false 2024 FY 0000935419 P2D 252 iso4217:USD xbrli:shares iso4217:USD xbrli:shares rick:reportingUnit rick:club rick:restaurant rick:ventureProject xbrli:pure rick:location rick:note rick:investor rick:employees rick:monthly_installment rick:property rick:subsidiary rick:loan rick:plaintiff rick:claim rick:individual rick:executive rick:member rick:asset_purchase_agreement rick:stock_purchase_agreement rick:entity rick:state rick:building rick:seller rick:bombshell 0000935419 2023-10-01 2024-09-30 0000935419 2024-03-30 0000935419 2024-12-13 0000935419 2022-10-01 2023-09-30 0000935419 2021-10-01 2022-09-30 0000935419 2024-09-30 0000935419 2023-09-30 0000935419 rick:AlcoholicBeveragesMember 2023-10-01 2024-09-30 0000935419 rick:AlcoholicBeveragesMember 2022-10-01 2023-09-30 0000935419 rick:AlcoholicBeveragesMember 2021-10-01 2022-09-30 0000935419 rick:FoodAndMerchandiseMember 2023-10-01 2024-09-30 0000935419 rick:FoodAndMerchandiseMember 2022-10-01 2023-09-30 0000935419 rick:FoodAndMerchandiseMember 2021-10-01 2022-09-30 0000935419 us-gaap:ServiceMember 2023-10-01 2024-09-30 0000935419 us-gaap:ServiceMember 2022-10-01 2023-09-30 0000935419 us-gaap:ServiceMember 2021-10-01 2022-09-30 0000935419 rick:OtherMember 2023-10-01 2024-09-30 0000935419 rick:OtherMember 2022-10-01 2023-09-30 0000935419 rick:OtherMember 2021-10-01 2022-09-30 0000935419 rick:ServiceAndOtherMember 2023-10-01 2024-09-30 0000935419 rick:ServiceAndOtherMember 2022-10-01 2023-09-30 0000935419 rick:ServiceAndOtherMember 2021-10-01 2022-09-30 0000935419 us-gaap:CommonStockMember 2021-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0000935419 us-gaap:RetainedEarningsMember 2021-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2021-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2021-09-30 0000935419 2021-09-30 0000935419 us-gaap:CommonStockMember 2021-10-01 2022-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2021-10-01 2022-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2021-10-01 2022-09-30 0000935419 us-gaap:RetainedEarningsMember 2021-10-01 2022-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2021-10-01 2022-09-30 0000935419 us-gaap:CommonStockMember 2022-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2022-09-30 0000935419 us-gaap:RetainedEarningsMember 2022-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2022-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2022-09-30 0000935419 2022-09-30 0000935419 us-gaap:CommonStockMember 2022-10-01 2023-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2022-10-01 2023-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2022-10-01 2023-09-30 0000935419 us-gaap:RetainedEarningsMember 2022-10-01 2023-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2022-10-01 2023-09-30 0000935419 us-gaap:CommonStockMember 2023-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2023-09-30 0000935419 us-gaap:RetainedEarningsMember 2023-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2023-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2023-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2023-10-01 2024-09-30 0000935419 us-gaap:CommonStockMember 2023-10-01 2024-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2023-10-01 2024-09-30 0000935419 us-gaap:RetainedEarningsMember 2023-10-01 2024-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2023-10-01 2024-09-30 0000935419 us-gaap:CommonStockMember 2024-09-30 0000935419 us-gaap:AdditionalPaidInCapitalMember 2024-09-30 0000935419 us-gaap:RetainedEarningsMember 2024-09-30 0000935419 us-gaap:TreasuryStockCommonMember 2024-09-30 0000935419 us-gaap:NoncontrollingInterestMember 2024-09-30 0000935419 srt:MinimumMember 2023-10-01 2024-09-30 0000935419 srt:MaximumMember 2023-10-01 2024-09-30 0000935419 us-gaap:AccountsReceivableMember 2024-09-30 0000935419 us-gaap:AccountsReceivableMember 2023-09-30 0000935419 us-gaap:NotesReceivableMember 2024-09-30 0000935419 us-gaap:NotesReceivableMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:BuildingMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:BuildingMember 2024-09-30 0000935419 srt:MinimumMember rick:FurnitureAndEquipmentMember 2024-09-30 0000935419 srt:MaximumMember rick:FurnitureAndEquipmentMember 2024-09-30 0000935419 rick:SOBLicensesMember 2023-10-01 2024-09-30 0000935419 rick:SOBLicensesMember 2022-10-01 2023-09-30 0000935419 rick:SOBLicensesMember 2021-10-01 2022-09-30 0000935419 us-gaap:ComputerSoftwareIntangibleAssetMember 2022-10-01 2023-09-30 0000935419 us-gaap:FairValueInputsLevel1Member 2024-09-30 0000935419 us-gaap:FairValueInputsLevel2Member 2024-09-30 0000935419 us-gaap:FairValueInputsLevel3Member 2024-09-30 0000935419 us-gaap:FairValueInputsLevel1Member 2023-09-30 0000935419 us-gaap:FairValueInputsLevel2Member 2023-09-30 0000935419 us-gaap:FairValueInputsLevel3Member 2023-09-30 0000935419 us-gaap:GoodwillMember 2023-10-01 2024-09-30 0000935419 us-gaap:GoodwillMember 2022-10-01 2023-09-30 0000935419 us-gaap:GoodwillMember 2021-10-01 2022-09-30 0000935419 us-gaap:PropertyPlantAndEquipmentMember 2023-10-01 2024-09-30 0000935419 us-gaap:PropertyPlantAndEquipmentMember 2022-10-01 2023-09-30 0000935419 us-gaap:PropertyPlantAndEquipmentMember 2021-10-01 2022-09-30 0000935419 us-gaap:IndefinitelivedIntangibleAssetsMember 2023-10-01 2024-09-30 0000935419 us-gaap:IndefinitelivedIntangibleAssetsMember 2022-10-01 2023-09-30 0000935419 us-gaap:IndefinitelivedIntangibleAssetsMember 2021-10-01 2022-09-30 0000935419 us-gaap:FiniteLivedIntangibleAssetsMember 2023-10-01 2024-09-30 0000935419 us-gaap:FiniteLivedIntangibleAssetsMember 2022-10-01 2023-09-30 0000935419 us-gaap:FiniteLivedIntangibleAssetsMember 2021-10-01 2022-09-30 0000935419 rick:OperatingLeaseRightOfUseAssetsMember 2023-10-01 2024-09-30 0000935419 rick:OperatingLeaseRightOfUseAssetsMember 2022-10-01 2023-09-30 0000935419 rick:OperatingLeaseRightOfUseAssetsMember 2021-10-01 2022-09-30 0000935419 us-gaap:OtherAssetsMember 2023-10-01 2024-09-30 0000935419 us-gaap:OtherAssetsMember 2022-10-01 2023-09-30 0000935419 us-gaap:OtherAssetsMember 2021-10-01 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:PropertyPlantAndEquipmentMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember us-gaap:MeasurementInputEbitdaMultipleMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputRevenueEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:GoodwillMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputRevenueEBITDAGrowthRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:SOBLicensesMember rick:MeasurementInputContributoryAssetChargesRateMember rick:ValuationTechniqueMultiperiodExcessEarningsMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRevenueGrowthRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputRoyaltyRateMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:TradeNamesMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:ValuationTechniqueReliefFromRoyaltyMethodMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputEBITDAGrowthRateMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2024-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:OperatingLeaseRightOfUseAssetsMember rick:MeasurementInputWeightedAverageCostOfCapitalMember us-gaap:ValuationTechniqueDiscountedCashFlowMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputEBITDAGrowthRateMember rick:VariousMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputWeightedAverageCostOfCapitalMember rick:VariousMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputInternalRateOfReturnMember rick:VariousMember 2022-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2023-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2023-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2023-09-30 0000935419 srt:MinimumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2022-09-30 0000935419 srt:MaximumMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2022-09-30 0000935419 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member rick:BusinessCombinationMember rick:MeasurementInputContributoryAssetChargesRateMember rick:VariousMember 2022-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember 2023-10-01 2024-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 us-gaap:FoodAndBeverageMember 2023-10-01 2024-09-30 0000935419 us-gaap:ServiceMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 us-gaap:ServiceMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 us-gaap:ServiceMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 rick:OtherRevenuesMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 rick:OtherRevenuesMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 rick:OtherRevenuesMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 rick:OtherRevenuesMember 2023-10-01 2024-09-30 0000935419 rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 rick:OtherMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:BombshellsMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:OtherMember 2023-10-01 2024-09-30 0000935419 us-gaap:TransferredOverTimeMember 2023-10-01 2024-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember 2022-10-01 2023-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 us-gaap:FoodAndBeverageMember 2022-10-01 2023-09-30 0000935419 us-gaap:ServiceMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 us-gaap:ServiceMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 us-gaap:ServiceMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 rick:OtherRevenuesMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 rick:OtherRevenuesMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 rick:OtherRevenuesMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 rick:OtherRevenuesMember 2022-10-01 2023-09-30 0000935419 rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 rick:OtherMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:BombshellsMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:OtherMember 2022-10-01 2023-09-30 0000935419 us-gaap:TransferredOverTimeMember 2022-10-01 2023-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 rick:SalesofAlcoholicBeveragesMember 2021-10-01 2022-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 us-gaap:FoodAndBeverageMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 us-gaap:FoodAndBeverageMember 2021-10-01 2022-09-30 0000935419 us-gaap:ServiceMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 us-gaap:ServiceMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 us-gaap:ServiceMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 rick:OtherRevenuesMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 rick:OtherRevenuesMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 rick:OtherRevenuesMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 rick:OtherRevenuesMember 2021-10-01 2022-09-30 0000935419 rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 rick:OtherMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredAtPointInTimeMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:BombshellsMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredOverTimeMember rick:OtherMember 2021-10-01 2022-09-30 0000935419 us-gaap:TransferredOverTimeMember 2021-10-01 2022-09-30 0000935419 rick:AdRevenueMember 2022-09-30 0000935419 rick:AdRevenueMember 2022-10-01 2023-09-30 0000935419 rick:AdRevenueMember 2023-09-30 0000935419 rick:AdRevenueMember 2023-10-01 2024-09-30 0000935419 rick:AdRevenueMember 2024-09-30 0000935419 rick:ExpoRevenueMember 2022-09-30 0000935419 rick:ExpoRevenueMember 2022-10-01 2023-09-30 0000935419 rick:ExpoRevenueMember 2023-09-30 0000935419 rick:ExpoRevenueMember 2023-10-01 2024-09-30 0000935419 rick:ExpoRevenueMember 2024-09-30 0000935419 rick:OtherMember 2022-09-30 0000935419 rick:OtherMember 2023-09-30 0000935419 rick:OtherMember 2024-09-30 0000935419 2020-12-22 0000935419 2020-12-22 2020-12-22 0000935419 2022-05-02 0000935419 2022-05-02 2022-05-02 0000935419 us-gaap:CorporateMember 2023-10-01 2024-09-30 0000935419 us-gaap:CorporateMember 2022-10-01 2023-09-30 0000935419 us-gaap:CorporateMember 2021-10-01 2022-09-30 0000935419 rick:NightclubsMember 2024-09-30 0000935419 rick:NightclubsMember 2023-09-30 0000935419 rick:BombshellsMember 2024-09-30 0000935419 rick:BombshellsMember 2023-09-30 0000935419 rick:OtherMember 2024-09-30 0000935419 rick:OtherMember 2023-09-30 0000935419 us-gaap:CorporateMember 2024-09-30 0000935419 us-gaap:CorporateMember 2023-09-30 0000935419 rick:IntercompanyRentalRevenueMember rick:NightclubsMember 2023-10-01 2024-09-30 0000935419 rick:IntercompanyRentalRevenueMember rick:NightclubsMember 2022-10-01 2023-09-30 0000935419 rick:IntercompanyRentalRevenueMember rick:NightclubsMember 2021-10-01 2022-09-30 0000935419 rick:IntercompanySalesMember rick:OtherSegmentMember 2023-10-01 2024-09-30 0000935419 rick:IntercompanySalesMember rick:OtherSegmentMember 2022-10-01 2023-09-30 0000935419 rick:IntercompanySalesMember rick:OtherSegmentMember 2021-10-01 2022-09-30 0000935419 srt:MinimumMember 2024-09-30 0000935419 srt:MaximumMember 2024-09-30 0000935419 us-gaap:LandMember 2024-09-30 0000935419 us-gaap:LandMember 2023-09-30 0000935419 us-gaap:BuildingAndBuildingImprovementsMember 2024-09-30 0000935419 us-gaap:BuildingAndBuildingImprovementsMember 2023-09-30 0000935419 us-gaap:EquipmentMember 2024-09-30 0000935419 us-gaap:EquipmentMember 2023-09-30 0000935419 us-gaap:FurnitureAndFixturesMember 2024-09-30 0000935419 us-gaap:FurnitureAndFixturesMember 2023-09-30 0000935419 us-gaap:LicensingAgreementsMember 2024-09-30 0000935419 us-gaap:LicensingAgreementsMember 2023-09-30 0000935419 us-gaap:TradeNamesMember 2024-09-30 0000935419 us-gaap:TradeNamesMember 2023-09-30 0000935419 rick:DiscountedLeasesMember 2024-09-30 0000935419 rick:DiscountedLeasesMember 2023-09-30 0000935419 us-gaap:NoncompeteAgreementsMember 2024-09-30 0000935419 us-gaap:NoncompeteAgreementsMember 2023-09-30 0000935419 rick:SoftwareMember 2024-09-30 0000935419 rick:SoftwareMember 2023-09-30 0000935419 us-gaap:LicensingAgreementsMember 2024-09-30 0000935419 us-gaap:LicensingAgreementsMember 2023-09-30 0000935419 us-gaap:LeasesAcquiredInPlaceMember 2024-09-30 0000935419 us-gaap:LeasesAcquiredInPlaceMember 2023-09-30 0000935419 us-gaap:TradeNamesMember 2022-10-01 2023-09-30 0000935419 rick:NotePayableAt8MaturesOctober2027Member 2024-09-30 0000935419 rick:NotePayableAt8MaturesOctober2027Member 2023-09-30 0000935419 rick:NotePayableAt8MaturesMay2029Member 2024-09-30 0000935419 rick:NotePayableAt8MaturesMay2029Member 2023-09-30 0000935419 rick:NotePayableAt599MaturesSeptember2033Member 2024-09-30 0000935419 rick:NotePayableAt599MaturesSeptember2033Member 2023-09-30 0000935419 rick:NotePayableAt5.49PaidInJune2024Member 2024-09-30 0000935419 rick:NotePayableAt5.49PaidInJune2024Member 2023-09-30 0000935419 rick:NotePayableAt525MaturesSeptember2031Member 2024-09-30 0000935419 rick:NotePayableAt525MaturesSeptember2031Member 2023-09-30 0000935419 rick:NotesPayableAt12MaturesOctober2026Member 2024-09-30 0000935419 rick:NotesPayableAt12MaturesOctober2026Member 2023-09-30 0000935419 rick:ANotesPayableAt12MaturesNovember2027Member 2024-09-30 0000935419 rick:ANotesPayableAt12MaturesNovember2027Member 2023-09-30 0000935419 rick:A1NotesPayableAt12MaturesNovember2027Member 2024-09-30 0000935419 rick:A1NotesPayableAt12MaturesNovember2027Member 2023-09-30 0000935419 rick:NotePayableAt525MaturesOctober2031Member 2024-09-30 0000935419 rick:NotePayableAt525MaturesOctober2031Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesOctober2031Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesOctober2031Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesOctober2041Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesOctober2041Member 2023-09-30 0000935419 rick:ANotePayableAt6MaturesOctober2041Member 2024-09-30 0000935419 rick:ANotePayableAt6MaturesOctober2041Member 2023-09-30 0000935419 rick:NotePayableAt4MaturesNovember2028Member 2024-09-30 0000935419 rick:NotePayableAt4MaturesNovember2028Member 2023-09-30 0000935419 rick:NotePayableAt525MaturesJanuary2032Member 2024-09-30 0000935419 rick:NotePayableAt525MaturesJanuary2032Member 2023-09-30 0000935419 rick:NotePayableAt425MaturesFebruary2043Member 2024-09-30 0000935419 rick:NotePayableAt425MaturesFebruary2043Member 2023-09-30 0000935419 rick:NotePayableAt10MaturesSeptember2026Member 2024-09-30 0000935419 rick:NotePayableAt10MaturesSeptember2026Member 2023-09-30 0000935419 rick:NotePayableAt10MaturesMay2032Member 2024-09-30 0000935419 rick:NotePayableAt10MaturesMay2032Member 2023-09-30 0000935419 rick:NotePayableAt5MaturesNovember2023Member 2024-09-30 0000935419 rick:NotePayableAt5MaturesNovember2023Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesJuly2029Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesJuly2029Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesJuly2032Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesJuly2032Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesAugust2032Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesAugust2032Member 2023-09-30 0000935419 rick:NotePayableAt7.79MaturesAugust2039Member 2024-09-30 0000935419 rick:NotePayableAt7.79MaturesAugust2039Member 2023-09-30 0000935419 rick:NotePayableAt479MaturesOctober2042Member 2024-09-30 0000935419 rick:NotePayableAt479MaturesOctober2042Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt6MaturesOctober2024Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt6MaturesOctober2024Member 2023-09-30 0000935419 rick:NotePayableAt6MaturesOctober2037Member 2024-09-30 0000935419 rick:NotePayableAt6MaturesOctober2037Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt7.79MaturesAugust2039Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt7.79MaturesAugust2039Member 2023-09-30 0000935419 rick:NotePayableAt667MaturesJanuary2028Member 2024-09-30 0000935419 rick:NotePayableAt667MaturesJanuary2028Member 2023-09-30 0000935419 rick:NotesPayableAt7ForgivenInSeptember2024Member 2024-09-30 0000935419 rick:NotesPayableAt7ForgivenInSeptember2024Member 2023-09-30 0000935419 rick:NotesPayableAt7MaturesMarch2033Member 2024-09-30 0000935419 rick:NotesPayableAt7MaturesMarch2033Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt875MaturesMarch2025Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt875MaturesMarch2025Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt712MaturesJune2028Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt712MaturesJune2028Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt8.50MaturesNovember2033Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt8.50MaturesNovember2033Member 2023-09-30 0000935419 rick:NotePayableInitiallyAt8.25MaturesApril2034Member 2024-09-30 0000935419 rick:NotePayableInitiallyAt8.25MaturesApril2034Member 2023-09-30 0000935419 rick:SecuredByRealEstateMember us-gaap:SecuredDebtMember 2024-09-30 0000935419 rick:SecuredByRealEstateMember us-gaap:SecuredDebtMember 2023-09-30 0000935419 rick:SecuredByStockInSubsidiaryMember us-gaap:SecuredDebtMember 2024-09-30 0000935419 rick:SecuredByStockInSubsidiaryMember us-gaap:SecuredDebtMember 2023-09-30 0000935419 rick:SecuredByOtherAssetsMember us-gaap:SecuredDebtMember 2024-09-30 0000935419 rick:SecuredByOtherAssetsMember us-gaap:SecuredDebtMember 2023-09-30 0000935419 us-gaap:UnsecuredDebtMember 2024-09-30 0000935419 us-gaap:UnsecuredDebtMember 2023-09-30 0000935419 rick:ScarlettsAcquisitionMember 2017-05-08 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember rick:PromissoryNoteOneMember 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember rick:PromissoryNoteOneMember 2017-05-08 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember rick:PromissoryNoteTwoMember 2017-05-08 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember rick:PromissoryNoteTwoMember 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember us-gaap:ShortTermDebtMember 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember us-gaap:ShortTermDebtMember rick:OctobeOneTwoThousandAndtwentyTwoMember 2017-05-08 0000935419 rick:ScarlettsAcquisitionMember us-gaap:ShortTermDebtMember 2017-05-08 0000935419 rick:LenderMember 2017-12-07 2017-12-07 0000935419 rick:LenderMember 2017-12-07 0000935419 rick:LenderMember rick:OldAircraftsNotePayableMember 2017-12-07 0000935419 2018-12-11 0000935419 2018-12-11 2018-12-11 0000935419 rick:FivePointFourNinePercentagePromissoryNoteMember 2018-12-11 0000935419 rick:FivePointFourNinePercentagePromissoryNoteMember 2018-12-11 2018-12-11 0000935419 rick:SeptemberTwoThousandAndTwentyOneRefinancingNoteMember 2021-09-30 0000935419 rick:SeptemberTwoThousandAndTwentyOneRefinancingNoteMember 2021-09-30 2021-09-30 0000935419 rick:ScarlettsAcquisitionMember 2017-05-31 0000935419 rick:ScarlettsAcquisitionMember 2021-10-12 0000935419 us-gaap:UnsecuredDebtMember 2021-10-12 0000935419 us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:UnsecuredDebtMember 2021-10-12 0000935419 us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:UnsecuredDebtMember 2021-10-12 0000935419 us-gaap:UnsecuredDebtMember 2021-10-12 2021-10-12 0000935419 2021-10-12 0000935419 rick:NoteOneMember us-gaap:UnsecuredDebtMember us-gaap:RelatedPartyMember 2021-10-12 0000935419 rick:NoteTwoMember us-gaap:UnsecuredDebtMember us-gaap:RelatedPartyMember 2021-10-12 0000935419 rick:NonofficerEmployeeOneMember us-gaap:UnsecuredDebtMember 2021-10-12 0000935419 rick:NonofficerEmployeeTwoMember us-gaap:UnsecuredDebtMember 2021-10-12 0000935419 2021-10-18 0000935419 rick:FirstPromissoryNoteMember 2021-10-18 2021-10-18 0000935419 rick:FirstPromissoryNoteMember 2021-10-18 0000935419 rick:SecondPromissoryNoteMember 2021-10-18 2021-10-18 0000935419 rick:SecondPromissoryNoteMember 2021-10-18 0000935419 rick:ThirdPromissoryNoteMember 2021-10-18 2021-10-18 0000935419 rick:ThirdPromissoryNoteMember 2021-10-18 0000935419 rick:FourthPromissoryNoteMember 2021-10-18 2021-10-18 0000935419 rick:FourthPromissoryNoteMember 2021-10-18 0000935419 2021-11-08 0000935419 2021-11-08 2021-11-08 0000935419 us-gaap:NotesPayableToBanksMember 2022-01-25 0000935419 us-gaap:NotesPayableToBanksMember 2022-01-25 2022-01-25 0000935419 us-gaap:NotesPayableToBanksMember us-gaap:UsTreasuryUstInterestRateMember 2022-01-25 2022-01-25 0000935419 us-gaap:NotesPayableToBanksMember rick:USTreasuryUSTInterestRateFloorMember 2022-01-25 2022-01-25 0000935419 2022-01-25 0000935419 us-gaap:NotesPayableToBanksMember 2022-03-01 0000935419 us-gaap:NotesPayableToBanksMember 2022-03-01 2022-03-01 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember rick:A10ThreeYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-05-02 2022-05-02 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember rick:A10ThreeYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-05-02 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember rick:A10TenYearInterestOnlyPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-05-02 2022-05-02 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember rick:A10TenYearInterestOnlyPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-05-02 0000935419 us-gaap:NotesPayableToBanksMember 2022-05-23 0000935419 us-gaap:NotesPayableToBanksMember 2022-05-23 2022-05-23 0000935419 rick:ClubInOdessaTexasAdultEntertainmentBusinessMember rick:A6SellerFinancedPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-21 0000935419 rick:ClubInOdessaTexasAdultEntertainmentBusinessMember rick:A6SellerFinancedPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-21 2022-07-21 0000935419 us-gaap:NotesPayableToBanksMember 2022-07-27 0000935419 rick:ClubInHallandaleBeachAdultEntertainmentBusinessMember rick:A6TenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-27 0000935419 rick:ClubInHallandaleBeachAdultEntertainmentBusinessMember rick:A6TenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-27 2022-07-27 0000935419 rick:ClubInHallandaleBeachRealEstatePropertyMember rick:A6TenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-27 0000935419 rick:ClubInHallandaleBeachRealEstatePropertyMember rick:A6TenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-07-27 2022-07-27 0000935419 rick:RealEstateInHuntsvilleAlabamaMember 2022-08-18 2022-08-18 0000935419 us-gaap:NotesPayableToBanksMember 2022-08-18 0000935419 us-gaap:NotesPayableToBanksMember 2022-08-18 2022-08-18 0000935419 us-gaap:NotesPayableToBanksMember 2024-08-31 0000935419 us-gaap:UnsecuredDebtMember 2022-08-18 2022-08-18 0000935419 us-gaap:NotesPayableToBanksMember 2023-08-18 0000935419 2022-09-23 2022-09-23 0000935419 us-gaap:NotesPayableToBanksMember 2022-09-23 0000935419 us-gaap:NotesPayableToBanksMember 2022-10-10 0000935419 us-gaap:NotesPayableToBanksMember 2022-10-10 2022-10-10 0000935419 rick:ClubInDickinsonTexasAdultEntertainmentBusinessMember rick:A6FifteenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-10-26 0000935419 rick:ClubInDickinsonTexasAdultEntertainmentBusinessMember rick:A6FifteenYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2022-10-26 2022-10-26 0000935419 us-gaap:NotesPayableToBanksMember 2022-11-18 0000935419 us-gaap:NotesPayableToBanksMember 2022-11-18 2022-11-18 0000935419 us-gaap:UnsecuredDebtMember 2022-11-18 2022-11-18 0000935419 us-gaap:NotesPayableToBanksMember 2023-11-18 0000935419 rick:A667FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:FoodHallPropertyInGreenwoodVillageColoradoMember 2022-12-20 0000935419 rick:A667FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:FoodHallPropertyInGreenwoodVillageColoradoMember 2022-12-20 2022-12-20 0000935419 rick:SixSellerFinancedPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2023-02-07 0000935419 rick:SixSellerFinancedPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2023-02-07 2023-02-07 0000935419 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2023-03-09 0000935419 us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2023-03-09 2023-03-09 0000935419 rick:BabyDollsChicasLocasMember 2023-03-16 2023-03-16 0000935419 rick:NineSecuredPromissoryNotesMember us-gaap:NotesPayableToBanksMember 2023-03-16 0000935419 rick:NineSecuredPromissoryNotesMember us-gaap:NotesPayableToBanksMember 2023-03-16 2023-03-16 0000935419 rick:PromissoryNoteRelatedToRealEstatePropertiesMember us-gaap:NotesPayableToBanksMember 2023-03-16 0000935419 rick:A712FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:RealEstateInDenverColoradoMember 2023-06-18 0000935419 rick:A712FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:RealEstateInDenverColoradoMember 2023-06-18 2023-06-18 0000935419 us-gaap:UnsecuredDebtMember 2023-10-25 0000935419 2023-10-25 0000935419 us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:UnsecuredDebtMember 2024-09-30 0000935419 us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:UnsecuredDebtMember 2024-09-30 0000935419 us-gaap:UnsecuredDebtMember 2023-10-01 2024-09-30 0000935419 us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:UnsecuredDebtMember 2021-10-31 0000935419 us-gaap:ConstructionLoansMember 2023-11-17 0000935419 us-gaap:ConstructionLoansMember 2023-11-17 2023-11-17 0000935419 us-gaap:DebtInstrumentRedemptionPeriodOneMember us-gaap:ConstructionLoansMember 2023-11-17 2023-11-17 0000935419 us-gaap:DebtInstrumentRedemptionPeriodTwoMember us-gaap:ConstructionLoansMember 2023-11-17 2023-11-17 0000935419 rick:TermLoanMember 2024-04-30 0000935419 rick:TermLoanMember 2024-04-30 2024-04-30 0000935419 rick:TermLoanMember us-gaap:InterestRateFloorMember 2024-04-30 2024-04-30 0000935419 rick:RegularAmortizationMember 2024-09-30 0000935419 rick:BalloonPaymentsMember 2024-09-30 0000935419 2020-05-08 0000935419 rick:TenOfOurRestaurantMember srt:MinimumMember rick:CARESActMember 2020-05-08 2020-05-08 0000935419 rick:TenOfOurRestaurantMember srt:MaximumMember rick:CARESActMember 2020-05-08 2020-05-08 0000935419 rick:TenOfOurRestaurantMember rick:CARESActMember 2020-05-08 2020-05-08 0000935419 rick:OurSharedServicesMember rick:CARESActMember 2020-05-08 2020-05-08 0000935419 rick:OneOfOurLoungesMember rick:CARESActMember 2020-05-08 2020-05-08 0000935419 2021-11-01 2021-11-30 0000935419 rick:IndemnityInsuranceCorporationMember 2014-04-10 2014-04-10 0000935419 rick:IndemnityInsuranceCorporationMember 2024-09-30 0000935419 rick:IndemnityInsuranceCorporationMember 2023-10-01 2024-09-30 0000935419 rick:CompensatoryDamagesMember rick:JAIPhoenixMember 2017-04-01 2017-04-30 0000935419 rick:PunitiveDamagesMember rick:JAIPhoenixMember 2017-04-01 2017-04-30 0000935419 2023-03-01 2023-03-31 0000935419 2023-09-01 2023-09-30 0000935419 2024-05-29 0000935419 2022-02-07 0000935419 2022-02-09 2022-02-09 0000935419 2022-02-09 0000935419 2019-04-01 2019-06-30 0000935419 2022-07-01 2022-09-30 0000935419 2024-07-01 2024-09-30 0000935419 us-gaap:AccountsReceivableMember 2024-09-30 0000935419 us-gaap:AccountsReceivableMember 2023-09-30 0000935419 us-gaap:AccountsReceivableMember 2022-09-30 0000935419 2021-10-18 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2021-10-18 2021-10-18 0000935419 rick:TwoClubOwningEntitiesMember 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember rick:FourSellerFinancedNotesMember 2021-10-18 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember us-gaap:CommonStockMember 2021-10-18 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember us-gaap:LicensingAgreementsMember 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember us-gaap:TradeNamesMember 2021-10-18 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2020-10-01 2021-09-30 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2021-10-01 2022-09-30 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2023-10-01 2024-09-30 0000935419 rick:GentlemensClubsRelatedRealEstatePropertyAndIntellectualPropertyMember 2022-10-01 2023-09-30 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember 2021-11-08 2021-11-08 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember rick:SellerFinanacedNotesMember 2021-11-08 2021-11-08 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember rick:SevenYearPromissoryNoteMember 2021-11-08 2021-11-08 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember rick:SevenYearPromissoryNoteMember 2021-11-08 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember 2021-11-08 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember 2021-11-08 2022-09-30 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember 2020-10-01 2021-09-30 0000935419 rick:ClubAndRelatedRealEstateInNewburghNewYorkMember 2021-10-01 2022-09-30 0000935419 rick:ClubInSouthFloridaMember 2021-12-30 2021-12-30 0000935419 rick:ClubInSouthFloridaMember 2021-12-30 0000935419 rick:RealEstateInStaffordTexasMember 2022-03-01 2022-03-01 0000935419 rick:RealEstateInLubbockTexasMember 2022-03-01 2022-03-01 0000935419 rick:ClubInMiamiFloridaMember 2022-05-02 2022-05-02 0000935419 rick:ClubInMiamiFloridaRealEstatePropertyMember 2022-05-02 2022-05-02 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember 2022-05-02 2022-05-02 0000935419 rick:ClubInMiamiFloridaAdultEntertainmentBusinessMember 2022-05-02 0000935419 rick:ClubInMiamiFloridaMember 2022-05-02 0000935419 rick:ClubInMiamiFloridaMember us-gaap:LicensingAgreementsMember 2022-05-02 0000935419 rick:ClubInMiamiFloridaMember us-gaap:TradeNamesMember 2022-05-02 0000935419 rick:RealEstateInRowlettTexasMember 2022-05-23 2022-05-23 0000935419 rick:ClubInOdessaTexasMember 2022-07-21 2022-07-21 0000935419 rick:ClubInOdessaTexasRealEstatePropertyMember 2022-07-21 2022-07-21 0000935419 rick:ClubInOdessaTexasAdultEntertainmentBusinessMember 2022-07-21 2022-07-21 0000935419 rick:ClubInOdessaTexasAdultEntertainmentBusinessMember 2022-07-21 0000935419 rick:ClubInHallandaleBeachFloridaMember 2022-07-27 2022-07-27 0000935419 rick:ClubInHallandaleBeachAdultEntertainmentBusinessMember 2022-07-27 2022-07-27 0000935419 rick:ClubInHallandaleBeachRealEstatePropertyMember 2022-07-27 2022-07-27 0000935419 rick:ClubInHallandaleBeachFloridaMember 2022-07-27 0000935419 rick:RealEstateInHuntsvilleAlabamaMember us-gaap:NotesPayableToBanksMember 2022-08-18 0000935419 rick:RealEstateInAustinTexasMember 2022-09-12 2022-09-12 0000935419 2022-09-12 0000935419 2021-10-08 2021-10-08 0000935419 2022-07-12 2022-07-12 0000935419 2022-07-12 0000935419 rick:RealEstateInLubbockTexasMember 2022-10-10 2022-10-10 0000935419 rick:ClubInDickinsonTexasMember 2022-10-26 2022-10-26 0000935419 rick:ClubInDickinsonTexasAdultEntertainmentBusinessMember 2022-10-26 2022-10-26 0000935419 rick:ClubInDickinsonTexasRealEstatePropertyMember 2022-10-26 2022-10-26 0000935419 rick:ClubInDickinsonTexasMember 2022-10-26 0000935419 rick:ClubInDickinsonTexasMember us-gaap:LicensingAgreementsMember 2022-10-26 0000935419 rick:ClubInDickinsonTexasMember us-gaap:TradeNamesMember 2022-10-26 0000935419 rick:ClubInDickinsonTexasMember 2023-10-01 2024-09-30 0000935419 rick:RealEstateInAuroraColoradoMember 2022-11-08 2022-11-08 0000935419 rick:RealEstateInCentralCityColoradoMember 2022-12-05 2022-12-05 0000935419 rick:RealEstateInCentralCityColoradoMember 2023-02-06 2023-02-06 0000935419 rick:RealEstateInFortWorthTexasMember 2022-12-16 2022-12-16 0000935419 rick:RealEstateInFortWorthTexasMember 2022-12-16 0000935419 rick:FoodHallPropertyInGreenwoodVillageColoradoMember 2022-12-20 2022-12-20 0000935419 rick:FoodHallPropertyInGreenwoodVillageColoradoMember us-gaap:LandMember 2022-12-20 0000935419 rick:FoodHallPropertyInGreenwoodVillageColoradoMember us-gaap:BuildingAndBuildingImprovementsMember 2022-12-20 0000935419 rick:FoodHallPropertyInGreenwoodVillageColoradoMember rick:FurnitureFixturesAndEquipmentMember 2022-12-20 0000935419 us-gaap:LeasesAcquiredInPlaceMember rick:FoodHallPropertyInGreenwoodVillageColoradoMember 2022-12-20 0000935419 us-gaap:LeasesAcquiredInPlaceMember rick:FoodHallPropertyInGreenwoodVillageColoradoMember 2022-12-20 2022-12-20 0000935419 rick:BombshellsLocationInSanAntonioTexasMember 2023-02-07 2023-02-07 0000935419 rick:BombshellsLocationInSanAntonioTexasMember 2023-02-07 0000935419 rick:BombshellsLocationInSanAntonioTexasMember rick:SixSellerFinancedPromissoryNoteMember us-gaap:NotesPayableToBanksMember 2023-02-07 0000935419 rick:BabyDollsChicasLocasMember rick:A7SellerFinancingPromissoryNotesMember 2023-03-16 2023-03-16 0000935419 rick:A7SellerFinancingPromissoryNotesMember us-gaap:NotesPayableToBanksMember rick:BabyDollsChicasLocasMember 2023-03-16 2023-03-16 0000935419 rick:A7SellerFinancingPromissoryNotesMember us-gaap:NotesPayableToBanksMember rick:BabyDollsChicasLocasMember 2023-03-16 0000935419 rick:BabyDollsChicasLocasMember us-gaap:CommonStockMember 2023-03-16 2023-03-16 0000935419 rick:BabyDollsChicasLocasMember 2023-03-16 0000935419 rick:BabyDollsChicasLocasMember us-gaap:LineOfCreditMember 2023-03-09 0000935419 rick:BabyDollsChicasLocasMember us-gaap:LicensingAgreementsMember 2023-03-16 0000935419 rick:BabyDollsChicasLocasMember us-gaap:TradeNamesMember 2023-03-16 0000935419 rick:BabyDollsChicasLocasMember 2022-10-01 2023-09-30 0000935419 rick:BabyDollsChicasLocasMember 2023-10-01 2024-09-30 0000935419 rick:BabyDollsChicasLocasMember 2021-10-01 2022-09-30 0000935419 rick:BabyDollsChicasLocasMember us-gaap:RevolvingCreditFacilityMember us-gaap:LineOfCreditMember 2023-03-09 0000935419 rick:BabyDollsChicasLocasMember rick:NineSecuredPromissoryNotesMember us-gaap:NotesPayableToBanksMember 2023-03-16 0000935419 rick:RealEstateInDenverColoradoMember 2023-06-20 2023-06-20 0000935419 rick:A712FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:RealEstateInDenverColoradoMember 2023-06-20 2023-06-20 0000935419 rick:A712FiveYearPromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:RealEstateInDenverColoradoMember 2023-06-20 0000935419 rick:HangarInArcolaTexasMember 2022-10-11 2022-10-11 0000935419 rick:NonIncomeProducingCorporatePropertyInDenverColoradoMember 2023-02-06 2023-02-06 0000935419 2023-08-03 2023-08-03 0000935419 2022-11-04 2022-11-04 0000935419 2023-06-29 0000935419 2023-06-29 2023-06-29 0000935419 rick:AdministartiveBuildingCentralCityColoradoMember 2023-10-24 2023-10-24 0000935419 rick:VacantLotCentralCityColoradoMember 2023-10-24 2023-10-24 0000935419 2024-05-31 0000935419 2024-05-31 2024-05-31 0000935419 2024-06-06 0000935419 2024-06-06 2024-06-06 0000935419 2024-09-01 2024-09-01 0000935419 2023-10-01 2023-12-31 0000935419 2024-01-01 2024-03-30 0000935419 2024-03-31 2024-06-30 0000935419 2022-10-01 2022-12-31 0000935419 2023-01-01 2023-03-31 0000935419 2023-04-01 2023-06-30 0000935419 2023-07-01 2023-09-30 0000935419 2021-10-01 2021-12-31 0000935419 2022-01-01 2022-03-31 0000935419 2022-04-01 2022-06-30 0000935419 rick:CommercialBankIndebtednessMember 2024-09-30 0000935419 rick:CommercialBankIndebtednessMember 2023-09-30 0000935419 us-gaap:RelatedPartyMember rick:EdAnakarAndNourdeanAnakarMember 2021-10-12 2021-10-12 0000935419 us-gaap:RelatedPartyMember rick:AllenChhayAndBradleyChhayMember 2021-10-12 2021-10-12 0000935419 rick:NottinghamCreationsAndSherwoodForestCreationsLLCMember 2023-10-01 2024-09-30 0000935419 rick:NottinghamCreationsAndSherwoodForestCreationsLLCMember 2022-10-01 2023-09-30 0000935419 rick:NottinghamCreationsAndSherwoodForestCreationsLLCMember 2021-10-01 2022-09-30 0000935419 us-gaap:RelatedPartyMember rick:NottinghamCreationsAndSherwoodForestCreationsLLCMember 2024-09-30 0000935419 us-gaap:RelatedPartyMember rick:NottinghamCreationsAndSherwoodForestCreationsLLCMember 2023-09-30 0000935419 us-gaap:RelatedPartyMember rick:TWMechanicalLLCMember 2024-09-30 0000935419 rick:ThirdPartyGeneralContractorMember us-gaap:RelatedPartyMember rick:TWMechanicalLLCMember 2023-10-01 2024-09-30 0000935419 rick:ThirdPartyGeneralContractorMember us-gaap:RelatedPartyMember rick:TWMechanicalLLCMember 2022-10-01 2023-09-30 0000935419 rick:ThirdPartyGeneralContractorMember us-gaap:RelatedPartyMember rick:TWMechanicalLLCMember 2021-10-01 2022-09-30 0000935419 rick:TWMechanicalLLCMember 2023-10-01 2024-09-30 0000935419 rick:TWMechanicalLLCMember 2022-10-01 2023-09-30 0000935419 rick:TWMechanicalLLCMember 2021-10-01 2022-09-30 0000935419 us-gaap:RelatedPartyMember rick:TWMechanicalLLCMember 2023-09-30 0000935419 rick:PrincipalPaymentsMember 2024-09-30 0000935419 rick:InterestPaymentsMember 2024-09-30 0000935419 us-gaap:EquipmentMember 2023-10-01 2024-09-30 0000935419 us-gaap:EquipmentMember 2022-10-01 2023-09-30 0000935419 us-gaap:EquipmentMember 2021-10-01 2022-09-30 0000935419 2023-10-01 2023-12-14 0000935419 rick:RealEstateInAustinTexasMember us-gaap:SubsequentEventMember 2024-11-14 2024-11-14 0000935419 us-gaap:NotesPayableToBanksMember rick:RealEstateInAustinTexasMember us-gaap:SubsequentEventMember 2024-11-14 2024-11-14 0000935419 rick:A6PromissoryNoteMember us-gaap:NotesPayableToBanksMember rick:RealEstateInAustinTexasMember us-gaap:SubsequentEventMember 2024-11-14 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2021-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2021-10-01 2022-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2022-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2022-10-01 2023-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2023-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2023-10-01 2024-09-30 0000935419 rick:SECSchedule1209AllowanceForDoubtfulAccountsReceivableMember 2024-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2021-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2021-10-01 2022-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2022-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2022-10-01 2023-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2023-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2023-10-01 2024-09-30 0000935419 us-gaap:AllowanceForNotesReceivableMember 2024-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2021-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2021-10-01 2022-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2022-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2022-10-01 2023-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2023-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2023-10-01 2024-09-30 0000935419 us-gaap:ValuationAllowanceOfDeferredTaxAssetsMember 2024-09-30
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

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

For the fiscal year ended September 30, 2024

o | Transition report under 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

Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
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, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). 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
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $498,887,736.
As of December 13, 2024, there were approximately 8,900,000 shares of common stock outstanding.

