Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2021 | Feb. 07, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --09-30 | |
Entity File Number | 001-13992 | |
Entity Registrant Name | RCI HOSPITALITY HOLDINGS, INC. | |
Entity Central Index Key | 0000935419 | |
Entity Tax Identification Number | 76-0458229 | |
Entity Incorporation, State or Country Code | TX | |
Entity Address, Address Line One | 10737 Cutten Road | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77066 | |
City Area Code | (281) | |
Local Phone Number | 397-6730 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | RICK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,499,910 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Current assets | ||
Cash and cash equivalents | $ 17,954 | $ 35,686 |
Accounts receivable, net | 6,012 | 7,570 |
Current portion of notes receivable | 225 | 220 |
Inventories | 3,530 | 2,659 |
Prepaid expenses and other current assets | 8,245 | 1,928 |
Assets held for sale | 3,113 | 4,887 |
Total current assets | 39,079 | 52,950 |
Property and equipment, net | 203,878 | 175,952 |
Operating lease right-of-use assets, net | 35,845 | 24,308 |
Notes receivable, net of current portion | 5,512 | 2,839 |
Goodwill | 54,484 | 39,379 |
Intangibles, net | 125,314 | 67,824 |
Other assets | 1,566 | 1,367 |
Total assets | 465,678 | 364,619 |
Current liabilities | ||
Accounts payable | 5,807 | 4,408 |
Accrued liabilities | 18,413 | 10,403 |
Current portion of debt obligations, net | 9,003 | 6,434 |
Current portion of operating lease liabilities | 2,288 | 1,780 |
Total current liabilities | 35,511 | 23,025 |
Deferred tax liability, net | 22,040 | 19,137 |
Debt, net of current portion and debt discount and issuance costs | 152,847 | 118,734 |
Operating lease liabilities, net of current portion | 35,154 | 24,150 |
Other long-term liabilities | 357 | 350 |
Total liabilities | 245,909 | 185,396 |
Commitments and contingencies (Note 10) | ||
Equity | ||
Preferred stock, $0.10 par value per share; 1,000,000 shares authorized; none issued and outstanding | ||
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 9,499,910 and 8,999,910 shares issued and outstanding as of December 31, 2021 and September 30, 2021, respectively | 95 | 90 |
Additional paid-in capital | 80,397 | 50,040 |
Retained earnings | 139,888 | 129,693 |
Total RCIHH stockholders’ equity | 220,380 | 179,823 |
Noncontrolling interests | (611) | (600) |
Total equity | 219,769 | 179,223 |
Total liabilities and equity | $ 465,678 | $ 364,619 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Sep. 30, 2021 |
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 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,499,910 | 8,999,910 |
Common stock, shares outstanding | 9,499,910 | 8,999,910 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues | ||
Total revenues | $ 61,836 | $ 38,398 |
Cost of goods sold | ||
Total cost of goods sold (exclusive of items shown separately below) | 8,891 | 6,204 |
Salaries and wages | 16,505 | 11,486 |
Selling, general and administrative | 18,486 | 12,152 |
Depreciation and amortization | 2,194 | 2,023 |
Other gains, net | (151) | (50) |
Total operating expenses | 45,925 | 31,815 |
Income from operations | 15,911 | 6,583 |
Other income (expenses) | ||
Interest expense | (2,604) | (2,434) |
Interest income | 106 | 60 |
Non-operating gains, net | 84 | 4,916 |
Income before income taxes | 13,497 | 9,125 |
Income tax expense (benefit) | 2,933 | (384) |
Net income | 10,564 | 9,509 |
Net loss attributable to noncontrolling interests | 11 | 134 |
Net income attributable to RCIHH common shareholders | $ 10,575 | $ 9,643 |
Earnings per share | ||
Basic and diluted | $ 1.12 | $ 1.07 |
Weighted average number of common shares outstanding | ||
Basic and diluted | 9,407,519 | 9,019,088 |
Dividends per share | $ 0.04 | $ 0.04 |
Alcoholic Beverages [Member] | ||
Revenues | ||
Total revenues | $ 26,431 | $ 17,360 |
Cost of goods sold | ||
Total cost of goods sold (exclusive of items shown separately below) | 4,834 | 3,262 |
Food and Beverage [Member] | ||
Revenues | ||
Total revenues | 10,894 | 8,609 |
Cost of goods sold | ||
Total cost of goods sold (exclusive of items shown separately below) | 3,957 | 2,889 |
Service [Member] | ||
Revenues | ||
Total revenues | 20,876 | 10,060 |
Other [Member] | ||
Revenues | ||
Total revenues | 3,635 | 2,369 |
Service and Other [Member] | ||
Cost of goods sold | ||
Total cost of goods sold (exclusive of items shown separately below) | $ 100 | $ 53 |
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] | Treasury Stock [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Sep. 30, 2020 | $ 91 | $ 51,833 | $ 100,797 | $ (414) | $ 152,307 | |
Beginning Balance Shares at Sep. 30, 2020 | 9,074,569 | |||||
Purchase of treasury shares | $ (1,794) | (1,794) | ||||
Purchase of treasury shares, shares | 74,659 | |||||
Canceled treasury shares | $ (1) | (1,793) | $ 1,794 | |||
Canceled treasury shares, shares | 74,659 | (74,659) | ||||
Payment of dividends | (360) | (360) | ||||
Net income (loss) | 9,643 | (134) | 9,509 | |||
Purchase of treasury shares, shares | (74,659) | |||||
Canceled treasury shares, shares | (74,659) | 74,659 | ||||
Ending balance, value at Dec. 31, 2020 | $ 90 | 50,040 | 110,080 | (548) | 159,662 | |
Ending Balance Shares at Dec. 31, 2020 | 8,999,910 | |||||
Beginning balance, value at Sep. 30, 2021 | $ 90 | 50,040 | 129,693 | (600) | 179,223 | |
Beginning Balance Shares at Sep. 30, 2021 | 8,999,910 | |||||
Issuance of common shares | $ 5 | 30,357 | 30,362 | |||
Issuance of common shares, shares | 500,000 | |||||
Payment of dividends | (380) | (380) | ||||
Net income (loss) | 10,575 | (11) | 10,564 | |||
Ending balance, value at Dec. 31, 2021 | $ 95 | $ 80,397 | $ 139,888 | $ (611) | $ 219,769 | |
Ending Balance Shares at Dec. 31, 2021 | 9,499,910 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 10,564,000 | $ 9,509,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,194,000 | 2,023,000 |
Gain on sale of businesses and assets | (523,000) | (5,000) |
Unrealized loss on equity securities | 1,000 | 33,000 |
Amortization of debt discount and issuance costs | 51,000 | 51,000 |
Gain on debt extinguishment | (83,000) | (4,920,000) |
Noncash lease expense | 629,000 | 421,000 |
Gain on insurance | (250,000) | |
Doubtful accounts expense (reversal) on notes receivable | 17,000 | (93,000) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,344,000 | 1,433,000 |
Inventories | (445,000) | (22,000) |
Prepaid expenses, other current and other assets | (6,519,000) | 1,125,000 |
Accounts payable, accrued and other liabilities | 9,034,000 | (3,031,000) |
Net cash provided by operating activities | 16,264,000 | 6,274,000 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of businesses and assets | 803,000 | |
Proceeds from insurance | 185,000 | 250,000 |
Proceeds from notes receivable | 34,000 | 26,000 |
Payments for property and equipment and intangible assets | (9,850,000) | (1,289,000) |
Acquisition of businesses, net of cash acquired | (39,302,000) | |
Net cash used in investing activities | (48,130,000) | (1,013,000) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from debt obligations, including related party proceeds of $650 and $0, respectively | 17,002,000 | |
Payments on debt obligations | (2,488,000) | (1,745,000) |
Purchase of treasury stock | (1,794,000) | |
Payment of dividends | (380,000) | (360,000) |
Net cash provided by (used in) financing activities | 14,134,000 | (3,899,000) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (17,732,000) | 1,362,000 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 35,686,000 | 15,605,000 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 17,954,000 | 16,967,000 |
CASH PAID DURING PERIOD FOR: | ||
Interest | 2,330,000 | 3,108,000 |
Income taxes | 3,000 | |
Noncash investing and financing transactions: | ||
Debt incurred in connection with acquisition of businesses | 22,200,000 | |
Note receivable from sale of property | 2,700 | |
Issuance of shares of common stock for acquisition of businesses: | ||
Number of shares | 500,000,000 | |
Fair value | 30,362,000 | |
Adjustment to operating lease right-of-use assets and lease liabilities related to new and renewed leases | 18,243,000 | |
Unpaid liabilities on capital expenditures | $ 626,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Cash Flows [Abstract] | ||
Related party proceeds | $ 650 | $ 0 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of RCI Hospitality Holdings, Inc. (the “Company,” “RCIHH,” “we,” or “us”) 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, 2021 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, 2021 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on December 14, 2021. 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 months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. Certain reclassifications of cost of goods sold components with immaterial amounts have been made to prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total cost of goods sold, results of operations, and cash flows in all periods presented. |
