Unless the context requires otherwise, references to “we,” “us,” “our,” “ARKR” and the “Company” refer specifically to Ark Restaurants Corp., and its subsidiaries, partnerships, variable interest entities and predecessor entities.

~~- 2 -~~

Part I. Financial Information

Item 1. Consolidated Condensed Financial Statements

~~ARK RESTAURANTS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED CONDENSED BALANCE SHEETS~~

~~(In Thousands, Except Per Share Amounts)~~

December 30,
2017 September 30,
2017
(unaudited) (see Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (includes $153 at December 30, 2017 and $363 at September 30, 2017 related to VIEs) $ 153 $ 1,406
Accounts receivable (includes $344 at December 30, 2017 and $367 at September 30, 2017 related to VIEs) 3,369 3,353
Employee receivables 374 399
Inventories (includes $27 at December 30, 2017 and $22 at September 30, 2017 related to VIEs) 2,028 1,992
Prepaid and refundable income taxes (includes $228 at December 30, 2017 and $226 at September 30, 2017 related to VIEs) 833 945
Prepaid expenses and other current assets (includes $57 at December 30, 2017 and $63 at September 30, 2017 related to VIEs) 1,800 1,988
Total current assets 8,557 10,083
FIXED ASSETS - Net (includes $2 at December 30, 2017 and $6 at September 30, 2017 related to VIEs) 46,477 45,215
INTANGIBLE ASSETS - Net 385 409
GOODWILL 9,880 9,880
TRADEMARKS 3,331 3,331
DEFERRED INCOME TAXES 2,694 1,491
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK 6,993 6,979
OTHER ASSETS (includes $71 at December 30, 2017 and September 30, 2017 related to VIEs) 2,679 2,679
TOTAL ASSETS $ 80,996 $ 80,067

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable - trade (includes $53 at December 30, 2017 and $116 at September 30, 2017 related to VIEs) $ 5,041 $ 4,750
Accrued expenses and other current liabilities (includes $310 at December 30, 2017 and $260 at September 30, 2017 related to VIEs) 9,035 10,176
Dividend payable - 857
Borrowings under credit facility 8,498 6,198
Current portion of notes payable 4,180 4,174
Total current liabilities 26,754 26,155
OPERATING LEASE DEFERRED CREDIT (includes $42 at December 30, 2017 and $51 at September 30, 2017 related to VIEs) 3,570 3,648
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs 7,473 7,824
TOTAL LIABILITIES 37,797 37,627

COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $.01 per share - authorized, 10,000 shares; issued and outstanding, 3,436 shares at December 30, 2017 and 3,428 shares at September 30, 2017 34 34
Additional paid-in capital 12,799 12,639
Retained earnings 28,539 27,771
Total Ark Restaurants Corp. shareholders’ equity 41,372 40,444
NON-CONTROLLING INTERESTS 1,827 1,996
TOTAL EQUITY 43,199 42,440
TOTAL LIABILITIES AND EQUITY $ 80,996 $ 80,067

ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)



	December 28, 2019		September 28, 2019
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents (includes $95 at December 28, 2019 and $170 at September 28, 2019 related to VIEs)	$	7,211	$	7,177
Accounts receivable (includes $266 at December 28, 2019 and $219 at September 28, 2019 related to VIEs)	2,407		2,621
Employee receivables	433		414
Inventories (includes $34 at December 28, 2019 and $41 at September 28, 2019 related to VIEs)	3,247		2,222
Prepaid and refundable income taxes (includes $254 at December 28, 2019 and $254 at September 28, 2019 related to VIEs)	254		254
Prepaid expenses and other current assets (includes $13 at December 28, 2019 and $12 at September 28, 2019 related to VIEs)	706		1,021
Total current assets	14,258		13,709
FIXED ASSETS - Net (includes $236 at December 28, 2019 and September 28, 2019 related to VIEs)	39,107		47,781
OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $2,846 at December 28, 2019 related to VIEs)	60,749		—
INTANGIBLE ASSETS - Net	291		303
GOODWILL	15,570		15,570
TRADEMARKS	3,720		3,720
DEFERRED INCOME TAXES	3,981		4,106
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK	6,834		6,821
OTHER ASSETS (includes $82 at December 28, 2019 and September 28, 2019 related to VIEs)	2,640		2,642
TOTAL ASSETS	$	147,150	$	94,652

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable - trade (includes $75 at December 28, 2019 and $65 at September 28, 2019 related to VIEs)	$	4,318	$	3,549
Accrued expenses and other current liabilities (includes $431 at December 28, 2019 and $440 at September 28, 2019 related to VIEs)	9,761		10,672
Accrued income taxes	471		285
Dividend payable	875		875
Current portion of notes payable	2,701		2,701
Current portion of operating lease liabilities (includes $211 at December 28, 2019 related to VIEs)	6,218		—
Total current liabilities	24,344		18,082
OPERATING LEASE DEFERRED CREDIT (includes ($30) at September 28, 2019 related to VIEs)	—		10,077
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs	23,121		23,786
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $2,614 at December 28, 2019 related to VIEs)	56,242		—
TOTAL LIABILITIES	103,707		51,945
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $.01 per share - authorized, 10,000 shares; issued and outstanding, 3,499 shares at December 28, 2019 and September 28, 2019	35		35
Additional paid-in capital	13,289		13,277
Retained earnings	29,190		28,552
Total Ark Restaurants Corp. shareholders’ equity	42,514		41,864
NON-CONTROLLING INTERESTS	929		843
TOTAL EQUITY	43,443		42,707
TOTAL LIABILITIES AND EQUITY	$	147,150	$	94,652

See notes to consolidated condensed financial statements.

~~- 3 -~~

ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

(In Thousands, Except Per Share Amounts)

~~ARK RESTAURANTS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)~~

~~FOR THE 13 WEEKS ENDED DECEMBER 30, 2017 AND DECEMBER 31, 2016~~

~~(In Thousands, Except Per Share Amounts)~~

13 Weeks Ended
December 30,
2017 December 31,
2016

REVENUES:
Food and beverage sales $ 38,617 $ 37,953
Other revenue 735 467
Total revenues 39,352 38,420
COSTS AND EXPENSES:
Food and beverage cost of sales 10,230 9,750
Payroll expenses 13,710 12,956
Occupancy expenses 5,031 4,732
Other operating costs and expenses 5,117 4,866
General and administrative expenses 3,079 3,300
Depreciation and amortization 1,303 1,483
Total costs and expenses 38,470 37,087
RESTAURANT OPERATING INCOME 882 1,333
Gain on sale of Ark Jupiter RI, LLC - 1,637
OPERATING INCOME 882 2,970
OTHER (INCOME) EXPENSE:
Interest expense 233 101
Interest income (14 ) (96 )
Total other (income) expense, net 219 5
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES 663 2,965
Provision (benefit) for income taxes (1,078 ) 880
CONSOLIDATED NET INCOME 1,741 2,085
Net income attributable to non-controlling interests (114 ) (351 )
NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP. $ 1,627 $ 1,734
NET INCOME PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic $ 0.47 $ 0.51
Diluted $ 0.46 $ 0.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic 3,432 3,423
Diluted 3,549 3,507



	13 Weeks Ended
	December 28, 2019			December 29, 2018
REVENUES:
Food and beverage sales	$	42,829		$	39,838
Other revenue	685			710
Total revenues	43,514			40,548

COSTS AND EXPENSES:
Food and beverage cost of sales	10,940			10,476
Payroll expenses	15,122			14,105
Occupancy expenses	5,439			5,005
Other operating costs and expenses	5,328			4,975
General and administrative expenses	3,054			3,409
Depreciation and amortization	1,195			1,206
Total costs and expenses	41,078			39,176
RESTAURANT OPERATING INCOME	2,436			1,372
Loss on closure of Durgin-Park	—			(1,067		)
OPERATING INCOME	2,436			305
OTHER (INCOME) EXPENSE:
Interest expense	459			311
Interest income	(13		)	(14		)
Total other expense, net	446			297
INCOME BEFORE PROVISION FOR INCOME TAXES	1,990			8
Provision for income taxes	319			23
CONSOLIDATED NET INCOME (LOSS)	1,671			(15		)
Net income attributable to non-controlling interests	(158		)	(47		)
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$	1,513		$	(62	)

NET INCOME (LOSS) PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic	$	0.43		$	(0.02	)
Diluted	$	0.43		$	(0.02	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	3,499			3,474
Diluted	3,541			3,474

See notes to consolidated condensed financial statements.

~~- 4 -~~

ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (Unaudited) FOR THE 13 WEEKS ENDED DECEMBER 28, 2019 AND DECEMBER 29, 2018

(In Thousands, Except Per Share Amounts)

~~ARK RESTAURANTS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (Unaudited)~~

~~FOR THE 13 WEEKS ENDED DECEMBER 30, 2017 AND DECEMBER 31, 2016~~

~~(In Thousands, Except Per Share Amounts)~~

Common Stock Additional
Paid-In Retained Total Ark
Restaurants
Corp.
Shareholders’ Non-
controlling Total
Shares Amount Capital Earnings Equity Interests Equity

BALANCE - October 1, 2016 3,423 $ 34 $ 12,942 $ 27,158 $ 40,134 $ 2,570 $ 42,704

Net income - - - 1,734 1,734 351 2,085
Change in excess tax benefits from stock-based compensation - - (397 ) - (397 ) - (397 )
Distributions to non-controlling interests - - - - - (622 ) (622 )
Dividends paid - $0.25 per share - - - (856 ) (856 ) - (856 )

BALANCE - December 31, 2016 3,423 $ 34 $ 12,545 $ 28,036 $ 40,615 $ 2,299 $ 42,914

BALANCE - September 30, 2017 3,428 $ 34 $ 12,639 $ 27,771 $ 40,444 $ 1,996 $ 42,440

Net income - - - 1,627 1,627 114 1,741
Exercise of stock options 8 - 148 - 148 - 148
Tax benefit on exercise of stock options - - 12 - 12 - 12
Distributions to non-controlling interests - - - - - (283 ) (283 )
Dividends paid - $0.25 per share - - - (859 ) (859 ) - (859 )

BALANCE - December 30, 2017 3,436 $ 34 $ 12,799 $ 28,539 $ 41,372 $ 1,827 $ 43,199




	Common Stock			Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity
	Shares	Amount		Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity

BALANCE - September 29, 2018	3,470	$	35	$	12,897	$	29,364		$	42,296		$	1,440		$	43,736

Net income	—	—		—		(62		)	(62		)	47			(15		)
Exercise of stock options	7	—		94		—			94			—			94
Stock-based compensation	—	—		12		—			12			—			12
Distributions to non-controlling interests	—	—		—		—			—			(97		)	(97		)
Dividends paid - $0.25 per share	—	—		—		(868		)	(868		)	—			(868		)

BALANCE - December 29, 2018	3,477	$	35	$	13,003	$	28,434		$	41,472		$	1,390		$	42,862



	Common Stock			Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity
	Shares	Amount		Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity

BALANCE - September 28, 2019	3,499	$	35	$	13,277	$	28,552		$	41,864		$	843		$	42,707

Net income	—	—		—		1,513			1,513			158			1,671
Stock-based compensation	—	—		12		—			12			—			12
Distributions to non-controlling interests	—	—		—		—			—			(72		)	(72		)
Dividends accrued - $0.25 per share	—	—		—		(875		)	(875		)	—			(875		)

BALANCE - December 28, 2019	3,499	$	35	$	13,289	$	29,190		$	42,514		$	929		$	43,443

See notes to consolidated condensed financial statements.