Table of Contents
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K 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: Item 1 – “Business,” Item 1A – “Risk Factors,” and Item 7 – “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 Annual Report on Form 10-K, and, in particular, the risks discussed under the caption “Risk Factors” in Item 1A 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) the impact of the COVID-19 pandemic, and (vii) 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.
2

Table of Contents
TABLE OF CONTENTS

|  | Page No.
PART I |
Item 1. | Business | 4
Item 1A. | Risk Factors | 9
Item 1B. | Unresolved Staff Comments | 22
Item 2. | Properties | 24
Item 3. | Legal Proceedings | 26
Item 4. | Mine Safety Disclosures | 26
PART II |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 27
Item 6. | [Reserved] | 29
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 51
Item 8. | Financial Statements and Supplementary Data | 52
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 104
Item 9A. | Controls and Procedures | 104
Item 9B. | Other Information | 106
PART III |
Item 10. | Directors, Executive Officers and Corporate Governance | 109
Item 11. | Executive Compensation | 113
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 121
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 122
Item 14. | Principal Accounting Fees and Services | 124
PART IV |
Item 15. | Exhibits, Financial Statement Schedules | 126
Item 16. | Form 10-K Summary | 130
| Signatures | 131

3

Table of Contents
PART I
Item 1. BUSINESS.
OUR COMPANY
RCI Hospitality Holdings, Inc. is a holding company that, through its subsidiaries, engages in businesses that offer live adult entertainment and/or high-quality dining experiences to its guests. Our subsidiaries operated 69 establishments in 13 states as of September 30, 2024. Together with its subsidiaries, RCI Hospitality Holdings, Inc. is collectively referred to as “RCIHH,” "RCI," the “Company,” “we,” “us,” or “our” in this report. We also operate a leading business communications company serving the multibillion-dollar adult nightclubs industry. RCIHH was incorporated in the State of Texas in 1994 and became public in 1995.
Our fiscal year ends on September 30. References to years 2024, 2023, and 2022 are for fiscal years ended September 30, 2024, 2023, and 2022, respectively. Our fiscal quarters chronologically end on December 31, March 31, June 30 and September 30.
OUR BUSINESS
Through our subsidiaries, we operate several businesses, which we aggregate for financial reporting purposes into two reportable segments – Nightclubs and Bombshells. Businesses that are not included as Nightclubs or Bombshells are combined as “Other.”
During fiscal 2024, 2023, and 2022, consolidated revenues were $295.6 million, $293.8 million, and $267.6 million, respectively, generating diluted earnings per share of $0.33, $3.13, and $4.91, respectively.
The table below shows the number of Nightclubs and Bombshells open by state as of September 30, 2024:

| Nightclubs |  | Bombshells(1) |  | Total
Arizona | 1 |  | — |  | 1
Colorado | 5 |  | 1 |  | 6
Florida | 4 |  | — |  | 4
Illinois | 5 |  | — |  | 5
Indiana | 1 |  | — |  | 1
Kentucky | 1 |  | — |  | 1
Louisiana | 1 |  | — |  | 1
Maine | 1 |  | — |  | 1
Minnesota | 3 |  | — |  | 3
New York | 4 |  | — |  | 4
North Carolina | 2 |  | — |  | 2
Pennsylvania | 1 |  | — |  | 1
Texas | 27 |  | 12 |  | 39
| 56 |  | 13 |  | 69

(1) Includes one food hall location.
4

Table of Contents
Nightclubs Segment
Our Nightclubs subsidiaries operate our adult entertainment nightclubs through several brands that target many different demographics of customers by providing a unique, quality entertainment environment. Our clubs do business as Rick’s Cabaret, Jaguars Club, Tootsie’s Cabaret, XTC Cabaret, Club Onyx, Hoops Cabaret and Sports Bar, Scarlett’s Cabaret, Diamond Cabaret, Cheetah Gentlemen's Club, PT's Showclub, Playmates Club, Country Rock Cabaret, Temptations Adult Cabaret, Foxy’s Cabaret, Vivid Cabaret, Downtown Cabaret, Cabaret East, The Seville, Silver City Cabaret, Heartbreakers Gentlemen's Club, Kappa Men’s Club, Baby Dolls, and Chicas Locas. We also operate one dance club under the brand name Studio 80.
We generate revenue from our nightclubs through the sale of alcoholic beverages, food, and merchandise items; service in the form of cover charge, licensing fees, and room rentals; and through other related means such as ATM commissions and vending income, among others.
During fiscal 2024, our Nightclub segment sales mix was 40.3% service revenue; 43.3% alcoholic beverages; and 16.4% food, merchandise, and other. Segment gross margin (revenues less cost of goods sold, divided by revenues) was approximately 88.3%. Our Nightclubs segment revenue increased by approximately 3.0% and income from operations decreased by 20.6% compared to the prior year. Same-stores sales for Nightclubs in 2024 was -2.1%.
For a list of our nightclub locations, refer to Item 2—“Properties.”
Bombshells Segment
Our Bombshells segment operates a restaurant and bar concept that sets itself apart with décor that pays homage to all branches of the U.S. military. Locations feature local DJs, large outdoor patios, and more than 75 state-of-the-art flat screen TVs for watching your favorite sports. All food and drink menu items have military names. Bombshell Girls, with their military-inspired uniforms, are a key attraction. Their mission, in addition to waitressing, is to interact with guests and generate a fun atmosphere. During fiscal 2024, we opened one Bombshells location in Stafford, Texas and sold one location in San Antonio, Texas.
During fiscal 2024, Bombshells sales mix was 54.3% alcoholic beverages and 45.7% food, merchandise, and other. Segment gross margin (revenues less cost of goods sold, divided by revenues) was approximately 75.9%. Bombshells segment revenue decreased by 9.2%, while income from operations decreased by 263.7% from prior year. Same-stores sales for Bombshells in 2024 was -18.4%.
For a list of our Bombshells locations, refer to Item 2—“Properties.”
Other Segment
We group together all businesses not belonging to either Nightclubs and Bombshells as Other reportable segment. This is made up of several wholly-owned subsidiaries composed primarily of our Media Group and Drink Robust. Our Media Group is the leading business communications company serving the multibillion-dollar adult nightclubs industry and the adult retail products industry. It owns a national industry convention and trade show; two national industry trade publications; two national industry award shows; and more than a dozen industry and social media websites. Included in the Media Group is ED Publications, publishers of the bimonthly ED Club Bulletin, the only national business magazine serving the 2,200-plus adult nightclubs in North America, which collectively have annual revenues in excess of $5 billion, according to the Association of Club Executives. ED Publications, founded in 1991, also publishes the Annual VIP Guide of adult nightclubs, touring entertainers and industry vendors; and produces the Annual Gentlemen’s Club Owners EXPO, a national convention and trade show. The Media Group produces two nationally recognized industry award shows for the readers of both ED Club Bulletin and StorErotica magazines, and maintains a number of B-to-B and consumer websites for both industries. Drink Robust is licensed to sell Robust Energy Drink in the United States.
5

Table of Contents
OUR STRATEGY
Our overall objective is to create value for our shareholders by developing and operating profitable businesses in the hospitality and related space. We strive to achieve that by providing an attractive price-value entertainment, dining experience, and top-notch service; by attracting and retaining quality personnel; and by focusing on unit-level operating performance. Aside from our operating strategy, we employ a capital allocation strategy.
Capital Allocation Strategy
Our capital allocation strategy provides us with disciplined guidelines on how we should use our free cash flows; provided however, that we may deviate from this strategy if other strategic rationale warrants. We calculate free cash flow as net cash flows from operating activities minus maintenance capital expenditures. Using the after-tax yield of buying our own stock as baseline, management believes that we are able to make better investment decisions.
Based on our current capital allocation strategy:
•We consider buying back our own stock if the after-tax yield on free cash flow is above 10%;
•We consider 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%, absent an otherwise strategic rationale;
•We consider disposing of underperforming units to free up capital for more productive use;
•We consider paying down our most expensive debt if it makes sense on a tax-adjusted basis, or there is an otherwise strategic rationale.
Over a five-year period from fiscal 2019 through fiscal 2024, our diluted earnings per share declined at a compound annual growth rate (“CAGR”) of 30.9%, which was mainly caused by increasing revenue at a CAGR of 10.3%, with impairment of assets as the most significant offset at a CAGR of 44.9% increase. Excluding noncash and certain nonrecurring items, our non-GAAP diluted earnings per share improved at a CAGR of 14.1%. Net cash provided by operating activities improved at 8.5% and free cash flow also improved at 7.8% CAGR for the same period. See discussions of our non-GAAP financial measures starting on page 44.
During 2022, we achieved our highest financial performance in terms of profitability and cash flow due to government stimulus due to the pandemic and the fact that our restaurants and clubs were among the first to open and resume business operations. Compared to our record net income in 2022, our 2024 net income decreased by 93%. But for the same time period, our net cash from operating activities only decreased by 13%. We are managing this by carefully evaluating our Bombshells program in view of recent performance trends. Currently, we have three locations that are under construction and do not plan to add anymore locations after those. We terminated our franchising program, and are aggressively closing underperforming locations.
6

Table of Contents
COMPETITION
The adult entertainment and the restaurant/sports bar businesses are highly competitive with respect to price, service and location. All of our nightclubs compete with a number of locally owned adult clubs, some of whose brands may have name recognition that equals that of ours. The names “Rick’s” and “Rick’s Cabaret,” “Tootsie’s Cabaret,” “XTC Cabaret,” “Scarlett’s,” “Silver City,” “Club Onyx,” “Downtown Cabaret,” “Temptations,” “The Seville,” “Jaguars,” “Hoops Cabaret,” “Foxy’s Cabaret,” "Studio 80," “Country Rock Cabaret,” “PT’s,” “Diamond Cabaret,” “Baby Dolls Saloon," "Baby Dolls," "Chicas Locas," "Rick's Rewards," and "Venice Cabaret" are proprietary. In the restaurant/sports bar business, “Bombshells” is also proprietary. We believe that the combination of our existing brand name recognition and the distinctive entertainment environment that we have created allows us to compete effectively in the industry and within the cities where we operate. Although we believe that we are well positioned to compete successfully, there can be no assurance that we will be able to maintain our high level of name recognition and prestige within the marketplace.
GOVERNMENTAL REGULATIONS
We are subject to various federal, state and local laws affecting our business activities. Particularly in Texas, the authority to issue a permit to sell alcoholic beverages is governed by the Texas Alcoholic Beverage Commission (“TABC”), which has the authority, in its discretion, to issue the appropriate permits. We presently hold a Mixed Beverage Permit and a Late Hour Permit at numerous Texas locations. Colorado, Minnesota, North Carolina, Louisiana, Arizona, Pennsylvania, Florida, New York, Kentucky, Maine, Indiana, and Illinois have similar laws that may limit the availability of a permit to sell alcoholic beverages or that may provide for suspension or revocation of a permit to sell alcoholic beverages in certain circumstances. It is our policy, prior to expanding into any new market, to take steps to ensure compliance with all licensing and regulatory requirements for the sale of alcoholic beverages, as well as the sale of food.
In addition to various regulatory requirements affecting the sale of alcoholic beverages, in many cities where we operate, the location of an adult entertainment cabaret is subject to restriction by city, county or other governmental ordinance. The prohibitions deal generally with distance from schools, churches and other sexually oriented businesses, and contain restrictions based on the percentage of residences within the immediate vicinity of the sexually oriented business. The granting of a sexually oriented business permit is not subject to discretion; the permit must be granted if the proposed operation satisfies the requirements of the ordinance. In all states where we operate, management believes we are in compliance with applicable city, county, state or other local laws governing the sale of alcohol and sexually oriented businesses.
TRADEMARKS
Our rights to the trade names “RCI Hospitality Holdings, Inc.,” “Rick’s,” “Rick’s Cabaret,” “Tootsie’s Cabaret,” “Club Onyx,” “XTC Cabaret,” “Temptations,” “Jaguars,” “Downtown Cabaret,” “Cabaret East,” “Bombshells Restaurant and Bar,” “Vee Lounge,” “Mile High Men’s Club,” “Country Rock Cabaret,” “PT’s,” and “Diamond Cabaret” are established under common law, based upon our substantial and continuous use of these trade names in interstate commerce, some of which have been in use at least as early as 1987. We have registered our service mark, “RICK’S AND STARS DESIGN,” and the “BOMBSHELLS RESTAURANT & BAR” logo design with the United States Patent and Trademark Office. We have also obtained service mark registrations from the Patent and Trademark Office for “RICK’S AND STARS DESIGN” logo, “RCI HOSPITALITY HOLDINGS, INC.,” “RICK’S,” “RICK’S CABARET,” “CLUB ONYX,” “XTC CABARET,” “SCARLETT’S CABARET,” “SILVER CITY CABARET,” “BOMBSHELLS RESTAURANT AND BAR,” “THE SEVILLE CLUB,” “DOWN IN TEXAS SALOON,” “HOOPS CABARET,” “VEE LOUNGE,” “STUDIO 80,” “FOXY’S CABARET,” “EXOTIC DANCER,” “TOYS FOR TATAS,” "LA BOHEME GENTLEMAN'S CLUB," “MILE HIGH MEN’S CLUB,” “MHMC logo,” “AFTER DARK,” “COUNTRY ROCK CABARET,” “PT’S,” “DIAMOND CABARET,” "CABARET ROYALE," "BABY DOLLS SALOON," "BABY DOLLS TOPLESS SALOON," "BABY DOLLS," "JAGUARS," and “BOMBSHELLS OFFICER’S CLUB” are registered through service mark registrations issued by the United States Patent and Trademark Office. As of this date, we have pending registration applications for the names “TOOTSIES CABARET,” “RICK'S REWARDS,” “VENICE CABARET,” "CHERRY CREEK FOOD HALL AND BREWERY," and “THE MANSION.” We also own the rights to numerous trade names associated with our media division. There can be no assurance that these steps we have taken to protect our service marks will be adequate to deter misappropriation of our protected intellectual property rights.
7

Table of Contents
EMPLOYEES AND INDEPENDENT CONTRACTORS
Our people are employed by the parent company or by its subsidiaries. Executive officers are employed by the registrant (parent company); shared services personnel and managers responsible for multiple clubs or restaurants are employed by RCI Management Services, Inc.; and the rest are employed by the individual operating entities. As of September 30, 2024, we had the following employees:

| Operations |  |  |  |
| Managers |  | Non-Managers |  | Corporate |  | Total
Hourly | 68 |  | 3,041 |  | 15 |  | 3,124
Salaried | 367 |  | 44 |  | 78 |  | 489
| 435 |  | 3,085 |  | 93 |  | 3,613

Additionally, as of September 30, 2024, we had independent contractor entertainers who are self-employed and conduct business at our locations on a non-exclusive basis. Our entertainers at Rick’s Cabaret in Minneapolis, Minnesota and at Jaguars Club in Phoenix, Arizona may elect to act as commissioned employees. All employees and independent contractors sign arbitration non-class-action participation agreements, where allowed by federal and state laws. None of our employees are represented by a union. We consider our employee relations to be good.
We believe that the adult entertainment industry standard of treating entertainers as independent contractors provides us with safe harbor protection to preclude payroll tax assessment. We have prepared plans that we believe will protect our profitability in the event that the sexually oriented business industry is required in all states to convert entertainers, who are now independent contractors, into employees. See related discussion in “Risk Factors” below.
AVAILABLE INFORMATION
Our corporate website address is www.rcihospitality.com. Upon written request, we make available free of charge our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with the SEC under the Securities Exchange Act of 1934, as amended (www.sec.gov). Information contained in the corporate website shall not be construed as part of this Form 10-K.
8

Table of Contents
Item 1A. RISK FACTORS.
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occurs, our business, financial condition, or results of operations could be seriously harmed. The trading price of our common stock could, in turn, decline and you could lose all or part of your investment.
A summary of our risk factors is as follows:
Risks related to our business
◦We may deviate from our present capital allocation strategy.
◦We may need additional financing, or our business expansion plans may be significantly limited.
◦There is substantial competition in the nightclub entertainment industry, which may affect our ability to operate profitably or acquire additional clubs.
◦The adult entertainment industry is extremely volatile.
◦Private advocacy group actions targeted at the kind of adult entertainment we offer could result in limitations and our inability to operate in certain locations and negatively impact our business.
◦We rely heavily on information technology in our operations and any material failure, weakness, interruption or breach of security could prevent us from effectively operating our business.
◦We are exposed to risks related to cyber security and protection of confidential information, and failure to protect the integrity and security of payment card or individually identifiable information of our guests and employees or confidential and proprietary information of the Company could damage our reputation and expose us to loss of revenues, increased costs and litigation.
◦Our acquisitions may result in disruptions in our business and diversion of management’s attention.
◦The impact of new club or restaurant openings could result in fluctuations in our financial performance.
◦Our ability to grow sales through delivery orders is uncertain.
◦We incur significant costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives.
◦We have identified material weaknesses in our internal control over financial reporting.
◦We may have uninsured risks in excess of our insurance coverage or self-insurance.
◦We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.
◦Our previous liability insurer may be unable to provide coverage to us and our subsidiaries.
◦The protection provided by our service marks is limited.
◦We are dependent on key personnel.
◦If we are not able to hire, develop, and retain qualified club and restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.
9

Table of Contents
◦A failure to maintain food safety throughout the supply chain and food-borne illness concerns may have an adverse effect on our business.
◦Our venture, expansion, and renovation projects may face significant inherent risks.
◦Other risk factors may adversely affect our financial performance.
Risks related to general macroeconomic and safety conditions
◦The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt our business, which has and could continue to materially affect our operations, financial condition, and results of operations for an extended period of time.
◦Our business, financial condition, and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing war between Russia and Ukraine and the Israel-Hamas war.
◦If we are unable to maintain compliance with certain of our debt covenants or unable to obtain waivers, we may be unable to make additional borrowings and be declared in default where our debt will be made immediately due and payable. In addition, global economic conditions may make it more difficult to access new credit facilities.
◦We have recorded impairment charges in current and past periods and may record additional impairment charges in future periods.
Risks related to regulations and/or regulatory agencies
◦Our business operations are subject to regulatory uncertainties which may affect our ability to continue operations of existing nightclubs, acquire additional nightclubs, or be profitable.
◦The adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees. If federal or state law mandates that they be classified as employees, our business could be adversely impacted.
◦Our revenues could be significantly affected by limitations relating to permits to sell alcoholic beverages.
◦Activities or conduct at our nightclubs may cause us to lose necessary business licenses, expose us to liability, or result in adverse publicity, which may increase our costs and divert management’s attention from our business.
Risk related to our common stock
◦We must continue to meet NASDAQ Global Market Continued Listing Requirements, or we risk delisting.
◦We may be subject to allegations, defamations, or other detrimental conduct by third parties, which could harm our reputation and cause us to lose customers and/or contribute to a deflation of our stock price.
◦Our quarterly operating results may fluctuate and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.
◦Anti-takeover effects of the issuance of our preferred stock could adversely affect our common stock.
◦Future sales or the perception of future sales of a substantial amount of our common stock may depress our stock price.
◦Our stock price has been volatile and may fluctuate in the future.
◦Cumulative voting is not available to our stockholders.
◦Our directors and officers have limited liability and have rights to indemnification.
10

Table of Contents
Details of our risk factors are as follows:
Risks related to our business
We may deviate from our present capital allocation strategy.
We believe that our present capital allocation strategy will provide us with optimized returns. However, implementation of our capital allocation strategy depends on the interplay of several factors such as our stock price, our outstanding common shares, the interest rates on our debt, and the rate of return on available investments. If these factors are not conducive to implementing our present capital allocation strategy, or we determine that adopting a different capital allocation strategy is in the best interest of shareholders, we reserve the right to deviate from this approach. There can be no assurance that we will not deviate from or adopt an alternative capital allocation strategy moving forward.
We may need additional financing, or our business expansion plans may be significantly limited.
If cash generated from our operations is insufficient to satisfy our working capital and capital expenditure requirements, we will need to raise additional funds through the public or private sale of our equity or debt securities. The timing and amount of our capital requirements will depend on a number of factors, including cash flow and cash requirements for nightclub acquisitions and new restaurant development. If additional funds are raised through the issuance of equity or convertible debt securities, the ownership percentage of our then-existing shareholders will be diluted. We cannot ensure that additional financing will be available on terms favorable to us, if at all. Any future equity financing, if available, may result in dilution to existing shareholders; and debt financing, if available, may include restrictive covenants. Any failure by us to procure timely additional financing, if needed, will have material adverse consequences on our business operations.
There is substantial competition in the nightclub entertainment industry, which may affect our ability to operate profitably or acquire additional clubs.
Our nightclubs face substantial competition. Some of our competitors may have greater financial and management resources than we do. Additionally, the industry is subject to unpredictable competitive trends and competition for general entertainment dollars. There can be no assurance that we will be able to remain profitable in this competitive industry.
The adult entertainment industry is extremely volatile.
Historically, the adult entertainment, restaurant and bar industry has been an extremely volatile industry. The industry tends to be extremely sensitive to the general local economy, in that when economic conditions are prosperous, adult entertainment industry revenues increase, and when economic conditions are unfavorable, entertainment industry revenues decline. Coupled with this economic sensitivity are the trendy personal preferences of the customers who frequent adult nightclubs. We continuously monitor trends in our customers’ tastes and entertainment preferences so that, if necessary, we can make appropriate changes which will allow us to remain one of the premiere adult nightclubs. However, any significant decline in general corporate conditions or uncertainties regarding future economic prospects that affect consumer spending could have a material adverse effect on our business. In addition, we have historically catered to a clientele base from the upper end of the market. Accordingly, further reductions in the amounts of entertainment expenses allowed as deductions from income under the Internal Revenue Code of 1954, as amended, could adversely affect sales to customers dependent upon corporate expense accounts.
Private advocacy group actions targeted at the kind of adult entertainment we offer could result in limitations in our inability to operate in certain locations and negatively impact our business.
Our ability to operate successfully depends on the protection provided to us under the First Amendment to the U.S. Constitution. From time to time, private advocacy groups have sought to target our nightclubs by petitioning for non-renewal of certain of our permits and licenses. Furthermore, private advocacy groups, which have influence on certain financial institutions, have swayed these institutions to not do business with us. In addition to possibly limiting our operations and financing options, negative publicity campaigns, lawsuits and boycotts could negatively affect our businesses and cause additional financial harm by discouraging investors from investing in our securities or requiring that we incur significant expenditures to defend our business.
11

Table of Contents
We rely heavily on information technology in our operations and any material failure, weakness, interruption, or breach of security could prevent us from effectively operating our business.
Our operations and corporate functions rely heavily on information systems, including point-of-sale processing, management of our supply chain, payment of obligations, collection of cash, electronic communications, data warehousing to support analytics, finance and accounting systems, mobile technologies to enhance the customer experience, and other various processes and procedures, some of which are handled by third parties. Our ability to efficiently and effectively manage our business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, or a breach in security relating to these systems could result in delays in consumer service and reduce efficiency in our operations. These problems could adversely affect our results of operations, and remediation could result in significant, unplanned capital investments.
We are exposed to risks related to cyber security and protection of confidential information, and failure to protect the integrity and security of payment card or individually identifiable information of our guests and employees or confidential and proprietary information of the Company could damage our reputation and expose us to loss of revenues, increased costs, and litigation.
Our technology systems contain personal, financial, and other information that is entrusted to us by our guests and employees, as well as financial, proprietary, and other confidential information related to our business, and a significant portion of our sales are by credit or debit cards. If our technology systems, or those of third-party services providers we rely upon, are compromised as a result of a cyber-attack (including whether from circumvention of security systems, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, or social engineering) or other external or internal method, it could result in an adverse and material impact on our reputation, operations, and financial condition. The cyber risks we face range from cyber-attacks common to most industries, to attacks that target us due to the confidential consumer information we obtain through our electronic processing of credit and debit card transactions. Such security breaches could also result in litigation or governmental investigation against us, as well as the imposition of penalties. These impacts could also occur if we are perceived either to have had an attack or to have failed to properly respond to an incident.
We are subject to a variety of continually evolving and developing laws and regulations regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of personal data. The use and disclosure of such information is regulated and enforced at the federal, state and international levels, and these laws, rules and regulations are subject to change.
As privacy and information security laws and regulations change or cyber risks evolve pertaining to data, we may incur significant additional costs in technology, third-party services, and personnel to maintain systems designed to anticipate and prevent cyber-attacks. As with many public companies, our defenses are under attack regularly. There might be minor intrusions from time to time. We have added certain preventive measures to reduce cyber risks. However, we cannot provide assurance that our security frameworks and measures will be successful in preventing future significant cyber-attacks or data loss.
Our acquisitions may result in disruptions in our business and diversion of management’s attention.
We have made and may continue to make acquisitions of complementary nightclubs, restaurants or related operations. Any acquisitions will require the integration of the operations, products and personnel of the acquired businesses and the training and motivation of these individuals. Such acquisitions may disrupt our operations and divert management’s attention from day-to-day operations, which could impair our relationships with current employees, customers and partners. We may also incur debt or issue equity securities to pay for any future acquisitions. These issuances could be substantially dilutive to our stockholders. In addition, our profitability may suffer because of acquisition-related costs or amortization, or impairment costs for acquired goodwill and other intangible assets. If management is unable to fully integrate acquired business, products, or persons with existing operations, we may not receive the benefits of the acquisitions, and our revenues and stock trading price may decrease.
12

Table of Contents
The impact of new club or restaurant openings could result in fluctuations in our financial performance.
Performance of any new club or restaurant location will usually differ from its originally targeted performance due to a variety of factors, and these differences may be material. New clubs and restaurants typically encounter higher customer traffic and sales in their initial months, which may decrease over time. Accordingly, sales achieved by new or reconcepted locations may not be indicative of future operating results. Additionally, we incur substantial pre-opening expenses each time we open a new establishment, which expenses may be higher than anticipated. Due to the foregoing factors, results for any one fiscal quarter are not necessarily indicative of results to be expected for any other fiscal quarter or for a full fiscal year.
Our ability to grow sales through delivery orders is uncertain.
Part of our strategy for restaurant growth is dependent on increased sales from guests that want our food delivered to them. We currently rely on third-party delivery providers for the ordering and payment platforms that receive guest orders and that send orders directly to our point-of-sale system. These platforms could be damaged or interrupted by technological failures, cyber-attacks, or other factors, which may adversely impact our sales through these channels.
Delivery providers generally fulfill delivery orders through drivers that are independent contractors. These drivers may make errors, fail to make timely deliveries, damage our food, or poorly represent our brands, which may lead to customer disappointment, reputational harm and unmet sales expectations. Our sales may also be adversely impacted if there is a shortage of drivers that are willing and available to make deliveries from our restaurants. We also incur additional costs associated with delivery orders, and it is possible that these orders could cannibalize more profitable in-restaurant visits or take-out orders.
We incur significant costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives.
We incur significant legal, accounting and other expenses that our non-public competition does not incur. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), as well as new rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring certain corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and effective disclosure controls and procedures. In particular, under Section 404 of the Sarbanes-Oxley Act, we are required to perform system and process evaluation and testing on the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm is required to report on the effectiveness of our internal control over financial reporting. In performing this evaluation and testing, both our management and our independent registered public accounting firm concluded that our internal control over financial reporting is not effective as of September 30, 2024. We are, however, addressing this issue and remediating our material weaknesses. When we were to identify a material weakness, correcting that issue, and thereafter our continued compliance with Section 404 require that we incur substantial accounting expense and expend significant management efforts. Moreover, if we are not able to correct an internal control issue and comply with the requirements of Section 404 in a timely manner, or if in the future we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.
13

Table of Contents
We have identified material weaknesses in our internal control over financial reporting.
Management, including our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2024, and concluded that we did not maintain effective internal control over financial reporting. Management identified material weaknesses related to (1) ineffective design and operation of controls over certain information technology general controls, including 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 (3) ineffective design and operation of controls, which include management review controls, over the Company's assessments of potential impairment. See Item 9A, “Controls and Procedures,” below. While certain actions have been taken to implement a remediation plan to address these material weaknesses and to enhance our internal control over financial reporting, if these material weaknesses are not remediated, it could adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner, which could negatively affect investor confidence in our Company, and, as a result, the value of our common stock could be adversely affected.
We may have uninsured risks in excess of our insurance coverage or self-insurance.
Historically, we have maintained insurance in amounts we consider adequate for personal injury and property damage to which the business of the Company may be subject. As of October 1, 2024, however, we discontinued general liability and liquor insurance coverage in a number of establishments due to increasingly prohibitive costs of such coverage, and we are currently in the process of establishing self-insurance for the claims for which third-party insurance coverage is financially prohibitive. However, we still carry at least the minimum insurance coverage where it is required by law for licensing requirements. There can be no assurance that we will not have uninsured liabilities or liabilities in excess of the coverage provided by insurance or self-insurance, which liabilities may be imposed pursuant to the Texas “dram shop” statute or similar “dram shop” statutes or common law theories of liability in other states where we operate or expand. For example, the Texas “dram shop” statute provides a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to such person if it was apparent to the server that the individual being sold, served or provided with an alcoholic beverage was obviously intoxicated to the extent that he presented a clear danger to himself and others. An employer is not liable for the actions of its employee who over-serves if (i) the employer requires its employees to attend a seller training program approved by the TABC; (ii) the employee has actually attended such a training program; and (iii) the employer has not directly or indirectly encouraged the employee to violate the law. It is our policy to require that all servers of alcohol working at our clubs in Texas be certified as servers under a training program approved by the TABC, which certification gives statutory immunity to the sellers of alcohol from damage caused to third parties by those who have consumed alcoholic beverages at such establishment pursuant to the TABC. There can be no assurance, however, that uninsured liabilities may not arise in the markets in which we operate which could have a material adverse effect on the Company.
We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.
Increasing legal complexity will continue to affect our operations and results. We could be subject to legal proceedings that may adversely affect our business, including class actions, administrative proceedings, government investigations, employment and personal injury claims, claims alleging violations of federal and state laws regarding consumer, workplace and employment matters, wage and hour claims, discrimination and similar matters, landlord/tenant disputes, disputes with current and former suppliers, claims by current and former franchisees, contractors, data privacy claims and intellectual property claims (including claims that we infringed upon another party’s trademarks, or copyrights). Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure to litigation which could result in significant judgments, including punitive and liquidated damages, and injunctive relief.
14

Table of Contents
Occasionally, our guests file complaints or lawsuits against us alleging that we are responsible for an illness or injury they suffered as a result of a visit to our clubs or restaurants, or that we have problems with food quality or operations. As a Company, we take responsible alcohol service seriously. However, we are subject to "dram shop" statutes. These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that served alcoholic beverages to the intoxicated person. Some litigation against restaurant chains has resulted in significant judgments, including punitive damages, under dram shop statutes. Because a plaintiff may seek punitive damages, which may not be covered by insurance, this type of action could have an adverse impact on our financial condition and results of operations.
Litigation involving our relationship with contractors and the legal distinction between our contractors and us for employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our operations and subject us to incremental liability for their actions.
Our operating results could also be affected by the following:
•The relative level of our defense costs and nature and procedural status of pending proceedings;
•The cost and other effects of settlements, judgments or consent decrees, which may require us to make disclosures or to take other actions that may affect perceptions of our brands and products;
•Adverse results of pending or future litigation, including litigation challenging the composition and preparation of our products, or the appropriateness or accuracy of our marketing or other communication practices; and
•The scope and terms of insurance or indemnification protections that we may have (if any).
Claims brought by government authorities have the potential to be especially disruptive to our business and operations. As described further under “Legal Matters” in Note 10 to our consolidated financial statements, in 2024, the New York State Attorney General (“NY AG”) and the New York State Department of Taxation and Finance (“NY DTF”) has executed search warrants on the Company’s corporate headquarters in Houston, Texas, three separate clubs in New York, New York, and has sent the Company a subpoena requesting documents and other information with respect to certain clubs in New York and Florida. The investigation appears to be related to the Company’s New York State tax filings and possible entertainment benefits provided to NY DTF personnel. The Company is cooperating with the NY AG and its investigation. As a result of this investigation, a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process. It is not possible at this time to determine whether the Company will incur any fines, penalties, or liabilities in connection with the investigation. If, however, a government authority was to allege that illegal conduct was committed by the Company or any of its employees or executives, regardless of whether any such claims are valid, such claims have the potential to affect our business and defending such claims may be expensive and may divert time, attention and money away from our operations and hurt our performance. Further, adverse publicity resulting from these claims may hurt our business.
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time, attention and money away from our operations and hurt our performance. A judgment significantly in excess of any applicable insurance coverage could have significant adverse effect on our financial condition or results of operations. Further, adverse publicity resulting from these claims may hurt our business.
Our previous liability insurer may be unable to provide coverage to us and our subsidiaries.
As previously reported, the Company and its subsidiaries were insured under a liability policy issued by Indemnity Insurance Corporation, RRG (“IIC”) through October 25, 2013. The Company and its subsidiaries changed insurance companies on that date.
On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (“Rehabilitation Order”), which declared IIC impaired, insolvent and in an unsafe condition and placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (“Commissioner”) in her capacity as receiver (“Receiver”). The Rehabilitation Order empowered the Commissioner to rehabilitate IIC through a variety of means, including gathering assets and marshaling those assets, as necessary. Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014.
15

Table of Contents
On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC. The Liquidation Order further ordered that all claims against IIC must have been filed with the Receiver before the close of business on January 16, 2015 and that all pending lawsuits involving IIC as the insurer were further stayed or abated until October 7, 2014. As a result, the Company and its subsidiaries no longer had insurance coverage under the liability policy with IIC. The Company has retained counsel to defend against and evaluate these claims and lawsuits. We are funding 100% of the costs of litigation and will seek reimbursement from the bankruptcy receiver. The Company filed the appropriate claims against IIC with the Receiver before the January 16, 2015 deadline and has provided updates as requested; however, there are no assurances of any recovery from these claims. It is unknown at this time what effect this uncertainty will have on the Company. As of September 30, 2024, we have 1 remaining unresolved claim out of the original 71 claims.
The protection provided by our service marks is limited.
Our rights to the trade names “RCI Hospitality Holdings, Inc.,” “Rick’s,” “Rick’s Cabaret,” “Tootsie’s Cabaret,” “Club Onyx,” “XTC Cabaret,” “Temptations,” “Jaguars,” “Downtown Cabaret,” “Cabaret East,” “Bombshells Restaurant and Bar,” “Vee Lounge,” “Mile High Men’s Club,” “Country Rock Cabaret,” “PT’s,” and “Diamond Cabaret” are established under common law, based upon our substantial and continuous use of these trade names in interstate commerce, some of which have been in use at least as early as 1987. We have registered our service mark, “RICK’S AND STARS DESIGN,” and the “BOMBSHELLS RESTAURANT & BAR” logo design with the United States Patent and Trademark Office. We have also obtained service mark registrations from the Patent and Trademark Office for “RICK’S AND STARS DESIGN” logo, “RCI HOSPITALITY HOLDINGS, INC.,” “RICK’S,” “RICK’S CABARET,” “CLUB ONYX,” “XTC CABARET,” “SCARLETT’S CABARET,” “SILVER CITY CABARET,” “BOMBSHELLS RESTAURANT AND BAR,” “THE SEVILLE CLUB,” “DOWN IN TEXAS SALOON,” “HOOPS CABARET,” “VEE LOUNGE,” “STUDIO 80,” “FOXY’S CABARET,” “EXOTIC DANCER,” “TOYS FOR TATAS,” “MILE HIGH MEN’S CLUB,” “MHMC logo,” “AFTER DARK,” “COUNTRY ROCK CABARET,” “PT’S,” “DIAMOND CABARET,” "CABARET ROYALE," BABY DOLLS SALOON," "BABY DOLLS TOPLESS SALOON," "BABY DOLLS," "JAGUARS," and BOMBSHELLS OFFICER’S CLUB are registered through service mark registrations issued by the United States Patent and Trademark Office. As of this date, we have pending registration applications for the names “TOOTSIES CABARET,” "RICK'S REWARDS," "VENICE CABARET," “CHERRY CREEK FOOD HALL AND BREWERY”, and “THE MANSION.” We also own the rights to numerous trade names associated with our media division. There can be no assurance that these steps we have taken to protect our service marks will be adequate to deter misappropriation of our protected intellectual property rights. Litigation may be necessary in the future to protect our rights from infringement, which may be costly and time consuming. The loss of the intellectual property rights owned or claimed by us could have a material adverse effect on our business.
We are dependent on key personnel.
Our future success is dependent, in a large part, on retaining the services of Eric Langan, our President and Chief Executive Officer, and Bradley Chhay, our Chief Financial Officer. Mr. Langan possesses a unique and comprehensive knowledge of our industry. While Mr. Langan has no present plans to leave or retire in the near future, his loss could have a negative effect on our operating, marketing and financial performance if we are unable to find an adequate replacement with similar knowledge and experience within our industry. Mr. Chhay possesses thorough familiarity with our accounting system and how it affects our operations. Mr. Chhay is also vital in our due diligence efforts when acquiring clubs. We maintain key-man life insurance with respect to Mr. Langan but not for Mr. Chhay. Although Messrs. Langan and Chhay have signed employment agreements with us (as described herein), there can be no assurance that Mr. Langan or Mr. Chhay will continue to be employed by us.
If we are not able to hire, develop, and retain qualified club and restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.
We rely on our restaurant and club-level employees to consistently provide high-quality food and positive experiences to our guests. In addition, our ability to continue to open new restaurants depends on us attracting, hiring, developing, and retaining high-quality managers. Maintaining appropriate staffing in our restaurants requires precise workforce planning, which planning has become more complex due to predictive scheduling laws (also called “fair workweek” or “secure scheduling”) and “just cause” termination legislation in certain geographic areas where we operate, and the so-called “great resignation” trend. The market for qualified talent continues to be competitive and we must ensure that we continue to offer competitive wages, benefits, and workplace conditions to retain qualified employees. We have experienced and may continue to experience challenges in hiring and retaining restaurant and club employees and in maintaining full restaurant
16

Table of Contents
and or club staffing in various locations, which has resulted in longer wait times for guest orders and potentially decreased employee satisfaction. A shortage of qualified candidates who meet all legal work authorization and training requirements, failure to hire and retain new restaurant or club employees in a timely manner or higher than expected turnover levels could affect our ability to open new restaurants, grow sales at existing restaurants and clubs or meet our labor cost objectives. In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our ability to meet our growth targets.
A failure to maintain food safety throughout the supply chain and food-borne illness concerns may have an adverse effect on our business.
Food safety is a top priority, and we dedicate substantial resources to ensuring that our guests enjoy safe, quality food products. However, food safety issues could be caused at the point of source or by food suppliers or distributors and, as a result, be out of our control. In addition, regardless of the source or cause, any report of food-borne illnesses such as E. coli, hepatitis A, trichinosis or salmonella, and other food safety issues including food tampering or contamination, at one of our restaurants or clubs could adversely affect the reputation of our brands and have a negative impact on our sales. Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the food service industry generally and adversely impact our sales. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.
Our venture, expansion, and renovation projects may face significant inherent risks.
Investment in certain projects we may undertake will be subject to the many risks inherent in the expansion or renovation of an existing enterprise or construction of a new enterprise, including unanticipated design, construction, regulatory, environmental and operating problems and lack of demand for our projects.
Our current and future projects could also experience:
•delays and significant cost increases;
•delays in obtaining or inability to obtain necessary permits, licenses and approvals;
•lack of sufficient, or delays in the availability of, financing;
•shortages of materials;
•shortages of skilled labor, work stoppages or labor disputes;
•poor performance or nonperformance by any third parties on whom we place reliance;
•unforeseen construction scheduling, engineering, environmental, permitting, construction or geological problems, including defective plans and specifications;
•weather interference, floods, fires or other casualty losses; and
•COVID-19 related delays.
The completion dates of any of our projects could differ significantly from expectations for construction-related or other reasons. Actual costs and construction periods for any of our projects can differ significantly from initial expectations. Our initial project costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared at inception of the project in consultation with architects and contractors. Many of these costs can increase over time as the project is built to completion.
We can provide no assurance that any project will be completed on time, if at all, or within established budgets, or that any project will result in increased earnings to us. Significant delays, cost overruns, or failures of our projects to achieve market acceptance could have a material adverse effect on our business, financial condition and results of operations.
17

