019 Taxes and permits $ 2,240 $ 2,370 $ 4,914 $ 4,551 Advertising and marketing 1,907 2,070 4,317 4,218 Supplies and services 1,390 1,465 2,924 2,921 Insurance 1,473 1,402 2,956 2,755 Accounting and professional fees 1,311 1,278 2,509 1,928 Lease 1,023 957 2,053 1,976 Charge card fees 845 886 1,891 1,819 Legal 1,072 773 2,268 1,831 Utilities 798 762 1,693 1,506 Security 749 756 1,597 1,465 Repairs and maintenance 652 721 1,449 1,308 Other 990 901 2,410 2,090 $ 14,450 $ 14,341 $ 30,981 $ 28,368 |
Assets Held for Sale
Assets Held for Sale | 6 Months Ended |
Mar. 31, 2020 | |
Indefinite Lived License Agreements, Impairment | |
Assets Held for Sale | 6. Assets Held for Sale As of September 30, 2019, the Company had two real estate properties for sale. The aggregate estimated fair value of the properties less cost to sell as of September 30, 2019 was approximately $2.9 million and was reclassified to assets held for sale in the Company’s consolidated balance sheet. The assets were measured at the carrying value as adjusted for depreciation, which was lower than the fair value at the date reclassified. During the six months ended March 31, 2020, the Company classified as held-for-sale another real estate property. The aggregate estimated fair value of the property less cost to sell was $1.9 million. As of March 31, 2020, the Company has a total of three real estate properties held for sale with a total value of $4.8 million. The Company expects the properties held for sale, which are primarily comprised of land and buildings, to be sold within 12 months through property listings by our real estate brokers. Liabilities associated with held-for-sale assets amounting to $1.2 million and $0 as of March 31, 2020 and September 30, 2019, respectively, are included in current portion of long-term debt in our unaudited consolidated balance sheets. The gain or loss on the sale of properties held for sale is included in other charges/gains, net in the unaudited condensed consolidated statements of operations. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 7. Long-term Debt In December 2019, the Company amended the $5.0 million short-term note payable related to the Scarlett’s acquisition in May 2017, which had a balance of $3.0 million as of the amendment date, extending the maturity date to October 1, 2022. The amendment did not have an impact in the Company’s results of operations and cash flows. In February 2020, in relation to a $4.0 million 12% note payable earlier refinanced on August 15, 2018, the Company restructured the note with a private lender by executing a 12% 10-year note payable $57,388 monthly, including interest, starting March 2020. The restructured note eliminates a scheduled balloon principal payment of $4.0 million in August 2021. The refinancing did not have an impact in the Company’s results of operations and cash flows. In February 2020, in relation to a $9.9 million 12% note payable that was partially paid during the December 2017 Refinancing Loan, the Company restructured the note, which had a balance of $5.2 million as of the amendment date, by executing a 12% 10-year note payable $74,515 monthly, including interest, starting March 2020. The restructured note eliminates a scheduled balloon principal payment of $3.8 million in October 2021. As a result of the refinancing, the Company wrote off approximately $25,400 in unamortized debt issuance cost as interest expense in the unaudited condensed consolidated statement of operations for the quarter ended March 31, 2020. Included in the balance of long-term debt as of March 31, 2020 and September 30, 2019 is a $500,000 note borrowed from a related party (see Note 13) and three notes totaling $600,000 borrowed from two non-officer employees and a family member of a non-officer employee in which the terms of the notes are the same as the rest of the lender groups. Future maturities of long-term debt as of March 31, 2020 are as follows: $14.8 million, $11.7 million, $11.6 million, $8.1 million, $8.4 million and $87.2 million for the twelve months ending March 31, 2021, 2022, 2023, 2024, 2025, and thereafter, respectively. Of the maturity schedule mentioned above, $6.1 million, $2.8 million, $3.8 million, $0, $0 and $56.0 million, respectively, relate to scheduled balloon payments. On May 1, 2020, the Company negotiated extensions to November 1, 2020 on $1,740,000 of $2,040,000 of notes to individuals that were due on May 1, 2020. The Company paid $300,000 to certain lenders and received $200,000 in new debt from existing lenders and their affiliates. The aggregate amount of debt due on these notes on November 1, 2020 is now $1,940,000. |
Equity
Equity | 6 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Equity | 8. Equity During the three and six months ended March 31, 2020, the Company purchased and retired 132,719 and 465,390 common shares, respectively, at a cost of approximately $2.0 and $8.5 million, respectively. The Company paid $0.04 and $0.07 per share cash dividends during the three and six months ended March 31, 2020 totaling approximately $368,000 and $647,000, respectively. During the three and six months ended March 31, 2019, the Company purchased and retired 70,700 and 84,811 common shares, respectively, at a cost of approximately $1.6 million and $2.0 million, respectively. The Company paid a $0.03 per share cash dividend per quarter totaling approximately $291,000 and $582,000 for the three and six months ended March 31, 2019, respectively. On February 6, 2020, the Company’s Board of Directors authorized an additional $10.0 million to repurchase the Company’s common stock. As of May 8, 2020, the Company has $11.8 million remaining to purchase additional shares under its share repurchase program. |
Income Taxes