Recent Accounting Standards and
Recent Accounting Standards and Pronouncements | 3 Months Ended |
Dec. 31, 2021 | |
Recent Accounting Standards And Pronouncements | |
Recent Accounting Standards and Pronouncements | 2. Recent Accounting Standards and Pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Ongoing Impact of COVID-19 Pand
Ongoing Impact of COVID-19 Pandemic | 3 Months Ended |
Dec. 31, 2021 | |
Ongoing Impact Of Covid-19 Pandemic | |
Ongoing Impact of COVID-19 Pandemic | 3. Ongoing Impact of COVID-19 Pandemic Since the U.S. declaration of the COVID-19 pandemic as a national emergency in March 2020, we have had a major disruption in our business operations that threatened to significantly impact our cash flow. The pandemic 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 were mandated or encouraged by federal, state and local governments. To adapt to the situation, we took significant steps to augment an anticipated decline in operating cash flows, including negotiating deferment of some of our debts, reducing the number of our employees and related payroll costs where necessary, and deferring or modifying certain fixed and variable monthly expenses, among others. The temporary closure of our clubs and restaurants caused by the COVID-19 pandemic has presented operational challenges. Our strategy is to open locations and operate in accordance with local and state guidelines. We believe that we can borrow capital if needed but currently we do not have unused credit facilities so 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. On May 8, 2020, the Company received approval and funding under the PPP of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) for its restaurants, shared service entity and lounge. See Note 9. As of the release of this report, we do not know the future extent and duration of the impact of COVID-19 on our businesses. Closures and operating restrictions, as caused by local, state and national 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. We continue to adhere to state and local government mandates regarding the pandemic and, since March 2020, have closed and reopened a number of our locations depending on changing government mandates, including operating hour and limited occupancy restrictions, where applicable. Valuation of Goodwill, Indefinite-Lived Intangibles and Long-Lived 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 assets in our clubs and restaurants that are affected. We evaluated forecasted cash flows considering the future assumed impact of the COVID-19 pandemic on sales. Based on the evaluation we conducted during the interim period ended December 31, 2021, we determined that there is no impairment in our goodwill, indefinite-lived intangibles, and long-lived assets as of December 31, 2021. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Acquisitions and Dispositions
Acquisitions and Dispositions | 3 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions and Dispositions | 4. Acquisitions and Dispositions On October 6, 2021, the Company sold a property classified as held-for-sale with a carrying value of $ 3.0 million for $ 3.2 million, of which $ 2.7 million was in the form of a secured promissory note. This 7 % note receivable has a term of eight years and is collectible in equal monthly installments of $ 21,544 in principal and interest with the remaining balance to be paid at maturity. On October 8, 2021, the Company sold one of its clubs in South Houston for $ 300,000 On October 18, 2021, we and certain of our subsidiaries completed our acquisition of eleven gentlemen’s clubs, six related real estate properties, and associated intellectual property for a total agreed acquisition price of $ 88.0 million (with a total consideration preliminary fair value of $ 88.4 million based on the Company’s stock price at acquisition date and discounted due to the lock-up period, with interest rates on promissory notes reflective of market yields). The acquisition was structured by entering into nine asset purchase agreements, which allowed the Company to acquire from each club all of the tangible and intangible assets and personal property in that business except certain excluded assets, and two stock purchase agreements, where a newly formed subsidiary purchased 100 36.8 million in cash, $ 21.2 million in four seller-financed notes (see Note 7), and 500,000 shares of our common stock. Schedule of Preliminary Fair Value of Consideration Cash $ 36,800 Notes payable 21,200 Common stock 30,362 Total consideration fair value $ 88,362 We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment. We have not finalized our valuation of the tangible and identifiable intangible assets acquired in this transaction. As of the release of this report, the fair value of the acquired tangible and identifiable intangible assets are provisional pending receipt of the final valuations for those assets. Based on the allocation of the preliminary fair value of the acquisition price and subject to any working capital adjustments, the amount of goodwill is estimated to be $ 13.8 million. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangibles and identifiable intangibles assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities. Goodwill will not be amortized but will be tested at least annually for impairment. Approximately $ 9.3 million of the recognized goodwill will be deductible for tax purposes. The following is our preliminary allocation of the fair value of the acquisition price (in thousands) as of October 18, 2021: Schedule of Allocation of Fair Values Assigned to Assets at Acquisition Current assets $ 386 Property and equipment 19,534 Licenses 50,080 Trademarks 7,460 Deferred tax liability (2,903 ) Total net assets acquired 74,557 Goodwill 13,805 Acquisition price fair value $ 88,362 Licenses and trademarks will not be amortized but will be tested at least annually for impairment. The Company entered into leases with third parties for certain clubs where the real estate were not part of the acquisition. See Note 13. In connection with the acquisition, we incurred acquisition-related expenses of approximately $ 417,000 173,000 244,000 0 was expensed in the first quarter of 2021 and $ 244,000 From the date of acquisition until December 31, 2021, the eleven acquired clubs contributed revenues of $ 6.0 1.7 The following table presents the unaudited pro forma combined results of operations of the Company and the eleven acquired clubs and related assets as though the acquisition occurred at the beginning of fiscal 2021 (in thousands, except per share amounts and number of shares): Schedule of Unaudited Pro Forma Combined Results of Operations 2021 2020 For the Three Months Ended December 31, 2021 2020 Pro forma revenues $ 63,562 $ 43,384 Pro forma net income attributable to RCIHH common stockholders $ 9,992 $ 9,892 Pro forma earnings per share – basic and diluted $ 1.05 $ 1.04 Pro forma weighted average number of common shares outstanding 9,499,910 9,519,088 The above unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2021. The unaudited pro forma financial information reflects material, nonrecurring adjustments directly attributable to the acquisition including acquisition-related expenses, interest expense, and any related tax effects. Since we do not have a final valuation of the assets that we acquired yet, the unaudited pro forma financial information only includes preliminary adjustments related to changes in recognized expenses caused by the fair value of assets acquired, such as depreciation and amortization and related tax effects. Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the 28 private lender group notes and 4 seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2021. Pro forma weighted average number of common shares outstanding includes the impact of 500,000 shares of our common stock issued as partial consideration for the acquisition. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On November 8, 2021, the Company acquired a club and related real estate in Newburgh, New York for a total preliminary purchase price of $ 3.5 million, by which $ 2.5 million was paid in cash at closing and $ 1.0 million through a seller-financed 7-year promissory note with an interest rate of 4.0 % per annum. The $ 3.5 million acquisition price is preliminarily allocated $ 2.0 million to real estate, $ 200,000 to tangible assets, and $ 1.3 million to goodwill, which is deductible for tax purposes. The note is payable $ 13,669 per month, including principal and interest. See Note 7. From the date of acquisition until December 31, 2021, the acquired club contributed revenues of $ 289,000 and income from operations of $ 4,000 , which are included in our unaudited condensed consolidated statement of income. The Company is not providing supplemental pro forma disclosures to this acquisition as it does not materially contribute to the consolidated operations of the Company. On December 30, 2021, the Company acquired the real estate of one of its clubs in South Florida, which the Company previously leased, for $ 7.0 million in an all-cash purchase. At closing, the Company wrote off the balance of its operating lease right-of-use asset and corresponding operating lease liability related to the discontinued lease. |