~~- 5 -~~

ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In Thousands)

~~ARK RESTAURANTS CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)~~

~~FOR THE 13 WEEKS ENDED DECEMBER 30, 2016 AND DECEMBER 31, 2016~~

~~(In Thousands)~~

13 Weeks Ended
December 30,
2017 December 31,
2016

CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $ 1,741 $ 2,085
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Gain on sale of Ark Jupiter RI, LLC - (1,637 )
Deferred income taxes (1,191 ) (13 )
Accrued interest on note receivable from NMR (14 ) -
Depreciation and amortization 1,303 1,483
Amortization of deferred financing costs 6 11
Operating lease deferred credit (78 ) (52 )
Changes in operating assets and liabilities:
Accounts receivable (16 ) 18
Inventories (36 ) 24
Prepaid, refundable and accrued income taxes 112 855
Prepaid expenses and other current assets 188 470
Other assets - 29
Accounts payable - trade 291 587
Accrued expenses and other current liabilities (1,141 ) (2,036 )
Net cash provided by operating activities 1,165 1,824
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets (2,541 ) (1,716 )
Loans and advances made to employees (25 ) (20 )
Payments received on employee receivables 50 45
Proceeds from the sale of Ark Jupiter RI, LLC - 2,474
Purchase of the Oyster House - (3,043 )
Net cash used in investing activities (2,516 ) (2,260 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (351 ) (663 )
Borrowings under credit facility 2,300 -
Dividends paid (1,716 ) (856 )
Proceeds from issuance of stock upon exercise of stock options 148 -
Distributions to non-controlling interests (283 ) (622 )
Net cash provided by (used in) financing activities 98 (2,141 )
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,253 ) (2,577 )
CASH AND CASH EQUIVALENTS, Beginning of period 1,406 7,239
CASH AND CASH EQUIVALENTS, End of period $ 153 $ 4,662
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 227 $ 101
Income taxes $ 2 $ 37
Non-cash financing activities:
Note payable in connection with the purchase of the Oyster House $ - $ 8,000
Change in excess tax benefits from stock-based compensation $ 12 $ (397 )



	13 Weeks Ended
	December 28, 2019			December 29, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	1,671		$	(15	)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:
Stock-based compensation	12			12
Asset impairment on closure of Durgin-Park	—			1,067
Deferred income taxes	125			26
Accrued interest on note receivable from NMR	(13		)	(15		)
Depreciation and amortization	1,195			1,206
Amortization of deferred financing costs	10			8
Operating lease deferred credit	(98		)	(171		)
Changes in operating assets and liabilities:
Accounts receivable	214			440
Inventories	(1,025		)	(28		)
Prepaid, refundable and accrued income taxes	186			294
Prepaid expenses and other current assets	315			(66		)
Other assets	2			41
Accounts payable - trade	769			(521		)
Accrued expenses and other current liabilities	(911		)	(1,438		)
Net cash provided by operating activities	2,452			840

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets	(777		)	(554		)
Loans and advances made to employees	(68		)	(113		)
Payments received on employee receivables	49			48
Net cash used in investing activities	(796		)	(619		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable	(675		)	(311		)
Dividends paid	(875		)	(1,736		)
Proceeds from issuance of stock upon exercise of stock options	—			94
Distributions to non-controlling interests	(72		)	(97		)
Net cash used in financing activities	(1,622		)	(2,050		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	34			(1,829		)
CASH AND CASH EQUIVALENTS, Beginning of period	7,177			5,012
CASH AND CASH EQUIVALENTS, End of period	$	7,211		$	3,183

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	379		$	210
Income taxes	$	8		$	10
Non-cash financing activities:
Accrued dividend	$	875		$	—

See notes to consolidated condensed financial statements.

~~- 6 -~~

ARK RESTAURANTS CORP. AND SUBSIDIARIES

NOTES TO ~~CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~December 30, 2017~~

~~(Unaudited)~~

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

December 28, 2019

(Unaudited)


1.	BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES

The consolidated condensed balance sheet as of September ~~30, 2017,~~28, 2019, which has been derived from audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended September ~~30, 2017~~28, 2019 (“Form 10-K”), and the unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. All adjustments that, in the opinion of management are necessary for a fair presentation for the periods presented, have been reflected as required by Article 10 of Regulation S-X. Such adjustments are of a normal, recurring nature. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

The Company had a working capital deficiency of ~~$18,197,000~~$10,086,000 at December ~~30, 2017 primarily as a result of our purchase of The Oyster House properties in November 2016 and costs associated with the renovation of our Sequoia property in Washington, DC.~~28, 2019. We believe that our existing cash balances, current banking facilities and cash provided by operations will be sufficient to meet our liquidity and capital spending requirements at least through February 13, 2019. In addition, the Company is in the process of negotiating an increase in the amounts available under its existing credit facility and refinancing outstanding borrowings over longer repayment periods. Such refinancing is expected to be completed in Q2 2018.

USE OF ESTIMATES — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three months ended December 30, 2017 are not necessarily indicative of the results to be expected for any other interim period or for the year ending September 29, 2018.

12, 2021.

PRINCIPLES OF CONSOLIDATION — The consolidated condensed interim financial statements include the accounts of Ark Restaurants Corp. and all of its wholly-owned subsidiaries, partnerships and other entities in which it has a controlling interest, collectively herein referred to as the “Company”. Also included in the consolidated condensed interim financial statements are certain variable interest entities (“VIEs”). All significant intercompany balances and transactions have been eliminated in consolidation.

~~RECLASSIFICATIONS~~

USE OF ESTIMATES — ~~Certain reclassifications have been made to the prior year’s~~The preparation of financial statements in conformity with GAAP requires us to ~~enhance comparability with~~make estimates and assumptions that affect the ~~current year’s presentation~~reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include allowances for potential bad debts on receivables, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments and share-based compensation, the realizable value of its tax assets and determining when investment impairments are other-than-temporary. Because of the uncertainty in such estimates, actual results may differ from these estimates. The results of operations for the 13 weeks ended December 28, 2019 are not necessarily indicative of the results to be expected for any other ~~income. As a result, comparative figures have been adjusted to conform to~~interim period or for the ~~current year’s presentation.~~

year ending October 3, 2020.

SEASONALITY — The Company has substantial fixed costs that do not decline proportionally with sales. The first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants.

FAIR VALUE OF FINANCIAL INSTRUMENTS — The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair values of notes receivable and payable are determined using current applicable rates for similar instruments as of the balance sheet ~~date~~dates and approximate the carrying value of such debt instruments.

CASH AND CASH EQUIVALENTS — Cash and cash equivalents include cash on hand, deposits with banks and highly liquid investments generally with original maturities of three months or less. Outstanding checks in excess of account balances, typically vendor payments, payroll and other contractual obligations disbursed after the last day of a reporting period are reported as a current liability in the accompanying consolidated condensed balance sheets.

CONCENTRATIONS OF CREDIT RISK— Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions with high credit ratings. At times, such amounts may exceed Federally insured limits. Accounts receivable are primarily comprised of normal business receivables, such as credit card receivables, that are ~~paid off~~collected in a short period of time and amounts due from the hotel operators where the Company has a location, and are recorded ~~when~~upon satisfaction of the ~~products or services have been delivered.~~performance obligation. The Company reviews the collectability of its

~~- 7 -~~

receivables on an ongoing basis, and provides for an allowance when it considers the entity unable to meet its obligation. The concentration of credit risk with respect to accounts

receivable is generally limited due to the short payment terms extended by the Company and the number of customers comprising the Company’s customer base.

As of December ~~30, 2017 and September 30, 2017,~~28, 2019, the Company had accounts receivable balances due from ~~two~~one hotel ~~operators~~operator totaling ~~48% and 39%, respectively,~~38% of total accounts receivable.

As of September 28, 2019, the Company had accounts receivable balances due from one hotel operator totaling 34% of total accounts receivable.

For the 13-week period ended December ~~30, 2017~~28, 2019, the Company did not make purchases from any vendor that accounted for 10% or greater of total purchases for the respective period. For the 13-week period ended December 29, 2018, the Company made purchases from one vendor that accounted for ~~10%~~11% of total purchases. ~~For~~

As of December 28, 2019 and September 28, 2019, all debt outstanding is with one lender (see Note 7 – Notes Payable – Bank).

REVENUE RECOGNITION — We recognize revenues when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer. Revenues from restaurant operations are presented net of discounts, coupons, employee meals and complimentary meals and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Catering service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate for the service. Revenues from catered events are recognized in income upon satisfaction of the performance obligation (the date the event is held) and all customer payments, including nonrefundable upfront deposits, are deferred as a liability until such time. We recognized $5,682,000 and $5,830,000 in catering services revenue for the 13-week ~~period~~periods ended December ~~31, 2016,~~28, 2019 and December 29, 2018, respectively. Unearned revenue which is included in accrued expenses and other current liabilities on the ~~Company did~~consolidated condensed balance sheets as of December 28, 2019 and September 28, 2019, was $3,067,000 and $4,549,000, respectively.

LEASES — We determine if an arrangement contains a lease at inception. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. As a lessee, we include operating leases in Operating lease right-of-use assets and Operating lease liabilities in our consolidated condensed balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. As most of our leases do not ~~make purchases from any one vendor~~provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Our lease terms may include options to extend or terminate the lease. Options are included when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with a lease term of 12 months or less are accounted for ~~10% or greater~~using the practical expedient which allows for straight-line rent expense over the remaining term of ~~total purchases.~~

the lease.

SEGMENT REPORTING — As of December ~~30, 2017,~~28, 2019, the Company owned and operated 20 restaurants and bars, 1917 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and ~~service,~~services, class of customers and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

~~NEW~~

RECENTLY ADOPTED ACCOUNTING ~~STANDARDS NOT YET ADOPTED~~PRINCIPLES — In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers. The guidance provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. This update is effective for the Company in the first quarter of fiscal 2019, which is when we plan to adopt these provisions. This update permits the use of either the retrospective or cumulative effect transition method, however we have not yet selected a transition method. Upon initial evaluation, we do not believe this guidance will impact our recognition of revenue from company-owned restaurants, which is our primary source of revenue. We are continuing to evaluate the effect this guidance will have on other, less significant revenue sources, including catering revenues. The Company continues to monitor additional changes, modifications, clarifications or interpretations being undertaken by the FASB, which may, in conjunction with the completion of the Company’s overall assessment of the new guidance, impact the Company’s current conclusions.

In February 2016, the FASB issued ASU No. 2016-02, ~~Leases. This update requires a lessee~~Leases (Topic 842), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize ~~on the balance sheet a liability to make~~assets and liabilities for leases with lease ~~payments and a corresponding right-of-use asset.~~terms of more than twelve months. The new guidance also requires ~~certain qualitative and quantitative~~additional disclosures about leases. The Company adopted the ~~amount, timing~~new standard on September 29, 2019 (the first day of fiscal year 2020) using the modified retrospective approach, without restating comparative periods for those lease contracts for which we have taken possession of the property as of September 28, 2019. Accordingly, prior period amounts were not revised and ~~uncertainty~~continue to be reported in accordance with ASC Topic 840 (“ASC 840”), the accounting standard then in effect. As part of ~~cash flows arising from leases. This update is effective for~~our adoption we elected the "package of practical expedients", as well as the hindsight practical expedient, permitted under the new guidance, which, among other things, allowed the Company to continue utilizing historical classifications of leases as well as allowing us to combine lease and non-lease components of our real estate leases. We also elected to adopt the short-term lease exception for all leases with terms of twelve months or less and account for them using straight-line rent expense over the remaining life of the lease. As a result of the adoption of this guidance, we recorded right-of-use assets of $62,330,000 and lease liabilities related to our real estate operating leases of $63,943,000. The adoption of this standard did not materially impact retained earnings or our consolidated condensed statement of operations and had no impact on cash flows.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to non-employees for goods

and services. Under this ASU, the guidance on share-based payments to non-employees would be aligned with the requirements for share-based payments granted to employees, with certain exceptions. The Company adopted this guidance in the first quarter of fiscal ~~2020, which is when we plan to adopt these provisions. We plan to elect the available practical expedients on~~2020. Such adoption and we expect our balance sheet presentation to be materially impacted upon adoption due to the recognition of right-of-use assets and lease liabilities for operating leases. We are continuing to evaluate the effect this guidance willdid not have a material impact on our ~~Consolidated Condensed Financial Statements and related disclosures.~~

consolidated condensed financial statements.