Income Taxes | 6 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes Income taxes were $1.4 million benefit and $175,000 expense during the three and six months ended March 31, 2020, respectively, compared to income tax expense of $1.9 million and $3.7 million during the three and six months ended March 31, 2019, respectively. The effective income tax rate was a 28.9% benefit and a 7.6% expense during the three and six months ended March 31, 2020, respectively, compared to expense rates of 22.3% and 22.2% during the three and six months ended March 31, 2019, respectively. Our effective tax rate for both years is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit. The Company or one of its subsidiaries file income tax returns for U.S. federal jurisdiction and various states. Fiscal years ended September 30, 2016 and thereafter remain open to tax examination. The Company’s federal income tax returns for the years ended September 30, 2015, 2014 and 2013 have been examined by the Internal Revenue Service with no changes. Tax years 2014 through 2017 are now under examination for payroll taxes. The Company is also being examined for state income taxes, the outcome of which may occur within the next twelve months. The Company accounts for uncertain tax positions pursuant to ASC Topic 740, Income Taxes On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act") into law. As a result of this, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration. The CARES Act includes, among other items, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The Company is currently evaluating the impact of the provisions of the CARES Act. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. The loan may be forgiven if the funds are used for payroll and other qualified expenses. The Company has submitted its application for a PPP loan and on May 8, 2020 has received approval and funding for its restaurants, shared service entity and lounge. Ten of our restaurant subsidiaries received amounts ranging from $271,000 to $579,000 for an aggregate amount of $4.2 million; our shared-services subsidiary received $1.1 million; and one of our lounges received $124,000. None of our adult nightclub and other non-core business subsidiaries received funding under the PPP. There is no certainty that the loan will qualify for forgiveness. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Legal Matters Texas Patron Tax In 2015, the Company reached a settlement with the State of Texas over the payment of the state’s Patron Tax on adult club customers. To resolve the issue of taxes owed, the Company agreed to pay $10.0 million in equal monthly installments of $119,000, without interest, over 84 months, beginning in June 2015, for all but two non-settled locations. The Company agreed to remit the Patron Tax on a monthly basis, based on the current rate of $5 per customer. For accounting purposes, the Company has discounted the $10.0 million at an imputed interest rate of 9.6%, establishing a net present value for the settlement of $7.2 million. As a consequence, the Company recorded an $8.2 million pre-tax gain for the third quarter ended June 30, 2015, representing the difference between the $7.2 million and the amount previously accrued for the tax. In March 2017, the Company settled with the State of Texas for one of the two remaining unsettled Patron Tax locations. To resolve the issue of taxes owed, the Company agreed to pay a total of $687,815 with $195,815 paid at the time the settlement agreement was executed followed by 60 equal monthly installments of $8,200 without interest. The aggregate balance of Patron Tax settlement liability, which is included in long-term debt in the consolidated balance sheets, amounted to $2.8 million and $3.4 million as of March 31, 2020 and September 30, 2019, respectively. A declaratory judgment action was brought by five operating subsidiaries of the Company to challenge a Texas Comptroller administrative rule related to the $5 per customer Patron Tax Fee assessed against Sexually Oriented Businesses. An administrative rule attempted to expand the fee to cover venues featuring dancers using latex cover as well as traditional nude entertainment. The administrative rule was challenged on both constitutional and statutory grounds. On November 19, 2018, the Court issued an order that a key aspect of the administrative rule is invalid based on it exceeding the scope of the Comptroller’s authority. On March 6, 2020, the U.S. District Court for the Western District of Texas, Austin Division, ruled that the Texas Patron Tax is unconstitutional as it has been applied and enforced by the Comptroller. The State of Texas has filed a Notice of Appeal. We will continue to vigorously defend the matter through the appeals process. 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. The Company and its subsidiaries changed insurance companies on that date. On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (“Rehabilitation Order”), which declared IIC impaired, insolvent and in an unsafe condition and placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (“Commissioner”) in her capacity as receiver (“Receiver”). The Rehabilitation Order empowered the Commissioner to rehabilitate IIC through a variety of means, including gathering assets and marshaling those assets as necessary. Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014. On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC. The Liquidation Order further ordered that all claims against IIC must have been filed with the Receiver before the close of business on January 16, 2015 and that all pending lawsuits involving IIC as the insurer were further stayed or abated until October 7, 2014. As a result, the Company and its subsidiaries no longer have insurance coverage under the liability policy with IIC. The Company has retained counsel to defend against and evaluate these claims and lawsuits. We are funding 100% of the costs of litigation and will seek reimbursement from the bankruptcy receiver. The Company filed the appropriate claims against IIC with the Receiver before the January 16, 2015 deadline and has provided updates as requested; however, there are no assurances of any recovery from these claims. It is unknown at this time what effect this uncertainty will have on the Company. As previously stated, since October 25, 2013, the Company has obtained general liability coverage from other insurers, which have covered and/or will cover any claims arising from actions after that date. As of March 31, 2020, we have 2 unresolved claims out of the original 71 claims. Shareholder Class and Derivative Actions In May and June 2019, three putative securities class action complaints were 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 various alleged transactions by the Company and management. The complaints seek unspecified damages, costs, and attorneys’ fees. These lawsuits are Hoffman v. RCI Hospitality Holdings, Inc., et al. (filed May 21, 2019, naming the Company and Eric Langan); Gu v. RCI Hospitality Holdings, Inc., et al. (filed May 28, 2019, naming the Company, Eric Langan, and Phil Marshall); and Grossman v. RCI Hospitality Holdings, Inc., et al. (filed June 28, 2019, naming the Company, Eric Langan, and Phil Marshall). The plaintiffs in all three cases moved to consolidate the purported class actions. On January 10, 2020 an order consolidating the Hoffman, Grossman, and Gu cases was entered by the Court. The consolidated case is styled In re RCI Hospitality Holdings, Inc., No. 4:19-cv-01841. On February 24, 2020, the plaintiffs in the consolidated case filed an Amended Class Action Complaint, continuing to allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and 