UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~December 3031, 2025

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-13992

RCI HOSPITALITY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Texas						76-0458229
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10737 Cutten Road

Houston, Texas 77066

(Address of principal executive offices) (Zip Code)

(281) 397-6730

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.01 par value

RICK

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of ~~August~~May 81, ~~2025~~2026, 87,~~720~~651,~~461~~500 shares of the registrant’s common stock were outstanding.

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements may appear throughout this report, including, without limitation, the following sections: Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Important factors that in our view could cause material adverse effects on our financial condition and results of operations include, but are not limited to, the risks and uncertainties associated with (i) operating and managing an adult business, (ii) the business climates in cities where we operate, (iii) the success or lack thereof in launching and building our businesses, (iv) cyber security, (v) conditions relevant to real estate transactions, (vi) our ability to regain and maintain compliance with the filing requirements of the SEC and the Nasdaq Stock Market, and (vivii) numerous other factors such as laws governing the operation of adult entertainment businesses, competition and dependence on key personnel. We undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

As used herein, the “Company,” “we,” “our,” and similar terms include RCI Hospitality Holdings, Inc. and its subsidiaries, unless the context indicates otherwise.

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RCI HOSPITALITY HOLDINGS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended June 30, 2025, and 2024	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended December 31, 2025, and 2024	4
	Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended June 30, 2025, and 2024	5
	Condensed Consolidated Statements of Income (unaudited) for the three months ended December 31, 2025, and 2024	5
	Condensed Consolidated Statements of Changes in Equity (unaudited) for the three and nine months ended June 30, 2025, and 2024	6
	Condensed Consolidated Statements of Changes in Equity (unaudited) for the three months ended December 31, 2025, and 2024	6
	Condensed Consolidated Balance Sheets as of June 30, 2025, (unaudited) and September 30, 2024	7
	Condensed Consolidated Balance Sheets as of December 31, 2025, (unaudited) and September 30, 2025	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2520
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4232
Item 4.	Controls and Procedures	4232
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	4434
Item1A.	Risk Factors	4434
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4434
Item 6.	Exhibits	4535
	Signatures	4636

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PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

RCI HOSPITALITY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except number of shares)

(unaudited)

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	16,319	$	2,773
Net income (loss)	$	(4,649)	$	9,065
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	114,~~237~~187		113,~~638~~569
Impairment of assets	1,~~780~~163		~~25,964~~—
Deferred income tax benefit	~~(2,200)~~—		(~~6,419~~389)
Stock-based compensation	~~980~~392		~~1,412~~470
Loss (gain) on sale of businesses and assets	~~(1,226)~~30		~~116~~(1,463)
Amortization of debt discount and issuance costs	~~420~~137		~~462~~63
Noncash lease expense	~~2,002~~734		~~2,318~~658
Gain on insurance	(~~1,879~~141)		—(1,150)
Doubtful accounts expense on notes receivable	27		22
Credit loss expense on notes receivable	75		—
Changes in operating assets and liabilities, net of business acquisitions:
Premium on stock repurchase	9,885		—
Receivables	1,271		3,052
Changes in operating assets and liabilities:
Inventories	90		(212)
Receivables	(354)		2,373
Prepaid expenses, other current, and other assets	400		(3,484)
Inventories	25		(4)
Accounts payable, accrued, and other liabilities	6,463		2,591
Prepaid expenses, other current and other assets	(2,822)		(598)
Net cash provided by operating activities	35,684		40,233
Accounts payable, accrued and other liabilities	(846)		750
Net cash provided by operating activities	7,816		13,344
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses and assets	~~1,086~~600		~~1,950~~129
Proceeds from insurance	~~1,893~~138		—1,150
Proceeds from notes receivable	~~223~~50		~~179~~71
Payments for property and equipment and intangible assets	(122,~~289~~331)		(195,~~219~~754)
Acquisition of businesses, net of cash acquired	(13,000)		—
Net cash used in investing activities	(1,543)		(4,404)
Net cash used in investing activities	(22,087)		(17,090)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt obligations	92,~~175~~253		222,~~657~~963
Payments on debt obligations	(144,~~431~~952)		(175,~~137~~694)
Purchase of treasury stock	(9,158)		(12,775)
Payment of loan origination costs	(40)		—
Payment of dividends	(1,856)		(1,674)
Purchase of treasury stock	(9,831)		(3,218)
Payment of loan origination costs	(80)		(290)
Payment of dividends	(545)		(623)
Net cash used in financing activities	(16,350)		(9,219)
Investment from noncontrolling partner	1,800		—
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(2,753)		13,924
Payments to noncontrolling interests	(36)		—
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	32,350		21,023
Net cash used in financing activities	(11,351)		(6,572)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	29,597	$	34,947
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(5,078)		2,368
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	33,709		32,350
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	28,631	$	34,718

See accompanying notes to unaudited condensed consolidated financial statements.

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RCI HOSPITALITY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

(unaudited)

	Three Months Ended June 30,				Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024		~~2025~~		~~2024~~
Revenues
Sales of alcoholic beverages	$	30,~~780~~139	$	3432,~~442~~188	$	~~91,834~~	$	~~100,665~~
Sales of food and merchandise	109,~~037~~966		1110,~~736~~106		~~29,554~~		~~33,606~~
Service revenues	25,~~169~~811		2524,~~268~~181		~~72,262~~		~~73,951~~
Other	54,~~159~~912		45,~~734~~008		~~14,854~~		~~14,148~~
Total revenues	7170,~~145~~828		7671,~~180~~483		~~208,504~~		~~222,370~~
Operating expenses
Cost of goods sold
Alcoholic beverages sold	5,~~580~~511		65,~~273~~846		~~16,630~~		~~18,445~~
Food and merchandise sold	3,~~519~~629		43,~~197~~563		~~10,264~~		~~12,228~~
Service and other	36101		3672		~~133~~		~~111~~
Total cost of goods sold (exclusive of items shown separately below)	9,~~135~~241		109,~~506~~481		~~27,027~~		~~30,784~~
Salaries and wages	2021,~~916~~443		20,~~992~~564		~~61,971~~		~~63,299~~
Selling, general and administrative	2624,~~140~~704		2526,~~057~~207		~~75,247~~		~~74,911~~
Depreciation and amortization	34,~~892~~187		3,~~901~~569		~~11,237~~		~~11,638~~
Impairments and other charges, net	2,349		18,260		2,232		26,452
Impairments and other charges (gains), net	217		(2,244)
Total operating expenses	6259,~~432~~792		7857,~~716~~577		~~177,714~~		~~207,084~~
Income (loss) from operations	8,713		(2,536)		30,790		15,286
Income from operations	11,036		13,906
Other income (expenses)
Interest expense	(4,~~032~~350)		(4,~~240~~152)		~~(12,232)~~		~~(12,455)~~
Interest income	~~117~~99		~~130~~179		~~435~~		~~320~~
Gain on lease termination and other	(5)		—		974		—
Premium on stock repurchase	(9,885)		—
Income (loss) before income taxes	4,793		(6,646)		19,967		3,151
Gain on lease termination	—		979
Income tax expense (benefit)	733		(1,426)		3,648		378
Income (loss) before income taxes	(3,100)		10,912
Net income (loss)	4,060		(5,220)		16,319		2,773
Income tax expense	1,549		1,847
Net income attributable to noncontrolling interests	(2)		(13)		(6)		(6)
Net income (loss)	(4,649)		9,065
Net income (loss) attributable to RCIHH common stockholders	$	4,058	$	(5,233)	$	16,313	$	2,767
Net income attributable to noncontrolling interests	(85)		(41)
Earnings (loss) per share
Net income (loss) attributable to RCIHH common stockholders	$	(4,734)	$	9,024
Basic and diluted	$	0.46	$	(0.56)	$	1.84	$	0.30
Earnings (loss) per share
Weighted average shares used in computing earnings (loss) per share
Basic and diluted	$	(0.57)	$	1.01
Basic and diluted	8,793,809		9,278,921		8,859,028		9,332,249
Weighted average shares used in computing earnings (loss) per share
Basic and diluted	8,295,880		8,920,774

See accompanying notes to unaudited condensed consolidated financial statements.

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RCI HOSPITALITY HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except number of shares)

(unaudited)

	Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock			Noncontrolling Interests		Total Equity
	Number of Shares	Amount						Number of Shares	Amount
Balance at September 30, 2025	8,684,061	$	87	$	50,908	$	210,106	—	$	—	$	(222)	$	260,879
Purchase of treasury shares	—	—		—		—		(895,061)	(21,946)		—		(21,946)
Canceled treasury shares	(895,061)	(9)		(21,937)		—		895,061	21,946		—		—
Excise tax on stock repurchases	—	—		(219)		—		—	—		—		(219)
Payment of dividends ($0.07 per share)	—	—		—		(545)		—	—		—		(545)
Stock-based compensation	—	—		392		—		—	—		—		392
Investment from noncontrolling partner	—	—		—		(790)		—	—		2,590		1,800
Payments to noncontrolling interests	—	—		—		—		—	—		(36)		(36)
Net income (loss)	—	—		—		(4,734)		—	—		85		(4,649)
Balance at December 31, 2025	7,789,000	$	78	$	29,144	$	204,037	—	$	—	$	2,417	$	235,676
Balance at September 30, 2024	8,955,000	$	90	$	61,511	$	201,759	—	$	—	$	(250)	$	263,110
Purchase of treasury shares	—	—		—		—		(66,000)	(3,218)		—		(3,218)
Canceled treasury shares	(66,000)	(1)		(3,217)		—		66,000	3,218		—		—
Excise tax on stock repurchases	—	—		(33)		—		—	—		—		(33)
Payment of dividends ($0.07 per share)	—	—		—		(623)		—	—		—		(623)
Stock-based compensation	—	—		470		—		—	—		—		470
Net income	—	—		—		9,024		—	—		41		9,065
Balance at December 31, 2024	8,889,000	89$	89	~~58,731~~$	58,731	~~210,160~~$	210,160	—	—$	—	~~(209)~~$	(209)	~~268,771~~$	268,771
Purchase of treasury shares	—	—		—		—		(56,875)	(2,896)		—		(2,896)
Canceled treasury shares	(56,875)	(1)		(2,895)		—		56,875	2,896		—		—
Excise tax on stock repurchases	—	—		(29)		—		—	—		—		(29)
Payment of dividends ($0.07 per share)	—	—		—		(619)		—	—		—		(619)
Stock-based compensation	—	—		118		—		—	—		—		118
Net income (loss)	—	—		—		3,231		—	—		(37)		3,194
Balance at March 31, 2025	8,832,125	88		55,925		212,772		—	—		(246)		268,539
Purchase of treasury shares	—	—		—		—		(75,325)	(3,044)		—		(3,044)
Canceled treasury shares	(75,325)	(1)		(3,043)		—		75,325	3,044		—		—
Excise tax on stock repurchases	—	—		(30)		—		—	—		—		(30)
Payment of dividends ($0.07 per share)	—	—		—		(614)		—	—		—		(614)
Stock-based compensation	—	—		392		—		—	—		—		392
Net income	—	—		—		4,058		—	—		2		4,060
Balance at June 30, 2025	8,756,800	$	87	$	53,244	$	216,216	—	$	—	$	(244)	$	269,303
Balance at September 30, 2023	9,397,639	$	94	$	80,437	$	201,050	—	$	—	$	(257)	$	281,324
Purchase of treasury shares	—	—		—		—		(37,954)	(2,072)		—		(2,072)
Canceled treasury shares	(37,954)	—		(2,072)		—		37,954	2,072		—		—
Excise tax on stock repurchases	—	—		(20)		—		—	—		—		(20)
Payment of dividends ($0.06 per share)	—	—		—		(562)		—	—		—		(562)
Stock-based compensation	—	—		470		—		—	—		—		470
Net income	—	—		—		7,226		—	—		18		7,244
Balance at December 31, 2023	9,359,685	94		78,815		207,714		—	—		(239)		286,384
Purchase of treasury shares	—	—		—		—		(27,265)	(1,530)		—		(1,530)
Canceled treasury shares	(27,265)	(1)		(1,529)		—		27,265	1,530		—		—
Excise tax on stock repurchases	—	—		(15)		—		—	—		—		(15)
Payment of dividends ($0.06 per share)	—	—		—		(560)		—	—		—		(560)
Stock-based compensation	—	—		471		—		—	—		—		471
Net income (loss)	—	—		—		774		—	—		(25)		749
Balance at March 31, 2024	9,332,420	93		77,742		207,928		—	$	—	(264)		285,499
Purchase of treasury shares	—	—		—		—		(202,630)	(9,173)		—		(9,173)
Canceled treasury shares	(202,630)	(2)		(9,171)		—		202,630	9,173		—		—
Excise tax on stock repurchases	—	—		(92)		—		—	—		—		(92)
Payment of dividends ($0.06 per share)	—	—		—		(552)		—	—		—		(552)
Stock-based compensation	—	—		471		—		—	—		—		471
Net income (loss)	—	—		—		(5,233)		—	—		13		(5,220)
Balance at June 30, 2024	9,129,790	$	91	$	68,950	$	202,143	—	$	—	$	(251)	$	270,933

See accompanying notes to unaudited condensed consolidated financial statements.

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RCI HOSPITALITY HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	June 30, 2025		September 30, 2024
	December 31, 2025		September 30, 2025
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2928,~~347~~631	$	3233,~~350~~709
Receivables, net	4,~~606~~221		53,~~832~~940
Inventories	4,~~746~~832		4,~~676~~857
Prepaid expenses and other current assets	37,~~214~~820		4,~~427~~968
Assets held for sale	34,~~394~~463		—3,394
Total current assets	4549,~~307~~967		4750,~~285~~868
Property and equipment, net	~~282~~276,~~246~~333		~~280~~279,~~075~~027
Operating lease right-of-use assets, net	2625,~~641~~053		2625,~~231~~781
Notes receivable, net of current portion	3,~~939~~797		43,~~174~~849
Goodwill	7062,~~236~~242		6162,~~911~~725
Intangibles, net	~~166~~170,~~942~~164		~~163~~171,~~461~~948
Other assets	2,~~101~~706		12,~~227~~737
Total assets	$	~~597~~590,~~412~~262	$	~~584~~596,~~364~~935
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	54,~~406~~499	$	5,~~637~~836
Accrued liabilities	2133,~~764~~928		2032,~~280~~607
Current portion of debt obligations, net	1834,~~623~~431		1821,~~871~~198
Current portion of operating lease liabilities	3,~~249~~386		3,~~290~~314
Total current liabilities	4976,~~042~~244		4862,~~078~~955
Deferred tax liability, net	2021,~~493~~689		2221,~~693~~689
Debt, net of current portion and debt discount and issuance costs	~~222~~221,~~638~~997		~~219~~214,~~326~~583
Operating lease liabilities, net of current portion	2826,~~171~~442		3027,~~759~~320
Other long-term liabilities	78,~~765~~214		~~398~~9,509
Total liabilities	~~328~~354,~~109~~586		~~321~~336,~~254~~056
Commitments and contingencies (Note 9)
Equity
Preferred stock, $0.10 par value per share; 1,000,000 shares authorized; none issued and outstanding	—		—
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 8,756,800 and 8,955,000 shares issued and outstanding as of June 30, 2025, and September 30, 2024, respectively	87		90
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 7,789,000 and 8,684,061 shares issued and outstanding as of December 31, 2025, and September 30, 2025, respectively	78		87
Additional paid-in capital	5329,~~244~~144		6150,~~511~~908
Retained earnings	~~216~~204,~~216~~037		~~201~~210,~~759~~106
Total RCIHH stockholders’ equity	~~269~~233,~~547~~259		~~263~~261,~~360~~101
Noncontrolling interests	~~(244)~~2,417		(~~250~~222)
Total equity	~~269~~235,~~303~~676		~~263~~260,~~110~~879
Total liabilities and equity	$	~~597~~590,~~412~~262	$	~~584~~596,~~364~~935

See accompanying notes to unaudited condensed consolidated financial statements.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of RCI Hospitality Holdings, Inc. (the “Company,” “RCIHH,” “we,” or “us”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by GAAP for complete financial statements. The September 30, 2025 consolidated balance sheet data ~~as of September 30, 2024,~~ 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, ~~2024~~2025, included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on ~~December~~March 1619, ~~2024~~2026. 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 ~~nine~~three months ended ~~June~~December 3031, 2025, are not necessarily indicative of the results that may be expected for the year ending September 30, ~~2025~~2026.

2. Recent Accounting Standards and Pronouncements

In ~~June~~November ~~2022~~2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2022~~No. 2024-03, ~~Fair~~Income ~~Value~~Statement—Reporting ~~Measurement~~Comprehensive Income—Expense Disaggregation Disclosures (~~Topic~~Subtopic ~~820~~220-40): ~~Fair~~Disaggregation ~~Value~~of ~~Measurement~~Income ofStatement ~~Equity~~Expenses, ~~Securities~~which ~~Subject~~expands todisclosures ~~Contractual~~about ~~Sale~~income ~~Restrictions~~statement expenses. The ~~amendments~~guidance inrequires ~~this~~disaggregation ~~ASU~~of ~~clarify~~certain ~~that~~costs anand ~~entity~~expenses ~~should~~included ~~measure~~in ~~the~~each ~~fair~~relevant ~~value~~expense caption on our consolidated statements of anincome ~~equity~~in ~~security~~a ~~subject~~separate note to ~~contractual~~the ~~sale~~financial ~~restriction~~statements ~~the~~at ~~same~~each ~~way~~interim itand ~~measures~~annual anreporting ~~identical~~period, ~~equity~~including ~~security~~amounts ~~that~~of ispurchases ~~not~~of ~~subject~~inventory, toemployee ~~such~~compensation, adepreciation, ~~restriction.~~and ~~The~~intangible ~~FASB~~asset ~~said~~amortization. ~~the~~The ~~contractual~~amendments ~~restriction~~in onthis ~~the~~ASU ~~sale~~are ofeffective anfor ~~equity~~annual ~~security~~reporting isperiods ~~not~~beginning ~~considered~~after ~~part~~December of15, ~~the~~2026, ~~unit~~and ofinterim ~~account~~reporting ofperiods ~~the~~beginning ~~equity~~after ~~security~~December ~~and~~15, ~~therefore~~2027, ~~should~~as ~~not~~clarified ~~affect~~by ~~its~~ASU ~~fair~~2025-01, ~~value~~with early adoption permitted. The ~~ASU~~amendments isin ~~effective~~this ~~for~~ASU ~~public~~should ~~entities~~be ~~for~~applied ~~fiscal~~either ~~years~~(1) ~~beginning~~prospectively ~~after~~to ~~December~~financial ~~15,~~statements ~~2023,~~issued ~~and~~for ~~interim~~reporting periods ~~within~~after ~~those~~the ~~fiscal~~effective ~~years.~~date ~~Early~~of ~~adoption~~the isASU ~~permitted.~~or We(2) ~~adopted~~retrospectively ~~ASU~~to ~~2022-03~~any onor ~~October~~all 1,prior ~~2024.~~periods ~~Our~~presented ~~adoption~~in ofthe ~~this~~financial ~~ASU~~statements. ~~did~~We ~~not~~are ~~have~~currently aevaluating ~~significant~~the impact of this guidance on our ~~consolidated~~ financial ~~statements~~statement disclosures.