Table of Contents
Other risk factors may adversely affect our financial performance.
Other risk factors that could cause our actual results to differ materially from those indicated in the forward-looking statements by affecting, among many things, pricing, consumer spending and consumer confidence, include, without limitation, changes in economic conditions and financial and credit markets, credit availability, increased fuel costs and availability for our employees, customers and suppliers, health epidemics or pandemics or the prospects of these events (such as reports on avian flu or COVID-19), consumer perceptions of food safety, changes in consumer tastes and behaviors, governmental monetary policies, changes in demographic trends, terrorist acts, energy shortages and rolling blackouts, and weather (including, major hurricanes and regional snow storms) and other acts of God.
We are also subject to the general risks of inflation, increases in minimum wage, health care, and other benefits that may have a material adverse effect on our cost structure, and the disruption in our supply chain caused by several factor, including the COVID-19 pandemic.
Risks related to general macroeconomic and safety conditions
The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt our business, which has and could continue to materially affect our operations, financial condition and results of operations for an extended period of time.
The COVID-19 pandemic had an adverse effect that was material on our business. The COVID-19 pandemic, federal, state and local government responses to COVID-19, our customers’ responses to the pandemic, and our Company’s responses to the pandemic all disrupted our business. In the United States, state and local governments imposed a variety of restrictions on people and businesses and public health authorities offered regular guidance on health and safety. Once COVID-19 vaccines were approved and moved into wider distribution in the United States in early 2021, public health conditions improved and almost all of the COVID-19 restrictions on businesses eased. During fiscal 2022, increases in the numbers of cases of COVID-19 throughout the United States including the Omicron variant which impacted our restaurants in the second quarter, mostly in January 2022, subjected some of our restaurants to other COVID-19-related restrictions such as mask and/or vaccine requirements for team members, guests or both. Exclusions and quarantines of restaurant team members or groups thereof disrupt an individual restaurant’s operations and often come with little or no notice to the local restaurant management. In the last couple of years, along with COVID-19, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and other cost of goods sold. These events further impacted the availability of team members needed to staff our restaurants and caused additional disruptions in our product supply chain.
Our business, financial condition, and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing war between Russia and Ukraine and the Israel-Hamas war.
The ongoing war between Russia and Ukraine and the more recent Israel-Hamas war could have adverse effects on global macroeconomic conditions which could negatively impact our business, financial condition, and results of operations. These conflicts are highly unpredictable and have already resulted in significant volatility in oil and natural gas prices worldwide.
If we are unable to maintain compliance with certain of our debt covenants or unable to obtain waivers, we may be unable to make additional borrowings and be declared in default where our debt will be made immediately due and payable. In addition, global economic conditions may make it more difficult to access new credit facilities.
Our liquidity position is, in part, dependent upon our ability to borrow funds from financial institutions and/or private individuals. Certain of our debts have financial covenants that require us to maintain certain operating income to debt service ratios. As of September 30, 2024, we were in compliance with all covenants. Due to the impact of macroeconomic, geopolitical, and health and safety factors, and the potential economic slowdown, our financial performance in future periods could be negatively impacted. A failure to comply with the financial covenants under our credit facility or obtain waivers would give rise to an event of default under the terms of certain of our debts, allowing the lenders to accelerate repayment of any outstanding debt.
18

Table of Contents
We have recorded impairment charges in current and past periods and may record additional impairment charges in future periods.
Our nightclubs are often acquired with a purchase price based on historical EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). This results in certain nightclubs carrying a substantial amount of intangible asset value, mostly allocated to licenses and goodwill. Generally accepted accounting principles require periodic impairment review of indefinite-lived intangible assets, long-lived assets, and goodwill to determine if, or when events and circumstances indicate that, the fair value of these assets is not recoverable. As a result of our periodic impairment reviews, we recorded impairment charges of $38.5 million in 2024 (representing $8.9 million of goodwill impairment on four clubs, $11.8 million of SOB license impairment on seven clubs, $10.6 million of property and equipment impairment on four clubs and nine Bombshells units, $6.5 million of operating lease right-of-use assets impairment on five Bombshells units, $693,000 of tradename impairment on one club, and $68,000 related to other assets); $12.6 million in 2023 (representing $4.2 million of goodwill impairment on four clubs, $6.5 million of SOB license impairment on eight clubs, $1.0 million of operating lease right-of-use asset on one club, $814,000 of software impairment on two investment projects, and $58,000 of property and equipment impairment on one club); and $1.9 million in 2022 (representing $566,000 of goodwill impairment on one club, $293,000 of SOB license impairment on one club, and $1.0 million of property and equipment impairment on one club and one Bombshells unit). If difficult market and economic conditions materialize over the next year and/or we experience a decrease in revenue at one or more nightclubs or restaurants, we could incur a decline in fair value of one or more of our nightclubs or restaurants. This could result in future impairment charges of up to the total value of our tangible and intangible assets, including goodwill. We actively monitor our clubs and restaurants for any indication of impairment.
Risks related to regulations and/or regulatory agencies
Our business operations are subject to regulatory uncertainties which may affect our ability to continue operations of existing nightclubs, acquire additional nightclubs, or be profitable.
Adult entertainment nightclubs are subject to local, state and federal regulations. Our business is regulated by local zoning, local and state liquor licensing, local ordinances, and state and federal time place and manner restrictions. The adult entertainment provided by our nightclubs has elements of speech and expression and, therefore, enjoys some protection under the First Amendment to the United States Constitution. However, the protection is limited to the expression, and not the conduct of an entertainer. While our nightclubs are generally well established in their respective markets, there can be no assurance that local, state and/or federal licensing and other regulations will permit our nightclubs to remain in operation or profitable in the future.
The adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees. If federal or state law mandates that they be classified as employees, our business could be adversely impacted.
The adult entertainment industry standard is to classify adult entertainers as independent contractors, not employees. The Internal Revenue Service regulations and applicable state law guidelines regarding independent contractor classification are subject to judicial and agency interpretation, and it could be determined that the independent contractor classification is inapplicable. Further, if legal standards for classification of independent contractors change, it may be necessary to modify our compensation structure for these adult entertainers, including by paying additional compensation or reimbursing expenses. While we take steps to ensure that our adult entertainers are deemed independent contractors, if our adult entertainers are determined to have been misclassified as independent contractors, we would incur additional exposure under federal and state law, workers’ compensation, unemployment benefits, labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings. Any of these outcomes could result in substantial costs to us, could significantly impair our financial condition and our ability to conduct our business as we choose, and could damage our ability to attract and retain other personnel.
Our revenues could be significantly affected by limitations relating to permits to sell alcoholic beverages.
We derive a significant portion of our revenues from the sale of alcoholic beverages. States in which we operate may have laws which may limit the availability of a permit to sell alcoholic beverages, or which may provide for suspension or revocation of a permit to sell alcoholic beverages in certain circumstances. The temporary or permanent suspension or revocations of any such permits would have a material adverse effect on our revenues, financial condition and results of operations. In all states where we operate, management believes we are in compliance with applicable city, county, state or other local laws governing the sale of alcohol.
19

Table of Contents
Activities or conduct at our nightclubs may cause us to lose necessary business licenses, expose us to liability, or result in adverse publicity, which may increase our costs and divert management’s attention from our business.
We are subject to risks associated with activities or conduct at our nightclubs that are illegal or violate the terms of necessary business licenses. Some of our nightclubs operate under licenses for sexually oriented businesses and are afforded some protection under the First Amendment to the U.S. Constitution. While we believe that the activities at our nightclubs comply with the terms of such licenses, and that the element of our business that constitutes an expression of free speech under the First Amendment to the U.S. Constitution is protected, activities and conduct at our nightclubs may be found to violate the terms of such licenses or be unprotected under the U.S. Constitution. This protection is limited to the expression and not the conduct of an entertainer. An issuing authority may suspend or terminate a license for a nightclub found to have violated the license terms. Illegal activities or conduct at any of our nightclubs may result in negative publicity or litigation. Such consequences may increase our cost of doing business, divert management’s attention from our business and make an investment in our securities unattractive to current and potential investors, thereby lowering our profitability and our stock price.
We have developed comprehensive policies aimed at ensuring that the operation of each of our nightclubs is conducted in conformance with local, state and federal laws. We have a “no tolerance” policy on illegal drug use in or around our facilities. We continually monitor the actions of entertainers, waitresses and customers to ensure that proper behavior standards are met. However, such policies, no matter how well designed and enforced, can provide only reasonable, not absolute, assurance that the policies’ objectives are being achieved. Because of the inherent limitations in all control systems and policies, there can be no assurance that our policies will prevent deliberate acts by persons attempting to violate or circumvent them. Notwithstanding the foregoing limitations, management believes that our policies are reasonably effective in achieving their purposes.
Risk related to our common stock
We must continue to meet NASDAQ Global Market Continued Listing Requirements, or we risk delisting.
Our securities are currently listed for trading on the NASDAQ Global Market. We must continue to satisfy NASDAQ’s continued listing requirements or risk delisting which would have an adverse effect on our business. If our securities are ever delisted from NASDAQ, they may trade on the over-the-counter market, which may be a less liquid market. In such case, our shareholders’ ability to trade or obtain quotations of the market value of shares of our common stock would be severely limited because of lower trading volumes and transaction delays. These factors could contribute to lower prices and larger spreads in the bid and ask prices for our securities.
We may be subject to allegations, defamations, or other detrimental conduct by third parties, which could harm our reputation and cause us to lose customers and/or contribute to a deflation of our stock price.
We have been subject to allegations by third parties or purported former employees, negative internet postings, and other adverse public exposure on our business, operations and staff compensation. We may also become the target of defamations or other detrimental conduct by third parties or disgruntled former or current employees. Such conduct may include complaints, anonymous or otherwise, to regulatory agencies, media or other organizations. We may be subject to government or regulatory investigation or other proceedings as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such third-party conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Any government or regulatory investigations initiated as a result of the above may cause a deflation in our stock price. Additionally, allegations, directly or indirectly against us, may be posted on the internet, including social media platforms by anyone, whether or not related to us, on an anonymous basis. Any negative publicity on us or our management can be quickly and widely disseminated. Social media platforms and devices immediately publish the content of their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information posted may be inaccurate and adverse to us, and it may harm our reputation, business or prospects. The harm may be immediate without affording us an opportunity for redress or correction. Our reputation may be negatively affected as a result of the public dissemination of negative and potentially false information about our business and operations, which in turn may cause us to lose customers.
20

Table of Contents
Our quarterly operating results may fluctuate and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.
Our nightclub operations are affected by seasonal factors. Historically, we have experienced reduced revenues from April through September with the strongest operating results occurring from October through March. As a result, our quarterly and annual operating results and comparable restaurant sales may fluctuate significantly as a result of seasonality and the factors discussed above. Accordingly, results for any one fiscal quarter are not necessarily indicative of results to be expected for any other fiscal quarter or for any fiscal year and same-store sales for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of our common stock would likely decrease.
Anti-takeover effects of the issuance of our preferred stock could adversely affect our common stock.
Our board of directors has the authority to issue up to 1,000,000 shares of preferred stock in one or more series, to fix the number of shares constituting any such series, and to fix the rights and preferences of the shares constituting any series, without any further vote or action by the stockholders. The issuance of preferred stock by the board of directors could adversely affect the rights of the holders of our common stock. For example, such issuance could result in a class of securities outstanding that would have preferences with respect to voting rights and dividends and in liquidation over the common stock, and could (upon conversion or otherwise) enjoy all of the rights appurtenant to common stock. The board’s authority to issue preferred stock could discourage potential takeover attempts and could delay or prevent a change in control of the Company through merger, tender offer, proxy contest or otherwise by making such attempts more difficult to achieve or costlier. There are no issued and outstanding shares of preferred stock; there are no agreements or understandings for the issuance of preferred stock; and the board of directors has no present intention to issue preferred stock.
Future sales or the perception of future sales of a substantial amount of our common stock may depress our stock price.
The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market, or as a result of the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock.
Our stock price has been volatile and may fluctuate in the future.
The trading price of our securities may fluctuate significantly. This price may be influenced by many factors, including:
•our performance and prospects;
•the depth and liquidity of the market for our securities;
•investor perception of us and the industry in which we operate;
•changes in earnings estimates or buy/sell recommendations by analysts;
•general financial and other market conditions; and
•domestic economic conditions.
Public stock markets have experienced, and may experience, extreme price and trading volume volatility. These broad market fluctuations may adversely affect the market price of our securities.
Cumulative voting is not available to our stockholders.
Cumulative voting in the election of directors is expressly denied in our Articles of Incorporation. Accordingly, the holder or holders of a majority of the outstanding shares of our common stock may elect all of our directors.
21

Table of Contents
Our directors and officers have limited liability and have rights to indemnification.
Our Articles of Incorporation and Bylaws provide, as permitted by governing Texas law, that our directors and officers shall not be personally liable to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director or officer, with certain exceptions. The Articles further provide that we will indemnify our directors and officers against expenses and liabilities they incur to defend, settle, or satisfy any civil litigation or criminal action brought against them on account of their being or having been its directors or officers unless, in such action, they are adjudged to have acted with gross negligence or willful misconduct.
The inclusion of these provisions in the Articles may have the effect of reducing the likelihood of derivative litigation against directors and officers and may discourage or deter stockholders or management from bringing a lawsuit against directors and officers for breach of their duty of care, even though such an action, if successful, might otherwise have benefited us and our stockholders.
The Articles provide for the indemnification of our officers and directors, and the advancement to them of expenses in connection with any proceedings and claims, to the fullest extent permitted by Texas law. The Articles include related provisions meant to facilitate the indemnitee’s receipt of such benefits. These provisions cover, among other things: (i) specification of the method of determining entitlement to indemnification and the selection of independent counsel that will in some cases make such determination, (ii) specification of certain time periods by which certain payments or determinations must be made and actions must be taken, and (iii) the establishment of certain presumptions in favor of an indemnitee.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 1B. UNRESOLVED STAFF COMMENTS.
None.
22

Table of Contents
Item 1C. CYBERSECURITY.
We rely heavily on information technology systems to operate and manage all key aspects of our business. We also process substantial volumes of sensitive customer and employee personal information, which if impacted by cyber threats could result in financial and reputational harms and regulatory sanction. We have developed and implemented, and update on an ongoing basis, a risk-based information security program designed to identify, assess and manage material risks from cybersecurity threats.
Risk Management and Strategy
We assess, identify, and manage material risks related to potential cyber attacks on or through our information systems that could adversely affect the confidentiality, integrity, or availability of our information systems or the information residing on those systems through various processes. These processes include a wide variety of controls, technologies, methods, systems, and other processes that are designed to prevent, detect, or mitigate data loss, theft, and misuse, and unauthorized access to, or other cyber attacks or vulnerabilities affecting, our data.
The assessment of cyber risk is integrated into our overall risk management processes and cybersecurity is identified as a key risk within our enterprise risk management program. We strive to implement cyber policies, standards, processes, and controls for assessing, identifying, and managing material risks from cyber threats and responding to cyber attacks that are aligned with industry best practices.
We have an information technology team, led by our director of information technology, that is responsible for implementing and maintaining cybersecurity and data protection practices at the Company in close coordination with our senior management team. We seek to address cyber risks through a cross-functional approach, including relevant training for applicable employees and regular reviews and tests of our cybersecurity program that leverage work done by internal audit.
We use processes to oversee and identify material risks from cyber threats associated with our use of third-party technology and systems. We maintain processes to reduce the impact of a cyber attack at a third-party vendor. We maintain a cybersecurity incident response plan, which details the incident response procedures and points of contact related to the response processes. The response plan includes a decision-tree-based playbook, which is a supplement to the plan, and focuses on specific types of incidents and the appropriate response steps.
As of the date of this report, we are not aware of any recent cybersecurity attacks that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
See Item 1A—"Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information security systems.
Governance
Our board of directors has ultimate risk oversight responsibility for the Company and administers this responsibility both directly and with assistance from its committees. The Audit Committee oversees our overall enterprise risk management program and assists the entire board in fulfilling its oversight responsibility with respect to our information security and technology risks. The Audit Committee actively reviews and discusses our information security and technology risk management programs and regularly reports to the entire board on our relevant strengths and opportunities.
The Audit Committee receives periodic updates from our director of information technology. These updates include matters such as ongoing changes in our external and internal cyber threat landscape, new technology trends and regulatory developments, evolving internal policies and practices used to manage and mitigate cyber and technology-related risks, and trends in various metrics that are used to help assess our overall cybersecurity program effectiveness.
23

Table of Contents
Item 2. PROPERTIES.
As of September 30, 2024, we own 87 real estate properties. On 57 of these properties, we operate clubs or restaurants, including those temporarily closed. We lease multiple other properties to third-party tenants. Eight of our owned properties are in locations where we previously operated clubs or are adjacent to acquired clubs, but now lease the buildings to third parties. Twenty two are non-income-producing properties for corporate use (including our corporate office) or future club or restaurant locations, or may be offered for sale in the future. Thirteen of our clubs and restaurants are in leased locations.
Our principal corporate office is located at 10737 Cutten Road, Houston, Texas 77066, consisting of a 21,000-square foot corporate office and an 18,000-square foot warehouse facility.
Below is a list of locations we operated as of September 30, 2024:

Name of Establishment |  | Fiscal Year Acquired/Opened |
Club Onyx, Houston, TX |  | 1995 |
Rick’s Cabaret, Minneapolis, MN |  | 1998 |
XTC Cabaret, Austin, TX |  | 1998 |
Scarlett's Cabaret, San Antonio, TX |  | 1998 |
Rick’s Cabaret, New York City, NY |  | 2005 |
Club Onyx, Charlotte, NC |  | 2005 | (1)
Jaguars Club, San Antonio, TX |  | 2006 |
Rick’s Cabaret, Fort Worth, TX |  | 2007 |
Tootsie’s Cabaret, Miami Gardens, FL |  | 2008 |
Dallas Showclub, Dallas, TX |  | 2008 |
Rick’s Cabaret, Round Rock, TX |  | 2009 |
Cabaret East, Fort Worth, TX |  | 2010 |
Rick’s Cabaret DFW, Fort Worth, TX |  | 2011 |
Downtown Cabaret, Minneapolis, MN |  | 2011 |
Silver City Cabaret, Dallas, TX |  | 2012 |
Jaguars Club, Odessa, TX |  | 2012 |
Jaguars Club, Phoenix, AZ |  | 2012 |
Jaguars Club, Longview, TX |  | 2012 |
Baby Dolls, Tye, TX |  | 2012 |
Jaguars Club, Edinburg, TX |  | 2012 |
Chicas Locas, El Paso, TX |  | 2012 |
Chicas Locas, Harlingen, TX |  | 2012 |
Studio 80, Fort Worth, TX |  | 2013 | (1)
Bombshells, Dallas, TX |  | 2013 |
Scarlett's Cabaret, Sulphur, LA |  | 2013 |
Temptations, Beaumont, TX |  | 2013 |
Vivid Cabaret, New York, NY |  | 2014 | (1)
Bombshells, Austin, TX |  | 2014 | (1)
Rick’s Cabaret, Odessa, TX |  | 2014 |
Bombshells, Spring, TX |  | 2014 | (1)
Bombshells Fuqua, Houston, TX |  | 2014 | (1)
Foxy’s Cabaret, Austin TX |  | 2015 |
The Seville, Minneapolis, MN |  | 2015 |

24

Table of Contents

Hoops Cabaret and Sports Bar, New York, NY |  | 2016 | (1)
Bombshells, Highway 290 Houston, TX |  | 2017 | (1)
Scarlett’s Cabaret, Washington Park, IL |  | 2017 |
Scarlett’s Cabaret, Miami, FL |  | 2017 |
Bombshells, Pearland, TX |  | 2018 |
Kappa Men’s Club, Kappa, IL |  | 2018 |
Rick’s Cabaret, Chicago, IL |  | 2019 |
Rick’s Cabaret, Pittsburgh, PA |  | 2019 |
Bombshells I-10, Houston, TX |  | 2019 |
Bombshells 249, Houston, TX |  | 2019 |
Bombshells, Katy, TX |  | 2020 |
Bombshells 59, Houston, TX |  | 2020 |
Diamond Cabaret, Denver, CO |  | 2022 | (1)
Scarlett's Cabaret, Denver, CO |  | 2022 |
PT's Showclub, Denver, CO |  | 2022 |
Rick's Cabaret, Denver, CO |  | 2022 | (1)
Diamond Cabaret, St. Louis, IL |  | 2022 | (1)
Country Rock Cabaret, St. Louis, IL |  | 2022 | (1)
PT's Showclub, Indianapolis, IN |  | 2022 |
Rick's Cabaret, Raleigh, NC |  | 2022 | (1)
Rick's Cabaret, Portland, ME |  | 2022 |
PT's Showclub, Louisville, KY |  | 2022 |
PT's Centerfold, Denver, CO |  | 2022 |
Mansion Gentlemen's Club & Steakhouse, Newburgh, NY |  | 2022 |
Bombshells, Arlington, TX |  | 2022 |
Playmates Club, Miami, FL |  | 2022 |
Cheetah Gentlemen's Club, Miami, FL |  | 2022 |
PT's Showclub, Odessa, TX |  | 2022 |
Heartbreakers Gentlemen's Club, Dickinson, TX |  | 2023 |
Cherry Creek Food Hall, Denver, CO |  | 2023 |
Baby Dolls, Dallas, TX |  | 2023 |
Chicas Locas, Dallas, TX |  | 2023 |
Chicas Locas, Arlington, TX |  | 2023 |
Chicas Locas, Houston, TX |  | 2023 |
Baby Dolls, Fort Worth, TX |  | 2023 | (2)
PT's Centerfold, Lubbock, TX |  | 2024 |
Bombshells, Stafford, TX |  | 2024 |

(1)Leased location.
(2)Temporarily closed due to fire.
Our property leases are typically for a fixed rental rate with contingent rent for certain locations. The lease terms generally have initial terms of 10 to 20 years with renewal terms of 5 to 20 years. At September 30, 2024, certain of the properties we own were collateral for mortgage debt amounting to approximately $151.1 million. We believe that our existing facilities, both owned and leased, are in good condition and adequate and suitable for the conduct of our business.
See related information in Notes 6 and 8 to our consolidated financial statements.
25

Table of Contents
Item 3. LEGAL PROCEEDINGS.
See the “Legal Matters” section within Note 10 to our consolidated financial statements within this Annual Report on Form 10-K for the requirements of this Item, which section is incorporated herein by reference.
Item 4. MINE SAFETY DISCLOSURES.
Not applicable.
26

Table of Contents
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our common stock is quoted on the NASDAQ Global Market under the symbol “RICK.”
Holders
On December 13, 2024, the closing stock price for our common stock as reported by NASDAQ was $52.09, and there were 87 stockholders of record of our common stock (excluding broker held shares in “street name”). Currently, we estimate that there are approximately 11,700 stockholders having beneficial ownership in street name.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Colonial Stock Transfer Company, Inc., 66 Exchange Place, 1st Floor, Salt Lake City, Utah 84111.
Dividend Policy
Prior to 2016, we had not paid cash dividends on our common stock. Starting in March 2016, in conjunction with our share buyback program (see discussion below), our board of directors declared regular quarterly cash dividends. Below are our historical dividend payments:

| Quarterly Dividend per Share
Second quarter 2016 through third quarter 2019 | $0.03
Fourth quarter 2019 | $0.04
First quarter 2020 | $0.03
Second quarter 2020 | $0.04
Third quarter 2020 | $0.03
Fourth quarter 2020 through first quarter 2022 | $0.04
Second quarter 2022 through first quarter 2023 | $0.05
Second quarter 2023 though third quarter 2024 | $0.06
Fourth quarter 2024 through current | $0.07

During fiscal 2024, 2023, and 2022, we paid cash dividends totaling $2.3 million, $2.1 million, and $1.8 million, respectively.
27

Table of Contents
Purchases of Equity Securities by the Issuer
Our share repurchase activity during the three months ended September 30, 2024 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
July 1-31, 2024 |  | 130,244 |  |  | $ | 44.85 |  |  | 130,244 |  |  | $ | 23,025,567 |
August 1-31, 2024 |  | 21,895 |  |  | $ | 45.23 |  |  | 21,895 |  |  | $ | 22,035,349 |
September 1-30, 2024 |  | 22,651 |  |  | $ | 44.16 |  |  | 22,651 |  |  | $ | 21,035,109 |
|  | 174,790 |  |  |  |  | 174,790 |  |  |

(1) Prices include any commissions and transaction costs, excluding excise tax on stock buybacks.
(2) All shares were purchased pursuant to the repurchase plans approved by the board of directors. On July 9, 2024, the board of directors approved a $25.0 million increase in the Company's share repurchase program.
Equity Compensation Plan Information
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.
See Note 1 1 to our consolidated financial statements for details.
28

Table of Contents
Stock Performance Graph
The following chart compares the five-year cumulative total stock performance of our common stock; the NASDAQ Composite Index (IXIC); the Russell 2000 Index (RUT); and the Dow Jones U.S. Restaurant & Bar Index (DJUSRU), our peer index. The graph assumes a hypothetical investment of $100 on September 30, 2019 in each of our common stock and each of the indices, and that all dividends were reinvested. The measurement points utilized in the graph consist of the last trading day as of September 30 each year, representing the last day of our fiscal year. The calculations exclude trading commissions and taxes. We have selected the Dow Jones U.S. Restaurant & Bar Index as our peer index since it represents a broader group of restaurant and bar operators that are more aligned to our core business operations. RICK is a component of the NASDAQ Composite Index and the Russell 2000 Index. The historical stock performance presented below is not intended to and may not be indicative of future stock performance.

| 9/30/2019 |  | 9/30/2020 |  | 9/30/2021 |  | 9/30/2022 |  | 9/30/2023 |  | 9/30/2024
RCI Hospitality Holdings, Inc. | $ | 100.00 |  |  | $ | 98.88 |  |  | $ | 332.43 |  |  | $ | 315.45 |  |  | $ | 293.07 |  |  | $ | 215.37 |
NASDAQ Composite Index | $ | 100.00 |  |  | $ | 139.61 |  |  | $ | 180.62 |  |  | $ | 132.21 |  |  | $ | 165.26 |  |  | $ | 227.38 |
Dow Jones U.S. Restaurant & Bar Index | $ | 100.00 |  |  | $ | 101.30 |  |  | $ | 124.18 |  |  | $ | 106.75 |  |  | $ | 121.60 |  |  | $ | 148.63 |
Russell 2000 Index | $ | 100.00 |  |  | $ | 98.97 |  |  | $ | 144.70 |  |  | $ | 109.28 |  |  | $ | 117.18 |  |  | $ | 146.38 |

Item 6. [RESERVED]
29

Table of Contents
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand RCI Hospitality Holdings, Inc., our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes thereto contained in Item 8 – “Financial Statements and Supplementary Data” of this report. This overview summarizes the MD&A, which includes the following sections:
•Our Business — a general description of our business and the adult nightclub industry, our objective, our strategic priorities, our core capabilities, and challenges and risks of our business.
•Critical Accounting Policies and Estimates — a discussion of accounting policies that require critical judgments and estimates.
•Operations Review — an analysis of our Company’s consolidated results of operations for the three years presented in our consolidated financial statements.
•Liquidity and Capital Resources — an analysis of cash flows, aggregate contractual obligations, and an overview of financial position.
OUR BUSINESS
The following are our operating segments:

Nightclubs | Our wholly-owned subsidiaries own and/or operate upscale adult nightclubs. These nightclubs are in Houston, Austin, San Antonio, Dallas, Fort Worth, Beaumont, Longview, Harlingen, Edinburg, Tye, Lubbock, Round Rock, El Paso and Odessa, Texas; Denver, Colorado; Charlotte and Raleigh, North Carolina; Minneapolis, Minnesota; New York and Newburgh, New York; Miami Gardens, Pembroke Park and Miami, Florida; Pittsburgh, Pennsylvania; Phoenix, Arizona; Louisville, Kentucky; Portland, Maine; Indianapolis, Indiana; and Washington Park, Kappa, Sauget and Chicago, Illinois. No sexual contact is permitted at any of our locations. We also own and operate a Studio 80 dance club in Fort Worth, Texas. We also own and lease to third parties real properties that are adjacent to (or used to be locations of) our clubs.
Bombshells | Our wholly-owned subsidiaries own and operate restaurants and sports bars in Houston, Dallas, Austin, Spring, Pearland, Tomball, Katy, Arlington, and Stafford, Texas under the brand name Bombshells Restaurant & Bar. Bombshells also operates a food hall in Denver, Colorado.
Other | Our wholly-owned subsidiaries own a media division (“Media Group”), including the leading trade magazine serving the multibillion-dollar adult nightclubs industry and the adult retail products industry. We also own an industry trade show, an industry trade publication and more than a dozen industry and social media websites. Included here is Drink Robust, which is licensed to sell Robust Energy Drink in the United States.

We generate our revenues from the sale of liquor, beer, wine, food, and merchandise; service revenues such as cover charges, membership fees, and facility use fees; and other revenues such as commissions from vending and ATM machines, real estate rental, valet parking, and other products and services for both nightclub and restaurant/sports bar operations. Other revenues include Media Group revenues for the sale of advertising content and revenues from our annual Expo convention, and Drink Robust sales. Our fiscal year-end is September 30.
30

Table of Contents
Same-Store Sales. 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 significantly higher than normal. We exclude from a particular month’s calculation units previously included in the same-store sales base that have closed temporarily for more than 15 days 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 definitions stated above. Revenues outside of our Nightclubs and Bombshells reportable segments’ core business are excluded from same-store sales calculation.
Our goal is to use our Company’s assets—our brands, financial strength, and the talent and strong commitment of our management and employees—to become more competitive and to accelerate growth.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s discussion and analysis of financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these consolidated financial statements requires our management to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates are based on management’s historical and industry experience and on various other assumptions that are believed to be reasonable under the circumstances. On a regular basis, we evaluate these accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results may differ from our estimates, and such differences could be material.
A full discussion of our significant accounting policies is contained in Note 2 to our consolidated financial statements, which is included in Item 8 – “Financial Statements and Supplementary Data” of this report. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our financial results. These estimates require our most difficult, subjective or complex judgments because they relate to matters that are inherently uncertain. We have reviewed these critical accounting policies and estimates and related disclosures with our Audit Committee.
Impairment of Long-Lived Assets
We review long-lived assets, such as property and equipment, and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. These events or changes in circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the estimated undiscounted cash flows over the estimated remaining useful life of the primary asset included in the asset group. If the asset group is not recoverable, the impairment loss is calculated as the excess of the carrying value over the fair value. We define our asset group as an operating club or restaurant location, which is also our reporting unit or the lowest level for which cash flows can be identified. Key estimates in the undiscounted cash flow model include management’s estimate of the projected revenues and operating margins. Fair value is determined using the market, income, or cost approaches. If fair value is used to determine using the income approach, an additional key assumption is the selection of a weighted-average cost of capital to discount cash flows. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated.
During the third quarter of 2024, we impaired six properties for $4.8 million in property and equipment and $5.7 million in operating lease right-of-use assets. During the fourth quarter of 2024, we impaired ten properties for $5.8 million in property and equipment and $747,000 in operating lease right-of-use assets. These properties are predominantly comprised of leased Bombshells locations.
During the third quarter of 2023, we impaired one property for $58,000 for its property and equipment and $1.0 million for its operating lease right-of-use asset before the club's permanent closure. During the fourth quarter of 2023, we also recognized software impairments amounting to $814,000 related to two venture projects.
31

Table of Contents
During the third quarter of 2022, we impaired two properties for a total of $1.0 million one due to eminent domain by the state of Texas and the other due to underperformance.
Key assumptions and estimates used in long-lived asset impairment testing, the most significant of which is our estimated future cash flows, may produce materially different amounts of fair value, which could significantly impact our results of operations.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets that have indefinite useful lives are tested annually for impairment during our fourth fiscal quarter and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired.
Our impairment calculations require management to make assumptions and to apply judgment in order to estimate fair values. If our actual results are not consistent with our estimates and assumptions, we may be exposed to impairments that could be material. We do not believe that there is a reasonable likelihood that there will be a change in the estimates or assumptions we used that could cause a material change in our calculated impairment charges.
For our goodwill impairment review, we have the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value. This assessment is based on several factors, including industry and market conditions, overall financial performance, including an assessment of cash flows in comparison to actual and projected results of prior periods. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value based on our qualitative analysis, or if we elect to skip this step, we perform a Step 1 quantitative analysis to determine the fair value of the reporting unit. The fair value is determined using market-related valuation models, including discounted cash flows and comparable asset market values. Key estimates in the discounted cash flow model include management’s estimate of the projected revenues and operating margins, along with the selection of a weighted-average cost of capital to discount cash flows. We recognize goodwill impairment in the amount that the carrying value of the reporting unit exceeds the fair value of the reporting unit, not to exceed the amount of goodwill allocated to the reporting unit, based on the results of our Step 1 analysis. For the year ended September 30, 2024, we identified four reporting units that were impaired and recognized a total goodwill impairment of $8.9 million. For the year ended September 30, 2023, we identified four reporting units that were impaired and recognized a total goodwill impairment of $4.2 million. For the year ended September 30, 2022, we identified one reporting unit that was impaired and recognized a goodwill impairment loss of $566,000.
For indefinite- and definite-lived intangibles, specifically SOB licenses, we determine fair value by estimating the multiperiod excess earnings of the asset with key assumptions being similar to those used in the goodwill impairment valuation model. We recorded impairment charges for SOB licenses amounting to $11.8 million in 2024 related to seven clubs, $6.5 million in 2023 related to eight clubs, and $293,000 in 2022 related to one club. For indefinite-lived tradename, we determine fair value by using the relief from royalty method. The fair value is then compared to the carrying value and an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. We recorded impairment charges for tradenames amounting to $693,000 in 2024 related to one club, $0 in 2023, and $0 in 2022.
Business Combinations
The Company accounts for business combinations under the acquisition method of accounting, which requires the recognition of acquired tangible and identifiable intangible assets and assumed liabilities at their acquisition date fair values. These fair values are a result of valuation techniques that use significant assumptions that are subject to a high degree of judgment. The excess of the acquisition price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to acquired entities are included prospectively beginning with the date of acquisition. Acquisition-related costs are expensed as incurred.
32

Table of Contents
Stock-based Compensation
We recognize expense for stock-based compensation awards, which is equal to the fair value of the awards at grant date, ratably in selling, general and administrative expenses in our consolidated statements of income over their requisite service period. Calculating the grant date fair value of stock-based compensation awards requires the input of subjective assumptions. We determine the fair value of each stock option grant using the Black-Scholes option-pricing model with assumptions based primarily on historical data. Specific inputs to the model include the expected term of the stock options, stock price volatility, dividend yield, and risk-free interest rate.
We used our historical exercise and post-vesting expiration behavior of grantees on stock options awarded prior to the 2022 Plan which may not be reflective of current stock market environment and current mix of grantees. We estimated expected volatility based on historical volatility of the Company's stock price for a period equal to the award's expected term. We estimated expected dividend yield based on the current dividend payout activity and the exercise price (that is, the expected dividends that would likely be reflected in an amount at which the stock option would be exchanged). The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. We recognize forfeitures when they occur.
Income Taxes
We estimate certain components of our provision for income taxes including the recoverability of deferred tax assets that arise from temporary differences between the tax and book carrying amounts of existing assets and liabilities and their respective tax bases. These estimates include depreciation and amortization expense allowable for tax purposes, allowable tax credits for items such as taxes paid on employee tip income, effective rates for state and local income taxes, and the deductibility of certain other items, among others. We adjust our annual effective income tax rate as additional information on outcomes or events becomes available. When necessary, we record a valuation allowance to reduce deferred tax assets to a balance that is more likely than not to be realized.
Legal and Other Contingencies
As mentioned in Item 3 – “Legal Proceedings” and in a more detailed discussion in Note 10 to our consolidated financial statements, we are involved in various suits and claims in the normal course of business. We record a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility that we may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for that reporting period could be materially adversely affected. 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.
33

Table of Contents
OPERATIONS REVIEW
Highlights of operations from fiscal 2024, 2023, and 2022 are as follows (in thousands, except percentages and per share amounts):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Revenues |  |  |  |  |  |  |  |  |
Consolidated | $ | 295,604 |  |  | 0.6 | % |  | $ | 293,790 |  |  | 9.8 | % |  | $ | 267,620 |
Nightclubs | $ | 243,864 |  |  | 3.0 | % |  | $ | 236,748 |  |  | 14.8 | % |  | $ | 206,251 |
Bombshells | $ | 50,578 |  |  | (9.2) | % |  | $ | 55,723 |  |  | (7.0) | % |  | $ | 59,925 |
Same-store sales |  |  |  |  |  |  |  |  |
Consolidated |  |  | -5.1 | % |  |  |  | -6.0 | % |  |
Nightclubs |  |  | -2.1 | % |  |  |  | -3.5 | % |  |
Bombshells |  |  | -18.4 | % |  |  |  | -14.6 | % |  |
Income (loss) from operations |  |  |  |  |  |  |  |  |
Consolidated | $ | 18,805 |  |  | (63.5) | % |  | $ | 51,484 |  |  | (28.0) | % |  | $ | 71,459 |
Nightclubs | $ | 58,094 |  |  | (20.6) | % |  | $ | 73,187 |  |  | (11.6) | % |  | $ | 82,798 |
Bombshells | $ | (10,646) |  |  | (263.7) | % |  | $ | 6,502 |  |  | (43.5) | % |  | $ | 11,504 |
Diluted earnings per share | $ | 0.33 |  |  | (89.5) | % |  | $ | 3.13 |  |  | (36.3) | % |  | $ | 4.91 |
Non-GAAP diluted earnings per share* | $ | 4.72 |  |  | (3.6) | % |  | $ | 4.90 |  |  | (8.9) | % |  | $ | 5.38 |
Net cash provided by operating activities | $ | 55,884 |  |  | (5.5) | % |  | $ | 59,130 |  |  | (8.3) | % |  | $ | 64,509 |
Free cash flow* | $ | 48,421 |  |  | (8.9) | % |  | $ | 53,176 |  |  | (9.7) | % |  | $ | 58,911 |

*Reconciliation and discussion of non-GAAP financial measures are included under the “Non-GAAP Financial Measures” section of this Item. These measures should be considered in addition to, rather than as a substitute for, U.S. GAAP measures.
34

Table of Contents
The following common size tables present a comparison of our results of operations as a percentage of total revenues for the three most recently completed fiscal years:

| 2024 |  | 2023 |  | 2022
Revenues |  |  |  |  |
Sales of alcoholic beverages | 45.0 | % |  | 43.3 | % |  | 42.3 | %
Sales of food and merchandise | 15.1 | % |  | 14.9 | % |  | 16.6 | %
Service revenues | 33.3 | % |  | 35.3 | % |  | 35.1 | %
Other | 6.6 | % |  | 6.5 | % |  | 6.0 | %
Total revenues | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Operating expenses |  |  |  |  |
Cost of goods sold |  |  |  |  |
Alcoholic beverages sold | 18.2 | % |  | 18.3 | % |  | 17.8 | %
Food and merchandise sold | 36.7 | % |  | 35.1 | % |  | 35.1 | %
Service and other | 0.3 | % |  | 0.2 | % |  | 0.3 | %
Total cost of goods sold (exclusive of items shown separately below) | 13.9 | % |  | 13.3 | % |  | 13.5 | %
Salaries and wages | 28.5 | % |  | 27.1 | % |  | 25.6 | %
Selling, general and administrative | 33.7 | % |  | 31.7 | % |  | 29.5 | %
Depreciation and amortization | 5.2 | % |  | 5.2 | % |  | 4.6 | %
Impairments and other charges, net | 12.4 | % |  | 5.3 | % |  | 0.2 | %
Total operating expenses | 93.6 | % |  | 82.5 | % |  | 73.3 | %
Income from operations | 6.4 | % |  | 17.5 | % |  | 26.7 | %
Other income (expenses) |  |  |  |  |
Interest expense | (5.6) | % |  | (5.4) | % |  | (4.5) | %
Interest income | 0.2 | % |  | 0.1 | % |  | 0.2 | %
Non-operating gains, net | — | % |  | — | % |  | 0.1 | %
Income before income taxes | 0.9 | % |  | 12.2 | % |  | 22.5 | %
Income tax expense (benefit) | (0.1) | % |  | 2.3 | % |  | 5.3 | %
Net income | 1.0 | % |  | 9.9 | % |  | 17.2 | %

†Percentages may not foot due to rounding in this and in all of the succeeding tables presenting percentages in this report. Percentage of revenue for individual cost of goods sold items pertains to their respective revenue line.
35

Table of Contents
Below is a table presenting the changes in each line item of the income statement for the last three fiscal years (dollar amounts in thousands)

| Better (Worse)
| 2024 vs. 2023 |  | 2023 vs. 2022
| Amount |  | % |  | Amount |  | %
Revenues |  |  |  |  |  |  |
Sales of alcoholic beverages | $ | 5,862 |  |  | 4.6 | % |  | $ | 13,946 |  |  | 12.3 | %
Sales of food and merchandise | 700 |  |  | 1.6 | % |  | (388) |  |  | (0.9) | %
Service revenues | (5,122) |  |  | (4.9) | % |  | 9,689 |  |  | 10.3 | %
Other | 374 |  |  | 2.0 | % |  | 2,923 |  |  | 18.1 | %
Total revenues | 1,814 |  |  | 0.6 | % |  | 26,170 |  |  | 9.8 | %
Operating expenses |  |  |  |  |  |  |
Cost of goods sold |  |  |  |  |  |  |
Alcoholic beverages sold | (937) |  |  | (4.0) | % |  | (3,136) |  |  | (15.6) | %
Food and merchandise sold | (931) |  |  | (6.0) | % |  | 108 |  |  | 0.7 | %
Service and other | (115) |  |  | (40.8) | % |  | 35 |  |  | 11.0 | %
Total cost of goods sold (exclusive of items shown separately below) | (1,983) |  |  | (5.1) | % |  | (2,993) |  |  | (8.3) | %
Salaries and wages | (4,677) |  |  | (5.9) | % |  | (11,053) |  |  | (16.1) | %
Selling, general and administrative | (6,648) |  |  | (7.1) | % |  | (14,177) |  |  | (18.0) | %
Depreciation and amortization | (244) |  |  | (1.6) | % |  | (2,760) |  |  | (22.3) | %
Impairments and other charges, net | (20,941) |  |  | (134.0) | % |  | (15,162) |  |  | (3,246.7) | %
Total operating expenses | (34,493) |  |  | (14.2) | % |  | (46,145) |  |  | (23.5) | %
Income from operations | (32,679) |  |  | (63.5) | % |  | (19,975) |  |  | (28.0) | %
Other income/expenses |  |  |  |  |  |  |
Interest expense | (753) |  |  | (4.7) | % |  | (3,976) |  |  | (33.3) | %
Interest income | 94 |  |  | 24.2 | % |  | (23) |  |  | (5.6) | %
Non-operating gains/losses, net | — |  |  | — | % |  | (211) |  |  | (100.0) | %
Income/loss before income taxes | (33,338) |  |  | (92.7) | % |  | (24,185) |  |  | (40.2) | %
Income tax expense/benefit | 7,256 |  |  | 106.0 | % |  | 7,225 |  |  | 51.3 | %
Net income | $ | (26,082) |  |  | (89.6) | % |  | $ | (16,960) |  |  | (36.8) | %