10b-5 promulgated thereunder. In addition to naming the Company, Eric Langan, and Phil Marshall, the amended complaint also adds director Nour-Dean Anakar and former director Steven Jenkins as defendants. On April 24, 2020, the Company and the individual defendants moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted. The plaintiff’s response to the motion is currently due June 23, 2020. The Company and the individual defendants will have the opportunity to file a reply in support of their motion by July 23, 2020. The Company intends to continue to vigorously defend against this action. This action is in its preliminary phase, and a potential loss cannot yet be estimated. On August 16, 2019, a shareholder derivative action was filed in the Southern District of Texas, Houston Division against officers and directors, Eric S. Langan, Phillip Marshall, Nour-Dean Anakar, Yura Barabash, Luke Lirot, Travis Reese, former director Steven Jenkins, 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 regarding the Company’s business, operations, prospects, and legal compliance and engaged in or caused the Company to engage in, inter alia, related party transactions, questionable uses of corporate assets, and failure to maintain internal controls. The action asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of Sections 14(a), 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees. The case, Cecere v. Langan, et al. SEC Matter and Internal Review In mid- and late 2018, a series of negative articles about the Company was anonymously published in forums associated with the short-selling community. Subsequently in 2019, the SEC initiated an informal inquiry. In connection with these events, a special committee of the Company’s audit committee engaged independent outside counsel to conduct an internal review. Management of the Company fully cooperated with the internal review conducted by the special committee and its outside counsel. The board of directors has implemented the recommendations resulting from the internal review. As of the date hereof, the internal review has been completed subject to any ongoing cooperation with regulatory authorities. Since the initiation of the informal inquiry by the SEC in early 2019, the Company and its management have fully cooperated and continue to fully cooperate with the SEC matter, which has now converted to a formal investigation and is ongoing. At this time, the Company is unable to predict the duration, scope, result or related costs associated with the investigation. The Company is also unable to predict what, if any, action may be taken as a result of the investigation. Any determination by the SEC that the Company’s activities were not in compliance with federal securities laws or regulations, however, could result in the imposition of fines, penalties, disgorgement, or equitable relief, which could have a material adverse effect on the Company. Other On March 26, 2016, an image infringement lawsuit was filed in federal court in the Southern District of New York against the Company and several of its subsidiaries. Plaintiffs allege that their images were misappropriated, intentionally altered and published without their consent by clubs affiliated with the Company. The causes of action asserted in Plaintiffs’ Complaint include alleged violations of the Federal Lanham Act, the New York Civil Rights Act, and other statutory and common law theories. The Company contends that there is insurance coverage under an applicable insurance policy. The insurer has raised several issues regarding coverage under the policy. At this time, this disagreement remains unresolved. The Company has denied all allegations, continues to vigorously defend against the lawsuit and continues to believe the matter is covered by insurance. The Company has been sued by a landlord in the 333rd Judicial District Court of Harris County, Texas for a Houston Bombshells which was under renovation in 2015. The plaintiff alleges RCI Hospitality Holdings, Inc.’s subsidiary, BMB Dining Services (Willowbrook), Inc., breached a lease agreement by constructing an outdoor patio, which allegedly interfered with the common areas of the shopping center, and by failing to provide Plaintiff with proposed plans before beginning construction. Plaintiff also asserts RCI Hospitality Holdings, Inc. is liable as guarantor of the lease. The lease was for a Bombshells restaurant to be opened in the Willowbrook Shopping Center in Houston, Texas. Both RCI Hospitality Holdings, Inc. and BMB Dining Services (Willowbrook), Inc. have denied liability and assert that Plaintiff has failed to mitigate its claimed damages. Further, BMB Dining Services (Willowbrook), Inc. asserts that Plaintiff affirmatively represented that the patio could be constructed under the lease and has filed counter claims and third-party claims against Plaintiff and Plaintiff’s manager asserting that they committed fraud and that the landlord breached the applicable agreements. The case was tried to a jury in late September 2018 and an adverse judgment was entered in January 2019 in the amount totaling $1.0 million, which includes damages, attorney fees and interest. The matter is being appealed. The appeal process required that a check be deposited in the registry of the court in the amount of $690,000, which was deposited in April 2019 and included in other current assets in both consolidated balance sheets as of March 31, 2020 and September 30, 2019. Management believes that the case has no merit and is vigorously defending itself in the appeal. On June 23, 2014, Mark H. Dupray and Ashlee Dupray filed a lawsuit against Pedro Antonio Panameno and our subsidiary JAI Dining Services (Phoenix) Inc. (“JAI Phoenix”) in the Superior Court of Arizona for Maricopa County. The suit alleged that Mr. Panameno injured Mr. Dupray in a traffic accident after being served alcohol at an establishment operated by JAI Phoenix. The suit alleged that JAI Phoenix was liable under theories of common law dram shop negligence and dram shop negligence per se. After a jury trial proceeded to a verdict in favor of the plaintiffs against both defendants, in April 2017 the Court entered a judgment under which JAI Phoenix’s share of compensatory damages is approximately $1.4 million and its share of punitive damages is $4 million. In May 2017, JAI Phoenix filed a motion for judgment as a matter of law or, in the alternative, motion for new trial. The Court denied this motion in August 2017. In September 2017, JAI Phoenix filed a notice of appeal. In June 2018, the matter was heard by the Arizona Court of Appeals. On November 15, 2018 the Court of Appeals vacated the jury’s verdict and remanded the case to the trial court. It is anticipated that a new trial will occur at some point in the future. JAI Phoenix will continue to vigorously defend itself. As set forth in the risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019, 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. General 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. We assess the probability that we could incur liability in connection with certain of these lawsuits. Our assessments are made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its subsidiaries. In certain cases that are in the early stages and in light of the uncertainties surrounding them, we do not currently possess sufficient information to determine a range of reasonably possible liability. 