Revenues
Revenues | 3 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 5. 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 income. 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. Lease revenue (included in other revenues) is recognized when earned (recognized over time) and is more appropriately covered by guidance under ASC 842, Leases Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 11), are shown below (in thousands): Schedule of Disaggregation of Segment Revenues Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 18,167 $ 8,264 $ - $ 26,431 $ 9,634 $ 7,726 $ - $ 17,360 Sales of food and merchandise 4,589 6,305 - 10,894 3,423 5,186 - 8,609 Service revenues 20,684 192 - 20,876 9,998 62 - 10,060 Other revenues 3,341 10 284 3,635 2,142 32 195 2,369 $ 46,781 $ 14,771 $ 284 $ 61,836 $ 25,197 $ 13,006 $ 195 $ 38,398 Recognized at a point in time $ 46,344 $ 14,770 $ 283 $ 61,397 $ 24,835 $ 13,006 $ 193 $ 38,034 Recognized over time 437 * 1 1 439 362 * - 2 364 $ 46,781 $ 14,771 $ 284 $ 61,836 $ 25,197 $ 13,006 $ 195 $ 38,398 * Lease revenue (included in Other Revenues) as covered by ASC 842. All other revenues are covered by ASC 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): Schedule of Reconciliation of Contract Liabilities with Customers Balance at September 30, 2021 Consideration Received Recognized in Revenue Balance at December 31, 2021 Ad revenue $ 84 $ 280 $ (167 ) $ 197 Expo revenue 151 116 - 267 Other (including franchise fees) 119 - (20 ) 99 $ 354 $ 396 $ (187 ) $ 563 Contract liabilities with customers are included in accrued liabilities as unearned revenues in our unaudited condensed consolidated balance sheets (see also Note 6), while the revenues associated with these contract liabilities are included in other revenues in our unaudited condensed consolidated statements of income. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Selected Account Information
Selected Account Information | 3 Months Ended |
Dec. 31, 2021 | |
Selected Account Information | |
Selected Account Information | 6. Selected Account Information The components of accounts receivable, net are as follows (in thousands): Schedule of Accounts Receivable December 31, 2021 September 30, 2021 Credit card receivables $ 2,300 $ 1,447 Income tax refundable 1,542 4,472 Insurance receivable - 185 ATM in-transit 684 277 Other (net of allowance for doubtful accounts of $ 414 382 1,486 1,189 Total accounts receivable, net $ 6,012 $ 7,570 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 9 1 20 years 118,000 102,000 The components of prepaid expenses and other current assets are as follows (in thousands): Schedule of Components of Prepaid Expenses and Other Current Assets December 31, 2021 September 30, 2021 Prepaid insurance $ 6,835 $ 277 Prepaid legal 37 112 Prepaid taxes and licenses 216 380 Prepaid rent 251 309 Other 906 850 Total prepaid expenses and other current assets $ 8,245 $ 1,928 A reconciliation of goodwill as of December 31, 2021 and September 30, 2021 is as follows (in thousands): Schedule of Reconciliation of Goodwill Gross Accumulated Impairment Net Balance at September 30, 2021 $ 59,967 $ 20,588 $ 39,379 Acquisitions 15,105 - 15,105 Balance at December 31, 2021 $ 75,072 $ 20,588 $ 54,484 The components of intangible assets, net are as follows (in thousands): Schedule of Components of Intangible Assets December 31, 2021 September 30, 2021 Indefinite-lived: Licenses $ 115,266 $ 65,186 Trademarks 9,675 2,215 Domain names 23 23 Definite-lived: Noncompete agreements 137 182 Discounted leases 84 86 Software 129 132 Total intangible assets, net $ 125,314 $ 67,824 The components of accrued liabilities are as follows (in thousands): Schedule of Accrued Liabilities December 31, 2021 September 30, 2021 Insurance $ 6,785 $ 54 Sales and liquor taxes 2,255 2,261 Payroll and related costs 3,887 3,220 Property taxes 2,506 2,178 Interest 366 145 Patron tax 455 452 Unearned revenues 563 354 Lawsuit settlement 245 378 Other 1,351 1,361 Total accrued liabilities $ 18,413 $ 10,403 The components of selling, general and administrative expenses are as follows (in thousands): Schedule of Selling, General and Administrative Expenses 2021 2020 For the Three Months Ended December 31, 2021 2020 Taxes and permits $ 2,236 $ 2,028 Advertising and marketing 2,383 1,189 Supplies and services 1,980 1,228 Insurance 2,395 1,457 Legal 1,060 861 Lease 1,640 977 Charge card fees 1,331 564 Utilities 935 713 Security 1,087 860 Accounting and professional fees 1,346 715 Repairs and maintenance 725 573 Other 1,368 987 Total selling, general and administrative expenses $ 18,486 $ 12,152 The components of non-operating gains (losses), net are as follows: Components of Non-Operating Gains (Losses), Net 2021 2020 For the Three Months Ended December 31, 2021 2020 Gain on debt extinguishment $ 85 $ 4,949 Unrealized loss on equity securities (1 ) (33 ) Non-operating gains, net $ 84 $ 4,916 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Debt
Debt | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt On October 12, 2021, we closed a debt financing transaction with 28 investors for unsecured promissory notes with a total principal amount of $ 17.0 12 9.5 October 1, 2024 7.5 10 October 12, 2024 17.0 500,000 150,000 500,000 300,000 On October 18, 2021, in relation to an acquisition (see Note 4), the Company executed four seller-financed promissory notes. The first promissory note was a 10 -year $ 11.0 million 6 % secured note payable in 120 equal monthly payments of $ 122,123 in principal and interest. The second promissory note was a 20 -year $ 8.0 million 6 % secured note payable in 240 equal monthly payments of $ 57,314 in principal and interest. The third promissory note was a 10 -year $ 1.2 million 5.25 % note payable in monthly payments of $ 8,086 in principal and interest based on a 20 -year amortization period, with the balance payable at maturity date. The fourth note was a 20 -year $ 1.0 million 6 % note payable in 240 equal monthly payments of $ 7,215 in principal and interest. On November 8, 2021, in relation to an acquisition (see Note 4), the Company executed a $ 1.0 7 4.0 13,669 Future maturities of long-term debt as of December 31, 2021 are as follows: $ 9.2 million, $ 7.4 million, $ 22.7 million, $ 7.1 million, $ 7.5 million and $ 109.6 million for the twelve months ending December 31, 2022, 2023, 2024, 2025, 2026, and thereafter, respectively. Of the maturity schedule mentioned above, $ 0 , $ 651,000 , $ 15.6 million, $ 0 , $ 0 and $ 63.1 million, respectively, relate to scheduled balloon payments. Unamortized debt discount and issuance costs amounted to $ 1.6 million and $ 1.6 million as of December 31, 2021 and September 30, 2021, respectively. On January 25, 2022, the Company borrowed $ 18.7 million from a bank lender for working capital purposes by executing a 10 -year promissory note with an initial interest rate of 5.25 % per annum to be adjusted after five years to a rate equal to the weekly average yield on U.S. Treasury securities plus 3.98 % with a floor of 5.25 %. The note is payable in monthly payments of $ 126,265 in principal and interest to be adjusted after five years. The promissory note is secured by eleven real estate properties and is personally guaranteed by the Company CEO, Eric Langan (see Note 12). After the 10 -year term, the remaining balance of principal and interest are payable at maturity date. There are certain financial covenants with which the Company is to be in compliance related to this loan, among which is to maintain a debt service coverage of not less than 1.4 times, reviewed annually. |
Equity