*Not meaningful.
Revenues
Consolidated revenues increased by $1.8 million, or 0.6%, from 2023 to 2024 due mainly from recently acquired clubs and a newly opened Bombshells, partially offset by a decrease in same-store sales and a sales decrease from locations that were closed or rebranded in 2024. From 2022 to 2023, consolidated revenues increased by $26.2 million, or 9.8%, due mainly to newly acquired locations, partially offset by a decrease in same-store sales and a sales decrease from locations closed in 2023.
36

Table of Contents
Segment contribution to total revenues was as follows (dollar amounts in thousands):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Nightclubs |  |  |  |  |  |  |  |  |
Sales of alcoholic beverages | $ | 105,669 |  |  | 9.7 | % |  | $ | 96,325 |  |  | 20.4 | % |  | $ | 80,001 |
Sales of food and merchandise | 22,129 |  |  | 10.7 | % |  | 19,995 |  |  | 9.3 | % |  | 18,289 |
Service revenues | 98,233 |  |  | (4.8) | % |  | 103,217 |  |  | 10.4 | % |  | 93,481 |
Other revenues | 17,833 |  |  | 3.6 | % |  | 17,211 |  |  | 18.9 | % |  | 14,480 |
| 243,864 |  |  | 3.0 | % |  | 236,748 |  |  | 14.8 | % |  | 206,251 |
Bombshells |  |  |  |  |  |  |  |  |
Sales of alcoholic beverages | 27,455 |  |  | (11.3) | % |  | 30,937 |  |  | (7.1) | % |  | 33,315 |
Sales of food and merchandise | 22,477 |  |  | (6.0) | % |  | 23,911 |  |  | (8.1) | % |  | 26,005 |
Service revenues | 222 |  |  | (38.3) | % |  | 360 |  |  | (11.5) | % |  | 407 |
Other revenues | 424 |  |  | (17.7) | % |  | 515 |  |  | 160.1 | % |  | 198 |
| 50,578 |  |  | (9.2) | % |  | 55,723 |  |  | (7.0) | % |  | 59,925 |
Other |  |  |  |  |  |  |  |  |
Other revenues | 1,162 |  |  | (11.9) | % |  | 1,319 |  |  | (8.7) | % |  | 1,444 |
| $ | 295,604 |  |  | 0.6 | % |  | $ | 293,790 |  |  | 9.8 | % |  | $ | 267,620 |

Nightclubs segment revenues. Nightclubs revenues increased by 3.0% from 2023 to 2024 and by 14.8% from 2022 to 2023, as explained below.

| 2024 vs. 2023 |  | 2023 vs. 2022
Impact of 2.1% and 3.5% decrease in same-store sales, respectively, to total revenues | (2.0) | % |  | (3.2) | %
Newly acquired units | 7.6 | % |  | 18.4 | %
Closed units | (1.4) | % |  | (0.4) | %
Other | (1.3) | % |  | — | %
Net Nightclubs revenue increase | 3.0 | % |  | 14.8 | %

Nightclubs segment sales mix for the three fiscal years, below:

| 2024 |  | 2023 |  | 2022
Sales of alcoholic beverages | 43.3 | % |  | 40.7 | % |  | 38.8 | %
Sales of food and merchandise | 9.1 | % |  | 8.4 | % |  | 8.9 | %
Service revenues | 40.3 | % |  | 43.6 | % |  | 45.3 | %
Other | 7.3 | % |  | 7.3 | % |  | 7.0 | %
| 100.0 | % |  | 100.0 | % |  | 100.0 | %

The 2023 new units include six clubs, one of which was acquired in October 2022 and five acquired in March 2023. The 2022 new units include fifteen clubs, of which eleven were acquired in October 2021, one acquired in November 2021, one acquired in May 2022, and two acquired in July 2022. See Note 14 to our consolidated financial statements for more information on our club acquisitions. No new clubs were acquired in 2024.
Included in other revenues of the Nightclubs segment is real estate rental revenue amounting to $1.7 million in 2024, $1.8 million in 2023, and $1.6 million in 2022.
37

Table of Contents
Bombshells segment revenues. Bombshells revenues decreased by 9.2% from 2023 to 2024 and decreased by 7.0% from 2022 to 2023, as explained below.

| 2024 vs. 2023 |  | 2023 vs. 2022
Impact of 18.4% and 14.6% decrease in same-store sales, respectively, to total revenues | (16.9) | % |  | (13.5) | %
New units | 9.0 | % |  | 6.5 | %
Closed units | (1.1) | % |  | — | %
Other | (0.2) | % |  | — | %
Net Bombshells revenue decrease | (9.2) | % |  | (7.0) | %

Bombshells segment sales mix for the three fiscal years is as follows:

| 2024 |  | 2023 |  | 2022
Sales of alcoholic beverages | 54.3 | % |  | 55.5 | % |  | 55.6 | %
Sales of food and merchandise | 44.4 | % |  | 42.9 | % |  | 43.4 | %
Service and other revenues | 1.3 | % |  | 1.6 | % |  | 1.0 | %
| 100.0 | % |  | 100.0 | % |  | 100.0 | %

Bombshells Arlington was opened in the first quarter of 2022. Bombshells San Antonio was acquired from our franchisee in the second quarter of 2023. We also acquired a food hall in Greenwood Village, Colorado during the first quarter of 2023. We opened Bombshells Stafford in the first quarter of 2024 and sold Bombshells San Antonio in the fourth quarter of 2024.
Other segment revenues. Other revenues included revenues from Drink Robust in all three fiscal years presented. Drink Robust sales were $131,000, $145,000, and $201,000 in fiscal 2024, 2023, and 2022, respectively, which exclude intercompany sales to Nightclubs and Bombshells units amounting to $270,000, $254,000, and $261,000 in fiscal 2024, 2023, and 2022, respectively. Media business revenues were $1.0 million, $1.1 million, and $1.2 million in fiscal 2024, 2023, and 2022, respectively.
Operating Expenses
Total operating expenses, as a percent of consolidated revenues, were 93.6%, 82.5%, and 73.3% for the fiscal year 2024, 2023, and 2022, respectively. Significant contributors to the change in operating expenses as a percent of revenues are explained below.
Cost of goods sold. Cost of goods sold includes cost of alcoholic and non-alcoholic beverages, food, cigars and cigarettes, merchandise, media printing/binding, and Drink Robust. As a percentage of consolidated revenues, consolidated cost of goods sold was 13.9%, 13.3%, and 13.5% for fiscal 2024, 2023, and 2022, respectively. See page 34 above for the breakdown of percentages for each line item of consolidated cost of goods sold as it relates to the respective consolidated revenue line. For the Nightclubs segment, cost of goods sold was 11.7%, 11.1%, and 10.5% for fiscal 2024, 2023, and 2022, respectively, which was primarily caused by shifts in sales mix among the three fiscal years. Bombshells cost of goods sold was 24.1%, 22.4%, and 23.5% for fiscal 2024, 2023, and 2022, respectively, which was mainly driven by food cost inflation.
Salaries and wages. Consolidated salaries and wages increased by $4.7 million, or 5.9%, from 2023 to 2024 and increased by $11.1 million, or 16.1%, from 2022 to 2023. The dollar increases are mostly from newly acquired or constructed locations. As a percentage of revenues, consolidated salaries and wages were 28.5%, 27.1%, and 25.6% in 2024, 2023, and 2022, respectively, mainly due to sales trend and the impact of fixed salaries on change in sales.
38

Table of Contents
By reportable segment, salaries and wages are broken down as follows (dollar amounts in thousands):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Nightclubs | $ | 54,217 |  |  | 7.4 | % |  | $ | 50,489 |  |  | 23.6 | % |  | $ | 40,859 |
Bombshells | 14,643 |  |  | (2.0) | % |  | 14,949 |  |  | 2.5 | % |  | 14,585 |
Other | 571 |  |  | (5.5) | % |  | 604 |  |  | 0.5 | % |  | 601 |
Corporate | 14,746 |  |  | 9.6 | % |  | 13,458 |  |  | 8.5 | % |  | 12,402 |
| $ | 84,177 |  |  | 5.9 | % |  | $ | 79,500 |  |  | 16.1 | % |  | $ | 68,447 |

Unit-level manager payroll is included in salaries and wages of each location, while payroll for regional manager and above are included in Corporate.
Salaries and wages as a percentage of segment revenue (except Corporate, which is based on consolidated revenues):

| 2024 |  | 2023 |  | 2022
Nightclubs | 22.2 | % |  | 21.3 | % |  | 19.8 | %
Bombshells | 29.0 | % |  | 26.8 | % |  | 24.3 | %
Other | 49.1 | % |  | 45.8 | % |  | 41.6 | %
Corporate | 5.0 | % |  | 4.6 | % |  | 4.6 | %
| 28.5 | % |  | 27.1 | % |  | 25.6 | %

Bombshells and Other segment salaries and wages decreased in 2024 but as a percentage of revenue they increased due to their decrease in revenue.
Selling, general and administrative expenses. The components of consolidated selling, general and administrative expenses are in the tables below (dollar amounts in thousands):

| 2024 |  | 2023 |  | 2022
| Amount |  | % |  | Amount |  | % |  | Amount |  | %
Taxes and permits | $ | 16,177 |  |  | 5.5 | % |  | $ | 11,966 |  |  | 4.1 | % |  | $ | 9,468 |  |  | 3.5 | %
Advertising and marketing | 12,461 |  |  | 4.2 | % |  | 11,928 |  |  | 4.1 | % |  | 9,860 |  |  | 3.7 | %
Supplies and services | 10,896 |  |  | 3.7 | % |  | 10,724 |  |  | 3.7 | % |  | 8,614 |  |  | 3.2 | %
Insurance | 13,059 |  |  | 4.4 | % |  | 10,268 |  |  | 3.5 | % |  | 10,152 |  |  | 3.8 | %
Lease | 7,099 |  |  | 2.4 | % |  | 7,206 |  |  | 2.5 | % |  | 6,706 |  |  | 2.5 | %
Legal | 4,155 |  |  | 1.4 | % |  | 3,742 |  |  | 1.3 | % |  | 1,995 |  |  | 0.7 | %
Utilities | 6,075 |  |  | 2.1 | % |  | 5,760 |  |  | 2.0 | % |  | 4,585 |  |  | 1.7 | %
Charge card fees | 6,968 |  |  | 2.4 | % |  | 7,090 |  |  | 2.4 | % |  | 6,292 |  |  | 2.4 | %
Security | 5,080 |  |  | 1.7 | % |  | 5,618 |  |  | 1.9 | % |  | 4,404 |  |  | 1.6 | %
Accounting and professional fees | 4,260 |  |  | 1.4 | % |  | 4,286 |  |  | 1.5 | % |  | 3,909 |  |  | 1.5 | %
Repairs and maintenance | 4,690 |  |  | 1.6 | % |  | 4,924 |  |  | 1.7 | % |  | 3,754 |  |  | 1.4 | %
Stock-based compensation | 1,882 |  |  | 0.6 | % |  | 2,588 |  |  | 0.9 | % |  | 2,353 |  |  | 0.9 | %
Other | 6,870 |  |  | 2.3 | % |  | 6,924 |  |  | 2.4 | % |  | 6,755 |  |  | 2.5 | %
| $ | 99,672 |  |  | 33.7 | % |  | $ | 93,024 |  |  | 31.7 | % |  | $ | 78,847 |  |  | 29.5 | %

39

Table of Contents
By reportable segment, selling, general and administrative expenses are broken down as follows (dollar amounts in thousands):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Nightclubs | $ | 68,546 |  |  | 11.7 | % |  | $ | 61,350 |  |  | 19.6 | % |  | $ | 51,285 |
Bombshells | 18,475 |  |  | (2.4) | % |  | 18,928 |  |  | 9.4 | % |  | 17,295 |
Other | 709 |  |  | 17.8 | % |  | 602 |  |  | 44.0 | % |  | 418 |
Corporate | 11,942 |  |  | (1.7) | % |  | 12,144 |  |  | 23.3 | % |  | 9,849 |
| $ | 99,672 |  |  | 7.1 | % |  | $ | 93,024 |  |  | 18.0 | % |  | $ | 78,847 |

Selling, general and administrative expenses as a percentage of segment revenue (except Corporate, which is based on consolidated revenues):

| 2024 |  | 2023 |  | 2022
Nightclubs | 28.1 | % |  | 25.9 | % |  | 24.9 | %
Bombshells | 36.5 | % |  | 34.0 | % |  | 28.9 | %
Other | 61.0 | % |  | 45.6 | % |  | 28.9 | %
Corporate | 4.0 | % |  | 4.1 | % |  | 3.7 | %
| 33.7 | % |  | 31.7 | % |  | 29.5 | %

The significant variances in selling, general and administrative expenses are as follows:
As a percentage of revenues, relatively fixed expenses tend to be higher in rate due to lower sales, while more variable expenses tend to keep their rates even if dollar amounts are increasing. Nightclubs expenses increased as a percentage of segment revenue due to newly acquired clubs. Bombshells expenses increased as a percentage of segment revenue due to lower sales.
Taxes and permits increased mainly due to the increase in the Texas patron tax. Insurance expense increased due to additional clubs and restaurants, with additional impact from insurance premium refunds received in 2023.
Depreciation and amortization. Depreciation and amortization increased by $244,000, or 1.6%, from 2023 to 2024 and increased by $2.8 million, or 22.3%, from 2022 to 2023. The increase from 2022 to 2023 was mainly from newly acquired clubs, while the smaller increase from 2023 to 2024 was mainly caused by a decrease in the amortization of intangibles due to previous impairment.
Impairments and other charges, net. The components of impairments and other charges, net are in the table below (dollars in thousands):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Impairment of assets | $ | 38,517 |  |  | 205.0 | % |  | $ | 12,629 |  |  | 568.9 | % |  | $ | 1,888 |
Settlement of lawsuits | 520 |  |  | (86.2) | % |  | 3,759 |  |  | 165.3 | % |  | 1,417 |
Gain on sale of businesses and assets | (2,140) |  |  | 213.8 | % |  | (682) |  |  | (71.3) | % |  | (2,375) |
Gain on insurance | (327) |  |  | 324.7 | % |  | (77) |  |  | (83.4) | % |  | (463) |
| $ | 36,570 |  |  | 134.0 | % |  | $ | 15,629 |  |  | 3,246.7 | % |  | $ | 467 |

40

Table of Contents
The significant variances in impairments and other charges, net are discussed below:
During 2024, we recorded aggregate impairment charges amounting to $38.5 million related to goodwill of four clubs ($8.9 million), SOB licenses of seven clubs ($11.8 million), operating lease right-of-use assets of five Bombshells locations ($6.5 million), tradename of one club ($693,000), property and equipment of four clubs and nine Bombshells locations ($10.6 million). During 2023, we recorded aggregate impairment charges amounting to $12.6 million related to goodwill of four clubs ($4.2 million), SOB licenses of eight clubs ($6.5 million), operating lease right-of-use asset and property and equipment of a closed club ($1.1 million), and software of two investment projects ($814,000). During 2022, we recorded aggregate impairment charges amounting to $1.9 million related to goodwill of one club ($566,000), SOB license of one club ($293,000), and property and equipment of one club and one Bombshells unit ($1.0 million).
In 2023, we recognized settlements with the New York Department of Labor amounting to $3.1 million related to the assessment by the New York Department of Labor for state unemployment insurance. In 2022, we settled several cases including the image infringement lawsuit and the securities class actions part of which was paid by insurance. See Note 10 to our consolidated financial statements. Going forward, settlements might be more volatile and higher in value due to self-insurance.
Refer to dispositions in Note 14 to our consolidated financial statement for details on gains or losses on sale of businesses and assets.
In relation to insurance claims and recoveries, we recognized a $77,000 gain in 2023 and $463,000 gain in 2022 mainly related to a fire in one of our clubs in Washington Park, Illinois, toward the end of fiscal 2018 and a hurricane that damaged one of our clubs in Sulphur, Louisiana, in August 2020. The rest of the claims for the Sulphur club were received in 2022. Gains related to insurance recoveries are recognized when the contingencies related to the insurance claims have been resolved, which may be in a subsequent reporting period. We also partially recovered and recognized a $327,000 gain related to a fire in one of our clubs in Fort Worth, Texas, during the fourth quarter of 2024. See Note 13 to our consolidated financial statements.
Income from Operations
During fiscal 2024, 2023, and 2022, our consolidated operating margin was 6.4%, 17.5%, and 26.7%, respectively.
Below is a table which reflects segment contribution to income from operations (in thousands):

| 2024 |  | 2023 |  | 2022
Nightclubs | $ | 58,094 |  |  | $ | 73,187 |  |  | $ | 82,798 |
Bombshells | (10,646) |  |  | 6,502 |  |  | 11,504 |
Other | (523) |  |  | (1,446) |  |  | 57 |
Corporate | (28,120) |  |  | (26,759) |  |  | (22,900) |
| $ | 18,805 |  |  | $ | 51,484 |  |  | $ | 71,459 |

Nightclubs operating margin was 23.8%, 30.9%, and 40.1% in 2024, 2023, and 2022. Bombshells operating margin was (21.0)%, 11.7%, and 19.2% in 2024, 2023, and 2022, respectively.
41

Table of Contents
Excluding certain items, non-GAAP operating income (loss) and non-GAAP operating margin are computed in the tables below (dollars in thousands). Refer to discussion of Non-GAAP Financial Measures on page 41.

| 2024
| Nightclubs |  | Bombshells |  | Other |  | Corporate |  | Total
Income (loss) from operations | $ | 58,094 |  |  | $ | (10,646) |  |  | $ | (523) |  |  | $ | (28,120) |  |  | $ | 18,805 |
Amortization of intangibles | 2,334 |  |  | 137 |  |  | — |  |  | 23 |  |  | 2,494 |
Settlement of lawsuits | 465 |  |  | 25 |  |  | — |  |  | 30 |  |  | 520 |
Impairment of assets | 22,691 |  |  | 15,826 |  |  | — |  |  | — |  |  | 38,517 |
Loss (gain) on sale of businesses and assets | (56) |  |  | (2,322) |  |  | — |  |  | 238 |  |  | (2,140) |
Gain on insurance | (327) |  |  | — |  |  | — |  |  | — |  |  | (327) |
Stock-based compensation | — |  |  | — |  |  | — |  |  | 1,882 |  |  | 1,882 |
Non-GAAP operating income (loss) | $ | 83,201 |  |  | $ | 3,020 |  |  | $ | (523) |  |  | $ | (25,947) |  |  | $ | 59,751 |
GAAP operating margin | 23.8 | % |  | (21.0) | % |  | (45.0) | % |  | (9.5) | % |  | 6.4 | %
Non-GAAP operating margin | 34.1 | % |  | 6.0 | % |  | (45.0) | % |  | (8.8) | % |  | 20.2 | %

| 2023
| Nightclubs |  | Bombshells |  | Other |  | Corporate |  | Total
Income (loss) from operations | $ | 73,187 |  |  | $ | 6,502 |  |  | $ | (1,446) |  |  | $ | (26,759) |  |  | $ | 51,484 |
Amortization of intangibles | 2,497 |  |  | 530 |  |  | 484 |  |  | 17 |  |  | 3,528 |
Settlement of lawsuits | 3,552 |  |  | 207 |  |  | — |  |  | — |  |  | 3,759 |
Impairment of assets | 11,815 |  |  | — |  |  | 814 |  |  | — |  |  | 12,629 |
Loss (gain) on sale of businesses and assets | (734) |  |  | 77 |  |  | — |  |  | (25) |  |  | (682) |
Gain on insurance | (48) |  |  | — |  |  | — |  |  | (29) |  |  | (77) |
Stock-based compensation | — |  |  | — |  |  | — |  |  | 2,588 |  |  | 2,588 |
Non-GAAP operating income (loss) | $ | 90,269 |  |  | $ | 7,316 |  |  | $ | (148) |  |  | $ | (24,208) |  |  | $ | 73,229 |
GAAP operating margin | 30.9 | % |  | 11.7 | % |  | (109.6) | % |  | (9.1) | % |  | 17.5 | %
Non-GAAP operating margin | 38.1 | % |  | 13.1 | % |  | (11.2) | % |  | (8.2) | % |  | 24.9 | %

| 2022
| Nightclubs |  | Bombshells |  | Other |  | Corporate |  | Total
Income (loss) from operations | $ | 82,798 |  |  | $ | 11,504 |  |  | $ | 57 |  |  | $ | (22,900) |  |  | $ | 71,459 |
Amortization of intangibles | 2,042 |  |  | 6 |  |  | 61 |  |  | 9 |  |  | 2,118 |
Settlement of lawsuits | 1,287 |  |  | 18 |  |  | — |  |  | 112 |  |  | 1,417 |
Impairment of assets | 1,238 |  |  | 650 |  |  | — |  |  | — |  |  | 1,888 |
Loss (gain) on sale of businesses and assets | (2,010) |  |  | 17 |  |  | — |  |  | (382) |  |  | (2,375) |
Gain on insurance | (463) |  |  | — |  |  | — |  |  | — |  |  | (463) |
Stock-based compensation | — |  |  | — |  |  | — |  |  | 2,353 |  |  | 2,353 |
Non-GAAP operating income (loss) | $ | 84,892 |  |  | $ | 12,195 |  |  | $ | 118 |  |  | $ | (20,808) |  |  | $ | 76,397 |
GAAP operating margin | 40.1 | % |  | 19.2 | % |  | 3.9 | % |  | (8.6) | % |  | 26.7 | %
Non-GAAP operating margin | 41.2 | % |  | 20.4 | % |  | 8.2 | % |  | (7.8) | % |  | 28.5 | %

42

Table of Contents
Other Income/Expenses
Interest expense increased by approximately $753,000 from 2023 to 2024 and by approximately $4.0 million from 2022 to 2023. The increase in interest expense was primarily caused by the significantly higher average debt balance from borrowings to finance our acquisitions in 2023 and the additional interest expense from construction loans in 2024 related to build-out projects.
We consider lease plus interest expense as our occupancy costs since most of our debts are for real properties where our clubs and restaurants are located. For occupancy cost purposes, we exclude non-real-estate-related interest expense. Total occupancy cost rate (total occupancy cost as a percentage of revenues) is shown in the table below.

| 2024 |  | 2023 |  | 2022
Lease | 2.4 | % |  | 2.5 | % |  | 2.5 | %
Interest | 5.6 | % |  | 5.4 | % |  | 4.5 | %
Total occupancy cost | 8.0 | % |  | 7.9 | % |  | 7.0 | %

Income Taxes
Income tax was approximately a $410,000 benefit in 2024, a $6.8 million expense in 2023, and a $14.1 million expense in 2022. Our effective income tax rate was (15.7)% in 2024, 19.0% in 2023, and 23.4% in 2022. The components of our annual effective income tax rate are the following:

| 2024 |  | 2023 |  | 2022
Federal statutory income tax expense/benefit | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 8.6 | % |  | 4.5 | % |  | 3.0 | %
Permanent differences | 18.7 | % |  | 1.7 | % |  | 0.2 | %
Change in tax rates | (4.2) | % |  | (0.7) | % |  | 1.5 | %
Change in valuation allowance | 5.5 | % |  | (0.5) | % |  | 0.6 | %
Tax credits | (87.8) | % |  | (5.9) | % |  | (3.0) | %
Other | 22.6 | % |  | (1.0) | % |  | 0.2 | %
Total effective income tax rate | (15.7) | % |  | 19.0 | % |  | 23.4 | %

The effective income tax rate difference from the statutory federal corporate tax rate of 21% comes from offsetting impact of state income tax, net of federal benefit, changes in the deferred tax asset valuation allowance, and tax credits that are mostly FICA tip credits. The effective income tax rate for fiscal 2024 was also affected by the low pretax income that caused a high offsetting rate for tax credits, whose dollar value does not change based on pretax income.
43

Table of Contents
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) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, (e) settlement of lawsuits, 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 attributable to RCIHH common stockholders and diluted earnings per share. Adjustment items are: (a) amortization of intangibles, (b) impairment of assets, (c) gains or losses on sale of businesses and assets, (d) gains or losses on insurance, (e) settlement of lawsuits, (f) gain on debt extinguishment, (g) stock-based compensation, (h) the income tax effect of the above-described adjustments, and (i) change in deferred tax asset valuation allowance. Included in the income tax effect of the above adjustments is the net effect of the non-GAAP provision for income taxes, calculated at 0.0%, 20.6%, and 22.8% effective tax rate of the pre-tax non-GAAP income before taxes for 2024, 2023, and 2022, respectively, and the GAAP income tax expense. We believe that excluding and including such items help management and investors better understand our operating activities.
44

Table of Contents
Adjusted EBITDA. We calculate adjusted EBITDA by excluding the following items from net income attributable to RCIHH common stockholders: (a) depreciation and amortization, (b) income tax expense, (c) net interest expense, (d) gains or losses on sale of businesses and assets, (e) gains or losses on insurance, (f) impairment of assets, (g) settlement of lawsuits, (h) gain on debt extinguishment, and (i) stock-based compensation. 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 the unleveraged performance return on our investments. Adjusted EBITDA multiple is also used as a 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 periods indicated (in thousands, except per share amounts and percentages):

| 2024 |  | 2023 |  | 2022
Reconciliation of GAAP net income to Adjusted EBITDA |  |  |  |  |
Net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | $ | 29,246 |  |  | $ | 46,041 |
Income tax expense (benefit) | (410) |  |  | 6,846 |  |  | 14,071 |
Interest expense, net | 16,197 |  |  | 15,538 |  |  | 11,539 |
Settlement of lawsuits | 520 |  |  | 3,759 |  |  | 1,417 |
Impairment of assets | 38,517 |  |  | 12,629 |  |  | 1,888 |
Gain on sale of businesses and assets | (2,140) |  |  | (682) |  |  | (2,375) |
Depreciation and amortization | 15,395 |  |  | 15,151 |  |  | 12,391 |
Gain on debt extinguishment | — |  |  | — |  |  | (138) |
Gain on insurance | (327) |  |  | (77) |  |  | (463) |
Stock-based compensation | 1,882 |  |  | 2,588 |  |  | 2,353 |
Adjusted EBITDA | $ | 72,645 |  |  | $ | 84,998 |  |  | $ | 86,724 |
Reconciliation of GAAP net income to non-GAAP net income |  |  |  |  |
Net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | $ | 29,246 |  |  | $ | 46,041 |
Amortization of intangibles | 2,494 |  |  | 3,528 |  |  | 2,118 |
Settlement of lawsuits | 520 |  |  | 3,759 |  |  | 1,417 |
Impairment of assets | 38,517 |  |  | 12,629 |  |  | 1,888 |
Gain on sale of businesses and assets | (2,140) |  |  | (682) |  |  | (2,375) |
Gain on debt extinguishment | — |  |  | — |  |  | (138) |
Gain on insurance | (327) |  |  | (77) |  |  | (463) |
Stock-based compensation | 1,882 |  |  | 2,588 |  |  | 2,353 |
Change in deferred tax asset valuation allowance | 143 |  |  | (176) |  |  | 343 |
Net income tax effect | (410) |  |  | (5,068) |  |  | (729) |
Non-GAAP net income | $ | 43,690 |  |  | $ | 45,747 |  |  | $ | 50,455 |

45

Table of Contents

| 2024 |  | 2023 |  | 2022
Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share |  |  |  |  |
Diluted shares | 9,250,245 |  | 9,335,983 |  | 9,383,445
GAAP diluted earnings per share | $ | 0.33 |  |  | $ | 3.13 |  |  | $ | 4.91 |
Amortization of intangibles | 0.27 |  |  | 0.38 |  |  | 0.23 |
Settlement of lawsuits | 0.06 |  |  | 0.40 |  |  | 0.15 |
Impairment of assets | 4.16 |  |  | 1.35 |  |  | 0.20 |
Gain on sale of businesses and assets | (0.23) |  |  | (0.07) |  |  | (0.25) |
Gain on debt extinguishment | — |  |  | — |  |  | (0.01) |
Gain on insurance | (0.04) |  |  | (0.01) |  |  | (0.05) |
Stock-based compensation | 0.20 |  |  | 0.28 |  |  | 0.25 |
Change in deferred tax asset valuation allowance | 0.02 |  |  | (0.02) |  |  | 0.04 |
Net income tax effect | (0.04) |  |  | (0.54) |  |  | (0.08) |
Non-GAAP diluted earnings per share | $ | 4.72 |  |  | $ | 4.90 |  |  | $ | 5.38 |
Reconciliation of GAAP operating income to non-GAAP operating income |  |  |  |  |
Income from operations | $ | 18,805 |  |  | $ | 51,484 |  |  | $ | 71,459 |
Amortization of intangibles | 2,494 |  |  | 3,528 |  |  | 2,118 |
Settlement of lawsuits | 520 |  |  | 3,759 |  |  | 1,417 |
Impairment of assets | 38,517 |  |  | 12,629 |  |  | 1,888 |
Gain on sale of businesses and assets | (2,140) |  |  | (682) |  |  | (2,375) |
Gain on insurance | (327) |  |  | (77) |  |  | (463) |
Stock-based compensation | 1,882 |  |  | 2,588 |  |  | 2,353 |
Non-GAAP operating income | $ | 59,751 |  |  | $ | 73,229 |  |  | $ | 76,397 |
Reconciliation of GAAP operating margin to non-GAAP operating margin |  |  |  |  |
GAAP operating margin | 6.4 | % |  | 17.5 | % |  | 26.7 | %
Amortization of intangibles | 0.8 | % |  | 1.2 | % |  | 0.8 | %
Settlement of lawsuits | 0.2 | % |  | 1.3 | % |  | 0.5 | %
Impairment of assets | 13.0 | % |  | 4.3 | % |  | 0.7 | %
Gain on sale of businesses and assets | (0.7) | % |  | (0.2) | % |  | (0.9) | %
Gain on insurance | (0.1) | % |  | — | % |  | (0.2) | %
Stock-based compensation | 0.6 | % |  | 0.9 | % |  | 0.9 | %
Non-GAAP operating margin | 20.2 | % |  | 24.9 | % |  | 28.5 | %

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.
46

Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2024, our cash and cash equivalents were $32.4 million as compared to $21.0 million at September 30, 2023. Because of the large volume of cash we handle, we have very stringent cash controls. As of September 30, 2024, we had negative working capital of $793,000 compared to a negative working capital of $10.5 million as of September 30, 2023. 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.
During 2022, we acquired fifteen clubs at an aggregate acquisition date fair value of $132.6 million, of which $55.3 million was in cash, $49.0 million in debt (with an acquisition date fair value of $47.4 million) and $30.0 million in equity (500,000 shares of our common stock with an acquisition date fair value of $29.9 million, discounted for lack of marketability due to the lock-up period).
During 2023, we acquired six clubs at an aggregate acquisition date fair value of $72.3 million, of which $29.0 million was in cash, $30.5 million in debt (with an acquisition date fair value of $30.4 million), and $16.0 million in equity (200,000 shares of our common stock with an acquisition date fair value of $12.8 million, discounted for lack of marketability due to the lock-up period).
We did not have any business acquisition in 2024.
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 net cash flows from operating, investing, and financing activities (in thousands):

| 2024 |  | 2023 |  | 2022
Operating | $ | 55,884 |  |  | $ | 59,130 |  |  | $ | 64,509 |
Investing | (21,015) |  |  | (64,824) |  |  | (67,797) |
Financing | (23,542) |  |  | (9,263) |  |  | 3,582 |
Net increase (decrease) in cash and cash equivalents | $ | 11,327 |  |  | $ | (14,957) |  |  | $ | 294 |

We require capital principally for the acquisition of new clubs, construction of new Bombshells, renovation of older units, and investments in technology. We also utilize capital to repurchase our common stock as part of our share repurchase program, based on our capital allocation strategy guidelines, and to pay our quarterly dividends.
47

Table of Contents
Cash Flows from Operating Activities
Following are our summarized cash flows from operating activities (in thousands):

| 2024 |  | 2023 |  | 2022
Net income | $ | 3,018 |  |  | $ | 29,100 |  |  | $ | 46,060 |
Depreciation and amortization | 15,395 |  |  | 15,151 |  |  | 12,391 |
Deferred tax expense (benefit) | (6,450) |  |  | (1,781) |  |  | 3,080 |
Stock-based compensation expense | 1,882 |  |  | 2,588 |  |  | 2,353 |
Impairment of assets | 38,517 |  |  | 12,629 |  |  | 1,888 |
Gain on debt extinguishment | — |  |  | — |  |  | (83) |
Net change in operating assets and liabilities | 2,671 |  |  | (1,203) |  |  | (1,421) |
Other | 851 |  |  | 2,646 |  |  | 241 |
Net cash provided by operating activities | $ | 55,884 |  |  | $ | 59,130 |  |  | $ | 64,509 |

Net cash flows from operating activities decreased from 2022 to 2023 and from 2023 to 2024 mainly due to the lower same-store sales and the higher interest expense paid, partially offset by the lower income taxes paid.
In the next five years, we expect interest payments on our debts to range from $16.0 million in the early years to $9.0 million annually in the latter years for debts we owe as of September 30, 2024.
See Note 1 7 for our operating lease payment schedule for the next five years and thereafter.
Cash Flows from Investing Activities
Following are our summarized cash flows from investing activities (in thousands):

| 2024 |  | 2023 |  | 2022
Proceeds from sale of businesses and assets | $ | 1,969 |  |  | $ | 4,245 |  |  | $ | 10,669 |
Proceeds from notes receivable | 249 |  |  | 229 |  |  | 182 |
Proceeds from insurance | 1,367 |  |  | 86 |  |  | 648 |
Payments for property and equipment and intangible assets | (24,600) |  |  | (40,384) |  |  | (24,003) |
Acquisition of businesses, net of cash acquired | — |  |  | (29,000) |  |  | (55,293) |
Net cash used in investing activities | $ | (21,015) |  |  | $ | (64,824) |  |  | $ | (67,797) |

In 2023, we acquired six clubs for a combined sum of $75.5 million (with an aggregate acquisition date fair value of $72.3 million), of which $29.0 million was in cash, $30.5 million in debt (with an acquisition date fair value of $30.4 million), and 200,000 shares of our common stock in equity (with an acquisition date fair value of $12.8 million). We also acquired several real estate properties for club and Bombshells sites totaling $19.7 million, and invested $7.5 million for future casino locations.
In 2022, we acquired fifteen clubs for a combined sum of $134.2 million (with an aggregate acquisition date fair value of $132.6 million), of which $55.3 million was in cash, $49.0 million in debt (with an acquisition date fair value of $47.4 million), and 500,000 shares of our common stock in equity (with an acquisition date fair value of $29.9 million). We also purchased an aircraft and six real estate properties, of which, four are for future Bombshells locations, one for a club that we were leasing, and another to replace a club location which was taken by eminent domain. Also in 2022, we received payment for four real estate properties. We did not receive payment for the eminent domain property mentioned above until November 2022.
As of September 30, 2024, 2023, and 2022, we had $14.0 million, $7.7 million, and $1.5 million in construction-in-progress related mostly to Bombshells units that are opening in subsequent fiscal years.
See Note 14 to our consolidated financial statements for details of our acquisition and disposition activities.
48

Table of Contents
Following is a reconciliation of our additions to property and equipment for the years ended September 30, 2024, 2023, and 2022 (in thousands):

| 2024 |  | 2023 |  | 2022
New capital expenditures in new clubs and Bombshells units and equipment* | $ | 17,137 |  |  | $ | 34,430 |  |  | $ | 18,405 |
Maintenance capital expenditures | 7,463 |  |  | 5,954 |  |  | 5,598 |
Total capital expenditures, excluding business acquisitions | $ | 24,600 |  |  | $ | 40,384 |  |  | $ | 24,003 |

*Includes real estate, except those acquired through business acquisitions.
We expect capital expenditure payments in the range of $15.0 million to $20.0 million in 2025, $5.0 million to $7.0 million of which relate to maintenance capital expenditures to support our existing clubs and restaurants and our corporate office.
Cash Flows from Financing Activities
Following are our summarized cash flows from financing activities (in thousands):

| 2024 |  | 2023 |  | 2022
Proceeds from debt obligations | $ | 22,657 |  |  | $ | 11,595 |  |  | $ | 35,820 |
Payments on debt obligations | (23,001) |  |  | (15,650) |  |  | (14,894) |
Purchase of treasury stock | (20,606) |  |  | (2,223) |  |  | (15,097) |
Payment of dividends | (2,302) |  |  | (2,146) |  |  | (1,784) |
Payment of loan origination costs | (290) |  |  | (239) |  |  | (463) |
Distribution to noncontrolling interests | — |  |  | (600) |  |  | — |
Net cash provided by (used in) financing activities | $ | (23,542) |  |  | $ | (9,263) |  |  | $ | 3,582 |

See Note 8 to our consolidated financial statements for a detailed discussion of our debt obligations, including the future maturities of our debt obligations in the next five years and thereafter.
We purchased shares of our common stock representing 442,639 shares, 34,086 shares, and 268,185 shares in 2024, 2023, and 2022, respectively. We paid quarterly dividends of $0.04 per share in the first quarter of 2022. In the second quarter of 2022 through the first quarter of 2023, we increased our quarterly dividends to $0.05 per share. Then starting in the second quarter of 2023 through the third quarter of 2024, we increased our quarterly dividends to $0.06 per share. We paid $0.07 per share in the fourth quarter of 2024. We expect annual dividend payments of $2.5 million in 2025 based on our current quarterly dividend rate.
Non-GAAP Cash Flow Measure
We also use certain non-GAAP cash flow measures, such as free cash flow. We define 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. See table below (in thousands):

| 2024 |  | 2023 |  | 2022
Net cash provided by operating activities | $ | 55,884 |  |  | $ | 59,130 |  |  | $ | 64,509 |
Less: Maintenance capital expenditures | 7,463 |  |  | 5,954 |  |  | 5,598 |
Free cash flow | $ | 48,421 |  |  | $ | 53,176 |  |  | $ | 58,911 |
As a % of revenue | 16.4 | % |  | 18.1 | % |  | 22.0 | %

We do not include total capital expenditures 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.
49

Table of Contents
Other than the impact of uncertainties caused by near-term macro environment, including supply chain challenges, and commodity and labor inflation, and the contractual obligations described above, 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.
The following table presents a summary of such indicators (dollars in thousands):

| 2024 |  | Inc (Dec) |  | 2023 |  | Inc (Dec) |  | 2022
Sales of alcoholic beverages | $ | 133,124 |  |  | 4.6 | % |  | $ | 127,262 |  |  | 12.3 | % |  | $ | 113,316 |
Sales of food and merchandise | 44,606 |  |  | 1.6 | % |  | 43,906 |  |  | (0.9) | % |  | 44,294 |
Service revenues | 98,455 |  |  | (4.9) | % |  | 103,577 |  |  | 10.3 | % |  | 93,888 |
Other revenues | 19,419 |  |  | 2.0 | % |  | 19,045 |  |  | 18.1 | % |  | 16,122 |
Total revenues | $ | 295,604 |  |  | 0.6 | % |  | $ | 293,790 |  |  | 9.8 | % |  | $ | 267,620 |
Net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | (89.7) | % |  | $ | 29,246 |  |  | (36.5) | % |  | $ | 46,041 |
Net cash provided by operating activities | $ | 55,884 |  |  | (5.5) | % |  | $ | 59,130 |  |  | (8.3) | % |  | $ | 64,509 |
Adjusted EBITDA* | $ | 72,645 |  |  | (14.5) | % |  | $ | 84,998 |  |  | (2.0) | % |  | $ | 86,724 |
Free cash flow* | $ | 48,421 |  |  | (8.9) | % |  | $ | 53,176 |  |  | (9.7) | % |  | $ | 58,911 |
Debt (end of period) | $ | 238,197 |  |  | (0.6) | % |  | $ | 239,751 |  |  | 18.4 | % |  | $ | 202,463 |

*See definition and calculation of Adjusted EBITDA and Free Cash Flow under Non-GAAP Financial Measures and Liquidity and Capital Resources above.
We have not established financing other than the notes payable discussed in Note 8 to the consolidated financial statements. 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.
50

Table of Contents
Share Repurchase
As part of our capital allocation strategy, we buy back shares in the open market or through negotiated purchases, as authorized by our board of directors. During fiscal years 2024, 2023, and 2022, we paid for treasury stock amounting to $20.6 million, $2.2 million, and $15.1 million, representing 442,639 shares, 34,086 shares, and 268,185 shares, respectively. On each of May 24, 2022 and July 9, 2024, the board of directors approved a $25.0 million increase in the Company's share repurchase program. We have approximately $21.0 million remaining to purchase additional shares as of September 30, 2024.
For additional details regarding our board approved share repurchase plans, please refer to Item 5 – Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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.
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 clubs, opening new clubs after market analysis and developing new club concepts that are consistent with our management and marketing skills as our capital and manpower allow. We also strive to enter into businesses that complement our own, such as gaming, if they can enhance shareholder value.
Our growth strategy is to diversify our operations with these units which do not require SOB licenses, which are sometimes difficult to obtain. While we are searching for adult nightclubs to acquire, we are able to also search for restaurant/sports bar locations that are consistent with our income targets.
In fiscal 2022, we acquired fifteen clubs with an aggregate acquisition date fair value of $132.6 million, of which $55.3 million in cash, $49.0 million in debt (with an acquisition date fair value of $47.4 million), and 500,000 shares of our common stock in equity. We also opened a new Bombshells location in Arlington, Texas in December 2021 and our first franchised location in San Antonio, Texas opened in June 2022.
In fiscal 2023, we acquired six clubs with an aggregate acquisition date fair value of $72.3 million, of which $29.0 million was in cash, $30.5 million in debt (with an acquisition date fair value of $30.4 million), and 200,000 shares of our common stock in equity.
In fiscal 2024, we did not have any club business acquisitions but opened a new Bombshells location in Stafford, Texas in November 2023.
See Note 14 to our consolidated financial statements.
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.
51