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. Settlements of lawsuits for the three and six months ended March 31, 2020 total approximately $0 and $24,000, respectively, while for the three and six months ended March 31, 2019 total $84,000 and $144,000, respectively. As of March 31, 2020 and September 30, 2019, the Company has accrued $75,000 and $115,000 in accrued liabilities, respectively, related to settlement of lawsuits. |
Acquisition
Acquisition | 6 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisition | 11. Acquisition On November 5, 2019, we announced that our subsidiaries had signed definitive agreements to acquire the assets and related real estate of a well-established, top gentlemen’s club located in the Northeast Corridor for $15.0 million. The agreements terminated prior to closing. We provided the sellers notice of the termination in April 2020. |
Segment Information
Segment Information | 6 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 12. Segment Information The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such reportable 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 consolidated financial statements. Below is the financial information related to the Company’s segments (in thousands): For the Three Months For the Six Months Ended March 31, Ended March 31, 2020 2019 2020 2019 Revenues Nightclubs $ 31,367 $ 37,047 $ 69,226 $ 74,775 Bombshells 8,803 7,527 19,153 13,540 Other 256 252 441 534 $ 40,426 $ 44,826 $ 88,820 $ 88,849 Income (loss) from operations Nightclubs $ 2,314 $ 15,078 $ 16,090 $ 30,465 Bombshells 690 738 2,263 857 Other (178 ) (176 ) (385 ) (295 ) General corporate (5,301 ) (4,474 ) (10,757 ) (8,729 ) $ (2,475 ) $ 11,166 $ 7,211 $ 22,298 Depreciation and amortization Nightclubs $ 1,486 $ 1,467 $ 2,956 $ 2,974 Bombshells 456 339 873 631 Other 104 106 208 210 General corporate 211 288 424 438 $ 2,257 $ 2,200 $ 4,461 $ 4,253 Capital expenditures Nightclubs $ 526 $ 647 $ 2,858 $ 1,094 Bombshells 612 5,788 2,337 9,797 Other - 9 - 18 General corporate 127 163 128 2,993 $ 1,265 $ 6,607 $ 5,323 $ 13,902 March 31, 2020 September 30, 2019 Total assets Nightclubs $ 281,080 $ 274,071 Bombshells 48,271 44,144 Other 1,723 1,773 General corporate 30,822 33,649 $ 361,896 $ 353,637 General corporate expenses include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, depreciation and other corporate costs such as automobile and travel costs. 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. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company. Mr. Langan receives no compensation or other direct financial benefit for any of the guarantees. The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of March 31, 2020 and September 30, 2019 is $86.0 million and $86.8 million, respectively. Included in the $2.35 million borrowing on November 1, 2018 was a $500,000 note borrowed from a related party (Ed Anakar, an employee of the Company and brother of our director Nourdean Anakar). The terms of this related party note are the same as the rest of the lender group in the November 1, 2018 transaction. We used the services of Nottingham Creations (formerly Sherwood Forest Creations, LLC), a furniture fabrication company that manufactures tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Nottingham Creations (as was Sherwood Forest) is owned by a brother of Eric Langan. Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were $53,556 and $72,809 during the three and six months ended March 31, 2020, respectively, and $98,072 and $107,815 during the three and six months ended March 31, 2019, respectively. As of March 31, 2020 and September 30, 2019, we owed Nottingham Creations and Sherwood Forest $13,705 and $6,588, respectively, in unpaid billings. TW Mechanical LLC (“TW Mechanical”) provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2020 and 2019. A son-in-law of Eric Langan owns a noncontrolling interest in TW Mechanical. Amounts billed by TW Mechanical to the third-party general contractor were $18,758 and $30,585 for the three and six months ended March 31, 2020, respectively, and $359,500 and $435,800 for the three and six months ended March 31, 2019, respectively. Amounts billed directly to the Company were $24,416 and $26,241 for the three and six months ended March 31, 2020, respectively, and $206 and $206 for the three and six months ended March 31, 2019, respectively. As of March 31, 2020 and September 30, 2019, the Company owed TW Mechanical $20,401 and $0, respectively, in unpaid direct billings. |
Leases
Leases | 6 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | 14. Leases The Company leases certain facilities and equipment under operating leases. Under ASC 840, lease expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease, is recorded using the straight-line method over the initial lease term whereby an equal amount of lease expense is attributed to each period during the term of the lease, regardless of when actual payments are made. Generally, this results in lease expense in excess of cash payments during the early years of a lease and lease expense less than cash payments in the later years. The difference between lease expense recognized and actual lease payments is accumulated and included in other long-term liabilities in the consolidated balance sheets. Included in lease expense in our unaudited condensed consolidated statements of operations (see Note 5) were lease payments for a house that the Company’s CEO rented to the Company for corporate housing for its out-of-town Bombshells management and trainers, of which lease expense totaled $0 and $19,500 for the three and six months ended March 31, 2020, respectively, and $19,500 and $39,000 for the three and six months ended March 31, 2019. This lease terminated on December 31, 2019. Undiscounted future minimum annual lease obligations as of September 30, 2019 are as follows (in thousands): 2020 $ 3,237 2021 3,154 2022 3,057 2023 2,889 2024 2,850 Thereafter 21,038 Total future minimum lease obligations $ 36,225 Included in the future minimum lease obligations are billboard and outdoor sign leases. These leases were recorded as advertising and marketing expenses, and included in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. Under ASC 840, we recorded lease expense amounting to $957,000 and $2.0 million during the three and six months ended March 31, 2019. The Company adopted ASC 842 as of October 1, 2019. The Company’s adoption of ASC 842 included renewal or termination options for varying periods which we deemed reasonably certain to exercise. This determination is based on our consideration of certain economic, strategic and other factors that we evaluate at lease commencement date and reevaluate throughout the lease term. Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments. The variable portion of lease payments is not included in our right-of-use assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations. We have elected to apply the short-term lease exception for all underlying asset classes, which mainly includes equipment leases. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases. Our adoption of ASC 842 did not have a material impact on our lease revenue accounting as a lessor. See Note 4. Future maturities of lease liabilities as of March 31, 2020 are as follows (in thousands): Principal Payments Interest Total Payments April 2020 – March 2021 $ 1,552 $ 1,641 $ 3,193 April 2021 – March 2022 1,692 1,543 3,235 April 2022 – March 2023 1,728 1,438 3,166 April 2023 – March 2024 1,706 1,336 3,042 April 2024 – March 2025 1,860 1,229 3,089 Thereafter 19,289 5,992 25,281 $ 27,827 $ 13,179 $ 41,006 Total lease expense, under ASC 842, was included in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations, except for sublease income which was included in other revenue, for the three and six months ended March 31, 2020 as follows (in thousands): Three Months Ended March 31, 2020 Six Months Ended March 31, 2020 Operating lease expense – fixed payments $ 838 $ 1,680 Variable lease expense 65 130 Short-term equipment and other lease expense (includes $145 and $291 recorded in advertising and marketing, and $100 and $225 recorded in repairs and maintenance for the three and six months ended March 31, 2020, respectively; see Note 5) 365 759 Sublease income (4 ) (6 ) Total lease expense, net $ 1,264 $ 2,563 Other information: Operating cash outflows from operating leases $ 1,207 $ 2,462 Weighted average remaining lease term 13 years Weighted average discount rate 6.1 % |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Segment Revenues | Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 12), are shown below (in thousands): Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 11,860 $ 5,059 $ - $ 16,919 $ 14,148 $ 4,338 $ - $ 18,486 Sales of food and merchandise 2,799 3,680 - 6,479 3,293 3,146 - 6,439 Service revenues 14,290 58 - 14,348 16,943 36 - 16,979 Other revenues 2,418 6 256 2,680 2,663 7 252 2,922 $ 31,367 $ 8,803 $ 256 $ 40,426 $ 37,047 $ 7,527 $ 252 $ 44,826 Recognized at a point in time $ 30,977 $ 8,803 $ 252 $ 40,032 $ 36,582 $ 7,527 $ 238 $ 44,347 Recognized over time 390 * - 4 394 465 * - 14 479 $ 31,367 $ 8,803 $ 256 $ 40,426 $ 37,047 $ 7,527 $ 252 $ 44,826 Six Months Ended March 31, 2020 Six Months Ended March 31, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 26,544 $ 11,118 $ - $ 37,662 $ 28,950 $ 7,846 $ - $ 36,796 Sales of food and merchandise 6,063 7,863 - 13,926 6,500 5,629 - 12,129 Service revenues 31,384 157 - 31,541 34,256 54 - 34,310 Other revenues 5,235 15 441 5,691 5,069 11 534 5,614 $ 69,226 $ 19,153 $ 441 $ 88,820 $ 74,775 $ 13,540 $ 534 $ 88,849 Recognized at a point in time $ 68,411 $ 19,153 $ 430 $ 87,994 $ 73,974 $ 13,540 $ 505 $ 88,019 Recognized over time 815 * - 11 826 801 * - 29 830 $ 69,226 $ 19,153 $ 441 $ 88,820 $ 74,775 $ 13,540 $ 534 $ 88,849 * Lease revenue (included in Other Revenues) as covered by ASC Topic 842 in the current year (and ASC Topic 840 in the prior year). All other revenues are covered by ASC Topic 606. |
Schedule of Reconciliation of Contract Liabilities with Customers | A reconciliation of contract liabilities with customers is presented below (in thousands): Balance at September 30, 2019 Consideration Received Recognized in Revenue Balance at March 31, 2020 Ad revenue $ 76 $ 355 $ (303 ) $ 128 Expo revenue - 351 - 351 Other 7 12 (17 ) 2 $ 83 $ 718 $ (320 ) $ 481 |
Selected Account Information (T
Selected Account Information (Tables) | 6 Months Ended |
Mar. 31, 2020 | |
Selected Account Information | |
Schedule of Accrued Liabilities | The components of accrued liabilities are as follows (in thousands): March 31, 2020 September 30, 2019 Insurance $ 1,700 $ 4,937 Sales and liquor taxes 2,460 3,086 Payroll and related costs 1,372 2,892 Property taxes 829 1,675 Patron tax 480 595 Unearned revenues 481 83 Lawsuit settlement 75 115 Other 1,274 1,261 $ 8,671 $ 14,644 |
Schedule of Selling, General and Administrative Expenses | The components of selling, general and administrative expenses are as follows (in thousands): For the Three Months For the Six Months Ended March 31, Ended March 31, 2020 2019 2020 2019 Taxes and permits $ 2,240 $ 2,370 $ 4,914 $ 4,551 Advertising and marketing 1,907 2,070 4,317 4,218 Supplies and services 1,390 1,465 2,924 2,921 Insurance 1,473 1,402 2,956 2,755 Accounting and professional fees 1,311 1,278 2,509 1,928 Lease 1,023 957 2,053 1,976 Charge card fees 845 886 1,891 1,819 Legal 1,072 773 2,268 1,831 Utilities 798 762 1,693 1,506 Security 749 756 1,597 1,465 Repairs and maintenance 652 721 1,449 1,308 Other 990 901 2,410 2,090 $ 14,450 $ 14,341 $ 30,981 $ 28,368 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Below is the financial information related to the Company’s segments (in thousands): For the Three Months For the Six Months Ended March 31, Ended March 31, 2020 2019 2020 2019 Revenues Nightclubs $ 31,367 $ 37,047 $ 69,226 $ 74,775 Bombshells 8,803 7,527 19,153 13,540 Other 256 252 441 534 $ 40,426 $ 44,826 $ 88,820 $ 88,849 Income (loss) from operations Nightclubs $ 2,314 $ 15,078 $ 16,090 $ 30,465 Bombshells 690 738 2,263 857 Other (178 ) (176 ) (385 ) (295 ) General corporate (5,301 ) (4,474 ) (10,757 ) (8,729 ) $ (2,475 ) $ 11,166 $ 7,211 $ 22,298 Depreciation and amortization Nightclubs $ 1,486 $ 1,467 $ 2,956 $ 2,974 Bombshells 456 339 873 631 Other 104 106 208 210 General corporate 211 288 424 438 $ 2,257 $ 2,200 $ 4,461 $ 4,253 Capital expenditures Nightclubs $ 526 $ 647 $ 2,858 $ 1,094 Bombshells 612 5,788 2,337 9,797 Other - 9 - 18 General corporate 127 163 128 2,993 $ 1,265 $ 6,607 $ 5,323 $ 13,902 March 31, 2020 September 30, 2019 Total assets Nightclubs $ 281,080 $ 274,071 Bombshells 48,271 44,144 Other 1,723 1,773 General corporate 30,822 33,649 $ 361,896 $ 353,637 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Undiscounted future minimum annual lease obligations as of September 30, 2019 are as follows (in thousands): 2020 $ 3,237 2021 3,154 2022 3,057 2023 2,889 2024 2,850 Thereafter 21,038 Total future minimum lease obligations $ 36,225 |