NEW ACCOUNTING STANDARDS NOT YET ADOPTED — In ~~January 2017,~~August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance ~~clarifying~~in ASC 350-40 to determine which implementation costs to capitalize as assets. A customer’s accounting for the ~~definition of a business. The update provides that when substantially all the fair value~~costs of the ~~assets acquired~~hosting component of the arrangement are not affected by the new guidance. This ASU is ~~concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The new rules will be~~ effective for ~~the Company in the first quarter of 2019.~~fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. The ~~Company is currently evaluating the potential impact~~ adoption of this ~~guidance on its Consolidated Condensed Financial Statements.~~

~~In January 2017,~~standard is not expected to result in a material impact to the FASB guidance simplifying the test for goodwill impairment. The update simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount. The new rules will be effective for the Company in the first quarter of 2021. The Company is currently evaluating the potential impact adoption of this guidance on its Consolidated Condensed Financial Statements.

Company’s consolidated condensed financial statements.


2.	VARIABLE INTEREST ENTITIES

The Company consolidates any variable interest entities in which it holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has determined that it is the primary beneficiary of three VIEs and, accordingly, consolidates the financial results of these entities. Following are the required disclosures associated with the Company’s consolidated VIEs:

~~- 8 -~~

December 30,
2017 September 30,
2017
(in thousands)

Cash and cash equivalents $ 153 $ 363
Accounts receivable 344 367
Inventories 27 22
Prepaid and refundable income taxes 228 226
Prepaid expenses and other current assets 57 63
Due from Ark Restaurants Corp. and affiliates (1) 628 534
Fixed assets - net 2 6
Other assets 71 71
Total assets $ 1,510 $ 1,652

Accounts payable - trade $ 53 $ 116
Accrued expenses and other current liabilities 310 260
Operating lease deferred credit 42 51
Total liabilities 405 427
Equity of variable interest entities 1,105 1,225
Total liabilities and equity $ 1,510 $ 1,652



	December 28, 2019		September 28, 2019
	(in thousands)
Cash and cash equivalents	$	95	$	170
Accounts receivable	266		219
Inventories	34		41
Prepaid and refundable income taxes	254		254
Prepaid expenses and other current assets	13		12
Due from Ark Restaurants Corp. and affiliates (1)	394		392
Fixed assets - net	236		236
Operating lease right-of-use assets - net	2,846		—
Other assets	82		82
Total assets	$	4,220	$	1,406

Accounts payable - trade	$	75	$	65
Accrued expenses and other current liabilities	431		440
Current portion of operating lease liabilities	211		—
Operating lease deferred credit	—		(30		)
Operating lease liabilities, less current portion	2,614		—
Total liabilities	3,331		475
Equity of variable interest entities	889		931
Total liabilities and equity	$	4,220	$	1,406


(1)	Amounts Due from and to Ark Restaurants Corp. and affiliates are eliminated upon consolidation.

The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets.


3.	RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

On ~~November 30, 2016,~~May 15, 2019, the Company, through a newly formed, wholly-owned ~~subsidiaries,~~subsidiary, acquired the assets of JB's on the ~~Original Oyster House, Inc.~~Beach, a restaurant and bar located in the City of Gulf Shores, Baldwin County, Alabama and the related real estate and an adjacent retail shopping plaza and the Original Oyster House II, Inc., a restaurant and bar located in the City of Spanish Fort, Baldwin County, Alabama and the related real estate. The total purchase price wasDeerfield Beach, Florida, for ~~$10,750,000 plus inventory of approximately $293,000.~~$7,036,000 as set out below. The acquisition is accounted for as a business combination and was financed with a bank loan from the Company’s existing lender in the amount of ~~$8,000,000~~$7,000,000 and cash from operations.

The fair values of the assets acquired, none of which are amortizable, were allocated as follows (amounts in thousands):

Inventory $ 293
Land and buildings 6,650
Furniture, fixtures and equipment 395
Trademarks 1,720
Goodwill 1,985
$ 11,043

~~The Consolidated Condensed Statements~~



Cash	$	11
Inventory	80
Furniture, fixtures and equipment	200
Trademarks	1,110
Goodwill	5,690
Liabilities assumed	(55		)
	$	7,036

Goodwill recognized in connection with this transaction represents the residual amount of ~~Income~~the purchase price over separately identifiable intangible assets and is expected to be deductible for tax purposes.

Concurrent with the acquisition, the Company entered into a 20 year lease (with a five year extension option) for the ~~13-weeks~~restaurant facility and parking lot with the former owner of JB's on the Beach, who is also the owner of the underlying real estate. Payments under the lease are $600,000 per year with 10% increases every five years.

The consolidated condensed statements of income for the 13 weeks ended December ~~30, 2017~~28, 2019 include revenues and ~~losses~~income of approximately ~~$2,388,000~~$2,422,000 and ~~($125,000),~~$43,000, respectively, related to JB's on the~~Oyster Houseproperties.~~ Beach. The unaudited pro forma financial information set forth below is based upon the Company’s historical ~~Consolidated Condensed Statements~~consolidated condensed statements of ~~Income~~income for the ~~13-weeks~~13 weeks ended December ~~31, 2016~~29, 2018 and includes the results of operations for JB's on the~~Oyster Houseproperties~~ Beach for the period prior to acquisition. The unaudited pro forma financial information (which is presented in thousands except per share and share data), which has been adjusted for payments under the lease discussed above as well as interest expense of the term loan, is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the acquisition of JB's on the~~Oyster Houseproperties~~ Beach occurred on the dates indicated, nor does it purport to represent the results of operations for future periods.



	13 Weeks Ended
	December 29, 2018
	(unaudited)

Total revenues	$	43,144
Net income	$	24
Net income per share - basic	$	0.01
Net income per share - diluted	$	0.01

Basic	3,474
Diluted	3,539

During 2019, the Company was advised by the landlord of our food court at the Hard Rock Casino and Hotel in Hollywood, Florida, that they were exercising their right to relocate our space, at their sole cost, as contractually agreed to in the original lease. The new facilities were completed on September 16, 2019, on which date we closed our existing location and opened the new facilities. The Company recorded the value of the renovations made by the landlord, which includes leasehold improvements and furniture, fixtures and equipment, in the amount of $5,474,000 with a corresponding increase in deferred rent. The net book value of the existing

leasehold improvements relating to the original location in the amount of $918,000 is being reflected as a reduction of deferred rent on a straight-line basis over the remaining lease term.

During 2019, the Company was advised by the landlord of our food court at the Hard Rock Casino and Hotel in Tampa, Florida, that they were exercising their right to renovate the front of the house space, at their sole cost, as contractually agreed to in the original lease. In connection with this renovation we closed our existing facilities on June 2, 2019 and re-opened the renovated facilities on September 28, 2019. The Company recorded the value of the renovations made by the landlord, which includes leasehold improvements and furniture, fixtures and equipment, in the amount of $3,179,000 with a corresponding increase in deferred rent. The net book value of the existing leasehold improvements relating to the original location in the amount of $459,000 is being reflected as a reduction of deferred rent on a straight-line basis over the remaining lease term.

Upon adoption of ASC 842, the unamortized Hollywood and Tampa balances of leasehold improvements and deferred rent in the amounts of $8,269,000 and $7,198,000, respectively were reclassified as right-of-use assets in the net amount of $1,071,000 and are being amortized to lease expense on a straight line basis over the remaining terms of the respective leases.

~~- 9 -~~

13 Weeks Ended
December 31,
2016
(unaudited)

Total revenues $ 40,233
Net income $ 1,941
Net income per share - basic $ 0.57
Net income per share - diluted $ 0.55

Basic 3,423
Diluted 3,507

4.	RECENT RESTAURANT DISPOSITIONS

~~Lease Expirations~~ ~~– The~~

As of December 29, 2018, the Company ~~was advised by the landlord~~determined that it would ~~have~~not be able to ~~vacate~~~~The Grill at Two Trees~~ ~~property~~operate Durgin-Park profitably due to decreased traffic at the ~~Foxwoods Resort~~Faneuil Hall Marketplace in Boston, MA, where it was located, and ~~Casino~~rising labor costs. As a result, included in ~~Ledyard, CT~~,~~which had a no rent lease. The~~the consolidated condensed statements of income for the 13 weeks ended December 29, 2018, are losses on closure ~~of this property occurred on January 1, 2017 and did not result in a material charge.~~

~~Other~~ – On November 18, 2016, Ark Jupiter RI, LLC (“Ark Jupiter”), a wholly-owned subsidiary of the Company, entered into a ROFR Purchase and Sale Agreement (the “ROFR”) with SCFRC-HWG, LLC, the landlord (the “Seller”) to purchase the land and building in which the Company operates its~~Rustic Inn~~location in Jupiter, Florida. The Seller had entered into a Purchase and Sale Agreement with a third party to sell the premises; however, Ark Jupiter’s lease provided the Company with a right of first refusal to purchase the property. Ark Jupiter exercised the ROFR on October 4, 2016 and made a ten (10%) percent deposit on the purchase price of approximately Five Million Two Hundred Thousand Dollars ($5,200,000). Concurrent with the execution of the ROFR, Ark Jupiter entered into a Purchase and Sale Agreement with 1065 A1A, LLC to sell this same property for Eight Million Two Hundred Fifty Thousand Dollars ($8,250,000). In connection with the sale, Ark Jupiter and 1065 A1A, LLC entered into a temporary lease and sub-lease arrangement which expired on July 18, 2017. The Company vacated the space in June 2017. In connection with these transactions the Company recognized a gain in the amount of ~~$1,637,000 during the 13-weeks ended December 31, 2016.~~

~~The Company transferred its lease and the related assets~~$1,067,000 consisting of: (i) impairment of~~Canyon Road~~ ~~located in New York, NY to a former employee. In connection with this transfer, the Company recognized an impairment loss included in depreciation and amortization expense~~ trademarks in the amount of ~~$75,000 for~~$721,000, (ii) accelerated depreciation of fixed assets in the ~~13-weeks ended December 31, 2016.~~

amount of $333,000, and (iii) write-offs of prepaid and other expenses in the amount of $13,000. The restaurant closed on January 12, 2019.


5.	INVESTMENT IN NEW MEADOWLANDS RACETRACK

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a then 63.7% ownership interest. On November 19, 2013, the Company invested an additional $464,000 in NMR through a purchase of an additional membership interest in Meadowlands Newmark, LLC resulting in a total ownership of 11.6% of Meadowlands Newmark, LLC, and an effective ownership interest in NMR of 7.4%, subject to dilution. In 2015, the Company invested an additional $222,000 in NMR and on February 7, 2017, the Company invested an additional $222,000 in NMR, both as a result of capital calls, bringing its total investment to $5,108,000 with no change in ownership. ~~This~~As of September 29, 2018, this investment ~~has been~~was accounted for based on the cost method.

As of September 30, 2018, the Company elected to account for this investment at cost, less impairment, adjusted for subsequent observable price changes in accordance with ASU No. 2016-01. Such change did not affect the value of our investment in NMR as no events or changes in circumstances occurred during the 13 weeks ended December 28, 2019 that would indicate impairment and there are no observable prices for this investment. Any future changes in the carrying value of our Investment in NMR will be reflected in earnings.