Equity | 3 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Equity | 8. Equity During the quarters ended December 31, 2021 and 2020, the Company purchased and retired 0 and 74,659 common shares at a cost of approximately $ 0 and $ 1.8 million, respectively. The Company paid a $ 0.04 and $ 0.04 per share cash dividend during the quarters ended December 31, 2021 and 2020 totaling approximately $ 380,000 and $ 360,000 , respectively. On October 18, 2021, we partially paid for an acquisition using 500,000 shares of our common stock with a fair value of $ 30.4 On February 7, 2022, our board of directors approved the 2022 Stock Option Plan (the “2022 Plan”). The board’s adoption of the 2022 Plan is subject to approval of shareholders, and in the event that the 2022 Plan is not approved by the shareholders within one year of the date of adoption of the 2022 Plan by the board, or less than the required amount of votes of shareholders are received in favor of approval of the 2022 Plan at a duly held meeting of shareholders within one year of the board’s adoption of the 2022 Plan, then we will unwind and terminate the 2022 Plan, and all outstanding stock options granted under the 2022 Plan will be cancelled. The 2022 Plan provides that the maximum aggregate number of shares of common stock underlying options that may be granted under the 2022 Plan is 300,000 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes Income taxes were an expense of $ 2.9 million during the quarter ended December 31, 2021 compared to a benefit of $ 384,000 during the quarter ended December 31, 2020. The effective income tax rate was an expense of 21.7 % and a benefit of 4.2 % for the quarters ended December 31, 2021 and 2020, respectively. Our effective tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both years, and the change in the deferred tax asset valuation allowance and the impact of the forgiveness of the PPP loans in the prior period, as presented below. Schedule of Effective Income Tax Rate Reconciliation 2021 2020 For the Three Months Ended December 31, 2021 2020 Federal statutory income tax expense/benefit 21.0 % 21.0 % State income taxes, net of federal benefit 2.9 % 3.3 % Permanent differences 0.4 % (8.2 )% Change in valuation allowance - (14.0 )% Tax credits (2.0 )% (6.3 )% Other (0.6 )% - Total income tax expense (benefit) 21.7 % ( 4.2 )% The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. The Company’s federal income tax returns for the years ended September 30, 2013 through 2017 have been examined by the Internal Revenue Service with no changes. The Company ordinarily goes through various federal and state reviews and examinations for various tax matters. Fiscal year ended September 30, 2018 and subsequent years remain open to federal tax examination. The Company is also being examined for state income taxes, the outcome of which may occur within the next twelve months. On March 27, 2020, former President Trump signed 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 CARES Act also established a Paycheck Protection Program, 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 submitted its application for a PPP loan and on May 8, 2020 received approval and funding for its restaurants, shared service entity and lounge. Ten of our restaurant subsidiaries received amounts ranging from $ 271,000 579,000 4.2 1.1 124,000 All of the notices received forgave 100% of each of the 11 PPP loans totaling the amount of $5.3 million in principal and interest and were included in non-operating gains (losses), net in our consolidated statement of operations 124,000 85,000 41,000 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2021 | |
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 $ 10.0 119,000 5 10.0 9.6 7.2 8.2 7.2 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 $ 687,815 195,815 8,200 The aggregate balance of Patron Tax settlement liability, which is included in long-term debt in the consolidated balance sheets, amounted to $ 398,000 813,000 A declaratory judgment action was brought by five operating subsidiaries of the Company to challenge a Texas Comptroller administrative rule related to the $ 5 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 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 alleged 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 sought unspecified damages, costs, and attorneys’ fees. These lawsuits were 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 (who is no longer an officer of the Company)); 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 added former directors Nourdean Anakar and 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. On March 31, 2021, the court denied defendants’ motion to dismiss the lawsuit. On April 14, 2021, defendants filed their answer and affirmative defenses, denying liability as to all claims. On June 14, 2021, a scheduling order was entered in the case, setting January 9, 2023 as the trial date. On December 22, 2021, an amended scheduling order was entered, extending the trial date to April 7, 2023 and extending all other case deadlines. The Company vigorously defended against this action. In January 2022, the parties engaged in settlement discussions beginning with a formal mediation on January 13, 2022, which resulted in an agreement-in-principle to resolve the matter. The parties are in the process of negotiating a long-form settlement agreement, subject to preliminary and final court approval. On January 24, 2022, a Joint Notice of Settlement was filed, informing the District Court of the agreement-in-principle and the anticipation of executing a formal stipulation of settlement within 30 calendar days. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On January 21, 2022, Shiva Stein and Kevin McCarty filed a shareholder derivative action in the Southern District of Texas, Houston Division against former director Nourdean Anakar, Yura Barabash, former director Steven L. Jenkins, Eric Langan, Luke Lirot, former CFO Phillip K. Marshall, Elaine J. Martin, Allan Priaulx, and Travis Reese as defendants, as well as against RCI Hospitality Holdings, Inc. as nominal defendant. The action, styled Stein v. Anakar, et al. 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. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 4 As set forth in the risk factors as disclosed in our most recent Annual Report on Form 10-K, 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 quarters ended December 31, 2021 and 2020 amount to approximately $ 192,000 and $ 152,000 , respectively. As of December 31, 2021 and September 30, 2021, the Company has accrued $ 245,000 and $ 378,000 in accrued liabilities, respectively, related to settlement of lawsuits. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Segment Information
Segment Information | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Information | 11. Segment Information The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such segments based on management responsibility and the nature of the Company’s products, services and costs. There are no major distinctions in geographical areas served as all operations are in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements. Below is the financial information related to the Company’s segments (in thousands): Schedule of Segment Reporting Information 2021 2020 For the Three Months Ended December 31, 2021 2020 Revenues (from external customers) Nightclubs $ 46,781 $ 25,197 Bombshells 14,771 13,006 Other 284 195 Total Revenues $ 61,836 $ 38,398 Income (loss) from operations Nightclubs $ 18,736 $ 8,495 Bombshells 2,802 2,717 Other (43 ) (75 ) General corporate (5,584 ) (4,554 ) Total Income (loss) from operations $ 15,911 $ 6,583 Depreciation and amortization Nightclubs $ 1,547 $ 1,324 Bombshells 429 457 Other 6 36 General corporate 212 206 Total Depreciation and amortization $ 2,194 $ 2,023 Capital expenditures Nightclubs $ 9,228 $ 1,130 Bombshells 304 151 Other 189 3 General corporate 129 5 Total Capital expenditures $ 9,850 $ 1,289 December 31, 2021 September 30, 2021 Total assets Nightclubs $ 377,611 $ 280,561 Bombshells 52,385 52,073 Other 2,059 1,573 General corporate 33,623 30,412 Total assets $ 465,678 $ 364,619 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs and Corporate segments for the quarter ended December 31, 2021 amounting to $ 3.2 168,000 69,000 2.8 110,000 26,000 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 | 3 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 12. 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 December 31, 2021 and September 30, 2021, was $ 98.5 99.7 Included in the $ 17.0 500,000 150,000 We used the services of Nottingham Creations, and previously Sherwood Forest Creations, LLC, both furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest). Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were $ 24,037 0 0 12,205 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 2022 and 2021. A son-in-law of Eric Langan owns a 50 0 and $ 0 for the three months ended December 31, 2021 and 2020, respectively. Amounts billed directly to the Company were $ 80,996 and $ 7,130 for the three months ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and September 30, 2021, the Company owed TW Mechanical $ 752 and $ 7,500 , respectively, in unpaid direct billings. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Leases
Leases | 3 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | 13. Leases The Company leases certain facilities and equipment under operating leases. In relation to an acquisition that was completed on October 18, 2021 (see Note 4), the Company entered into leases with third parties for certain clubs where the real estate locations were not part of the acquisition. 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, 2021 and 2020 is as follows (in thousands): Schedule of Lease Expense Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 Operating lease expense – fixed payments $ 1,131 $ - Variable lease expense 334 64 Short-term equipment and other lease expense (includes $ 72 and $ 57 recorded in advertising and marketing, and $ 83 and $ 88 recorded in repairs and maintenance for the three months ended December 31, 2021 and 2020, respectively; see Note 6) 330 229 Sublease income (2 ) (2 ) Total lease expense, net $ 1,793 $ 1,120 Other information: Operating cash outflows from operating leases $ 1,749 $ 1,091 Weighted average remaining lease term – operating leases 12.4 years 12 Weighted average discount rate – operating leases 5.7 % 6.1 % Future maturities of operating lease liabilities as of December 31, 2021 are as follows (in thousands): Schedule of Future Maturities of Lease Liabilities Principal Payments Interest Payments Total Payments January - December 2022 $ 2,288 $ 2,058 $ 4,346 January - December 2023 2,291 1,927 4,218 January - December 2024 2,475 1,790 4,265 January - December 2025 2,702 1,641 4,343 January - December 2026 2,915 1,480 4,395 Thereafter 24,771 6,247 31,018 Future maturities of lease liabilities $ 37,442 $ 15,143 $ 52,585 |