Schedule of Future Maturities of Lease Liabilities | Future maturities of lease liabilities as of March 31, 2020 are as follows (in thousands): Principal Payments Interest Total Payments April 2020 – March 2021 $ 1,552 $ 1,641 $ 3,193 April 2021 – March 2022 1,692 1,543 3,235 April 2022 – March 2023 1,728 1,438 3,166 April 2023 – March 2024 1,706 1,336 3,042 April 2024 – March 2025 1,860 1,229 3,089 Thereafter 19,289 5,992 25,281 $ 27,827 $ 13,179 $ 41,006 |
Schedule of Lease Expense | Total lease expense, under ASC 842, was included in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations, except for sublease income which was included in other revenue, for the three and six months ended March 31, 2020 as follows (in thousands): Three Months Ended March 31, 2020 Six Months Ended March 31, 2020 Operating lease expense – fixed payments $ 838 $ 1,680 Variable lease expense 65 130 Short-term equipment and other lease expense (includes $145 and $291 recorded in advertising and marketing, and $100 and $225 recorded in repairs and maintenance for the three and six months ended March 31, 2020, respectively; see Note 5) 365 759 Sublease income (4 ) (6 ) Total lease expense, net $ 1,264 $ 2,563 Other information: Operating cash outflows from operating leases $ 1,207 $ 2,462 Weighted average remaining lease term 13 years Weighted average discount rate 6.1 % |
Recent Accounting Standards a_2
Recent Accounting Standards and Pronouncements (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2020 | Oct. 02, 2019 | Sep. 30, 2019 |
Operating lease right-of-use assets | $ 26,485 | ||
ASU 2016-02 [Member] | |||
Operating lease right-of-use assets | $ 27,300 | ||
Reclassification of deferred rent liability | 1,200 | ||
Operating lease Liability | $ 28,600 |
Liquidity and Impact of COVID_2
Liquidity and Impact of COVID-19 Pandemic (Details Narrative) - USD ($) $ in Thousands | May 08, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Impairment of assets | $ 8,210 | ||
Impairment of goodwill | 6,500 | ||
Impairment of SOB licenses | 1,400 | ||
Impairment of property and equipment | $ 302 | ||
CARES Act [Member] | Our Shared-Services [Member] | |||
Subsidiaries received | $ 1,100 | ||
CARES Act [Member] | Ten of Our Restaurant [Member] | |||
Proceeds from loan | 4,200 | ||
CARES Act [Member] | Ten of Our Restaurant [Member] | Minimum [Member] | |||
Subsidiaries received | 271 | ||
CARES Act [Member] | Ten of Our Restaurant [Member] | Maximum [Member] | |||
Subsidiaries received | 579 | ||
CARES Act [Member] | One of Our Lounges [Member] | |||
Subsidiaries received | $ 124 | ||
Texas [Member] | |||
Percentage for occupancy requirement | 25.00% |
Revenues - Schedule of Disaggre
Revenues - Schedule of Disaggregation of Segment Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | ||
Revenues | $ 40,426 | $ 44,826 | $ 88,820 | $ 88,849 | |
Recognized at a Point in Time [Member] | |||||
Revenues | 40,032 | 44,347 | 87,994 | 88,019 | |
Recognized Over Time [Member] | |||||
Revenues | 394 | 479 | 826 | 830 | |
Sales of Alcoholic Beverages [Member] | |||||
Revenues | 16,919 | 18,486 | 37,662 | 36,796 | |
Sales of Food and Merchandise [Member] | |||||
Revenues | 6,479 | 6,439 | 13,926 | 12,129 | |
Service Revenues [Member] | |||||
Revenues | 14,348 | 16,979 | 31,541 | 34,310 | |
Other Revenues [Member] | |||||
Revenues | 2,680 | 2,922 | 5,691 | 5,614 | |
Nightclubs [Member] | |||||
Revenues | 31,367 | 37,047 | 69,226 | 74,775 | |
Nightclubs [Member] | Recognized at a Point in Time [Member] | |||||
Revenues | 30,977 | 36,582 | 68,411 | 73,974 | |
Nightclubs [Member] | Recognized Over Time [Member] | |||||
Revenues | [1] | 390 | 465 | 815 | 801 |
Nightclubs [Member] | Sales of Alcoholic Beverages [Member] | |||||
Revenues | 11,860 | 14,148 | 26,544 | 28,950 | |
Nightclubs [Member] | Sales of Food and Merchandise [Member] | |||||
Revenues | 2,799 | 3,293 | 6,063 | 6,500 | |
Nightclubs [Member] | Service Revenues [Member] | |||||
Revenues | 14,290 | 16,943 | 31,384 | 34,256 | |
Nightclubs [Member] | Other Revenues [Member] | |||||
Revenues | 2,418 | 2,663 | 5,235 | 5,069 | |
Bombshells [Member] | |||||
Revenues | 8,803 | 7,527 | 19,153 | 13,540 | |
Bombshells [Member] | Recognized at a Point in Time [Member] | |||||
Revenues | 8,803 | 7,527 | 19,153 | 13,540 | |
Bombshells [Member] | Recognized Over Time [Member] | |||||
Revenues | |||||
Bombshells [Member] | Sales of Alcoholic Beverages [Member] | |||||
Revenues | 5,059 | 4,338 | 11,118 | 7,846 | |
Bombshells [Member] | Sales of Food and Merchandise [Member] | |||||
Revenues | 3,680 | 3,146 | 7,863 | 5,629 | |
Bombshells [Member] | Service Revenues [Member] | |||||
Revenues | 58 | 36 | 157 | 54 | |
Bombshells [Member] | Other Revenues [Member] | |||||
Revenues | 6 | 7 | 15 | 11 | |
Other [Member] | |||||
Revenues | 256 | 252 | 441 | 534 | |
Other [Member] | Recognized at a Point in Time [Member] | |||||
Revenues | 252 | 238 | 430 | 505 | |
Other [Member] | Recognized Over Time [Member] | |||||
Revenues | 4 | 14 | 11 | 29 | |
Other [Member] | Sales of Alcoholic Beverages [Member] | |||||
Revenues | |||||
Other [Member] | Sales of Food and Merchandise [Member] | |||||
Revenues | |||||
Other [Member] | Service Revenues [Member] | |||||
Revenues | |||||
Other [Member] | Other Revenues [Member] | |||||
Revenues | $ 256 | $ 252 | $ 441 | $ 534 | |
[1] | Lease revenue (included in Other Revenues) as covered by ASC Topic 842 in the current year (and ASC Topic 840 in the prior year). All other revenues are covered by ASC Topic 606. |
Revenues - Schedule of Reconcil
Revenues - Schedule of Reconciliation of Contract Liabilities with Customers (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2020USD ($) | |
Contract liabilities with customers beginning | $ 83 |
Consideration Received | 718 |
Recognized in Revenue | (320) |
Contract liabilities with customers ending | 481 |
Ad Revenue [Member] | |
Contract liabilities with customers beginning | 76 |
Consideration Received | 355 |
Recognized in Revenue | (303) |
Contract liabilities with customers ending | 128 |
Expo Revenue [Member] | |
Contract liabilities with customers beginning | |
Consideration Received | 351 |
Recognized in Revenue | |
Contract liabilities with customers ending | 351 |
Other [Member] | |
Contract liabilities with customers beginning | 7 |
Consideration Received | 12 |
Recognized in Revenue | (17) |
Contract liabilities with customers ending | $ 2 |
