Cover
Cover - shares | 9 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --09-30 | |
Entity File Number | 001-13992 | |
Entity Registrant Name | RCI HOSPITALITY HOLDINGS, INC. | |
Entity Central Index Key | 0000935419 | |
Entity Tax Identification Number | 76-0458229 | |
Entity Incorporation, State or Country Code | TX | |
Entity Address, Address Line One | 10737 Cutten Road | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77066 | |
City Area Code | 281 | |
Local Phone Number | 397-6730 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | RICK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,125,281 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Current assets | ||
Cash and cash equivalents | $ 14,795 | $ 14,097 |
Accounts receivable, net | 5,529 | 6,289 |
Current portion of notes receivable | 219 | 954 |
Inventories | 2,627 | 2,598 |
Prepaid insurance | 1,415 | 5,446 |
Other current assets | 1,752 | 2,521 |
Assets held for sale | 2,013 | 2,866 |
Total current assets | 28,350 | 34,771 |
Property and equipment, net | 181,960 | 183,956 |
Operating lease right-of-use assets, net | 25,962 | |
Notes receivable, net of current portion | 2,896 | 4,211 |
Goodwill | 47,109 | 53,630 |
Intangibles, net | 73,224 | 75,951 |
Other assets | 873 | 1,118 |
Total assets | 360,374 | 353,637 |
Current liabilities | ||
Accounts payable | 3,955 | 3,810 |
Accrued liabilities | 10,286 | 14,644 |
Current portion of long-term debt, net | 17,249 | 15,754 |
Current portion of operating lease liabilities | 1,586 | |
Total current liabilities | 33,076 | 34,208 |
Deferred tax liability, net | 20,141 | 21,658 |
Long-term debt, net of current portion and debt discount and issuance costs | 125,487 | 127,774 |
Operating lease liabilities, net of current portion | 25,863 | |
Other long-term liabilities | 372 | 1,696 |
Total liabilities | 204,939 | 185,336 |
Commitments and contingencies (Note 10) | ||
Equity | ||
Preferred stock, $0.10 par value per share; 1,000 shares authorized; none issued and outstanding | ||
Common stock, $0.01 par value per share; 20,000 shares authorized; 9,125 and 9,591 shares issued and outstanding as of June 30, 2020 and September 30, 2019, respectively | 91 | 96 |
Additional paid-in capital | 52,829 | 61,312 |
Retained earnings | 102,837 | 107,049 |
Total RCIHH stockholders’ equity | 155,757 | 168,457 |
Noncontrolling interests | (322) | (156) |
Total equity | 155,435 | 168,301 |
Total liabilities and equity | $ 360,374 | $ 353,637 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 9,125,000 | 9,591,000 |
Common stock, shares outstanding | 9,125,000 | 9,591,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | ||||
Total revenues | $ 14,721 | $ 47,027 | $ 103,541 | $ 135,876 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 2,390 | 6,701 | 14,948 | 18,705 |
Salaries and wages | 5,421 | 13,164 | 30,866 | 37,168 |
Selling, general and administrative | 8,908 | 14,895 | 39,889 | 43,263 |
Depreciation and amortization | 2,235 | 2,465 | 6,696 | 6,718 |
Other charges (gains), net | 424 | (172) | 8,588 | (2,250) |
Total operating expenses | 19,378 | 37,053 | 100,987 | 103,604 |
Income (loss) from operations | (4,657) | 9,974 | 2,554 | 32,272 |
Other income (expenses) | ||||
Interest expense | (2,459) | (2,543) | (7,403) | (7,709) |
Interest income | 80 | 92 | 263 | 218 |
Unrealized gain (loss) on equity securities | 31 | (38) | (103) | (408) |
Income (loss) before income taxes | (7,005) | 7,485 | (4,689) | 24,373 |
Income tax expense (benefit) | (1,437) | 1,806 | (1,262) | 5,547 |
Net income (loss) | (5,568) | 5,679 | (3,427) | 18,826 |
Net loss (income) attributable to noncontrolling interests | 94 | (41) | 135 | (109) |
Net income (loss) attributable to RCIHH common stockholders | $ (5,474) | $ 5,638 | $ (3,292) | $ 18,717 |
Earnings (loss) per share | ||||
Basic and diluted | $ (0.60) | $ 0.59 | $ (0.36) | $ 1.94 |
Weighted average number of common shares outstanding | ||||
Basic and diluted | 9,125,000 | 9,620,000 | 9,224,000 | 9,671,000 |
Dividends per share | $ 0.03 | $ 0.03 | $ 0.10 | $ 0.09 |
Sales of Alcoholic Beverages [Member] | ||||
Revenues | ||||
Total revenues | $ 7,623 | $ 19,570 | $ 45,285 | $ 56,366 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 1,245 | 4,015 | 8,826 | 11,541 |
Sales of Food and Merchandise [Member] | ||||
Revenues | ||||
Total revenues | 3,452 | 7,046 | 17,378 | 19,175 |
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | 1,125 | 2,565 | 5,917 | 6,857 |
Service Revenues [Member] | ||||
Revenues | ||||
Total revenues | 2,907 | 17,299 | 34,448 | 51,609 |
Other [Member] | ||||
Revenues | ||||
Total revenues | 739 | 3,112 | 6,430 | 8,726 |
Service and Other [Member] | ||||
Cost of goods sold | ||||
Total cost of goods sold (exclusive of items shown separately below) | $ 20 | $ 121 | $ 205 | $ 307 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Treasury Stock [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Sep. 30, 2018 | $ 97,000 | $ 64,212,000 | $ 88,906,000 | $ 220,000 | $ (103,000) | $ 153,332,000 | |
Beginning balance, shares at Sep. 30, 2018 | 9,719,000 | ||||||
Purchase of treasury shares | $ (355,000) | (355,000) | |||||
Purchase of treasury shares, shares | (14,000) | ||||||
Canceled treasury shares | (355,000) | $ 355,000 | |||||
Canceled treasury shares, shares | (14,000) | 14,000 | |||||
Payment of dividends | (291,000) | (291,000) | |||||
Reclassification upon adoption of ASU 2016-01 | 220,000 | (220,000) | |||||
Net income (loss) | 6,344,000 | 60,000 | 6,404,000 | ||||
Ending balance, value at Dec. 31, 2018 | $ 97,000 | 63,857,000 | 95,179,000 | (43,000) | 159,090,000 | ||
Ending balance, shares at Dec. 31, 2018 | 9,705,000 | ||||||
Beginning balance, value at Sep. 30, 2018 | $ 97,000 | 64,212,000 | 88,906,000 | 220,000 | (103,000) | 153,332,000 | |
Beginning balance, shares at Sep. 30, 2018 | 9,719,000 | ||||||
Net income (loss) | 18,826,000 | ||||||
Ending balance, value at Jun. 30, 2019 | $ 96,000 | 61,849,000 | 106,976,000 | (15,000) | 168,906,000 | ||
Ending balance, shares at Jun. 30, 2019 | 9,617,000 | ||||||
Beginning balance, value at Dec. 31, 2018 | $ 97,000 | 63,857,000 | 95,179,000 | (43,000) | 159,090,000 | ||
Beginning balance, shares at Dec. 31, 2018 | 9,705,000 | ||||||
Purchase of treasury shares | $ (1,606,000) | (1,606,000) | |||||
Purchase of treasury shares, shares | (71,000) | ||||||
Canceled treasury shares | $ (1,000) | (1,605,000) | $ 1,606,000 | ||||
Canceled treasury shares, shares | (71,000) | 71,000 | |||||
Payment of dividends | (291,000) | (291,000) | |||||
Net income (loss) | 6,735,000 | 8,000 | 6,743,000 | ||||
Ending balance, value at Mar. 31, 2019 | $ 96,000 | 62,252,000 | 101,623,000 | (35,000) | 163,936,000 | ||
Ending balance, shares at Mar. 31, 2019 | 9,634,000 | ||||||
Beginning balance, value at Dec. 31, 2018 | $ 97,000 | 63,857,000 | 95,179,000 | (43,000) | 159,090,000 | ||
Beginning balance, shares at Dec. 31, 2018 | 9,705,000 | ||||||
Payment of dividends | 867,000 | ||||||
Ending balance, value at Jun. 30, 2019 | $ 96,000 | 61,849,000 | 106,976,000 | (15,000) | 168,906,000 | ||
Ending balance, shares at Jun. 30, 2019 | 9,617,000 | ||||||
Beginning balance, value at Mar. 31, 2019 | $ 96,000 | 62,252,000 | 101,623,000 | (35,000) | 163,936,000 | ||
Beginning balance, shares at Mar. 31, 2019 | 9,634,000 | ||||||
Purchase of treasury shares | $ (403,000) | (403,000) | |||||
Purchase of treasury shares, shares | (17,000) | ||||||
Canceled treasury shares | (403,000) | $ 403,000 | |||||
Canceled treasury shares, shares | (17,000) | 17,000 | |||||
Payment of dividends | (285,000) | (285,000) | |||||
Payment to noncontrolling interest | (21,000) | (21,000) | |||||
Net income (loss) | 5,638,000 | 41,000 | 5,679,000 | ||||
Ending balance, value at Jun. 30, 2019 | $ 96,000 | 61,849,000 | 106,976,000 | (15,000) | 168,906,000 | ||
Ending balance, shares at Jun. 30, 2019 | 9,617,000 | ||||||
Beginning balance, value at Sep. 30, 2019 | $ 96,000 | 61,312,000 | 107,049,000 | (156,000) | $ 168,301,000 | ||
Beginning balance, shares at Sep. 30, 2019 | 9,591,000 | ||||||
Purchase of treasury shares | $ (6,441,000) | $ (6,441,000) | |||||
Purchase of treasury shares, shares | (333,000) | ||||||
Canceled treasury shares | $ (3,000) | (6,438,000) | $ 6,441,000 | ||||
Canceled treasury shares, shares | (333,000) | 333,000 | |||||
Payment of dividends | (279,000) | (279,000) | |||||
Payment to noncontrolling interest | (10,000) | (10,000) | |||||
Net income (loss) | 5,634,000 | 5,634,000 | |||||
Ending balance, value at Dec. 31, 2019 | $ 93,000 | 54,874,000 | 112,404,000 | (166,000) | 167,205,000 | ||
Ending balance, shares at Dec. 31, 2019 | 9,258,000 | ||||||
Beginning balance, value at Sep. 30, 2019 | $ 96,000 | 61,312,000 | 107,049,000 | (156,000) | $ 168,301,000 | ||
Beginning balance, shares at Sep. 30, 2019 | 9,591,000 | ||||||
Net income (loss) | $ (3,427,000) | ||||||
Ending balance, value at Jun. 30, 2020 | $ 91,000 | 52,829,000 | 102,837,000 | (322,000) | 155,435,000 | ||
Ending balance, shares at Jun. 30, 2020 | 9,125,000 | ||||||
Beginning balance, value at Dec. 31, 2019 | $ 93,000 | 54,874,000 | 112,404,000 | (166,000) | 167,205,000 | ||
Beginning balance, shares at Dec. 31, 2019 | 9,258,000 | ||||||
Purchase of treasury shares | $ (2,047,000) | (2,047,000) | |||||
Purchase of treasury shares, shares | (133,000) | ||||||
Canceled treasury shares | $ (2,000) | (2,045,000) | $ 2,047,000 | ||||
Canceled treasury shares, shares | (133,000) | 133,000 | |||||
Payment of dividends | (368,000) | (368,000) | |||||
Payment to noncontrolling interest | (21,000) | (21,000) | |||||