Table of Contents
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The items in our financial statements subject to market risk are potential debt instruments with variable interest rates. We have certain debts that have variable interest rates in effect as of September 30, 2024. An increase in interest rates in the future may have a negative impact on our results of operations and cash flows. A hypothetical 10% change in interest rates would have had a $45,000 impact on the Company's annual results of operations and cash flows.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this Item begins on page 51.
52

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents

Reports of Independent Registered Public Accounting Firms (Marcum LLP, Firm ID: 688; Friedman LLP, Firm ID: 711) | 54
Consolidated Financial Statements: |
Consolidated Balance Sheets at September 30, 2024 and 2023 | 57
Consolidated Statements of Income for the years ended September 30, 2024, 2023, and 2022 | 58
Consolidated Statements of Changes in Equity for the years ended September 30, 2024, 2023, and 2022 | 59
Consolidated Statements of Cash Flows for the years ended September 30, 2024, 2023, and 2022 | 60
Notes to Consolidated Financial Statements | 62

53

Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
RCI Hospitality Holdings, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of RCI Hospitality Holdings, Inc. (the “Company”) as of September 30, 2024 and 2023, the related consolidated statements of income, changes in equity, and cash flows for each of the years in the two-year period ended September 30, 2024, and the related notes and schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of September 30, 2024, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated December 16, 2024, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Impairment of Goodwill, Indefinite-lived Intangible Assets, and Long-lived Assets
As discussed in Note 2 to the consolidated financial statements, the Company reviews goodwill and indefinite-lived intangible assets on an annual basis for impairment, or when events and circumstances indicate that the asset might be impaired. Additionally, the Company reviews long-lived assets, such as property and equipment, intangible assets subject to amortization, and right-of-use assets on operating leases for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value, and impairment of indefinite-lived intangible assets is recognized in the amount by which the carrying value of the assets exceed their fair value. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the
54

Table of Contents
asset groups to the future undiscounted cash flows expected to be generated by the asset groups. If these assets are determined to be impaired, the amount of impairment recognized is the amount by which the carrying amount of the assets exceeds their fair value. Fair value is generally determined using forecasted cash flows discounted by an estimated weighted average cost of capital or using a market approach that utilizes market multiples derived from a set of comparable assets. As of September 30, 2024, the Company had goodwill of approximately $61.9 million, and indefinite-lived intangible assets of approximately $143.6 million. Long-lived assets consisted of property and equipment, right-of-use assets, and intangible assets subject to amortization totaling approximately $326.2 million. During the year ended September 30, 2024, the Company recorded an impairment of these assets of approximately $38.5 million.
We identified the evaluation of the impairment analysis of goodwill, indefinite-lived intangible assets, and long-lived assets as a critical audit matter. There was a high degree of subjective auditor judgment in evaluating the estimated undiscounted future cash flows used to test operating locations for recoverability and the determination of fair value of the relevant assets when required. Specifically, a high degree of subjective auditor judgment was required to evaluate future revenues, operating cash flows, and the discount rate.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design of certain internal controls related to the Company’s goodwill, indefinite-lived intangible asset, and long-lived asset impairment process, including controls over the identification of relevant assets at risk of impairment, the determination of estimated undiscounted future cash flows and the fair value of individual reporting unit or asset, as necessary, and controls over the key assumptions as noted above. These procedures also included, among others, (1) testing management’s process for developing the fair value estimates of the reporting units or assets; (2) evaluating the appropriateness of the underlying discounted and undiscounted cash flow models; (3) testing the completeness and accuracy of underlying data used in the models; and (4) evaluating the reasonableness of the significant assumptions used by management, including the future cash flows, growth rates, and discount rates. Evaluating management’s significant assumptions related to future cash flows, growth rates, and the discount rates involved, with the assistance of valuation specialists, evaluating whether the assumptions used by management were reasonable considering (1) the historical performance of the reporting unit or asset group; (2) the consistency with external market data; and (3) sensitivities over significant inputs and assumptions, including the development of a point estimate.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2019 (such date takes into account the acquisition of Friedman LLP by Marcum LLP effective September 1, 2022).
Marlton, New Jersey
December 16, 2024
55

Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
RCI Hospitality Holdings, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of income, changes in equity and cash flows of RCI Hospitality Holdings, Inc. (the "Company") for the year ended September 30, 2022, and the related notes and schedule as of and for the year ended September 30, 2022 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company's operations and its cash flows for the year ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Friedman LLP
Friedman LLP
We have served as the Company’s auditor from 2019 to 2023.
Marlton, New Jersey
December 14, 2022
56

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and number of shares)

| September 30,
| 2024 |  | 2023
ASSETS |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 32,350 |  |  | $ | 21,023 |
Receivables, net | 5,563 |  |  | 9,846 |
Current portion of notes receivable | 269 |  |  | 249 |
Inventories | 4,676 |  |  | 4,412 |
Prepaid expenses and other current assets | 4,427 |  |  | 1,943 |
Total current assets | 47,285 |  |  | 37,473 |
Property and equipment, net | 280,075 |  |  | 282,705 |
Operating lease right-of-use assets, net | 26,231 |  |  | 34,931 |
Notes receivable, net of current portion | 4,174 |  |  | 4,443 |
Goodwill | 61,911 |  |  | 70,772 |
Intangibles, net | 163,461 |  |  | 179,145 |
Other assets | 1,227 |  |  | 1,415 |
Total assets | $ | 584,364 |  |  | $ | 610,884 |
LIABILITIES AND EQUITY |  |  |
Current liabilities |  |  |
Accounts payable | $ | 5,637 |  |  | $ | 6,111 |
Accrued liabilities | 20,280 |  |  | 16,051 |
Current portion of debt obligations, net | 18,871 |  |  | 22,843 |
Current portion of operating lease liabilities | 3,290 |  |  | 2,977 |
Total current liabilities | 48,078 |  |  | 47,982 |
Deferred tax liability, net | 22,693 |  |  | 29,143 |
Debt, net of current portion and debt discount and issuance costs | 219,326 |  |  | 216,908 |
Operating lease liabilities, net of current portion | 30,759 |  |  | 35,175 |
Other long-term liabilities | 398 |  |  | 352 |
Total liabilities | 321,254 |  |  | 329,560 |
Commitments and contingencies (Note 10) |  |  |
Equity |  |  |
Preferred stock, $0.10 par value per share; 1,000,000 shares authorized; none issued and outstanding | — |  |  | — |
Common stock, $0.01 par value per share; 20,000,000 shares authorized; 8,955,000 shares and 9,397,639 shares issued and outstanding as of September 30, 2024 and 2023, respectively | 90 |  |  | 94 |
Additional paid-in capital | 61,511 |  |  | 80,437 |
Retained earnings | 201,759 |  |  | 201,050 |
Total RCIHH stockholders’ equity | 263,360 |  |  | 281,581 |
Noncontrolling interests | (250) |  |  | (257) |
Total equity | 263,110 |  |  | 281,324 |
Total liabilities and equity | $ | 584,364 |  |  | $ | 610,884 |

See accompanying notes to consolidated financial statements.
57

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share and number of shares data)

| Years Ended September 30,
| 2024 |  | 2023 |  | 2022
Revenues |  |  |  |  |
Sales of alcoholic beverages | $ | 133,124 |  |  | $ | 127,262 |  |  | $ | 113,316 |
Sales of food and merchandise | 44,606 |  |  | 43,906 |  |  | 44,294 |
Service revenues | 98,455 |  |  | 103,577 |  |  | 93,888 |
Other | 19,419 |  |  | 19,045 |  |  | 16,122 |
Total revenues | 295,604 |  |  | 293,790 |  |  | 267,620 |
Operating expenses |  |  |  |  |
Cost of goods sold |  |  |  |  |
Alcoholic beverages sold | 24,228 |  |  | 23,291 |  |  | 20,155 |
Food and merchandise sold | 16,360 |  |  | 15,429 |  |  | 15,537 |
Service and other | 397 |  |  | 282 |  |  | 317 |
Total cost of goods sold (exclusive of items shown separately below) | 40,985 |  |  | 39,002 |  |  | 36,009 |
Salaries and wages | 84,177 |  |  | 79,500 |  |  | 68,447 |
Selling, general and administrative | 99,672 |  |  | 93,024 |  |  | 78,847 |
Depreciation and amortization | 15,395 |  |  | 15,151 |  |  | 12,391 |
Impairments and other charges, net | 36,570 |  |  | 15,629 |  |  | 467 |
Total operating expenses | 276,799 |  |  | 242,306 |  |  | 196,161 |
Income from operations | 18,805 |  |  | 51,484 |  |  | 71,459 |
Other income (expenses) |  |  |  |  |
Interest expense | (16,679) |  |  | (15,926) |  |  | (11,950) |
Interest income | 482 |  |  | 388 |  |  | 411 |
Non-operating gains, net | — |  |  | — |  |  | 211 |
Income before income taxes | 2,608 |  |  | 35,946 |  |  | 60,131 |
Income tax expense (benefit) | (410) |  |  | 6,846 |  |  | 14,071 |
Net income | 3,018 |  |  | 29,100 |  |  | 46,060 |
Net loss (income) attributable to noncontrolling interests | (7) |  |  | 146 |  |  | (19) |
Net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | $ | 29,246 |  |  | $ | 46,041 |
Earnings per share |  |  |  |  |
Basic and diluted | $ | 0.33 |  |  | $ | 3.13 |  |  | $ | 4.91 |
Weighted average shares used in computing earnings per share |  |  |  |  |
Basic and diluted | 9,250,245 |  | 9,335,983 |  | 9,383,445

See accompanying notes to consolidated financial statements.
58

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended September 30, 2024, 2023, and 2022
(in thousands, except per share and number of shares data)

| 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, 2021 | 8,999,910 |  | $ | 90 |  |  | $ | 50,040 |  |  | $ | 129,693 |  |  | — |  | $ | — |  |  | $ | (600) |  |  | $ | 179,223 |
Issuance of common shares for business combination | 500,000 |  | 5 |  |  | 29,928 |  |  | — |  |  | — |  | — |  |  | — |  |  | 29,933 |
Purchase of treasury shares | — |  | — |  |  | — |  |  | — |  |  | (268,185) |  | (15,097) |  |  | — |  |  | (15,097) |
Canceled treasury shares | (268,185) |  | (3) |  |  | (15,094) |  |  | — |  |  | 268,185 |  | 15,097 |  |  | — |  |  | — |
Payment of dividends ($0.19 per share) | — |  | — |  |  | — |  |  | (1,784) |  |  | — |  | — |  |  | — |  |  | (1,784) |
Stock-based compensation | — |  | — |  |  | 2,353 |  |  | — |  |  | — |  | — |  |  | — |  |  | 2,353 |
Investment from noncontrolling partner | — |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | 1,070 |  |  | 1,070 |
Net income | — |  | — |  |  | — |  |  | 46,041 |  |  | — |  | — |  |  | 19 |  |  | 46,060 |
Balance at September 30, 2022 | 9,231,725 |  | 92 |  |  | 67,227 |  |  | 173,950 |  |  | — |  | — |  |  | 489 |  |  | 241,758 |
Issuance of common shares for business combination | 200,000 |  | 2 |  |  | 12,845 |  |  | — |  |  | — |  | — |  |  | — |  |  | 12,847 |
Purchase of treasury shares | — |  | — |  |  | — |  |  | — |  |  | (34,086) |  | (2,223) |  |  | — |  |  | (2,223) |
Canceled treasury shares | (34,086) |  | — |  |  | (2,223) |  |  | — |  |  | 34,086 |  | 2,223 |  |  | — |  |  | — |
Payment of dividends ($0.23 per share) | — |  | — |  |  | — |  |  | (2,146) |  |  | — |  | — |  |  | — |  |  | (2,146) |
Stock-based compensation | — |  | — |  |  | 2,588 |  |  | — |  |  | — |  | — |  |  | — |  |  | 2,588 |
Share in return of investment by noncontrolling partner | — |  | — |  |  | — |  |  | — |  |  | — |  | — |  |  | (600) |  |  | (600) |
Net income (loss) | — |  | — |  |  | — |  |  | 29,246 |  |  | — |  | — |  |  | (146) |  |  | 29,100 |
Balance at September 30, 2023 | 9,397,639 |  | 94 |  |  | 80,437 |  |  | 201,050 |  |  | — |  | — |  |  | (257) |  |  | 281,324 |
Purchase of treasury shares | — |  | — |  |  | — |  |  | — |  |  | (442,639) |  | (20,606) |  |  | — |  |  | (20,606) |
Canceled treasury shares | (442,639) |  | (4) |  |  | (20,602) |  |  | — |  |  | 442,639 |  | 20,606 |  |  | — |  |  | — |
Excise tax on stock repurchases | — |  | — |  |  | (206) |  |  | — |  |  | — |  | — |  |  | — |  |  | (206) |
Payment of dividends ($0.25 per share) | — |  | — |  |  | — |  |  | (2,302) |  |  | — |  | — |  |  | — |  |  | (2,302) |
Stock-based compensation | — |  | — |  |  | 1,882 |  |  | — |  |  | — |  | — |  |  | — |  |  | 1,882 |
Net income | — |  | — |  |  | — |  |  | 3,011 |  |  | — |  | — |  |  | 7 |  |  | 3,018 |
Balance at September 30, 2024 | 8,955,000 |  | $ | 90 |  |  | $ | 61,511 |  |  | $ | 201,759 |  |  | — |  | $ | — |  |  | $ | (250) |  |  | $ | 263,110 |

See accompanying notes to consolidated financial statements.
59

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

| Years Ended September 30,
| 2024 |  | 2023 |  | 2022
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |
Net income | $ | 3,018 |  |  | $ | 29,100 |  |  | $ | 46,060 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 15,395 |  |  | 15,151 |  |  | 12,391 |
Deferred tax expense (benefit) | (6,450) |  |  | (1,781) |  |  | 3,080 |
Gain on sale of businesses and assets | (2,215) |  |  | (870) |  |  | (2,970) |
Impairment of assets | 38,517 |  |  | 12,629 |  |  | 1,888 |
Amortization and writeoff of debt discount and issuance costs | 608 |  |  | 615 |  |  | 314 |
Doubtful accounts expense on notes receivable | — |  |  | — |  |  | 753 |
Gain on insurance | (522) |  |  | (77) |  |  | (463) |
Noncash lease expense | 2,980 |  |  | 2,978 |  |  | 2,607 |
Stock-based compensation expense | 1,882 |  |  | 2,588 |  |  | 2,353 |
Gain on debt extinguishment | — |  |  | — |  |  | (83) |
Changes in operating assets and liabilities, net of business acquisitions: |  |  |  |  |
Receivables | 4,283 |  |  | (2,383) |  |  | (175) |
Inventories | (309) |  |  | 177 |  |  | (554) |
Prepaid expenses, other current, and other assets | (2,421) |  |  | (366) |  |  | 387 |
Accounts payable, accrued, and other liabilities | 1,118 |  |  | 1,369 |  |  | (1,079) |
Net cash provided by operating activities | 55,884 |  |  | 59,130 |  |  | 64,509 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |
Proceeds from sale of businesses and assets | 1,969 |  |  | 4,245 |  |  | 10,669 |
Proceeds from notes receivable | 249 |  |  | 229 |  |  | 182 |
Proceeds from insurance | 1,367 |  |  | 86 |  |  | 648 |
Payments for property and equipment and intangible assets | (24,600) |  |  | (40,384) |  |  | (24,003) |
Acquisition of businesses, net of cash acquired | — |  |  | (29,000) |  |  | (55,293) |
Net cash used in investing activities | (21,015) |  |  | (64,824) |  |  | (67,797) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |
Proceeds from debt obligations, including related party proceeds of $0, $0, and $650, respectively | 22,657 |  |  | 11,595 |  |  | 35,820 |
Payments on debt obligations | (23,001) |  |  | (15,650) |  |  | (14,894) |
Purchase of treasury stock | (20,606) |  |  | (2,223) |  |  | (15,097) |
Payment of dividends | (2,302) |  |  | (2,146) |  |  | (1,784) |
Payment of loan origination costs | (290) |  |  | (239) |  |  | (463) |
Share in return of investment by noncontrolling partner | — |  |  | (600) |  |  | — |
Net cash provided by (used in) financing activities | (23,542) |  |  | (9,263) |  |  | 3,582 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 11,327 |  |  | (14,957) |  |  | 294 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 21,023 |  |  | 35,980 |  |  | 35,686 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 32,350 |  |  | $ | 21,023 |  |  | $ | 35,980 |

60

Table of Contents

| Years Ended September 30,
| 2024 |  | 2023 |  | 2022
CASH PAID DURING THE YEAR FOR: |  |  |  |  |
Interest paid, net of amounts capitalized | $ | 16,157 |  |  | $ | 15,156 |  |  | $ | 11,227 |
Income taxes paid (net of refunds of $173, $1,656, and $2,256 in 2024, 2023, and 2022, respectively) | $ | 5,068 |  |  | $ | 8,636 |  |  | $ | 9,500 |
Non-cash investing and financing transactions: |
Debt incurred in connection with acquisition of businesses | $ | — |  |  | $ | 30,405 |  |  | $ | 49,000 |
Debt incurred in connection with purchase of property and equipment | $ | — |  |  | $ | 10,476 |  |  | $ | 9,201 |
Debt exchanged in connection with the sale of a restaurant location | $ | 1,471 |  |  | $ | — |  |  | $ | — |
Notes receivable received as proceeds from sale of assets | $ | — |  |  | $ | — |  |  | $ | 2,700 |
Investment from noncontrolling partner in connection with purchase of property | $ | — |  |  | $ | — |  |  | $ | 1,070 |
Issuance of shares of common stock for acquisition of business: |  |  |  |  |
Number of shares | — |  | 200,000 |  | 500,000
Fair value at acquisition date | $ | — |  |  | $ | 12,847 |  |  | $ | 29,933 |
Adjustment to operating lease right-of-use assets related to new and renewed leases | $ | 760 |  |  | $ | 1,864 |  |  | $ | 21,424 |
Adjustment to operating lease liabilities related to new and renewed leases | $ | 760 |  |  | $ | 2,163 |  |  | $ | 21,424 |
Unpaid excise tax on stock repurchases | $ | 206 |  |  | $ | — |  |  | $ | — |
Unpaid liabilities on capital expenditures | $ | 1,474 |  |  | $ | 1,967 |  |  | $ | 1,503 |
Receivable on eminent domain disposition | $ | — |  |  | $ | — |  |  | $ | 1,047 |

See accompanying notes to consolidated financial statements.
61

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
1. Nature of Business
RCI Hospitality Holdings, Inc. (the “Company,” “we,” “us,” or “our”) is a holding company incorporated in Texas in 1994. Through its subsidiaries, the Company currently owns and operates establishments that offer live adult entertainment, restaurant, and/or bar operations. These establishments are located in Houston, Austin, San Antonio, Dallas, Fort Worth, Tomball, Katy, Pearland, Dickinson, Odessa, Lubbock, Longview, Tye, Round Rock, Edinburg, El Paso, Harlingen, Arlington, Beaumont, and Stafford, Texas, as well as Denver, Colorado; Minneapolis, Minnesota; Pittsburgh, Pennsylvania; Charlotte and Raleigh, North Carolina; New York and Newburgh, New York; Miami, Pembroke Park and Miami Gardens, Florida; Phoenix, Arizona; Sulphur, Louisiana; Portland, Maine; Louisville, Kentucky; Indianapolis, Indiana; and Chicago, Washington Park, Sauget, and Kappa, Illinois. The Company also owns and operates media businesses for the adult industry. The Company’s corporate offices are located in Houston, Texas.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accounts are maintained and the consolidated financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”).
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries in which a controlling interest is owned. Intercompany accounts and transactions have been eliminated in consolidation.
Fiscal Year
Our fiscal year ends on September 30. References to years 2024, 2023, and 2022 are for fiscal years ended September 30, 2024, 2023, and 2022, respectively. Our fiscal quarters chronologically end on December 31, March 31, June 30 and September 30.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts in the consolidated financial statements and accompanying notes. Estimates and assumptions are based on historical experience, forecasted future events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and assumptions may vary under different circumstances and conditions. We evaluate our estimates and assumptions on an ongoing basis.
Cash and Cash Equivalents
The Company considers as cash equivalents all highly liquid investments with a maturity of three months or less when purchased. The Company maintains deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses related to amounts in excess of FDIC limits.
62

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
Receivables
Receivables for club and restaurant operations are primarily comprised of credit card charges, which are generally converted to cash in two to five days after a purchase is made. The media division’s receivables are primarily comprised of receivables for advertising sales and Expo registration. Receivables also include employee advances, construction advances, and other miscellaneous receivables. Long-term notes receivable, which have original maturity of more than one year, include consideration from the sale of certain investment interest entities and real estate. The Company recognizes interest income on notes receivable based on the terms of the agreement and based upon management’s evaluation that the notes receivable and interest income will be collected. The Company recognizes allowances for doubtful accounts or notes when, based on management judgment, circumstances indicate that operating or notes receivable will not be collected. Allowance for doubtful accounts balance related to operating receivables was $42,000 and $62,000 as of September 30, 2024 and 2023, respectively (see Note 5). Allowance for doubtful accounts balance related to notes receivable was $0 and $0 as of September 30, 2024 and 2023, respectively.
Inventories
Inventories include alcoholic beverages, energy drinks, food, and Company merchandise. Inventories are carried at the lower of cost (on a first-in, first-out (“FIFO”) basis), or net realizable value.
Property and Equipment
Property and equipment are stated at cost. Provisions for depreciation and amortization are made using straight-line rates over the estimated useful lives of the related assets, and the shorter of useful lives or terms of the applicable leases for leasehold improvements. Buildings have estimated useful lives ranging from 29 to 40 years. Furniture and equipment have estimated useful lives of 5 to 7 years, while leasehold improvements are depreciated at the shorter of the lease term or estimated useful life. Expenditures for major renewals and betterments that extend the useful lives are capitalized. Expenditures for normal maintenance and repairs are expensed as incurred. The cost of assets sold, retired or abandoned and the related accumulated depreciation are written off from the accounts, and any gains or losses are charged or credited in the accompanying consolidated statement of income of the respective period. Interest expense from related debt incurred during site construction is capitalized, which amounted to $155,000 in 2024, $0 in 2023, and $0 in 2022.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets with indefinite lives are not amortized but reviewed on an annual basis for impairment. Definite-lived intangible assets are amortized on a straight-line basis over their estimated lives.
The costs of transferable licenses purchased through open markets are capitalized as indefinite-lived intangible assets. The costs of obtaining non-transferable licenses that are directly issued by local government agencies are expensed as incurred. Annual license renewal fees are expensed over their renewal term.
Goodwill and other intangible assets that have indefinite useful lives are tested annually for impairment during our fourth fiscal quarter and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value.
63

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
For our goodwill impairment review, we have the option to first perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value. This assessment is based on several factors, including industry and market conditions, overall financial performance, including an assessment of cash flows in comparison to actual and projected results of prior periods. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value based on our qualitative analysis, or if we elect to skip this step, we perform a Step 1 quantitative analysis to determine the fair value of the reporting unit. The fair value is determined using market-related valuation models, including discounted cash flows and comparable asset market values. We recognize goodwill impairment in the amount that the carrying value of the reporting unit exceeds the fair value of the reporting unit, not to exceed the amount of goodwill allocated to the reporting unit, based on the results of our Step 1 analysis. For the year ended September 30, 2024, we identified four reporting units that were impaired and recognized a goodwill impairment loss totaling $8.9 million. For the year ended September 30, 2023, we identified four reporting unit that were impaired and recognized a goodwill impairment loss totaling $4.2 million. For the year ended September 30, 2022, we identified one reporting units that was impaired and recognized a goodwill impairment loss of $566,000.
For indefinite-lived intangibles, specifically sexually-oriented business ("SOB") licenses, we determine fair value by estimating the multiperiod excess earnings of the asset. For indefinite-lived tradename, we determine fair value by using the relief from royalty method. The fair value is then compared to the carrying value and an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. We recorded impairment charges for SOB licenses amounting to $11.8 million in 2024 related to seven clubs, $6.5 million in 2023 related to eight clubs, $293,000 in 2022 related to one club, which are included in impairments and other charges, net in the consolidated statements of income.
Impairment of Long-Lived Assets
The Company reviews long-lived assets, such as property and equipment, intangible assets subject to amortization, and right-of-use assets on operating leases for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. These events or changes in circumstances include, but are not limited to, significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for the overall business, and significant negative industry or economic trends. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset group to the estimated undiscounted cash flows over the estimated remaining useful life of the primary asset included in the asset group. If the asset group is not recoverable, the impairment loss is calculated as the excess of the carrying value over the fair value. We define our asset group as an operating club or restaurant location, which is also our reporting unit or the lowest level for which cash flows can be identified. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. For assets held for sale, we measure fair value using an estimation based on quoted prices for similar items in active or inactive markets (level 2) developed using observable data. The assets and liabilities of a disposal group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet.
During fiscal 2024, the Company impaired four clubs and nine Bombshells for property and equipment totaling $10.6 million and five Bombshells locations for operating lease right-of-use assets totaling $6.5 million. During fiscal 2023, the Company impaired one club for operating lease right-of-use assets amounting to $1.0 million and property and equipment amounting to $58,000, and two venture projects for software totaling $814,000. During fiscal 2022, the Company impaired one club and one Bombshells for property and equipment totaling $1.0 million. See Notes 5, 6, and 1 7.
Fair Value of Financial Instruments
The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of receivables, accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of notes receivable and short and long-term debt also approximates fair value since these instruments bear market rates of interest. None of these instruments are held for trading purposes.
64

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
Revenue Recognition
The Company recognizes revenue from the sale of alcoholic beverages, food and merchandise, service (which include cover charges, dance dollar surcharges, membership fees, and facility use fees, among others), and other revenues (which include commissions from vending and ATM machines, real estate rental, valet parking, and other products and services for both nightclub and restaurant/sports bar operations, among others) at the point-of-sale upon receipt of cash, check, or credit card charge, net of discounts and promotional allowances based on consideration specified in implied contracts with customers. Sales and liquor taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying consolidated statements of income. The Company recognizes revenue when it satisfies a performance obligation (point in time of sale) by transferring control over a product or service to a customer.
Commission revenues, such as ATM commission, are recognized when the basis for such commission has transpired. Revenues from the sale of magazines and advertising content are recognized when the issue is published and shipped. Revenues and external expenses related to the Company’s annual Expo convention are recognized upon the completion of the convention, which normally occurs during our fiscal fourth quarter. Lease revenue (included in other revenues) is recognized when earned (recognized over time) and is more appropriately covered by guidance under ASC 842, Leases. Lease revenue is generally recognized ratably over the term of the lease. A substantial portion of our lessor contracts are classified as operating lease and a number of them are month-to-month or short-term contracts.
Revenue from initial franchise and area development fees are recognized as the performance obligations are satisfied over the term of the franchise agreement. Franchise royalties and advertising contributions, which are a percentage of net sales of franchised restaurants, are recognized in the period the related sales occur.
Refer to Notes 3 and 1 7 for additional disclosures on revenues and leases, respectively.
Advertising and Marketing
Advertising and marketing expenses are primarily comprised of costs related to public advertisements and giveaways, which are used for promotional purposes. Advertising and marketing expenses are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of income. See Note 5.
Income Taxes
The Company and its subsidiaries are subject to U.S. federal income tax and income taxes imposed in the state and local jurisdictions where we operate our businesses. Deferred income taxes are determined using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.
U.S. GAAP creates a single model to address accounting for uncertainty in tax positions by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. We recognize penalties related to unrecognized tax benefits as a component of selling, general and administrative expenses, and recognize interest accrued related to unrecognized tax benefits in interest expense.
65

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
Investments
Investments in companies in which the company has a 20% to 50% interest are accounted for using the equity method, which are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses. Investments in companies in which the Company owns less than a 20% interest, or where the Company does not exercise significant influence, are accounted for at cost and reviewed for any impairment. Cost and equity method investments are included in other assets in the Company’s consolidated balance sheets.
Earnings Per Share
Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings or losses of the Company. Potential common stock shares consist of shares that may arise from outstanding dilutive common restricted stock, stock options and warrants (the number of which is computed using the treasury stock method) and from outstanding convertible debentures (the number of which is computed using the if-converted method). Diluted earnings per share considers the potential dilution that could occur if the Company’s outstanding common restricted stock, stock options, warrants and convertible debentures were converted into common stock that then shared in the Company’s earnings or losses (as adjusted for interest expense, that would no longer be incurred if the debentures were converted).
During the years ended September 30, 2024, 2023, and 2022, the Company did not have any adjustment items to reconcile the numerator and the denominator in the calculation of basic and diluted earnings per share. For all fiscals presented, we excluded 300,000 stock options from the calculation of diluted earnings per share because the effect was anti-dilutive.
Business Combinations
The Company accounts for business combinations under the acquisition method of accounting, which requires the recognition of acquired tangible and identifiable intangible assets and assumed liabilities at their acquisition date fair values. The excess of the acquisition price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Results of operations related to acquired entities are included prospectively beginning with the date of acquisition. Acquisition-related costs are expensed as incurred.
Share Repurchases
The Company accounts for treasury stock transactions using the cost method. When treasury shares are retired, we charge the excess of the repurchase price over the par value of the repurchased shares to additional paid-in capital. We also charge additional paid-in capital for any excise tax incurred related to share repurchases.
Stock-based Compensation
The Company recognizes all employee stock-based compensation in selling, general and administrative expenses in our consolidated statements of operations. Equity-classified awards are measured at the grant date fair value of the award and recognized as expense over their requisite service period. The Company estimates grant date fair value of stock options using the Black-Scholes option-pricing model.
The following table provides the significant assumptions used in determining the estimated grant date fair value of the stock options granted in fiscal 2022. No grants were awarded in fiscal 2024 and 2023.

Expected term (in years) | 4.45
Expected volatility | 64.42 | %
Expected dividend yield | 0.20 | %
Risk-free rate | 3.23 | %

66

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
The expected term was estimated using the historical exercise and post-vesting expiration behavior of grantees on stock options awarded prior to the 2022 Plan. The expected volatility was based on historical volatility of the Company's stock price for a period equal to the award's expected term. The expected dividend yield is based on the current dividend payout activity and the exercise price (that is, the expected dividends that would likely be reflected in an amount at which the stock option would be exchanged). The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. We recognize forfeitures when they occur.
Legal and Other Contingencies
The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility that we may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims. The Company recognizes legal fees and expenses, including those related to legal contingencies, as incurred.
Generally, the Company recognizes gain contingencies when they are realized or when all related contingencies have been resolved.
The Company maintains insurance that covers claims arising from risks associated with the Company’s business including claims for workers’ compensation, general liability, property, auto, and business interruption coverage. The Company has historically carried substantial insurance to cover such risks with large deductibles, with such policies being structured to limit our per-occurrence exposure. As of October 1, 2024, however, we discontinued general liability and liquor insurance coverage in a number of establishments due to increasingly prohibitive costs of such coverage, and we are currently in the process of establishing self-insurance for the claims for which third-party insurance coverage is financially prohibitive. However, we still carry at least the minimum insurance coverage where it is required by law for licensing requirements. The Company believes, and the Company’s experience has been, that such insurance policies have been sufficient to cover such risks.
Fair Value Measurement
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels.
U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
•Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 – Include other inputs that are directly or indirectly observable in the marketplace.
•Level 3 – Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company classifies its marketable securities as available-for-sale, which are reported at fair value. Realized gains and losses (including unrealized holding gains and losses) from securities classified as available-for-sale are included in comprehensive income. The Company measures the fair value of its marketable securities based on quoted prices for identical securities in active markets, or Level 1 inputs.
67

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
In accordance with U.S. GAAP, the Company reviews its marketable securities to determine whether a decline in fair value of a security below the cost basis is other than temporary. Should the decline be considered other than temporary, the Company writes down the cost basis of the security and include the loss in current earnings as opposed to an unrealized holding loss. No losses or other-than-temporary impairments in our marketable securities portfolio were recognized during the years ended September 30, 2024, 2023, and 2022.
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to tangible property and equipment, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. If it is determined that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is included in impairments and other charges, net in the consolidated statements of operations.
Assets and liabilities that are measured at fair value on a nonrecurring basis are as follows (in thousands):

|  |  |  | Fair Value at Reporting Date Using
Description |  | September 30, 2024 |  | Quoted Prices in Active Markets for Identical Asset (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Property and equipment** |  | $ | 7,975 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,975 |
Indefinite-lived intangibles** |  | 16,575 |  |  | — |  |  | — |  |  | 16,575 |
Definite-lived intangibles** |  | 1,682 |  |  | — |  |  | — |  |  | 1,682 |

|  |  |  | Fair Value at Reporting Date Using
Description |  | September 30, 2023 |  | Quoted Prices in Active Markets for Identical Asset (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Property and equipment* |  | $ | 21,454 |  |  | $ | — |  |  | $ | — |  |  | $ | 21,454 |
Indefinite-lived intangibles* |  | 43,948 |  |  | — |  |  | — |  |  | 43,948 |
Indefinite-lived intangibles** |  | 2,996 |  |  | — |  |  | — |  |  | 2,996 |
Definite-lived intangibles** |  | 8,220 |  |  | — |  |  | — |  |  | 8,220 |
Goodwill* |  | 6,881 |  |  | — |  |  | — |  |  | 6,881 |
Goodwill** |  | 1,084 |  |  | — |  |  | — |  |  | 1,084 |
Current assets* |  | 696 |  |  | — |  |  | — |  |  | 696 |

*Certain assets and liabilities measured at the acquisition dates.
** Measured at year-end impairment testing.
68

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued

|  | Unrealized Gain (Loss/Impairments†) Recognized
|  | Years Ended September 30,
Description |  | 2024 |  | 2023 |  | 2022
Goodwill |  | $ | (8,861) |  |  | $ | (4,239) |  |  | $ | (566) |
Property and equipment, net (including held for sale) |  | (10,582) |  |  | (58) |  |  | (1,029) |
Indefinite-lived intangibles |  | (11,243) |  |  | (5,516) |  |  | (293) |
Definite-lived intangibles |  | (1,283) |  |  | (1,813) |  |  | — |
Operating lease right-of-use assets |  | (6,480) |  |  | (1,003) |  |  | — |
Other assets |  | (68) |  |  | — |  |  | — |

† Cumulative annual impairments based on interim and year-end testing.
The significant unobservable inputs used in our level 3 fair value measurements are as follows:

|  |  |  |  |  | Range (Weighted Average)
Areas |  | Valuation Techniques |  | Unobservable Input |  | 2024 |  | 2023 |  | 2022
Property and equipment |  | Discounted cash flow |  | Long-term revenue/EBITDA growth rate |  | -2.3% - 1.6% (0.9%) |  | 0% - 2.5% (1.25%) |  | 0% - 2.5% (1.5%)
|  | Weighted average cost of capital |  | 9.6% (9.6%) |  | 11% (11%) |  | 12.5% (12.5%)
Goodwill |  | Discounted cash flow |  | EBITDA multiple |  | 1x - 13x (13x) |  | 9x - 12x (12x) |  | 8x - 10x (9x)
|  | Long-term revenue/EBITDA growth rate |  | -2.3% - 1.6% (0.9%) |  | 0% - 2.5% (2.5%) |  | 0% - 2.5% (1.5%)
|  | Weighted average cost of capital |  | 9.6% (9.6%) |  | 11% (11%) |  | 12.5% (12.5%)
SOB licenses |  | Multiperiod excess earnings |  | Long-term revenue/EBITDA growth rate |  | 1.6% (1.6%) |  | 0% - 2.5% (2.5%) |  | 0% - 2.5% (1.5%)
|  | Weighted average cost of capital |  | 9.6% (9.6%) |  | 11% (11%) |  | 12.5% (12.5%)
|  | Contributory asset charges rate |  | 5.1% - 16.2% (15.1%) |  | 10% - 21.5% (15%) |  | 0.5% - 7.4% (2.3%)
Tradename |  | Relief-from-royalty method |  | Long-term revenue growth rate |  | 1.6% (1.6%) |  | 0% - 2.5% (2.5%) |  | 0% - 2.5% (1.5%)
|  | Royalty rate |  | 3% - 6% (4.4%) |  | 3.0% - 6.0% (4.7%) |  | 3.5% - 4.5% (4%)
|  | Weighted average cost of capital |  | 9.6% (9.6%) |  | 11% (11%) |  | 12.5% (12.5%)
Operating lease right-of-use assets |  | Discounted cash flow |  | Long-term EBITDA growth rate |  | -2.3% - 1.6% (0.9%) |  | 1.5% - 2.5% (2.3%) |  | 0% - 2.5% (1.5%)
|  | Weighted average cost of capital |  | 9.6% (9.6%) |  | 11% (11%) |  | 12.5% (12.5%)
Business combinations |  | Various* |  | Growth rate |  | None |  | 0% - 11% (5.5%) |  | 2.5% - 10% (4.8%)
|  | Weighted average cost of capital |  | None |  | 16.5% - 18% (17.8%) |  | 15% - 19.5% (18.1%)
|  | Internal rate of return |  | None |  | 16.5% - 30% (22.4%) |  | 15% - 21.5% (19.4%)
|  | Contributory asset charges rate |  | None |  | 15.6% - 21.5% (16.3%) |  | 8.5% - 10.2% (9.3%)

* Includes all of the valuation techniques for each of the fair valued assets above as of each acquisition date.
69

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
Impact of Recently Issued Accounting Standards
In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU amends Accounting Standards Codification ("ASC") Topic 805 to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in business combinations. The ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We adopted ASU 2021-08 on October 1, 2023. Our adoption of this ASU did not have a significant impact on our consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify that an entity should measure the fair value of an equity security subject to contractual sale restriction the same way it measures an identical equity security that is not subject to such a restriction. The FASB said the contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, should not affect its fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. We are evaluating the impact of this ASU and we believe that the adoption of this guidance will not have a significant impact on our consolidated financial statements.
In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Arrangements, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. The ASU requires all companies to amortize leasehold improvements associated with common control leases over the asset's useful life to the common control group regardless of the lease term. It also allows private and certain not-for-profit entities to use the written terms and conditions of an agreement to account for common control leases without further assessing the legal enforceability of those terms. The guidance is effective for all entities in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. We are still evaluating the impact of this ASU but we believe that the adoption of this guidance will not have a significant impact on our consolidated financial statements.
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 are still evaluating the impact of this ASU on our consolidated financial statements.
70

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies - continued
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 of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows. The ASU applies to all public entities that are required to report segment information in accordance with ASC 280, and 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.
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.
3. Revenues
Revenues, as disaggregated by revenue type, timing of recognition, and reportable segment (see also Note 4), are shown below (in thousands).

| Fiscal 2024
| Nightclubs |  | Bombshells |  | Other |  | Total
Sales of alcoholic beverages | $ | 105,669 |  |  | $ | 27,455 |  |  | $ | — |  |  | $ | 133,124 |
Sales of food and merchandise | 22,129 |  |  | 22,477 |  |  | — |  |  | 44,606 |
Service revenues | 98,233 |  |  | 222 |  |  | — |  |  | 98,455 |
Other revenues | 17,833 |  |  | 424 |  |  | 1,162 |  |  | 19,419 |
| $ | 243,864 |  |  | $ | 50,578 |  |  | $ | 1,162 |  |  | $ | 295,604 |
Recognized at a point in time | $ | 242,162 |  |  | $ | 50,573 |  |  | $ | 1,162 |  |  | $ | 293,897 |
Recognized over time | 1,702 |  |  | 5 |  |  | — |  |  | 1,707 |
| $ | 243,864 |  |  | $ | 50,578 |  |  | $ | 1,162 |  |  | $ | 295,604 |

| Fiscal 2023
| Nightclubs |  | Bombshells |  | Other |  | Total
Sales of alcoholic beverages | $ | 96,325 |  |  | $ | 30,937 |  |  | $ | — |  |  | $ | 127,262 |
Sales of food and merchandise | 19,995 |  |  | 23,911 |  |  | — |  |  | 43,906 |
Service revenues | 103,217 |  |  | 360 |  |  | — |  |  | 103,577 |
Other revenues | 17,211 |  |  | 515 |  |  | 1,319 |  |  | 19,045 |
| $ | 236,748 |  |  | $ | 55,723 |  |  | $ | 1,319 |  |  | $ | 293,790 |
Recognized at a point in time | $ | 234,981 |  |  | $ | 55,677 |  |  | $ | 1,274 |  |  | $ | 291,932 |
Recognized over time | 1,767 |  |  | 46 |  |  | 45 |  |  | 1,858 |
| $ | 236,748 |  |  | $ | 55,723 |  |  | $ | 1,319 |  |  | $ | 293,790 |

71

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
3. Revenues - continued

| Fiscal 2022
| Nightclubs |  | Bombshells |  | Other |  | Total
Sales of alcoholic beverages | $ | 80,001 |  |  | $ | 33,315 |  |  | $ | — |  |  | $ | 113,316 |
Sales of food and merchandise | 18,289 |  |  | 26,005 |  |  | — |  |  | 44,294 |
Service revenues | 93,481 |  |  | 407 |  |  | — |  |  | 93,888 |
Other revenues | 14,480 |  |  | 198 |  |  | 1,444 |  |  | 16,122 |
| $ | 206,251 |  |  | $ | 59,925 |  |  | $ | 1,444 |  |  | $ | 267,620 |
Recognized at a point in time | $ | 204,644 |  |  | $ | 59,918 |  |  | $ | 1,443 |  |  | $ | 266,005 |
Recognized over time | 1,607 |  |  | 7 |  |  | 1 |  |  | 1,615 |
| $ | 206,251 |  |  | $ | 59,925 |  |  | $ | 1,444 |  |  | $ | 267,620 |