Selected Account Information -
Selected Account Information - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Sep. 30, 2019 |
Selected Account Information | ||
Insurance | $ 1,700 | $ 4,937 |
Sales and liquor taxes | 2,460 | 3,086 |
Payroll and related costs | 1,372 | 2,892 |
Property taxes | 829 | 1,675 |
Patron tax | 480 | 595 |
Unearned revenues | 481 | 83 |
Lawsuit settlement | 75 | 115 |
Other | 1,274 | 1,261 |
Accrued liabilities | $ 8,671 | $ 14,644 |
Selected Account Information _2
Selected Account Information - Schedule of Selling, General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Selected Account Information | ||||
Taxes and permits | $ 2,240 | $ 2,370 | $ 4,914 | $ 4,551 |
Advertising and marketing | 1,907 | 2,070 | 4,317 | 4,218 |
Supplies and services | 1,390 | 1,465 | 2,924 | 2,921 |
Insurance | 1,473 | 1,402 | 2,956 | 2,755 |
Accounting and professional fees | 1,311 | 1,278 | 2,509 | 1,928 |
Lease | 1,023 | 957 | 2,053 | 1,976 |
Charge card fees | 845 | 886 | 1,891 | 1,819 |
Legal | 1,072 | 773 | 2,268 | 1,831 |
Utilities | 798 | 762 | 1,693 | 1,506 |
Security | 749 | 756 | 1,597 | 1,465 |
Repairs and maintenance | 652 | 721 | 1,449 | 1,308 |
Other | 990 | 901 | 2,410 | 2,090 |
Selling, general and administrative expenses | $ 14,450 | $ 14,341 | $ 30,981 | $ 28,368 |
Assets Held for Sale (Details N
Assets Held for Sale (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Sep. 30, 2019 | |
Assets held for sale | $ 4,825 | $ 2,866 |
Liabilities associated with held-for-sale assets | 1,200 | 0 |
Two Real Estate Properties For Sale [Member] | ||
Estimated fair value of properties lease cost | $ 2,900 | |
Real Estate Properties For Sale [Member] | ||
Estimated fair value of properties lease cost | 1,900 | |
Three Real Estate Properties For Sale [Member] | ||
Assets held for sale | $ 4,800 |
Long-Term Debt (Details Narrati
Long-Term Debt (Details Narrative) - USD ($) | May 01, 2020 | Feb. 29, 2020 | Dec. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Nov. 01, 2020 | Sep. 30, 2019 | Nov. 01, 2018 |
Short-term note payable | $ 3,000,000 | ||||||||
Debt instrument, maturity date | Oct. 1, 2022 | ||||||||
Write-off unamortized debt issuance cost | $ 25,400 | ||||||||
Borrowed from a related party | 500,000 | $ 500,000 | $ 500,000 | $ 2,350,000 | |||||
Repayment of long term debt | 4,097,000 | $ 13,287,000 | |||||||
Proceeds from long term debt | 880,000 | $ 10,296,000 | |||||||
Future maturities of long-term debt, March 31, 2021 | 14,800,000 | 14,800,000 | |||||||
Future maturities of long-term debt, March 31, 2022 | 11,700,000 | 11,700,000 | |||||||
Future maturities of long-term debt, March 31, 2023 | 11,600,000 | 11,600,000 | |||||||
Future maturities of long-term debt, March 31, 2024 | 8,100,000 | 8,100,000 | |||||||
Future maturities of long-term debt, March 31, 2025 | 8,400,000 | 8,400,000 | |||||||
Future maturities of long-term debt, March 31, 2025 and thereafter | 87,200,000 | 87,200,000 | |||||||
March 31, 2021 [Member] | |||||||||
Debt instrument, balloon principal payment | 6,100,000 | 6,100,000 | |||||||
March 31, 2022 [Member] | |||||||||
Debt instrument, balloon principal payment | 2,800,000 | 2,800,000 | |||||||
March 31, 2023 [Member] | |||||||||
Debt instrument, balloon principal payment | 3,800,000 | 3,800,000 | |||||||
March 31, 2024 [Member] | |||||||||
Debt instrument, balloon principal payment | 0 | 0 | |||||||
March 31, 2025 [Member] | |||||||||
Debt instrument, balloon principal payment | 0 | 0 | |||||||
March 31, 2025 and Thereafter [Member] | |||||||||
Debt instrument, balloon principal payment | 56,000,000 | 56,000,000 | |||||||
Subsequent Event [Member] | |||||||||
Short-term note payable | $ 2,040,000 | ||||||||
Debt instrument, maturity date | May 1, 2020 | ||||||||
Scenario Forecast [Member] | |||||||||
Short-term note payable | $ 1,740,000 | ||||||||
December 2017 Refinancing Loan [Member] | |||||||||
Short-term note payable | $ 9,900,000 | 5,200,000 | 5,200,000 | ||||||
Debt instrument, maturity date | Oct. 31, 2021 | ||||||||
Debt instrument, interest rate | 12.00% | ||||||||
Debt instrument, terms | 10 years | ||||||||
Debt instrument monthly payment | $ 74,515 | ||||||||
October 2021 [Member] | December 2017 Refinancing Loan [Member] | |||||||||
Debt instrument, balloon principal payment | 3,800,000 | ||||||||
Private Lender [Member] | |||||||||
Short-term note payable | $ 4,000,000 | ||||||||
Debt instrument, maturity date | Aug. 31, 2021 | ||||||||
Debt instrument, interest rate | 12.00% | ||||||||
Debt instrument, terms | 10 years | ||||||||
Debt instrument monthly payment | $ 57,388 | ||||||||
Private Lender [Member] | August 2021 [Member] | |||||||||
Debt instrument, balloon principal payment | $ 4,000,000 | ||||||||
Two Non-officer Employees and Family Member [Member] | Three Notes [Member] | |||||||||
Borrowed from a related party | $ 600,000 | $ 600,000 | |||||||
Lender [Member] | New Debt [Member] | Subsequent Event [Member] | |||||||||
Debt instrument, maturity date | Nov. 1, 2020 | ||||||||
Repayment of long term debt | $ 300,000 | ||||||||
Proceeds from long term debt | $ 200,000 | ||||||||
Lender [Member] | New Debt [Member] | Scenario Forecast [Member] | |||||||||
Due to related party | $ 1,940,000 | ||||||||
Scarlett's Acquisition [Member] | |||||||||
Short-term note payable | $ 5,000,000 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 25, 2020 | Feb. 06, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2020 | Mar. 31, 2019 |
Number of shares purchased and retired, shares | 132,719 | 70,700 | 465,390 | 84,811 | ||||
Number of shares purchased and retired, shares | $ 2,000 | $ 1,600 | $ 8,500 | $ 2,000 | ||||
Share price | $ 0.04 | $ 0.03 | $ 0.07 | $ 0.03 | ||||
Cash dividend | $ 368 | $ 279 | $ 291 | $ 291 | $ 279 | $ 582 | ||
Stock repurchased during the period | $ 11,800 | |||||||
Board of Directors [Member] | ||||||||
Stock repurchased during the period | $ 10,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | May 08, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2019 |
Income tax expenses | $ (1,418) | $ 1,930 | $ 175 | $ 3,741 | ||
Effective income tax rate | 28.90% | 22.30% | 7.60% | 22.20% | ||
Liability for uncertain tax positions | $ 0 | $ 0 | $ 0 | |||
CARES Act [Member] | Our Shared-Services [Member] | ||||||
Subsidiaries received | $ 1,100 | |||||
CARES Act [Member] | Ten of Our Restaurant [Member] | ||||||
Proceeds from loans | 4,200 | |||||
CARES Act [Member] | Ten of Our Restaurant [Member] | Minimum [Member] | ||||||
Subsidiaries received | 271 | |||||
CARES Act [Member] | Ten of Our Restaurant [Member] | Maximum [Member] | ||||||
Subsidiaries received | 579 | |||||
CARES Act [Member] | One of Our Lounges [Member] | ||||||