Net income (loss) | (3,452,000) | (41,000) | (3,493,000) | ||||
Ending balance, value at Mar. 31, 2020 | $ 91,000 | 52,829,000 | 108,584,000 | (228,000) | 161,276,000 | ||
Ending balance, shares at Mar. 31, 2020 | 9,125,000 | ||||||
Payment of dividends | (273,000) | (273,000) | |||||
Net income (loss) | (5,474,000) | (94,000) | (5,568,000) | ||||
Ending balance, value at Jun. 30, 2020 | $ 91,000 | $ 52,829,000 | $ 102,837,000 | $ (322,000) | $ 155,435,000 | ||
Ending balance, shares at Jun. 30, 2020 | 9,125,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (3,427) | $ 18,826 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 6,696 | 6,718 |
Deferred income tax expense (benefit) | (1,517) | 1,237 |
Gain on sale of businesses and assets | (749) | (2,704) |
Impairment of assets | 9,192 | |
Unrealized loss on equity securities | 103 | 408 |
Amortization of debt discount and issuance costs | 194 | 276 |
Deferred rent | 236 | |
Noncash lease expense | 1,244 | |
Loss (gain) on insurance | (33) | 93 |
Doubtful accounts expense on notes receivable | 495 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (53) | 2,305 |
Inventories | (29) | (87) |
Prepaid insurance, other current and other assets | 4,942 | 4,199 |
Accounts payable, accrued and other liabilities | (4,911) | (3,093) |
Net cash provided by operating activities | 12,147 | 28,414 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of businesses and assets | 2,041 | 5,106 |
Proceeds from insurance | 945 | |
Proceeds from notes receivable | 1,555 | 107 |
Issuance of note receivable | (420) | |
Payments for property and equipment and intangible assets | (5,565) | (16,901) |
Acquisition of businesses, net of cash acquired | (13,500) | |
Net cash used in investing activities | (1,024) | (25,608) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from debt obligations | 6,503 | 12,330 |
Payments on debt obligations | (7,489) | (18,634) |
Purchase of treasury stock | (8,488) | (2,364) |
Payment of dividends | (920) | (867) |
Payment of loan origination costs | (20) | |
Distribution to noncontrolling interests | (31) | (21) |
Net cash used in financing activities | (10,425) | (9,576) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 698 | (6,770) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 14,097 | 17,726 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 14,795 | 10,956 |
CASH PAID DURING PERIOD FOR: | ||
Interest (net of amounts capitalized of $155 and $447, respectively) | 7,303 | 7,769 |
Income taxes | 2,067 | 1,827 |
Noncash investing and financing transactions: | ||
Notes receivable received as proceeds from sale of assets | 625 | |
Operating lease right-of-use assets established upon adoption of ASC 842 | 27,310 | |
Deferred rent liabilities reclassified upon adoption of ASC 842 | 1,241 | |
Operating lease liabilities established upon adoption of ASC 842 | 28,551 | |
Unpaid liabilities on capital expenditures | $ 6 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Cash Flows [Abstract] | ||
Interest amount capitalized | $ 155 | $ 447 |
Borrowing from certain investors | 2,350 | |
Exchange of notes payable one principal balance | 300 | |
Exchange of notes payable two principal balance | 100 | |
Amount of new notes payable one | 450 | |
Amount of new notes payable two | 200 | |
Entire transaction cash received | 1,950 | |
Total acquisition price of two clubs acquired | 25,500 | |
Payment of two clubs acquired | 13,500 | |
Total amount of executing three-seller financed notes | 12,000 | |
Total sale price of nightclub sold | 1,000 | |
Sale price received as cash | 375 | |
Notes receivable | 625 | |
Proceeds from disposal of assets held for sale | 1,400 | |
Payments to acquire assets held for sale | 163 | |
Property taxes | 87 | |
Notes receivable assets, held for sales | $ 1,150 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of RCI Hospitality Holdings, Inc. (the “Company or “RCIHH”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The September 30, 2019 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended September 30, 2019 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 13, 2020. The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair statement of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three and nine months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020. |
Recent Accounting Standards and
Recent Accounting Standards and Pronouncements | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards and Pronouncements | 2. Recent Accounting Standards and Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) 27.3 1.2 28.6 In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Income Statement—Reporting Comprehensive Income In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842): Codification Improvements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Liquidity and Impact of COVID-1
Liquidity and Impact of COVID-19 Pandemic | 9 Months Ended |
Jun. 30, 2020 | |
Liquidity And Impact Of Covid-19 Pandemic | |
Liquidity and Impact of COVID-19 Pandemic | 3. Liquidity and Impact of COVID-19 Pandemic In March 2020, President Donald Trump declared the coronavirus disease 2019 (“COVID-19”) pandemic as a national public health emergency. COVID-19 is the disease caused by a novel strain of a coronavirus that originated from Wuhan, China in November 2019. The declaration resulted in a significant reduction in customer traffic in our clubs and restaurants due to changes in consumer behavior as social distancing practices, dining room closures and other restrictions that were mandated or encouraged by federal, state and local governments, and since March 2020, we have temporarily closed and reopened several of our clubs and restaurants. The closure of our clubs and restaurants caused by the COVID-19 pandemic has presented operational challenges. Our strategy is to open locations in accordance with local and state guidelines and it is too early to know when and if they will generate positive cash flows for us. Depending on the timing and number of locations we get open, and their ability to generate positive cash flow, we may need to borrow funds to meet our obligations or consider selling certain assets. The COVID-19 pandemic is adversely affecting the availability of liquidity generally in the credit markets, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms, especially the longer the COVID-19 pandemic lasts. To augment an expected decline in operating cash flows caused by the COVID-19 pandemic, we instituted the following measures: ● Arranged and continue to arrange for deferment of principal and interest payment on certain of our debts; ● Furloughed employees working at our clubs and restaurants, except for a limited number of managers; ● Pay cut for all remaining salaried and hourly employees and deferral of board of director compensation; ● Deferred or modified certain fixed monthly expenses such as insurance, rent, and taxes, among others; ● Canceled certain non-essential expenses such as advertising, cable, pest control, point-of-sale system support, and investor relations coverage, among others. On May 8, 2020, the Company received approval and funding under the Paycheck Protection Program (“PPP”) of the CARES Act for its restaurants, shared service entity and lounge. See Notes 7 and 9. Ten of our restaurant subsidiaries received amounts ranging from $ 271 579 4.2 1.1 124 As of the release of this report, we do not know the extent and duration of the impact of COVID-19 on our businesses due to the uncertainty about the spread of the virus. Lower sales, as caused by social distancing guidelines, could lead to adverse financial results. However, we will continually monitor and evaluate the situation and will determine any further measures to be instituted, including refinancing several of our debt obligations. We continue to adhere to state and local government mandates regarding the pandemic and, since March 2020, have closed and reopened several of our locations depending on changing government mandates. As of the release of this report, we have reopened many of our club and Bombshells locations with limited occupancy but some of our bigger clubs are still closed. Valuation of Goodwill, Indefinite-Lived Intangibles and Long-Lived Assets We consider the COVID-19 pandemic as a triggering event in the assessment of recoverability of the goodwill, indefinite-lived intangibles, and long-lived assets in our clubs and restaurants that are affected. We evaluated forecasted cash flows considering future assumed impact of COVID-19 pandemic on sales. Based on our evaluation as of June 30, 2020, we determined our assets are impaired in a total amount of approximately $ 9.2 6.5 2.3 302 104 |
Revenues