In ~~March~~December ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0111, ~~Leases~~Interim Reporting (Topic ~~842~~270): ~~Common~~Narrow-Scope ~~Control Arrangements~~Improvements, which ~~amends~~intended ~~certain~~to ~~provisions~~improve the navigability of ~~ASC~~the ~~842~~guidance ~~that~~in ~~apply~~Accounting toStandards ~~arrangements~~Codification ~~between~~("ASC") ~~related~~Topic ~~parties~~270 ~~under~~and ~~common~~clarify ~~control~~when it applies. ~~The~~Under ~~ASU~~the ~~requires~~amendments, ~~all~~an ~~companies~~entity is subject to ~~amortize~~ASC ~~leasehold~~270 ~~improvements~~if ~~associated~~it provides interim financial statements and notes in accordance with ~~common~~GAAP. ~~control~~The ~~leases~~ASU ~~over~~also addresses the ~~asset's~~form ~~useful~~and ~~life~~content toof ~~the~~such ~~common~~financial ~~control~~statements, ~~group~~adds ~~regardless~~list to ASC 270 of the ~~lease~~interim ~~term.~~disclosures Itrequired ~~also~~by ~~allows~~all ~~private~~other ~~and~~ASC ~~certain~~topics, ~~not-for-profit~~and ~~entities~~establishes toa ~~use~~principle ~~the~~under ~~written~~which ~~terms~~an ~~and~~entity ~~conditions~~must ofdisclose anevents ~~agreement~~since tothe ~~account~~end ~~for~~of ~~common~~the ~~control~~last ~~leases~~annual ~~without~~reporting ~~further~~period ~~assessing~~that ~~the~~have ~~legal~~a ~~enforceability~~material ofimpact ~~those~~on ~~terms~~the entity. The ~~guidance~~amendments isare ~~effective~~not ~~for~~intended ~~all~~to ~~entities~~change inthe ~~fiscal~~fundamental ~~years~~nature ~~beginning~~of ~~after~~interim ~~December~~reporting ~~15,~~or ~~2023,~~expand ~~including~~or reduce current interim ~~periods~~disclosure ~~within~~requirements ~~those~~but ~~fiscal~~rather ~~years.~~to ~~Early~~reflect ~~adoption~~the iseffects ~~permitted~~of ~~for~~the ~~both~~SEC's ~~interim~~form and ~~annual~~content ~~financial~~requirements ~~statements~~related ~~that~~to ~~have~~interim ~~not~~reporting. ~~yet~~The ~~been~~amendments ~~made~~of ~~available~~this ASU are effective to us for ~~issuance.~~interim Wereporting ~~adopted~~periods ~~ASU~~within ~~2023-01~~annual onreporting ~~October~~periods 1beginning after December 15, ~~2024.~~2027, ~~Our~~with early adoption ofpermitted. ~~this~~This ASU ~~did~~may ~~not~~be ~~have~~applied aeither ~~significant~~prospectively or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact of this ASU on our ~~consolidated~~interim reporting financial ~~statements~~statement disclosures.

In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture's separate financial statements. The objectives of the ASU are to (1) provide decision-useful information to investors and other allocators of capital in a joint venture's financial statements and (2) reduce diversity in practice. The FASB decided to require a joint venture to apply a new basis of accounting upon formation that will recognize and initially measure its assets and liabilities at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments of this ASU are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. Additionally, a joint venture that was formed before January 1, 2025 may elect to apply the amendments retrospectively if it has sufficient information. early adoptions is permitted in any interim or annual period in which financial statements have not yet been issued (or made available for issuance), either prospectively or retrospectively. We adopted the provisions of ASU 2023-05 on October 1, 2024, and will apply them on future joint ventures.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

23. ~~Recent~~Supplemental ~~Accounting~~Disclosure ~~Standards~~of ~~and~~Cash ~~Pronouncements—continued~~Flow Information

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments in the ASU enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The ~~purpose~~following oftable ~~the~~sets ~~amendments~~forth iscertain tocash ~~enable investors to better understand an entity's overall performance~~ and ~~assess~~noncash ~~potential~~activities ~~future cash flows. The ASU applies to all public entities that are required to report segment information~~ (in ~~accordance with ASC 280~~thousands), ~~and~~as is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are evaluating the impact of this ASU on our consolidated financial statements.follows:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Under the ASU, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate. The amendments of the ASU are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard for annual financial statements that have not been issued or made available for issuance. We are enhancing our income tax reporting system to be able to capture the required disclosures of this ASU.


	Three Months Ended December 31,
	2025		2024
Cash paid during the period for:
Interest, net of amounts capitalized	$	4,086	$	4,080
Income taxes, net of refunds of $17 and $0, respectively	$	115	$	3

Noncash investing and financing transactions:
Debt incurred in connection with stock repurchases	$	22,000	$	—
Unpaid excise tax on stock repurchases	$	219	$	33
Unpaid liabilities on capital expenditures	$	278	$	2,451

InOn November ~~2024~~21, ~~the FASB issued ASU 2024-03~~2025, ~~Income~~the ~~Statement—Reporting~~Company ~~Comprehensive~~repurchased ~~Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses~~821,000 ~~which~~shares ~~expands disclosures about income statement expenses. The guidance requires disaggregation~~ of ~~certain~~its ~~costs~~own ~~and~~common ~~expenses~~stock ~~included~~from ~~in each relevant expense caption on our consolidated statements of income in~~ a ~~separate~~single ~~note~~stockholder tofor ~~the financial statements at each interim and annual reporting period~~$30.0 million, ~~including~~paid ~~amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization~~$8.0 million ~~The amendments~~ in ~~this~~cash ~~ASU are effective for annual reporting periods beginning after December 15, 2026,~~ and ~~interim~~$22.0 million ~~reporting~~under ~~periods~~a ~~beginning after December 15, 2027, as clarified by ASU 2025~~two-~~01,~~year ~~with~~12% ~~early~~unsecured ~~adoption~~promissory ~~permitted.~~note ~~The amendments in this ASU should be applied either~~ (1)see ~~prospectively~~Note ~~to financial statements issued for reporting periods after the effective date of the ASU or (2~~7) ~~retrospectively to any or all prior periods presented in the financial statements~~. ~~We are currently evaluating the impact of this guidance on our financial statement disclosures.~~

Subsequent to the balance sheet date through May 1, 2026, we repurchased 137,500 shares of our common stock at an average price of $23.96 per share.

4. Segment Information

The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such segments based on how the chief operating decision maker assigns management responsibility, how financial information is regularly reviewed, the nature of the Company’s products, services and costs, regulatory environments, and how resources are allocated. There are no major distinctions in geographical areas served as all operations are in the United States. The Company's chief operating decision maker ("CODM") is its chief executive officer. 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.

In adopting ASU 2023-07, we recast one of our shared-services subsidiary from Other to Corporate. We also recast three previously planned and previously reported casino-related subsidiaries classified in Other to Nightclubs and Bombshells. We reclassified certain prior year segment disclosures to conform to current year presentation.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

34. ~~Revenues~~Segment Information—continued

~~Revenues,~~Below asis ~~disaggregated~~the byfinancial ~~revenue~~information ~~type,~~(in ~~timing~~thousands) ofrelated ~~recognition,~~to ~~and~~the Company’s reportable ~~segment~~segments ~~(see~~as ~~also~~provided ~~Note~~to ~~4),~~the ~~are shown below (in thousands)~~CODM:

	Three Months Ended June 30, 2025									Three Months Ended June 30, 2024
	Three Months Ended December 31, 2025							Three Months Ended December 31, 2024
	Nightclubs			Bombshells		~~Other~~Total		~~Total~~Nightclubs		~~Nightclubs~~Bombshells			~~Bombshells~~Total		~~Other~~		~~Total~~
Sales of alcoholic beverages	$	26,338		$	4,442	$	—	$	30,780	$	27,413		$	7,029	$	—	$	34,442
Revenues
Sales of food and merchandise	5,914			4,123		—		10,037		5,904			5,832		—		11,736
Third party	$	62,309		$	8,381	$	70,690	$	61,724	$	9,587		$	71,311
Service revenues	25,166			3		—		25,169		25,103			165		—		25,268
Intersegment	1,323			—		1,323		1,019		—			1,019
Other revenues	4,918			41		200		5,159		4,403			113		218		4,734
	63,632			8,381		72,013		62,743		9,587			72,330
	$	62,336		$	8,609	$	200	$	71,145	$	62,823		$	13,139	$	218	$	76,180
Reconciliation of revenue
Recognized at a point in time	$	61,524		$	8,573	$	200	$	70,297	$	62,411		$	13,137	$	218	$	75,766
Other revenues, including intersegment						211							244
Recognized over time	812		*	36		—		848		412		*	2		—		414
Elimination of intersegment revenues						(1,396)							(1,091)
	$	62,336		$	8,609	$	200	$	71,145	$	62,823		$	13,139	$	218	$	76,180
Total consolidated revenues						70,828							71,483
Less:
Cost of goods sold, including intersegment	7,162			1,987		9,149		7,124		2,292			9,416
Salaries and wages	14,742			2,876		17,618		13,930		2,807			16,737
Selling, general, and administrative, including intersegment	18,002			4,329		22,331		17,668		4,369			22,037
Depreciation and amortization	3,500			415		3,915		2,971		331			3,302
Impairments and other charges (gains), net	181			29		210		(822)		(1,330)			(2,152)
Other segment items	—			—		—		—		(979)			(979)
Segment income (loss)	20,045			(1,255)		18,790		21,872		2,097			23,969
Reconciliation of segment income (loss)
Other loss						(130)							(80)
Interest expense, net						(4,251)							(3,973)
Elimination of intersegment income						(35)							(34)
Unallocated corporate overhead						(17,474)							(8,970)
Consolidated income (loss) before income taxes						$	(3,100)						$	10,912
Segment capital expenditures	$	584		$	1,270	$	1,854	$	1,554	$	3,919		$	5,473
Reconciliation to consolidated capital expenditures
Other operating segments						1							85
Unallocated corporate						476							196
Consolidated capital expenditures						$	2,331						$	5,754

	Nine Months Ended June 30, 2025									Nine Months Ended June 30, 2024
	December 31, 2025							September 30, 2025
	Nightclubs			Bombshells		~~Other~~Total		~~Total~~Nightclubs		~~Nightclubs~~Bombshells			~~Bombshells~~Total		~~Other~~		~~Total~~
Sales of alcoholic beverages	$	77,948		$	13,886	$	—	$	91,834	$	79,595		$	21,070	$	—	$	100,665
Segment assets	$	477,077		$	78,388	$	555,465	$	478,516	$	78,877		$	557,393
Sales of food and merchandise	17,169			12,385		—		29,554		16,490			17,116		—		33,606
Reconciliation to consolidated total assets
Service revenues	72,214			48		—		72,262		73,784			167		—		73,951
Other operating segments						3,363							3,775
Other revenues	14,270			106		478		14,854		13,359			288		501		14,148
Unallocated corporate						31,434							35,767
	$	181,601		$	26,425	$	478	$	208,504	$	183,228		$	38,641	$	501	$	222,370
Consolidated total assets						$	590,262						$	596,935
Recognized at a point in time	$	179,964		$	26,387	$	478	$	206,829	$	181,960		$	38,637	$	501	$	221,098
Recognized over time	1,637		*	38		—		1,675		1,268		*	4		—		1,272
	$	181,601		$	26,425	$	478	$	208,504	$	183,228		$	38,641	$	501	$	222,370

*General ~~Lease~~corporate ~~revenue~~overhead ~~(included~~include incorporate ~~Other~~salaries, ~~Revenues)~~health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, unallocated self-insurance reserve, depreciation and other corporate costs such as ~~covered~~automobile byand ~~ASC~~travel ~~842~~costs. ~~All~~Management ~~other~~considers ~~revenues~~these ~~are~~to ~~covered~~be bynon-allocable ~~ASC~~costs ~~606~~for segment purposes.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

35. Revenues~~—continued~~

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


	Three Months Ended December 31, 2025									Three Months Ended December 31, 2024
	Nightclubs			Bombshells		Other		Total		Nightclubs			Bombshells		Other		Total
Sales of alcoholic beverages	$	25,795		$	4,344	$	—	$	30,139	$	27,035		$	5,153	$	—	$	32,188
Sales of food and merchandise	5,936			4,030		—		9,966		5,736			4,370		—		10,106
Service revenues	25,810			1		—		25,811		24,178			3		—		24,181
Other revenues	4,768			6		138		4,912		4,775			61		172		5,008
	$	62,309		$	8,381	$	138	$	70,828	$	61,724		$	9,587	$	172	$	71,483

Recognized at a point in time	$	61,879		$	8,381	$	138	$	70,398	$	61,311		$	9,586	$	172	$	71,069
Recognized over time	430		*	—		—		430		413		*	1		—		414
	$	62,309		$	8,381	$	138	$	70,828	$	61,724		$	9,587	$	172	$	71,483

* Lease revenue (included in Other Revenues) as covered by ASC 842. All other revenues are covered by ASC 606.

The Company does not have contract assets with customers. The Company’s unconditional right to consideration for goods and services transferred to the customer is included in accounts receivable, net in our unaudited condensed consolidated balance sheet. A reconciliation of contract liabilities with customers is presented below (in thousands):

	Balance at September 30, 2024		Net ConsiderationReceived		Recognized inRevenue		Balance at June 30, 2025
	Balance at September 30, 2025		Net ConsiderationReceived/Recognized		Recognized inRevenue		Balance at December 31, 2025
Ad revenue	$	3145	$	~~344~~98	$	(~~297~~113)	$	7830
Expo revenue	1		~~342~~50		—		~~343~~51
Franchise fees and other	67		372		(409)		30
VIP cards	—		585		(115)		470
	$	99	$	1,058	$	(706)	$	451
Other	31		2		(29)		4
	$	77	$	735	$	(257)	$	555

Contract liabilities with customers are included in accrued liabilities as unearned revenues in our unaudited condensed consolidated balance sheets (see also Note 56), while the revenues associated with these contract liabilities are included in other revenues in our unaudited condensed consolidated statements of income. ~~Certain VIP cards to be issued as part of a settlement agreement (see Note 9) will be reclassified to unearned revenues upon issuance of the VIP cards.~~

In relation to the Illinois BIPA settlement (see Notes 6 and 9), VIP card claims processed during the first quarter of fiscal 2026 amounting to $470,000 were recorded in unearned revenues and subsequently ratably recognized in revenues with no actual cash received.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

46. ~~Segment~~Selected Account Information

The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such segments based on management responsibility and the nature of the Company’s products, services, and costs. There are no major distinctions in geographical areas served as all operations are in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. The Other category below includes our media and energy drink divisions that are not significant to the unaudited condensed consolidated financial statements.

Below is the financial information related to the Company’s segments (in thousands):

	Three Months EndedJune 30,				Nine Months EndedJune 30,
	2025		2024		2025		2024
Revenues (from external customers)
Nightclubs	$	62,336	$	62,823	$	181,601	$	183,228
Bombshells	8,609		13,139		26,425		38,641
Other	200		218		478		501
	$	71,145	$	76,180	$	208,504	$	222,370
Income (loss) from operations
Nightclubs	$	17,761	$	13,640	$	53,246	$	45,030
Bombshells	87		(8,914)		1,831		(8,129)
Other	(441)		(108)		(1,292)		(581)
Corporate	(8,694)		(7,154)		(22,995)		(21,034)
	$	8,713	$	(2,536)	$	30,790	$	15,286
Depreciation and amortization
Nightclubs	$	3,311	$	2,996	$	9,440	$	8,828
Bombshells	302		615		961		1,908
Other	13		3		40		7
Corporate	266		287		796		895
	$	3,892	$	3,901	$	11,237	$	11,638
Capital expenditures
Nightclubs	$	1,972	$	2,424	$	4,218	$	6,655
Bombshells	1,278		1,684		6,924		5,127
Other	325		2,288		762		5,991
Corporate	106		21		385		1,446
	$	3,681	$	6,417	$	12,289	$	19,219

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Segment Information—continued

	June 30, 2025		September 30, 2024
Total assets
Nightclubs	$	477,731	$	454,892
Bombshells	77,071		79,091
Other	9,407		14,197
Corporate	33,203		36,184
	$	597,412	$	584,364

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs, Other, and Corporate segments for the three months ended June 30, 2025, amounting to $4.9 million, $45,000, and $0, respectively, and for the nine months ended June 30, 2025, amounting to $14.5 million, $90,000, and $385,000, respectively; and intercompany sales of Robust Energy Drink included in Other segment for the three and nine months ended June 30, 2025, amounting to $58,000 and $195,000, respectively. Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs, Other, and Corporate segments for the three months ended June 30, 2024, amounting to $4.7 million, $0, and $21,000, respectively, and for the nine months ended June 30, 2024, amounting to $13.8 million, $0, and $269,000, respectively; and intercompany sales of Robust Energy Drink included in Other segment for the three and nine months ended June 30, 2024, amounting to $66,000 and $194,000, respectively. These intercompany revenue amounts are eliminated upon consolidation.

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, unallocated self-insurance reserve, depreciation and other corporate costs such as automobile and travel costs. Management considers these to be non-allocable costs for segment purposes.

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.

5. Selected Account Information

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

	June 30, 2025		September 30, 2024
	December 31, 2025		September 30, 2025
Credit card receivables	$	2,~~010~~183	$	21,~~056~~637
Income tax refundable	~~479~~—		~~2,017~~951
ATM in-transit	~~839~~730		~~877~~374
Insurance claims receivable	30		—
Current portion of notes receivable	247		320
Current portion of notes receivable	314		269
Other (net of allowance for doubtful accounts of $99 and $91, respectively)	1,061		658
Other (net of allowance for doubtful accounts of $67 and $42, respectively)	934		613
Total receivables, net	$	4,221	$	3,940
Total receivables, net	$	4,606	$	5,832

Notes receivable consist primarily of secured promissory notes executed between the Company and various buyers of our businesses and assets with interest rates ranging from 6% to 9% per annum and having original terms ranging from 1 to 20 years.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. Selected Account Information—continued

The components of prepaid expenses and other current assets are as follows (in thousands):

	June 30, 2025		September 30, 2024
	December 31, 2025		September 30, 2025
Prepaid insurance	$	16,~~012~~619	$	23,~~792~~367
Prepaid legal	~~190~~84		~~177~~123
Prepaid taxes and licenses	~~742~~261		~~522~~498
Prepaid rent	~~421~~231		~~322~~324
Other	~~849~~625		~~614~~656
Total prepaid expenses and other current assets	$	37,~~214~~820	$	4,~~427~~968

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

	June 30, 2025		September 30, 2024
	December 31, 2025		September 30, 2025
Insurance	$	37	$	2,390
Legal fees	$	8,167	$	9,366
Sales and liquor taxes	2,215		2,440
Insurance	4,855		1,600
Payroll and related costs	4,~~662~~475		4,~~676~~930
Property taxes	23,~~432~~862		3,~~347~~501
Interest	553		568
Sales and liquor taxes	2,266		2,303
Patron tax	893		1,024
Lawsuit settlement	2,726		4,173
Unearned revenues	451		99
Estimated self-insurance liability	2,555		2,555
Lawsuit settlement	5,248		1,985
Construction in progress	233		464
Construction in progress	—		1,012
Patron tax	1,120		1,078
Estimated self-insurance liability	1,982		—
Income taxes	482		—
Other	3,291		2,739
Interest	651		524
Total accrued liabilities	$	21,764	$	20,280
Unearned revenues	555		77
Other	1,981		2,036
Total accrued liabilities	$	33,928	$	32,607

~~The components of other long-term liabilities are as follows (in thousands):~~12

	June 30, 2025		September 30, 2024
Estimated self-insurance liability	$	7,439	$	—
Other	326		398
Total other long-term liabilities	$	7,765	$	398

In fiscal 2025, the Company started self-insuring a significant portion of expected losses under its general liability and liquor insurance programs due to increasingly prohibitive costs of such coverage from third-party insurers. The Company continues to purchase insurance for workers' compensation, property, auto, and business interruption, as well as the minimum insurance coverage where it is required by law for licensing requirements. See also tables of accrued liabilities (above) and selling, general and administrative expenses (below).