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 receivables, net in our consolidated balance sheet. A reconciliation of contract liabilities with customers, included in accrued liabilities in our consolidated balance sheets, is presented below (in thousands):

| Balance at September 30, 2022 |  | Consideration Received (Refunded) |  | Recognized in Revenue |  | Balance at September 30, 2023 |  | Consideration Received |  | Recognized in Revenue |  | Balance at September 30, 2024
Ad revenue | $ | 82 |  |  | $ | 451 |  |  | $ | (484) |  |  | $ | 49 |  |  | $ | 422 |  |  | $ | (440) |  |  | $ | 31 |
Expo revenue | 8 |  |  | 574 |  |  | (581) |  |  | 1 |  |  | 519 |  |  | (519) |  |  | 1 |
Other (including franchise fees, see below) | 144 |  |  | (51) |  |  | (47) |  |  | 46 |  |  | 26 |  |  | (5) |  |  | 67 |
| $ | 234 |  |  | $ | 974 |  |  | $ | (1,112) |  |  | $ | 96 |  |  | $ | 967 |  |  | $ | (964) |  |  | $ | 99 |

Contract liabilities with customers are included in accrued liabilities as unearned revenues in our consolidated balance sheets (see also Note 5), while the revenues associated with these contract liabilities are included in other revenues in our consolidated statements of income.
On December 22, 2020, the Company signed a franchise development agreement with a group of private investors to open three Bombshells locations in San Antonio, Texas over a period of five years, and the right of first refusal for three more locations in Corpus Christi, New Braunfels, and San Marcos, all in Texas. Upon execution of the agreement, the Company collected $75,000 in development fees representing 100% of the initial franchise fee of the first restaurant and 50% of the initial franchise fee of the second restaurant. The first Bombshells franchised location opened in June 2022. On May 2, 2022, the Company signed a franchise development agreement with a private investor to open three Bombshells locations in the state of Alabama over a period of five years. Upon execution of the agreement, the Company received $50,000 in development fees representing 100% of the initial franchise fee of the first restaurant. In February 2023, the Company purchased the franchised Bombshells unit in San Antonio, Texas, and in September 2024, was sold back to members of the former franchisee group. See Note 14.
4. Segment Information
The Company owns and operates adult nightclubs and Bombshells Restaurants and Bars. The Company has identified such segments based on management responsibility and the nature of the Company’s products, services and costs. There are no major distinctions in geographical areas served as all operations are in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. The Other category below includes our media and energy drink divisions that are not significant to the consolidated financial statements.
72

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
4. Segment Information – continued
Below is the financial information related to the Company’s reportable segments (in thousands):

| 2024 |  | 2023 |  | 2022
Revenues (from external customers) |  |  |  |  |
Nightclubs | $ | 243,864 |  |  | $ | 236,748 |  |  | $ | 206,251 |
Bombshells | 50,578 |  |  | 55,723 |  |  | 59,925 |
Other | 1,162 |  |  | 1,319 |  |  | 1,444 |
| $ | 295,604 |  |  | $ | 293,790 |  |  | $ | 267,620 |
Income (loss) from operations |  |  |  |  |
Nightclubs | $ | 58,094 |  |  | $ | 73,187 |  |  | $ | 82,798 |
Bombshells | (10,646) |  |  | 6,502 |  |  | 11,504 |
Other | (523) |  |  | (1,446) |  |  | 57 |
Corporate | (28,120) |  |  | (26,759) |  |  | (22,900) |
| $ | 18,805 |  |  | $ | 51,484 |  |  | $ | 71,459 |
Capital expenditures |  |  |  |  |
Nightclubs | $ | 9,106 |  |  | $ | 11,840 |  |  | $ | 17,477 |
Bombshells | 7,760 |  |  | 16,578 |  |  | 3,586 |
Other | 6,250 |  |  | 8,400 |  |  | 841 |
Corporate | 1,484 |  |  | 3,566 |  |  | 2,099 |
| $ | 24,600 |  |  | $ | 40,384 |  |  | $ | 24,003 |
Depreciation and amortization |  |  |  |  |
Nightclubs | $ | 11,823 |  |  | $ | 10,871 |  |  | $ | 9,604 |
Bombshells | 2,365 |  |  | 2,574 |  |  | 1,783 |
Other | 43 |  |  | 495 |  |  | 85 |
Corporate | 1,164 |  |  | 1,211 |  |  | 919 |
| $ | 15,395 |  |  | $ | 15,151 |  |  | $ | 12,391 |

| September 30, 2024 |  | September 30, 2023
Total assets |  |  |
Nightclubs | $ | 454,892 |  |  | $ | 483,563 |
Bombshells | 79,091 |  |  | 85,215 |
Other | 14,197 |  |  | 6,936 |
Corporate | 36,184 |  |  | 35,170 |
| $ | 584,364 |  |  | $ | 610,884 |

Excluded from revenues in the table above are intercompany rental revenues of the Nightclubs segment amounting to $18.8 million, $16.6 million, and $14.0 million for 2024, 2023, and 2022, respectively, and intercompany sales of Robust Energy Drink of Other segment amounting to $270,000, $254,000, and $261,000 for the same respective years. These intercompany revenue amounts are eliminated upon consolidation.
73

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
4. Segment Information – continued
General corporate expenses include corporate salaries, health insurance and social security taxes for officers, legal, accounting and information technology employees, corporate taxes and insurance, legal and accounting fees, depreciation and other corporate costs such as automobile and travel costs. Management considers these to be non-allocable costs for segment purposes.
Certain real estate assets previously wholly assigned to Bombshells have been subdivided and allocated to other future development or investment projects. Accordingly, those asset costs have been transferred out of the Bombshells segment.
5. Selected Account Information
The components of receivables, net are as follows (in thousands):

| September 30,
| 2024 |  | 2023
Credit card receivables | $ | 2,056 |  |  | $ | 4,141 |
Income tax refundable | 2,017 |  |  | 2,989 |
ATM-in-transit | 877 |  |  | 1,675 |
Other (net of allowance for doubtful accounts of $42 and $62, respectively) | 613 |  |  | 1,041 |
Total receivables, net | $ | 5,563 |  |  | $ | 9,846 |

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

| September 30,
| 2024 |  | 2023
Prepaid insurance | $ | 2,792 |  |  | $ | 375 |
Prepaid legal | 177 |  |  | 184 |
Prepaid taxes and licenses | 522 |  |  | 486 |
Prepaid rent | 322 |  |  | 346 |
Other | 614 |  |  | 552 |
Total prepaid expenses and other current assets | $ | 4,427 |  |  | $ | 1,943 |

74

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
5. Selected Account Information - continued
The components of accrued liabilities are as follows (in thousands):

| September 30,
| 2024 |  | 2023
Payroll and related costs | $ | 4,676 |  |  | $ | 4,412 |
Property taxes | 3,347 |  |  | 3,086 |
Sales and liquor taxes | 2,440 |  |  | 2,468 |
Insurance | 2,390 |  |  | 9 |
Interest | 568 |  |  | 654 |
Patron tax | 1,024 |  |  | 914 |
Lawsuit settlement | 1,985 |  |  | 2,448 |
Construction in progress | 1,012 |  |  | — |
Unearned revenues | 99 |  |  | 96 |
Other | 2,739 |  |  | 1,964 |
Total accrued liabilities | $ | 20,280 |  |  | $ | 16,051 |

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

| 2024 |  | 2023 |  | 2022
Taxes and permits | $ | 16,177 |  |  | $ | 11,966 |  |  | $ | 9,468 |
Advertising and marketing | 12,461 |  |  | 11,928 |  |  | 9,860 |
Supplies and services | 10,896 |  |  | 10,724 |  |  | 8,614 |
Insurance | 13,059 |  |  | 10,268 |  |  | 10,152 |
Lease | 7,099 |  |  | 7,206 |  |  | 6,706 |
Legal | 4,155 |  |  | 3,742 |  |  | 1,995 |
Utilities | 6,075 |  |  | 5,760 |  |  | 4,585 |
Charge cards fees | 6,968 |  |  | 7,090 |  |  | 6,292 |
Security | 5,080 |  |  | 5,618 |  |  | 4,404 |
Accounting and professional fees | 4,260 |  |  | 4,286 |  |  | 3,909 |
Repairs and maintenance | 4,690 |  |  | 4,924 |  |  | 3,754 |
Stock-based compensation | 1,882 |  |  | 2,588 |  |  | 2,353 |
Other | 6,870 |  |  | 6,924 |  |  | 6,755 |
Total selling, general and administrative expenses | $ | 99,672 |  |  | $ | 93,024 |  |  | $ | 78,847 |

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

| 2024 |  | 2023 |  | 2022
Impairment of assets | $ | 38,517 |  |  | $ | 12,629 |  |  | $ | 1,888 |
Settlement of lawsuits | 520 |  |  | 3,759 |  |  | 1,417 |
Gain on sale of businesses and assets | (2,140) |  |  | (682) |  |  | (2,375) |
Gain on insurance | (327) |  |  | (77) |  |  | (463) |
Total impairments and other charges, net | $ | 36,570 |  |  | $ | 15,629 |  |  | $ | 467 |

75

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
6. Property and Equipment
Property and equipment consisted of the following (in thousands):

| September 30,
| 2024 |  | 2023
Land | $ | 95,539 |  |  | $ | 95,018 |
Buildings and improvements | 224,439 |  |  | 210,579 |
Equipment | 51,075 |  |  | 49,632 |
Furniture | 15,285 |  |  | 13,959 |
Total property and equipment | 386,338 |  |  | 369,188 |
Less accumulated depreciation and impairment | (106,263) |  |  | (86,483) |
Property and equipment, net | $ | 280,075 |  |  | $ | 282,705 |

Included in buildings and leasehold improvements above are construction-in-progress amounting to $15.0 million and $7.7 million as of September 30, 2024, and 2023, respectively, which are mostly related to Bombshells development projects.
Depreciation expense was approximately $12.9 million, $11.6 million, and $10.3 million for fiscal years 2024, 2023, and 2022, respectively. Impairment loss for property and equipment, including those later reclassified to assets held for sale, was $10.6 million, $58,000, and $1.0 million for fiscal 2024, 2023, and 2022, respectively.
7. Goodwill and Other Intangible Assets
Goodwill and other intangible assets consisted of the following (in thousands):

| September 30,
| 2024 |  | 2023
Indefinite useful lives: |  |  |
Goodwill | $ | 61,911 |  |  | $ | 70,772 |
Licenses | 124,492 |  |  | 135,735 |
Tradename and domain name | 19,118 |  |  | 19,811 |
| 205,521 |  |  | 226,318 |

| Amortization Period |  |  |  |
Definite useful lives: |  |  |  |  |
Discounted leases | Lease term |  | 63 |  |  | 811 |
Non-compete agreements | 5 years |  | — |  |  | 3 |
Software | 5 years |  | 40 |  |  | 55 |
Licenses | Lease term |  | 19,732 |  |  | 22,597 |
Leases acquired in-place | Lease term |  | 16 |  |  | 133 |
|  |  | 19,851 |  |  | 23,599 |
Total goodwill and other intangible assets |  |  | $ | 225,372 |  |  | $ | 249,917 |

76

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
7. Goodwill and Other Intangible Assets - continued
Substantially all of our goodwill and other intangible assets belong to our Nightclubs segment.

| 2024 |  | 2023
| Definite- Lived Intangibles |  | Indefinite- Lived Intangibles |  | Goodwill |  | Definite- Lived Intangibles |  | Indefinite- Lived Intangibles |  | Goodwill
Beginning balance | $ | 23,599 |  |  | $ | 155,546 |  |  | $ | 70,772 |  |  | $ | 26,935 |  |  | $ | 117,114 |  |  | $ | 67,767 |
Acquisitions | 23 |  |  | — |  |  | — |  |  | 2,005 |  |  | 43,948 |  |  | 7,244 |
Impairment | (590) |  |  | (11,936) |  |  | (8,861) |  |  | (1,813) |  |  | (5,516) |  |  | (4,239) |
Dispositions | (687) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Amortization | (2,494) |  |  | — |  |  | — |  |  | (3,528) |  |  | — |  |  | — |
Ending balance | $ | 19,851 |  |  | $ | 143,610 |  |  | $ | 61,911 |  |  | $ | 23,599 |  |  | $ | 155,546 |  |  | $ | 70,772 |

Definite-lived intangible assets consist of the following (in thousands):

| September 30,
| 2024 |  | 2023
Licenses | $ | 27,725 |  |  | $ | 27,725 |
Software | 2,355 |  |  | 2,332 |
Leases acquired in-place | 826 |  |  | 826 |
Discounted leases | 297 |  |  | 1,076 |
Non-compete agreements | 1,100 |  |  | 1,100 |
Distribution agreements | 317 |  |  | 317 |
Total definite-lived intangibles | 32,620 |  |  | 33,376 |
Less accumulated amortization and impairment | (12,769) |  |  | (9,777) |
Definite-lived intangibles, net | $ | 19,851 |  |  | $ | 23,599 |

As of September 30, 2024 and 2023, the accumulated impairment balance of indefinite-lived intangibles was $28.8 million and $16.9 million, respectively, while the accumulated impairment balance of goodwill was $34.3 million and $25.4 million, respectively. As of September 30, 2024 and 2023, the gross amount of goodwill amounted to $96.2 million and $96.2 million, respectively. Future amortization expense related to definite-lived intangible assets that are subject to amortization at September 30, 2024 is: 2025 - $2.3 million; 2026 - $2.3 million; 2027 - $2.2 million; 2028 - $1.5 million; 2029 - $1.5 million; and thereafter - $10.2 million.
Indefinite-lived intangible assets consist of SOB licenses, liquor licenses, and tradenames, which were obtained as part of acquisitions. These licenses are the result of zoning ordinances, thus are valid indefinitely, subject to filing annual renewal applications, which are done at minimal costs to the Company. We considered certain licenses that are associated with leased locations as definite-lived. The discounted cash flow of the income approach method was used in calculating the value of these licenses in a business combination, while the relief-from-royalty method was used in calculating the value of tradenames. During the fiscal year ended September 30, 2024, the Company recognized a $11.8 million impairment related to the SOB licenses of seven clubs, a $8.9 million impairment related to goodwill of four reporting units, and a $693,000 impairment related to tradename of one club. During the fiscal year ended September 30, 2023, the Company recognized a $6.5 million impairment related to the SOB licenses of eight club and a $4.2 million impairment related to goodwill of four reporting unit. During the fiscal year ended September 30, 2022, the Company recognized a $293,000 impairment related to one club's SOB licenses and a $566,000 impairment related to the goodwill of one reporting unit.
77

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt
Debt consisted of the following (in thousands):

|  |  | September 30,
|  |  | 2024 |  | 2023
Note payable at 8%, matures October 2027, as amended | (b)(1)(5) |  | 3,025 |  |  | 3,025 |
Note payable at 8%, matures May 2029 | (b)(1) |  | 7,846 |  |  | 9,180 |
Note payable at 5.99%, matures September 2033, as amended | (c) (2) |  | 4,950 |  |  | 5,351 |
Note payable at 5.49%, paid in June 2024 | (c)(3) |  | — |  |  | 1,937 |
Note payable at 5.25%, matures September 2031 | *(a)(4) |  | 84,506 |  |  | 87,937 |
Notes payable at 12%, matures October 2026, as amended | (d)(6)(25) |  | 9,100 |  |  | 9,500 |
Notes payable at 12%, matures November 2027, as amended | (d)(6)(25) |  | 3,160 |  |  | 3,331 |
Notes payable at 12%, matures November 2027, as amended | (d)(6)(25) |  | 3,160 |  |  | 3,331 |
Note payable at 5.25%, matures October 2031 | (a)(7) |  | 1,099 |  |  | 1,136 |
Note payable at 6%, matures October 2031 | (b)(7) |  | 8,545 |  |  | 9,459 |
Note payable at 6% matures October 2041 | (b)(7) |  | 7,381 |  |  | 7,611 |
Note payable at 6% matures October 2041 | (b)(7) |  | 921 |  |  | 950 |
Note payable at 4% matures November 2028 | (b)(8) |  | 628 |  |  | 764 |
Note payable at 5.25% matures January 2032 | *(a)(9) |  | 15,978 |  |  | 16,622 |
Note payable at 4.25% matures February 2043 | *(a)(10) |  | 2,493 |  |  | 2,583 |
Note payable at 10% matures September 2026 | (b)(11) |  | 3,534 |  |  | 5,501 |
Note payable at 10% matures May 2032 | (b)(11) |  | 5,000 |  |  | 5,000 |
Note payable at 5%, paid in November 2023 | *(a)(12) |  | — |  |  | 2,195 |
Note payable at 6% matures July 2029 | (b)(13) |  | 589 |  |  | 690 |
Note payable at 6% matures July 2032 | (b)(14) |  | 8,314 |  |  | 9,119 |
Note payable at 6% matures August 2032 | (a)(14) |  | 4,191 |  |  | 4,592 |
Note payable at 7.79% matures August 2039, as amended | *(a)(15) |  | 1,571 |  |  | 1,575 |
Note payable at 4.79% matures October 2042 | (c)(16) |  | 2,644 |  |  | 2,731 |
Note payable initially at 6% matures October 2024 | *(a)(17) |  | 2,247 |  |  | 2,259 |
Note payable at 6% matures October 2037 | (a)(18) |  | 4,478 |  |  | 4,708 |
Note payable initially at 7.79% matures August 2039, as amended | *(a)(19) |  | 1,495 |  |  | 1,500 |
Note payable at 6.67% matures January 2028 | *(a)(20) |  | 3,250 |  |  | 3,302 |
Notes payable at 7%, forgiven in September 2024 | (b)(21) |  | — |  |  | 1,801 |
Notes payable at 7% matures March 2033 | (a)(b)(23) |  | 22,712 |  |  | 24,603 |
Note payable initially at 8.75% matures March 2025 | (d)(22) |  | 2,900 |  |  | 7,500 |
Note payable initially at 7.12% matures June 2028 | *(a)(24) |  | 2,833 |  |  | 2,874 |
Note payable at 8.50% matures November 2033 | (a)(26) |  | 2,657 |  |  | — |
Note payable at 8.25% matures April 2034 | (a)(27) |  | 19,847 |  |  | — |
Total debt |  |  | 241,054 |  |  | 242,667 |
Less unamortized debt discount and issuance costs |  |  | (2,857) |  |  | (2,916) |
Less current portion |  |  | (18,871) |  |  | (22,843) |
Total long-term portion of debt, net |  |  | $ | 219,326 |  |  | $ | 216,908 |

*These commercial bank debts are guaranteed by the Company’s CEO. See Note 1 6.
78

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt - continued
Following is a summary of long-term debt at September 30 (in thousands):

| 2024 |  | 2023
(a) Secured by real estate | $ | 151,098 |  |  | $ | 136,107 |
(b) Secured by stock in subsidiary | 64,042 |  |  | 72,879 |
(c) Secured by other assets | 7,594 |  |  | 10,019 |
(d) Unsecured | 18,320 |  |  | 23,662 |
| $ | 241,054 |  |  | $ | 242,667 |

(1)On May 8, 2017, in relation to the Scarlett’s acquisition, the Company executed two promissory notes with the sellers: (i) a 5% short-term note for $5.0 million payable in lump sum after six months from closing date and (ii) a 12-year amortizing 8% note for $15.6 million. The 12-year note is payable $168,343 per month, including interest. The Company has amended the $5.0 million short-term note payable several times, which has a remaining balance of $3.0 million, extending the maturity date and increasing the interest rate. Presently, the maturity date is October 1, 2027 and the interest rate is 8% for its remaining term.
(2)On December 7, 2017, the Company borrowed $7.1 million from a lender to purchase an aircraft at 5.99% interest. The transaction was partly funded by trading in an aircraft that the Company owned with a carrying value of $3.4 million, with an assumption of the old aircraft’s note payable liability of $2.0 million. The aircraft note is payable in 15 years with monthly payments of $59,869, which includes interest. In March 2020, this loan was extended to September 2033.
(3)On December 11, 2018, the Company purchased an aircraft for $2.8 million with a $554,000 down payment and financed for the remaining $2.2 million with a 5.49% promissory note payable in 20 years with monthly payments of $15,118, including interest. Certain principal and interest payments during the quarter ended June 30, 2020 were deferred until maturity date. This promissory note was fully paid in June 2024 upon sale of the aircraft (see Note 14).
(4) On September 30, 2021, we entered into a $99.1 million term loan refinancing $85.7 million of existing bank and seller-financed real estate debt and to provide $12.3 million in cash that will be used to pay off existing high-interest unsecured debt (“September 2021 Refinancing Note”), enabling those creditors to provide financing for the acquisition of 11 clubs and related real estate (see Note 1 4). The $99.1 million note has a term of 10 years with an initial interest rate of 5.25% per annum for the first five years, then adjusted to a rate equal to the then weekly average yield of U.S. Treasury Securities plus 350 basis points, with a floor rate of 5.25%. The note is payable in monthly payments of principal and interest of $668,051, based on a 20-year amortization period, with the balance paid at maturity. In connection with the transaction, we wrote off to interest expense approximately $103,000 of unamortized debt issuance costs related to the paid-off debts. We also paid approximately $1.0 million in loan costs, approximately $567,000 of which is capitalized and will be amortized together with the remaining unamortized debt issuance costs of some of the existing refinanced debts for the term of the new note using the effective interest method. There are certain financial covenants with which the Company is to be in compliance related to this loan.
(5) On October 12, 2021, the Company amended the $5.0 million short-term note payable related to the Scarlett’s acquisition in May 2017, which had a balance of $3.0 million as of the amendment date, extending the maturity date to October 1, 2027. The amendment did not have an impact in the Company’s results of operations and cash flows.
(6) On October 12, 2021, we closed on a debt financing transaction with 28 investors for unsecured promissory notes with a total principal amount of $17.0 million, all of which bear interest at a rate of 12% per annum. Of this amount, $9.5 million are promissory notes, payable interest only monthly (or quarterly) in arrears, with a final lump sum payment of principal and accrued and unpaid interest due on October 1, 2024. The remaining amount of the financing is $7.5 million in promissory notes, payable in monthly payments of principal and interest based on a 10-year amortization period, with the balance of the entire principal amount together with all accrued and unpaid interest due and payable in full on October 12, 2024. Included in the $17.0 million borrowing are two notes for $500,000 and $150,000 borrowed from related parties (see Note 1 6) and two notes for $500,000 and $300,000 borrowed from two non-officer employees
79

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt - continued
in which the terms of the notes are the same as the rest of the lender group. See the October 25, 2023 extension of the term of the promissory notes, below.
(7) On October 18, 2021, in relation to an acquisition (see Note 1 4), the Company executed four seller-financed promissory notes. The first promissory note was a 10-year $11.0 million 6% note payable in 120 equal monthly payments of $122,123 in principal and interest. The second promissory note was a 20-year $8.0 million 6% note payable in 240 equal monthly payments of $57,314 in principal and interest. The third promissory note was a 10-year $1.2 million 5.25% note payable in monthly payments of $8,086 in principal and interest based on a 20-year amortization period, with the balance payable at maturity date. The fourth note was a 20-year $1.0 million 6% note payable in 240 equal monthly payments of $7,215 in principal and interest.
(8) On November 8, 2021, in relation to an acquisition (see Note 1 4), the Company executed a $1.0 million 7-year promissory note with an interest rate of 4.0% per annum. The note is payable $13,669 per month, including principal and interest.
(9) On January 25, 2022, the Company borrowed $18.7 million from a bank lender for working capital purposes by executing a 10-year promissory note with an initial interest rate of 5.25% per annum to be adjusted after five years to a rate equal to the weekly average yield on U.S. Treasury securities plus 3.98% with a floor of 5.25%. The note is payable in monthly payments of $126,265 in principal and interest to be adjusted after five years. The promissory note is secured by eleven real estate properties and is personally guaranteed by the Company CEO, Eric Langan (see Note 17). After the 10-year term, the remaining balance of principal and interest are payable at maturity date. There are certain financial covenants with which the Company is to be in compliance related to this loan.
(10) On March 1, 2022, the Company borrowed $2.6 million from a bank lender in relation to a purchase of real estate (see Note 14). The 21-year promissory note has an initial interest rate of 4.25% per annum, repriced after five years and then again annually to prime plus 1% with a floor rate of 4.25%. The note is payable interest only during the first 12 months; then the next 48 months with $16,338 equal monthly payments of principal and interest; then the next 191 months at an equal monthly payment based on a 20-year amortization; with the balance of principal and interest payable at the 252nd month.
(11) On May 2, 2022, in relation to a club acquisition (see Note 1 4), the Company executed two seller-financed notes totaling $11.0 million, comprised of (1) $6.0 million under a 10% three-year promissory note payable in 35 equal monthly payments of $79,290 in principal and interest based on a ten-year amortization schedule, with a balloon payment for the remaining principal plus accrued interest due at maturity and (2) $5.0 million under a 10% ten-year interest-only promissory note payable in 119 equal monthly payments of $41,667 in interest, with a balloon payment of the total $5.0 million in principal plus accrued interest due at maturity.
(12) On May 23, 2022, the Company borrowed $2.2 million from a bank lender in relation to a purchase of real estate (see Note 1 4). The 18-month promissory note has an initial interest rate of 4.5% per annum to be adjusted daily to a rate equal to the Wall Street Journal prime rate plus 1% with a floor of 4.5%. The promissory note is payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity. The Company paid loan costs amounting to $25,000 for this note. This promissory note was fully paid in connection with a construction loan entered into in November 2023.
(13) On July 21, 2022, the Company executed an $800,000 6% seller-financed promissory note in relation to an acquisition of a club in Odessa, Texas (see Note 1 4). The promissory note matures in July 2029 and is payable in 84 equal monthly installments of $11,687 of principal and interest.
(14) On July 27, 2022, in relation to an acquisition of a club in Hallandale Beach, Florida (see Note 1 5), the Company executed two seller-financed promissory notes: (1) $10.0 million 6% ten-year promissory note payable in 120 equal monthly payments of $111,020 in principal and interest, and (2) $5.0 million 6% ten-year promissory note payable in 120 equal monthly payments of $55,510 in principal and interest.
80

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt - continued
(15) On August 18, 2022, in relation to a purchase of real estate for a future Bombshells location amounting to $2.1 million (see Note 1 5), the Company borrowed $1.6 million from a bank lender. The 5.25% mortgage note is payable interest-only for eleven months and on its August 18, 2023 maturity date payable with the entire principal balance plus accrued interest. This note has been amended in August 2024 to an amortizing 7.79% note with monthly installments of $14,959 of principal and interest and maturing in August 2039. The fixed 7.79% interest for the first five years will then be adjusted annually to Wall Street Journal prime plus 0.25%. There are certain financial covenants with which the Company is to be in compliance related to this loan.
(16) On September 23, 2022, in connection with the purchase of an aircraft worth $3.5 million (see Note 1 4), the Company entered into a financing transaction for $2.8 million. The financing agreement bears an interest of 4.79% per annum and payable in 240 monthly installments of principal and interest amounting to $18,298.
(17) On October 10, 2022, in relation to a real estate purchase (see Note 1 5), the Company borrowed $2.3 million from a bank lender. The 18-month promissory note bears an initial interest rate of 6% per annum adjusted daily to a rate equal to the Wall Street Journal prime rate plus 0.5% with a floor of 6%. The promissory note is payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity. The Company paid approximately $26,000 in debt issuance cost at closing. This promissory note is secured by the purchased real estate property.
(18) On October 26, 2022, in relation to a club acquisition (see Note 1 4), the Company executed a promissory note for $5.0 million with the seller. The 6% 15-year promissory note is payable in 180 equal monthly payments of $42,193 in principal and interest. This promissory note is secured by the purchased real estate property.
(19) On November 18, 2022, in relation to a real estate purchase on September 12, 2022 (see Note 1 4), the Company borrowed $1.5 million from a bank lender. The 18-month promissory note bears an initial interest rate of 6% per annum to be adjusted daily to a rate equal to the Wall Street Journal prime rate plus 0.5% with a floor of 6%. The promissory note is payable in 17 monthly interest-only installments with the full principal and accrued interest payable at maturity. This promissory note is secured by the purchased real estate property. This note has been amended in August 2024 to an amortizing 7.79% note with monthly installments of $14,248 of principal and interest and maturing in August 2039. The fixed 7.79% interest for the first five years will then be adjusted annually to Wall Street Journal prime plus 0.25%. There are certain financial covenants with which the Company is to be in compliance related to this loan.
(20) On December 20, 2022, the Company executed a promissory note for $3.3 million with a bank lender in relation to a purchase of a food hall property (see Note 1 4). The 6.67% five-year promissory note is payable in 59 equal monthly installments of $22,805 in principal and interest, with the balance of 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.
(21) On February 7, 2023, in relation to the acquisition of a franchised Bombshells location in San Antonio, Texas (see Note 1 4), the Company entered into six separate seller-financing promissory notes totaling $2.0 million. Each of the promissory notes has an interest rate of 7% per annum, has a term of 24 months, and is payable in monthly installments totaling $39,602 of principal and interest for the first 23 months based on a 60-month amortization schedule with the remaining unpaid principal and interest paid at maturity. These promissory notes were forgiven as part of the sale of Bombshells San Antonio (see Note 14).
(22) On March 9, 2023, the Company closed a $10.0 million line-of-credit facility with a lender bank evidenced by a revolving promissory note, with an initial draw of $10.0 million at closing. The facility has an initial term of 24 months with a variable interest rate equal to the Wall Street Journal prime rate plus 1%. On such date that the principal balance is repaid to an amount less than $5.0 million, the facility's revolver feature is activated where the Company may draw from the remaining availability up to a maximum of $5.0 million. The Company shall also pay a non-usage fee of 0.5% based on the amount by which the average outstanding balance for the prior twelve months was less than $3.0 million or the amount by which the total aggregate advances during the prior twelve months totaled less than $3.0 million. The Company paid $115,000 in debt issuance costs, which is recorded as deferred charges to be amortized on a straight-line basis over 24 months. There are certain financial covenants with which the Company is to be in compliance related to this loan, including a compensating balance requirement of $3.0 million and a minimum
81

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt - continued
tangible net worth requirement of $20.0 million. The compensating balance requirement does not contractually or legally restrict the withdrawal or use of cash.
(23) On March 16, 2023, in relation to the acquisition of five clubs with associated real estate, automated teller machines, and intellectual property (see Note 1 4), the Company executed nine secured promissory notes with a total principal amount of $25.5 million. Each of the nine promissory notes have an interest rate of 7% per annum with a term of 10 years, payable in arrears in 120 equal monthly payments of principal and interest amounting to $296,077 per month in the aggregate. The holder of the $5.0 million promissory note related to the real estate properties may call due from the Company a principal payment of $1.0 million once in every calendar year.
(24) On June 18, 2023, in relation to a purchase of a retail parcel in a condominium property (see Note 1 4), the Company executed a promissory note for $2.9 million with a bank lender. The 7.12% five-year promissory note is payable in monthly installments of $20,654 in principal and interest, with the balance of 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.
(25) On October 25, 2023, the Company entered into a debt modification transaction under which 26 investors holding a total principal amount of $15.7 million in unsecured promissory notes agreed to extend the maturity dates of such notes, with no other changes to the terms and conditions of the original promissory notes, which original promissory notes were issued in October 2021 and had original maturity dates in October 2024. The transaction was effected by the 26 investors returning for cancellation their original promissory notes, with us issuing new amended and restated promissory notes to such investors. The original promissory notes will be deemed cancelled as of the end of the day on October 31, 2023, and the new amended promissory notes will have an original issue date, and be deemed effective, as of November 1, 2023.
Other than the extension of the maturity dates, there were no other changes to the terms and conditions of the original promissory notes (except for the reduction in principal, as described below, and the corresponding reduction in monthly installments of principal and interest). The new amended notes will continue to bear interest at the rate of 12% per annum. Of the new amended promissory notes, $9.1 million are payable interest-only monthly (or quarterly) in arrears, with a final lump sum payment of principal and accrued and unpaid interest due on October 1, 2026. The remaining $6.6 million in promissory notes are payable in monthly payments of principal and interest based on a 10-year amortization period, with the balance of the entire principal amount together with all accrued and unpaid interest due and payable in full on November 1, 2027. The original promissory notes that were returned and cancelled as consideration for the issuance of the $6.6 million in new amended promissory notes had an original principal amount of $7.5 million in October 2021.
(26) On November 17, 2023, the Company closed on a construction loan agreement with a bank lender for a total amount of $7.2 million bearing an interest rate of 8.5% per annum for the construction of a Bombshells restaurant in Rowlett, Texas. The promissory note is payable in 120 monthly payments, the first 18 months of which will be interest-only. The succeeding 101 monthly payments will be payable in equal installments of $63,022 in principal and interest, and the remaining balance in principal and accrued interest payable on the 120th month. There are certain financial covenants with which the Company is to be in compliance related to this loan.
(27) On April 30, 2024, the Company entered into a term loan with a bank lender for $20.0 million for additional working capital. The loan has a 10-year term and an interest rate of 8.25% per annum for the first five years, after which the interest rate is to be adjusted to a rate equal to the then weekly average yield on U.S. Treasury Securities plus 362 basis points, with a 6.5% floor. The promissory note is payable in equal monthly installments of $170,408 for principal and interest, based on a 20-year amortization period, during the first five years, after which the monthly payments shall adjust based on the new interest rate to continue until April 30, 2034, at which time the remaining principal amount and accrued interest shall be paid. The Company paid $356,000 in debt issuance costs at the time of closing. There are certain financial covenants with which the Company is to be in compliance with related to this loan, including a minimum tangible net worth requirement of $25.0 million.
82

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
8. Debt - continued
Future maturities of debt obligations as of September 30, 2024, consist of the following (in thousands):

| Regular Amortization |  | Balloon Payments |  | Total Payments
2025 | $ | 14,264 |  |  | $ | 5,121 |  |  | $ | 19,385 |
2026 | 14,192 |  |  | 2,276 |  |  | 16,468 |
2027 | 14,461 |  |  | 9,100 |  |  | 23,561 |
2028 | 14,812 |  |  | 13,636 |  |  | 28,448 |
2029 | 14,836 |  |  | — |  |  | 14,836 |
Thereafter | 52,452 |  |  | 85,904 |  |  | 138,356 |
| $ | 125,017 |  |  | $ | 116,037 |  |  | $ | 241,054 |

9. Income Taxes
Income tax expense consisted of the following (in thousands):

| 2024 |  | 2023 |  | 2022
Current |  |  |  |  |
Federal | $ | 4,570 |  |  | $ | 6,506 |  |  | $ | 8,335 |
State and local | 1,470 |  |  | 2,121 |  |  | 2,656 |
Total current income tax expense | 6,040 |  |  | 8,627 |  |  | 10,991 |
Deferred |  |  |  |  |
Federal | (5,522) |  |  | (1,294) |  |  | 2,080 |
State and local | (928) |  |  | (487) |  |  | 1,000 |
Total deferred income tax expense (benefit) | (6,450) |  |  | (1,781) |  |  | 3,080 |
Total income tax expense (benefit) | $ | (410) |  |  | $ | 6,846 |  |  | $ | 14,071 |

The Company and its subsidiaries do not operate in tax jurisdictions outside of the United States.
Income tax expense (benefit) differs from the “expected” income tax expense computed by applying the U.S. federal statutory rate to earnings before income taxes for the years ended September 30 as a result of the following (in thousands):

| 2024 |  | 2023 |  | 2022
| Amount |  | % |  | Amount |  | % |  | Amount |  | %
Federal statutory income tax expense | $ | 547 |  |  | 21.0 | % |  | $ | 7,549 |  |  | 21.0 | % |  | $ | 12,628 |  |  | 21.0 | %
State income taxes, net of federal benefit | 223 |  |  | 8.6 | % |  | 1,620 |  |  | 4.5 | % |  | 1,801 |  |  | 3.0 | %
Permanent differences | 487 |  |  | 18.7 | % |  | 605 |  |  | 1.7 | % |  | 96 |  |  | 0.2 | %
Change in tax rates | (109) |  |  | (4.2) | % |  | (255) |  |  | (0.7) | % |  | 896 |  |  | 1.5 | %
Change in valuation allowance | 143 |  |  | 5.5 | % |  | (176) |  |  | (0.5) | % |  | 343 |  |  | 0.6 | %
Tax credits | (2,291) |  |  | (87.8) | % |  | (2,131) |  |  | (5.9) | % |  | (1,796) |  |  | (3.0) | %
Other | 590 |  |  | 22.6 | % |  | (366) |  |  | (1.0) | % |  | 103 |  |  | 0.2 | %
Total income tax expense (benefit) | $ | (410) |  |  | (15.7) | % |  | $ | 6,846 |  |  | 19.0 | % |  | $ | 14,071 |  |  | 23.4 | %

83

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
9. Income Taxes - continued
The effective income tax rate difference from the statutory federal corporate tax rate of 21% comes from offsetting impact of state income tax, net of federal benefit, changes in the deferred tax asset valuation allowance, and tax credits that are mostly FICA tip credits. The effective income tax rate for fiscal 2024 was also affected by the low pretax income that caused a high offsetting rate for tax credits, whose dollar value does not change based on pretax income.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

| September 30,
| 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 961 |  |  | $ | 827 |
Capital loss carryforwards | 535 |  |  | 651 |
Right-of-use assets | 2,096 |  |  | 946 |
Accrued expenses | 733 |  |  | 748 |
Stock-based compensation | 1,629 |  |  | 1,185 |
Other | 27 |  |  | 123 |
Valuation allowance | (951) |  |  | (808) |
| 5,030 |  |  | 3,672 |
Deferred tax liabilities: |  |  |
Intangibles | (19,557) |  |  | (21,468) |
Property and equipment | (7,875) |  |  | (11,085) |
Prepaid expenses | (291) |  |  | (262) |
| (27,723) |  |  | (32,815) |
| $ | (22,693) |  |  | $ | (29,143) |

The Company may recognize the tax benefit from uncertain tax positions only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities. We recognize accrued interest related to unrecognized tax benefits as a component of accrued liabilities. We recognize penalties related to unrecognized tax benefits as a component of selling, general and administrative expenses, and recognize interest accrued related to unrecognized tax benefits in interest expense.
The full balance of uncertain tax positions, if recognized, would affect the Company’s annual effective tax rate, net of any federal tax benefits. As of September 30, 2024, and 2023, the Company does not have any uncertain tax position. The Company does not expect any changes that will significantly impact its uncertain tax positions within the next twelve months.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states. The Company ordinarily goes through various federal and state reviews and examinations for various tax matters. Fiscal year ended September 30, 2021 and subsequent years remain open to federal tax examination.
84

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
9. Income Taxes - continued
On March 27, 2020, former President Trump signed the CARES Act into law. As a result of this, additional avenues of relief were available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration. The CARES Act included, among other items, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act also established a Paycheck Protection Program ("PPP"), whereby certain small businesses are eligible for a loan to fund payroll expenses, rent, and related costs. The loan may be forgiven if the funds are used for payroll and other qualified expenses. The Company submitted its application for a PPP loan and on May 8, 2020 received approval and funding for its restaurants, shared service entity and lounge. Ten of our restaurant subsidiaries received amounts ranging from $271,000 to $579,000 for an aggregate amount of $4.2 million; our shared-services subsidiary received $1.1 million; and one of our lounges received $124,000. None of our adult nightclub and other non-core business subsidiaries received funding under the PPP. The Company believes it used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company utilized all of the PPP funds and submitted its forgiveness applications. During fiscal 2022, we received 11 Notices of PPP Forgiveness Payment from the Small Business Administration out of the 12 of our PPP loans granted. All of the notices received forgave 100% of each of the 11 PPP loans totaling the amount of $5.3 million in principal and interest and were included in non-operating gains (losses), net in our consolidated statement of income for the fiscal year ended September 30, 2022. In November 2021, we received a partial forgiveness of the remaining $124,000 PPP loan for $85,000 in principal and interest. The remaining unforgiven portion of approximately $41,000 in principal was fully paid as debt plus accrued interest in fiscal 2022.
10. Commitments and Contingencies
Legal Matters
Texas Patron Tax
A declaratory judgment action was brought by five operating subsidiaries of the Company to challenge a Texas Comptroller administrative rule related to the $5 per customer Patron Tax Fee assessed against Sexually Oriented Businesses. An administrative rule attempted to expand the fee to cover venues featuring dancers using latex cover as well as traditional nude entertainment. The administrative rule was challenged on both constitutional and statutory grounds. On November 19, 2018, the Court issued an order that a key aspect of the administrative rule is invalid based on it exceeding the scope of the Comptroller’s authority. On March 6, 2020, the U.S. District Court for the Western District of Texas, Austin Division, ruled that the Texas Patron Tax is unconstitutional as it has been applied and enforced by the Comptroller. The State of Texas appealed to the Fifth Circuit Court of Appeals, who affirmed that the Texas Patron Fee is unconstitutional as applied. The State of Texas next sought review from the Supreme Court, but the high court declined to take the case and in doing so exhausted the State's rights to appeal the judgment. The lawsuit was sent back to the trial court for post-trial proceedings, which resulted in the award of attorneys' fees to the operating subsidiaries. Pursuant to the rulings, the Texas Patron Fee is unconstitutional as applied to clubs featuring dancers using latex cover.
Indemnity Insurance Corporation
As previously reported, the Company and its subsidiaries were insured under a liability policy issued by Indemnity Insurance Corporation, RRG (“IIC”) through October 25, 2013. The Company and its subsidiaries changed insurance companies on that date.
On November 7, 2013, the Court of Chancery of the State of Delaware entered a Rehabilitation and Injunction Order (“Rehabilitation Order”), which declared IIC impaired, insolvent and in an unsafe condition and placed IIC under the supervision of the Insurance Commissioner of the State of Delaware (“Commissioner”) in her capacity as receiver (“Receiver”). The Rehabilitation Order empowered the Commissioner to rehabilitate IIC through a variety of means, including gathering assets and marshaling those assets as necessary. Further, the order stayed or abated pending lawsuits involving IIC as the insurer until May 6, 2014.
85