Acquisitions and Dispositions (
Acquisitions and Dispositions (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Preliminary Fair Value of Consideration | Schedule of Preliminary Fair Value of Consideration Cash $ 36,800 Notes payable 21,200 Common stock 30,362 Total consideration fair value $ 88,362 |
Schedule of Allocation of Fair Values Assigned to Assets at Acquisition | Schedule of Allocation of Fair Values Assigned to Assets at Acquisition Current assets $ 386 Property and equipment 19,534 Licenses 50,080 Trademarks 7,460 Deferred tax liability (2,903 ) Total net assets acquired 74,557 Goodwill 13,805 Acquisition price fair value $ 88,362 |
Schedule of Unaudited Pro Forma Combined Results of Operations | Schedule of Unaudited Pro Forma Combined Results of Operations 2021 2020 For the Three Months Ended December 31, 2021 2020 Pro forma revenues $ 63,562 $ 43,384 Pro forma net income attributable to RCIHH common stockholders $ 9,992 $ 9,892 Pro forma earnings per share – basic and diluted $ 1.05 $ 1.04 Pro forma weighted average number of common shares outstanding 9,499,910 9,519,088 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
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 11), are shown below (in thousands): Schedule of Disaggregation of Segment Revenues Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 18,167 $ 8,264 $ - $ 26,431 $ 9,634 $ 7,726 $ - $ 17,360 Sales of food and merchandise 4,589 6,305 - 10,894 3,423 5,186 - 8,609 Service revenues 20,684 192 - 20,876 9,998 62 - 10,060 Other revenues 3,341 10 284 3,635 2,142 32 195 2,369 $ 46,781 $ 14,771 $ 284 $ 61,836 $ 25,197 $ 13,006 $ 195 $ 38,398 Recognized at a point in time $ 46,344 $ 14,770 $ 283 $ 61,397 $ 24,835 $ 13,006 $ 193 $ 38,034 Recognized over time 437 * 1 1 439 362 * - 2 364 $ 46,781 $ 14,771 $ 284 $ 61,836 $ 25,197 $ 13,006 $ 195 $ 38,398 * Lease revenue (included in Other Revenues) as covered by ASC 842. All other revenues are covered by ASC 606. |
Schedule of Reconciliation of Contract Liabilities with Customers | Schedule of Reconciliation of Contract Liabilities with Customers Balance at September 30, 2021 Consideration Received Recognized in Revenue Balance at December 31, 2021 Ad revenue $ 84 $ 280 $ (167 ) $ 197 Expo revenue 151 116 - 267 Other (including franchise fees) 119 - (20 ) 99 $ 354 $ 396 $ (187 ) $ 563 |
Selected Account Information (T
Selected Account Information (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Selected Account Information | |
Schedule of Accounts Receivable | The components of accounts receivable, net are as follows (in thousands): Schedule of Accounts Receivable December 31, 2021 September 30, 2021 Credit card receivables $ 2,300 $ 1,447 Income tax refundable 1,542 4,472 Insurance receivable - 185 ATM in-transit 684 277 Other (net of allowance for doubtful accounts of $ 414 382 1,486 1,189 Total accounts receivable, net $ 6,012 $ 7,570 |
Schedule of Components of Prepaid Expenses and Other Current Assets | The components of prepaid expenses and other current assets are as follows (in thousands): Schedule of Components of Prepaid Expenses and Other Current Assets December 31, 2021 September 30, 2021 Prepaid insurance $ 6,835 $ 277 Prepaid legal 37 112 Prepaid taxes and licenses 216 380 Prepaid rent 251 309 Other 906 850 Total prepaid expenses and other current assets $ 8,245 $ 1,928 |
Schedule of Reconciliation of Goodwill | A reconciliation of goodwill as of December 31, 2021 and September 30, 2021 is as follows (in thousands): Schedule of Reconciliation of Goodwill Gross Accumulated Impairment Net Balance at September 30, 2021 $ 59,967 $ 20,588 $ 39,379 Acquisitions 15,105 - 15,105 Balance at December 31, 2021 $ 75,072 $ 20,588 $ 54,484 |
Schedule of Components of Intangible Assets | Schedule of Components of Intangible Assets December 31, 2021 September 30, 2021 Indefinite-lived: Licenses $ 115,266 $ 65,186 Trademarks 9,675 2,215 Domain names 23 23 Definite-lived: Noncompete agreements 137 182 Discounted leases 84 86 Software 129 132 Total intangible assets, net $ 125,314 $ 67,824 |
Schedule of Accrued Liabilities | The components of accrued liabilities are as follows (in thousands): Schedule of Accrued Liabilities December 31, 2021 September 30, 2021 Insurance $ 6,785 $ 54 Sales and liquor taxes 2,255 2,261 Payroll and related costs 3,887 3,220 Property taxes 2,506 2,178 Interest 366 145 Patron tax 455 452 Unearned revenues 563 354 Lawsuit settlement 245 378 Other 1,351 1,361 Total accrued liabilities $ 18,413 $ 10,403 |
Schedule of Selling, General and Administrative Expenses | The components of selling, general and administrative expenses are as follows (in thousands): Schedule of Selling, General and Administrative Expenses 2021 2020 For the Three Months Ended December 31, 2021 2020 Taxes and permits $ 2,236 $ 2,028 Advertising and marketing 2,383 1,189 Supplies and services 1,980 1,228 Insurance 2,395 1,457 Legal 1,060 861 Lease 1,640 977 Charge card fees 1,331 564 Utilities 935 713 Security 1,087 860 Accounting and professional fees 1,346 715 Repairs and maintenance 725 573 Other 1,368 987 Total selling, general and administrative expenses $ 18,486 $ 12,152 |
Components of Non-Operating Gains (Losses), Net | The components of non-operating gains (losses), net are as follows: Components of Non-Operating Gains (Losses), Net 2021 2020 For the Three Months Ended December 31, 2021 2020 Gain on debt extinguishment $ 85 $ 4,949 Unrealized loss on equity securities (1 ) (33 ) Non-operating gains, net $ 84 $ 4,916 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | Schedule of Effective Income Tax Rate Reconciliation 2021 2020 For the Three Months Ended December 31, 2021 2020 Federal statutory income tax expense/benefit 21.0 % 21.0 % State income taxes, net of federal benefit 2.9 % 3.3 % Permanent differences 0.4 % (8.2 )% Change in valuation allowance - (14.0 )% Tax credits (2.0 )% (6.3 )% Other (0.6 )% - Total income tax expense (benefit) 21.7 % ( 4.2 )% |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Below is the financial information related to the Company’s segments (in thousands): Schedule of Segment Reporting Information 2021 2020 For the Three Months Ended December 31, 2021 2020 Revenues (from external customers) Nightclubs $ 46,781 $ 25,197 Bombshells 14,771 13,006 Other 284 195 Total Revenues $ 61,836 $ 38,398 Income (loss) from operations Nightclubs $ 18,736 $ 8,495 Bombshells 2,802 2,717 Other (43 ) (75 ) General corporate (5,584 ) (4,554 ) Total Income (loss) from operations $ 15,911 $ 6,583 Depreciation and amortization Nightclubs $ 1,547 $ 1,324 Bombshells 429 457 Other 6 36 General corporate 212 206 Total Depreciation and amortization $ 2,194 $ 2,023 Capital expenditures Nightclubs $ 9,228 $ 1,130 Bombshells 304 151 Other 189 3 General corporate 129 5 Total Capital expenditures $ 9,850 $ 1,289 December 31, 2021 September 30, 2021 Total assets Nightclubs $ 377,611 $ 280,561 Bombshells 52,385 52,073 Other 2,059 1,573 General corporate 33,623 30,412 Total assets $ 465,678 $ 364,619 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Leases | |
Schedule of Lease Expense | The Company leases certain facilities and equipment under operating leases. In relation to an acquisition that was completed on October 18, 2021 (see Note 4), the Company entered into leases with third parties for certain clubs where the real estate locations were not part of the acquisition. 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, 2021 and 2020 is as follows (in thousands): Schedule of Lease Expense Three Months Ended December 31, 2021 Three Months Ended December 31, 2020 Operating lease expense – fixed payments $ 1,131 $ - Variable lease expense 334 64 Short-term equipment and other lease expense (includes $ 72 and $ 57 recorded in advertising and marketing, and $ 83 and $ 88 recorded in repairs and maintenance for the three months ended December 31, 2021 and 2020, respectively; see Note 6) 330 229 Sublease income (2 ) (2 ) Total lease expense, net $ 1,793 $ 1,120 Other information: Operating cash outflows from operating leases $ 1,749 $ 1,091 Weighted average remaining lease term – operating leases 12.4 years 12 Weighted average discount rate – operating leases 5.7 % 6.1 % |
Schedule of Future Maturities of Lease Liabilities | Future maturities of operating lease liabilities as of December 31, 2021 are as follows (in thousands): Schedule of Future Maturities of Lease Liabilities Principal Payments Interest Payments Total Payments January - December 2022 $ 2,288 $ 2,058 $ 4,346 January - December 2023 2,291 1,927 4,218 January - December 2024 2,475 1,790 4,265 January - December 2025 2,702 1,641 4,343 January - December 2026 2,915 1,480 4,395 Thereafter 24,771 6,247 31,018 Future maturities of lease liabilities $ 37,442 $ 15,143 $ 52,585 |