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

56. Selected Account Information—continued

The components of other long-term liabilities are as follows (in thousands):


	December 31, 2025		September 30, 2025
Estimated self-insurance liability	$	7,008	$	7,008
Advances from creditors	—		1,250
Other	1,206		1,251
Total other long-term liabilities	$	8,214	$	9,509

The components of selling, general and administrative expenses are as follows (in thousands):

Three Months EndedJune 30,

Nine Months EndedJune 30,

Three Months Ended December 31,

2025

2024

~~2025~~

~~2024~~

Taxes and permits

3,~~418~~593

43,~~575~~828

~~10,664~~

~~12,584~~

Advertising and marketing

23,~~974~~030

32,~~072~~962

~~8,537~~

~~9,539~~

Supplies and services

2,~~503~~783

2,~~642~~488

~~7,459~~

~~8,073~~

Insurance

52,~~389~~718

35,~~183~~283

~~13,495~~

~~9,763~~

Legal

1,~~383~~207

1,~~034~~386

~~4,138~~

~~2,883~~

Lease

1,~~607~~651

1,~~793~~602

~~4,746~~

~~5,402~~

Charge card fees

1,~~791~~955

1,~~798~~748

~~5,189~~

~~5,212~~

Utilities

1,~~320~~570

1,~~467~~371

~~4,199~~

~~4,414~~

Security

1,~~019~~112

1,~~178~~084

~~3,121~~

~~3,876~~

Stock-based compensation

392

~~471~~470

~~980~~

~~1,412~~

Accounting and professional fees

1,~~259~~497

~~910~~1,134

~~3,570~~

~~3,232~~

Repairs and maintenance

1,~~221~~303

1,~~154~~203

~~3,712~~

~~3,367~~

Other

1,~~864~~893

1,~~780~~648

~~5,437~~

~~5,154~~

Total selling, general and administrative expenses

2624,~~140~~704

2526,~~057~~207

~~75,247~~

~~74,911~~

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

	Three Months EndedJune 30,				Nine Months EndedJune 30,
	Three Months Ended December 31,
	2025		2024		~~2025~~		~~2024~~
Impairment of assets	$	—1,163	$	~~17,931~~—	$	~~1,780~~	$	~~25,964~~
Settlement of lawsuits	3,281		141		3,587		308
Settlement of lawsuits, net of recoveries (Notes 5 and 9)	(802)		179
Loss (gain) on sale of businesses and assets	~~202~~33		~~188~~(1,406)		~~(984)~~		~~180~~
Gain on insurance	(~~1,134~~177)		—(1,017)		~~(2,151)~~		—
Total impairments and other charges, net	$	2,349	$	18,260	$	2,232	$	26,452
Total impairments and other charges (gains), net	$	217	$	(2,244)

During the second quarter ended March 31, 2025, we recorded $1.8 million in SOB license impairment related to four clubs. During the second quarter ended March 31, 2024, we recorded $4.4 million in SOB license impairment related to four clubs, $2.9 million in goodwill impairment related to two clubs, and $693,000 in tradename impairment related to one club. During the third quarter ended June 30, 2024, we recorded $6.0 million in goodwill impairment related to four clubs, $5.7 million in operating lease right-of-use asset impairment related to five Bombshells restaurants, $1.4 million in SOB license impairment related to two clubs, and $4.8 million in property and equipment impairment related to one club and five restaurants. 13

During the third quarter ended June 30, 2025, we recorded $2.95 million for a class action settlement agreement to resolve claims under the Illinois Biometric Information Privacy Act. See Note 9.

During the first quarter ended December 31, 2024, we sold Bombshells Austin for a gain of $1.3 million. See Note 13.

During the first quarter ended December 31, 2024, we received insurance recovery amounting to $1.15 million for a club razed by fire in a prior period.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

67. Debt

On ~~November~~October 261, ~~2024~~2025, the Company ~~converted~~entered ~~a bank loan secured on October 10, 2022 to purchase real property~~ into a ~~construction~~debt ~~loan~~modification transaction with ~~the~~22 ~~same~~investors ~~bank~~by ~~lender.~~extending ~~The~~their ~~old~~promissory ~~loan~~notes' ~~had~~maturity adate ~~remaining~~to ~~principal~~October ~~balance of $2~~2028.~~4 million.~~ ~~The~~Two new ~~construction~~investors ~~loan~~joined ~~has~~with ~~maximum~~a ~~principal~~combined ~~limit of~~ $62.31 million and ~~has~~two aexisting ~~term~~investors ofincreased ~~204~~their ~~months.~~participation ~~The~~by ~~loan~~a ~~bears~~combined ~~an interest rate of 6~~$250,000.~~99%~~ ~~per~~The ~~annum~~promissory ~~for~~notes ~~the~~continue ~~first five years after which it will adjust annually~~ to abear ~~new rate equal to the then-current Wall Street Journal Prime Rate plus 0.25% per annum, with~~ a ~~floor of 6.99~~12% ~~per~~annual ~~annum.~~interest ~~The~~rate ~~loan~~with ~~is payable~~ interest-only ~~during~~monthly ~~the first 24 months, then payable for the next 36 months in equal~~ installments ofuntil ~~$60,162~~full inbalance ~~principal and interest, after which will be payable based on the adjusted interest rate for the next 143 months, with the remaining principal and accrued interest payable~~ at maturity. ~~There are certain financial covenants with which the Company is to be in compliance related to this loan.~~

On ~~January~~November 21, 2025, in ~~relation~~connection towith a ~~club~~stock ~~acquisition~~repurchase transaction (see Note 133), the Company executed a ~~promissory~~two-year ~~note for~~ $522.0 million ~~with~~unsecured ~~the~~promissory ~~seller.~~note ~~The~~bearing 8a 12% ~~promissory~~annual interest rate. The note is payable in 59 monthly ~~installments~~payments of ~~$67,718 in~~ principal and interest, ~~with~~of ~~the~~$1.0 million ~~balance~~for of23 ~~principal~~months ~~and~~with ~~accrued~~the ~~interest~~remaining ~~payable~~balance paid at maturity.

OnFuture ~~February~~maturities ~~26, 2025, the Company extended its line-~~of~~-credit~~ ~~facility~~debt ~~with~~obligations aas ~~lender bank for a maximum availability~~ of ~~$5.0~~December ~~million~~31, ~~to mature on March 9~~2025, ~~2027.~~are ~~All~~as ~~other~~follows ~~terms and conditions~~ (in ~~the original line-of-credit remain unchanged.~~thousands):

On April 7, 2025, in relation to a club acquisition (see Note 13), the Company executed a seller-financed promissory note for $2.5 million bearing an interest of 7% per annum. The promissory note matures in five years and is payable in equal monthly installments of $49,503 in principal and interest.


	Regular Amortization		Balloon Payments		Total Payments
January - December 2026	$	30,969	$	3,950	$	34,919
January - December 2027	26,282		10,493		36,775
January - December 2028	17,388		9,451		26,839
January - December 2029	17,167		—		17,167
January - December 2030	15,290		2,524		17,814
Thereafter	44,969		80,259		125,228
	$	152,065	$	106,677	$	258,742

On June 7, 2025, in relation to a club acquisition (see Note 13), the Company executed a seller-financed promissory note for $500,000 bearing an interest of 7% per annum. The promissory note matures in five years and is payable in equal monthly installments of $9,901 in principal and interest.14

Future maturities of debt obligations as of June 30, 2025, are as follows (in thousands):

	Regular Amortization		Balloon Payments		Total Payments
July 2025 - June 2026	$	19,117	$	—	$	19,117
July 2026 - June 2027	16,008		15,676		31,684
July 2027 - June 2028	16,458		11,207		27,665
July 2028 - June 2029	16,927		—		16,927
July 2029 - June 2030	15,481		2,524		18,005
Thereafter	45,187		85,213		130,400
	$	129,178	$	114,620	$	243,798

7. Stock-based Compensation

On February 7, 2022, our board of directors approved the 2022 Stock Option Plan (the “2022 Plan”). The board’s adoption of the 2022 Plan was approved by the shareholders during the annual stockholders' meeting on August 23, 2022. The 2022 Plan provides that the maximum aggregate number of shares of common stock underlying options that may be granted under the 2022 Plan is 300,000. The options granted under the 2022 Plan may be either incentive stock options or non-qualified options. The 2022 Plan is administered by the compensation committee of the board of directors. The compensation committee has the exclusive power to select individuals to receive grants, to establish the terms of the options granted to each participant, provided that all options granted shall be granted at an exercise price not less than the fair market value of the common stock covered by the option on the grant date, and to make all determinations necessary or advisable under the 2022 Plan. On February 9, 2022, the board of directors approved a grant of 50,000 stock options each to six members of management subject to the approval of the 2022 Plan.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

7. Stock-based Compensation—continued

Stock-based compensation, which is included in corporate segment selling, general and administrative expenses amounted to $392,000 and $980,000 during the three and nine months ended June 30, 2025, respectively, and $471,000 and $1.4 million during the three and nine months ended June 30, 2024, respectively. As of June 30, 2025, we had unrecognized compensation cost amounting to $981,000 related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 0.6 years.

The February 9, 2022 stock options vest over four years with the first 20% having vested on the approval of the 2022 Plan at the 2022 annual stockholders' meeting on August 23, 2022, and 20% vesting on February 9 of each year thereafter, provided however that the options will be subject to earlier vesting under certain events set forth in the Plan, including without limitation a change in control. All of the options will expire, if not exercised, at the end of five years. The weighted average grant-date fair value of the stock options was $31.37.

The following table summarizes information about stock option activity during the nine months ended June 30, 2025, under the 2022 Plan:

	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at September 30, 2024	300,000
Granted	—
Exercised	—
Forfeited	(50,000)	$	100.00
Outstanding at June 30, 2025	250,000	$	100.00	1.6	$	—
Exercisable at June 30, 2025	200,000	$	100.00	1.6	$	—

For the three and nine months ended June 30, 2025, and 2024, we excluded the impact of 300,000 stock options from the calculation of diluted earnings per share because their effect was anti-dilutive. Aside from the outstanding stock options, there were no other potentially dilutive securities for inclusion in the calculation of diluted earnings per share.

8. Income Taxes

Income ~~taxes~~tax ~~were an~~ expense ofwas $~~733,000~~1.5 million and $31.68 million during the three ~~and nine~~ months ended ~~June~~December 3031, 2025, ~~respectively,~~ and ~~a benefit of $1.4 million and an expense of $378,000 during the three and nine months ended June 30,~~ 2024, respectively. The effective income tax rate was 15(50.30)% and 1816.39% for the three ~~and nine~~ months ended ~~June~~December 3031, 2025, ~~respectively,~~ and ~~21.5% and 12.0% for the three and nine months ended June 30,~~ 2024, respectively. ~~The disproportionate tax rates during the nine months ended June 30, 2024, were caused by the decrease in the then-expected annual effective tax rate.~~ Our effective income tax rate is affected by state taxes, permanent differences, and tax credits, including the FICA tip credit, for both ~~years~~periods, asand ~~presented~~the ~~below~~pretax ~~(dollars~~loss and the nondeductible premium on stock repurchase in ~~thousands)~~the current quarter.

	Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
	Amount		%		Amount		%
Federal statutory income tax expense (benefit)	$	1,006	21.0	%	$	(1,395)	21.0	%
State income taxes, net of federal benefit	145		3.0	%	(214)		3.2	%
Permanent differences	83		1.7	%	22		(0.3)	%
Tax credits	(509)		(10.6)	%	152		(2.3)	%
Other	8		0.2	%	9		(0.1)	%
Total income tax expense (benefit)	$	733	15.3	%	$	(1,426)	21.5	%

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

8. Income Taxes—continued

	Nine Months Ended June 30, 2025				Nine Months Ended June 30, 2024
	Amount		%		Amount		%
Federal statutory income tax expense	$	4,193	21.0	%	$	662	21.0	%
State income taxes, net of federal benefit	561		2.8	%	135		4.3	%
Permanent differences	210		1.1	%	100		3.2	%
Tax credits	(1,488)		(7.5)	%	(528)		(16.8)	%
Other	172		0.9	%	9		0.3	%
Total income tax expense	$	3,648	18.3	%	$	378	12.0	%

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. Fiscal year ended September 30, 2022, and subsequent years remain open to federal tax examination. The Company ordinarily goes through various federal and state reviews and examinations for various tax matters.

On July 4, 2025, President Trump signed into law the legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14" (the "Act") and commonly referred to as the One Big Beautiful Bill Act. Among other things, the Act extends certain expiring, and in some cases expired, provisions of the 2017 Tax Cuts and Jobs Act. The Act also adjusted a number of provisions affecting businesses that were subject to sunsets, phase-outs, or phase-ins that would have taken effect in the absence of action by Congress or that have already taken effect. The Company has reviewed the changes from the Act and determined that any impact would be immaterial.

9. Commitments and Contingencies

Legal Matters

~~Indemnity~~New ~~Insurance~~York ~~Corporation~~Indictment and Related Matters

AsOn ~~previously~~or ~~reported~~about May 29, 2024, search warrants were executed on the Company’s corporate headquarters in Houston, Texas, three separate clubs in New York, New York, and ~~its~~for ~~subsidiaries~~the ~~were~~mobile ~~insured~~phone ~~under~~of three individuals (including two executive officers and a ~~liability~~non-executive ~~policy~~corporate ~~issued~~employee) by ~~Indemnity~~the ~~Insurance~~New ~~Corporation,~~York ~~RRG~~State Attorney General (“~~IIC~~NY AG”) ~~through~~and ~~October~~the ~~25,~~New ~~2013~~York State Department of Taxation and Finance (“NY DTF”). On ~~that~~June ~~date~~7, 2024, the Company ~~transitioned~~received to a ~~new~~subpoena ~~insurance~~from ~~provider~~the NY AG requesting documents and ~~has~~other ~~since~~information ~~obtained~~with ~~general~~respect ~~liability~~to ~~coverage~~certain ~~from~~clubs ~~other~~in ~~insurers~~New toYork ~~cover~~and ~~claims~~Florida. ~~arising~~The ~~from~~Company ~~actions~~cooperated ~~occurring~~with ~~after~~the ~~October~~NY 25AG during its investigation. As a result of this investigation, ~~2013~~a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process.

On ~~November~~or 7about September 16, ~~2013~~2025, the ~~Court~~Company, ofthree ~~Chancery~~subsidiaries, and five employees, including two executive officers, were arraigned in connection with an indictment filed by the NY AG in which the defendants were variously charged with committing the crimes of Criminal Tax Fraud in the ~~State~~First Degree in violation of ~~Delaware~~Tax ~~entered~~Law §1806, a ~~Rehabilitation~~class ~~and~~B ~~Injunction~~felony; ~~Order~~Bribery (in the ~~“Rehabilitation~~Second ~~Order”)~~Degree ~~declaring~~in ~~IIC~~violation ~~impaired~~of Penal Law §200.03, ~~insolvent~~a class C felony; Criminal Tax Fraud in the Second Degree in violation of Tax Law §1805, ~~and~~a class C felony; Criminal Tax Fraud in anthe ~~unsafe~~Third ~~financial~~Degree ~~condition.~~in ~~The~~violation ~~Court~~of ~~placed~~Tax ~~IIC~~Law ~~under~~§1804, a class D felony; Criminal Tax Fraud in the ~~supervision~~Fourth Degree in violation of Tax Law §1803, a class E felony; Conspiracy in the ~~Insurance~~Fourth ~~Commissioner~~Degree in violation of Penal Law §105.10, a class E felony; and Offering a False Instrument for Filing in the ~~State~~First Degree in violation of ~~Delaware~~Penal Law §175.35(1). According to the ~~“Commissioner”)~~NY AG, as"an ~~receiver.~~investigation ~~The~~by ~~Rehabilitation~~the ~~Order~~Office ~~authorized~~of the ~~Commissioner~~Attorney toGeneral ~~rehabilitate~~revealed ~~IIC~~that ~~by,~~RCI ~~among~~executives ~~other~~bribed ~~things,~~an ~~gathering~~auditor ~~and~~with ~~marshaling~~the ~~assets.~~NY ~~The~~DTF ~~order~~to ~~also~~avoid ~~stayed~~paying orover ~~abated~~$8 million ~~pending~~in ~~lawsuits~~sales ~~involving~~taxes ~~IIC~~to asNew York City and the ~~insurer~~state ~~until~~from ~~May~~2010 6,to ~~2014~~2024."

On ~~April 10~~November 25, ~~2014~~2025, the ~~Court~~board ~~entered~~of directors convened and approved a ~~Liquidation~~resolution for Eric Langan and ~~Injunction~~Bradley ~~Order~~Chhay ~~With~~to ~~Bar~~step ~~Date~~down (as CEO and CFO of the ~~“Liquidation~~Company, ~~Order”)~~respectively, ~~which~~effective ~~ordered~~November 28, 2025. In the ~~liquidation~~same meeting, the board nominated and approved the appointment of ~~IIC~~Travis Reese and ~~terminated~~Albert ~~all~~Molina ~~insurance~~as ~~policies~~Interim ~~issued~~President byand ~~IIC~~CEO and Interim CFO, respectively. ~~The~~Messrs. ~~Liquidation~~Langan ~~Order~~and ~~established~~Chhay aremain ~~claims~~employed ~~bar~~with ~~date~~the ofCompany ~~January~~and ~~16,~~will ~~2015,~~be focusing on operational improvement and ~~further~~strategic ~~stayed~~efforts oras ~~abated~~Head ~~pending~~of ~~lawsuits~~M&A ~~involving~~and ~~IIC~~Head ~~through~~of ~~October~~Corporate 7Development, ~~2014~~respectively. AsOn aJanuary ~~result~~29, of2026, ~~this~~Mr. ~~order,~~Langan stepped down as Chairman of the Company’s noboard ~~longer~~of ~~had~~directors. ~~insurance~~Mr. ~~coverage~~Langan ~~under~~was ~~the~~replaced ~~IIC~~by ~~policy~~Mr. ~~for~~Reese ~~any~~as ~~claims~~Chairman. ~~The~~Mr. ~~Company~~Langan ~~retained~~remains ~~counsel~~a tomember ~~defend~~of ~~and~~the ~~evaluate~~board ~~affected~~of ~~claims~~directors. ~~and~~The ~~lawsuits~~non-executive ~~and~~corporate ~~has~~employee ~~funded~~mentioned ~~100%~~above ofcontinues to be on administrative leave during the ~~associated~~pendency ~~litigation~~of ~~costs~~the indictment. The ~~Company~~defendants ~~timely~~entered ~~filed~~a ~~claims~~plea ~~with~~of not guilty to all of the ~~Receiver~~charges and ~~has~~are ~~continued~~vigorously todefending ~~provide~~themselves ~~information~~against ~~and~~the ~~updates~~charges asin ~~requested;~~court. ~~however,~~It ~~there~~ is nonot ~~assurance~~possible ~~that~~at ~~any~~this ~~recovery~~time to determine whether the Company will beincur ~~received~~(or ~~from~~to reasonably estimate the ~~IIC~~amount ~~estate.~~of) ~~The~~any ~~ultimate~~fines, ~~financial~~penalties, ~~impact~~or ofliabilities ~~this~~in ~~uncertainty~~connection ~~remains~~with ~~unknown.~~the indictment.

18On or about May 20, 2025, the Company received a subpoena from the U.S. Securities and Exchange Commission ("SEC") seeking certain documents and information related to the NY AG investigation and NY DTF issues. The Company is cooperating with the SEC and its investigation. It is not possible at this time to determine whether the Company will incur (or to reasonably estimate the amount of) any fines, penalties, or liabilities in connection with the SEC investigation.