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
10. Commitments and Contingencies - continued
On April 10, 2014, the Court of Chancery of the State of Delaware entered a Liquidation and Injunction Order With Bar Date (“Liquidation Order”), which ordered the liquidation of IIC and terminated all insurance policies or contracts of insurance issued by IIC. The Liquidation Order further ordered that all claims against IIC must have been filed with the Receiver before the close of business on January 16, 2015, and that all pending lawsuits involving IIC as the insurer were further stayed or abated until October 7, 2014. As a result, the Company and its subsidiaries no longer have insurance coverage under the liability policy with IIC. The Company has retained counsel to defend against and evaluate these claims and lawsuits. We are funding 100% of the costs of litigation and will seek reimbursement from the bankruptcy receiver. The Company filed the appropriate claims against IIC with the Receiver before the January 16, 2015 deadline and has provided updates as requested; however, there are no assurances of any recovery from these claims. It is unknown at this time what effect this uncertainty will have on the Company. As of September 30, 2024, we had 1 remaining unresolved claim out of the original 71 claims.
Shareholder Derivative Action
On January 21, 2022, Shiva Stein and Kevin McCarty filed a shareholder derivative action in the Southern District of Texas, Houston Division against former director Nourdean Anakar, Yura Barabash, former director Steven L. Jenkins, Eric Langan, Luke Lirot, former CFO Phillip K. Marshall, Elaine J. Martin, Allan Priaulx, and Travis Reese as defendants, as well as against RCI Hospitality Holdings, Inc. as nominal defendant. The action, styled Stein v. Anakar, et al., No. 4:22-mc-00149 (S.D. Tex.), alleges claims for breach of fiduciary duty based on alleged dissemination of inaccurate information and failure to maintain internal controls. These allegations are substantively similar to claims asserted in a prior securities class action that was settled in August of 2022 and a prior derivative action that was dismissed in June of 2021. On July 24, 2023, the parties reached an agreement in principle to resolve the action. On October 10, 2023, the parties submitted an agreement to settle the action to the Court for the Court's preliminary approval. On July 19 2024, the Court approved the settlement. On July 30, 2024, the final order of settlement was entered by the Court. The case is now closed.
Other
On June 23, 2014, Mark H. Dupray and Ashlee Dupray filed a lawsuit against Pedro Antonio Panameno and our subsidiary JAI Dining Services (Phoenix) Inc. (“JAI Phoenix”) in the Superior Court of Arizona for Maricopa County. The suit alleged that Mr. Panameno injured Mr. Dupray in a traffic accident after being served alcohol at an establishment operated by JAI Phoenix. The suit alleged that JAI Phoenix was liable under theories of common law dram shop negligence and dram shop negligence per se. After a jury trial proceeded to a verdict in favor of the plaintiffs against both defendants, in April 2017 the Court entered a judgment under which JAI Phoenix’s share of compensatory damages is approximately $1.4 million and its share of punitive damages is $4 million. In May 2017, JAI Phoenix filed a motion for judgment as a matter of law or, in the alternative, motion for new trial. The Court denied this motion in August 2017. In September 2017, JAI Phoenix filed a notice of appeal. In June 2018, the matter was heard by the Arizona Court of Appeals. On November 15, 2018 the Court of Appeals vacated the jury’s verdict and remanded the case to the trial court. A new trial has been set for June 2025. JAI Phoenix will continue to vigorously defend itself.
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.
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 (see Note 5). 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 quarter ended September 30, 2023.
86

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
10. Commitments and Contingencies - continued
On or 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 for the mobile phone of three individuals (including two executive officers and a non-executive corporate employee) by the New York State Attorney General (“NY AG”) and the New York State Department of Taxation and Finance (“NY DTF”). On June 7, 2024, the Company received a subpoena from the NY AG requesting documents and other information with respect to certain clubs in New York and Florida. The investigation appears to be related to the Company’s New York State tax filings and possible entertainment benefits provided to NY DTF personnel. The Company is cooperating with the NY AG and its investigation. As a result of this investigation, a non-executive corporate employee was placed on administrative leave during the pendency of an internal review process. 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 investigation.
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.
Settlement of lawsuits for the years ended September 30, 2024, 2023, and 2022 total $520,000, $3.8 million, and $1.4 million, respectively. As of September 30, 2024 and 2023, the Company has accrued $2.0 million and $2.4 million in accrued liabilities, respectively, related to settlement of lawsuits.
Leases
See Note 1 7 for lease commitments.
11. 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.
Stock-based compensation expense for fiscal 2024, 2023, and 2022, which is included in corporate segment selling, general and administrative expenses, amounted to $1.9 million, $2.6 million, and $2.4 million, respectively, with related tax benefit amounting to $444,000, $616,000, and $569,000, respectively. As of September 30, 2024, we had unrecognized compensation cost amounting to $2.6 million related to stock-based compensation awards granted, which is expected to be recognized over a weighted average period of 1.4 years.
87

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
11. Stock-based Compensation - continued
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 vested, at the end of five years. The weighted average grant-date fair value of the stock options was $31.37. No stock options were exercised in fiscal 2024, 2023, and 2022.
The following table summarizes information about stock option activity during fiscal 2024 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, 2023 | 300,000 |  |  | $ | 100.00 |  |  |  |  |
Granted | — |  |  |  |  |  |  |
Outstanding at September 30, 2024 | 300,000 |  |  | $ | 100.00 |  |  | 2.4 |  | $ | — |
Exercisable at September 30, 2024 | 180,000 |  |  | $ | 100.00 |  |  | 2.4 |  | $ | — |

12. Employee Retirement Plan
The Company sponsors a Simple IRA plan (the “Plan”), which covers all of the Company’s corporate employees. The Plan allows corporate employees to contribute up to the maximum amount allowed by law, with the Company making a matching contribution of up to 3% of the employee’s salary. Expenses related to matching contributions to the Plan approximated $280,000, $287,000, and $258,000 for the years ended September 30, 2024, 2023, and 2022, respectively.
13. Insurance Recoveries
One of our clubs in Washington Park, Illinois, was temporarily closed due to a fire during the third quarter of 2019, and another club in Fort Worth, Texas, sustained weather-related damage toward the end of fiscal 2019. Both of these casualties received insurance recoveries in subsequent fiscal years. During the fourth quarter of 2022, one club in Sulphur, Louisiana, incurred damage from a hurricane. We also partially recovered and recognized a $327,000 gain related to a fire in one of our clubs in Fort Worth, Texas, during the fourth quarter of 2024. We wrote off the net carrying value of the assets destroyed in the said events and recorded corresponding recovery of losses or gains in as much as the insurers have paid us or where contingencies relating to the insurance claims have been resolved.
In relation to these casualty events, we recorded the following in our consolidated financial statements (in thousands):

| Included in |  | 2024 |  | 2023 |  | 2022
Consolidated balance sheets (period end) |  |  |  |  |  |  |
Insurance receivable | Receivables, net |  | $ | — |  |  | $ | — |  |  | $ | — |
Consolidated statements of income – gain |  |  |  |  |  |  |
Property | Impairments and other charges, net |  | $ | (327) |  |  | $ | (77) |  |  | $ | (463) |
Consolidated statements of cash flows |  |  |  |  |  |  |
Proceeds from business interruption insurance claims | Operating activity |  | $ | — |  |  | $ | — |  |  | $ | — |
Proceeds from property insurance claims | Investing activity |  | $ | 1,367 |  |  | $ | 86 |  |  | $ | 648 |

88

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
13. Insurance Recoveries – continued
The net property insurance gain/loss amount in fiscal 2024, 2023, and 2022 was net of assets written off and expenses amounting to $845,000, $9,000, and $0, respectively.
14. Acquisitions and Dispositions
2022 Acquisitions
Big Sky Clubs
On October 18, 2021, we and certain of our subsidiaries completed our acquisition of eleven gentlemen’s clubs, six related real estate properties, and associated intellectual property for a total agreed acquisition price of $88.0 million (with a total consideration fair value of $87.9 million based on the Company’s stock price at acquisition date and discounted due to the lock-up period, with interest rates on promissory notes reflective of market yields). We used the Finnerty Model to estimate the discount on stock marketability. The acquisition was structured by entering into nine asset purchase agreements, which allowed the Company to acquire from each club all of the tangible and intangible assets and personal property in that business except certain excluded assets, and two stock purchase agreements, where a newly formed subsidiary purchased 100% of the capital stock of two club-owning entities. Along with the asset and stock purchase agreements, the Company also entered into a real estate purchase and sale agreement for six real estate properties, and an intellectual property purchase agreement for substantially all of the intellectual property used in the adult entertainment establishment business owned and operated by the sellers. The acquisition gives the Company presence in four additional states. We paid for the acquisition with $36.8 million in cash, $21.2 million in four seller-financed notes (see Note 8), and 500,000 shares of our common stock.
The fair value of the consideration transferred is as follows (in thousands):

Cash | $ | 36,800 |
Notes payable | 21,200 |
Common stock | 29,933 |
Total consideration fair value | $ | 87,933 |

We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment. Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated at $15.4 million. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities. Goodwill will not be amortized but will be tested at least annually for impairment. Approximately $7.1 million of the recognized goodwill for this transaction will be deductible for tax purposes.
The following is our allocation of the fair value of the acquisition price (in thousands) as of October 18, 2021:

Current assets | $ | 386 |
Property and equipment | 19,273 |
Licenses | 47,390 |
Tradenames | 6,934 |
Leases acquired in-place | 261 |
Deferred tax liability | (1,741) |
Total net assets acquired | 72,503 |
Goodwill | 15,430 |
Acquisition price fair value | $ | 87,933 |

89

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
Licenses and tradenames, except for those associated with certain leased locations, will not be amortized but will be tested at least annually for impairment.
The Company entered into leases with third parties for certain acquired clubs where the real estate was not part of the acquisition.
In connection with this acquisition, we incurred acquisition-related expenses of approximately $414,000, of which $173,000 was recognized in fiscal 2021 and $241,000 was recognized in fiscal 2022, and in both periods included in selling, general and administrative expenses in our consolidated statements of income. We recorded $1.8 million in measurement period adjustments related to amortization of definite-lived intangibles and debt discount during fiscal 2022.
During fiscal 2024, 2023, and 2022 (from the date of acquisition), the eleven acquired clubs contributed the following, which are included in our consolidated statements of income (in thousands):

| 2024 |  | 2023 |  | 2022
Revenues | $ | 39,383 |  |  | $ | 40,563 |  |  | $ | 35,437 |
Income from operations | $ | 8,662 |  |  | $ | 11,372 |  |  | $ | 12,525 |

The following table presents the unaudited pro forma combined results of operations of the Company and the eleven acquired clubs and related assets as though the acquisition occurred at the beginning of fiscal 2021 (in thousands, except per share amounts and number of shares):

| 2024 |  | 2023 |  | 2022
Pro forma revenues | $ | 295,604 |  |  | $ | 293,790 |  |  | $ | 269,347 |
Pro forma net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | $ | 29,246 |  |  | $ | 45,623 |
Pro forma earnings per share - basic and diluted | $ | 0.33 |  |  | $ | 3.13 |  |  | $ | 4.86 |
Pro forma weighted average number of common shares outstanding - basic and diluted | 9,250,245 |  | 9,335,983 |  | 9,383,445

The above unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2021. The unaudited pro forma financial information reflects material, nonrecurring adjustments directly attributable to the acquisition including acquisition-related expenses, interest expense, and any related tax effects. Since we do not have a final valuation of the assets that we acquired yet, the unaudited pro forma financial information only includes preliminary adjustments related to changes in recognized expenses caused by the fair value of assets acquired, such as depreciation and amortization and related tax effects. Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the 28 private lender group notes and 4 seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2021. Pro forma weighted average number of common shares outstanding includes the impact of 500,000 shares of our common stock issued as partial consideration for the acquisition. Since the results of operations during fiscal 2024 and 2023 were subsequent to the fiscal year of acquisition and that those years fully include the results of operations of the eleven acquired clubs and related assets, the amounts presented for fiscal 2024 and 2023 above do not reflect any pro forma adjustments.
90

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
The Mansion
On November 8, 2021, the Company acquired a club and related real estate in Newburgh, New York for a total acquisition price of $3.5 million, of which $2.5 million was paid in cash at closing and $1.0 million through a seller-financed 7-year promissory note with an interest rate of 4.0% per annum. The $3.5 million acquisition price was allocated $2.1 million to real estate, $200,000 to tangible assets, and $1.2 million to goodwill, which is deductible for tax purposes. The note is payable $13,669 per month, including principal and interest. See Note 8. The Company incurred approximately $21,000 of acquisition-related costs for this acquisition, of which $11,000 was incurred in fiscal 2021 and $10,000 was incurred in fiscal 2022, both of which were included in selling, general and administrative expenses in our consolidated statements of income.
J.W. Lee Property
On December 30, 2021, the Company acquired the real estate of one of its clubs in South Florida, which the Company previously leased, for $7.0 million in an all-cash purchase. At closing, the Company wrote off the balance of its operating lease right-of-use assets and corresponding operating lease liability related to the discontinued lease, both of which amounted to $5.9 million.
Stafford TX Property
On March 1, 2022, the Company acquired real estate in Stafford, Texas for $3.5 million for a future Bombshells location. The Company secured a $2.6 million loan in relation to the purchase. See Note 8.
Lubbock TX Club Property
On March 1, 2022, the Company acquired real estate in Lubbock, Texas for $400,000 to move one of our existing clubs due to eminent domain on the current location. See 2023 Disposition below.
Playmates Club
On May 2, 2022, the Company completed an acquisition of a club in Miami, Florida for a total acquisition price of $16.0 million. The acquisition price includes $3.0 million for the real estate property covered in a stock purchase agreement payable in cash at closing, and $13.0 million for the adult entertainment business covered in a separate stock purchase agreement payable as follows: (1) $2.0 million in cash at closing; (2) $6.0 million under a 10% three-year promissory note payable in 35 equal monthly payments of $79,290 in principal and interest based on a ten-year amortization schedule, with a balloon payment for the remaining principal plus accrued interest due at maturity; and (3) $5.0 million under a 10% ten-year interest-only promissory note payable in 119 equal monthly payments of $41,667 in interest, with a balloon payment of the total $5.0 million in principal plus accrued interest due at maturity. The Company acquired 100% of the capital stock of the acquired companies in each of the stock purchase agreements mentioned above. The $5.0 million promissory note may be earlier canceled if there are any regulatory changes that would prohibit the business from operating as an adult entertainment establishment within ten years of the closing date of the stock purchase agreement. Based on recent renewals of licenses of similar businesses in the region where the club operates, the Company believes that the probability of any changes to the regulatory environment is low as of the reporting date and would not materially impact the fair value of the debt.
We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment. Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated to be $6.8 million. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities. Goodwill will not be amortized but will be tested at least annually for impairment. The recognized goodwill will not be deductible for tax purposes.
91

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
The following is our allocation of the fair value of the acquisition price (in thousands) as of May 2, 2022:

Current assets | $ | 172 |
Property and equipment | 5,336 |
Licenses | 4,900 |
Tradenames | 1,460 |
Deferred tax liability | (2,627) |
Total net assets acquired | 9,241 |
Goodwill | 6,759 |
Acquisition price fair value | $ | 16,000 |

Licenses and tradenames will not be amortized but will be tested at least annually for impairment.
In connection with the acquisition, we incurred acquisition-related expenses of approximately $28,000, which is included in selling, general and administrative expenses in our consolidated statement of income for the year ended September 30, 2022.
Rowlett TX Property
On May 23, 2022, the Company acquired real estate in Rowlett, Texas for $3.3 million for a future Bombshells location. The Company secured a $2.2 million loan in relation to the purchase. See Note 8.
Odessa TX Club
On July 21, 2022, the Company acquired a club in Odessa, Texas for a total acquisition price of $1.8 million, of which $1.0 million was for the real estate and $800,000 for the adult entertainment business. The Company paid $1.0 million in cash at closing for the real estate and executed an $800,000 6% seller-financed promissory note for the business. The promissory note matures in seven years and is payable in 84 equal monthly installments of $11,687 of principal and interest. See Note 8. The $1.8 million acquisition price was allocated $11,000 to current assets, $1.1 million to property and equipment, and $684,000 to licenses.
Cheetah Gentlemen's Club
On July 27, 2022, the Company completed the acquisition of a club in Hallandale Beach, Florida for a total acquisition price of $25.0 million. The acquisition includes (1) $20.0 million for the adult entertainment business covered in a stock purchase agreement paid $10.0 million in cash at closing and $10.0 million under a 6% ten-year promissory note payable in 120 equal monthly payments of $111,020 in principal and interest, and (2) $5.0 million for the real estate property covered in an asset purchase agreement payable under a 6% ten-year promissory note payable in 120 equal monthly payments of $55,510 in principal and interest. In the stock purchase agreement, the Company acquired 100% of the capital stock of the company which owned the adult entertainment business. The total fair value of the consideration transferred is $23.4 million, which includes a discount on the $10.0 million promissory note to reflect market participant yield expectations.
We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclubs reportable segment. Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill was estimated to be $5.6 million. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities. Goodwill will not be amortized but will be tested at least annually for impairment. The recognized goodwill will not be deductible for tax purposes.
92

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
The following is our allocation of the fair value of the acquisition price (in thousands) as of July 27, 2022:

Current assets | $ | 71 |
Property and equipment | 4,921 |
Licenses | 16,810 |
Deferred tax liability | (3,979) |
Total net assets acquired | 17,823 |
Goodwill | 5,577 |
Acquisition price fair value | $ | 23,400 |

On August 18, 2022, the Company purchased real estate in Huntsville, Alabama amounting to $2.1 million for a future Bombshells location. The Company paid $525,000 in cash at closing and entered into a bank financing for the $1.6 million remainder (see Note 8).
On September 12, 2022, the Company entered into a joint venture with a private investment company to acquire real estate in Austin, Texas amounting to $2.2 million for a future Bombshells location. The Company has a 51% interest in the joint venture and paid its $1.1 million share for the real estate purchase while the investment of the private investment company was recorded as noncontrolling interest in our consolidated balance sheet.
2022 Dispositions
On October 8, 2021, the Company sold one of its clubs in South Houston for $300,000.
On July 12, 2022, the Company received $6.0 million from the Philadelphia Regional Port Authority for one of the Company's rental properties, with a carrying value of $4.9 million, due to eminent domain. The Company paid the current lessee a termination fee of $250,000, which is included in impairments and other charges, net in our consolidated statement of income. The Company used $2.1 million of the proceeds to pay down a loan related to the property.
2023 Acquisitions
Lubbock Property
On October 10, 2022, the Company purchased real estate in Lubbock, Texas amounting to $3.4 million for a future Bombshells location. The Company paid $1.2 million in cash at closing and obtained bank financing for the $2.3 million remainder (see Note 8). The site includes extra land that will be listed for sale once the Bombshells unit is completed.
93

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
Heartbreakers Gentlemen's Club
On October 26, 2022, the Company completed the acquisition of a club in Dickinson, Texas for a total agreed acquisition price of $9.0 million (with an acquisition date fair value of $8.9 million based on certain legal contingencies that existed pre-acquisition). The acquisition includes (1) $2.5 million for the adult entertainment business covered in a stock purchase agreement paid fully in cash at closing and (2) $6.5 million for the real estate property covered in a real estate purchase agreement paid $1.5 million in cash at closing and $5.0 million under a 6% 15-year promissory note (see Note 8). In the stock purchase agreement, the Company acquired 100% of the capital stock of the company which owned the adult entertainment business. The acquisition gives the Company its first adult club in the Galveston, Texas area market.
The following is our allocation of the fair value of the acquisition price (in thousands) as of October 26, 2022:

Current assets | $ | 64 |
Property and equipment | 4,884 |
Licenses | 1,170 |
Tradename | 340 |
Accrued liability | (95) |
Deferred tax liability | (363) |
Total net assets acquired | 6,000 |
Goodwill | 2,905 |
Acquisition price fair value | $ | 8,905 |

We believe that in this acquisition goodwill represents the existing customer base of the club in the area and the added synergy profitability expansion when we implement the Company's processes into the club. Goodwill, licenses, and tradename will not be amortized but will be tested at least annually for impairment. Approximately $1.5 million of the recognized goodwill will be deductible for tax purposes.
In connection with this acquisition, we incurred approximately $23,000 in acquisition-related expenses during 2023, which is included in selling, general and administrative expenses in our consolidated statement of income. From the date of acquisition until September 30, 2023, the club contributed revenues $2.0 million and loss from operations of $3.1 million, which are included in our consolidated statement of income. The Company is not providing supplemental pro forma disclosures for this acquisition as it does not materially contribute to the consolidated operations of the Company.
Aurora CO Property
On November 8, 2022, the Company purchased real estate in Aurora, Colorado amounting to $850,000 in cash for a future Bombshells location.
Central City CO Casino Properties
On December 5, 2022, the Company purchased real estate in Central City, Colorado amounting to $2.5 million in cash for the development of a Rick's Cabaret Steakhouse and Casino business.
On February 6, 2023, the Company purchased real estate in Central City, Colorado amounting to $2.2 million in cash for the development of another casino business.
Mark IV Property
On December 16, 2022, the Company purchased real estate in Fort Worth, Texas amounting to $2.4 million in cash. The property has two buildings, one of which the Company is leasing out to an existing tenant and the other building the Company is remodeling for future adult club operations.
94

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
Grange Food Hall
On December 20, 2022, the Company purchased a food hall property in Greenwood Village, Colorado for $5.3 million, including direct transaction costs and net of certain accrued taxes amounting to $102,000. The purchase price was paid $1.9 million in cash at closing and $3.3 million under a 6.67% five-year promissory note (see Note 8). The Company allocated $2.1 million to land, $2.6 million to building improvements, $98,000 to furniture, fixtures and equipment, and $565,000 to in-place leases based on their relative fair values. The in-place lease intangible has a weighted average amortization period of 1.7 years.
Bombshells San Antonio
On February 7, 2023, the Company completed the acquisition of a previously franchised Bombshells location in San Antonio, Texas for a total acquisition price of $3.2 million. The transaction was effected through a membership interest purchase agreement under which a subsidiary of the Company purchased 100% of the issued and outstanding membership interests of the target limited liability company that owns and operates the Bombshells location from the six previous owners of the entity (the "Sellers"). At acquisition date, the Sellers were paid $1.2 million in cash and were issued six seller-financed promissory notes totaling $2.0 million (see Note 8). The Company allocated the acquisition price $61,000 to inventory, $2.7 million to property and equipment, and $480,000 to favorable lease intangible and right-of-use assets (which both have amortizable life of 13.4 years), net of lease liability.
Baby Dolls-Chicas Locas
On March 16, 2023, the Company and certain of its subsidiaries completed the acquisition of five gentlemen's clubs, five related real estate properties, associated intellectual properties, and certain automated teller machines for a total agreed acquisition price of $66.5 million, payable with a total of $25.0 million in cash, a total of $25.5 million in 10-year 7% seller financing promissory notes, and 200,000 restricted shares of common stock based on an $80 per share price, subject to lock-up, leak out restrictions. The five clubs, which are all located in Texas, were purchased through four different asset purchase agreements and one stock purchase agreement, under each of which a newly formed wholly-owned subsidiary of the Company acquired from each club-owning entity all of the tangible and intangible assets and personal property used in the business of that club, except for certain excluded assets. The fair value of the common stock consideration was discounted due to lack of marketability during the lock-up period. The cash consideration at closing was partially funded by the $10.0 million line of credit secured by the Company on March 9, 2023 (see Note 8).
The fair value of the consideration transferred is as follows:

Cash | $ | 25,000 |
Notes payable | 25,500 |
Common stock | 12,847 |
Total consideration fair value | $ | 63,347 |

We recognized the assets and liabilities for this acquisition based on our estimates of their acquisition date fair values, all in our Nightclub reportable segment. Upon finalization of our valuation of the assets acquired in this transaction, we reallocated certain amounts from goodwill to indefinite-lived intangible assets. Based on the allocation of the fair value of the acquisition price, measurement period adjustments, and subject to any working capital adjustments, the amount of goodwill is estimated at $4.3 million. Goodwill represents the excess of the acquisition price fair value over the fair values of the tangible and identifiable intangible assets acquired and liabilities assumed, which is essentially the forward earnings potential of the acquired entities. This acquisition also gives the Company a bigger market share in the Hispanic demographic in the Texas metropolitan areas. Goodwill will not be amortized but will be tested at least annually for impairment. Approximately $4.3 million of the recognized goodwill will be deductible for tax purposes.
95

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
The following is our allocation of the fair value of the acquisition price (in thousands) as of March 16, 2023:

Current assets | $ | 632 |
Property and equipment | 16,570 |
Licenses | 36,110 |
Tradename | 6,328 |
Accounts payable | (632) |
Total net assets acquired | 59,008 |
Goodwill | 4,339 |
Acquisition price fair value | $ | 63,347 |

Licenses and tradenames will not be amortized but will be tested at least annually for impairment.
In connection with this acquisition, we incurred approximately $304,000 in acquisition-related expenses during 2023, which is included in selling, general and administrative expenses in our consolidated statement of income. During fiscal 2024 and 2023 (from the date of acquisition), the five acquired clubs contributed the following, which are included in our consolidated statements of income (in thousands):

| 2024 |  | 2023
Revenues | $ | 34,781 |  |  | $ | 16,132 |
Income from operations | $ | 8,279 |  |  | $ | 4,827 |

The following table presents the unaudited pro forma combined results of operations of the Company and the five acquired clubs and related assets in the March 16, 2023 acquisition transaction above as though the acquisition occurred at the beginning of fiscal 2022 (in thousands, except per share amount and number of shares):

| 2024 |  | 2023 |  | 2022
Pro forma revenues | $ | 295,604 |  |  | $ | 306,729 |  |  | $ | 291,764 |
Pro forma net income attributable to RCIHH common stockholders | $ | 3,011 |  |  | $ | 28,329 |  |  | $ | 51,198 |
Pro forma earnings per share - basic and diluted | $ | 0.33 |  |  | $ | 3.01 |  |  | $ | 5.34 |
Pro forma weighted average number of common shares outstanding - basic and diluted | 9,250,245 |  | 9,426,942 |  | 9,583,445

The above unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2022. The unaudited pro forma financial information reflects material, nonrecurring adjustments directly attributable to the acquisition including acquisition-related expenses, interest expense, and any related tax effects. The unaudited pro forma financial information includes adjustments related to changes in recognized expenses caused by the fair value of assets acquired, such as depreciation and amortization and related tax effects. Pro forma net income and pro forma earnings per share include the impact of acquisition-related expenses and interest expense related to the $10.0 million line-of-credit facility (see Note 8) and the nine seller-financed notes in the acquisition as if they were incurred as of the first day of fiscal 2022. Pro forma weighted average number of common shares outstanding includes the impact of 200,000 shares of our common stock issued as partial consideration for the acquisition. Since the results of operations during fiscal 2024 were subsequent to the fiscal year of acquisition and that fiscal 2024 fully includes the results of operations of the five acquired clubs, the amounts presented for fiscal 2024 above do not reflect any pro forma adjustments.
96

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
14. Acquisitions and Dispositions - continued
Arapahoe Street, Denver CO Property
On June 20, 2023, the Company purchased a restaurant parcel located in a condominium building in Denver, Colorado amounting to $4.6 million for a future Bombshells location. The purchase price was paid $1.7 million in cash and $2.9 million under a 7.12% five-year promissory note (see Note 8).
Non-Income-Producing Properties
•On October 11, 2022, the Company purchased a hangar in Arcola, Texas amounting to $754,000 in cash.
•On February 6, 2023, in view of the increasing business presence of the Company in the Denver, Colorado area, the Company acquired a non-income-producing corporate property for $458,000 in cash, to be used for office space and employee housing.
•On August 3, 2023, the Company purchased real estate and office space in Central City, Colorado amounting to $2.9 million in cash to house administrative operations in the region.
2023 Dispositions
On November 4, 2022, the Company received $1.0 million from the Texas Department of Transportation for one of the Company's club properties in Lubbock, Texas due to eminent domain.
On June 29, 2023, the Company sold a property with a carrying value of $1.1 million for $1.5 million in cash. The Company used $904,000 of the proceeds to pay off a loan related to the property.
2024 Acquisitions
Non-Income-Producing Properties
•On October 24, 2023, the Company purchased an administrative building in Central City, Colorado for $1.0 million in cash.
•On October 24, 2023, the Company purchased a vacant lot in Central City, Colorado for $65,000 in cash.
2024 Dispositions
South Houston Property
On May 31, 2024, the Company sold parking lot properties with a combined carrying value of $74,000 related to a previously owned club in South Houston, Texas for $160,000 in cash. The Company paid approximately $9,500 in closing costs related to the transaction.
Airplane
On June 6, 2024, the Company sold an aircraft with a carrying value of approximately $2.0 million for $1.8 million in cash. The Company paid approximately $53,000 in closing costs related to the transaction. The proceeds of the sale were used to pay off related debt.
Bombshells San Antonio
Effective September 1, 2024, the Company sold Bombshells San Antonio to members of its former franchisee group for a noncash exchange of the Company's membership interest in the owner-subsidiary for the forgiveness of notes payable to the former franchisee group members. The transaction resulted in a $2.3 million gain, which is included in impairments and other charges, net in our consolidated statements of income.
97

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
15. Quarterly Results of Operations (Unaudited)
The following tables summarize unaudited quarterly data for fiscal 2024, 2023, and 2022 (in thousands, except share and per share data):

| For the Three Months Ended
| December 31, 2023 |  | March 31, 2024 |  | June 30, 2024 |  | September 30, 2024
Revenues | $ | 73,907 |  |  | $ | 72,283 |  |  | $ | 76,180 |  |  | $ | 73,234 |
Income (loss) from operations(1) | $ | 13,165 |  |  | $ | 4,657 |  |  | $ | (2,536) |  |  | $ | 3,519 |
Net income (loss) attributable to RCIHH stockholders(1) | $ | 7,226 |  |  | $ | 774 |  |  | $ | (5,233) |  |  | $ | 244 |
Earnings (loss) per share(1) |  |  |  |  |  |  |
Basic and diluted | $ | 0.77 |  |  | $ | 0.08 |  |  | $ | (0.56) |  |  | $ | 0.03 |
Weighted average number of common shares outstanding |  |  |  |  |  |  |
Basic and diluted | 9,367,151 |  | 9,350,292 |  | 9,278,921 |  | 9,006,014
Dividends per share declared and paid | $ | 0.06 |  |  | $ | 0.06 |  |  | $ | 0.06 |  |  | $ | 0.07 |

| For the Three Months Ended
| December 31, 2022 |  | March 31, 2023 |  | June 30, 2023 |  | September 30, 2023
Revenues(2) | $ | 69,968 |  |  | $ | 71,517 |  |  | $ | 77,055 |  |  | $ | 75,250 |
Income from operations(2) | $ | 16,898 |  |  | $ | 13,427 |  |  | $ | 15,515 |  |  | $ | 5,644 |
Net income attributable to RCIHH stockholders(2) | $ | 10,238 |  |  | $ | 7,732 |  |  | $ | 9,085 |  |  | $ | 2,191 |
Earnings per share(2) |  |  |  |  |  |  |
Basic and diluted | $ | 1.11 |  |  | $ | 0.83 |  |  | $ | 0.96 |  |  | $ | 0.23 |
Weighted average number of common shares outstanding |  |  |  |  |  |  |
Basic and diluted | 9,230,258 |  | 9,265,781 |  | 9,430,225 |  | 9,417,166
Dividends per share declared and paid | $ | 0.05 |  |  | $ | 0.06 |  |  | $ | 0.06 |  |  | $ | 0.06 |

98

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
15. Quarterly Results of Operations (Unaudited) – continued

| For the Three Months Ended
| December 31, 2021 |  | March 31, 2022 |  | June 30, 2022 |  | September 30, 2022
Revenues(3) | $ | 61,836 |  |  | $ | 63,692 |  |  | $ | 70,714 |  |  | $ | 71,378 |
Income from operations(3) | $ | 15,911 |  |  | $ | 17,081 |  |  | $ | 20,507 |  |  | $ | 17,960 |
Net income attributable to RCIHH stockholders(3) | $ | 10,575 |  |  | $ | 10,952 |  |  | $ | 13,902 |  |  | $ | 10,612 |
Earnings per share(3) |  |  |  |  |  |  |
Basic and diluted | $ | 1.12 |  |  | $ | 1.15 |  |  | $ | 1.48 |  |  | $ | 1.15 |
Weighted average number of common shares outstanding |  |  |  |  |  |  |
Basic and diluted | 9,407,519 |  | 9,489,085 |  | 9,389,675 |  | 9,249,864
Dividends per share declared and paid | $ | 0.04 |  |  | $ | 0.05 |  |  | $ | 0.05 |  |  | $ | 0.05 |

(1) | Fiscal year 2024 results of operations were mainly impacted by $38.5 million in asset impairments ($8.0 million in the second quarter, $17.9 million in the third quarter, and $12.6 million in the fourth quarter). Quarterly effective income tax rate was 19.9%, 0.7%, 21.5%, and 145.1% from first to fourth quarter, respectively.
(2) | Fiscal year 2023 results of operations were mainly impacted by the six newly acquired clubs and the lower same-store sales. Net income attributable to RCIHH stockholders and earnings per share were impacted by $12.6 million in asset impairments ($662,000 in the second quarter, $2.6 million in the third quarter, and $9.3 million in the fourth quarter) and $3.8 million in lawsuit settlements ($3.1 million in the second quarter, $63,000 in the third quarter, and $576,000 in the fourth quarter). Quarterly effective income tax expense (benefit) rate was 22.8%, 21.8%, 20.1%, and (39.6)% from first to fourth quarter, respectively, including the impact of the release of a $176,000 deferred tax asset valuation allowance and the pretax loss in the fourth quarter.
(3) | Fiscal year 2022 results of operations were significantly higher than prior year due to the fifteen acquired clubs and one new Bombshells. Net income attributable to RCIHH stockholders and earnings per share were impacted by $1.9 million in asset impairments ($1.7 million in the third quarter and $166,000 in the fourth quarter) and $2.4 million gain on sale or disposition of businesses and assets ($342,000 in the first quarter, $58,000 in the second quarter, $266,000 in the third quarter, and $1.7 million in the fourth quarter). Quarterly effective income tax expense rate was 21.7%, 23.4%, 21.3%, and 27.5% from first to fourth quarter, respectively, including the impact of the $343,000 deferred tax asset valuation allowance in the fourth quarter.

Our nightclub operations are normally 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.
16. Related Party Transactions
Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the Company. Mr. Langan receives no compensation or other direct financial benefit for any of the guarantees. The balance of our commercial bank indebtedness, net of debt discount and issuance costs, as of September 30, 2024 and 2023 was $135.3 million and $119.2 million, respectively.
Included in the $17.0 million borrowing on October 12, 2021 (see Note 8) are notes borrowed from related parties—one note for $500,000 (Ed Anakar, President of RCI Management Services, Inc. and our Director of Operations) and another note for $150,000 (from a brother of Company CFO, Bradley Chhay, see above) in which the terms of the notes are the same as the rest of the lender group. Refer to Note 8 for October 2023 extension of term of promissory notes.
99

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
16. Related Party Transactions – continued
We used the services of Nottingham Creations, and previously Sherwood Forest Creations, LLC, both furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest). Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were approximately $350,000 in fiscal 2024, $195,000 in fiscal 2023, and $207,000 in fiscal 2022. As of September 30, 2024 and 2023, we owed Nottingham Creations and Sherwood Forest $18,700 and $10,700, respectively, in unpaid billings.
TW Mechanical LLC (“TW Mechanical”) provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2024, 2023, and 2022. 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 approximately $16,491, $443,295, and $3,809 for the fiscal years 2024, 2023, and 2022, respectively. Amounts billed directly to the Company were approximately $3,160, $9,430, and $133,000 for the fiscal years 2024, 2023, and 2022, respectively. As of September 30, 2024 and 2023, the Company owed TW Mechanical approximately $0 and $0, respectively, in unpaid direct billings.
17. Leases
The Company leases certain facilities and equipment under operating leases per ASC 842. These leases include renewal or termination options for varying periods which we deemed reasonably certain to exercise. This determination is based on our consideration of certain economic, strategic and other factors that we evaluate at lease commencement date and reevaluate throughout the lease term.
Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance and tax payments and additional lease payments contingent on sales. The variable portion of lease payments is not included in our right-of-use assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses recorded in selling, general and administrative expenses in our consolidated statement of income.
We have elected to apply the short-term lease exception for all underlying asset classes, which mainly includes equipment leases. That is, leases with a term of 12 months or less are not recognized on the balance sheet, but rather expensed on a straight-line basis over the lease term. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases.
Future maturities of operating lease liabilities as of September 30, 2024 are as follows (in thousands):

| Principal Portion |  | Interest Portion |  | Total Payments
October 2024 - September 2025 | $ | 3,290 |  |  | $ | 1,790 |  |  | $ | 5,080 |
October 2025 - September 2026 | 3,572 |  |  | 1,591 |  |  | 5,163 |
October 2026 - September 2027 | 3,590 |  |  | 1,381 |  |  | 4,971 |
October 2027 - September 2028 | 3,047 |  |  | 1,187 |  |  | 4,234 |
October 2028 - September 2029 | 3,127 |  |  | 1,001 |  |  | 4,128 |
Thereafter | 17,423 |  |  | 3,025 |  |  | 20,448 |
| $ | 34,049 |  |  | $ | 9,975 |  |  | $ | 44,024 |

100

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
17. Leases – continued
Total lease expense under ASC 842 is included in selling, general and administrative expenses in our consolidated statement of income, except for sublease income which is included in other revenue, for the years ended September 30, 2024, 2023, and 2022 as follows (in thousands):

| 2024 |  | 2023 |  | 2022
Operating lease expense – fixed payments | $ | 5,029 |  |  | $ | 5,166 |  |  | $ | 4,738 |
Variable lease expense | 1,707 |  |  | 1,629 |  |  | 1,397 |
Short-term equipment and other lease expense (includes $448, $357 and $258 recorded in advertising and marketing for fiscal 2024, 2023, and 2022, respectively, and $605, $557 and $435 recorded in repairs and maintenance, respectively; see Note 5) | 1,416 |  |  | 1,325 |  |  | 1,264 |
Sublease income | — |  |  | — |  |  | (4) |
Total lease expense, net | $ | 8,152 |  |  | $ | 8,120 |  |  | $ | 7,395 |
Other information: |  |  |  |  |
Operating cash outflows from operating leases | $ | 8,154 |  |  | $ | 7,949 |  |  | $ | 7,200 |
Weighted average remaining lease term | 9.4 years |  | 10.5 years |  | 11.0 years
Weighted average discount rate | 5.7 | % |  | 5.8 | % |  | 5.6 | %

In relation to certain rent concessions that we received from certain of our lessors in view of the COVID-19 pandemic, we accounted for those rent concessions as deferral of payments as if the lease is unchanged. Any reduction in total lease expense during the period caused by either an extension of the lease term or a forgiveness of certain lease payments is accounted for as variable lease payment adjustments.
We recorded impairment charges of operating lease right-of-use assets amounting to $6.5 million, $1.0 million, and $0 during fiscal years 2024, 2023, and 2022, respectively.
We recorded third-party operating lease revenue under ASC 842 amounting to $1.7 million, $1.8 million, and $1.6 million for fiscal 2024, 2023, and 2022, respectively. Minimum future base rentals are as follows: $2.4 million for 2025, $1.6 million for 2026, $1.5 million for 2027, $1.4 million for 2028, $1.3 million for 2029, and $5.1 million thereafter.
101

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Notes to Consolidated Financial Statements
18. Subsequent Events
Share Repurchase
Subsequent to September 30, 2023 through the filing date of this report, we purchased 55,000 shares of the Company's common stock at a cost of $2.6 million. These shares were subsequently retired.
Closure/Disposition of Bombshells Locations
In November 2024, the Company closed two underperforming Bombshells location in Spring, Texas, and in South Houston, Texas. The assets of these Bombshells locations were fully impaired as of September 30, 2024.
On November 14, 2024, the Company sold a Bombshells location in Austin, Texas, for $130,000, of which $70,000 was in cash at signing and $60,000 in a 6% promissory note maturing in a year. The Company assigned the lease on the property to the buyer at the date of closing.
102

Table of Contents
RCI HOSPITALITY HOLDINGS, INC.
Schedule of Valuation and Qualifying Accounts
(Amounts in Thousands)

| Balance at beginning of year |  | Charged to costs and expenses(1) |  | Deductions(2) |  | Balance at end of year
Allowance for doubtful operating receivables |  |  |  |  |  |  |
Fiscal 2022 | $ | 382 |  |  | $ | 191 |  |  | $ | (543) |  |  | $ | 30 |
Fiscal 2023 | $ | 30 |  |  | $ | 47 |  |  | $ | (15) |  |  | $ | 62 |
Fiscal 2024 | $ | 62 |  |  | $ | 60 |  |  | $ | (80) |  |  | $ | 42 |
Allowance for doubtful notes receivable |  |  |  |  |  |  |
Fiscal 2022 | $ | 102 |  |  | $ | 753 |  |  | $ | (855) |  |  | $ | — |
Fiscal 2023 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Fiscal 2024 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred tax asset valuation allowance(3) |  |  |  |  |  |  |
Fiscal 2022 | $ | 641 |  |  | $ | 343 |  |  | $ | — |  |  | $ | 984 |
Fiscal 2023 | $ | 984 |  |  | $ | (176) |  |  | $ | — |  |  | $ | 808 |
Fiscal 2024 | $ | 808 |  |  | $ | 143 |  |  | $ | — |  |  | $ | 951 |

(1) | Charged to bad debts expense (under other selling, general and administrative expenses) in the consolidated statements of income.
(2) | Write off of gross amount against allowance.
(3) | Included in deferred tax liability, net in the consolidated balance sheets.