In addition to the Company’s ownership interest in NMR through Meadowlands Newmark, LLC, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, neither of which can be assured, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

In conjunction with this investment, the Company, through a ~~98%~~97% owned subsidiary, Ark Meadowlands LLC (“AM VIE”), also entered into a long-term agreement with NMR for the exclusive right to operate food and beverage concessions serving the new raceway facilities (the “Racing F&B Concessions”) located in the new raceway grandstand constructed at the Meadowlands Racetrack in northern New Jersey. Under the agreement, NMR is responsible to pay for the costs and expenses incurred in the operation of the Racing F&B Concessions, and all revenues and profits thereof inure to the benefit of NMR. AM VIE receives an annual fee equal to 5% of the net profits received by NMR from the Racing F&B Concessions during each calendar year. ~~At December 30, 2017, it was determined that~~ AM VIE is a variable interest ~~entity. However,~~entity; however, based on qualitative consideration of the contracts with AM VIE, the operating structure of AM VIE, the Company’s role with AM VIE, and that the Company is not obligated to absorb expected losses of AM VIE, the Company has concluded that it is not the primary beneficiary and not required to consolidate the operations of AM VIE.

~~- 10 -~~

The Company’s maximum exposure to loss as a result of its involvement with AM VIE is limited to aany receivable from AM VIE’s primary beneficiary (NMR, a related party) ~~which aggregated approximately $5,000 and $9,000 at~~. As of December ~~30, 2017~~28, 2019 and September ~~30, 2017, respectively, and are included in Prepaid Expenses and Other Current Assets in the Consolidated Condensed Balance Sheets.~~

29, 2018, no amounts were due AM VIE by NMR.

On April 25, 2014, the Company loaned $1,500,000 to Meadowlands Newmark, LLC. The note bears interest at 3%, compounded monthly and added to the principal, and is due in its entirety on January 31, 2024. The note may be prepaid, in whole or in part, at

any time without penalty or premium. On July 13, 2016, the Company made an additional loan to Meadowlands Newmark, LLC in the amount of $200,000. Such amount is subject to the same terms and conditions as the original loan as discussed above. The principal and accrued interest related to this note in the amounts of ~~$1,885,000~~$1,726,000 and ~~$1,871,000,~~$1,713,000 are included in Investment In and Receivable From New Meadowlands Racetrack in the ~~Consolidated Balance Sheets~~consolidated condensed balance sheets at December ~~30, 2017~~28, 2019 and September ~~30, 2017,~~28, 2019, respectively.

In accordance with the cost method, our initial investment is recorded at cost and we record dividend income when applicable, if dividends are declared. We review our Investment in NMR each reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on its fair value, such as the defeat of the referendum for casino gaming in Northern New Jersey in November 2016. State law prohibits the issue from being put on the ballot before voters for the following two years. As a result, we performed an assessment of the recoverability of our indirect Investment in NMR as of September 30, 2017 which included estimates requiring significant management judgment, include inherent uncertainties and are often interdependent; therefore, they do not change in isolation. Factors that management estimated include, among others, the probability of gambling being approved in Northern NJ which is the most heavily weighted assumption and NMR obtaining a license to operate a casino, revenue levels, cost of capital, marketing spending, tax rates and capital spending.

In performing this assessment, we estimated the fair value of our Investment in NMR using our best estimate of these assumptions which we believe would be consistent with what a hypothetical marketplace participant would use. The variability of these factors depends on a number of conditions, including uncertainty about future events and our inability as a minority shareholder to control certain outcomes and thus our accounting estimates may change from period to period. If other assumptions and estimates had been used when these tests were performed, impairment charges could have resulted. As a result of the above, no impairment was deemed necessary as of December 30, 2017.


6.	ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

December 30,
2017 September 30,
2017
(In thousands)

Sales tax payable $ 1,184 $ 813
Accrued wages and payroll related costs 1,892 2,475
Customer advance deposits 2,782 4,186
Accrued occupancy and other operating expenses 3,177 2,702

$ 9,035 $ 10,176



	December 28, 2019		September 28, 2019
	(In thousands)

Sales tax payable	$	1,666	$	1,141
Accrued wages and payroll related costs	2,348		2,942
Customer advance deposits	3,506		5,071
Accrued occupancy and other operating expenses	2,241		1,518
	$	9,761	$	10,672


7.	NOTES PAYABLE – BANK

Long-term debt consists of the following:

~~- 11 -~~

December 30,
2017 September 30,
2017
(In thousands)

Promissory Note - Rustic Inn purchase $ 2,156 $ 2,290
Promissory Note - Shuckers purchase 3,000 3,083
Promissory Note - Oyster House purchase 6,533 6,667

11,689 12,040
Less: Current maturities (4,180 ) (4,174 )
Less: Unamortized deferred financing costs (36 ) (42 )

Long-term debt $ 7,473 $ 7,824



	December 28, 2019			September 28, 2019
	(In thousands)

Promissory Note - Rustic Inn purchase	$	3,972		$	4,043
Promissory Note - Shuckers purchase	4,590			4,675
Promissory Note - Oyster House purchase	4,573			4,728
Promissory Note - JB's on the Beach purchase	6,500			6,750
Promissory Note - Sequoia renovation	2,972			3,086
Revolving Facility	3,366			3,366
	25,973			26,648
Less: Current maturities	(2,701		)	(2,701		)
Less: Unamortized deferred financing costs	(151		)	(161		)
Long-term debt	$	23,121		$	23,786

On June 1, 2018, the Company refinanced (the "Refinancing") its then existing indebtedness with its current lender, Bank Hapoalim B.M. (“BHBM”), by entering into an amended and restated credit agreement (the "Revolving Facility”), which expires on May 31, 2021. The Revolving Facility provides for total availability of the lesser of (i) $10,000,000 and (ii) $35,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. Borrowings under the Revolving Facility are payable upon maturity of the Revolving Facility with interest payable monthly at LIBOR plus 3.5%, subject to adjustment based on certain ratios. As of December 28, 2019 and September 28, 2019, borrowings of $3,366,000, were outstanding under the Revolving Facility and had a weighted average interest rate of 4.4% and 4.9%, respectively. As of December 28, 2019, $6,396,000 was available under the Revolving Facility.

In connection with the Refinancing, the Company also amended the principal amounts and payment terms of its outstanding term notes with BHBM as follows:

Promissory Note – Rustic Inn purchase – On February 25, 2013, the Company issued a promissory note to ~~Bank Hapoalim B.M. (the “BHBM”)~~BHBM for $3,000,000. The note bore interest at LIBOR plus 3.5% per annum, and was payable in 36 equal monthly installments of $83,333, commencing on March 25, 2013. On February 24, 2014, in connection with the acquisition of~~The~~ the Rustic Inn, the Company borrowed an additional $6,000,000 from BHBM under the same terms and conditions as the original loan which

was consolidated with the remaining principal balance from the original borrowing at that date. The new loan iswas payable in 60 equal monthly installments of $134,722, which commenced on March 25, 2014.

In connection with the Refinancing, this note was amended and restated and increased by $2,783,333 of credit facility borrowings. The new principal amount of $4,400,000, which is secured by a mortgage on the Rustic Inn real estate, is payable in 27 equal quarterly installments of $71,333, commencing on September 1, 2018, with a balloon payment of $2,474,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

Promissory Note – Shuckers purchase – On October 22, 2015, in connection with the acquisition ofShuckers, the Company issued a promissory note to BHBM for $5,000,000. The note ~~bears~~bore interest at LIBOR plus 3.5% per annum, and iswas payable in 60 equal monthly installments of $83,333, commencing on November 22, 2015.

~~Also on October 22, 2015,~~ In connection with the ~~Company also entered into a~~Refinancing, this note was amended and restated and increased by $2,433,324 of credit ~~agreement (the “Revolving Facility”) with BHBM which expires on October 21, 2019 and provides for total availability of the lesser of (i) $10,000,000 and (ii) $20,000,000 less the then aggregate~~facility borrowings. The new principal amount of ~~all indebtedness and obligations to BHBM. Borrowings under the Revolving Facility are evidenced~~$5,100,000, which is secured by a ~~promissory note (the “Revolving Note”)~~mortgage on the Shuckers real estate, is payable in ~~favor~~27 equal quarterly installments of ~~BHBM~~$85,000, commencing on September 1, 2018, with a balloon payment of $2,805,000 on June 1, 2025 and ~~will be payable over five years with~~bears interest at ~~an annual rate equal to~~ LIBOR plus 3.5% per year. On December 12, 2017, the Company amended its Revolving Facility to increase the total availability to be the lesser of (i) $12,000,000 and (ii) $22,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. As of December 30, 2017 and September 30, 2017, borrowings of $8,498,000 and $6,198,000 outstanding under the Revolving Facility had a weighted average interest rate of 5.0% and 4.7%, respectively.

annum.

Promissory Note – Oyster House purchase – On November 30, 2016, in connection with the acquisition of theOyster Houseproperties, the Company issued a promissory note under the Revolving Facility to BHBM for $8,000,000. The note ~~bears~~bore interest at LIBOR plus 3.5% per annum, and iswas payable in 60 equal monthly installments of $133,273, commencing on January 1, 2017.

~~Deferred financing costs~~ In connection with the Refinancing, this note was amended and restated and separated into two notes. The first note, in the principal amount of $3,300,000, is secured by a mortgage on the Oyster House Gulf Shores real estate, is payable in 19 equal quarterly installments of $117,857, commencing on September 1, 2018, with a balloon payment of $1,060,716 on June 1, 2023 and bears interest at LIBOR plus 3.5% per annum. The second note, in the principal amount of $2,200,000, is secured by a mortgage on the Oyster House Spanish Fort real estate, is payable in 27 equal quarterly installments of $36,667, commencing on September 1, 2018, with a balloon payment of $1,210,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

Promissory Note - JB's on the Beach purchase –On May 15, 2019, in connection with the previously discussed acquisition of JB’s on the Beach, the Company issued a promissory note under the Revolving Facility to BHBM for $7,000,000 which is payable in 23 equal quarterly installments of $250,000, commencing on September 1, 2019, with a balloon payment of $1,250,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

Promissory Note - Sequoia renovation – Also on May 15, 2019, the Company converted $3,200,000 of Revolving Facility borrowings incurred in connection with the ~~Revolving Facility~~Sequoia renovation to a promissory note which is payable in 23 equal quarterly installments of $114,286, commencing on September 1, 2019, with a balloon payment of $571,429 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

Deferred financing costs in the amount of ~~$130,585~~$207,000 are being amortized over the life of the agreements on a straight-line basis, which is materially consistent with the effective interest method, and included in interest expense. Amortization expense of approximately ~~$6,000~~$10,000 and ~~$11,000~~$8,000 is included in interest expense for the ~~13-weeks~~13 weeks ended December ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

Borrowings under the Revolving Facility, which include all of the above promissory notes, are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

The loan agreements provide, among other things, that the Company meet minimum quarterly tangible net worth amounts, as defined therein, maintain a fixed charge coverage ratio of not less than 1.1:1 on a latest 12-months' basis and minimum annual net income amounts, and contain customary representations, warranties and affirmative covenants. The agreements also contain customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership. The Company was in compliance with all of its financial covenants under the Revolving Facility as of December ~~30, 2017 except~~28, 2019.


8.	LEASES

Other than locations where we own the underlying property, we lease our restaurant locations as well as our corporate office under various non-cancelable real-estate lease agreements that expire on various dates through 2044. We evaluate whether we control the use of the asset, which is determined by assessing whether we obtain substantially all economic benefits from the use of the asset, and whether we have the right to direct the use of the asset. If these criteria are met and we have identified a lease, we account for the ~~fixed charge coverage ratio covenant. On February 9, 2018,~~contract under the requirements of ASC 842.

Upon the possession of a leased asset, we ~~were issued a waiver for this covenant~~determine its classification as an operating or finance lease. All of our real estate leases are classified as operating leases. We do not have any finance leases as of December ~~30, 2017.~~

28, 2019. Generally, our real estate leases have initial terms ranging from 10 to 25 years and typically include renewal options. Renewal options are recognized as part of the right-of-use assets and lease liabilities if it is reasonably certain at the date of adoption that we would exercise the options to extend the lease. Our real estate leases typically provide for fixed minimum rent payments and/or contingent rent payments based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, variable lease expense is accrued in proportion to the sales recognized during the period. For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property. We record the straight-line lease expense and any contingent rent, if applicable, in occupancy expenses on the consolidated condensed statements of operations.