Revenues | 9 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 4. Revenues The Company recognizes revenue from the sale of alcoholic beverages, food and merchandise, service and other revenues at the point-of-sale upon receipt of cash, check, or credit card charge, net of discounts and promotional allowances based on consideration specified in implied contracts with customers. Sales and liquor taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying unaudited condensed consolidated statements of operations. The Company recognizes revenue when it satisfies a performance obligation (point in time of sale) by transferring control over a product or service to a customer. Commission revenues, such as ATM commission, are recognized when the basis for such commission has transpired. Revenues from the sale of magazines and advertising content are recognized when the issue is published and shipped. Revenues and external expenses related to the Company’s annual Expo convention are recognized upon the completion of the convention, which normally occurs during our fiscal fourth quarter. Lease revenue (included in other revenues) is recognized when earned (recognized over time) and is more appropriately covered by guidance under ASC 842, Leases RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 12), are shown below (in thousands): Schedule of Disaggregation of Segment Revenues Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 1,777 $ 5,846 $ - $ 7,623 $ 14,597 $ 4,973 $ - $ 19,570 Sales of food and merchandise 774 2,678 - 3,452 3,313 3,733 - 7,046 Service revenues 2,906 1 - 2,907 17,257 42 - 17,299 Other revenues 556 6 177 739 2,722 7 383 3,112 $ 6,013 $ 8,531 $ 177 $ 14,721 $ 37,889 $ 8,755 $ 383 $ 47,027 Recognized at a point in time $ 5,781 $ 8,531 $ 175 $ 14,487 $ 37,457 $ 8,755 $ 369 $ 46,581 Recognized over time 232 * - 2 234 432 * - 14 446 $ 6,013 $ 8,531 $ 177 $ 14,721 $ 37,889 $ 8,755 $ 383 $ 47,027 Nine Months Ended June 30, 2020 Nine Months Ended June 30, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 28,321 $ 16,964 $ - $ 45,285 $ 43,547 $ 12,819 $ - $ 56,366 Sales of food and merchandise 6,837 10,541 - 17,378 9,813 9,362 - 19,175 Service revenues 34,290 158 - 34,448 51,513 96 - 51,609 Other revenues 5,791 21 618 6,430 7,791 18 917 8,726 $ 75,239 $ 27,684 $ 618 $ 103,541 $ 112,664 $ 22,295 $ 917 $ 135,876 Recognized at a point in time $ 74,192 $ 27,684 $ 605 $ 102,481 $ 111,431 $ 22,295 $ 874 $ 134,600 Recognized over time 1,047 * - 13 1,060 1,233 * - 43 1,276 $ 75,239 $ 27,684 $ 618 $ 103,541 $ 112,664 $ 22,295 $ 917 $ 135,876 * Lease revenue (included in Other Revenues) as covered by ASC 842 in the current year (and ASC 840 in the prior year). All other revenues are covered by ASC 606. The Company does not have contract assets with customers. The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net in our unaudited condensed consolidated balance sheet. A reconciliation of contract liabilities with customers is presented below (in thousands): Schedule of Reconciliation of Contract Liabilities with Customers Balance at September 30, 2019 Consideration Received Recognized in Revenue Balance at June 30, 2020 Ad revenue $ 76 $ 403 $ (412 ) $ 67 Expo revenue - 262 - 262 Other 7 18 (23 ) 2 $ 83 $ 683 $ (435 ) $ 331 Contract liabilities with customers are included in accrued liabilities as unearned revenues in our unaudited condensed consolidated balance sheets (see also Note 5), while the revenues associated with these contract liabilities are included in other revenues in our unaudited condensed consolidated statements of operations. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Selected Account Information
Selected Account Information | 9 Months Ended |
Jun. 30, 2020 | |
Selected Account Information | |
Selected Account Information | 5. Selected Account Information The components of accrued liabilities are as follows (in thousands): Schedule of Accrued Liabilities June 30, 2020 September 30, 2019 Insurance $ 425 $ 4,937 Sales and liquor taxes 2,844 3,086 Payroll and related costs 1,972 2,892 Property taxes 1,355 1,675 Interest 1,565 508 Patron tax 679 595 Unearned revenues 331 83 Lawsuit settlement 75 115 Other 1,040 753 Accrued liabilities $ 10,286 $ 14,644 The components of selling, general and administrative expenses are as follows (in thousands): Schedule of Selling, General and Administrative Expenses 2020 2019 2020 2019 For the Three Months For the Nine Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Taxes and permits $ 1,187 $ 2,258 $ 6,101 $ 6,809 Advertising and marketing 428 2,083 4,745 6,301 Supplies and services 681 1,493 3,605 4,414 Insurance 1,481 1,367 4,437 4,122 Accounting and professional fees 407 631 2,916 2,559 Lease 1,010 965 3,063 2,941 Charge card fees 146 1,011 2,037 2,830 Legal 841 1,479 3,109 3,310 Utilities 512 756 2,205 2,262 Security 272 757 1,869 2,222 Repairs and maintenance 353 787 1,802 2,095 Other 1,590 1,308 4,000 3,398 Selling, general and administrative expenses $ 8,908 $ 14,895 $ 39,889 $ 43,263 |
Assets Held for Sale
Assets Held for Sale | 9 Months Ended |
Jun. 30, 2020 | |
Assets Held For Sale | |
Assets Held for Sale | 6. Assets Held for Sale As of September 30, 2019, the Company had two real estate properties for sale. The aggregate estimated fair value of the properties less cost to sell as of September 30, 2019 was approximately $ 2.9 During the three months ended December 31, 2019, the Company classified as held-for-sale another real estate property with an aggregate estimated fair value of the property less cost to sell of $ 1.9 million. This property was later reclassified out of held-for-sale assets and back to property and equipment during the three months ended June 30, 2020 due to a change in management’s plan with the property. During the three months ended June 30, 2020, the Company sold one held-for-sale property valued at $ 853 ,000 for $ 1.5 million. As of June 30, 2020, the Company has a total of one real estate property held for sale with a total value of $ 2.0 The Company expects the properties held for sale, which are primarily comprised of land and buildings, to be sold within 12 months through property listings by our real estate brokers. No liabilities were associated with held-for-sale assets as of June 30, 2020 and September 30, 2019. Gains or losses on the sale of properties held for sale are included in other charges (gains), net within the unaudited condensed consolidated statements of operations. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Debt
Debt | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt In December 2019, the Company amended the $ 5.0 3.0 October 1, 2022 In February 2020, in relation to a $ 4.0 12% August 15, 2018 10 57,388 4.0 In February 2020, in relation to a $ 9.9 12% 5.2 10 74,515 3.8 October 2021 25,400 Included in the balance of debt obligations as of June 30, 2020 and September 30, 2019 is a $ 500,000 600,000 (of which $200,000 was included in the $1,740,000 extension in the succeeding paragraph) borrowed from two non-officer employees and a family member of a non-officer employee in which the terms of the notes are the same as the rest of the lender groups. On May 1, 2020, the Company negotiated extensions to November 1, 2020 on $ 1,740,000 2,040,000 May 1, 2020 300,000 200,000 November 1, 2020 1,940,000 Future maturities of long-term debt as of June 30, 2020 are as follows: $ 17.5 million, $ 14.6 million, $ 11.6 million, $ 8.4 million, $ 8.5 million and $ 83.5 million for the twelve months ending June 30, 2021, 2022, 2023, 2024, 2025, and thereafter, respectively. Of the maturity schedule mentioned above, $ 6.5 million, $ 2.4 million, $ 3.7 million, $ 0 , $ 0 and $ 41.7 million, respectively, relate to scheduled balloon payments. Unamortized debt discount and issuance costs amounted to $ 1.3 1.5 Included in the balance of debt obligations as of June 30, 2020 are PPP loans amounting to $ 5.4 million. If not forgiven, under the terms of the loans as provided by the CARES Act, the twelve PPP loans bear an interest rate of 1 % per annum and will be payable in 18 equal monthly installments of $ 305,138 starting December 6, 2020. See Notes 3 and 9. |
Equity
Equity | 9 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Equity | 8. Equity During the three and nine months ended June 30, 2020, the Company purchased and retired 0 465,390 0 8.5 0.03 0.10 273,000 920,000 During the three and nine months ended June 30, 2019, the Company purchased and retired 17,302 102,113 403,000 2.4 0.03 285 867,000 On February 6, 2020, the Company’s Board of Directors authorized an additional $ 10.0 11.8 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Income Taxes
Income Taxes | 9 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes Income tax benefit was $ 1.4 million and $ 1.3 million during the three and nine months ended June 30, 2020, respectively, compared to income tax expense of $ 1.8 million and $ 5.5 million during the three and nine months ended June 30, 2019, respectively. The effective income tax rate was a benefit of 20.5% and 26.9% during the three and nine months ended June 30, 2020, respectively, compared to expense rates of 24.1% and 22.8% during the three and nine months ended June 30, 2019, respectively. Our effective tax rate for both years is affected by the estimate of pre-tax accounting income (loss) for the year, state taxes, permanent differences, and tax credits, including the FICA tip credit. The Company or one of its subsidiaries file income tax returns for U.S. federal jurisdiction and various states. Fiscal years ended September 30, 2017 and thereafter remain open to tax examination. The Company’s federal income tax returns for the years ended September 30, 2015, 2014 and 2013 have been examined by the Internal Revenue Service with no changes. In July 2020, we have resolved payroll tax audits with the IRS for tax years 2014 through 2017 and have accrued approximately $ 149,000 The Company accounts for uncertain tax positions pursuant to ASC Topic 740, Income Taxes 0 0 On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law. As a result of this, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration. The CARES Act includes, among other items, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The Company is currently evaluating the impact of the provisions of the CARES Act. The CARES Act also established a Paycheck Protection Program (“PPP”), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. The loan may be forgiven if the funds are