Table of Contents

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Commitments and Contingencies—continued

AsShareholder ofClass June 30, 2025, only 1 claim remains unresolved out of the original 71 claims associated with IIC. The sole remaining matter is the Dupray case, as described below, involving a traffic accident allegedly caused by a third party after being served alcohol at a JAI Phoenix location. The Company continues to vigorously defend this matter and ~~pursue~~Derivative ~~all available rights to potential reimbursement through the IIC liquidation process.~~Actions

~~Other~~In September 2025, a putative securities class action was 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 the indictment filed by the NY AG and other related issues. The complaints seek unspecified damages, costs, and attorneys’ fees. This lawsuit is captioned Hernandez v. RCI Hospitality Holdings, Inc., et al. (filed September 21, 2025, naming the Company, Eric S. Langan, and Bradley Chhay). On April 14, 2026, the court entered an order appointing the lead plaintiff and the respective lead and liaison counsel for the purported class. The Company has not yet answered or otherwise responded to the complaint, but intends on moving to dismiss the operative pleading for failure to state a claim upon which relief can be granted. The Company intends to continue to vigorously defend against this action. This action is in its early stage, and a potential loss cannot yet be estimated.

On ~~June~~November 2317, ~~2014~~2025, ~~Mark~~a H.shareholder ~~Dupray~~derivative ~~and~~action ~~Ashlee~~was ~~Dupray~~ filed ain ~~lawsuit~~Harris ~~against~~County ~~Pedro~~District ~~Antonio~~Court ~~Panameno~~against officers and ~~our~~directors ~~subsidiary,~~Eric ~~JAI~~S. ~~Dining~~Langan, ~~Services~~Yura ~~(Phoenix)~~Barabash, ~~Inc.~~Bradley ~~(“JAI Phoenix”)~~Chhay, inLuke ~~the~~Lirot, ~~Superior~~Elaine ~~Court~~J. ofMartin, ~~Arizona~~Arthur ~~for Maricopa County~~A. ~~The~~Priaulx, ~~complaint~~Travis ~~alleged~~Reese, ~~that~~and ~~Mr.~~RCI ~~Panameno~~Hospitality ~~injured~~Holdings, MrInc., ~~Dupray~~as innominal adefendant. ~~traffic~~The ~~accident~~action ~~after~~alleges ~~being~~that ~~served~~the ~~alcohol~~individual atofficers anand ~~establishment~~directors ~~operated~~made byor ~~JAI~~caused ~~Phoenix~~the ~~and~~Company ~~asserted~~to ~~claims~~make ~~against~~a ~~JAI~~series ~~Phoenix under theories~~ of ~~common~~materially ~~law~~false ~~dram~~and/or misleading ~~shop~~statements ~~negligence~~ and ~~dram~~omissions ~~shop~~related ~~negligence~~to ~~per~~the ~~se.~~indictment ~~Following~~filed aby ~~jury~~the ~~trial,~~NY inAG ~~April~~and ~~2017~~other ~~the~~related ~~court~~issues ~~entered~~and ~~judgment~~engaged in ~~favor~~or ofcaused the ~~plaintiffs~~Company ~~and~~to, ~~awarded~~inter ~~compensatory~~alia, ~~and~~fail ~~punitive~~to ~~damages,~~maintain ~~allocating~~internal ~~approximately~~controls ~~$1.4 million~~over inits ~~compensatory~~business ~~damages~~ and ~~$4.0 million~~financial inreporting ~~punitive~~sufficient ~~damages~~ to ~~JAI~~ensure ~~Phoenix.~~the ~~JAI~~accuracy ~~Phoenix~~of ~~filed~~its ~~post-trial~~public ~~motions,~~filings. ~~which~~The ~~were~~action ~~denied~~asserts inclaims ~~August~~for ~~2017,~~breach ~~and~~of ~~subsequently~~fiduciary ~~filed~~duty aand ~~notice~~unjust ofenrichment. ~~appeal~~The incomplaint ~~September~~seeks ~~2017.~~injunctive Inrelief, ~~June~~damages, ~~2018~~restitution, ~~the~~costs, ~~Arizona~~and ~~Court~~attorneys’ offees. ~~Appeals~~The ~~heard~~case, ~~the~~Ayers ~~matter~~v. ~~and,~~RCI onHospitality ~~November 15~~Holdings, ~~2018~~Inc., ~~issued~~et aal., ~~decision~~is ~~vacating~~in ~~the~~its ~~jury’s~~early ~~verdict~~stage, and ~~remanding~~a ~~the~~potential ~~case~~loss ~~for~~cannot ayet ~~new~~be ~~trial~~estimated.

~~The~~On ~~retrial~~March 2, 2026, a shareholder derivative action was ~~held~~filed in ~~June~~the ~~2025.~~Eleventh ~~The~~Division ~~jury~~of ~~found~~the ~~Mr.~~Texas ~~Panameno~~Business ~~94%~~Court ~~responsible~~against officers and ~~JAI~~directors ~~Phoenix~~Eric ~~6% responsible~~S. ~~The~~Langan, ~~jury~~Yura ~~awarded~~Barabash, ~~total~~Bradley ~~damages~~Chhay, ofLuke $5Lirot, Elaine J.1 ~~million~~Martin, ~~and~~Arthur ~~punitive~~A. ~~damages~~Priaulx, ofTravis ~~$125~~Reese,~~000~~ and Ahmed Anakar. ~~Based~~The onaction alleges that the ~~jury’s~~individual ~~allocation~~officers ofand ~~fault,~~directors ~~JAI~~breached ~~Phoenix~~their isfiduciary ~~responsible~~duties ~~for~~by ~~$332,884~~failing ofto adequately monitor issues related to the ~~total~~indictment ~~award~~filed by the NY AG and other related issues. ~~Under~~The ~~applicable~~action ~~law,~~asserts ~~plaintiffs~~claims ~~retain~~for ~~the~~breaches ~~right~~of tofiduciary ~~appeal;~~duties ~~however,~~respectively itowed isby ~~not~~the ~~known~~directors atand ~~this~~officers. ~~time~~The ~~whether~~complaint anseeks ~~appeal~~injunctive ~~will~~relief, bedamages, ~~filed~~restitution, ~~but~~costs, ifand anattorneys’ ~~appeal~~fees. The case, Taylor v. Langan, et al., is ~~filed~~in its early stage, ~~the~~and ~~Company~~a ~~will~~potential ~~vigorously~~loss ~~defend~~cannot yet be estimated.

~~The~~Illinois ~~adult~~BIPA 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.Matter

InOn ~~March~~April ~~2023~~14, 2025, the ~~New~~Company's ~~York~~subsidiaries, ~~State~~RCI ~~Department~~Management ofServices, ~~Labor~~Inc., ~~assessed~~Pooh aBah ~~final~~Enterprises, ~~judgment~~Inc., ~~against~~and ~~one~~RCI ofDining ~~our~~Services ~~subsidiaries~~(Harvey), inInc. a(collectively, ~~state~~"Defendants") ~~unemployment~~entered ~~tax~~into ~~matter~~a ~~for~~class ~~the~~action ~~years~~settlement ~~2009-2022.~~agreement ~~The~~to ~~assessment~~resolve ofclaims ~~$2.8 million,~~under ~~which was recorded by~~ the ~~Company~~Illinois ~~during~~Biometric ~~the~~Information ~~quarter~~Privacy ~~ended~~Act ~~March 31~~("BIPA"), ~~2023,~~740 ~~was~~ILCS ~~issued~~14/1 inet ~~final~~seg., ~~notice~~arising byfrom the NYalleged ~~DOL~~collection ~~after~~of ~~several~~customer ~~appeals~~fingerprints ~~were~~at ~~denied~~Rick's byCabaret ~~the~~in ~~Supreme~~Chicago ~~Court~~and ofScarlett's ~~the~~Cabaret ~~State~~in ofWashington ~~New York~~Park, ~~Appellate Division, Third Department~~Illinois. InThe ~~September~~settlement ~~2023,~~resolves ~~the~~two NYconsolidated ~~DOL~~cases: ~~assessed~~Rapp ~~another~~et ofal. ~~our~~v. ~~subsidiaries~~RCI ~~for~~Management ~~approximately $280~~Services,~~000~~ onInc. ~~the~~et ~~same~~al., ~~matter~~Case ~~for~~No. ~~the~~22LA0884 ~~period~~(St. ~~January~~Clair ~~2015~~County, ~~through~~Illinois) ~~June~~and ~~2022~~Loera v. WePooh ~~recorded~~Bah ~~this~~Enterprises, ~~latter~~Inc., ~~assessment~~Case ~~during~~No. ~~the~~2021CH04759 ~~fiscal~~(Cook ~~year ended September 30~~County, ~~2023~~Illinois).

OnUnder orthe ~~about~~terms ~~May~~of ~~29, 2024, search warrants were executed on~~ the ~~Company’s corporate headquarters in Houston~~agreement, ~~Texas,~~and ~~three~~without ~~separate~~admitting ~~clubs~~any ~~in New York~~liability, ~~New~~Defendants ~~York,~~will ~~and~~provide ~~for the mobile phone of three individuals (including two executive officers and~~ a ~~non-executive~~settlement ~~corporate~~fund ~~employee)~~valued byat ~~the~~approximately ~~New~~$2.95 million, ~~York~~consisting ~~State~~of ~~Attorney~~$1.25 million ~~General~~in ~~(“NY~~cash ~~AG”)~~ and ~~the New York State Department of Taxation and Finance (“NY DTF”)~~$1. ~~On June~~ 7, million ~~2024, the Company received a subpoena from the NY AG requesting documents and other information with respect to certain clubs~~ in ~~New~~VIP ~~York and Florida~~cards. The ~~investigation~~settlement ~~appears~~includes topayments ~~be related~~ to ~~the~~class ~~Company’s~~members ~~New~~submitting ~~York~~valid ~~State tax filings~~claims, ~~audits~~attorneys' ~~thereof,~~fees ~~and~~of ~~entertainment~~up ~~benefits provided~~ to a40% ~~former~~of NYthe ~~DTF~~fund, ~~employee.~~incentive Onawards orto ~~about~~named ~~July 2~~plaintiffs, ~~2025, the Company received a second subpoena from the NY AG requesting additional documents~~ and ~~information~~administrative ~~related to the same issues~~costs. ~~The~~Any ~~Company~~unclaimed isfunds ~~cooperating~~remaining ~~with~~after ~~the~~payment ~~NY AG and its investigation. As a result~~ of ~~this~~valid ~~investigation~~claims, afees, ~~non-executive~~and ~~corporate~~costs ~~employee~~will ~~was~~revert ~~placed~~to ~~on administrative leave during~~ the ~~pendency of an internal review process~~Defendants. ItThe iscash ~~not~~settlement ~~possible~~was atpaid ~~this~~in ~~time~~full toin ~~determine~~July ~~whether~~2025 and the ~~Company~~VIP ~~will~~cards ~~incur~~were ~~(or~~issued toin ~~reasonably~~December ~~estimate the amount of) any fines~~2025, ~~penalties,~~with orunclaimed ~~liabilities~~VIP incards ~~connection~~amounting ~~with~~to ~~the investigation~~$1.23 million.

1916

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Commitments and Contingencies—continued

On or about May 20, 2025, the Company received a subpoena from the U.S. Securities and Exchange Commission ("SEC") seeking certain documents and information related to the NY AG investigation and NY DTF issues. The Company is cooperating with the SEC and its investigation. It is not possible at this time to determine whether the Company will incur (or to reasonably estimate the amount of) any fines, penalties, or liabilities in connection with the SEC investigation.Other

On ~~April~~June 1423, ~~2025~~2014, ~~the~~Mark ~~Company's~~H. ~~subsidiaries,~~Dupray ~~RCI~~and ~~Management~~Ashlee ~~Services,~~Dupray ~~Inc.,~~filed ~~Pooh~~a ~~Bah~~lawsuit ~~Enterprises,~~against ~~Inc.,~~Pedro Antonio Panameno and ~~RCI~~our subsidiary, JAI Dining Services (~~Harvey~~Phoenix), Inc. (~~collectively,~~“JAI ~~"Defendants"~~Phoenix”), ~~entered~~in ~~into~~the Superior Court of Arizona for Maricopa County. The complaint alleged that Mr. Panameno injured Mr. Dupray in a ~~class~~traffic ~~action~~accident ~~settlement~~after ~~agreement~~being toserved ~~resolve~~alcohol at an establishment operated by JAI Phoenix and asserted claims against JAI Phoenix under ~~the~~theories ~~Illinois~~of ~~Biometric~~common ~~Information~~law ~~Privacy~~dram ~~Act~~shop ~~("BIPA"),~~negligence ~~740~~and ~~ILCS~~dram ~~14/1~~shop etnegligence ~~seg~~per se., ~~arising~~Following ~~from~~a ~~the~~jury ~~alleged~~trial, ~~collection~~in ofApril ~~customer~~2017, ~~fingerprints~~the atcourt ~~Rick's~~entered ~~Cabaret~~judgment in ~~Chicago~~favor of the plaintiffs and ~~Scarlett's~~awarded ~~Cabaret~~compensatory inand ~~Washington~~punitive ~~Park~~damages, ~~Illinois~~allocating approximately $1.4 ~~The~~million ~~settlement~~in ~~resolves~~compensatory ~~two~~damages ~~consolidated~~and ~~cases:~~$4.0 ~~Rapp~~million etin ~~al.~~punitive vdamages to JAI Phoenix. ~~RCI~~JAI ~~Management~~Phoenix ~~Services~~filed post-trial motions, ~~Inc.~~which etwere ~~al.~~denied in August 2017, ~~Case~~and Nosubsequently filed a notice of appeal in September 2017. ~~22LA0884~~In ~~(St~~June 2018, ~~Clair~~the ~~County,~~Arizona ~~Illinois)~~Court ~~and~~of ~~Loera~~Appeals v.heard ~~Pooh~~the ~~Bah~~matter ~~Enterprises~~and, ~~Inc.~~on November 15, ~~Case~~2018, ~~No.~~issued ~~2021CH04759~~a ~~(Cook~~decision ~~County,~~vacating ~~Illinois)~~the jury’s verdict and remanding the case for a new trial.

~~Under~~The ~~the~~retrial ~~terms~~was ofheld ~~the~~in ~~agreement,~~June ~~and~~2025. ~~without~~The ~~admitting~~jury ~~any~~found ~~liability,~~Mr. ~~Defendants~~Panameno ~~will~~94% ~~provide~~responsible aand ~~settlement~~JAI ~~fund~~Phoenix ~~valued~~6% atresponsible. ~~approximately~~The ~~$2.95 million,~~jury ~~consisting~~awarded total damages of $15.25 1 million inand ~~cash~~punitive ~~and~~damages of $1125,000.~~7 million~~ inBased ~~VIP~~on ~~cards.~~the ~~The~~jury’s ~~settlement~~allocation ~~includes~~of ~~payments~~fault, toJAI ~~class~~Phoenix ~~members~~is ~~submitting~~responsible ~~valid~~for ~~claims~~$332,884 ~~attorneys' fees~~ of upthe tototal ~~40%~~award. ofUnder ~~the~~applicable ~~fund~~law, ~~incentive~~plaintiffs ~~awards~~retain the right to ~~named~~appeal; ~~plaintiffs~~however, ~~and~~it ~~administrative~~is ~~costs.~~not ~~Any~~known ~~unclaimed~~at ~~funds~~this ~~remaining~~time ~~after~~whether ~~payment~~an ofappeal ~~valid~~will ~~claims,~~be ~~fees~~filed, ~~and~~but ~~costs~~if ~~will~~an ~~revert~~appeal tois filed, the ~~Defendants. The~~ Company ~~denies~~will ~~all~~vigorously ~~allegations of wrongdoing~~defend. ~~The settlement remains subject to final court approval.~~

In March 2023, the New York State Department of Labor assessed a final judgment against one of our subsidiaries in a state unemployment tax matter for the years 2009-2022. The assessment of $2.8 million, which was recorded by the Company during the quarter ended March 31, 2023, was issued in final notice by the NY DOL after several appeals were denied by the Supreme Court of the State of New York, Appellate Division, Third Department. In September 2023, the NY DOL assessed another of our subsidiaries for approximately $280,000 on the same matter for the period January 2015 through June 2022. We recorded this latter assessment during the fiscal year ended September 30, 2023.

As set forth in the risk factors as disclosed in this report, the adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees. While we take steps to ensure that our adult entertainers are deemed independent contractors, from time to time, we are named in lawsuits related to the alleged misclassification of entertainers. Claims are brought under both federal and where applicable, state law. Based on the industry standard, the manner in which the independent contractor entertainers are treated at the clubs, and the entertainer license agreements governing the entertainer’s work at the clubs, the Company believes that these lawsuits are without merit. Lawsuits are handled by attorneys with an expertise in the relevant law and are defended vigorously.

General

In the regular course of business affairs and operations, we are subject to possible loss contingencies arising from third-party litigation and federal, state, and local environmental, labor, health and safety laws and regulations. We assess the probability that we could incur liability in connection with certain of these lawsuits. Our assessments are made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on the part of the Company or any of its subsidiaries. In certain cases that are in the early stages and in light of the uncertainties surrounding them, we do not currently possess sufficient information to determine a range of reasonably possible liability. In matters where there is insurance coverage, in the event we incur any liability, we believe it is unlikely we would incur losses in connection with these claims in excess of our insurance coverage.

The Company recorded lawsuit settlements incurred, ~~amounting~~net toof ~~$3.3~~recoveries, ~~million~~amounting ~~and~~to $~~3.6 million for the three and nine months ended June 30~~802,000 ~~2025,~~net ~~respectively,~~recoveries and $~~141~~179,000 ~~and~~net ~~$308,000~~settlements for the three ~~and nine~~ months ended ~~June~~December 3031, 2025, and 2024, respectively. As of ~~June~~December 3031, 2025, and September 30, ~~2024~~2025, the Company has accrued $5.2.7 million and $24.02 million, respectively, related to settlement of lawsuits, which is included in accrued liabilities in our unaudited condensed consolidated balance sheets.

~~Self-insurance Liability~~17

We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on historical experience. The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims development history, and settlement practices. Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances. We recorded estimated self-insurance expense amounting to $4.0 million and $9.4 million during the three and nine months ended June 30, 2025. As of June 30, 2025, the Company has self-insurance liability amounting to $9.4 million.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. Related Party Transactions

Presently, our ~~Chairman~~director and former Chairman, President, and CEO, 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~~December 3031, 2025, and September 30, ~~2024~~2025, was $~~136~~138.92 million and $~~135~~139.36 million, respectively.

Included in the debt balance as of ~~June~~December 3031, 2025, and September 30, ~~2024~~2025, ~~are~~is ~~notes~~a note borrowed from a related ~~parties—one~~party ~~note~~ for $~~500~~350,000 ~~(from Ed Anakar, an employee of the Company~~ and ~~brother of our former director Nourdean Anakar) and another note for~~ $150,000, (respectively, from a brother of the Company's former CFO, Bradley Chhay), in which the terms of the ~~notes~~note ~~are~~is the same as the rest of the lender group.

We used the services of Tall Oak Custom Furniture, and Nottingham Barrels and Furniture, previously Nottingham Creations, ~~both~~all furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Tall Oak Custom Furniture isand Nottingham Barrels and Furniture are owned by a brother of Eric Langan (as was Nottingham Creations). Amounts billed to us for goods and services provided by Tall Oak Custom Furniture, ~~and~~ Nottingham ~~Creations~~Barrels ~~were $12,344~~ and ~~$19~~Furniture,~~098~~ ~~during the three~~ and ~~nine~~Nottingham ~~months~~Creations ~~ended~~were ~~June 30, 2025, respectively, and~~ $0 and $~~344~~2,~~798~~780 during the three ~~and nine~~ months ended ~~June~~December 3031, 2025, and 2024, respectively. As of ~~June~~December 3031, 2025, and September 30, ~~2024~~2025, we owed Tall Oak Custom Furniture, Nottingham Barrels and Furniture, and Nottingham Creations $3,312 and $183,~~700~~312, respectively, in unpaid billings.