Many of our real estate leases also require us to pay real estate taxes, common area maintenance costs and other occupancy costs (“non-lease components”) which are included in occupancy related expenses on the consolidated condensed statements of operations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As there were no explicit rates provided in our leases, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease expense in the consolidated condensed statement of operations are as follows:



	13 Weeks Ended
	December 28, 2019
	(In thousands)
Operating lease expense - occupancy expenses (1)	$	2,524
Occupancy lease expense - general and administrative expenses	157
Variable lease expense	1,756
Total lease expense	$	4,437

8.
(1)	Includes short-term leases, which are immaterial.

Supplemental cash flow information related to leases:



	13 Weeks Ended
	December 28, 2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	3,740
Non-cash investing activities:
Right-of-use-assets obtained in exchange for new operating lease liabilities	$	62,330

The weighted-average remaining lease terms and discount rates as of December 28, 2019 are as follows:



	Weighted-Average Remaining Lease Term (Years)	Weighted-Average Discount Rate
Operating leases	11.0 Years	5.5	%

The annual maturities of our lease liabilities as of December 28, 2019 are as follows:



	Operating Leases
Fiscal Year Ending	(In thousands)
October 3, 2020	$	7,087
October 2, 2021	9,552
October 1, 2022	9,638
September 30, 2023	8,125
September 28, 2024	7,739
Thereafter	41,079
Total future lease commitments	83,220
Less imputed interest	(20,760		)
Present value of lease liabilities	$	62,460


9.	COMMITMENTS AND CONTINGENCIES

Leases — The Company leases several restaurants, bar facilities, and administrative headquarters through its subsidiaries under terms expiring at various dates through ~~2032.~~2039. Most of the leases provide for the payment of base rents plus real estate taxes, insurance and other expenses and, in certain instances, for the payment of a percentage of the restaurant’s sales in excess of stipulated amounts at such facility and in one instance based on profits.

~~- 12 -~~

~~On January 12, 2016, the Company entered into an Amended and Restated Lease for its~~~~Sequoia~~property in Washington D.C. extending the lease for 15 years through November 30, 2032 with one additional five-year option. Annual rent under the new lease is approximately $1,200,000 increasing annually through expiration. Under the terms of the agreement, the property was closed January 1, 2017 for renovation and reconcepting which cost approximately $11,000,000. In connection with this closure, the Company recognized an impairment loss related to fixed asset disposals in the amount of $283,000, which is included in Depreciation and Amortization Expense for the 13-weeks ended December 31, 2016. The restaurant re-opened in June 2017.

LegalProceedings— In the ordinary course of its business, the Company is a party to various lawsuits arising from accidents at its restaurants and ~~worker’s~~workers' compensation claims, which are generally handled by the Company’s insurance carriers. The employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of different restaurants has resulted, from time to time, in litigation alleging violation by the Company of employment discrimination laws. Management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

~~Share Repurchase Plan~~ —

On ~~July 5, 2016,~~May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the ~~Board of Directors authorized a share repurchase program authorizing management to purchase up to 500,000 shares~~Company and certain subsidiaries as well as certain officers of the ~~Company’s common stock during~~Company (the “Defendants”). Plaintiffs allege on behalf of themselves and the ~~next twelve months. Any repurchase under~~putative class, that the ~~program will be effected~~Company violated certain of the New York State Labor Laws and related regulations. The Complaint seeks unspecified money damages, together with interest, liquidated damages and attorney fees. There has been no discovery on the merits of the Complaint and the matter is still in ~~compliance with Rule 10b-18 under~~ the ~~Securities Exchange Act~~initial stages of ~~1934 “Purchases~~discovery concerning whether the named Plaintiffs are seeking to represent an appropriate class of ~~Certain Equity Securities by~~tipped service workers and if so, whether the ~~Issuer~~named Plaintiffs are appropriate class representatives. The Company's Motion to Dismiss the Complaint was denied on June 27, 2019. The Company believes that the allegations and ~~Others”, funded using~~claims in the Complaint are without merit, and it intends to defend itself vigorously in this litigation. However, the outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the probability or quantification of any loss. Based on information currently available, including the Company’s ~~working capital~~assessment of the facts underlying the Complaint and advice of counsel, the amount or range of reasonably possible losses, if any, cannot be ~~based on management’s evaluation~~estimated. Accordingly, the Company has not recorded any accrual related to this matter as of ~~market conditions and other factors. No repurchases were made during the 13-weeks ended~~ December ~~30, 2017 and December 31, 2016.~~

28, 2019.

9.
10.	STOCK OPTIONS

The Company has options outstanding under two stock option plans, the ~~2004 Stock Option Plan (the “2004 Plan”) and the~~ 2010 Stock Option Plan (the “2010 Plan”)~~, which was approved by shareholders in~~ and the ~~second quarter of 2010. Effective with this approval, the Company terminated the 2004 Plan. This action terminated the 400 authorized but unissued options under the 2004~~2016 Stock Option Plan ~~but it did not affect any of the options previously issued under the 2004 Plan.~~(the “2016 Plan”). Options granted under ~~the 2004 Plan~~both plans are exercisable at prices at least equal to the fair market value of such stock on the dates the options were ~~granted. The options~~granted and expire ten years after the date of grant. ~~Options granted under the 2010 Plan are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted.~~

The ~~options expire ten years after the date of grant.~~

~~On April 5, 2016, the shareholders of the~~ Company ~~approved the 2016 Stock Option Plan and the~~also maintains a Section 162(m) Cash Bonus Plan. Under the 2016 Stock Option Plan, 500,000 options were authorized for future grant and are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted. The options expire ten years after the date of grant. Under theCompany's Section 162(m) Cash Bonus Plan, compensation paid in excess of $1,000,000 to any employee who is the chief executive officer, or one of the three highest paid

executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) ~~will meet certain “performance-based” requirements of Section 162(m) and the related IRS regulations in order for it to be~~is not tax deductible.

~~During the quarter ended December 31, 2016, options to purchase 90,000 shares of common stock at an exercise price of $32.15 per share expired unexercised.~~

~~No options or performance-based awards were granted during the 13-week period ended December 30, 2017.~~

A summary of stock option activity is presented below:

~~- 13 -~~

2018
Shares Weighted
Average
Exercise
Price Weighted
Average
Contractual
Term Aggregate
Intrinsic
Value

Outstanding, beginning of period 421,800 $ 17.86 5.2 Years

Options:
Granted -
Exercised (7,500 ) $ 19.71
Canceled or expired -
Outstanding and expected to vest, end of period 414,300 $ 17.83 4.9 Years $ 3,812,249

Exercisable, end of period 414,300 $ 17.83 4.9 Years $ 3,812,249



	2020
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	363,500	$18.46	4.8 Years
Options:
Granted	—
Exercised	—
Canceled or expired	—
Outstanding and expected to vest, end of period	363,500	$19.25	4.5 Years	$	1,090,000
Exercisable, end of period	341,000	$19.21	4.1 Years	$	1,043,000

Shares available for future grant	441,000

Compensation cost charged to operations for the 13 weeks ended December 28, 2019 and December 29, 2018 for share-based compensation ~~costs are included~~programs was approximately $12,000 and $12,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the ~~Consolidated Condensed Statements~~consolidated condensed statements of ~~Income as all has been previously~~operations.

As of December 28, 2019, there was approximately $41,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized

over a period of three years.

	~~10.~~
11.	INCOME TAXES

~~On December 22, 2017,~~

The Company’s provision (benefit) for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the ~~Tax Cuts and Jobs Acts (“TCJA”) was enacted into law. The new legislation contains several key~~Company’s year-to-date tax ~~provisions including~~provision with the ~~reduction of the corporate income tax~~effective rate that it expects to 21% effective January 1, 2018, as well as a variety of other changes including limitation of the tax deductibility of interest expense, acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. As such,achieve for the ~~13-weeks ended December 30, 2017,~~full year. Each quarter, the Company ~~revised~~updates its estimated annual effective rate to reflect the change in the federal statutory rate from 34% to 21%. The rate change is administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, the blended statutory tax rate for the year is 24%.

The SEC issued SAB 118, which provides guidance on accounting for the tax effects of TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

We have recorded a provisional increase to our deferred tax assets and liabilities to reflect the new corporate tax rate. As a result, income tax expense reported for the first three months was adjusted to reflect the effects of the change in the tax law and resulted in a discrete income tax benefit of approximately $1.2 million during the first quarter. While we were able to make a reasonable estimate of the ~~impact of the reduction in the corporate~~annual effective tax rate ~~it may be affected by other analyses related to the TCJA.~~

and records cumulative adjustments as necessary.

The income tax ~~provisions~~provision for the 13-week periods ended December ~~30, 2017~~28, 2019 and December ~~31, 2016 reflect effective tax rates of approximately (162.5)%~~19, 2018 were $319,000 and ~~30%,~~$23,000, respectively. The ~~Company expects its~~ effective tax rate for ~~its current fiscal year to be lower than~~the 13 week period ended December 28, 2019 was 15.2% and differed from the statutory rate of 21% as a result of the tax benefits related to the generation of FICA tax credits and operating income attributable to ~~the~~ non-controlling interests ~~of the VIEs~~ that is not taxable to the ~~Company, and the one-time remeasurement of our deferred~~Company. The effective tax ~~assets and liabilities~~rate for the ~~TCJA. The final annual tax~~13 week period ended December 29, 2018 was 287.5% and differed significantly from the statutory rate ~~cannot be determined until the end~~of 21% as a result of the ~~fiscal year; therefore,~~estimated income tax provision for the ~~actual tax rate could differ from current estimates.~~

quarter which included a discrete item of $22,000 divided by the marginal ordinary income for the quarter.

The Company’s overall effective tax rate in the future will be affected by factors such as the utilization of state and local net operating loss carryforwards, the generation of FICA tax credits and the mix of earnings by state taxing ~~jurisdiction~~jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations.

~~During~~ The final annual tax rate cannot be determined until the ~~13-weeks ended December 31, 2016, certain equity compensation awards expired unexercised. As such,~~end of the ~~Company reversed~~fiscal year; therefore, the ~~related deferred~~actual tax ~~asset in the amount of approximately $397,000 as a charge to Additional Paid-in Capital as there was a sufficient pool of windfall tax benefit available.~~

rate could differ from current estimates.

	~~11.~~
12.	INCOME PER SHARE OF COMMON STOCK

~~Net income~~

Basic earnings per share is ~~calculated on~~computed by dividing net income attributable to Ark Restaurants Corp. by the ~~basis of the weighted average~~weighted-average number of common shares outstanding ~~during each period plus,~~ for the period. Our diluted ~~net income~~earnings per share is computed similarly to basic earnings per share, except that it reflects the ~~additional dilutive~~ effect of ~~potential~~ common ~~stock. Potential common~~shares issuable upon exercise of stock options, using the treasury stock method ~~consists~~in periods in which they have a dilutive effect.

A reconciliation of ~~dilutive stock options.~~

~~- 14 -~~

shares used in calculating earnings per basic and diluted share follows:



	13 Weeks Ended
	December 28,	December 29,
	2019	2018
Basic	3,499	3,474
Effect of dilutive securities:
Stock options	42	—
Diluted	3,541	3,474

For the 13-week period ended December ~~30, 2017,~~28, 2019, the dilutive effect of options to purchase ~~64,000~~192,000 shares of common stock at an exercise ~~price of $12.04~~prices ranging from $22.30 per share ~~options~~ to purchase 156,300 shares of common stock at an exercise price of $14.40 per share and options to purchase 194,000 shares of common stock at an exercise price of $22.50 per share were included in diluted earnings per share.