used for payroll and other qualified expenses. The Company has submitted its application for a PPP loan and on May 8, 2020 has received approval and funding for its restaurants, shared service entity and lounge. Ten of our restaurant subsidiaries received amounts ranging from $ 271,000 579,000 4.2 1.1 124,000 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Legal Matters Texas Patron Tax In 2015, the Company reached a settlement with the State of Texas over the payment of the state’s Patron Tax on adult club customers. To resolve the issue of taxes owed, the Company agreed to pay $ 10.0 119,000 5 10.0 9.6% 7.2 8.2 7.2 In March 2017, the Company settled with the State of Texas for one of the two remaining unsettled Patron Tax locations. To resolve the issue of taxes owed, the Company agreed to pay a total of $ 687,815 195,815 60 8,200 The aggregate balance of Patron Tax settlement liability, which is included in long-term debt in the unaudited condensed consolidated balance sheets, amounted to $ 2.5 million and $ 3.4 million as of June 30, 2020 and September 30, 2019, respectively. A declaratory judgment action was brought by five operating subsidiaries of the Company to challenge a Texas Comptroller administrative rule related to the $ 5 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Indemnity Insurance Corporation As previously reported, the Company and its subsidiaries were insured under a liability policy issued by Indemnity Insurance Corporation, RRG (“IIC”) through October 25, 2013. The Company and its subsidiaries changed insurance companies on that date. On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (“Rehabilitation Order”), which declared IIC impaired, insolvent and in an unsafe condition and placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (“Commissioner”) in her capacity as receiver (“Receiver”). The Rehabilitation Order empowered the Commissioner to rehabilitate IIC through a variety of means, including gathering assets and marshaling those assets as necessary. Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014. On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC. The Liquidation Order further ordered that all claims against IIC must have been filed with the Receiver before the close of business on January 16, 2015 and that all pending lawsuits involving IIC as the insurer were further stayed or abated until October 7, 2014. As a result, the Company and its subsidiaries no longer have insurance coverage under the liability policy with IIC. The Company has retained counsel to defend against and evaluate these claims and lawsuits. We are funding 100% Shareholder Class and Derivative Actions In May and June 2019, three putative securities class action complaints were filed against RCI Hospitality Holdings, Inc. and certain of its officers in the Southern District of Texas, Houston Division. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and 10b-5 promulgated thereunder based on alleged materially false and misleading statements made in the Company’s SEC filings and disclosures as they relate to various alleged transactions by the Company and management. The complaints seek unspecified damages, costs, and attorneys’ fees. These lawsuits are Hoffman v. RCI Hospitality Holdings, Inc., et al. (filed May 21, 2019, naming the Company and Eric Langan); Gu v. RCI Hospitality Holdings, Inc., et al. (filed May 28, 2019, naming the Company, Eric Langan, and Phil Marshall); and Grossman v. RCI Hospitality Holdings, Inc., et al. (filed June 28, 2019, naming the Company, Eric Langan, and Phil Marshall). The plaintiffs in all three cases moved to consolidate the purported class actions. On January 10, 2020 an order consolidating the Hoffman, Grossman, and Gu cases was entered by the Court. The consolidated case is styled In re RCI Hospitality Holdings, Inc., No. 4:19-cv-01841. On February 24, 2020, the plaintiffs in the consolidated case filed an Amended Class Action Complaint, continuing to allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and 10b-5 promulgated thereunder. In addition to naming the Company, Eric Langan, and Phil Marshall, the amended complaint also adds director Nour-Dean Anakar and former director Steven Jenkins as defendants. On April 24, 2020, the Company and the individual defendants moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted. As of July 23, 2020, briefing on the motion to dismiss is complete, and we are currently waiting for the court to rule on the motion. The Company intends to continue to vigorously defend against this action. This action is in its preliminary phase, and a potential loss cannot yet be estimated. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On August 16, 2019, a shareholder derivative action was filed in the Southern District of Texas, Houston Division against officers and directors, Eric S. Langan, Phillip Marshall, Nour-Dean Anakar, Yura Barabash, Luke Lirot, Travis Reese, former director Steven Jenkins, and RCI Hospitality Holdings, Inc., as nominal defendant. The action alleges that the individual officers and directors made or caused the Company to make a series of materially false and/or misleading statements and omissions regarding the Company’s business, operations, prospects, and legal compliance and engaged in or caused the Company to engage in, inter alia, related party transactions, questionable uses of corporate assets, and failure to maintain internal controls. The action asserts claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and violations of Sections 14(a), 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks injunctive relief, damages, restitution, costs, and attorneys’ fees. The case, Cecere v. Langan, et al. SEC Matter and Internal Review In mid- and late 2018, a series of negative articles about the Company was anonymously published in forums associated with the short-selling community. Subsequently in 2019, the SEC initiated an informal inquiry. In connection with these events, a special committee of the Company’s audit committee engaged independent outside counsel to conduct an internal review. Management of the Company fully cooperated with the internal review conducted by the special committee and its outside counsel. The board of directors has implemented the recommendations resulting from the internal review. As of the date hereof, the internal review has been completed subject to any ongoing cooperation with regulatory authorities. Since the initiation of the informal inquiry by the SEC in early 2019, the Company and its management have fully cooperated and continue to fully cooperate with the SEC matter, which has now converted to a formal investigation and is ongoing. At this time, the Company is unable to predict the duration, scope, result or related costs associated with the investigation. The Company is also unable to predict what, if any, action may be taken as a result of the investigation. Any determination by the SEC that the Company’s activities were not in compliance with federal securities laws or regulations, however, could result in the imposition of fines, penalties, disgorgement, or equitable relief, which could have a material adverse effect on the Company. Other On March 26, 2016, an image infringement lawsuit was filed in federal court in the Southern District of New York against the Company and several of its subsidiaries. Plaintiffs allege that their images were misappropriated, intentionally altered and published without their consent by clubs affiliated with the Company. The causes of action asserted in Plaintiffs’ Complaint include alleged violations of the Federal Lanham Act, the New York Civil Rights Act, and other statutory and common law theories. The Company contends that there is insurance coverage under an applicable insurance policy. The insurer has raised several issues regarding coverage under the policy. At this time, this disagreement remains unresolved. The Company has denied all allegations, continues to vigorously defend against the lawsuit and continues to believe the matter is covered by insurance. The Company has been sued by a landlord in the 333rd Judicial District Court of Harris County, Texas for a Houston Bombshells which was under renovation in 2015. The plaintiff alleges RCI Hospitality Holdings, Inc.’s subsidiary, BMB Dining Services (Willowbrook), Inc., breached a lease agreement by constructing an outdoor patio, which allegedly interfered with the common areas of the shopping center, and by failing to provide Plaintiff with proposed plans before beginning construction. Plaintiff also asserts RCI Hospitality Holdings, Inc. is liable as guarantor of the lease. The lease was for a Bombshells restaurant to be opened in the Willowbrook Shopping Center in Houston, Texas. Both RCI Hospitality Holdings, Inc. and BMB Dining Services (Willowbrook), Inc. have denied liability and assert that Plaintiff has failed to mitigate its claimed damages. Further, BMB Dining Services (Willowbrook), Inc. asserts that Plaintiff affirmatively represented that the patio could be constructed under the lease and has filed counter claims and third-party claims against Plaintiff and Plaintiff’s manager asserting that they committed fraud and that the landlord breached the applicable agreements. The case was tried to a jury in late September 2018 and an adverse judgment was entered in January 2019 in the amount totaling $ 1.0 690,000 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) On June 23, 2014, Mark H. Dupray and Ashlee Dupray filed a lawsuit against Pedro Antonio Panameno and our subsidiary JAI Dining Services (Phoenix) Inc. (“JAI Phoenix”) in the Superior Court of Arizona for Maricopa County. The suit alleged that Mr. Panameno injured Mr. Dupray in a traffic accident after being served alcohol at an establishment operated by JAI Phoenix. The suit alleged that JAI Phoenix was liable under theories of common law dram shop negligence and dram shop negligence per se. After a jury trial proceeded to a verdict in favor of the plaintiffs against both defendants, in April 2017 the Court entered a judgment under which JAI Phoenix’s share of compensatory damages is approximately $ 1.4 4 As set forth in the risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019, the adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees. While we take steps to ensure that our adult entertainers are deemed independent contractors, from time to time, we are named in lawsuits related to the alleged misclassification of entertainers. Claims are brought under both federal and where applicable, state law. Based on the industry standard, the manner in which the independent contractor entertainers are treated at the clubs, and the entertainer license agreements governing the entertainer’s work at the clubs, the Company believes that these lawsuits are without merit. Lawsuits are handled by attorneys with an expertise in the relevant law and are defended vigorously. Due to several COVID-19 regulations and restrictions imposed on some of our businesses by local municipalities and/or States, certain of our subsidiaries are plaintiffs to lawsuits that have been filed on behalf of the affected entities to have the restrictions eased or removed entirely. The lawsuits may increase or decrease based on the spread of the disease and new or additional restrictions placed on our businesses. General In the regular course of business affairs and operations, we are subject to possible loss contingencies arising from third-party litigation and federal, state, and local environmental, labor, health and safety laws and regulations. We assess the probability that we could incur liability in connection with certain of these lawsuits. Our assessments are made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its subsidiaries. In certain cases that are in the early stages and in light of the uncertainties surrounding them, we do not currently possess sufficient information to determine a range of reasonably possible liability. In matters where there is insurance coverage, in the event we incur any liability, we believe it is unlikely we would incur losses in connection with these claims in excess of our insurance coverage. Settlements of lawsuits for the three and nine months ended June 30, 2020 total approximately $ 50,000 74,000 0 144,000 75,000 115,000 |
Acquisition
Acquisition | 9 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition | 11. Acquisition On November 5, 2019, we announced that our subsidiaries had signed definitive agreements to acquire the assets and related real estate of a well-established, top gentlemen’s club located in the Northeast Corridor for $ 15.0 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Segment Information
Segment Information | 9 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 12. Segment Information The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such reportable segments based on management responsibility and the nature of the Company’s products, services, and costs. There are no major distinctions in geographical areas served as all operations are in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements. Schedule of Segment Reporting Information Below is the financial information related to the Company’s segments (in thousands): For the Three Months For the Nine Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Revenues Nightclubs $ 6,013 $ 37,889 $ 75,239 $ 112,664 Bombshells 8,531 8,755 27,684 22,295 Other 177 383 618 917 General corporate - - - - $ 14,721 $ 47,027 $ 103,541 $ 135,876 Income (loss) from operations Nightclubs $ (3,088 ) $ 14,034 $ 13,002 $ 44,499 Bombshells 1,903 686 4,166 1,543 Other (95 ) (111 ) (480 ) (406 ) General corporate (3,377 ) (4,635 ) (14,134 ) (13,364 ) $ (4,657 ) $ 9,974 $ 2,554 $ 32,272 Depreciation and amortization Nightclubs $ 1,470 $ 1,737 $ 4,426 $ 4,711 Bombshells 455 370 1,328 1,001 Other 103 102 311 312 General corporate 207 256 631 694 $ 2,235 $ 2,465 $ 6,696 $ 6,718 Capital expenditures Nightclubs $ 106 $ 1,935 $ 2,964 $ 3,029 Bombshells 136 900 2,473 10,697 Other - 2 - 20 General corporate - 162 128 3,155 $ 242 $ 2,999 $ 5,565 $ 16,901 June 30, 2020 September 30, 2019 Total assets Nightclubs $ 277,707 $ 274,071 Bombshells 51,907 44,144 Other 1,516 1,773 General corporate 29,244 33,649 $ 360,374 $ 353,637 RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) General corporate expenses include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, depreciation and other corporate costs such as automobile and travel costs. Management considers these to be non-allocable costs for segment purposes. Certain real estate assets previously wholly assigned to Bombshells have been subdivided and allocated to other future development or investment projects. Accordingly, those asset costs have been transferred out of the Bombshells segment. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company. Mr. Langan receives no compensation or other direct financial benefit for any of the guarantees. The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of June 30, 2020 and September 30, 2019 is $ 84.0 86.8 Included in the $ 2.35 500,000 We used the services of Nottingham Creations (formerly Sherwood Forest Creations, LLC), a furniture fabrication company that manufactures tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest). Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were $ 0 and $ 72,809 during the three and nine months ended June 30, 2020, respectively, and $ 12,990 and $ 120,805 during the three and nine months ended June 30, 2019, respectively. As of June 30, 2020 and September 30, 2019, we owed Nottingham Creations and Sherwood Forest $ 13,705 and $ 6,588 respectively, in unpaid billings. TW Mechanical LLC (“TW Mechanical”) provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2020 and 2019. A son-in-law of Eric Langan owns a noncontrolling interest in TW Mechanical. Amounts billed by TW Mechanical to the third-party general contractor were $ 0 and $ 18,758 for the three and nine months ended June 30, 2020, respectively, and $ 0 and $ 435,800 for the three and nine months ended June 30, 2019, respectively. Amounts billed directly to the Company were $ 11,363 and $ 37,605 for the three and nine months ended June 30, 2020, respectively, and $ 0 and $ 206 for the three and nine months ended June 30, 2019, respectively. As of June 30, 2020 and September 30, 2019, the Company owed TW Mechanical $ 4,439 and $ 0 , respectively, in unpaid direct billings. RCI HOSPITALITY HOLDINGS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
Leases
Leases | 9 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | 14. Leases The Company leases certain facilities and equipment under operating leases. Under ASC 840, lease expense for the Company’s operating leases, which generally have escalating rentals over the term of the lease, is recorded using the straight-line method over the initial lease term whereby an equal amount of lease expense is attributed to each period during the term of the lease, regardless of when actual payments are made. Generally, this results in lease expense in excess of cash payments during the early years of a lease and lease expense less than cash payments in the later years. The difference between lease expense recognized and actual lease payments is accumulated and included in other long-term liabilities in the consolidated balance sheets. Included in lease expense in our unaudited condensed consolidated statements of operations (see Note 5) were lease payments for a house that the Company’s CEO rented to the Company for corporate housing for its out-of-town Bombshells management and trainers, of which lease expense totaled $ 0 19,500 19,500 58,500 December 31, 2019 Schedule of Future Minimum Rental Payments for Operating Leases Undiscounted future minimum annual lease obligations as of September 30, 2019 under ASC 840 are as follows (in thousands): September 30, 2019 2020 $ 3,237 2021 3,154 2022 3,057 2023 2,889 2024 2,850 Thereafter 21,038 Total future minimum lease obligations $ 36,225 Included in the future minimum lease obligations are billboard and outdoor sign leases. These leases were recorded as advertising and marketing expenses, and included in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. Under ASC 840, we recorded lease expense amounting to $ 965,000 2.9 The Company adopted ASC 842 as of October 1, 2019. The Company’s adoption of ASC 842 included renewal or termination options for varying periods which we deemed reasonably certain to exercise. This determination is based on our consideration of certain economic, strategic and other factors that we evaluate at lease commencement date and reevaluate throughout the lease term. Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments. The variable portion of lease payments is not included in our right-of-use assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations. We have elected to apply the short-term lease exception for all underlying asset classes, which mainly includes equipment leases. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases. Our adoption of ASC 842 did not have a material impact on our lease revenue accounting as a lessor. See Note 4. Schedule of Future Maturities of Lease Liabilities Future maturities of ASC 842 lease liabilities as of June 30, 2020 are as follows (in thousands): Principal Payments Interest Total Payments July 2020 - June 2021 $ 1,586 $ 1,617 $ 3,203 July 2021 - June 2022 1,719 1,517 3,236 July 2022 - June 2023 1,703 1,412 3,115 July 2023 - June 2024 1,738 1,310 3,048 July 2024 - June 2025 1,906 1,200 3,106 Thereafter 18,797 5,703 24,500 $ 27,449 $ 12,759 $ 40,208 Schedule of Lease Expense Total lease expense, under ASC 842, was included in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations, except for sublease income which was included in other revenue, for the three and nine months ended June 30, 2020 as follows (in thousands): Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020 Operating lease expense – fixed payments $ 839 $ 2,519 Variable lease expense 158 288 Short-term equipment and other lease expense (includes $ 12 303 72 297 97 856 Sublease income (2 ) (8 ) Total lease expense, net $ 1,092 $ 3,655 Other information: Operating cash outflows from operating leases $ 1,051 $ 3,513 Weighted average remaining lease term 13 Weighted average discount rate 6.1 % |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Segment Revenues | Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 12), are shown below (in thousands): Schedule of Disaggregation of Segment Revenues Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 1,777 $ 5,846 $ - $ 7,623 $ 14,597 $ 4,973 $ - $ 19,570 Sales of food and merchandise 774 2,678 - 3,452 3,313 3,733 - 7,046 Service revenues 2,906 1 - 2,907 17,257 42 - 17,299 Other revenues 556 6 177 739 2,722 7 383 3,112 $ 6,013 $ 8,531 $ 177 $ 14,721 $ 37,889 $ 8,755 $ 383 $ 47,027 Recognized at a point in time $ 5,781 $ 8,531 $ 175 $ 14,487 $ 37,457 $ 8,755 $ 369 $ 46,581 Recognized over time 232 * - 2 234 432 * - 14 446 $ 6,013 $ 8,531 $ 177 $ 14,721 $ 37,889 $ 8,755 $ 383 $ 47,027 Nine Months Ended June 30, 2020 Nine Months Ended June 30, 2019 Nightclubs Bombshells Other Total Nightclubs Bombshells Other Total Sales of alcoholic beverages $ 28,321 $ 16,964 $ - $ 45,285 $ 43,547 $ 12,819 $ - $ 56,366 Sales of food and merchandise 6,837 10,541 - 17,378 9,813 9,362 - 19,175 Service revenues 34,290 158 - 34,448 51,513 96 - 51,609 Other revenues 5,791 21 618 6,430 7,791 18 917 8,726 $ 75,239 $ 27,684 $ 618 $ 103,541 $ 112,664 $ 22,295 $ 917 $ 135,876 Recognized at a point in time $ 74,192 $ 27,684 $ 605 $ 102,481 $ 111,431 $ 22,295 $ 874 $ 134,600 Recognized over time 1,047 * - 13 1,060 1,233 * - 43 1,276 $ 75,239 $ 27,684 $ 618 $ 103,541 $ 112,664 $ 22,295 $ 917 $ 135,876 * Lease revenue (included in Other Revenues) as covered by ASC 842 in the current year (and ASC 840 in the prior year). All other revenues are covered by ASC 606. |
Schedule of Reconciliation of Contract Liabilities with Customers | The Company does not have contract assets with customers. The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net in our unaudited condensed consolidated balance sheet. A reconciliation of contract liabilities with customers is presented below (in thousands): Schedule of Reconciliation of Contract Liabilities with Customers Balance at September 30, 2019 Consideration Received Recognized in Revenue Balance at June 30, 2020 Ad revenue $ 76 $ 403 $ (412 ) $ 67 Expo revenue - 262 - 262 Other 7 18 (23 ) 2 $ 83 $ 683 $ (435 ) $ 331 |
Selected Account Information (T
Selected Account Information (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Selected Account Information | |
Schedule of Accrued Liabilities | The components of accrued liabilities are as follows (in thousands): Schedule of Accrued Liabilities June 30, 2020 September 30, 2019 Insurance $ 425 $ 4,937 Sales and liquor taxes 2,844 3,086 Payroll and related costs 1,972 2,892 Property taxes 1,355 1,675 Interest 1,565 508 Patron tax 679 595 Unearned revenues 331 83 Lawsuit settlement 75 115 Other 1,040 753 Accrued liabilities $ 10,286 $ 14,644 |
Schedule of Selling, General and Administrative Expenses | The components of selling, general and administrative expenses are as follows (in thousands): Schedule of Selling, General and Administrative Expenses 2020 2019 2020 2019 For the Three Months For the Nine Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Taxes and permits $ 1,187 $ 2,258 $ 6,101 $ 6,809 Advertising and marketing 428 2,083 4,745 6,301 Supplies and services 681 1,493 3,605 4,414 Insurance 1,481 1,367 4,437 4,122 Accounting and professional fees 407 631 2,916 2,559 Lease 1,010 965 3,063 2,941 Charge card fees 146 1,011 2,037 2,830 Legal 841 1,479 3,109 3,310 Utilities 512 756 2,205 2,262 Security 272 757 1,869 2,222 Repairs and maintenance 353 787 1,802 2,095 Other 1,590 1,308 4,000 3,398 Selling, general and administrative expenses $ 8,908 $ 14,895 $ 39,889 $ 43,263 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | Schedule of Segment Reporting Information Below is the financial information related to the Company’s segments (in thousands): For the Three Months For the Nine Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Revenues Nightclubs $ 6,013 $ 37,889 $ 75,239 $ 112,664 Bombshells 8,531 8,755 27,684 22,295 Other 177 383 618 917 General corporate - - - - $ 14,721 $ 47,027 $ 103,541 $ 135,876 Income (loss) from operations Nightclubs $ (3,088 ) $ 14,034 $ 13,002 $ 44,499 Bombshells 1,903 686 4,166 1,543 Other (95 ) (111 ) (480 ) (406 ) General corporate (3,377 ) (4,635 ) (14,134 ) (13,364 ) $ (4,657 ) $ 9,974 $ 2,554 $ 32,272 Depreciation and amortization Nightclubs $ 1,470 $ 1,737 $ 4,426 $ 4,711 Bombshells 455 370 1,328 1,001 Other 103 102 311 312 General corporate 207 256 631 694 $ 2,235 $ 2,465 $ 6,696 $ 6,718 Capital expenditures Nightclubs $ 106 $ 1,935 $ 2,964 $ 3,029 Bombshells 136 900 2,473 10,697 Other - 2 - 20 General corporate - 162 128 3,155 $ 242 $ 2,999 $ 5,565 $ 16,901 June 30, 2020 September 30, 2019 Total assets Nightclubs $ 277,707 $ 274,071 Bombshells 51,907 44,144 Other 1,516 1,773 General corporate 29,244 33,649 $ 360,374 $ 353,637 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of Future Minimum Rental Payments for Operating Leases | Schedule of Future Minimum Rental Payments for Operating Leases Undiscounted future minimum annual lease obligations as of September 30, 2019 under ASC 840 are as follows (in thousands): September 30, 2019 2020 $ 3,237 2021 3,154 2022 3,057 2023 2,889 2024 2,850 Thereafter 21,038 Total future minimum lease obligations $ 36,225 |
Schedule of Future Maturities of Lease Liabilities | Schedule of Future Maturities of Lease Liabilities Future maturities of ASC 842 lease liabilities as of June 30, 2020 are as follows (in thousands): Principal Payments Interest Total Payments July 2020 - June 2021 $ 1,586 $ 1,617 $ 3,203 July 2021 - June 2022 1,719 1,517 3,236 July 2022 - June 2023 1,703 1,412 3,115 July 2023 - June 2024 1,738 1,310 3,048 July 2024 - June 2025 1,906 1,200 3,106 Thereafter 18,797 5,703 24,500 $ 27,449 $ 12,759 $ 40,208 |
Schedule of Lease Expense | Schedule of Lease Expense Total lease expense, under ASC 842, was included in selling, general and administrative expenses in our unaudited condensed consolidated statement of operations, except for sublease income which was included in other revenue, for the three and nine months ended June 30, 2020 as follows (in thousands): Three Months Ended June 30, 2020 Nine Months Ended June 30, 2020 Operating lease expense – fixed payments $ 839 $ 2,519 Variable lease expense 158 288 Short-term equipment and other lease expense (includes $ 12 303 72 297 97 856 Sublease income (2 ) (8 ) Total lease expense, net $ 1,092 $ 3,655 Other information: Operating cash outflows from operating leases $ 1,051 $ 3,513 Weighted average remaining lease term 13 Weighted average discount rate 6.1 % |
Recent Accounting Standards a_2
Recent Accounting Standards and Pronouncements (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2020 | Oct. 02, 2019 | Sep. 30, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 25,962 | ||
Accounting Standards Update 2016-02 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease right-of-use assets | $ 27,300 | ||
Reclassification of deferred rent liability | 1,200 | ||
Operating lease Liability | $ 28,600 |
Liquidity and Impact of COVID_2
Liquidity and Impact of COVID-19 Pandemic (Details Narrative) - USD ($) | May 08, 2020 | Jun. 30, 2020 |
Entity Listings [Line Items] | ||
Impairment of assets | $ 9,200,000 | |
Impairment of goodwill | 6,500,000 | |
Impairment of SOB licenses | 2,300,000 | |
Impairment of property and equipment | 302,000 | |
Right-of-use operating lease assets. | $ 104,000 | |
CARES Act [Member] | Our Shared-Services [Member] | ||
Entity Listings [Line Items] | ||
Subsidiaries received | $ 1,100,000 | |
CARES Act [Member] | Ten of Our Restaurant [Member] | ||
Entity Listings [Line Items] | ||
Proceeds from loan | 4,200,000 | |
CARES Act [Member] | Ten of Our Restaurant [Member] | Minimum [Member] | ||
Entity Listings [Line Items] | ||
Subsidiaries received | 271,000 | |
CARES Act [Member] | Ten of Our Restaurant [Member] | Maximum [Member] | ||
Entity Listings [Line Items] | ||
Subsidiaries received | 579,000 | |
CARES Act [Member] | One of Our Lounges [Member] | ||
Entity Listings [Line Items] | ||
Subsidiaries received | $ 124,000 |
Schedule of Disaggregation of S
Schedule of Disaggregation of Segment Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | $ 14,721 | $ 47,027 | $ 103,541 | $ 135,876 | |
Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 14,487 | 46,581 | 102,481 | 134,600 | |
Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 234 | 446 | 1,060 | 1,276 | |
Sales of Alcoholic Beverages [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 7,623 | 19,570 | 45,285 | 56,366 | |
Sales of Food and Merchandise [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 3,452 | 7,046 | 17,378 | 19,175 | |
Service Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 2,907 | 17,299 | 34,448 | 51,609 | |
Other Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 739 | 3,112 | 6,430 | 8,726 | |
Nightclubs [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 6,013 | 37,889 | 75,239 | 112,664 | |
Nightclubs [Member] | Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 5,781 | 37,457 | 74,192 | 111,431 | |
Nightclubs [Member] | Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | [1] | 232 | 432 | 1,047 | 1,233 |
Nightclubs [Member] | Sales of Alcoholic Beverages [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 1,777 | 14,597 | 28,321 | 43,547 | |
Nightclubs [Member] | Sales of Food and Merchandise [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 774 | 3,313 | 6,837 | 9,813 | |
Nightclubs [Member] | Service Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 2,906 | 17,257 | 34,290 | 51,513 | |
Nightclubs [Member] | Other Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 556 | 2,722 | 5,791 | 7,791 | |
Bombshells [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 8,531 | 8,755 | 27,684 | 22,295 | |
Bombshells [Member] | Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 8,531 | 8,755 | 27,684 | 22,295 | |
Bombshells [Member] | Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | |||||
Bombshells [Member] | Sales of Alcoholic Beverages [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 5,846 | 4,973 | 16,964 | 12,819 | |
Bombshells [Member] | Sales of Food and Merchandise [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 2,678 | 3,733 | 10,541 | 9,362 | |
Bombshells [Member] | Service Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 1 | 42 | 158 | 96 | |
Bombshells [Member] | Other Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 6 | 7 | 21 | 18 | |
Other [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 177 | 383 | 618 | 917 | |
Other [Member] | Transferred at Point in Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 175 | 369 | 605 | 874 | |
Other [Member] | Transferred over Time [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | 2 | 14 | 13 | 43 | |
Other [Member] | Sales of Alcoholic Beverages [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | |||||
Other [Member] | Sales of Food and Merchandise [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | |||||
Other [Member] | Service Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | |||||
Other [Member] | Other Revenues [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Total revenues | $ 177 | $ 383 | $ 618 | $ 917 | |
[1] | Lease revenue (included in Other Revenues) as covered by ASC 842 in the current year (and ASC 840 in the prior year). All other revenues are covered by ASC 606. |
Schedule of Reconciliation of C
Schedule of Reconciliation of Contract Liabilities with Customers (Details) $ in Thousands | 9 Months Ended |
Jun. 30, 2020USD ($) | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | $ 83 |
Consideration Received | 683 |
Recognized in Revenue | (435) |
Contract liabilities with customers ending | 331 |
Ad Revenue [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | 76 |
Consideration Received | 403 |
Recognized in Revenue | (412) |
Contract liabilities with customers ending | 67 |
Expo Revenue [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | |
Consideration Received | 262 |
Recognized in Revenue | |
Contract liabilities with customers ending | 262 |
Other [Member] | |
Disaggregation of Revenue [Line Items] | |
Contract liabilities with customers beginning | 7 |
Consideration Received | 18 |
Recognized in Revenue | (23) |
Contract liabilities with customers ending | $ 2 |
Schedule of Accrued Liabilities
Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Sep. 30, 2019 |
Selected Account Information | ||
Insurance | $ 425 | $ 4,937 |
Sales and liquor taxes | 2,844 | 3,086 |
Payroll and related costs | 1,972 | 2,892 |
Property taxes | 1,355 | 1,675 |
Interest | 1,565 | 508 |
Patron tax | 679 | 595 |
Unearned revenues | 331 | 83 |
Lawsuit settlement | 75 | 115 |
Other | 1,040 | 753 |
Accrued liabilities | $ 10,286 | $ 14,644 |
Schedule of Selling, General an
Schedule of Selling, General and Administrative Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Selected Account Information | ||||
Taxes and permits | $ 1,187 | $ 2,258 | $ 6,101 | $ 6,809 |
Advertising and marketing | 428 | 2,083 | 4,745 | 6,301 |
Supplies and services | 681 | 1,493 | 3,605 | 4,414 |
Insurance | 1,481 | 1,367 | 4,437 | 4,122 |
Accounting and professional fees | 407 | 631 | 2,916 | 2,559 |
Lease | 1,010 | 965 | 3,063 | 2,941 |
Charge card fees | 146 | 1,011 | 2,037 | 2,830 |
Legal | 841 | 1,479 | 3,109 | 3,310 |
Utilities | 512 | 756 | 2,205 | 2,262 |
Security | 272 | 757 | 1,869 | 2,222 |
Repairs and maintenance | 353 | 787 | 1,802 | 2,095 |
Other | 1,590 | 1,308 | 4,000 | 3,398 |
Selling, general and administrative expenses | $ 8,908 | $ 14,895 | $ 39,889 | $ 43,263 |
Assets Held for Sale (Details N
Assets Held for Sale (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Multiemployer Plan [Line Items] | |||
Proceeds from Sale of Property Held-for-sale | $ 1,500 | ||
Assets held for sale | 2,013 | $ 2,866 | |
Disposal Group, Including Discontinued Operation, Liabilities, Current | 0 | ||
Two Real Estate Properties For Sale [Member] | |||
Multiemployer Plan [Line Items] | |||
Estimated fair value of properties lease cost | $ 2,900 | ||
Real Estate Properties For Sale [Member] | |||
Multiemployer Plan [Line Items] | |||
Estimated fair value of properties lease cost | $ 1,900 | ||
Held-For-Sale Property [Member] | |||
Multiemployer Plan [Line Items] | |||
Proceeds from Sale of Property Held-for-sale | 853 | ||
One Real Estate Property For Sale [Member] | |||
Multiemployer Plan [Line Items] | |||
Assets held for sale | $ 2,000 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | May 01, 2020 | Feb. 29, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Nov. 01, 2020 | Sep. 30, 2019 |
Short-term Debt [Line Items] | |||||||
Short-term note payable | $ 2,040,000 | $ 3,000,000 | |||||
Debt instrument, maturity date | May 1, 2020 | Oct. 1, 2022 | |||||
Write-off unamortized debt issuance cost | $ 25,400 | ||||||
Borrowed from a related party | $ 500,000 | ||||||
Long-term Debt, Maturities, Repayments of Principal in Next Rolling Twelve Months | $ 17,500,000 | 17,500,000 | |||||
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Two | 14,600,000 | 14,600,000 | |||||
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Three | 11,600,000 | 11,600,000 | |||||
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Four | 8,400,000 | 8,400,000 | |||||
Long-term Debt, Maturities, Repayments of Principal in Rolling Year Five | 8,500,000 | 8,500,000 | |||||
Long-term Debt, Maturities, Repayments of Principal in Rolling after Year Five | 83,500,000 | 83,500,000 | |||||
Unamortized debt discount | 1,300,000 | 1,300,000 | |||||
Issuance costs | $ 1,500,000 | ||||||
June 30, 2021 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 6,500,000 | 6,500,000 | |||||
June 30, 2022 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 2,400,000 | 2,400,000 | |||||
June 30, 2023 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 3,700,000 | 3,700,000 | |||||
June 30, 2024 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 0 | 0 | |||||
June 30, 2025 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 0 | 0 | |||||
June 30, 2025 and Thereafter [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | 41,700,000 | 41,700,000 | |||||
Forecast [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Short-term note payable | $ 1,740,000 | ||||||
December 2017 Refinancing Loan [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Short-term note payable | $ 9,900,000 | 5,200,000 | 5,200,000 | ||||
Debt instrument, interest rate | 12.00% | ||||||
Debt instrument, terms | 10 years | ||||||
Debt instrument monthly payment | $ 74,515 | ||||||
Debt instrument, maturity date, description | October 2021 | ||||||
PPP Loans [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Long-term Debt, Gross | $ 5,400,000 | $ 5,400,000 | |||||
PPP Loans [Member] | December Six Two Thousand Twenty [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, interest rate | 1.00% | 1.00% | |||||
Debt instrument monthly payment | $ 305,138 | ||||||
October 2021 [Member] | December 2017 Refinancing Loan [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | $ 3,800,000 | ||||||
Private Lender [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Short-term note payable | $ 4,000,000 | ||||||
Debt instrument, maturity date | Aug. 15, 2018 | ||||||
Debt instrument, interest rate | 12.00% | ||||||
Debt instrument, terms | 10 years | ||||||
Debt instrument monthly payment | $ 57,388 | ||||||
Private Lender [Member] | August 2021 [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, balloon principal payment | $ 4,000,000 | ||||||
Lender [Member] | New Debt [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Debt instrument, maturity date | Nov. 1, 2020 | ||||||
Repayment of long term debt | $ 300,000 | ||||||
Proceeds from long term debt | $ 200,000 | ||||||
Lender [Member] | New Debt [Member] | Forecast [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Due to related party | $ 1,940,000 | ||||||
Scarlett's Acquisition [Member] | |||||||