Subsidiaries received | $ 124 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Apr. 30, 2017USD ($) | Mar. 31, 2017USD ($)Integer | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($) | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($) | |
Commitments And Contingencies [Line Items] | |||||||||
Patron tax amount agreed to pay | $ 10,000,000 | ||||||||
Monthly installment of settlement loss | $ 119,000 | ||||||||
Patron tax on monthly basis per customer | $ / shares | $ 5 | $ 5 | $ 5 | $ 5 | |||||
Patron tax amount discounted value | $ 10,000,000 | ||||||||
Imputed interest rate | 9.60% | ||||||||
Patron tax settlement | $ 7,200,000 | ||||||||
Pre-tax gain | $ 8,200,000 | ||||||||
Accrued tax value | $ 7,200,000 | $ 7,200,000 | |||||||
Settlement liabilities | $ 2,800,000 | $ 2,800,000 | $ 3,400,000 | ||||||
Loss contingency, damages sought, value | 1,000,000 | ||||||||
Appeal process amount | 690,000 | ||||||||
Payments for legal settlements | 0 | $ 84,000 | $ 24,000 | $ 144,000 | |||||
Indemnity Insurance Corporation [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Percentage of costs of litigation | 100.00% | ||||||||
Compensatory Damages [Member] | JAI Phoenix [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Loss contingency, damages sought, value | $ 1,400,000 | ||||||||
Punitive Damages [Member] | JAI Phoenix [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Loss contingency, damages sought, value | $ 4,000,000 | ||||||||
Settlement Agreement [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Payment of settlement amount | $ 687,815 | ||||||||
Litigation settlement, expense | $ 195,815 | ||||||||
Number of monthly installment | Integer | 60 | ||||||||
Settlement amount net of interest | $ 8,200 | ||||||||
Settlement of Lawsuits [Member] | |||||||||
Commitments And Contingencies [Line Items] | |||||||||
Accrued liabilities | $ 75,000 | $ 75,000 | $ 115,000 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) $ in Thousands | Nov. 05, 2019USD ($) |
Definitive Agreements [Member] | |
Purchase of real estate | $ 15,000 |
Segment Information - Schedule
Segment Information - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2019 | |
Revenues | $ 40,426 | $ 44,826 | $ 88,820 | $ 88,849 | |
Income (loss) from operations | (2,475) | 11,166 | 7,211 | 22,298 | |
Depreciation and amortization | 2,257 | 2,200 | 4,461 | 4,253 | |
Capital expenditures | 1,265 | 6,607 | 5,323 | 13,902 | |
Total assets | 361,896 | 361,896 | $ 353,637 | ||
Nightclubs [Member] | |||||
Revenues | 31,367 | 37,047 | 69,226 | 74,775 | |
Income (loss) from operations | 2,314 | 15,078 | 16,090 | 30,465 | |
Depreciation and amortization | 1,486 | 1,467 | 2,956 | 2,974 | |
Capital expenditures | 526 | 647 | 2,858 | 1,094 | |
Total assets | 281,080 | 281,080 | 274,071 | ||
Bombshells [Member] | |||||
Revenues | 8,803 | 7,527 | 19,153 | 13,540 | |
Income (loss) from operations | 690 | 738 | 2,263 | 857 | |
Depreciation and amortization | 456 | 339 | 873 | 631 | |
Capital expenditures | 612 | 5,788 | 2,337 | 9,797 | |
Total assets | 48,271 | 48,271 | 44,144 | ||
Other [Member] | |||||
Revenues | 256 | 252 | 441 | 534 | |
Income (loss) from operations | (178) | (176) | (385) | (295) | |
Depreciation and amortization | 104 | 106 | 208 | 210 | |
Capital expenditures | 9 | 18 | |||
Total assets | 1,723 | 1,723 | 1,773 | ||
General Corporate [Member] | |||||
Income (loss) from operations | (5,301) | (4,474) | (10,757) | (8,729) | |
Depreciation and amortization | 211 | 288 | 424 | 438 | |
Capital expenditures | 127 | $ 163 | 128 | $ 2,993 | |
Total assets | $ 30,822 | $ 30,822 | $ 33,649 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2019 | Nov. 01, 2018 | |
Indebtedness, net of debt discount and issuance costs | $ 86,000,000 | $ 86,000,000 | $ 86,800,000 | |||
Borrowings from related party | 500,000 | 500,000 | 500,000 | $ 2,350,000 | ||
Ed Anakar [Member] | ||||||
Borrowings from related party | $ 500,000 | |||||
Sherwood Forest Creations, LLC [Member] | ||||||
Amounts billed to related party | 53,556 | $ 98,072 | 72,809 | $ 107,815 | ||
Due from related party | 13,705 | 13,705 | 6,588 | |||
TW Mechanical LLC [Member] | ||||||
Amounts billed to related party | 24,416 | 206 | 26,241 | 206 | ||
Due from related party | 20,401 | 20,401 | $ 0 | |||
Third-Party General Contractor [Member] | TW Mechanical LLC [Member] | ||||||
Amounts billed to related party | $ 18,758 | $ 359,500 | $ 30,585 | $ 435,800 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Lease expense | $ 1,264 | $ 957,000 | $ 2,563 | $ 2,000,000 |
CEO [Member] | ||||
Lease expense | $ 0 | $ 19,500 | $ 19,500 | $ 39,000 |
Lease expiration date | Dec. 31, 2019 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 3,237 |
2021 | 3,154 |
2022 | 3,057 |
2023 | 2,889 |
2024 | 2,850 |
Thereafter | 21,038 |
Future minimum annual lease obligations | $ 36,225 |
Leases - Schedule of Future Mat
Leases - Schedule of Future Maturities of Lease Liabilities (Details) | Mar. 31, 2020USD ($) |
April 2020 - March 2021 | $ 3,193 |
April 2021 - March 2022 | 3,235 |
April 2022 - March 2023 | 3,166 |
April 2023 - March 2024 | 3,042 |
April 2024 - March 2025 | 3,089 |
Thereafter | 25,281 |
Future maturities of lease liabilities | 41,006 |
Principal Payments [Member] | |
April 2020 - March 2021 | 1,552 |
April 2021 - March 2022 | 1,692 |
April 2022 - March 2023 | 1,728 |
April 2023 - March 2024 | 1,706 |
April 2024 - March 2025 | 1,860 |
Thereafter | 19,289 |
Future maturities of lease liabilities | 27,827 |
Interest Payments [Member] | |
April 2020 - March 2021 | 1,641 |
April 2021 - March 2022 | 1,543 |
April 2022 - March 2023 | 1,438 |
April 2023 - March 2024 | 1,336 |
April 2024 - March 2025 | 1,229 |
Thereafter | 5,992 |
Future maturities of lease liabilities | $ 13,179 |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||||
Operating lease expense - fixed payments | $ 838 | $ 1,680 | ||
Variable lease expense | 65 | 130 | ||
Short-term equipment and other lease expense (includes $146 recorded in advertising and marketing, and $125 recorded in repairs and maintenance; see Note 4) | 365 | 759 | ||
Sublease income | (4) | (6) | ||
Total lease expense, net | 1,264 | $ 957,000 | 2,563 | $ 2,000,000 |
Operating cash outflows from operating leases | $ 1,207 | $ 2,462 | ||
Weighted average remaining lease term | 13 years | 13 years | ||
Weighted average discount rate | 6.10% | 6.10% |
Leases - Schedule of Lease Ex_2
Leases - Schedule of Lease Expense (Details) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Advertising and marketing | $ 1,907 | $ 2,070 | $ 4,317 | $ 4,218 |
Repairs and maintenance | 652 | $ 721 | 1,449 | $ 1,308 |
Equipment [Member] | ||||
Advertising and marketing | 145 | 291 | ||
Repairs and maintenance | $ 100 | $ 225 |