Schedule of Future Maturities of Lease Liabilities | Future maturities of operating lease liabilities as of December 31, 2021 are as follows (in thousands): Schedule of Future Maturities of Lease Liabilities Principal Payments Interest Payments Total Payments January - December 2022 $ 2,288 $ 2,058 $ 4,346 January - December 2023 2,291 1,927 4,218 January - December 2024 2,475 1,790 4,265 January - December 2025 2,702 1,641 4,343 January - December 2026 2,915 1,480 4,395 Thereafter 24,771 6,247 31,018 Future maturities of lease liabilities $ 37,442 $ 15,143 $ 52,585 |
Schedule of Preliminary Fair Va
Schedule of Preliminary Fair Value of Consideration (Details) $ in Thousands | Oct. 18, 2021USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 36,800 |
Eleven Gentlemens Clubs [Member] | |
Business Acquisition [Line Items] | |
Cash | 36,800 |
Notes payable | 21,200 |
Common stock | 30,362 |
Total consideration fair value | $ 88,362 |
Schedule of Allocation of Fair
Schedule of Allocation of Fair Values Assigned to Assets at Acquisition (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Oct. 18, 2021 | Sep. 30, 2021 |
Business Combination and Asset Acquisition [Abstract] | |||
Current assets | $ 386 | ||
Property and equipment | 19,534 | ||
Licenses | 50,080 | ||
Trademarks | 7,460 | ||
Deferred tax liability | (2,903) | ||
Total net assets acquired | 74,557 | ||
Goodwill | $ 54,484 | 13,805 | $ 39,379 |
Acquisition price fair value | $ 88,362 |
Schedule of Unaudited Pro Forma
Schedule of Unaudited Pro Forma Combined Results of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Business Combination and Asset Acquisition [Abstract] | ||
Pro forma revenues | $ 63,562 | $ 43,384 |
Pro forma net income attributable to RCIHH common stockholders | $ 9,992 | $ 9,892 |
Pro forma earnings per share – basic and diluted | $ 1.05 | $ 1.04 |
Pro forma weighted average number of common shares outstanding | 9,499,910 | 9,519,088 |
Acquisitions and Dispositions_2
Acquisitions and Dispositions (Details Narrative) - USD ($) | Dec. 30, 2021 | Nov. 08, 2021 | Oct. 18, 2021 | Oct. 08, 2021 | Oct. 06, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Sep. 30, 2021 |
Asset Acquisition [Line Items] | |||||||||
Land Available-for-sale | $ 3,000,000 | ||||||||
Proceeds from Sale of Property Held-for-sale | $ 300,000 | 3,200,000 | |||||||
Secured Debt | $ 2,700,000 | ||||||||
[custom:ReceivablePercent-0] | 7.00% | ||||||||
Debt Instrument, Face Amount | $ 1,000,000 | $ 21,544 | |||||||
Cash Acquired from Acquisition | $ 7,000,000 | ||||||||
Ownership percentage | 100.00% | ||||||||
Payments to Acquire Businesses, Gross | $ 36,800,000 | ||||||||
Stock Issued During Period, Shares, Acquisitions | 500,000 | ||||||||
Goodwill | $ 13,805,000 | $ 54,484,000 | $ 54,484,000 | $ 39,379,000 | |||||
Goodwill, Acquired During Period | 9,300,000 | 15,105,000 | |||||||
Acquisition-related expenses | $ 417,000 | 244,000 | $ 173,000 | ||||||
Amortization of cost | $ 244,000 | $ 0 | |||||||
Business acquisition, revenue reported by acquired entity | 6,000,000 | ||||||||
Business acquisition income from operation by acquired entity | 1,700,000 | ||||||||
Payments to Acquire Productive Assets | $ 2,500,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||||||||
Debt Instrument, Periodic Payment | $ 13,669 | ||||||||
Club [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Business acquisition, revenue reported by acquired entity | 289,000 | ||||||||
Business acquisition income from operation by acquired entity | $ 4,000 | ||||||||
Common Stock [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Stock Issued During Period, Shares, Acquisitions | 500,000 | 500,000 | |||||||
Four Seller Financed Notes [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Payments to Acquire Businesses, Gross | $ 21,200,000 | ||||||||
Seven Year Promissory Note [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||||||||
Eleven Gentlemens Clubs [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Cash Acquired from Acquisition | 88,000,000 | ||||||||
Business Combination, Consideration Transferred | $ 88,400,000 | ||||||||
Club and Related Real Estate [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Preliminarily allocated acquisition price | $ 3,500,000 | ||||||||
Club and Related Real Estate [Member] | Tangible Assets [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Preliminarily allocated acquisition price | 200,000 | ||||||||
Club and Related Real Estate [Member] | Goodwill [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Preliminarily allocated acquisition price | 1,300,000 | ||||||||
Club and Related Real Estate [Member] | Real Estate [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Preliminarily allocated acquisition price | 2,000,000 | ||||||||
Club and Related Real Estate [Member] | Seven Year Promissory Note [Member] | |||||||||
Asset Acquisition [Line Items] | |||||||||
Preliminarily allocated acquisition price | $ 1,000,000 |
Schedule of Disaggregation of S
Schedule of Disaggregation of Segment Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | ||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 61,836 | $ 38,398 | |
Transferred at Point in Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 61,397 | 38,034 | |
Transferred over Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 439 | 364 | |
Sales of Alcoholic Beverages [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 26,431 | 17,360 | |
Food and Beverage [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 10,894 | 8,609 | |
Service [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 20,876 | 10,060 | |
Other Revenues [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 3,635 | 2,369 | |
Nightclubs [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 46,781 | 25,197 | |
Nightclubs [Member] | Transferred at Point in Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 46,344 | 24,835 | |
Nightclubs [Member] | Transferred over Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | [1] | 437 | 362 |
Nightclubs [Member] | Sales of Alcoholic Beverages [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 18,167 | 9,634 | |
Nightclubs [Member] | Food and Beverage [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 4,589 | 3,423 | |
Nightclubs [Member] | Service [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 20,684 | 9,998 | |
Nightclubs [Member] | Other Revenues [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 3,341 | 2,142 | |
Bombshells [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 14,771 | 13,006 | |
Bombshells [Member] | Transferred at Point in Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 14,770 | 13,006 | |
Bombshells [Member] | Transferred over Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 1 | ||
Bombshells [Member] | Sales of Alcoholic Beverages [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 8,264 | 7,726 | |
Bombshells [Member] | Food and Beverage [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 6,305 | 5,186 | |
Bombshells [Member] | Service [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 192 | 62 | |
Bombshells [Member] | Other Revenues [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 10 | 32 | |
Other [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 284 | 195 | |
Other [Member] | Transferred at Point in Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 283 | 193 | |
Other [Member] | Transferred over Time [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 1 | 2 | |
Other [Member] | Sales of Alcoholic Beverages [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | |||
Other [Member] | Food and Beverage [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | |||
Other [Member] | Service [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | |||
Other [Member] | Other Revenues [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 284 | $ 195 | |
[1] | Lease revenue (included in Other Revenues) as covered by ASC 842. All other revenues are covered by ASC 606. |
Schedule of Reconciliation of C
Schedule of Reconciliation of Contract Liabilities with Customers (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2021USD ($) | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | $ 354 |
Consideration Received | 396 |
Recognized in Revenue | (187) |
Contract liabilities with customers ending | 563 |
Ad Revenue [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | 84 |
Consideration Received | 280 |
Recognized in Revenue | (167) |
Contract liabilities with customers ending | 197 |
Expo Revenue [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | 151 |
Consideration Received | 116 |
Recognized in Revenue | |
Contract liabilities with customers ending | 267 |
Other [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | 119 |
Consideration Received | |
Recognized in Revenue | (20) |