TW Mechanical LLC provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal ~~2025~~2026 and ~~2024~~2025. A son-in-law of Eric Langan owns a 50% interest in TW Mechanical. Amounts billed by TW Mechanical to the third-party general contractor were $0 and $0 for the three ~~and nine~~ months ended ~~June~~December 3031, 2025, ~~respectively,~~ and ~~$0 and $0 for the three and nine months ended June 30,~~ 2024, respectively. Amounts billed directly to the Company were $~~455~~0 and $~~1,856~~720 for the three ~~and nine~~ months ended ~~June~~December 3031, 2025, ~~respectively,~~ and ~~$0 and $3,160 for the three and nine months ended June 30,~~ 2024, respectively. As of ~~June~~December 3031, 2025, and September 30, ~~2024~~2025, the Company owed TW Mechanical $0 and $0, respectively, in unpaid direct billings.

~~11. Leases~~18

Total lease expense included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income for the three and nine months ended June 30, 2025, and 2024 is as follows (dollars in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025			2024
Operating lease expense – fixed payments	$	1,078	$	1,292	$	3,266		$	3,876
Variable lease expense	435		412		1,194			1,273
Short-term and other lease expense (includes $103 and $117 recorded in advertising and marketing for the three months ended June 30, 2025, and 2024, respectively, and $294 and $342 for the nine months ended June 30, 2025, and 2024, respectively; and $140 and $159 recorded in repairs and maintenance for the three months ended June 30, 2025, and 2024, respectively, and $415 and $447 for the nine months ended June 30, 2025, and 2024, respectively; see Note 5)	337		365		995			1,042
Sublease income	—		—		—			—
Total lease expense, net	$	1,850	$	2,069	$	5,455		$	6,191
Other information:
Operating cash outflows from operating leases	$	1,916	$	2,036	$	5,695		$	6,085
Weighted average remaining lease term – operating leases					9.1 years			10.1 years
Weighted average discount rate – operating leases					5.8		%	5.8		%

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

11. Leases~~—continued~~

~~Future~~Total ~~maturities~~lease ofexpense ~~operating~~included ~~lease~~in ~~liabilities~~selling, asgeneral and administrative expenses in our unaudited condensed consolidated statements of ~~June~~income for the three months ended December 3031, 2025, ~~are~~and 2024 is as follows (in thousands):

	Principal Payments			Interest Payments			Total Payments
	Three Months Ended December 31,
July 2025 - June 2026	$	3,249		$	1,661		$	4,910
	2025			2024
July 2026 - June 2027	3,370			1,466			4,836
Operating lease expense – fixed payments	$	1,156		$	1,109
July 2027 - June 2028	2,865			1,281			4,146
Variable lease expense	404			395
July 2028 - June 2029	2,851			1,112			3,963
Short-term and other lease expense (includes $94 and $102 recorded in advertising and marketing for the three months ended December 31, 2025, and 2024, respectively; and $153 and $142 recorded in repairs and maintenance for the three months ended December 31, 2025, and 2024, respectively; see Note 6)	338			342
July 2029 - June 2030	2,535			947			3,482
Sublease income	—			—
Thereafter	16,550			2,685			19,235
Total lease expense, net	$	1,898		$	1,846
	$	31,420		$	9,152		$	40,572
Other information:
Operating cash outflows from operating leases	$	1,969		$	1,958
Weighted average remaining lease term – operating leases	8.8 years			9.5 years
Weighted average discount rate – operating leases	5.8		%	5.7		%

~~12.~~Future ~~Supplemental~~maturities ~~Disclosure~~of operating lease liabilities as of ~~Cash~~December 31, ~~Flow~~2025, ~~Information~~are as follows (in thousands):

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


	Principal Payments		Interest Payments		Total Payments
January - December 2026	$	3,386	$	1,565	$	4,951
January - December 2027	3,143		1,370		4,513
January - December 2028	2,778		1,197		3,975
January - December 2029	2,781		1,026		3,807
January - December 2030	2,425		876		3,301
Thereafter	15,315		2,264		17,579
	$	29,828	$	8,298	$	38,126

	Nine Months Ended June 30,
	2025		2024
Cash paid for interest, net of amounts capitalized	$	11,827	$	12,015
Cash paid for income taxes	$	4,361	$	3,861
Restricted cash, included in other assets (at end of period)	$	250	$	—
Noncash investing and financing transactions:
Debt incurred in connection with acquisition of businesses	$	8,000	$	—
Note receivable from sale of businesses and assets	$	60	$	—
Unpaid excise tax on stock repurchases	$	91	$	127
Unpaid liabilities on capital expenditures	$	1,005	$	524

12. Dispositions

~~Restricted~~On ~~cash~~October ~~pertains~~7, to2025, the ~~minimum~~Company ~~capitalization~~sold ~~held~~100% byof ~~our~~the ~~captive~~common ~~insurance~~stock of a club subsidiary located in Harlingen, asTexas, ~~required~~for by$600,000. ~~state~~The ~~insurance~~sale ~~regulations~~did not included the real estate where the club is located. The Company recognized a loss of approximately $17,000 on the sale.

~~Subsequent~~On toFebruary 6, 2026, the ~~balance~~Company ~~sheet~~sold ~~date~~a ~~through~~club ~~August~~located 8in Edinburg, ~~2025~~Texas, wefor ~~repurchased~~$1.1 million 36recognizing a $219,~~339~~000 ~~shares~~loss ofon ~~our~~the ~~common~~sale. ~~stock~~Proceeds atfrom anthe ~~average~~sale ~~price~~were ofused ~~$38.09~~to ~~per~~pay ~~share~~down certain related debt.

~~13. Acquisitions and Dispositions~~19

Sale of Bombshells Austin

On November 14, 2024, the Company sold Bombshells Austin for $70,000 in cash and $60,000 in a 6% 12-month promissory note. The Company recognized a $1.3 million gain on the sale.

Flight Club

On January 21, 2025, the Company completed the acquisition of a club in the Detroit, Michigan, market for a total agreed acquisition price of $11.0 million, consisting of $3.0 million in cash and $5.0 million in a seller-financed 8.0% promissory note (see Note 6) for the club, and $3.0 million in cash for the associated real estate.

Table of Contents

RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Acquisitions and Dispositions—continued

The preliminary fair value of the consideration is as follows (in thousands):

Cash	$	6,000
Note payable	5,000
Total fair value of consideration	$	11,000

We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values in our Nightclubs reportable segment. We have not finalized our valuation of the tangible and identifiable intangible assets acquired in this transaction. As of the release of this report, the fair value of the acquired tangible and identifiable intangible assets are provisional pending the completion of the final valuations for those assets. Based on the allocation of the preliminary fair value of the acquisition price and subject to any working capital adjustments, the amount of goodwill is estimated at $613,000. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired, which is essentially the forward earnings potential of the acquired club and our entry into a new market. Goodwill will not be amortized but will be tested at least annually for impairment. Approximately $613,000 of the recognized goodwill will be deductible for income tax purposes.

The following is our preliminary allocation of the fair value of the acquisition price (in thousands) as of January 21, 2025:

Current assets	$	73
Property and equipment	3,305
Licenses	5,928
Tradename	1,081
Total net assets acquired	10,387
Goodwill	613
Total fair value of net assets acquired	$	11,000

Licenses and tradename will not be amortized but will be tested at least annually for impairment.

In connection with this acquisition, we incurred approximately $0 and $141,000 in acquisition-related expenses during the three and nine months ended June 30, 2025, respectively, which are included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

From the date of acquisition until June 30, 2025, the acquired club contributed the following, which are included in our unaudited condensed consolidated statements of income (in thousands):

	Three Months EndedJune 30, 2025		Nine Months EndedJune 30, 2025
Revenues	$	1,149	$	1,830
Income from operations	$	414	$	598

We have not yet received the fiscal 2024 financial statements from the seller, therefore, we could not provide supplemental pro forma information for the combined entities.

Sale of Aurora CO Property

On March 31, 2025, the Company sold a real estate property in Aurora, Colorado, for $825,000. The Company recognized a loss of $153,000 on the sale, net of closing costs.

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RCI HOSPITALITY HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Acquisitions and Dispositions—continued

Platinum West and Platinum Plus

On April 7, 2025, the Company completed the acquisition of a club in West Columbia, South Carolina, for a total purchase price of $8.0 million, consisting of $3.75 million cash and $2.5 million in a seller-financed 7% promissory note (see Note 6) for the club, and $1.75 million cash for the associated real estate. On June 13, 2025, the Company completed the acquisition of a club in Allentown, Pennsylvania, for a total purchase price of $2.0 million, consisting of $1.5 million cash and $500,000 in seller-financed 7% promissory note (see Note 6). The Allentown club transaction was completed several weeks after the West Columbia club due to delays in the issuance of licenses. As of the filing of this report, we have not completed our valuation and do not have estimates of fair value for the acquired assets and any assumed liability, if any.

In connection with this combined acquisition, we incurred approximately $52,000 and $103,000 in acquisition-related expenses during the three and nine months ended June 30, 2025, respectively, which are included in selling, general and administrative expenses in our unaudited condensed consolidated statements of income.

From the date of acquisition until June 30, 2025, the acquired clubs contributed the following, which are included in our unaudited condensed consolidated statements of income (in thousands):

	Three Months EndedJune 30, 2025		Nine Months EndedJune 30, 2025
Revenues	$	1,116	$	1,116
Income from operations	$	397	$	394

We have not yet received the fiscal 2024 financial statements from the seller, therefore, we could not provide supplemental pro forma information for the combined entities.

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

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included in this quarterly report, and the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended September 30, ~~2024~~2025.

Overview

RCI Hospitality Holdings, Inc. is a holding company that, through its subsidiaries, engages in businesses that offer live adult entertainment and/or high-quality sports bar and dining experiences to its guests. All services and management operations are conducted by subsidiaries of RCIHH.

Through our subsidiaries, as of ~~June~~December 3031, 2025, we operated a total of 7068 establishments that offer live adult entertainment and ~~restaurants and~~ sports bars and restaurants. We also operated a leading business communications company serving the multi-billion-dollar adult nightclubs industry. We have two principal reportable segments: Nightclubs and Bombshells. We combine operating segments not included in Nightclubs and Bombshells into “Other.” In the context of club and restaurant/sports bar operations, the terms the “Company,” “we,” “our,” “us” and similar terms used in this report refer to subsidiaries of RCIHH. RCIHH was incorporated in the State of Texas in 1994. Our corporate offices are located in Houston, Texas.

Upon initial adoption of ASU 2023-07 for the annual reporting period ended September 30, 2025, certain previously reported segment information have changed. There were no changes in consolidated financial information. Segment-related discussions and analyses in the MD&A relate to amounts exclusive of intersegment items.

Critical Accounting Policies and Estimates

The preparation of the unaudited condensed consolidated financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2024~~2025, filed with the SEC on ~~December~~March 1619, ~~2024~~2026.

InDuring ~~fiscal 2025,~~ the ~~Company~~three ~~started~~months ~~self-insuring~~ended aDecember significant portion of expected losses under its general liability and liquor insurance programs due to increasingly prohibitive costs of such coverage from third-party insurers. The Company continues to purchase insurance for workers' compensation31, ~~property~~2025, ~~auto,~~there ~~and~~were ~~business~~no ~~interruption,~~significant aschanges ~~well~~in asour ~~the~~accounting ~~minimum~~policies ~~insurance~~and ~~coverage where it is required by law for licensing requirements~~estimates.

During the three and nine months ended June 30, 2025, except as mentioned above, there were no significant changes in our accounting policies and estimates.

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Results of Operations

Highlights of the Company's operating results ~~and~~for ~~cash~~the ~~flows~~quarter ended December 31, 2025, are as follows, with comparisons against the same period of the prior year:

~~Third~~•Total ~~Quarter~~revenues ~~Ended~~were ~~June~~$70.8 30million compared to $71.5 million, ~~2025~~a 0.9% decrease (Nightclubs revenue of $62.3 million compared to $61.7 million, a 0.9% increase; and Bombshells revenue of $8.4 million compared to $9.6 million, an 12.6% decrease)

•~~Total~~Consolidated ~~revenues~~same-store ~~were~~sales ~~$71.1~~decreased ~~million~~by ~~compared to $76~~7.~~2 million during the comparable prior-year quarter, a 6.6~~7% ~~decrease~~ (Nightclubs ~~revenue~~decreased ofby ~~$62~~5.38%, ~~million~~while ~~compared~~Bombshells todecreased ~~$62.8~~by ~~million, a 0~~21.89%) ~~decrease;~~(refer ~~and~~to ~~Bombshells~~the ~~revenue~~definition of ~~$8.6~~same-store ~~million~~sales ~~compared~~in tothe ~~$13.1~~discussion ~~million,~~of arevenues ~~34.5% decrease~~below)

•~~Consolidated~~Basic ~~same-store~~and ~~sales~~diluted ~~decreased~~earnings byper ~~4.9%~~share (~~Nightclubs~~“EPS”) ~~decreased~~this byquarter ~~3.7%,~~of ~~while~~a ~~Bombshells~~loss ~~decreased~~of ~~by 13~~$0.~~5%)~~57 ~~(refer~~compared to ~~the~~an ~~definition~~income of ~~same-store sales in the discussion of revenues below)~~$1.01

•~~Basic and diluted earnings per share (“EPS”) this quarter of $0.46 compared to loss per share of $0.56 during the comparable prior~~Non-~~year quarter (non-~~GAAP diluted EPS* of $0.7774 compared to $10.~~35)~~80

•Net cash provided by operating activities ~~was~~of $137.8 million compared to $~~15.8 million during the comparable prior-year quarter, a 12.5% decrease (free cash flow* of $~~13.3 million ~~compared to $13.8 million~~, a 341.24% decrease)

~~Year-to-Date~~•Free ~~Period~~cash ~~Ended~~flow* ~~June~~of 30$6.7 million compared to $12.1 million, ~~2025~~a 44.6% decrease

•Total revenues $208.5 million compared to $222.4 million during the comparable prior-year nine-month period, a 6.2% decrease (Nightclubs revenue of $181.6 million compared to $183.2 million, a 0.9% decrease; and Bombshells revenue of $26.4 million compared to $38.6 million, a 31.6% decrease)

•Consolidated same-store sales decreased by 2.5% (Nightclubs same-store sales decreased by 1.3%, while Bombshells decreased by 11.5%)

•Basic and diluted EPS for the current nine months was $1.84 compared to $0.30 during the comparable prior-year period (non-GAAP diluted EPS* of $2.23 compared to $3.11)

•Net cash provided by operating activities was $35.7 million compared to $40.2 million during the comparable prior-year period, a 11.3% decrease (free cash flow* of $32.3 million compared to $35.3 million, a 8.3% decrease)

* Reconciliation and discussion of non-GAAP financial measures are included in the “Non-GAAP Financial Measures” section below.

Revenues

Consolidated revenues for the ~~third~~first quarter decreased by $5.0.7 million, or 60.69%, versus the comparable prior-year quarter due primarily to the $41.74 million impact of closed locations ~~and the $3.4 million impact of the 4.9% decline in consolidated same-store sales~~, partially offset by a $24.78 million increase in sales from new locations and the $~~326,000~~5.3 million impact of ~~reopened~~the ~~clubs~~decrease ~~that~~in ~~were~~consolidated ~~rebranded~~same-stores sales.

Consolidated revenues for the nine-month period decreased by $13.8 million, or 6.2%, versus the comparable prior-year nine-month period primarily due to $13.2 million impact of closed locations and the $5.0 million impact of the 2.5% decline in consolidated same-store sales, partially offset by a $3.6 million increase in sales from new locations and the $708,000 impact of reopened clubs that were rebranded.

We calculate same-store sales by comparing year-over-year revenues from nightclubs and restaurants/sports bars starting in the first full quarter of operations after at least 12 full months for Nightclubs and at least 18 full months for Bombshells. We consider the first six months of operations of a Bombshells unit to be the “honeymoon period” where sales are higher than normal. We exclude from a particular month’s calculation units previously included in the same-store sales base that have closed temporarily until its next full quarter of operations. We also exclude from the same-store sales base units that are being reconcepted or are closed due to renovations or remodels. Acquired units are included in the same-store sales calculation as long as they qualify based on the definition stated above. Revenues outside of our Nightclubs and Bombshells reportable segments are excluded from same-store sales calculation.

2621

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Segment contribution to total revenues was as follows (in thousands, except percentages):

	Three Months Ended June 30, 2025		Mix		Three Months Ended June 30, 2024		Mix		Inc (Dec) $		Inc (Dec) %
	Three Months Ended December 31, 2025		Mix		Three Months Ended December 31, 2024		Mix		Inc (Dec) $		Inc (Dec) %
Nightclubs
Sales of alcoholic beverages	$	2625,~~338~~795	4241.34	%	$	27,~~413~~035	43.68	%	$	(1,~~075~~240)	(34.96)	%
Sales of food and merchandise	5,~~914~~936		9.5	%	5,~~904~~736		9.43	%	10200		03.25	%
Service revenues	25,~~166~~810		4041.4	%	2524,~~103~~178		4039.02	%	631,632		06.37	%
Other revenues	4,~~918~~768		7.97	%	4,~~403~~775		7.07	%	~~515~~(7)		11(0.71)	%
	62,336		100.0	%	62,823		100.0	%	(487)		(0.8)	%
	62,309		100.0	%	61,724		100.0	%	585		0.9	%
Bombshells
Sales of alcoholic beverages	4,~~442~~344		51.68	%	75,~~029~~153		53.57	%	(~~2,587~~809)		(3615.87)	%
Sales of food and merchandise	4,~~123~~030		4748.91	%	54,~~832~~370		4445.46	%	(~~1,709~~340)		(297.38)	%
Service revenues	31		—	%	~~165~~3		~~1.3~~—	%	(~~162~~2)		(9866.27)	%
Other revenues	416		0.51	%	~~113~~61		0.96	%	(7255)		(6390.72)	%
	8,609		100.0	%	13,139		100.0	%	(4,530)		(34.5)	%
	8,381		100.0	%	9,587		100.0	%	(1,206)		(12.6)	%
Other
Other revenues	~~200~~138		100.0	%	~~218~~172		100.0	%	(1834)		(819.38)	%
	$	7170,~~145~~828			$	7671,~~180~~483			$	(~~5,035~~655)	(60.69)	%

	Nine Months Ended June 30, 2025		Mix		Nine Months Ended June 30, 2024		Mix		Inc (Dec) $		Inc (Dec) %
Nightclubs
Sales of alcoholic beverages	$	77,948	42.9	%	$	79,595	43.4	%	$	(1,647)	(2.1)	%
Sales of food and merchandise	17,169		9.5	%	16,490		9.0	%	679		4.1	%
Service revenues	72,214		39.8	%	73,784		40.3	%	(1,570)		(2.1)	%
Other revenues	14,270		7.9	%	13,359		7.3	%	911		6.8	%
	181,601		100.0	%	183,228		100.0	%	(1,627)		(0.9)	%
Bombshells
Sales of alcoholic beverages	13,886		52.5	%	21,070		54.5	%	(7,184)		(34.1)	%
Sales of food and merchandise	12,385		46.9	%	17,116		44.3	%	(4,731)		(27.6)	%
Service revenues	48		0.2	%	167		0.4	%	(119)		(71.3)	%
Other revenues	106		0.4	%	288		0.7	%	(182)		(63.2)	%
	26,425		100.0	%	38,641		100.0	%	(12,216)		(31.6)	%
Other
Other revenues	478		100.0	%	501		100.0	%	(23)		(4.6)	%
	$	208,504			$	222,370			$	(13,866)	(6.2)	%

Nightclubs revenues increased by 0.9% during the first quarter compared to the same quarter last year primarily due to the $3.0 million contribution of newly acquired clubs and the $3.5 million impact of the decrease in same-store sales, partially offset by the $256,000 impact of closed clubs. For clubs that were open enough days to qualify as a same-store location (refer to the definition of same-store sales in the preceding paragraph), sales decreased by 5.8%. By type of revenue, alcoholic beverage sales decreased by 4.6%, food, merchandise and other revenue increased by 1.8%, while service revenues increased by 6.7%.