For the 13-week period ended December 31, 2016, options to purchase 66,000 shares of common stock at an exercise price of $12.04 per share and options to purchase 160,800 shares of common stock at an exercise price of $14.40 per share were included in diluted earnings per share. Options to purchase 201,808 shares of common stock at an exercise price of $22.50 per share were not included in diluted earnings per share as their impact would behave been anti-dilutive.

For the 13-week period ended December 29, 2018 all options were excluded from diluted earnings per share as all were anti-dilutive.

~~12.~~
13.	DIVIDENDS

On ~~December 5, 2017,~~November 26, 2019, the Board of Directors declared a quarterly dividend of $0.25 per share on the Company’s common stock to be paid on January ~~3, 2018~~7, 2020, to shareholders of record at the close of business on December ~~19, 2017.~~16, 2019. The Company intends to continue to pay such quarterly cash dividends for the foreseeable ~~future,~~future; however, the payment of future dividends is at the discretion of the Company’s Board of Directors and is based on future earnings, cash flow, financial condition, capital requirements, changes in U.S. taxation and other relevant factors.

~~- 15 -~~
14.	SUBSEQUENT EVENT

On February 4, 2020, options to purchase 266,500 shares of common stock at an exercise price of $21.90 per share were granted employees and directors of the Company. Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and the remaining 50% becoming exercisable on the fourth anniversary of the date of grant. The grant date fair value of these stock options was $3.35 per share.

~~Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

As of December ~~30, 2017,~~28, 2019, the Company owned and operated 20 restaurants and bars, 1917 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and service, class of customer and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance. The ~~Consolidated Condensed Statements~~consolidated condensed statements of ~~Income~~operations for the ~~13-weeks~~13 weeks ended December ~~30, 2017 and December 31, 2016~~28, 2019 include revenues and ~~losses~~income of approximately ~~$2,388,000~~$2,442,000 and ~~($125,000) and $707,000 and ($52,000),~~$43,000, respectively, related to JB's on the~~Oyster House~~ ~~properties,~~ Beach, which ~~were~~was acquired on ~~November 30, 2016.~~

May 15, 2019. As of December 29, 2018, the Company determined that it would not be able to operate Durgin-Park profitably due to decreased traffic at the Faneuil Hall Marketplace in Boston, MA, where it was located, and rising labor costs. As a result, included in the consolidated condensed statement of income for the 13 weeks ended December 29, 2018 are losses on closure in the amount of $1,067,000 consisting of: (i) impairment of trademarks in the amount of $721,000, (ii) accelerated depreciation of fixed assets in the amount of $333,000, and (iii) write-offs of prepaid and other expenses in the amount of $13,000. The restaurant closed on January 12, 2019.

Accounting Period

Our fiscal year ends on the Saturday nearest September 30. We report fiscal years under a 52/53-week format. This reporting method is used by many companies in the hospitality industry and is meant to improve year-to-year comparisons of operating results. Under this method, certain years including the current year ending October 3, 2020 will contain 53 weeks. The periods ended December ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 each included 13 weeks.

Seasonality

The Company has substantial fixed costs that do not decline proportionately with sales. At our properties located in the northeast, the first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants.

Results of Operations

The Company’s restaurant operating income of $2,436,000 for the 13 weeks ended December ~~30, 2017 was $882,000~~28, 2019 increased 77.6%, as compared to ~~$2,970,000~~$1,372,000 for the 13 weeks ended December ~~30, 2016.~~29, 2018. This ~~decrease~~increase resulted primarily ~~from~~from: (i) significantly increased profitability at our food court in Hollywood, Florida located at the ~~recognition~~Hard Rock Hotel and Casino which completed an over $1 billion expansion in mid-October, (ii) strong performance at our other Florida properties and our Alabama locations, (iii) increased profitability at one of our DC properties as a result of a ~~gain~~renegotiated month-to-month rent, and (iv) the elimination of losses in the prior period of approximately $360,000 related to Durgin-Park, which was closed in ~~connection with the sale of the real estate underlying our Rustic Inn, Jupiter, FL property combined with increases in~~January 2019, partially offset by increased labor costs and ~~expenses as discussed below.~~

weaker than expected results at our New York properties.

The following table summarizes the significant components of the Company’s operating results for the 13-week periods ended December ~~30, 2017~~28, 2019 and December ~~31, 2016, respectively:~~

13 Weeks Ended Variance
December 30,
2017 December 31,
2016 $ %
(in thousands)
REVENUES:
Food and beverage sales $ 38,617 $ 37,953 $ 664 1.7 %
Other revenue 735 467 268 57.4 %
Total revenues 39,352 38,420 932 2.4 %

COSTS AND EXPENSES:
Food and beverage cost of sales 10,230 9,750 480 4.9 %
Payroll expenses 13,710 12,956 754 5.8 %
Occupancy expenses 5,031 4,732 299 6.3 %
Other operating costs and expenses 5,117 4,866 251 5.2 %
General and administrative expenses 3,079 3,300 (221 ) -6.7 %
Depreciation and amortization 1,303 1,483 (180 ) -12.1 %
Total costs and expenses 38,470 37,087 1,383 3.7 %
RESTAURANT OPERATING INCOME 882 1,333 (451 ) -33.8 %
Gain on sale of Rustic Inn, Jupiter - 1,637 (1,637 ) N/A
OPERATING INCOME $ 882 $ 2,970 $ (2,088 ) -70.3 %

~~- 16 -~~

29, 2018:



	13 Weeks Ended				Variance
	December 28, 2019		December 29, 2018		$			%
	(in thousands)
REVENUES:
Food and beverage sales	$	42,829	$	39,838	$	2,991		7.5	%
Other revenue	685		710		(25		)	-3.5	%
Total revenues	43,514		40,548		2,966			7.3	%
COSTS AND EXPENSES:
Food and beverage cost of sales	10,940		10,476		464			4.4	%
Payroll expenses	15,122		14,105		1,017			7.2	%
Occupancy expenses	5,439		5,005		434			8.7	%
Other operating costs and expenses	5,328		4,975		353			7.1	%
General and administrative expenses	3,054		3,409		(355		)	-10.4	%
Depreciation and amortization	1,195		1,206		(11		)	-0.9	%
Total costs and expenses	41,078		39,176		1,902			4.9	%
RESTAURANT OPERATING INCOME	$	2,436	$	1,372	$	1,064		77.6	%

Revenues

During the Company’s ~~13-week~~13 week period ended December ~~30, 2017,~~28, 2019, revenues increased ~~2.4%~~7.3% as compared to revenues in the ~~13-week~~13 week period ended December ~~31, 2016.~~29, 2018. This increase resulted primarily from ~~the~~an increase in same-store sales ~~impacts~~ discussed ~~below.~~

below and sales related to JB's on the Beach in the current period partially offset by sales related to Durgin-Park which closed in January 2019.

Food and Beverage Same-Store Sales

On a Company-wide basis, same-store sales increased ~~2.2%~~3.5% during the first fiscal quarter of ~~2018~~2020 as compared to the same period last year as follows:

13 Weeks Ended Variance
December 30,
2017 December 31,
2016 $ %
(in thousands)

Las Vegas $ 11,690 $ 11,342 $ 348 3.1 %
New York 11,312 11,177 135 1.2 %
Washington, DC 3,078 2,842 236 8.3 %
Atlantic City, NJ 1,574 1,640 (66 ) -4.0 %
Boston 787 907 (120 ) -13.2 %
Connecticut 505 514 (9 ) -1.8 %
Alabama 778 707 71 10.0 %
Florida 6,013 5,829 184 3.2 %
Same-store sales 35,737 34,958 $ 779 2.2 %
Other 2,880 2,995

Food and beverage sales $ 38,617 $ 37,953



	13 Weeks Ended				Variance
	December 28, 2019		December 29, 2018		$			%
	(in thousands)
Las Vegas	$	12,206	$	12,504	$	(298	)	-2.4	%
New York	11,489		11,580		(91		)	-0.8	%
Washington, DC	3,107		2,852		255			8.9	%
Atlantic City, NJ	1,513		1,639		(126		)	-7.7	%
Connecticut	410		471		(61		)	-13.0	%
Alabama	2,601		2,443		158			6.5	%
Florida	7,631		6,143		1,488			24.2	%
Same-store sales	38,957		37,632		$	1,325		3.5	%
Other	3,872		2,206
Food and beverage sales	$	42,829	$	39,838

Same-store sales in Las Vegas decreased 2.4% primarily as a result of lower convention traffic and increased ~~3.1%~~competition. Same-store sales in New York decreased 0.8% primarily as a result of increased competition and construction on the building where one of our properties is located. Same-store sales in Washington, DC increased 8.9% as a result of strong catering revenues at Sequoia. Same-store sales in Atlantic City decreased 7.7% as a result of increased competition from the opening of several new casinos. Same-store sales in Alabama increased 6.5% primarily as a result of increased traffic ~~near the properties where we operate our restaurants in connection with the opening~~due to closure of ~~the T-Mobile Arena nearby.~~several competitors. Same-store sales in ~~New York~~Florida increased ~~1.2%,~~24.2% primarily as a result of ~~good weather conditions during the months~~a significant increase in ~~which our properties with outdoor seating areas are open. Same-store sales in Washington, DC increased 8.3% as a result of the re-opening of~~~~Sequoia DC~~ in June 2017 which was preparing to close for renovation onJanuary 4, 2017. Same-store sales in Atlantic City decreased 4.0%, primarily due to decreased traffic at properties in which we operate our restaurants. Same-store sales in Boston decreased 13.2%, primarily as a result of decreased traffic at Faneuil Hall Marketplace where our property is located. Same-store sales in Alabama increased 10.0%, which represent only December sales, primarily as a result of increased trafficrevenue at our ~~properties. Same-store sales~~food court in Hollywood, Florida ~~increased 3.2% as a result of~~located at the ~~completion of the road construction project started~~Hard Rock Hotel and Casino which completed an over $1 billion expansion in ~~the second quarter of fiscal 2016 by the local municipality near~~~~The Rustic Inn~~ ~~in Dania Beach, FL.~~mid-October combined with higher traffic and modest menu price increases at our other Florida properties. Other food and beverage sales consist of sales related to new restaurants opened or acquired during the applicable period, ~~(e.g. the~~ ~~Oyster House~~~~properties)and~~ sales related to properties that were closed ~~due to lease expiration~~ and other ~~closures.~~

fees.

Costs and Expenses

Costs and expenses for the ~~13-weeks~~13 weeks ended December ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 were as follows (in thousands):

13 Weeks Ended
December 30, % to
Total 13 Weeks Ended
December 31, % to
Total Increase
(Decrease)
2017 Revenues 2016 Revenues $ %

Food and beverage cost of sales $ 10,230 26.0 % $ 9,750 25.4 % $ 480 4.9 %
Payroll expenses 13,710 34.8 % 12,956 33.7 % 754 5.8 %
Occupancy expenses 5,031 12.8 % 4,732 12.3 % 299 6.3 %
Other operating costs and expenses 5,117 13.0 % 4,866 12.7 % 251 5.2 %
General and administrative expenses 3,079 7.8 % 3,300 8.6 % (221 ) -6.7 %
Depreciation and amortization 1,303 3.3 % 1,483 3.9 % (180 ) -12.1 %

$ 38,470 $ 37,087 $ 1,383

~~- 17 -~~

~~The increases in food~~



	13 Weeks Ended December 28, 2019		% to Total Revenues		13 Weeks Ended December 29, 2018		% to Total Revenues		Increase (Decrease)
	13 Weeks Ended December 28, 2019		% to Total Revenues		13 Weeks Ended December 29, 2018		% to Total Revenues		$			%
Food and beverage cost of sales	$	10,940	25.1	%	$	10,476	25.8	%	$	464		4.4	%
Payroll expenses	15,122		34.8	%	14,105		34.8	%	1,017			7.2	%
Occupancy expenses	5,439		12.5	%	5,005		12.3	%	434			8.7	%
Other operating costs and expenses	5,328		12.2	%	4,975		12.3	%	353			7.1	%
General and administrative expenses	3,054		7.0	%	3,409		8.4	%	(355		)	-10.4	%
Depreciation and amortization	1,195		2.7	%	1,206		3.0	%	(11		)	-0.9	%
Total costs and expenses	$	41,078			$	39,176			$	1,902

Food and beverage costs as a percentage of total revenues for the ~~13-weeks~~13 weeks ended December ~~30, 2017~~28, 2019 decreased as compared towith the same ~~periods~~period of last year ~~are primarily the~~as a result of ~~higher~~a better mix of catering versus a la carte business at our larger properties combined with menu price increases partially offset by increases in food ~~costs as a percentage of sales associated with~~~~The Oyster House~~ ~~properties, which were acquired on November 30, 2016, seafood restaurants which, consistent with the industry, operate at a higher food cost structure.~~

costs.