Contract liabilities with customers ending | $ 99 |
Schedule of Accounts Receivable
Schedule of Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Selected Account Information | ||
Credit card receivables | $ 2,300 | $ 1,447 |
Income tax refundable | 1,542 | 4,472 |
Insurance receivable | 185 | |
ATM in-transit | 684 | 277 |
Other (net of allowance for doubtful accounts of $414 and $382, respectively) | 1,486 | 1,189 |
Total accounts receivable, net | $ 6,012 | $ 7,570 |
Schedule of Accounts Receivab_2
Schedule of Accounts Receivable (Details) (Parenthetical) - USD ($) | Nov. 08, 2021 | Dec. 31, 2021 | Sep. 30, 2021 |
Allowance for doubtful notes | $ 414,000 | $ 382,000 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||
Debt Instrument, Term | 7 years | ||
Notes Payable, Other Payables [Member] | |||
Allowance for doubtful notes | $ 118,000 | $ 102,000 | |
Minimum [Member] | |||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | 6.00% | |
Debt Instrument, Term | 1 year | ||
Maximum [Member] | |||
Debt Instrument, Interest Rate, Stated Percentage | 9.00% | 9.00% | |
Debt Instrument, Term | 20 years |
Schedule of Components of Prepa
Schedule of Components of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Selected Account Information | ||
Prepaid insurance | $ 6,835 | $ 277 |
Prepaid legal | 37 | 112 |
Prepaid taxes and licenses | 216 | 380 |
Prepaid rent | 251 | 309 |
Other | 906 | 850 |
Total prepaid expenses and other current assets | $ 8,245 | $ 1,928 |
Schedule of Reconciliation of G
Schedule of Reconciliation of Goodwill (Details) - USD ($) $ in Thousands | Oct. 18, 2021 | Dec. 31, 2021 |
Selected Account Information | ||
Balance at September 30, 2021, Gross | $ 59,967 | |
Balance at September 30, 2021,Accumulated Impairment Loss | 20,588 | |
Balance at September 30, 2021, Net | 39,379 | |
Acquisitions, Gross | 15,105 | |
Acquisitions, Accumulated Impairment Loss | ||
Acquisitions, Net | $ 9,300 | 15,105 |
Balance at December 31, 2021, Gross | 75,072 | |
Balance at December 31, 2021, Accumulated Impairment Loss | 20,588 | |
Balance at December 31, 2021, Net | $ 13,805 | $ 54,484 |
Schedule of Components of Intan
Schedule of Components of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangibles, net | $ 125,314 | $ 67,824 |
Noncompete Agreements [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Net | 137 | 182 |
Discounted Leases [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Net | 84 | 86 |
Software [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Assets, Net | 129 | 132 |
Licenses [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) | 115,266 | 65,186 |
Trademarks [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) | 9,675 | 2,215 |
Domain Name [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) | $ 23 | $ 23 |
Schedule of Accrued Liabilities
Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Selected Account Information | ||
Insurance | $ 6,785 | $ 54 |
Sales and liquor taxes | 2,255 | 2,261 |
Payroll and related costs | 3,887 | 3,220 |
Property taxes | 2,506 | 2,178 |
Interest | 366 | 145 |
Patron tax | 455 | 452 |
Unearned revenues | 563 | 354 |
Lawsuit settlement | 245 | 378 |
Other | 1,351 | 1,361 |
Total accrued liabilities | $ 18,413 | $ 10,403 |
Schedule of Selling, General an
Schedule of Selling, General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Selected Account Information | ||
Taxes and permits | $ 2,236 | $ 2,028 |
Advertising and marketing | 2,383 | 1,189 |
Supplies and services | 1,980 | 1,228 |
Insurance | 2,395 | 1,457 |
Legal | 1,060 | 861 |
Lease | 1,640 | 977 |
Charge card fees | 1,331 | 564 |
Utilities | 935 | 713 |
Security | 1,087 | 860 |
Accounting and professional fees | 1,346 | 715 |
Repairs and maintenance | 725 | 573 |
Other | 1,368 | 987 |
Total selling, general and administrative expenses | $ 18,486 | $ 12,152 |
Components of Non-Operating Gai
Components of Non-Operating Gains (Losses), Net (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Selected Account Information | ||
Gain on debt extinguishment | $ 85 | $ 4,949 |
Unrealized loss on equity securities | (1) | (33) |
Non-operating gains, net | $ 84 | $ 4,916 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Jan. 25, 2022 | Nov. 30, 2021 | Nov. 08, 2021 | Oct. 18, 2021 | Oct. 12, 2021 | Oct. 11, 2021 | Dec. 31, 2021 | Oct. 06, 2021 | Sep. 30, 2021 |
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 1,000,000 | $ 21,544 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||||||||
Notes Payable | $ 13,669 | ||||||||
Debt Instrument, Periodic Payment | $ 13,669 | ||||||||
Debt Instrument, Term | 7 years | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 85,000 | ||||||||
Long-Term Debt, Maturity, Year One | $ 9,200,000 | ||||||||
Long-Term Debt, Maturity, Year Two | 7,400,000 | ||||||||
Long-Term Debt, Maturity, Year Three | 22,700,000 | ||||||||
Long-Term Debt, Maturity, Year Four | 7,100,000 | ||||||||
Long-Term Debt, Maturity, Year Five | 7,500,000 | ||||||||
Long-Term Debt, Maturity, after Year Five | 109,600,000 | ||||||||
Debt Issuance Costs, Net | 1,600,000 | $ 1,600,000 | |||||||
Notes Payable to Banks [Member] | Subsequent Event [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 18,700,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | ||||||||
Debt Instrument, Term | 10 years | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 126,265 | ||||||||
Long-term Debt, Term | 10 years | ||||||||
Debt instrument, restrictive covenants | There are certain financial covenants with which the Company is to be in compliance related to this loan, among which is to maintain a debt service coverage of not less than 1.4 times, reviewed annually. | ||||||||
Notes Payable to Banks [Member] | Subsequent Event [Member] | Interest Rate Floor [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | ||||||||
Notes Payable to Banks [Member] | Subsequent Event [Member] | US Treasury Securities [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.98% | ||||||||
First Promissory Note [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 11,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | ||||||||
Debt Instrument, Term | 10 years | ||||||||
Debt Instrument, Frequency of Periodic Payment | 120 equal monthly payments | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 122,123 | ||||||||
Second Promissory Note [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 8,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | ||||||||
Debt Instrument, Term | 20 years | ||||||||
Debt Instrument, Frequency of Periodic Payment | 240 equal monthly payments | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 57,314 | ||||||||
Third Promissory Note [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 1,200,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | ||||||||
Debt Instrument, Term | 10 years | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 8,086 | ||||||||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 20 years | ||||||||
Fourth Promissory Note [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 1,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | ||||||||
Debt Instrument, Term | 20 years | ||||||||
Debt Instrument, Frequency of Periodic Payment | 240 equal monthly payments | ||||||||
Debt Instrument, Periodic Payment, Principal | $ 7,215 | ||||||||
Scheduled Balloon Payments Of Debt [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Long-Term Debt, Maturity, Year One | 0 | ||||||||
Long-Term Debt, Maturity, Year Two | 651,000 | ||||||||
Long-Term Debt, Maturity, Year Three | 15,600,000 | ||||||||
Long-Term Debt, Maturity, Year Four | 0 | ||||||||
Long-Term Debt, Maturity, Year Five | 0 | ||||||||
Long-Term Debt, Maturity, after Year Five | $ 63,100,000 | ||||||||
Twenty Eight Investors [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 17,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||||||
Notes Payable | $ 9,500,000 | ||||||||
Debt Instrument, Maturity Date | Oct. 1, 2024 | ||||||||
Debt Instrument, Periodic Payment | $ 7,500,000 | ||||||||
Debt Instrument, Term | 10 years | ||||||||
Debt Instrument, Maturity Date, Description | October 12, 2024 | ||||||||
Twenty Eight Investors [Member] | Non-officer Employee One [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 500,000 | ||||||||
Twenty Eight Investors [Member] | Non-officer Employee Two [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | 300,000 | ||||||||
Twenty Eight Investors [Member] | Note One [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Notes Payable, Related Parties, Current | 500,000 | ||||||||
Twenty Eight Investors [Member] | Note Two [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Notes Payable, Related Parties, Current | $ 150,000 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Feb. 07, 2022 | Oct. 18, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock Repurchased and Retired During Period, Shares | 0 | 74,659 | ||
Stock Repurchased and Retired During Period, Value | $ 0 | $ 1,800,000 | ||
Common Stock, Dividends, Per Share, Declared | $ 0.04 | $ 0.04 | ||
Dividends, Common Stock | $ 380,000 | $ 360,000 | ||