Short-term Debt [Line Items] | |||||||
Short-term note payable | $ 5,000,000 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Jul. 07, 2020 | Feb. 06, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||||||||||
Number of shares purchased and retired, shares | 0 | 17,302 | 465,390 | 102,113 | |||||||
Number of shares purchased and retired | $ 0 | $ 403,000 | $ 8,500,000 | $ 2,400,000 | |||||||
Share price | $ 0.03 | $ 0.03 | $ 0.10 | $ 0.03 | |||||||
Cash dividend | $ 273,000 | $ 920,000 | |||||||||
Payment of dividends | 273,000 | $ 368,000 | $ 279,000 | $ 285,000 | $ 291,000 | $ 291,000 | $ (867,000) | ||||
Dividends | $ (273,000) | (368,000) | (279,000) | (285,000) | (291,000) | (291,000) | $ 867,000 | ||||
Stock repurchased during the period | |||||||||||
Subsequent Event [Member] | |||||||||||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||||||||||
Stock repurchased during the period | $ 11,800,000 | ||||||||||
Board of Directors [Member] | |||||||||||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | |||||||||||
Stock repurchased during the period | $ 10,000,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | May 08, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Other Income Tax Expense (Benefit), Continuing Operations | $ 1,400,000 | $ 1,800,000 | $ 1,300,000 | $ 5,500,000 | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 20.50% | 24.10% | 26.90% | 22.80% | |||
Payroll taxes and penalties | $ 149,000 | $ 149,000 | $ 149,000 | ||||
Payroll taxes and penalties | 149,000 | ||||||
Liability for uncertain tax positions | $ 0 | $ 0 | $ 0 | $ 0 | |||
CARES Act [Member] | Our Shared-Services [Member] | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Subsidiaries received | $ 1,100,000 | ||||||
CARES Act [Member] | Ten of Our Restaurant [Member] | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Proceeds from loans | 4,200,000 | ||||||
CARES Act [Member] | Ten of Our Restaurant [Member] | Minimum [Member] | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Subsidiaries received | 271,000 | ||||||
CARES Act [Member] | Ten of Our Restaurant [Member] | Maximum [Member] | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Subsidiaries received | 579,000 | ||||||
CARES Act [Member] | One of Our Lounges [Member] | |||||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||||
Subsidiaries received | $ 124,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Apr. 30, 2017USD ($) | Mar. 31, 2017USD ($)Integer | Jun. 30, 2015USD ($)$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Jun. 30, 2015USD ($)$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Loss Contingencies [Line Items] | |||||||||
Patron tax amount agreed to pay | $ 10,000,000 | ||||||||
Monthly installment of settlement loss | $ 119,000 | ||||||||
Patron tax on monthly basis per customer | $ / shares | $ 5 | $ 5 | $ 5 | $ 5 | |||||
Patron tax amount discounted value | $ 10,000,000 | ||||||||
Imputed interest rate | 9.60% | ||||||||
Patron tax settlement | $ 7,200,000 | ||||||||
Pre-tax gain | $ 8,200,000 | ||||||||
Accrued tax value | $ 7,200,000 | $ 7,200,000 | |||||||
Settlement Liabilities, Current | $ 2,500,000 | $ 2,500,000 | $ 3,400,000 | ||||||
Loss contingency, damages sought, value | 1,000,000 | ||||||||
Appeal process amount | 690,000 | ||||||||
Payments for legal settlements | 50,000 | $ 0 | $ 74,000 | $ 144,000 | |||||
Indemnity Insurance Corporation [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Percentage of costs of litigation | 100.00% | ||||||||
Compensatory Damages [Member] | Notes Payable Twenty Two [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Loss contingency, damages sought, value | $ 1,400,000 | ||||||||
Punitive Damages [Member] | Notes Payable Twenty Two [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Loss contingency, damages sought, value | $ 4,000,000 | ||||||||
Settlement Agreement [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Payment of settlement amount | $ 687,815 | ||||||||
Litigation settlement, expense | $ 195,815 | ||||||||
Number of monthly installment | Integer | 60 | ||||||||
Settlement amount net of interest | $ 8,200 | ||||||||
Settlement of Lawsuits [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Accrued liabilities | $ 75,000 | $ 75,000 | $ 115,000 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) $ in Millions | Nov. 05, 2019USD ($) |
Percentage of Costs of Litigation | |
Schedule of Capitalization, Long-term Debt [Line Items] | |
Purchase of real estate | $ 15 |
Schedule of Segment Reporting I
Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | |||||
Total revenues | $ 14,721 | $ 47,027 | $ 103,541 | $ 135,876 | |
Income (loss) from operations | (4,657) | 9,974 | 2,554 | 32,272 | |
Depreciation and amortization | 2,235 | 2,465 | 6,696 | 6,718 | |
Capital expenditures | 242 | 2,999 | 5,565 | 16,901 | |
Total assets | 360,374 | 360,374 | $ 353,637 | ||
Nightclubs [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 6,013 | 37,889 | 75,239 | 112,664 | |
Income (loss) from operations | (3,088) | 14,034 | 13,002 | 44,499 | |
Depreciation and amortization | 1,470 | 1,737 | 4,426 | 4,711 | |
Capital expenditures | 106 | 1,935 | 2,964 | 3,029 | |
Total assets | 277,707 | 277,707 | 274,071 | ||
Bombshells [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 8,531 | 8,755 | 27,684 | 22,295 | |
Income (loss) from operations | 1,903 | 686 | 4,166 | 1,543 | |
Depreciation and amortization | 455 | 370 | 1,328 | 1,001 | |
Capital expenditures | 136 | 900 | 2,473 | 10,697 | |
Total assets | 51,907 | 51,907 | 44,144 | ||
Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 177 | 383 | 618 | 917 | |
Income (loss) from operations | (95) | (111) | (480) | (406) | |
Depreciation and amortization | 103 | 102 | 311 | 312 | |
Capital expenditures | 2 | 20 | |||
Total assets | 1,516 | 1,516 | 1,773 | ||
General Corporate [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | |||||
Income (loss) from operations | (3,377) | (4,635) | (14,134) | (13,364) | |
Depreciation and amortization | 207 | 256 | 631 | 694 | |
Capital expenditures | $ 162 | 128 | $ 3,155 | ||
Total assets | $ 29,244 | $ 29,244 | $ 33,649 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2019 | Nov. 01, 2018 | |
Related Party Transaction [Line Items] | ||||||
Indebtedness, net of debt discount and issuance costs | $ 84,000,000 | $ 84,000,000 | $ 86,800,000 | |||
Borrowing from related party | $ 2,350,000 | |||||
Borrowings from related party | 500,000 | |||||
Ed Anakar [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Borrowings from related party | $ 500,000 | |||||
Sherwood Forest Creations, LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | 0 | $ 12,990 | 72,809 | $ 120,805 | ||
Due from related parties | 13,705 | 13,705 | 6,588 | |||
TW Mechanical LLC [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | 11,363 | 0 | 37,605 | 206 | ||
Due from related parties | 4,439 | 4,439 | $ 0 | |||
TW Mechanical LLC [Member] | Third-Party General Contractor [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Related Party Transaction, Amounts of Transaction | $ 0 | $ 0 | $ 18,758 | $ 435,800 |
Schedule of Future Minimum Rent
Schedule of Future Minimum Rental Payments for Operating Leases (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases | |
2020 | $ 3,237 |
2021 | 3,154 |
2022 | 3,057 |
2023 | 2,889 |
2024 | 2,850 |
Thereafter | 21,038 |
Total future minimum lease obligations | $ 36,225 |
Schedule of Future Maturities o
Schedule of Future Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Lessor, Lease, Description [Line Items] | |
July 2020 – June 2021 | $ 3,203 |
July 2021 – June 2022 | 3,236 |
July 2022 – June 2023 | 3,115 |
July 2023 – June 2024 | 3,048 |
July 2024 – June 2025 | 3,106 |
Thereafter | 24,500 |
Future maturities of lease liabilities | 40,208 |
Principal Payments [Member] | |
Lessor, Lease, Description [Line Items] | |
July 2020 – June 2021 | 1,586 |
July 2021 – June 2022 | 1,719 |
July 2022 – June 2023 | 1,703 |
July 2023 – June 2024 | 1,738 |
July 2024 – June 2025 | 1,906 |
Thereafter | 18,797 |
Future maturities of lease liabilities | 27,449 |
Interest Payments [Member] | |
Lessor, Lease, Description [Line Items] | |
July 2020 – June 2021 | 1,617 |
July 2021 – June 2022 | 1,517 |
July 2022 – June 2023 | 1,412 |
July 2023 – June 2024 | 1,310 |
July 2024 – June 2025 | 1,200 |
Thereafter | 5,703 |
Future maturities of lease liabilities | $ 12,759 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Lessor, Lease, Description [Line Items] | ||
Operating lease expense – fixed payments | $ 839 | $ 2,519 |
Variable lease expense | 158 | 288 |
Short-term equipment and other lease expense (includes $12 and $303 recorded in advertising and marketing, and $72 and $297 recorded in repairs and maintenance for the three and nine months ended June 30, 2020, respectively; see Note 5) | 97 | 856 |
Sublease income | (2) | (8) |
Total lease expense, net | 1,092 | 3,655 |
Operating cash outflows from operating leases | $ 1,051 | $ 3,513 |
Weighted average remaining lease term | 13 years | 13 years |
Weighted average discount rate | 6.10% | 6.10% |
Equipment [Member] | ||
Lessor, Lease, Description [Line Items] | ||
Advertising and marketing | $ 12 | $ 303 |
Repairs and maintenance | $ 72 | $ 297 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | ||||
Lease expense | $ 1,092,000 | $ 3,655,000 | ||
Lease expense under ASC 840 | $ 965,000 | $ 2,900,000 | ||
Chief Executive Officer [Member] | ||||
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | ||||
Lease expense | $ 0 | $ 19,500 | $ 19,500 | $ 58,500 |
Lease expiration date | Dec. 31, 2019 |