Payroll expenses as a percentage of total revenues for the ~~13-weeks~~13 weeks ended December ~~30, 2017 increased as compared to~~28, 2019 were relatively consistent with the same period of last year primarily as a result of minimum wage increases associated with changes to labor ~~laws.~~

laws offset by a better mix of catering versus a la carte business at our larger properties combined with menu price increases.

Occupancy expenses as a percentage of total revenues for the ~~13-weeks~~13 weeks ended December ~~30, 2017~~28, 2019 increased slightly as compared to the same period of last year primarily as a result of ~~increased~~higher sales at properties where rents are paid based on a percentage of sales.

Other operating costs and expenses as a percentage of total revenues for the ~~13-weeks~~13 weeks ended December ~~30, 2017 increased~~28, 2019 were relatively consistent as compared to the same period of last year as ~~a result fixed~~many of these costs ~~associated with properties where sales declined.~~

are fixed.

General and administrative expenses (which relate solely to the corporate office in New York City) as a percentage of total revenues for the ~~13-weeks~~13 weeks ended December ~~30, 2017 decreased slightly compared to the same period of last year as a result of transaction costs in the prior period incurred in connection with the purchase of the~~~~Oyster House~~~~properties.~~

~~Depreciation and amortization expense for the 13-weeks ended December 30, 2017~~28, 2019 decreased as compared to the same period of last year primarily as a result of ~~additional depreciation~~lower professional fees and better cost management.

Depreciation and amortization expense for the 13 weeks ended December 28, 2019 decreased as compared to the same period of last year primarily as a result of lower charges in the ~~amount~~current period as a result of ~~$358,000 related to~~ asset ~~write-offs at~~~~Sequoia~~~~(which was undergoing a major renovation) and~~~~Canyon Road~~~~(whose lease was transferred to an unrelated party)~~impairments in the ~~prior period.~~

fourth quarter of 2019 partially offset by depreciation on improvements placed in service in fiscal 2019.

Income Taxes

~~On December 22, 2017,~~

The Company’s provision (benefit) for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the ~~Tax Cuts and Jobs Acts (“TCJA”) was enacted into law. The new legislation contains several key~~Company’s year-to-date tax ~~provisions including~~provision with the ~~reduction of the corporate income tax~~effective rate that it expects to 21% effective January 1, 2018, as well as a variety of other changes including limitation of the tax deductibility of interest expense, acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. As such,achieve for the full year. Each quarter, ~~ended December 30, 2017,~~ the Company ~~revised~~updates its estimated annual effective rate to reflect the change in the federal statutory rate from 34% to 21%. The rate change is administratively effective at the beginning of our fiscal year, using a blended rate for the annual period. As a result, the blended statutory tax rate for the year is 24%.

We have recorded a provisional increase to our deferred tax assets and liabilities to reflect the new corporate tax rate. As a result, income tax expense reported for the first three months was adjusted to reflect the effects of the change in the tax law and resulted in a discrete income tax benefit of $1.2 million during the first quarter. While we were able to make a reasonable estimate of the ~~impact of the reduction in the corporate~~annual effective tax rate ~~it may be affected by other analyses related to the TCJA.~~

and records cumulative adjustments as necessary.

The income tax ~~provisions~~provision for the 13-week periods ended December ~~30, 2017~~28, 2019 and December ~~31, 2016 reflect effective tax rates of approximately (162.5)%~~29, 2018 were $319,000 and ~~30%,~~$23,000, respectively. The ~~Company expects its~~ effective tax rate for ~~its current fiscal year to be lower than~~the 13 week period ended December 28, 2019 was 15.2% and differed from the statutory rate of 21% as a result of the tax benefits related to the generation of FICA tax credits and operating income attributable to ~~the~~ non-controlling interests ~~of the VIEs~~ that is not taxable to the ~~Company, and the one-time remeasurement of our deferred~~Company. The effective tax ~~assets and liabilities~~rate for the ~~TCJA. The final annual tax~~13 week period ended December 29, 2018 was 287.5% and differed significantly from the statutory rate ~~cannot be determined until the end~~of 21% as a result of the ~~fiscal year; therefore,~~estimated income tax provision for the ~~actual tax rate could differ from current estimates.~~

quarter which included a discrete item of $22,000 divided by the marginal ordinary income for the quarter.

The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates.

Liquidity and Capital Resources

Our primary source of capital has been cash provided by operations and, in recent years, bank and other borrowings to finance specific transactions, acquisitions and ~~acquisitions.~~large remodeling projects. We utilize cash generated from operations to fund the cost of developing and opening new restaurants and smaller remodeling projects of existing restaurants we own.

Net cash provided by operating activities for the ~~13-weeks~~13 weeks ended December ~~30, 2017 decreased~~28, 2019 increased to ~~$1,165,000~~$2,452,000 as compared to ~~$1,824,000~~$840,000 provided by operations in the same period of last year. This ~~decrease~~increase was attributable to increased operating income as discussed above and changes in net working capital

~~- 18 -~~

primarily related to accounts receivable, ~~prepaid, refundable and accrued income taxes~~inventory and accounts payable and accrued expenses.

Net cash used in investing activities for the ~~13-week period~~13 weeks ended December ~~30, 2017~~28, 2019 and December 29, 2018 was ~~$2,516,000~~$796,000 and $619,000, respectively, and resulted primarily from purchases of fixed assets at existing restaurants.

Net cash used in investing activities for the 13-week period ended December 31, 2016 was $2,260,000 and resulted primarily from purchases of fixed assets at existing restaurants and the cash portion of the purchase of the Oyster House properties in the amount of $3,043,000, partially offset by the net proceeds in the amount of $2,474,000 from the sale of The Rustic Inn in Jupiter, Florida.

~~Net cash provided by (used in)~~ financing activities for the ~~13-week periods~~13 weeks ended December ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 of ~~$98,000~~($1,622,000) and ($~~2,141,000)~~2,050,000), respectively, resulted primarily from the payment of dividends, principal payments on notes payable and distributions to non-controlling ~~interests, offset by borrowings under the credit facility.~~

interests.

The Company had a working capital deficiency of ~~$18,197,000~~($10,086,000) at December ~~30, 2017~~28, 2019 as compared with a deficiency of ~~$16,072,000~~$4,373,000 at September ~~30, 2017.~~28, 2019. This ~~increase resulted primarily from costs associated~~decrease is the result of the recognition of $6,218,000 of current operating lease liabilities in connection with the ~~renovation~~adoption of ~~our~~~~Sequoia~~~~property in Washington, DC.~~ASC 842. We believe that our existing cash balances, current banking facilities and cash provided by operations will be sufficient to meet our liquidity and capital spending requirements at least through February 13, 2019. In addition, the Company is in the process of negotiating an increase in the amounts available under the existing credit facility and refinancing outstanding borrowings over longer repayment periods. Such refinancing is expected to be completed in the second fiscal quarter of 2018.

12, 2021.

The Company was in compliance with all of its financial covenants under the Revolving Facility as of December ~~30, 2017 except for the fixed charge coverage ratio covenant. On February 9, 2018, we were issued a waiver for this covenant as of December 30, 2017.~~

28, 2019.

Recent Restaurant ~~Expansion~~

Expansions and Other Developments

On ~~November 30, 2016,~~May 15, 2019, the Company, through a newly formed, wholly-owned ~~subsidiaries,~~subsidiary, acquired the assets of JB's on the ~~Original Oyster House, Inc.~~Beach, a restaurant and bar located in the City of Gulf Shores, Baldwin County, Alabama and the related real estate and an adjacent retail shopping plaza and the Original Oyster House II, Inc., a restaurant and bar located in the City of Spanish Fort, Baldwin County, Alabama and the related real estate. The total purchase price wasDeerfield Beach, Florida for ~~$10,750,000 plus inventory of approximately $293,000.~~$7,036,000 as set out below. The acquisition is accounted for as a business combination and was financed with a bank loan from the Company’s existing lender in the amount of ~~$8,000,000~~$7,000,000 and cash from operations.

~~Recent Restaurant Dispositions~~

~~Lease Expirations~~ ~~– The~~ Concurrent with the acquisition, the Company entered into a 20 year lease (with a five year extension option) for the restaurant facility and parking lot with the former owner of JB's on the Beach, who is also the owner of the underlying real estate. Rent payments under the lease are $600,000 per year with 10% increases every five years.

During 2019, the Company was advised by the landlord ~~that it would have to vacate~~~~The Grill at Two Trees~~ ~~property~~of our food court at the ~~Foxwoods Resort~~Hard Rock Casino and ~~Casino~~Hotel in ~~Ledyard, CT~~,~~which had a no rent~~Hollywood, Florida that they were exercising their right to relocate our space, at their sole cost, as contractually agreed to in the original lease. The ~~closure of this property occurred~~new facilities were completed on ~~January 1, 2017~~September 16, 2019, on which date we closed our existing location and ~~did not result in a material charge.~~

~~Other~~~~– On November 18, 2016, Ark Jupiter RI, LLC (“Ark Jupiter”), a wholly-owned subsidiary~~opened the new facilities. The Company recorded the value of the ~~Company, entered into a ROFR Purchase and Sale Agreement (the “ROFR”) with SCFRC-HWG, LLC,~~renovations made by the landlord, ~~(the “Seller”) to purchase the land~~which includes leasehold improvements and ~~building in which the Company operates its~~~~Rustic Inn~~ ~~location in Jupiter, Florida. The Seller had entered into a Purchase~~furniture, fixtures and Sale Agreement with a third party to sell the premises; however, Ark Jupiter’s lease provided the Company with a right of first refusal to purchase the property. Ark Jupiter exercised the ROFR on October 4, 2016 and made a ten (10%) percent deposit on the purchase price of approximately Five Million Two Hundred Thousand Dollars ($5,200,000). Concurrent with the execution of the ROFR, Ark Jupiter entered into a Purchase and Sale Agreement with 1065 A1A, LLC to sell this same property for Eight Million Two Hundred Fifty Thousand Dollars ($8,250,000). In connection with the sale, Ark Jupiter and 1065 A1A, LLC entered into a temporary lease and sub-lease arrangement which expired on July 18, 2017. The Company vacated the space in June. In connection with these transactions the Company recognized a gainequipment, in the amount of ~~$1,637,000 during~~$5,474,000 with a corresponding increase in deferred rent. The net book value of the ~~13-weeks ended December 31, 2016.~~

~~The~~existing leasehold improvements relating to the original location in the amount of $918,000 is being reflected as a reduction of deferred rent on a straight-line basis over the remaining lease term.