~~Nightclubs~~Bombshells first quarter revenues decreased by 012.86%, ~~during~~of ~~the~~which ~~third quarter compared to the same quarter last year primarily due to the $2~~21.39% ~~million~~was ~~impact~~for ~~of the decrease in~~ same-store sales decline and ~~the~~ $~~871,000 impact of closed clubs, partially offset by the $2~~1.32 million ~~contribution~~from ofrecently aclosed ~~newly~~or ~~acquired~~sold ~~club and a $326~~locations,~~000~~ ~~impact~~with ~~from newly rebranded clubs. For Nightclubs that were open enough days to qualify for same-store sales (refer to~~ the ~~definition~~offsetting ofincrease ~~same-store~~caused ~~sales~~by ~~in the preceding paragraph),~~ sales ~~decreased~~from bya 3new location.~~7%.~~ By type of revenue, ~~alcoholic~~food ~~beverage~~and merchandise sales decreased by 37.98%~~; food~~, ~~merchandise~~while ~~and~~alcoholic ~~other~~beverage ~~revenue~~sales ~~increased~~decreased by 515.17%~~; while service revenues increased by 0~~.~~3%.~~

For the nine-month period, Nightclubs revenues decreased by 0.9% primarily due to the $3.1 million impact of closed clubs, partially offset by the $3.0 million contribution of a newly acquired club and a $708,000 impact from newly rebranded clubs. Same-store sales for the nine-month period decreased by 1.3%. By type of revenue, alcoholic beverage sales decreased by 2.1%; food, merchandise and other revenue increased by 5.3%; while service revenues decreased by 2.1%.

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Bombshells third quarter revenues decreased by 34.5%, which was primarily due to the $3.8 million impact of closed or sold locations and the $1.1 million impact of the decrease in same-store sales, partially offset by the $383,000 increase caused by sales from a new location. By type of revenue, food and merchandise sales decreased by 29.3% while alcoholic beverage sales decreased by 36.8%.

For the nine-month period, Bombshells revenues decreased by 31.6%, which was primarily caused by the $10.1 million impact of closed or sold locations and the $2.8 million impact from same-store sales decline. By type of revenue, food and merchandise sales decreased by 27.6% while alcoholic beverage sales decreased by 34.1%.

Operating Expenses

Total operating expenses, as a percent of revenues, ~~decreased~~increased to 8784.84% from ~~103~~80.35% from last year’s ~~third~~first quarter~~, and decreased to 85~~.2% ~~from 93.1% for the nine-month period.~~ Year-over-year change was a $162.32 million ~~decrease~~increase, or 203.78%~~, for the third quarter and a $29~~.4 ~~million decrease, or 14.2%, for the nine-month period.~~ Significant contributors to the changes in operating expenses are explained below.

Cost of goods sold. Cost of goods sold for the ~~third~~first quarter decreased by $~~1.4 million~~240, ~~or 13.0%~~000, ~~and for the nine-month period decreased by $3.8 million,~~ or ~~12.~~2.5%, mainly due to lower sales. As a percent of total revenues, cost of goods sold decreased to 1213.80% from 13.83% ~~for~~mainly ~~the~~due ~~third quarter and decreased~~ to ~~13.0%~~shift ~~from~~in ~~13.8%~~sales ~~for~~mix ~~the~~to ~~nine~~higher-~~month~~margin ~~period~~service revenues. Nightclubs cost of goods sold during the quarter ~~decreased~~was toflat ~~11.3%~~at ~~from~~ 11.65%, ~~while~~compared ~~Bombshells cost of goods sold decreased~~ to ~~23.7%~~prior ~~from 24.1%. For the nine-month period~~year, ~~Nightclubs cost of goods sold decreased to 11.4% from 11.7%,~~ while Bombshells cost of goods sold slightly decreased to 23.57% from 23.89%.

~~Cost~~Salaries ofand ~~goods~~wages. ~~sold~~Salaries and wages increased by ~~segment~~$0.9 ismillion, asor ~~follows~~4.3%, ~~(in~~for ~~thousands):~~the quarter mainly due to last year's club acquisitions. As a percent of total revenues, salaries and wages increased to 30.3% from 28.8%. Nightclubs increased to 23.7% from 22.6%, Bombshells increased to 34.3% from 29.3%, while corporate slightly increased to 5.3% from 5.2%.

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Nightclubs	$	7,071	$	7,315	$	20,707	$	21,512
Bombshells	2,037		3,164		6,211		9,187
Other	27		27		109		85
	$	9,135	$	10,506	$	27,027	$	30,784

Salaries and wages. Salaries and wages decreased by $76,000, or 0.4%, for the quarter and decreased by $1.3 million, or 2.1%, for the nine-month period mainly due to closed locations. As a percent of total revenues, salaries and wages increased to 29.4% from 27.6% for the quarter and increased to 29.7% from 28.5% for the nine-month period mainly due to lower sales. Nightclubs increased to 22.9% from 21.7% for the quarter and increased to 23.3% from 22.1% for the nine-month period. Bombshells increased to 33.2% from 26.7% for the quarter and increased to 32.0% from 28.9% for the nine-month period. Corporate slightly decreased to 4.7% from 4.9% for the quarter and decreased to 4.9% from 5.0% for the nine-month period.

Salaries and wages by segment are as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Nightclubs	$	14,276	$	13,653	$	42,297	$	40,486
Bombshells	2,860		3,507		8,458		11,174
Other	468		122		1,023		450
Corporate	3,312		3,710		10,193		11,189
	$	20,916	$	20,992	$	61,971	$	63,299

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Selling, general and administrative expenses. Total selling, general and administrative expenses decreased by $1.15 million, or 45.37%, for the quarter ~~and decreased by $336,000, or 0~~.~~4%,~~ ~~for the nine-month period.~~ Dollar amounts in the tables below are in thousands, except percentages.

	Three Months EndedJune 30, 2025				Three Months EndedJune 30, 2024				Better (Worse)
	Three Months EndedDecember 31, 2025				Three Months EndedDecember 31, 2024				Better (Worse)
	Amount		% of Revenues		Amount		% of Revenues		Amount		%
Taxes and permits	$	3,~~418~~593	45.81	%	$	43,~~575~~828	65.04	%	$	~~1,157~~235	256.31	%
Advertising and marketing	23,~~974~~030		4.23	%	32,~~072~~962		4.01	%	98(68)		3.(2.3)	%
Supplies and services	2,~~503~~783		3.59	%	2,~~642~~488		3.5	%	~~139~~(295)		5(11.39)	%
Insurance	52,~~389~~718		73.68	%	35,~~183~~283		47.24	%	(2,~~206)~~565		~~(69~~48.3)6	%
Legal	1,~~383~~207		1.97	%	1,~~034~~386		1.49	%	~~(349)~~179		~~(33~~12.8)9	%
Lease	1,~~607~~651		2.3	%	1,~~793~~602		2.42	%	~~186~~(49)		10(3.41)	%
Charge card fees	1,~~791~~955		2.58	%	1,~~798~~748		2.4	%	7(207)		0(11.48)	%
Utilities	1,~~320~~570		12.92	%	1,~~467~~371		1.9	%	~~147~~(199)		10(14.05)	%
Security	1,~~019~~112		1.46	%	1,~~178~~084		1.5	%	~~159~~(28)		13(2.56)	%
Stock-based compensation	392		0.6	%	~~471~~470		0.67	%	7978		16.86	%
Accounting and professional fees	1,~~259~~497		12.81	%	~~910~~1,134		1.26	%	(~~349~~363)		(3832.40)	%
Repairs and maintenance	1,~~221~~303		1.78	%	1,~~154~~203		1.57	%	(67100)		(5.8.3)	%
Other	1,~~864~~893		2.67	%	1,~~780~~648		2.3	%	(84245)		(414.79)	%
Total selling, general and administrative expenses	$	2624,~~140~~704	3634.79	%	$	2526,~~057~~207	3236.97	%	$	(1,~~083)~~503	(45.3)7	%

	Nine Months EndedJune 30, 2025				Nine Months EndedJune 30, 2024				Better (Worse)
	Amount		% of Revenues		Amount		% of Revenues		Amount		%
Taxes and permits	$	10,664	5.1	%	$	12,584	5.7	%	$	1,920	15.3	%
Advertising and marketing	8,537		4.1	%	9,539		4.3	%	1,002		10.5	%
Supplies and services	7,459		3.6	%	8,073		3.6	%	614		7.6	%
Insurance	13,495		6.5	%	9,763		4.4	%	(3,732)		(38.2)	%
Legal	4,138		2.0	%	2,883		1.3	%	(1,255)		(43.5)	%
Lease	4,746		2.3	%	5,402		2.4	%	656		12.1	%
Charge card fees	5,189		2.5	%	5,212		2.3	%	23		0.4	%
Utilities	4,199		2.0	%	4,414		2.0	%	215		4.9	%
Security	3,121		1.5	%	3,876		1.7	%	755		19.5	%
Stock-based compensation	980		0.5	%	1,412		0.6	%	432		30.6	%
Accounting and professional fees	3,570		1.7	%	3,232		1.5	%	(338)		(10.5)	%
Repairs and maintenance	3,712		1.8	%	3,367		1.5	%	(345)		(10.2)	%
Other	5,437		2.6	%	5,154		2.3	%	(283)		(5.5)	%
Total selling, general and administrative expenses	$	75,247	36.1	%	$	74,911	33.7	%	$	(336)	(0.4)	%

Supplies and services increased mainly due to the four new clubs and two Bombshells locations. Insurance expense decreased due to last year's estimated self-insurance reserve. Accounting and professional fees increased mainly due to additional audit procedures performed in relation to the delayed year-end filing.

~~Most~~Depreciation ~~of the decreases in selling, general~~ and ~~administrative~~amortization. ~~expenses~~Depreciation ~~come from closed or sold Bombshells locations~~ and ~~from~~amortization ~~lower~~increased ~~variable expenses caused~~ by ~~lower~~$618,000, ~~sales~~or 17.3%, ~~Insurance~~during ~~expense~~the ~~increased~~quarter primarily due to ~~the~~additional ~~estimated~~assets ~~self-insurance~~from ~~for~~last ~~general~~year's ~~liability~~club acquisitions and ~~liquor~~newly ~~liability.~~opened ~~Any unallocated self-insurance reserve remains in Corporate segment~~Bombshells. ~~Legal expenses increased due mainly to the increase in ongoing cases.~~

29Impairments and other charges (gains), net. Impairments and other charges (gains), net changed mainly due the current quarter impairment, the recovery in the current quarter from a previously recorded lawsuit settlement, and the sale of our Bombshells location in Austin, Texas, which was significantly impaired in a prior period, and the insurance recovery for a club razed by fire in last year's first quarter.

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Selling, general and administrative expenses by segment are as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Nightclubs	$	17,579	$	17,535	$	52,425	$	51,482
Bombshells	3,311		4,449		10,123		14,179
Other	133		174		598		540
Corporate	5,117		2,899		12,101		8,710
	$	26,140	$	25,057	$	75,247	$	74,911

Depreciation and amortization. Depreciation and amortization decreased by $9,000, or 0.2%, during the quarter and decreased by $401,000, or 3.4%, during the nine-month period primarily due to closed locations.

Depreciation and amortization expenses by segment are as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Nightclubs	$	3,311	$	2,996	$	9,440	$	8,828
Bombshells	302		615		961		1,908
Other	13		3		40		7
Corporate	266		287		796		895
	$	3,892	$	3,901	$	11,237	$	11,638

Impairment and other charges, net. Impairment and other charges, net changed mainly due to the sale during the first quarter of our Bombshells location in Austin, Texas, which was significantly impaired in a prior period; the insurance recovery received during the first and third quarters for a club razed by fire in a prior period; the decrease in impairment of assets during the current quarter and the nine-month period compared to last year; and the increase in lawsuit settlements during the current third quarter. See Notes 5 and 9 to our unaudited condensed consolidated financial statements.

By segment, impairment and other charges, net are as follows (in thousands):

	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Nightclubs	$	2,338	$	7,684	$	3,486	$	15,890
Bombshells	12		10,318		(1,159)		10,322
Other	—		—		—		—
Corporate	(1)		258		(95)		240
	$	2,349	$	18,260	$	2,232	$	26,452

Income (Loss) from Operations

For the three months ended ~~June~~December 3031, 2025, and 2024, our consolidated operating margin was 1215.26% and (319.3)5%, respectively~~, while for the nine months ended June 30, 2025, and 2024, our consolidated operating margin was 14~~.8% ~~and 6.9%, respectively.~~ Segment contribution to income (loss) from operations is presented in the table below (in thousands):

Three Months EndedJune 30,

Nine Months EndedJune 30,

Three Months Ended December 31,

2025

2024

~~2025~~

~~2024~~

Nightclubs

1718,~~761~~722

1320,~~640~~853

~~53,246~~

~~45,030~~

Bombshells

87(139)

(81,~~914)~~945

~~1,831~~

~~(8,129)~~

Other

(~~441~~150)

(~~108~~103)

~~(1,292)~~

~~(581)~~

Corporate

(87,~~694~~397)

(78,~~154~~789)

~~(22,995)~~

~~(21,034)~~

811,~~713~~036

(213,~~536)~~906

~~30,790~~

~~15,286~~

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Excluding certain items, the three months ended ~~June~~December 3031, 2025, and 2024 non-GAAP operating income (loss) and non-GAAP operating margin are computed in the tables below (dollars in thousands). Refer to the discussion of Non-GAAP Financial Measures on page 3325.

	Three Months Ended June 30, 2025
	Three Months Ended December 31, 2025
	Nightclubs			Bombshells			Other			Corporate			Total
Income (loss) from operations	$	1718,~~761~~722		$	87(139)		$	(~~441~~150)		$	(87,~~694~~397)		$	811,~~713~~036
Amortization of intangibles	~~572~~613			1—			—			32			~~576~~615
Settlement of lawsuits	3,281			—			—			—			3,281
Impairment of assets	1,163			—			—			—			1,163
Settlement of lawsuits, net of recoveries	(827)			25			—			—			(802)
Stock-based compensation	—			—			—			392			392
Loss (gain) on sale of businesses and assets	191			12			—			(1)			202
Loss on sale of businesses and assets	22			4			—			7			33
Gain on insurance	(~~1,134~~177)			—			—			—			(~~1,134~~177)
Non-GAAP operating income (loss)	$	2019,~~671~~516		$	~~100~~(110)		$	(~~441~~150)		$	(86,~~300~~996)		$	12,~~030~~260
GAAP operating margin	2830.50		%	(1.07)		%	(~~220~~108.57)		%	(1210.24)		%	1215.26		%
Non-GAAP operating margin	3331.23		%	(1.23)		%	(~~220~~108.57)		%	(119.79)		%	1617.93		%

	Three Months Ended June 30, 2024
	Three Months Ended December 31, 2024
	Nightclubs			Bombshells			Other			Corporate			Total
Income (loss) from operations	$	1320,~~640~~853		$	(81,~~914)~~945		$	(~~108~~103)		$	(78,~~154~~789)		$	(213,~~536)~~906
Amortization of intangibles	~~578~~574			161			—			45			~~598~~580
Impairment of assets	7,619			10,312			—			—			17,931
Settlement of lawsuits	179			—			—			—			179
Settlement of lawsuits	141			—			—			—			141
Stock-based compensation	—			—			—			470			470
Stock-based compensation	—			—			—			471			471
Loss (gain) on sale of businesses and assets	16			(1,330)			—			(92)			(1,406)
Loss (gain) on sale of businesses and assets	(76)			6			—			258			188
Gain on insurance	(1,017)			—			—			—			(1,017)
Non-GAAP operating income (loss)	$	2120,~~902~~605		$	~~1,420~~616		$	(~~108~~103)		$	(68,~~421~~406)		$	1612,~~793~~712
GAAP operating margin	2133.78		%	~~(67~~20.8)3		%	(4959.59)		%	(912.43)		%	(319.3)5		%
Non-GAAP operating margin	3433.94		%	106.84		%	(4959.59)		%	(811.48)		%	2217.08		%

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Excluding certain items, the nine months ended June 30, 2025, and 2024 non-GAAP operating income (loss) and non-GAAP operating margin are computed in the tables below (dollars in thousands).

	Nine Months Ended June 30, 2025
	Nightclubs			Bombshells			Other			Corporate			Total
Income (loss) from operations	$	53,246		$	1,831		$	(1,292)		$	(22,995)		$	30,790
Amortization of intangibles	1,718			3			—			12			1,733
Impairment of assets	1,780			—			—			—			1,780
Settlement of lawsuits	3,557			30			—			—			3,587
Stock-based compensation	—			—			—			980			980
Loss (gain) on sale of businesses and assets	300			(1,189)			—			(95)			(984)
Gain on insurance	(2,151)			—			—			—			(2,151)
Non-GAAP operating income (loss)	$	58,450		$	675		$	(1,292)		$	(22,098)		$	35,735
GAAP operating margin	29.3		%	6.9		%	(270.3)		%	(11.0)		%	14.8		%
Non-GAAP operating margin	32.2		%	2.6		%	(270.3)		%	(10.6)		%	17.1		%

	Nine Months Ended June 30, 2024
	Nightclubs			Bombshells			Other			Corporate			Total
Income (loss) from operations	$	45,030		$	(8,129)		$	(581)		$	(21,034)		$	15,286
Amortization of intangibles	1,758			126			—			13			1,897
Impairment of assets	15,652			10,312			—			—			25,964
Settlement of lawsuits	308			—			—			—			308
Stock-based compensation	—			—			—			1,412			1,412
Loss (gain) on sale of businesses and assets	(70)			10			—			240			180
Non-GAAP operating income (loss)	$	62,678		$	2,319		$	(581)		$	(19,369)		$	45,047
GAAP operating margin	24.6		%	(21.0)		%	(116.0)		%	(9.5)		%	6.9		%
Non-GAAP operating margin	34.2		%	6.0		%	(116.0)		%	(8.7)		%	20.3		%

Other Income/Expenses

~~During~~Interest ~~the third quarter, interest~~ expense ~~decreased~~increased by $~~208~~198,000, or 4.98%, ~~and~~while interest income decreased by $1380,000, or 1044.07%., ~~During~~during the ~~nine-month~~quarter. ~~period,~~Premium ~~interest~~on ~~expense~~stock ~~decreased~~repurchase byresulted ~~$223,000,~~from orthe ~~1.8%,~~November ~~while~~2025 ~~interest~~block ~~income~~stock ~~increased by $115,000, or 35~~buyback.~~9%.~~ Gain on lease termination was from a settlement of lease obligation related to a closed Bombshells unit ~~during~~in ~~the~~a ~~quarter~~prior ~~ended December 31, 2024~~period.

Our total occupancy costs, which we define as the sum of operating lease expense and interest expense, were $5.6 ~~million and $6~~.0 million ~~for the quarters ended June 30, 2025,~~ and ~~2024, respectively, and~~ $175.08 million ~~and $17.9 million~~ for the ~~nine~~quarters ~~months~~ ended ~~June~~December 3031, 2025, and 2024, respectively. As a percentage of revenue, total occupancy costs were ~~7.9% and 7.9% during the quarters ended June 30, 2025, and 2024, respectively, and~~ 8.15% and 8.0% during the ~~nine~~quarters ~~months~~ ended ~~June~~December 3031, 2025, and 2024, respectively. ~~Although total occupancy costs decreased in dollars, percentages based on revenue increased due to lower sales.~~

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Income Taxes

	Three Months Ended June 30, 2025				Three Months Ended June 30, 2024
	Amount		%		Amount		%
Federal statutory income tax expense	$	1,006	21.0	%	$	(1,395)	21.0	%
State income taxes, net of federal benefit	145		3.0	%	(214)		3.2	%
Permanent differences	83		1.7	%	22		(0.3)	%
Tax credit	(509)		(10.6)	%	152		(2.3)	%
Other	8		0.2	%	9		(0.1)	%
Total income tax expense (benefit)	$	733	15.3	%	$	(1,426)	21.5	%

	Nine Months Ended June 30, 2025				Nine Months Ended June 30, 2024
	Amount		%		Amount		%
Federal statutory income tax expense	$	4,193	21.0	%	$	662	21.0	%
State income taxes, net of federal benefit	561		2.8	%	135		4.3	%
Permanent differences	210		1.1	%	100		3.2	%
Tax credit	(1,488)		(7.5)	%	(528)		(16.8)	%
Other	172		0.9	%	9		0.3	%
Total income tax expense	$	3,648	18.3	%	$	378	12.0	%

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Income taxes increased due to a higher pretax income in the current quarter and the nine-month period.