Stock Issued During Period, Shares, Acquisitions | 500,000 | |||
Stock Issued During Period, Value, Acquisitions | $ 30,400,000 | |||
2022 Stock Option Plan [Member] | Maximum [Member] | Subsequent Event [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of share options granted | 300,000 |
Schedule of Effective Income Ta
Schedule of Effective Income Tax Rate Reconciliation (Details) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory income tax expense/benefit | 21.00% | 21.00% |
State income taxes, net of federal benefit | 2.90% | 3.30% |
Permanent differences | 0.40% | (8.20%) |
Change in valuation allowance | (14.00%) | |
Tax credits | (2.00%) | (6.30%) |
Other | (0.60%) | |
Total income tax expense (benefit) | 21.70% | 4.20% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Nov. 30, 2021 | May 08, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Current Income Tax Expense (Benefit) | $ 2,900,000 | $ 384,000 | |||
Effective Income Tax Rate Reconciliation, Percent | 21.70% | 4.20% | |||
Debt Instrument, Description | All of the notices received forgave 100% of each of the 11 PPP loans totaling the amount of $5.3 million in principal and interest and were included in non-operating gains (losses), net in our consolidated statement of operations | ||||
Debt forgiveness | $ 124,000 | ||||
Debt Instrument, Periodic Payment, Principal | 85,000 | ||||
Debt plus accrued interest | $ 41,000 | ||||
CARES Act [Member] | Our Shared-Services [Member] | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Proceeds from Loans | $ 1,100,000 | ||||
CARES Act [Member] | Ten of Our Restaurant [Member] | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Proceeds from Loans | 4,200,000 | ||||
CARES Act [Member] | One of Our Lounges [Member] | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Proceeds from Loans | 124,000 | ||||
Minimum [Member] | CARES Act [Member] | Ten of Our Restaurant [Member] | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Subsidiary or Equity Method Investee, Cumulative Proceeds Received on All Transactions | 271,000 | ||||
Maximum [Member] | CARES Act [Member] | Ten of Our Restaurant [Member] | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Subsidiary or Equity Method Investee, Cumulative Proceeds Received on All Transactions | $ 579,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Apr. 10, 2014 | Apr. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2015 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2015 | Sep. 30, 2021 |
Loss 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 | $ 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, current | $ 398,000 | $ 813,000 | ||||||
Payments for Legal Settlements | 192,000 | $ 152,000 | ||||||
Indemnity Insurance Corporation [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Percentage of Costs of Litigation | 100.00% | |||||||
Compensatory Damages [Member] | JAI Phoenix [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, damages sought, value | $ 1,400,000 | |||||||
Punitive Damages [Member] | JAI Phoenix [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Loss contingency, damages sought, value | $ 4,000,000 | |||||||
Settlement Agreement [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Payment of settlement amount | $ 687,815 | |||||||
Litigation settlement, expense | 195,815 | |||||||
Settlement amount net of interest | $ 8,200 | |||||||
Settlement of Lawsuits [Member] | ||||||||
Loss Contingencies [Line Items] | ||||||||
Accrued Liabilities | $ 245,000 | $ 378,000 |
Schedule of Segment Reporting I
Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | |||
Total Revenues | $ 61,836 | $ 38,398 | |
Total Income (loss) from operations | 15,911 | 6,583 | |
Total Depreciation and amortization | 2,194 | 2,023 | |
Total Capital expenditures | 9,850 | 1,289 | |
Total assets | 465,678 | $ 364,619 | |
Nightclubs [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenues | 46,781 | 25,197 | |
Total Income (loss) from operations | 18,736 | 8,495 | |
Total Depreciation and amortization | 1,547 | 1,324 | |
Total Capital expenditures | 9,228 | 1,130 | |
Total assets | 377,611 | 280,561 | |
Bombshells [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenues | 14,771 | 13,006 | |
Total Income (loss) from operations | 2,802 | 2,717 | |
Total Depreciation and amortization | 429 | 457 | |
Total Capital expenditures | 304 | 151 | |
Total assets | 52,385 | 52,073 | |
Other Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Revenues | 284 | 195 | |
Total Income (loss) from operations | (43) | (75) | |
Total Depreciation and amortization | 6 | 36 | |
Total Capital expenditures | 189 | 3 | |
Total assets | 2,059 | 1,573 | |
General Corporate [Member] | |||
Segment Reporting Information [Line Items] | |||
Total Income (loss) from operations | (5,584) | (4,554) | |
Total Depreciation and amortization | 212 | 206 | |
Total Capital expenditures | 129 | $ 5 | |
Total assets | $ 33,623 | $ 30,412 |
Segment Information (Details Na
Segment Information (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Total revenues | $ 61,836,000 | $ 38,398,000 |
Nightclubs and Corporate Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 168,000 | 110,000 |
Nightclubs and Corporate Segments [Member] | Intercompany Rental Revenue [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 3,200,000 | |
Other Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 284,000 | 195,000 |
Other Segment [Member] | Intercompany Sales [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 69,000 | 26,000 |
Nightclubs [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | $ 46,781,000 | 25,197,000 |
Nightclubs [Member] | Intercompany Rental Revenue [Member] | ||
Segment Reporting Information [Line Items] | ||
Total revenues | $ 2,800,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Oct. 12, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 30, 2020 | Oct. 18, 2021 | Sep. 30, 2021 |
Related Party Transaction [Line Items] | ||||||
Indebtedness, net of debt discount and issuance costs | $ 98,500,000 | $ 99,700,000 | ||||
Due from Related Parties | $ 17,000,000 | |||||
Proceeds from Related Party Debt | 650,000 | $ 0 | ||||
Ownership percentage | 100.00% | |||||
Ed Anakar and Nourdean Anakar [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Proceeds from Related Party Debt | 500,000 | |||||
Allen Chhay and Bradley Chhay [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Proceeds from Related Party Debt | $ 150,000 | |||||
Sherwood Forest Creations, LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | 24,037 | $ 0 | ||||
Nottingham Creations and Sherwood Forest Creations LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due from related parties | 0 | 12,205 | ||||
TW Mechanical LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | 80,996 | 7,130 | ||||
Due from related parties | $ 752 | $ 7,500 | ||||
Ownership percentage | 50.00% | |||||
TW Mechanical LLC [Member] | Third-Party General Contractor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | $ 0 | $ 0 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases | ||
Operating lease expense - fixed payments | $ 1,131 | |
Variable lease expense | 334 | 64 |
Short-term equipment and other lease expense (includes $72 and $57 recorded in advertising and marketing, and $84 and $88 recorded in repairs and maintenance for the three months ended December 31, 2021 and 2020, respectively; see Note 6) | 330 | 229 |
Sublease income | (2) | (2) |
Total lease expense, net | 1,793 | 1,120 |
Operating cash outflows from operating leases | $ 1,749 | $ 1,091 |
Weighted average remaining lease term | 12 years 4 months 24 days | 12 years |
Weighted average discount rate | 5.70% | 6.10% |
Schedule of Lease Expense (De_2
Schedule of Lease Expense (Details) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Marketing and Advertising Expense | $ 2,383 | $ 1,189 |
Cost of Property Repairs and Maintenance | 725 | 573 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Marketing and Advertising Expense | 72 | 57 |
Cost of Property Repairs and Maintenance | $ 83 | $ 88 |
Schedule of Future Maturities o
Schedule of Future Maturities of Lease Liabilities (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Lessee, Lease, Description [Line Items] | |
January - December 2022 | $ 4,346 |
January - December 2023 | 4,218 |
January - December 2024 | 4,265 |
January - December 2025 | 4,343 |
January - December 2026 | 4,395 |
Thereafter | 31,018 |
Future maturities of lease liabilities | 52,585 |
Principal Payments [Member] | |
Lessee, Lease, Description [Line Items] | |
January - December 2022 | 2,288 |
January - December 2023 | 2,291 |
January - December 2024 | 2,475 |
January - December 2025 | 2,702 |
January - December 2026 | 2,915 |
Thereafter | 24,771 |
Future maturities of lease liabilities | 37,442 |
Interest Payments [Member] | |
Lessee, Lease, Description [Line Items] | |
January - December 2022 | 2,058 |
January - December 2023 | 1,927 |
January - December 2024 | 1,790 |
January - December 2025 | 1,641 |
January - December 2026 | 1,480 |
Thereafter | 6,247 |
Future maturities of lease liabilities | $ 15,143 |