During 2019, the Company ~~transferred its lease~~was advised by the landlord of our food court at the Hard Rock Casino and Hotel in Tampa, Florida, that they were exercising their right to renovate the ~~related assets~~front of~~Canyon Road~~ ~~located~~ the house space, at their sole cost, as contractually agreed to in ~~New York, NY to a former employee.~~the original lease. In connection with this ~~transfer,~~renovation we closed our existing facilities on June 2, 2019 and re-opened the renovated facilities on September 28, 2019. The Company ~~recognized an impairment loss included in depreciation~~recorded the value of the renovations made by the landlord, which includes leasehold improvements and ~~amortization expense~~furniture, fixtures and equipment, in the amount of ~~$75,000~~$3,179,000 with a corresponding increase in deferred rent. The net book value of the existing leasehold improvements relating to the original location in the amount of $459,000 is being reflected as a reduction of deferred rent on a straight-line basis over the remaining lease term.

Upon adoption of ASC 842, the unamortized balances related to the above were reclassified as right-of-use assets in the net amount of $1,071,000 and are being amortized to lease expense on a straight line basis over the remaining terms of the respected leases.

Recent Restaurant Dispositions

As of December 29, 2018, the Company determined that it would not be able to operate Durgin-Park profitably due to decreased traffic at the Faneuil Hall Marketplace in Boston, MA, where it was located, and rising labor costs. As a result, included in the statement of income for the ~~13-weeks~~13 weeks ended December ~~31, 2016.~~

~~- 19 -~~

29, 2018 are losses on closure in the amount of $1,067,000 consisting of: (i) impairment of trademarks in the amount of $721,000, (ii) accelerated depreciation of fixed assets in the amount of $333,000, and (iii) write-offs of prepaid and other expenses in the amount of $13,000. The restaurant closed on January 12, 2019.

Critical Accounting Policies

The preparation of financial statements requires the application of certain accounting policies, which may require the Company to make estimates and assumptions of future events. In the process of preparing its consolidated condensed financial statements, the Company estimates the appropriate carrying value of certain assets and liabilities, which are not readily apparent from other sources. The primary estimates underlying the Company’s consolidated condensed financial statements include allowances for potential bad debts on accounts and notes receivable, ~~leases,~~assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments, the realizable value of its tax assets and other matters. Management bases its estimates on certain assumptions, which it believes are reasonable in the circumstances, and actual results could differ from those estimates. Although management does not believe that any change in those assumptions in the near term would have a material effect on the Company’s consolidated financial position or the results of operations, differences in actual results could be material to the consolidated condensed financial statements.

The Company’s critical accounting policies are described in the Company’s Form 10-K for the year ended September ~~30, 2017.~~28, 2019. There have been no significant changes to such policies during fiscal ~~2018~~2020 other than those disclosed in Note 1 to the ~~Consolidated Condensed Financial Statements.~~

consolidated condensed financial statements.

Recently Adopted and Issued Accounting Standards

See Note 1 to the ~~Consolidated Condensed Financial Statements~~consolidated condensed financial statements for a description of recent accounting pronouncements, including those adopted in fiscal ~~2018~~2020 and the expected dates of adoption and the anticipated impact on the ~~Consolidated Condensed Financial Statements.~~

consolidated condensed financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company purchases commodities such as chicken, beef, lobster, crabs and shrimp for the Company’s restaurants. The prices of these commodities may be volatile depending upon market conditions. The Company does not purchase forward commodity contracts because the changes in prices for these items have historically been short-term in nature and, in the Company’s view, the cost of the contracts is in excess of the benefits.

The Company’s business is also highly seasonal and dependent on the weather. Outdoor seating capacity, such as terraces and sidewalk cafes, is available for dining only in the warm seasons and then only in inclement weather.

Not Applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of December ~~30, 2017~~28, 2019 to ensure that all material information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure and that all such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the first quarter of fiscal ~~2018~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

~~- 20 -~~

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

~~The~~

Except as otherwise provided below, the Company is not subject to pending legal proceedings, other than ordinary claims incidental to its business, which the Company does not believe will materially impact results of operations.

On May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the Company and certain subsidiaries as well as certain officers of the Company (the “Defendants”). Plaintiffs allege on behalf of themselves and the putative class, that the Company violated certain of the New York State Labor Laws and related regulations. The Complaint seeks unspecified money damages, together with interest, liquidated damages and attorney fees. There has been no discovery on the merits of the Complaint and the matter is still in the initial stages of discovery concerning whether the named Plaintiffs are seeking to represent an appropriate class of tipped service workers and if so, whether the named Plaintiffs are appropriate class representatives. The Company's Motion to Dismiss the Complaint was denied on June 27, 2019. The Company believes that the allegations and claims in the Complaint are without merit, and it intends to defend itself vigorously in this litigation. However, the outcomes of legal actions are unpredictable and subject to significant uncertainties, and thus it is inherently difficult to determine the probability or quantification of any loss. Based on information currently available, including the Company’s assessment of the facts underlying the Complaint and advice of counsel, the amount or range of reasonably possible losses, if any, cannot be estimated. Accordingly, the Company has not recorded any accrual related to this matter as of December 28, 2019.

Item 1A. Risk Factors

The most significant risk factors applicable to the Company are described in Part I, Item 1A (Risk Factors) of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017 (the “2017 Form 10-K”). There have been no material changes to the risk factors previously disclosed in the 2017 Form 10-K. The risks described in the 2017 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to management may materially adversely affect the Company’s business, financial condition, and/or operating results.

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32 Certificate of Chief Executive Officer and Chief Financial ~~Officers~~Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002

101.INS* XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

__________________________

*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

~~- 21 -~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Date:	February ~~13, 2018~~	11, 2020

	ARK RESTAURANTS CORP.

By:	/s/ Michael Weinstein
	Michael Weinstein
	Chairman & Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ ~~Robert~~Anthony J. ~~Stewart~~	Sirica
	~~Robert~~Anthony J. ~~Stewart~~	Sirica
	~~President and~~ Chief Financial Officer
	(Authorized Signatory and Principal
	Financial and Accounting Officer)

~~- 22 -~~

- 25 -

x

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended December 28, 2019
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________



New York		13-3156768
(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~Incorporation or ~~organization)~~Organization)		(~~I.R.S.~~IRS Employer Identification No.)




85 Fifth Avenue, New York, ~~New York~~	NY	10003
	(Address of ~~principal executive offices)~~	Principal Executive Offices)	(Zip Code)

~~Registrant’s telephone number, including area code:~~
	~~(212) 206-8800~~
	Title of each class	Trading symbol(s)	Name of each exchange on which registered
	Common Stock, par value $.01 per share	ARKR	The NASDAQ Stock Market LLC



Large accelerated filer	o	Accelerated filer	o

Non-accelerated filero ~~(Do not check if a smaller~~ ~~reporting company)~~	x	Smaller Reporting Company	x

Emerging Growth Company	o

~~Class~~		~~Outstanding shares at February 8, 2018~~
~~(Common stock, $.01 par value)~~		~~3,436,681~~

	December 30, 2017		September 30, 2017
	(unaudited)		(see Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (includes $153 at December 30, 2017 and $363 at September 30, 2017 related to VIEs)	$	153	$	1,406
Accounts receivable (includes $344 at December 30, 2017 and $367 at September 30, 2017 related to VIEs)		3,369		3,353
Employee receivables		374		399
Inventories (includes $27 at December 30, 2017 and $22 at September 30, 2017 related to VIEs)		2,028		1,992
Prepaid and refundable income taxes (includes $228 at December 30, 2017 and $226 at September 30, 2017 related to VIEs)		833		945
Prepaid expenses and other current assets (includes $57 at December 30, 2017 and $63 at September 30, 2017 related to VIEs)		1,800		1,988
Total current assets		8,557		10,083
FIXED ASSETS - Net (includes $2 at December 30, 2017 and $6 at September 30, 2017 related to VIEs)		46,477		45,215
INTANGIBLE ASSETS - Net		385		409
GOODWILL		9,880		9,880
TRADEMARKS		3,331		3,331
DEFERRED INCOME TAXES		2,694		1,491
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK		6,993		6,979
OTHER ASSETS (includes $71 at December 30, 2017 and September 30, 2017 related to VIEs)		2,679		2,679
TOTAL ASSETS	$	80,996	$	80,067

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable - trade (includes $53 at December 30, 2017 and $116 at September 30, 2017 related to VIEs)	$	5,041	$	4,750
Accrued expenses and other current liabilities (includes $310 at December 30, 2017 and $260 at September 30, 2017 related to VIEs)		9,035		10,176
Dividend payable		-		857
Borrowings under credit facility		8,498		6,198
Current portion of notes payable		4,180		4,174
Total current liabilities		26,754		26,155
OPERATING LEASE DEFERRED CREDIT (includes $42 at December 30, 2017 and $51 at September 30, 2017 related to VIEs)		3,570		3,648
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs		7,473		7,824
TOTAL LIABILITIES		37,797		37,627

COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $.01 per share - authorized, 10,000 shares; issued and outstanding, 3,436 shares at December 30, 2017 and 3,428 shares at September 30, 2017		34		34
Additional paid-in capital		12,799		12,639
Retained earnings		28,539		27,771
Total Ark Restaurants Corp. shareholders’ equity		41,372		40,444
NON-CONTROLLING INTERESTS		1,827		1,996
TOTAL EQUITY		43,199		42,440
TOTAL LIABILITIES AND EQUITY	$	80,996	$	80,067

	13 Weeks Ended
	December 30, 2017			December 31, 2016

REVENUES:
Food and beverage sales	$	38,617		$	37,953
Other revenue		735			467
Total revenues		39,352			38,420
COSTS AND EXPENSES:
Food and beverage cost of sales		10,230			9,750
Payroll expenses		13,710			12,956
Occupancy expenses		5,031			4,732
Other operating costs and expenses		5,117			4,866
General and administrative expenses		3,079			3,300
Depreciation and amortization		1,303			1,483
Total costs and expenses		38,470			37,087
RESTAURANT OPERATING INCOME		882			1,333
Gain on sale of Ark Jupiter RI, LLC		-			1,637
OPERATING INCOME		882			2,970
OTHER (INCOME) EXPENSE:
Interest expense		233			101
Interest income		(14	)		(96	)
Total other (income) expense, net		219			5
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES		663			2,965
Provision (benefit) for income taxes		(1,078	)		880
CONSOLIDATED NET INCOME		1,741			2,085
Net income attributable to non-controlling interests		(114	)		(351	)
NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$	1,627		$	1,734
NET INCOME PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic	$	0.47		$	0.51
Diluted	$	0.46		$	0.49
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		3,432			3,423
Diluted		3,549			3,507

	Common Stock					Additional Paid-In			Retained			Total Ark Restaurants Corp. Shareholders’			Non- controlling			Total
	Shares		Amount			Capital			Earnings			Equity			Interests			Equity

BALANCE - October 1, 2016		3,423		$	34	$	12,942		$	27,158		$	40,134		$	2,570		$	42,704

Net income		-			-		-			1,734			1,734			351			2,085
Change in excess tax benefits from stock-based compensation		-			-		(397	)		-			(397	)		-			(397	)
Distributions to non-controlling interests		-			-		-			-			-			(622	)		(622	)
Dividends paid - $0.25 per share		-			-		-			(856	)		(856	)		-			(856	)

BALANCE - December 31, 2016		3,423		$	34	$	12,545		$	28,036		$	40,615		$	2,299		$	42,914

BALANCE - September 30, 2017		3,428		$	34	$	12,639		$	27,771		$	40,444		$	1,996		$	42,440

Net income		-			-		-			1,627			1,627			114			1,741
Exercise of stock options		8			-		148			-			148			-			148
Tax benefit on exercise of stock options		-			-		12			-			12			-			12
Distributions to non-controlling interests		-			-		-			-			-			(283	)		(283	)
Dividends paid - $0.25 per share		-			-		-			(859	)		(859	)		-			(859	)

BALANCE - December 30, 2017		3,436		$	34	$	12,799		$	28,539		$	41,372		$	1,827		$	43,199