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, management uses certain non-GAAP financial measures, within the meaning of the SEC Regulation G, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with GAAP. We monitor non-GAAP financial measures because it describes the operating performance of the Company and helps management and investors gauge our ability to generate cash flow, excluding (or including) some items that management believes are not representative of the ongoing business operations of the Company, but are included in (or excluded from) the most directly comparable measures calculated and presented in accordance with GAAP. Relative to each of the non-GAAP financial measures, we further set forth our rationale as follows:

Non-GAAP Operating Income and Non-GAAP Operating Margin. We calculate non-GAAP operating income and non-GAAP operating margin by excluding the following items from income from operations and operating margin: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, and (f) stock-based compensation. We believe that excluding these items assists investors in evaluating period-over-period changes in our operating income and operating margin without the impact of items that are not a result of our day-to-day business and operations.

Non-GAAP Net Income and Non-GAAP Net Income per Diluted Share. We calculate non-GAAP net income and non-GAAP net income per diluted share by excluding or including certain items to net income or loss attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) settlement of lawsuits, net of recoveries, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) stock-based compensation, (g) premium on stock repurchase, (h) gains or losses on lease termination, and (i) the income tax effect of the above-described adjustments. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at approximately 22.8% and 17.7% effective tax rate of the pre-tax non-GAAP income before taxes for the three months ended December 31, 2025, and 2024, respectively, and the GAAP income tax expense (benefit). We believe that excluding and including such items help management and investors better understand our operating activities.

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~~stock-based~~Adjusted ~~compensation,~~EBITDA. ~~(g)~~We ~~gains~~calculate adjusted EBITDA by excluding the following items from net income or ~~losses~~loss onattributable ~~lease~~to ~~termination,~~RCIHH ~~and~~common stockholders: (ha) ~~the~~depreciation and amortization, (b) income tax ~~effect~~expense, of(c) ~~the~~net ~~above-described~~interest ~~adjustments.~~expense, ~~Included~~(d) inimpairment ~~the~~of ~~income~~assets, ~~tax~~(e) ~~effect~~settlement of ~~the~~lawsuits, ~~above~~net ~~adjustments~~of isrecoveries, ~~the~~(f) ~~net~~gains ~~effect~~or losses on sale of ~~the~~businesses ~~non~~and assets, (g) gains or losses on insurance, (h) stock-~~GAAP~~based ~~provision~~compensation, ~~for~~(i) ~~income~~premium ~~taxes~~on stock repurchase, ~~calculated~~and at(j) 17gains or losses on lease termination.4% We believe that adjusting for such items helps management and 11investors better understand our operating activities.7% ~~effective~~Adjusted ~~tax~~EBITDA ~~rate~~provides ofa ~~the~~core ~~pre-tax~~operational ~~non-GAAP~~performance ~~income~~measurement ~~before~~that ~~taxes~~compares ~~for~~results without the ~~nine~~need ~~months~~to ~~ended~~adjust ~~June~~for 30federal, ~~2025,~~state and ~~2024~~local taxes which have considerable variation between domestic jurisdictions. The results are, ~~respectively~~therefore, ~~and~~without ~~the~~consideration ~~GAAP~~of ~~income~~financing ~~tax~~alternatives ~~expense~~of ~~(benefit)~~capital employed. We ~~believe~~use ~~that~~adjusted ~~excluding~~EBITDA ~~and~~as ~~including~~one ~~such~~guideline ~~items~~to ~~help~~assess ~~management~~our ~~and~~unleveraged ~~investors~~performance ~~better~~return ~~understand~~on our ~~operating~~investments. ~~activities~~Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.

Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income or loss attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) impairment of assets, (c) income tax expense, (d) net interest expense, (e) settlement of lawsuits, (f) gains or losses on sale of businesses and assets, (g) gains or losses on insurance, (h) stock-based compensation, and (i) gains or losses on lease termination. We believe that adjusting for such items helps management and investors better understand our operating activities. Adjusted EBITDA provides a core operational performance measurement that compares results without the need to adjust for federal, state and local taxes which have considerable variation between domestic jurisdictions. The results are, therefore, without consideration of financing alternatives of capital employed. We use adjusted EBITDA as one guideline to assess our unleveraged performance return on our investments. Adjusted EBITDA is also the target benchmark for our acquisitions of nightclubs.

We also use certain non-GAAP cash flow measures such as free cash flow. See “Liquidity and Capital Resources” section for further discussion.

The following tables present our non-GAAP performance measures for the three ~~and nine~~ months ended ~~June~~December 3031, 2025, and 2024 (in thousands, except per share, number of shares, and percentages):

	Three Months Ended June 30,				Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024		~~2025~~		~~2024~~
Reconciliation of GAAP net income (loss) to Adjusted EBITDA
Net income (loss) attributable to RCIHH common stockholders	$	(4,~~058~~734)	$	(59,~~233)~~024	$	~~16,313~~	$	~~2,767~~
Income tax expense (benefit)	733		(1,426)		3,648		378
Income tax expense	1,549		1,847
Interest expense, net	34,~~915~~251		43,~~110~~973		~~11,797~~		~~12,135~~
Depreciation and amortization	34,~~892~~187		3,~~901~~569		~~11,237~~		~~11,638~~
Impairment of assets	—1,163		~~17,931~~—		~~1,780~~		~~25,964~~
Settlement of lawsuits	3,281		141		3,587		308
Settlement of lawsuits, net of recoveries	(802)		179
Stock-based compensation	392		~~471~~470		~~980~~		~~1,412~~
Loss (gain) on sale of businesses and assets	~~202~~33		~~188~~(1,406)		~~(984)~~		~~180~~
Gain on insurance	(~~1,134~~177)		—(1,017)		~~(2,151)~~		—
Gain on lease termination	—		—		(979)		—
Premium on stock repurchase	9,885		—
Adjusted EBITDA	$	15,339	$	20,083	$	45,228	$	54,782
Gain on lease termination	—		(979)
Adjusted EBITDA	$	15,747	$	15,660


	Three Months Ended December 31,
	2025		2024
Reconciliation of GAAP net income (loss) to non-GAAP net income
Net income (loss) attributable to RCIHH common stockholders	$	(4,734)	$	9,024
Amortization of intangibles	615		580
Impairment of assets	1,163		—
Settlement of lawsuits, net of recoveries	(802)		179
Stock-based compensation	392		470
Loss (gain) on sale of businesses and assets	33		(1,406)
Gain on insurance	(177)		(1,017)
Premium on stock repurchase	9,885		—
Gain on lease termination	—		(979)
Net income tax effect	(261)		310
Non-GAAP net income	$	6,114	$	7,161

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	Three Months Ended June 30,				Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024		~~2025~~		~~2024~~
Reconciliation of GAAP net income (loss) to non-GAAP net income
Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share
Net income (loss) attributable to RCIHH common stockholders	$	4,058	$	(5,233)	$	16,313	$	2,767
Diluted shares	8,295,880		8,920,774
Amortization of intangibles	576		598		1,733		1,897
GAAP diluted earnings (loss) per share	$	(0.57)	$	1.01
Impairment of assets	—		17,931		1,780		25,964
Amortization of intangibles	0.07		0.07
Settlement of lawsuits	3,281		141		3,587		308
Impairment of assets	0.14		—
Stock-based compensation	392		471		980		1,412
Settlement of lawsuits, net of recoveries	(0.10)		0.02
Loss (gain) on sale of businesses and assets	202		188		(984)		180
Stock-based compensation	0.05		0.05
Gain on insurance	(1,134)		—		(2,151)		—
Loss (gain) on sale of businesses and assets	0.00		(0.16)
Gain on lease termination	—		—		(979)		—
Gain on insurance	(0.02)		(0.11)
Net income tax effect	(562)		(1,554)		(515)		(3,475)
Premium on stock repurchase	1.19		0.00
Non-GAAP net income	$	6,813	$	12,542	$	19,764	$	29,053
Gain on lease termination	—		(0.11)
Net income tax effect	(0.03)		0.03
Non-GAAP diluted earnings per share	$	0.74	$	0.80

	Three Months Ended June 30,				Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024		~~2025~~		~~2024~~
Reconciliation of GAAP diluted earnings (loss) per share to non-GAAP diluted earnings per share
Reconciliation of GAAP operating income to non-GAAP operating income
Diluted shares	8,793,809		9,278,921		8,859,028		9,332,249
Income from operations	$	11,036	$	13,906
GAAP diluted earnings (loss) per share	$	0.46	$	(0.56)	$	1.84	$	0.30
Amortization of intangibles	615		580
Amortization of intangibles	0.07		0.06		0.20		0.20
Impairment of assets	1,163		—
Impairment of assets	0.00		1.93		0.20		2.78
Settlement of lawsuits, net of recoveries	(802)		179
Settlement of lawsuits	0.37		0.02		0.40		0.03
Stock-based compensation	392		470
Stock-based compensation	0.04		0.05		0.11		0.15
Loss (gain) on sale of businesses and assets	33		(1,406)
Loss (gain) on sale of businesses and assets	0.02		0.02		(0.11)		0.02
Gain on insurance	(177)		(1,017)
Gain on insurance	(0.13)		0.00		(0.24)		0.00
Non-GAAP operating income	$	12,260	$	12,712
Gain on lease termination	0.00		0.00		(0.11)		0.00
Net income tax effect	(0.06)		(0.17)		(0.06)		(0.37)
Non-GAAP diluted earnings per share	$	0.77	$	1.35	$	2.23	$	3.11

	Three Months Ended June 30,						Nine Months Ended June 30,
	Three Months Ended December 31,
	2025			2024			~~2025~~		~~2024~~
Reconciliation of GAAP operating income (loss) to non-GAAP operating income
Reconciliation of GAAP operating margin to non-GAAP operating margin
Income (loss) from operations	$	8,713		$	(2,536)		$	30,790	$	15,286
Income from operations	15.6		%	19.5		%
Amortization of intangibles	~~576~~0.9		%	~~598~~0.8		%	~~1,733~~		~~1,897~~
Impairment of assets	—1.6		%	~~17,931~~0.0		%	~~1,780~~		~~25,964~~
Settlement of lawsuits	3,281			141			3,587		308
Settlement of lawsuits, net of recoveries	(1.1)		%	0.3		%
Stock-based compensation	~~392~~0.6		%	~~471~~0.7		%	~~980~~		~~1,412~~
Loss (gain) on sale of businesses and assets	~~202~~0.0		%	~~188~~(2.0)		%	~~(984)~~		~~180~~
Gain on insurance	(~~1,134~~0.2)		%	—(1.4)		%	~~(2,151)~~		—
Non-GAAP operating income	$17.3	~~12,030~~	%	$17.8	~~16,793~~	%	$	~~35,735~~	$	~~45,047~~

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	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Reconciliation of GAAP operating margin to non-GAAP operating margin
Income (loss) from operations	12.2	%	(3.3)	%	14.8	%	6.9	%
Amortization of intangibles	0.8	%	0.8	%	0.8	%	0.9	%
Impairment of assets	0.0	%	23.5	%	0.9	%	11.7	%
Settlement of lawsuits	4.6	%	0.2	%	1.7	%	0.1	%
Stock-based compensation	0.6	%	0.6	%	0.5	%	0.6	%
Loss (gain) on sale of businesses and assets	0.3	%	0.2	%	(0.5)	%	0.1	%
Gain on insurance	(1.6)	%	0.0	%	(1.0)	%	0.0	%
Non-GAAP operating income	16.9	%	22.0	%	17.1	%	20.3	%

* Per share amounts and percentages may not foot due to rounding.

** The adjustments to reconcile net income attributable to RCIHH common stockholders to non-GAAP net income exclude the impact of adjustments related to noncontrolling interests, which is immaterial.

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Liquidity and Capital Resources

At ~~June~~December 3031, 2025, our cash and cash equivalents were approximately $2928.36 million compared to $3233.47 million at September 30, ~~2024~~2025. Because of the large volume of cash we handle, we have very stringent cash controls. As of ~~June~~December 3031, 2025, we had negative working capital of $326.73 million compared to a negative working capital of $~~793,000~~12.1 million as of September 30, ~~2024~~2025. We believe that we can borrow capital if needed but currently we do not have unused credit facilities so there can be no guarantee that additional liquidity will be readily available or available on favorable terms.

We have not recently raised capital through the issuance of equity securities although we have used equity recently in our acquisitions. Instead, we use debt financing to lower our overall cost of capital and increase our return on stockholders’ equity. We have a history of borrowing funds in private transactions and from sellers in acquisition transactions and have secured traditional bank financing on our new development projects and refinancing of our existing notes payable. There can be no assurance though that any of these financing options would be presently available on favorable terms, if at all. We also have historically utilized these cash flows to invest in property and equipment, adult nightclubs, and restaurants/sports bars.

We expect to generate adequate cash flows from operations for the next 12 months from the issuance of this report.

The following table presents a summary of our cash flows from operating, investing, and financing activities (in thousands):

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024
Operating activities	$	357,~~684~~816	$	4013,~~233~~344
Investing activities	(221,~~087~~543)		(174,~~090~~404)
Financing activities	(1611,~~350~~351)		(96,~~219~~572)
Net increase (decrease) in cash and cash equivalents	$	(25,~~753~~078)	$	132,~~924~~368

Cash Flows from Operating Activities

Following are our summarized cash flows from operating activities (in thousands):

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024
Net income	$	16(4,~~319~~649)	$	29,~~773~~065
Depreciation and amortization	114,~~237~~187		113,~~638~~569
Deferred income tax benefit	(2,200)		(6,419)
Impairment of assets	1,163		—
Impairment of assets	1,780		25,964
Deferred income tax benefit	—		(389)
Stock-based compensation	~~980~~392		~~1,412~~470
Net change in operating assets and liabilities	8,224		1,947
Premium on stock repurchase	9,885		—
Other	(656)		2,918
Net change in operating assets and liabilities	(3,997)		2,521
Net cash provided by operating activities	$	35,684	$	40,233
Other	835		(1,892)
Net cash provided by operating activities	$	7,816	$	13,344

~~Although~~Net ~~income~~cash ~~from~~provided ~~operations~~by inoperating ~~the~~activities ~~current nine-month period~~ was ~~higher~~lower ~~than~~in the ~~comparable~~current ~~last~~quarter ~~year, net cash provided~~ by ~~operating~~41.4% ~~activities~~primarily ~~during the nine-month period decreased~~ due to the lower ~~cash~~income ~~generated~~ from ~~revenues~~operations, ~~and~~ higher ~~payments of~~ income taxes paid, ~~partially~~and ~~offset~~higher ~~by lower~~ payments ~~of operating liabilities and business interruption insurance received as compared~~ to ~~last~~settle ~~year~~lawsuits.

In view of self-insuring most of our general liability and liquor insurance programs, we expect our payments for expected losses for those programs to be volatile in the near future until we have fully established a trust to fund our estimated self-insurance liability.28

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Cash Flows from Investing Activities

Following are our cash flows from investing activities (in thousands):

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024
Payments for property and equipment and intangible assets	$	(122,~~289~~331)	$	(195,~~219~~754)
Acquisition of businesses	(13,000)		—
Proceeds from sale of businesses and assets	600		129
Proceeds from sale of businesses and assets	1,086		1,950
Proceeds from insurance	138		1,150
Proceeds from insurance	1,893		—
Proceeds from notes receivable	50		71
Proceeds from notes receivable	223		179
Net cash used in investing activities	$	(1,543)	$	(4,404)
Net cash used in investing activities	$	(22,087)	$	(17,090)

OnFollowing ~~January~~is ~~21,~~a ~~2025,~~breakdown ~~the Company completed the acquisition~~ of aour ~~club~~payments ~~in the Detroit, Michigan, market~~ for aproperty ~~total~~and ~~agreed~~equipment ~~acquisition price of $11.0 million, consisting of $3.0 million in cash~~ and ~~$5.0~~intangible ~~million~~assets infor athe ~~seller-financed~~three ~~8.0%~~months ~~promissory~~ended ~~note~~December ~~for~~31, ~~the club~~2025, and ~~$3.0~~2024 ~~million~~ (in ~~cash for the associated real estate. See Note 13 to our unaudited condensed consolidated financial statements.~~thousands):

On April 7, 2025, the Company completed the acquisition of a club in West Columbia, South Carolina, for a total purchase price of $8.0 million, consisting of $3.75 million cash and $2.5 million in a seller-financed 7% promissory note for the club, and $1.75 million cash for the associated real estate. On June 13, 2025, the Company completed the acquisition of a club in Allentown, Pennsylvania, for a total purchase price of $2.0 million, consisting of $1.5 million cash and $500,000 in seller-financed 7% promissory note. See Note 13 to our unaudited condensed consolidated financial statements.


	Three Months Ended December 31,
	2025		2024
New facilities, equipment, and intangible assets	$	1,195	$	4,478
Maintenance capital expenditures	1,136		1,276
Total capital expenditures	$	2,331	$	5,754

~~Following~~The iscapital aexpenditures ~~breakdown~~during ofthe ~~our~~quarter ~~payments~~ended ~~for~~December ~~property~~31, 2025, and ~~equipment~~2024 ~~and~~were ~~intangible~~composed mostly of construction projects in progress. Maintenance capital expenditures refer mainly to capitalized replacement of productive assets ~~for~~in already existing locations. Variances in capital expenditures are primarily due to the ~~nine~~number ~~months~~and ~~ended~~timing ~~June~~of 30new, ~~2025~~remodeled, ~~and~~or ~~2024~~reconcepted ~~(in~~locations ~~thousands):~~under construction.

	Nine Months Ended June 30,
	2025		2024
New facilities, equipment, and intangible assets	$	8,948	$	14,239
Maintenance capital expenditures	3,341		4,980
Total capital expenditures	$	12,289	$	19,219

The capital expenditures during the nine months ended June 30, 2025, and 2024 were composed mostly of construction projects in-progress. Maintenance capital expenditures refer mainly to capitalized replacement of productive assets in already existing locations. Variances in capital expenditures are primarily due to the number and timing of new, remodeled, or reconcepted locations under construction.

Cash Flows from Financing Activities

Following are our cash flows from financing activities (in thousands):

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025		2024
Proceeds from debt obligations	$	92,~~175~~253	$	222,~~657~~963
Payments on debt obligations	(144,~~431~~952)		(175,~~137~~694)
Purchase of treasury stock	(9,158)		(12,775)
Payment of loan origination costs	(40)		—
Payment of dividends	(1,856)		(1,674)
Purchase of treasury stock	(9,831)		(3,218)
Payment of loan origination costs	(80)		(290)
Payment of dividends	(545)		(623)
Net cash used in financing activities	$	(16,350)	$	(9,219)
Investment from noncontrolling partner	1,800		—
Payments to noncontrolling interests	(36)		—
Net cash used in financing activities	$	(11,351)	$	(6,572)

We purchased ~~198~~74,~~200~~061 shares of our common stock at an average price of $4624.2172 during the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2025, while we purchased ~~267~~66,~~849~~000 shares of our common stock at an average price of $4748.6976 during the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2024. As of ~~June~~December 3031, 2025, we have approximately $117.93 million authorization remaining to purchase additional shares. On April 2, 2026, the board of directors approved a $20.0 million increase in the Company's share repurchase program. Outside of our open-market stock repurchase program, on November 21, 2025, the Company repurchased in a privately negotiated transaction 821,000 shares of its own common stock from a single stockholder for $30.0 million, paid $8.0 million in cash and $22.0 million under a two-year 12% unsecured promissory note.

38We paid $0.07 per share in quarterly dividends during the quarters ended December 31, 2025, and 2024.

We have paid all our debts on time and have not defaulted nor requested forbearance on any of our debts during the quarters ended December 31, 2025, and 2024.

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We paid $0.07 per share in quarterly dividends during the three quarters ended June 30, 2025, while we paid $0.06 per share during the three quarters ended June 30, 2024.

See Note 6 to our unaudited condensed consolidated financial statements for future maturities of our debt obligations as of June 30, 2025.

We have paid all our debts on time and have not defaulted nor requested forbearance on any of our debts during the nine months ended June 30, 2025, and 2024.

Management also uses certain non-GAAP cash flow measures such as free cash flow. We calculate free cash flow as net cash provided by operating activities less maintenance capital expenditures. We use free cash flow as the baseline for the implementation of our capital allocation strategy.

Below is a table reconciling free cash flow to its most directly comparable GAAP measure (in thousands):

	Nine Months Ended June 30,
	Three Months Ended December 31,
	2025			2024
Net cash provided by operating activities	$	357,~~684~~816		$	4013,~~233~~344
Less: Maintenance capital expenditures	31,~~341~~136			41,~~980~~276
Free cash flow	$	326,~~343~~680		$	3512,~~253~~068
As a % of revenue	9.4		%	16.9		%

Our free cash flow for the ~~nine-month~~quarter ~~period~~ decreased by 844.36% compared to the comparable prior-year period primarily due to the lower ~~conversion~~income offrom ~~revenues earned to cash~~operations, ~~partially~~higher ~~offset~~income bytaxes ~~lower~~paid, ~~payments of operating liabilities~~ and ~~maintenance~~higher ~~capital~~payments ~~expenditures in the current nine-month period as compared~~ to ~~last~~settle ~~year~~lawsuits.

We do not include capital expenditures related to new facilities construction, equipment and intangible assets as a reduction from net cash flow from operating activities to arrive at free cash flow. This is because, based on our capital allocation strategy, acquisitions and development of our own clubs and restaurants are our primary uses of free cash flow.

Other than the impact of uncertainties caused by near-term macro environment, including commodity and labor inflation, and our contractual debt and lease obligations, we are not aware of any event or trend that would adversely impact our liquidity. In our opinion, working capital is not a true indicator of our financial status. Typically, businesses in our industry carry current liabilities in excess of current assets because businesses in our industry receive substantially immediate payment for sales, with nominal receivables, while inventories and other current liabilities normally carry longer payment terms. Vendors and purveyors often remain flexible with payment terms, providing businesses in our industry with opportunities to adjust to short-term business downturns. We consider the primary indicators of financial status to be the long-term trend of revenue growth, the mix of sales revenues, overall cash flow, profitability from operations and the level of long-term debt. We continue to monitor the macro environment and will adjust our overall approach to capital allocation as events and trends unfold.

39The following table presents a summary of such indicators for the quarters ended December 31 (in thousands, except percentages):

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	2025		Increase (Decrease)		2024		Increase (Decrease)		2023
Sales of alcoholic beverages	$	30,139	(6.4)	%	$	32,188	(3.4)	%	$	33,316
Sales of food and merchandise	9,966		(1.4)	%	10,106		(6.4)	%	10,802
Service revenues	25,811		6.7	%	24,181		(3.7)	%	25,119
Other	4,912		(1.9)	%	5,008		7.2	%	4,670
Total revenues	$	70,828	(0.9)	%	$	71,483	(3.3)	%	$	73,907
Net income (loss) attributable to RCIHH common stockholders	$	(4,734)	(152.5)	%	$	9,024	24.9	%	$	7,226
Net cash provided by operating activities	$	7,816	(41.4)	%	$	13,344	(2.1)	%	$	13,633
Adjusted EBITDA*	$	15,747	0.6	%	$	15,660	(10.3)	%	$	17,467
Free cash flow*	$	6,680	(44.6)	%	$	12,068	(4.6)	%	$	12,650
Debt (end of period)	$	256,428	8.9	%	$	235,529	0.6	%	$	234,113

The following table presents a summary of such indicators for the nine months ended June 30 (in thousands, except percentages):

	2025		Increase (Decrease)		2024		Increase (Decrease)		2023
Sales of alcoholic beverages	$	91,834	(8.8)	%	$	100,665	7.2	%	$	93,937
Sales of food and merchandise	29,554		(12.1)	%	33,606		2.6	%	32,757
Service revenues	72,262		(2.3)	%	73,951		(5.1)	%	77,916
Other	14,854		5.0	%	14,148		1.6	%	13,930
Total revenues	$	208,504	(6.2)	%	$	222,370	1.8	%	$	218,540
Net income attributable to RCIHH common stockholders	$	16,313	489.6	%	$	2,767	(89.8)	%	$	27,055
Net cash provided by operating activities	$	35,684	(11.3)	%	$	40,233	(14.4)	%	$	47,004
Adjusted EBITDA*	$	45,228	(17.4)	%	$	54,782	(15.5)	%	$	64,832
Free cash flow*	$	32,343	(8.3)	%	$	35,253	(16.2)	%	$	42,055
Debt (end of period)	$	241,261	(1.7)	%	$	245,400	0.6	%	$	243,823

*See definition and calculation of Adjusted EBITDA and Free Cash Flow above in the Non-GAAP Financial Measures subsection of Results of Operations.

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Impact of Inflation

To the extent permitted by competition, we have managed to recover increased costs through price increases and may continue to do so. However, there can be no assurance that we will be able to do so in the future.

Seasonality

Our nightclub operations are affected by seasonal factors. Historically, we have experienced reduced revenues from April through September (our fiscal third and fourth quarters) with the strongest operating results occurring during October through March (our fiscal first and second quarters). Our revenues in certain markets are also affected by sporting events that cause unusual changes in sales from year to year.

Capital Allocation Strategy

Our ~~capital~~overall ~~allocation~~objective ~~strategy~~is ~~provides~~to uscreate ~~with~~value ~~disciplined~~for ~~guidelines on how we should use~~ our ~~free~~shareholders ~~cash~~by ~~flows;~~developing ~~provided~~and ~~however,~~operating ~~that~~profitable webusinesses ~~may~~in ~~deviate~~the ~~from~~hospitality ~~this~~and ~~strategy~~related ~~if other strategic rationale warrants~~space. We ~~calculate~~strive ~~free~~to ~~cash~~achieve ~~flow~~that asby ~~net~~providing ~~cash~~an ~~flows~~attractive ~~from~~price-value ~~operating~~entertainment, ~~activities~~dining ~~minus~~experience, ~~maintenance~~and ~~capital expenditures. Using the after~~top-~~tax~~notch ~~yield~~service; ofby ~~buying~~attracting ~~our~~and ~~own~~retaining ~~stock~~quality aspersonnel; ~~baseline,~~and ~~management~~by ~~believes~~focusing ~~that~~on weunit-level ~~are~~operating ~~able to make better investment decisions~~performance.

~~Based~~In onDecember 2024, we launched our ~~current~~five-year Back-to-Basics strategy where we focus on improving performance of existing clubs and Bombshells units to fuel our capital allocation ~~strategy~~priorities. For the allocation of our free cash flow, we currently divide it among club acquisitions (investing), share buybacks (financing), and dividends (financing). Our financial targets by fiscal 2029 are to achieve:

•WeTotal ~~consider~~revenues ~~acquiring or developing our own clubs or restaurants that we believe have the potential to provide a minimum cash on cash return~~ of ~~25%-33%,~~$400 ~~absent an otherwise strategic rationale;~~million

•WeFree ~~consider~~cash ~~disposing~~flow of ~~underperforming~~$75 ~~units to free up capital for more productive use;~~million

•WeShares ~~consider~~outstanding ~~buying~~of ~~back~~7.5 ~~our own stock if the after-tax yield on free cash flow is above 10%;~~million

•We consider paying down our most expensive debt if it makes sense on a tax adjusted basis, or there is an otherwise strategic rationale.

Growth Strategy

We believe that we can continue to grow organically and through careful entry into markets with high growth potential. Our growth strategy includes acquiring existing units, opening new units after market analysis, and developing new club concepts that are consistent with our management and marketing skills as our capital and manpower allow.

As of ~~June~~December 3031, 2025, ~~nine~~ten of the ~~ten~~eleven existing Bombshells restaurants were located in Texas, with one location in Denver, Colorado. ~~Our~~As ~~growth~~part ~~strategy~~of ismanaging ~~to diversify~~ our ~~operations~~free ~~with~~cash ~~these~~flow ~~units~~to ~~which~~fuel ~~do not require SOB licenses~~growth, ~~which~~we are ~~sometimes~~evaluating ~~difficult~~our toBombshells ~~obtain.~~program ~~While~~in weview ~~are~~of ~~searching~~recent ~~for~~performance ~~adult~~trends. ~~nightclubs to acquire~~Currently, we ~~are~~have ~~able~~one toBombshells ~~also~~location ~~search~~that ~~for~~is ~~restaurant/sports~~under ~~bar~~construction ~~locations~~and ~~that~~do ~~are~~not ~~consistent~~plan ~~with~~to ~~our~~add ~~income~~anymore ~~targets~~locations after that.

We continue to evaluate opportunities to acquire new nightclubs and anticipate acquiring new locations that fit our business model as we have done in the past. The acquisition of additional clubs may require us to take on additional debt or issue our common stock, or both. There can be no assurance that we will be able to obtain additional financing on reasonable terms in the future, if at all, should the need arise. An inability to obtain such additional financing could have an adverse effect on our growth strategy.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of ~~June~~December 3031, 2025, there were no material changes to the information provided in Item 7A of the Company’s Annual Report on Form 10-K for fiscal year ended September 30, ~~2024~~2025.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that the information required to be filed or submitted with the SEC under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management of the company with the participation of its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q for the quarter ended ~~June~~December 3031, 2025, an evaluation was performed under the supervision and with the participation of management, including the interim chief executive officer and interim chief financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on their evaluation, they have concluded that our disclosure controls and procedures were not effective as of ~~June~~December 3031, 2025. This determination is based on the previously reported material weaknesses management identified in our internal control over financial reporting, as described below. We are in the process of remediating the material weaknesses in our internal control, as described below. We believe the completion of these processes should remedy our disclosure controls and procedures. We will continue to monitor these issues.

Previously Reported Material Weakness in Internal Control Over Financial Reporting

AsIn ~~previously reported in~~ our Annual Report for the year ended September 30, ~~2024~~2025, filed with the SEC on ~~December~~March 1619, ~~2024~~2026, management ~~evaluated~~concluded ~~the~~that ~~effectiveness of~~ our internal control over financial reporting was not effective as of September 30, ~~2024~~2025. In the evaluation, management identified material weaknesses in internal control related to (1) ineffective design and operation of controls over certain information technology general controls ("ITGCs"), including program change management, ~~user access,~~ and vendor management controls; (2) ineffective design and operation of controls, which include management review controls, over the accounting for business combinations and contingent liabilities; and (3) ineffective design and operation of controls, which include management review controls, over the ~~Company's~~impairment assessments ofover ~~potential~~long-lived ~~impairment.~~assets, ~~Our~~definite- ~~business~~and ~~process~~indefinite-lived ~~controls~~intangible ~~(automated~~assets, and ~~manual) that are dependent on the affected ITGCs were also deemed ineffective as those controls could have been adversely impacted~~goodwill. WeThe ~~believe~~identified ~~that~~ITGC ~~these~~ control deficiencies ~~were~~resulted afrom ~~result~~two offactors. ~~inadequate~~First, ITthe ~~controls~~Company's ~~over~~procedures ~~the~~governing ~~review~~program ofchange ~~user~~management ~~access~~were ~~and~~insufficiently ~~imprecise~~documented, ~~documentation~~resulting ofin ~~procedures~~controls ~~related~~that tocould ~~program~~not ~~change~~be ~~management~~consistently evidenced. ~~Additionally~~Second, wethe ~~rely~~Company ~~upon~~relies aon ~~variety~~third-party ~~of outsourced~~ IT service providers for certain key ~~elements~~components of the technology infrastructure ~~impacting~~supporting ~~our~~its financial reporting ~~process~~processes. ~~Certain~~Specifically, ~~outsourced~~certain IT service providers ~~could~~supporting ~~not~~applications within the Company's revenue cycle were unable to provide System and Organization Controls ("SOC") reports, ~~for~~thus ~~periods that closely align with our fiscal year end. Given that~~ management ~~did~~was ~~not~~unable to effectively ~~assess~~evaluate the design and ~~operation~~operating effectiveness of ~~these~~the ~~outsourced IT service providers’~~ internal controls, ~~some~~maintained ofby ~~our~~these ~~controls~~service ~~over~~providers. ITConsequently, ~~systems~~certain ~~and~~ business ~~processes~~process controls were ~~also~~determined ~~deemed~~to be ineffective, ~~but~~limited ~~only~~ to the extent ~~that~~those wecontrols rely upon information ~~that~~processed ~~was~~within, or subject to, the ~~outsourced~~control ITenvironments ~~service~~of ~~providers’~~the ~~control~~applicable ~~environment~~third-party service providers. These deficiencies may have an impact on our financial statements, account balances, and disclosures. Based on our evaluation, our management, with the participation of our chief executive officer and chief financial officer, concluded that our internal control over financial reporting was not effective as of September 30, ~~2024~~2025.

Remediation Efforts to Address Material Weakness

Review of Accounting for Business Combinations and Contingent Liabilities

~~Additional~~Management has re-evaluated the design of its controls ~~are~~over ~~being~~the ~~evaluated~~accounting tofor ~~both~~business ~~increase~~combinations ~~precision~~and ofwill ~~management’s~~continue ~~review~~to ofimplement ~~each~~enhancements ~~component~~to ofimprove ~~business~~the ~~combinations~~precision, documentation, and iftimeliness ~~necessary,~~of ~~retain~~review procedures. Management has re-evaluated the ~~services~~design of aits ~~third-party~~controls ~~consultant~~over tothe ~~assist~~accounting infor legal contingencies and will implement enhancements to improve the ~~valuation~~clarity and ~~accounting~~quality ~~for~~of ~~intangible~~documentation ~~assets~~supporting ~~acquired~~review inof alegal ~~business~~contingencies, ~~combination~~including related legal fees and unasserted claims.

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Review of ~~Accounting~~Impairment ~~for~~Assessments ~~Impairment~~over ofLong-lived ~~Goodwill~~Assets, Definite- and Indefinite-lived Intangible Assets, and Goodwill

AsGiven ~~most~~the inherently subjective nature of the assumptions ~~used~~underlying in the valuation models ~~employed~~used in impairment analyses ~~are subjective in nature~~, management will ~~employ~~re-evaluate ~~additional controls to validate these assumptions, including~~ the ~~engagement~~review ofprocedures ~~a third-party consultant~~ to ~~assist~~strengthen ~~developing~~the ~~valuation~~validation ~~models~~ and ~~establishing~~documentation ~~sound~~of ~~and~~such ~~reasonable~~ assumptions.

Information Technology General Controls

As a result of the material weakness, ~~we have initiated~~ and ~~will~~its ~~continue~~ongoing ~~to implement~~ remediation ~~measures to ensure that control deficiencies contributing to the material weakness are remediated~~efforts, ~~such~~management ~~that~~is ~~these controls are designed, implemented, and operating effectively. The remediation actions include: (i) strengthening and~~ enhancing ~~the~~change ~~review~~monitoring ~~and documentation~~ procedures ~~in our controls over user access review; (ii) defining~~ and ~~communicating~~evaluating ~~clear~~alternative ~~and concise program change management policy and~~ procedures; ~~(iii)~~where ~~enhancing~~SOC ~~the~~reports ~~reporting~~are ~~requirements~~not ~~of accounting system audit logs; (iv) continue to evaluate options to mitigate risks associated with the lack of~~ available ~~SOC~~for ~~reports~~certain ~~from~~ third-party ~~service~~application ~~providers; and (v) enhanced quarterly reporting on the remediation measures to the Audit Committee of the board of directors~~vendors.

Further, management is committed to enhanced quarterly reporting on the remediation measures to the Audit Committee of the board of directors.

It is our belief that these added controls will effectively remediate the existing material weaknesses.

The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. ~~The~~We ~~intention~~expect ofthat ~~management~~the isremediation toof ~~remediate~~ these material weaknesses will be completed prior to the end of fiscal ~~2025, but there are certain initiatives that are currently unfeasible, such as the lack of available SOC reports from third-party service providers, as mentioned above~~2026.

Changes in Internal Control Over Financial Reporting

Other than as described above, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended ~~June~~December 3031, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

See the “Legal Matters” section within Note 9 of the unaudited condensed consolidated financial statements within this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.

Item 1A. Risk Factors.

There were no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2024~~2025, except for such risks and uncertainties that may result from the additional disclosures in the “Legal Matters” ~~and~~section ~~“Self-insurance Liability” sections~~ within Note 9 of the unaudited condensed consolidated financial statements within this Quarterly Report on Form 10-Q, which information is incorporated herein by reference. The risks described in the Annual Report on Form 10-K and in this Form 10-Q are not the only risks the Company faces. Additional risks and uncertainties not currently known to the Company, or that the Company deems to be immaterial, also may have a material adverse impact on the Company’s business, financial condition or results of operations.

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

Our share repurchase activity during the three months ended ~~June~~December 3031, 2025, was as follows:

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)(1)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet be Purchased Under the Plans or Programs
April 1 - 30, 2025	25,125	$	39.17	25,125	$	13,936,737
October 1-31, 2025	—	$	—	—	$	9,174,873
May 1 - 31, 2025	25,200	$	41.71	25,200	$	12,885,669
November 1-30, 2025(3)	852,061	$	36.09	31,061	$	8,421,628
June 1 - 30, 2025	25,000	$	40.34	25,000	$	11,877,107
December 1-31, 2025	43,000	$	25.05	43,000	$	7,344,376
	75,325	$	40.41	75,325
	895,061	$	35.56	74,061

(1) Prices include any commissions and transaction costs, but exclude a 1% excise tax.

(2) All shares were purchased pursuant to the repurchase plans approved by the board of directors as disclosed in our most recent Annual Report on Form 10-K.

44(3) Outside of our open-market stock repurchase program, on November 21, 2025, the Company repurchased in a privately negotiated transaction 821,000 shares of its own common stock from a single stockholder for $30.0 million, paid $8.0 million in cash and $22.0 million under a two-year 12% unsecured promissory note.

On April 2, 2026, the board of directors approved a $20.0 million increase in the Company's share repurchase program.

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Item 6. Exhibits.

Exhibit No.						Description
31.1						Certification of Chief Executive Officer of RCI Hospitality Holdings, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer of RCI Hospitality Holdings, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification of Chief Executive Officer and Chief Financial Officer of RCI Hospitality Holdings, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.
101						The following financial information from RCI Hospitality Holdings, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~June~~December 3031, 2025, formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Statements of Cash Flows, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Changes in Equity, (iv) the Condensed Consolidated Balance Sheets, and (v) Notes to the Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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 hereunto duly authorized.

	RCI HOSPITALITY HOLDINGS, INC.
Date: August 11, 2025	By:	/s/ Eric S. Langan
Date: May 7, 2026	By:	/s/ Travis Reese
		Eric S. Langan
		Travis Reese
		Chief Executive Officer and President
		Interim Chief Executive Officer and President
Date: August 11, 2025	By:	/s/ Bradley Chhay
Date: May 7, 2026	By:	/s/ Albert Molina
		Bradley Chhay
		Albert Molina
		Chief Financial Officer and Principal Accounting Officer
		Interim Chief Financial Officer and Principal Accounting Officer

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