103

Table of Contents
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
There have been no disagreements with accountants on accounting and financial disclosure.
Item 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this report, an evaluation was carried out by certain members of Company management, with the participation of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the effectiveness of the Company’s disclosure controls and procedures (as defined in Securities and Exchange Commission’s (“SEC”) Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of September 30, 2024. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted 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, including the CEO and the CFO, to allow timely decisions regarding required disclosures.
Due to material weaknesses in internal control over financial reporting described below, management concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2024. Notwithstanding the existence of these material weaknesses, management believes that the consolidated financial statements in this annual report filed on Form 10-K present, in all material respects, the Company’s financial condition as reported, in conformity with United States Generally Accepted Accounting Principles (“U.S. GAAP”).
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision of and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of September 30, 2024, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013). A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have 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 (3) ineffective design and operation of controls, which include management review controls, over the Company's assessments of potential impairment. Our business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. We believe that these control deficiencies were a result of inadequate IT controls over the review of user access and imprecise documentation of procedures related to program change management. Additionally, we rely upon a variety of outsourced IT service providers for key elements of the technology infrastructure impacting our financial reporting process. Certain outsourced IT service providers could not provide System and Organization Controls ("SOC") reports for periods that closely align with our fiscal year end. Given that management did not effectively assess the design and operation of these outsourced IT service providers’ internal controls, some of our controls over IT systems and business processes were also deemed ineffective, but only to the extent
104

Table of Contents
that we rely upon information that was subject to the outsourced IT service providers’ control environment. 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.
Following identification of these material weaknesses, and prior to filing this Annual Report on Form 10-K, we completed substantive procedures for the year ended September 30, 2024. Based on these procedures, management believes that the consolidated financial statements included in this Form 10-K have been prepared in accordance with U.S. GAAP. Our CEO and CFO have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Form 10-K.
The Company’s independent registered public accounting firm, Marcum LLP, has expressed an unqualified opinion on our consolidated financial statements and an adverse opinion on our internal control over financial reporting as of September 30, 2024, in the audit report that appears at the end of Part II of this Annual Report on Form 10-K.
Remediation Plan for Existing Material Weaknesses
Management is committed to the remediation of the material weaknesses described above.
Review of Accounting for Business Combinations
Controls will be added to both increase precision of management’s review of each component of business combinations, and if necessary, retain the services of a third-party consultant to assist in the valuation and accounting for intangible assets acquired in a business combination.
Review of Accounting for Impairment of Goodwill and Intangible Assets
As most of the assumptions used in the valuation models employed in impairment analyses are subjective in nature, Management will employ additional controls to validate these assumptions, including the engagement of a third-party consultant to assist developing valuation models and establishing sound and reasonable assumptions.
Information Technology General Controls
As a result of the material weakness, we have initiated and will continue to implement remediation measures to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) strengthening and enhancing the review and documentation procedures in our controls over user access review; (ii) defining and communicating clear and concise program change management policy and procedures; (iii) enhancing the reporting requirements of accounting system audit logs; (vi) continuous improvement over our ITGC controls related to third party applications; and (vi) 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. We expect that the remediation of these material weaknesses will be completed prior to the end of fiscal 2025.
105

Table of Contents
Changes in Internal Control Over Financial Reporting
Except for the remediation efforts as discussed above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. OTHER INFORMATION.
Insider Trading Agreements
None of our officers or directors, as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, adopted, modified, or terminated a "Rule 10b5-1 trading agreement" or a "non-Rule 10b5-1 trading agreement," as defined in Item 408 of Regulation S-K, during the three months ended September 30, 2024.
106

Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Stockholders and Board of Directors of
RCI Hospitality Holdings, Inc.
Adverse Opinion on Internal Control over Financial Reporting
We have audited RCI Hospitality Holdings, Inc.’s (the "Company’s") internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in Management's Annual Report on Internal Control Over Financial Reporting:
•The Company had ineffective design and operation of controls over certain information technology general controls ("ITGCs"), including program change management, user access, and vendor management controls to ensure:
1) For all in-scope systems, IT program and data changes affecting the Company’s financial IT applications and underlying accounting records are identified, tested, authorized, and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate;
2) For a certain three systems, appropriate restrictions that would adequately prevent users from gaining inappropriate access; and
3) For three key service providers, SOC reports were obtained and reviewed.
As a result of the above deficiencies, automated process-level and manual controls, including the remaining ITGCs, that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective.
•Ineffective design and operation of controls, which include management review controls, over the accounting for business combinations.
•Ineffective design and operation of controls, which include management review controls, over the Company's assessments of potential impairment.
These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal 2024 consolidated financial statements and financial statement schedule, and this report does not affect our report dated December 16, 2024 on those consolidated financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of September 30, 2024 and 2023 and the related consolidated statements of income, changes in equity, and cash flows and the related financial statement schedule for each of the years in the two-year period ended September 30, 2024 of the Company and our report dated December 16, 2024 expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.
107

Table of Contents
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.
/s/ Marcum LLP
Marcum LLP
Marlton, New Jersey
December 16, 2024
108

Table of Contents
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
DIRECTORS AND EXECUTIVE OFFICERS
Our directors are elected annually and hold office until the next annual meeting of our stockholders or until their successors are elected and qualified. Officers are appointed by the board of directors annually and serve at the discretion of the board of directors (subject to any existing employment agreements). There is no family relationship between or among any of our directors and executive officers. Our board of directors consists of six persons. The following table sets forth our directors and executive officers as of December 16, 2024:

Name |  | Age |  | Position
Eric S. Langan |  | 56 |  | Director, Chairman, Chief Executive Officer, President
Bradley Chhay |  | 41 |  | Chief Financial Officer
Travis Reese |  | 55 |  | Director and Executive Vice President
Luke Lirot |  | 68 |  | Director
Yura Barabash |  | 50 |  | Director
Elain J. Martin |  | 68 |  | Director
Arthur Allan Priaulx |  | 84 |  | Director

Eric S. Langan has been a director since 1998, and our President, CEO and Chairman since 1999. He began his career in the hospitality industry in 1989 and has developed significant expertise in sports bar/restaurants and adult entertainment nightclubs, including related areas of real estate development and finance. Mr. Langan built the XTC Cabaret nightclub brand and merged it into RCI in 1998, expanding the scope of the company. He has been instrumental in bringing professional marketing, management, finance, and technology practices and systems to the gentlemen’s club industry. As one of the original founders of the National Association of Club Executives (ACE), Mr. Langan has been an active member of its board of directors since 1999. Through these activities, Mr. Langan has acquired the knowledge and skills necessary to successfully operate adult entertainment businesses.
Involvement in certain legal proceedings: On September 21, 2020, as part of the settlement of a civil administrative proceeding with the SEC, the Company, Mr. Langan, and Phil Marshall (our former chief financial officer) agreed, without admitting or denying the findings, to a cease-and-desist order regarding certain sections of the Securities Exchange Act of 1934 and certain rules promulgated thereunder.
The SEC’s order as to the Company, Mr. Langan, and Mr. Marshall found that, from fiscal 2014 through 2019, the Company failed to disclose a total of $615,000 in executive compensation in the form of perquisites. According to the order, these undisclosed perquisites included the cost of the personal use of the Company’s aircraft and Company-provided vehicles, reimbursements for personal airline flights, charitable corporate contributions to the school two of Mr. Langan’s children attended, and housing costs and meal allowance for Mr. Marshall. In addition, the order found that the Company failed to disclose related party transactions involving Mr. Langan’s father and brother and a director’s brother. The order further found that the Company failed to keep books and records that allowed it to report, and lacked sufficient internal controls concerning, these executive perquisites and related party transactions.
The SEC’s order as to the Company, Mr. Langan, and Mr. Marshall found that the Company and Mr. Langan violated, and Mr. Langan and Mr. Marshall caused the Company to violate, the proxy solicitation provisions of Section 14(a) of the Securities Exchange Act of 1934 and Rules 14a-3 and 14a-9 thereunder. The order further found that the Company violated, and Mr. Langan and Mr. Marshall caused the Company to violate, the reporting provisions of Section 13(a) of the Exchange Act and Rules 13a-1 and 12b-20 thereunder, the books and records provisions of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and the disclosure controls provision of Rule 13a-15(a) under the Exchange Act. The Company, Mr. Langan, and Mr. Marshall agreed, without admitting or denying the SEC’s findings, to a cease-and-desist order and to pay civil penalties in the amounts of $400,000, $200,000, and $35,000, respectively.
109

Table of Contents
Bradley Chhay was appointed as our CFO on September 14, 2020. He is a Certified Public Accountant (CPA), Certified Fraud Examiner (CFE), and Certified Information Systems Auditor (CISA). He joined us in November 2015 as Controller in charge of migrating the company to an upgraded ERP system and enhancing internal and external audit and SEC reporting functions. From 2007 through 2009, he was an auditor for Deloitte & Touche LLP. From 2009 through 2013, he served as Internal Audit Senior, IT Auditor, and Senior Fraud Auditor for Live Nation Entertainment, Inc. of Beverly Hills, a publicly-traded company that markets tickets for live entertainment worldwide, owns and operates entertainment venues, and manages music artists. From 2013 through 2015, Mr. Chhay was an Audit Supervisor and Global ERP Project Lead for RigNet, Inc. of Houston, a publicly-traded digital technology company serving the oil and gas, maritime and government markets. After RigNet, he briefly served as CFO for a smaller, privately-held, multi-unit restaurant chain.
Travis Reese became a director and our Executive Vice President in 1999. Throughout his time with the Company, Mr. Reese has served many different roles, including without limitation overseeing information technology, working to create the company’s intranet, permit tracking, and incident reporting systems as well as other technology platforms the Company uses. Additionally, with his family history in military and aviation, he created the Company’s Bombshells Restaurant and Sports Bar concept in 2013. Mr. Reese has been involved in the adult entertainment industry since 1992. His experience and knowledge in this industry is essential to the board’s oversight of our businesses.
Luke Lirot became a director on July 31, 2007. Mr. Lirot received his law degree from the University of San Francisco in 1986. After serving as an intern in the San Francisco Public Defender’s Office in 1986, Mr. Lirot returned to Florida and established a private law practice where he continues to practice and specializes in adult entertainment issues. He is a past President of the First Amendment Lawyers’ Association and has actively participated in numerous state and federal legal matters. Mr. Lirot represents as counsel scores of individuals and entities within our industry. Having practiced in this area for over 30 years, he is aware of virtually every type of legal issue that can arise, making him an important member of the board.
Yura Barabash became a director on September 19, 2017. Since October 2021, he has served as the Vice President of Business Development at AVI-SPL, the world's largest designer, integrator and provider of advanced audio-visual (AV) and collaboration solutions and services based in Florida. Mr. Barabash brings with him extensive corporate finance experience across various industries both domestically and internationally. He has played a key role in numerous equity and debt financings, as well as mergers and acquisitions in the United States, Latin America, China, and the European Union. From August 2019 to January 2021, Mr. Barabash was a Chief Operating Officer of Gingko Online Learning LLC, private online language learning company in Florida and a consultant to Chengdu Gingko Education Management, educational management company in Chengdu, China. From 2016 to June 2019, he was a Senior Vice President of Finance at Motorsport Network LLC (www.motorsportnetwork.com) in Miami, the largest motorsport digital media company in the world. Earlier in his career, Mr. Barabash held investment banking roles at Primary Capital, Rodman & Renshaw, and Merrill Lynch. He holds a B.A. from Sevastopol City University in Ukraine and a Master in International Affairs from Columbia University in New York City, and is fluent in Russian. Mr. Barabash recently completed the Cybersecurity Governance course at MIT Sloan and the Audit and Compensation Committees programs at Harvard Business School Executive Education.
Elaine J. Martin became a director on August 8, 2019. She is co-founder and general partner of two privately-held Houston area businesses for which she provides a broad array of management and accounting functions on a day-to-day basis. In 1993, she co-founded Medco Manufacturing LLC, which develops, manufactures and sells, under Food and Drug Administration (FDA) guidelines, equipment and disposable products used by plastic surgeons in domestic and international markets. In 1989, Ms. Martin co-founded Aero Tech Aviation LLC, which trains foreign nationals for the Federal Aviation Administration (FAA) Air Frame and Power Plant examination, for their license to repair US-origin aircraft. Earlier in her career, she was a Registered Nurse specializing in cosmetic surgery. Ms. Martin received her BS in Biology and Chemistry from Houston Baptist University. Her volunteer activities have included serving as a member of the board of directors of Texas A&M University Mothers’ Club (Aggie Moms). Ms. Martin’s business acumen and experience running companies make her an important member of the board.
110

Table of Contents
Arthur Allan Priaulx became a director on August 8, 2019. He has more than 45 years of experience in the communications industry. Earlier in his career, he was Vice President and General Manager of King Features Division of Hearst Corporation, in charge of worldwide newspaper activities and product licensing. He was also publisher of American Banker, a leading trade publication in the financial services industry, when it was owned by Thomson Financial. In 1993, he founded Resource Media Group, a New York-based financial media and investor relations firm. His clients included a wide range of companies, including RCI Hospitality Holdings, Inc., for which he provided public and investor relations services from 1994 to 2013. Mr. Priaulx has been retired since 2014. He attended Dartmouth College and University of Southampton in the U.K. He has also completed graduate-level courses at INSEAD Business School in France and the Wharton School of the University of Pennsylvania. His volunteer activities have included serving as national vice president of United Cerebral Palsy.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE
We have an Audit Committee whose members are Yura Barabash, Elaine Martin, and Arthur Allan Priaulx. All members of the Audit Committee are independent directors. The purpose of the Audit Committee is to (i) oversee our accounting and financial reporting processes, our disclosure controls and procedures and system of internal controls and audits of our consolidated financial statements, (ii) oversee the relationship with our independent auditors, including appointing or changing our auditors and ensuring their independence, and (iii) provide oversight regarding significant financial matters. The Audit Committee meets privately with our Chief Financial Officer and with our independent registered public accounting firm and evaluates the responses by the Chief Financial Officer both to the facts presented and to the judgments made by our outside independent registered public accounting firm. Yura Barabash serves as the Audit Committee’s financial expert.
In August 2015, our board adopted a new charter for the Audit Committee. A copy of the Audit Committee Charter can be found on our website at www.rcihospitality.com/investor. The Charter establishes the independence of our Audit Committee and sets forth the scope of the Audit Committee’s duties. The Audit Committee conducts an ongoing review of our financial reports and other financial information prior to their being filed with the SEC, or otherwise provided to the public. The Audit Committee also reviews our systems, methods and procedures of internal controls in the areas of: financial reporting, audits, treasury operations, corporate finance, managerial, financial and SEC accounting, compliance with law, and ethical conduct. NASDAQ Stock Market Rules require all members of the Audit Committee to be independent. The Audit Committee is objective, and reviews and assesses the work of our independent registered public accounting firm and our internal accounting department.
NOMINATING COMMITTEE
We have a Nominating Committee whose current members are Elaine Martin, Luke Lirot, Yura Barabash, and Arthur Allan Priaulx. In July 2004, the board unanimously adopted a Charter with regard to the process to be used for identifying and evaluating nominees for director. The Charter establishes the independence of our Nominating Committee and sets forth the scope of the Nominating Committee’s duties. NASDAQ Stock Market Rules require all members of the Nominating Committee to be independent. Pursuant to its Charter, the Committee has the power and authority to consider board nominees and proposals submitted by our stockholders and to establish any procedures, including procedures to facilitate stockholder communication with the board of directors, and to make any such disclosures required by applicable law in the course of exercising such authority. A copy of the Nominating Committee’s Charter can be found on our website at www.rcihospitality.com/investor.
COMPENSATION COMMITTEE
We have a Compensation Committee whose current members are Elaine Martin, Luke Lirot, Yura Barabash, and Arthur Allan Priaulx. In June 2014, the Compensation Committee adopted a Charter with regard to the Compensation Committee’s responsibilities, including evaluating, reviewing and determining the compensation of our Chief Executive Officer and other executive officers. A copy of the Compensation Committee’s Charter can be found on our website at www.rcihospitality.com/investor.
111

Table of Contents
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own beneficially more than ten percent of our common stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Based solely upon a review of Forms 3, 4 and 5 furnished to us during the fiscal year ended September 30, 2024, we believe that the directors, executive officers, and greater than ten percent beneficial owners have complied with all applicable filing requirements during the fiscal year ended September 30, 2024, except for a Form 4 for a single transaction that was not filed on a timely basis by Bradley Chhay, our Chief Financial Officer.
CODE OF ETHICS
We have adopted a code of ethics for our principal executive and senior financial officers, a copy of which can be found on our website at www.rcihospitality.com.
INSIDER TRADING POLICIES
We have adopted an insider trading policy governing the purchase, sale and other dispositions of our securities that applies to all of RCI Hospitality Holdings, Inc.’s directors, officers and employees, and also applies to other key employees of subsidiaries of RCI Hospitality Holdings, Inc., as determined by our Chief Compliance Officer. We do not presently have written procedures for the repurchase of our securities. We believe that our insider trading policy and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to us. A copy of our insider trading policy is filed as Exhibit 19.1 to this Form 10-K.
112

Table of Contents
Item 11. EXECUTIVE COMPENSATION.
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis describes the material elements of the Company’s compensation programs as they relate to our executive officers who are listed in the compensation tables appearing below. This compensation discussion and analysis focuses on the information contained in the following tables and related footnotes. The individuals who served as the Company’s Chief Executive Officer and Chief Financial Officer during fiscal 2024, as well as any other individuals included in the Summary Compensation Table, are referred to as “named executive officers” ("NEOs").
Overview of Compensation Committee Role and Responsibilities
The Compensation Committee of the board of directors oversees our compensation plans and policies, reviews and approves all decisions concerning the named executive officers’ compensation, which may further be approved by the board, and administers our stock option and equity plans, including reviewing and approving stock option grants and equity awards under the plans. The Compensation Committee’s membership is determined by the board and is composed entirely of independent directors.
Management plays a role in the compensation-setting process. The most significant aspects of management’s role are to evaluate employee performance and recommend salary levels and equity compensation awards. Our Chief Executive Officer often makes recommendations to the Compensation Committee and the board concerning compensation for other executive officers. Our Chief Executive Officer is a member of the board but does not participate in board decisions regarding any aspect of his own compensation. The Compensation Committee can retain independent advisors or consultants.
Compensation Committee Process
The Compensation Committee reviews executive compensation in connection with the evaluation and approval of an employment agreement, an increase in responsibilities or other factors. With respect to equity compensation awarded to other employees, the Compensation Committee or the board may grant stock options, often after receiving a recommendation from our Chief Executive Officer. The Compensation Committee also evaluates proposals for incentive and performance equity awards, and other compensation.
Compensation Philosophy
The Compensation Committee emphasizes the important link between the Company’s performance, which ultimately affects stockholder value, and the compensation of its executives. Therefore, the primary goal of the Company’s executive compensation policy is to try to align the interests of the executive officers with the interests of the stockholders. In order to achieve this goal, the Company attempts to (i) offer compensation opportunities that attract and retain executives whose abilities and skills are critical to the long-term success of the Company and reward them for their efforts in ensuring the success of the Company, (ii) align the Company’s compensation programs with the Company’s long-term business strategies and objectives, and (iii) provide variable compensation opportunities that are directly linked to the Company’s performance and stockholder value, including an equity stake in the Company. Our named executive officers’ compensation utilizes two primary components — base salary and long-term equity compensation — to achieve these goals. Additionally, the Compensation Committee may award discretionary bonuses to certain executives based on the individual’s contribution to the achievement of the Company’s strategic objectives.
Setting Executive Compensation
We fix executive base compensation at a level we believe enables us to hire and retain individuals in a competitive environment and to reward satisfactory individual performance and a satisfactory level of contribution to our overall business goals. We also take into account the compensation that is paid by companies that we believe to be our competitors and by other companies with which we believe we generally compete for executives.
113

Table of Contents
In establishing compensation packages for executive officers, numerous factors are considered, including the particular executive’s experience, expertise and performance, our company’s overall performance and compensation packages available in the marketplace for similar positions. In arriving at amounts for each component of compensation, our Compensation Committee strives to strike an appropriate balance between base compensation and incentive compensation. The Compensation Committee also endeavors to properly allocate between cash and non-cash compensation and between annual and long-term compensation.
The Role of Shareholder Say-on-Pay Votes
At our annual meeting of shareholders held on August 28, 2024, approximately 92% of the shareholders who voted (including abstentions) on the “say-on-pay” proposal approved the compensation of our named executive officers, as disclosed in the proxy statement. Although this advisory shareholder vote on executive compensation is non-binding, the Compensation Committee will consider the outcome of the vote when making future compensation decisions for named executive officers.
Base Salary
The Company provides executive officers and other employees with base salary to compensate them for services rendered during the fiscal year. Subject to the provisions contained in employment agreements with executive officers concerning base salary amounts, base salaries of the executive officers are established based upon compensation data of comparable companies in our market, the executive’s job responsibilities, level of experience, individual performance and contribution to the business. We believe it is important for the Company to provide adequate fixed compensation to highly qualified executives in our competitive industry. In making base salary decisions, the Compensation Committee uses its discretion and judgment based upon personal knowledge of industry practice but does not apply any specific formula to determine the base salaries for the executive officers.
Retirement Savings Plan
The Company maintains a retirement savings plan for the benefit of our executives and employees. Our Simple IRA Plan is intended to qualify as a defined contribution arrangement under the Internal Revenue Code (the “Code”). Participants may elect to defer a percentage of their eligible pretax earnings each year or contribute a fixed amount per pay period up to the maximum contribution permitted by the Code. All participants’ plan accounts are 100% vested at all times. All assets of our Simple IRA Plan are invested based on participant-directed elections. We make certain matching contributions to the Simple IRA Plan, which are also 100% vested.
Perquisites and Other Personal Benefits
The Company’s executive officers participate in the Company’s other benefit plans on the same terms as other employees on a non-discriminatory basis. These plans include medical, dental, life and disability insurance. Relocation benefits also are reimbursed and are individually negotiated when they occur. The Company reimburses each executive officer for all reasonable business and other expenses incurred by them in connection with the performance of their duties and obligations. The Company does not provide named executive officers with any significant perquisites or other personal benefits except for personal travel using Company-owned automobiles and aircrafts. On August 28, 2023, the board of directors, after a recommendation from the Audit Committee, amended the corporate aircraft policy changing the allowed use to a maximum personal use each fiscal year, as follows: (i) 100 hours flown for the CEO and (ii) 48 hours flown each for other executive officers. Refer to footnote on All Other Compensation in the Summary Compensation Table below.
114

Table of Contents
SUMMARY COMPENSATION TABLE
The following table reflects all forms of compensation for services to us for the fiscal years ended September 30, 2024, 2023, and 2022 of our named executive officers.

Name and Principal Position |  | Year |  | Salary ($) |  | Bonus ($) |  | Option Awards(1) ($) |  | All Other Compensation(2) ($) |  | Total ($)
Eric S. Langan |  | 2024 |  | 1,700,000 |  |  | — |  |  | — |  |  | 129,649 |  |  | 1,829,649 |
President and Chief Executive |  | 2023 |  | 1,700,000 |  |  | — |  |  | — |  |  | 167,388 |  |  | 1,867,388 |
Officer |  | 2022 |  | 1,700,000 |  |  | — |  |  | 1,568,500 |  |  | 151,353 |  |  | 3,419,853 |
Bradley Chhay |  | 2024 |  | 600,000 |  |  | — |  |  | — |  |  | 63,375 |  |  | 663,375 |
Chief Financial Officer |  | 2023 |  | 472,789 |  |  | — |  |  | — |  |  | 61,676 |  |  | 534,465 |
|  | 2022 |  | 428,077 |  |  | — |  |  | 1,568,500 |  |  | 77,374 |  |  | 2,073,951 |
Travis Reese |  | 2024 |  | 466,635 |  |  | — |  |  | — |  |  | 48,227 |  |  | 514,862 |
Executive Vice President |  | 2023 |  | 460,000 |  |  | 25,000 |  |  | — |  |  | 51,534 |  |  | 536,534 |
|  | 2022 |  | 423,077 |  |  | — |  |  | 1,568,500 |  |  | 66,862 |  |  | 2,058,439 |

(1)Amounts represent the aggregate grant date fair value of the stock options granted during the fiscal year, computed in accordance with FASB ASC Topic 718. Information about the assumptions used to value these stock option awards can be found in Note 2 to the consolidated financial statements in this Annual Report on Form 10-K.
(2)All Other Compensation consists of SIMPLE IRA matching contributions, automobile expenses, and personal use of aircraft. We account for personal use of aircraft to be the aggregate incremental cost of personal use of the company aircraft as calculated based on a cost-per-flight-hour charge developed by a nationally recognized and independent service. The charge reflects the direct cost of operating the aircraft, including fuel, additives, lubricants, maintenance labor, airframe parts, engine restoration, and major periodic maintenance. We added actual airport/hangar fees charged to the company on a per-flight basis. The charge does not include fixed costs that do not change based on usage, such as aircraft depreciation, home hangar expenses, and general taxes and insurance. We value automobile expenses based on the annual depreciation rate of automobiles assigned for use by the particular officer, plus cost of insurance, registration, repairs, maintenance, tolls, and fuel. Tax reimbursement benefit is based on automobile fringe benefits.
A table of All Other Compensation for fiscal 2024 for our named executive officers is presented below:

Name |  | SIMPLE IRA Matching Contribution ($) |  | Automobile Expenses ($) |  | Personal Use of Aircraft ($) |  | Tax Reimbursement ($) |  | Total All Other Compensation ($)
Eric S. Langan |  | 19,385 |  |  | 27,408 |  |  | 71,523 |  |  | 11,333 |  |  | 129,649 |
Bradley Chhay |  | 15,884 |  |  | 36,267 |  |  | — |  |  | 11,224 |  |  | 63,375 |
Travis Reese |  | 14,133 |  |  | 24,400 |  |  | 3,302 |  |  | 6,392 |  |  | 48,227 |

115

Table of Contents
CEO Pay Ratio
We reviewed a comparison of annual total compensation of our CEO to the annual compensation of our median employee who was selected from all employees who were employed (other than the CEO) during our fiscal year ended September 30, 2024.
The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
The compensation for our CEO in fiscal 2024 of $1,829,649 was approximately 59 times the $30,890 compensation of our fiscal 2024 median employee.
Pay vs. Performance
We are providing the following information about the relationship between executive compensation actually paid and certain financial performance measures of the Company as required by Section 953(a) of the Dodd-Frank and Consumer Protection Act, and Item 402(v) of Regulation S-K for fiscal 2024, 2023, 2022, and 2021, as it relates to our principal executive officer ("PEO") and certain non-PEO NEOs.

|  |  |  |  |  |  |  |  |  | Value of Initial Fixed $100 Investment Based On: |  |  |  |
Year |  | Summary Compensation Table Total for PEO |  | Compensation Actually Paid to PEO |  | Average Summary Compensation Table Total for Non-PEO NEOs |  | Average Compensation Actually Paid to Non-PEO NEOs |  | RICK Total Shareholder Return |  | DJUSRU Total Shareholder Return |  | Net Income |  | Free Cash Flow
2024 |  | $1,829,649 |  | $ | 1,669,815 |  |  | $ | 589,119 |  |  | $ | 429,285 |  |  | $ | 217.81 |  |  | $ | 146.72 |  |  | $ | 3,018,000 |  |  | $ | 48,421,000 |
2023 |  | $1,867,388 |  | $ | 1,905,910 |  |  | $ | 535,500 |  |  | $ | 574,022 |  |  | $ | 296.39 |  |  | $ | 98.12 |  |  | $ | 29,100,000 |  |  | $ | 53,176,000 |
2022 |  | $3,419,853 |  | $ | 3,329,003 |  |  | $ | 2,066,195 |  |  | $ | 1,975,345 |  |  | $ | 319.02 |  |  | $ | 129.93 |  |  | $ | 46,060,000 |  |  | $ | 58,911,000 |
2021 |  | $1,545,218 |  | $ | 1,545,218 |  |  | $ | 504,181 |  |  | $ | 504,181 |  |  | $ | 336.19 |  |  | $ | 88.89 |  |  | $ | 30,150,000 |  |  | $ | 36,084,000 |

(1) Non-PEO NEOs represent Bradley Chhay and Travis Reese for each of the fiscal years presented.
(2) We selected the Dow Jones U.S. Restaurants & Bars Index as our peer group for the purpose of calculating comparable total shareholder return ("TSR"). Also refer to Item 5 of this report for our and our peer group's five-year TSR.
(3) We selected free cash flow as our Company-selected measure for this purpose.
116

Table of Contents
(4) "Compensation Actually Paid" is computed in the table below, in accordance with Item 402(v) of Regulation S-K.

| 2024 |  | 2023 |  | 2022 |  | 2021
| PEO |  | Average for Non-PEO NEOs |  | PEO |  | Average for Non-PEO NEOs |  | PEO |  | Average for Non-PEO NEOs |  | PEO |  | Average for Non-PEO NEOs
Summary Compensation Table total | $ | 1,829,649 |  |  | $ | 589,119 |  |  | $ | 1,867,388 |  |  | $ | 535,500 |  |  | $ | 3,419,853 |  |  | $ | 2,066,195 |  |  | $ | 1,545,218 |  |  | $ | 504,181 |
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deduct option awards granted during the year | — |  |  | — |  |  | — |  |  | — |  |  | (1,568,500) |  |  | (1,568,500) |  |  | — |  |  | — |
Add fair value of options granted and vested at the same year | — |  |  | — |  |  | — |  |  | — |  |  | 313,700 |  |  | 313,700 |  |  | — |  |  | — |
Add fair value of options granted during the year and remain unvested at year-end | — |  |  | — |  |  | — |  |  | — |  |  | 1,163,950 |  |  | 1,163,950 |  |  | — |  |  | — |
Increase (decrease) for change in fair value from prior year-end to current year-end of options granted in prior year | (143,490) |  |  | (143,490) |  |  | (62,527) |  |  | (62,527) |  |  | — |  |  | — |  |  | — |  |  | — |
Increase (decrease) for change in fair value from prior year-end to current year vesting date of options granted in prior year | (16,344) |  |  | (16,344) |  |  | 101,049 |  |  | 101,049 |  |  | — |  |  | — |  |  | — |  |  | — |
Compensation Actually Paid | $ | 1,669,815 |  |  | $ | 429,285 |  |  | $ | 1,905,910 |  |  | $ | 574,022 |  |  | $ | 3,329,003 |  |  | $ | 1,975,345 |  |  | $ | 1,545,218 |  |  | $ | 504,181 |

The mix of compensation paid to our PEO and non-PEO NEOs is mostly cash salary that is fixed, as shown in the Summary Compensation Table above. Except for the stock options granted in fiscal 2022, there had been no stock-based compensation awarded since fiscal 2014. We also currently do not have long-term incentive plans that are based on the Company's stock price or any of our financial measures. As shown in the charts below, the compensation actually paid to our PEO and non-PEO NEOs is not directly aligned with our Company and peer group total shareholder return or with our Company's net income and free cash flow in the fiscal years presented.
117

Table of Contents
GRANTS OF PLAN-BASED AWARDS
There were no grants of plan-based awards for fiscal 2024.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information with respect to outstanding stock options awards for each of our named executive officers as of September 30, 2024.

|  |  |  | Option Awards
Name |  | Grant Date |  | Number of Securities Underlying Unexercised Options (#) Exercisable |  | Number of Securities Underlying Unexercised Options (#) Unexercisable |  | Option Exercise Price ($/Sh) |  | Option Expiration Date
Eric S. Langan |  | 2/9/2022 |  | 30,000 |  |  | 20,000 |  |  | 100.00 |  |  | 2/9/2027
Bradley Chhay |  | 2/9/2022 |  | 30,000 |  |  | 20,000 |  |  | 100.00 |  |  | 2/9/2027
Travis Reese |  | 2/9/2022 |  | 30,000 |  |  | 20,000 |  |  | 100.00 |  |  | 2/9/2027

OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2024
There were no stock options exercised nor stock that vested during the fiscal year ended September 30, 2024.
118

Table of Contents
DIRECTOR COMPENSATION
We pay the expenses of our directors in attending board meetings. We paid no equity-based compensation during the fiscal year ended September 30, 2024, and we paid our independent directors $50,000 in cash for the fiscal year. The Audit Committee chair received additional compensation of $10,000 in cash. Following is a schedule of all compensation paid to our directors in the year ended September 30, 2024:

Name |  | Fees earned or paid in cash ($)
Luke C. Lirot |  | 50,000 |
Yura Barabash |  | 60,000 |
Elaine Martin |  | 50,000 |
Arthur Allan Priaulx |  | 50,000 |
Eric S. Langan |  | — |
Travis Reese |  | — |

EMPLOYMENT AGREEMENTS
On August 28, 2023, we entered into a new two-year employment agreement with Bradley Chhay, under which he receives an annual salary of $600,000. The term of the agreement commenced on August 28, 2023, and will end on August 31, 2025.
On September 5, 2024, we entered into new two-year employment agreements with Eric Langan, our Chief Executive Officer and President, and Travis Reese, our Executive Vice President and Secretary, which agreements were effective as of September 1, 2024. Under their respective new agreements, Mr. Reese’s annual salary increased to $575,000; and Mr. Langan’s annual salary is $1,700,000. The term of each of the agreements commenced on September 1, 2024, and will end on August 31, 2026.
Each of the employment agreements above provides for bonus eligibility, expense reimbursement, health benefits, participation in our benefit plans, use of a company-owned automobile, access to company-owned aircraft (subject to the terms and conditions of our corporate aircraft policy), and two weeks paid vacation annually. Under the terms of the new agreements, each executive is bound to a confidentiality provision and cannot compete with us for a period upon termination of the agreement. Further, in the event we terminate any such employee without cause or such employee terminates his employment because we reduce or fail to pay his compensation or materially change his responsibilities, such employee is entitled to receive in one lump sum payment the full remaining amount under the term of his employment agreement to which he would have been entitled had his agreement not been terminated.
Currently, our executive officers do not have long-term incentive plans or defined benefit or actuarial plans outstanding.
EMPLOYEE STOCK OPTION PLANS
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.
119

Table of Contents
Timing of Grants of Certain Equity Awards
We do not have any formal policies regarding the timing of awards of options in relation to the disclosure of material nonpublic information. Except for the options granted in February 2022, we had not awarded any stock-based compensation since fiscal 2014. If we grant additional options in the future, it is anticipated that the board and Compensation Committee will take material nonpublic information into account when determining the timing and terms of such an award, with the goal being to not grant such awards close in time to the release of any material nonpublic information. We have never timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
COMPENSATION POLICIES AND PRACTICES AS THEY RELATE TO RISK MANAGEMENT
We attempt to make our compensation programs discretionary, balanced and focused on the long term. We believe goals and objectives of our compensation programs reflect a balanced mix of quantitative and qualitative performance measures to avoid excessive weight on a single performance measure. Our approach to compensation practices and policies applicable to employees and consultants is consistent with that followed for our executives. Based on these factors, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us.
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis to be included in this Form 10-K. Based on the reviews and discussions referred to above, the Compensation Committee recommends to the board of directors that the Compensation Discussion and Analysis referred to above be included in this report. This report is furnished by the Compensation Committee of our board of directors, whose members are:
Elaine Martin
Luke Lirot
Yura Barabash
Arthur Allan Priaulx
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised of Ms. Martin and Messrs. Lirot, Barabash, and Priaulx. No interlocking relationship exists between any member of the Compensation Committee and any member of any other company’s board of directors or compensation committee.
120

Table of Contents
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information at December 13, 2024, with respect to the beneficial ownership of shares of common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of common stock, (ii) each of our directors, (iii) each of our executive officers and (iv) all of our executive officers and directors as a group. Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o RCI Hospitality Holdings, Inc., 10737 Cutten Road, Houston, Texas 77066. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Applicable percentage ownership is based on 8,900,000 shares of common stock outstanding at December 13, 2024. Generally, in computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deem outstanding shares of common stock subject to stock options or warrants held by that person that are currently exercisable or exercisable within 60 days of December 13, 2024 and shares of common stock issuable upon conversion of other securities held by that person that are currently convertible or convertible within 60 days of December 13, 2024; we do not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person. Beneficial ownership representing less than 1% is denoted with an asterisk (*).

Name/Address |  | Common Stock |  | Percent of Class (1)
Executive Officers and Directors |  |  |  |
Eric S. Langan |  | 733,000 | (2) | 8.21 | %
Bradley Chhay |  | 33,607 | (2)(3) | *
Yura Barabash |  | 1,149 |  | *
Travis Reese |  | 42,671 | (2) | *
Luke Lirot |  | 518 |  | *
Elaine Martin |  | 11,158 |  | *
Arthur Allan Priaulx |  | 2,000 |  | *
All of our Directors and Officers as a Group of seven persons |  | 824,103 |  | 9.17 | %
Other > 5% Security Holders |  |  |  |
BlackRock, Inc. (4) |  | 633,098 |  | 7.11 | %
ADW Capital Partners, L.P. (5) |  | 934,592 |  | 10.50 | %
The Vanguard Group - 23-1945930 (6) |  | 492,823 |  | 5.54 | %
Progeny 3, Inc. (7) |  | 460,968 |  | 5.18 | %

(1)These percentages exclude treasury shares in the calculation of percentage of class.
(2)Includes stock options that are currently exercisable into 30,000 shares of common stock.
121

Table of Contents
(3)Number of shares is rounded to the nearest whole number. The actual amount is 33,606.681 shares.
(4)Based on the most recently available Schedule 13G filed with the SEC on January 26, 2024 by BlackRock Inc. BlackRock beneficially owned 633,098 shares, with sole voting power and sole dispositive power over all such shares. The address of BlackRock is 50 Hudson Yards, New York, New York 10001.
(5)Based on the most recently available Schedule 13G filed with the SEC on February 14, 2024 by ADW Capital Partners, L.P., ADW Capital Management, LLC and Adam D. Wyden. ADW Capital Management, LLC is the general partner and investment manager of ADW Capital Partners, L.P. Mr. Wyden is the sole manager of ADW Capital Management, LLC. ADW Capital Partners, L.P is the record and direct beneficial owner of 934,592 shares, with shared voting power and shared dispositive power over all such shares. The address of each of these reporting persons is 6431 Allison Road, Miami Beach, Florida 33141.
(6)Based on the most recently available Schedule 13G filed with the SEC on February 13, 2024 by The Vanguard Group - 23-1945930. The Vanguard Group - 23-1945930 beneficially owned an aggregate of 492,823 shares, with sole voting power over 0 shares, shared voting power over 15,450 shares, sole dispositive power over 468,833 shares and shared dispositive power over 23,990 shares. The address of Vanguard Group - 23-1945930 is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(7)Based on the most recently available Schedule 13G filed with the SEC on November 7, 2024 by Progeny 3, Inc. Progeny 3, Inc. beneficially owned 460,968 shares, with sole voting power and sole dispositive power over all such shares. Jon Hemingway controls Progeny 3, Inc. The address of Progeny 3, Inc. is 5209 Lake Washington Blvd NE, Suite 200, Kirkland, Washington 98033.
The Company is not aware of any arrangements that could result in a change in control of the Company.
The disclosure required by Item 201(d) of Regulation S-K is set forth in Item 5 herein and is incorporated herein by reference.
122

Table of Contents
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Presently, our Chairman and President, Eric Langan, personally guarantees all of the commercial bank indebtedness of the company. Mr. Langan receives no compensation or other direct financial benefit for any of the guarantees. Three adult children of Mr. Langan are also employed by the Company in corporate shared services. Colby Langan, one of Eric Langan's adult children mentioned above, is currently the President of RCI Development Services, Inc., which manages strategy on the Company's new business ventures, and received $180,960, $184,068, and $138,762 in employment compensation during the fiscal year ended September 30, 2024, 2023, and 2022, respectively. Included also in the adult children mentioned above is Ashley Wilkins, Eric Langan's daughter, who works in the Treasury Department of the Company, and received $123,600 in employment compensation during the fiscal year ended September 30, 2024.
In October 2021, we borrowed $500,000 from Ed Anakar, President of RCI Management Services, Inc. and our Director of Operations and brother of former director Nourdean Anakar, and $150,000 from Allen Chhay, brother of Company CFO, Bradley Chhay, as part of a larger group of private lenders (see Note 8 to our consolidated financial statements). Their promissory notes bear interest at the rate of 12% per annum and mature in October 2024 and later extended to October 2026. The notes are payable in monthly installments of interest only with a balloon payment of all unpaid principal and interest due at maturity. The terms of the notes are the same as the rest of the lender group. Refer to Note 8 to our consolidated financial statements for the October 2023 extension of term of promissory notes.
We paid Ed Anakar employment compensation of $759,605, $718,539, and $720,492 during the fiscal years ended September 30, 2024, 2023, and 2022, respectively.
We used the services of Nottingham Creations, and previously Sherwood Forest Creations, LLC, both furniture fabrication companies that manufacture tables, chairs and other furnishings for our Bombshells locations, as well as providing ongoing maintenance. Nottingham Creations is owned by a brother of Eric Langan (as was Sherwood Forest). Amounts billed to us for goods and services provided by Nottingham Creations and Sherwood Forest were approximately $350,000 in fiscal 2024, $195,000 in fiscal 2023, and $207,000 in fiscal 2022. As of September 30, 2024 and 2023, we owed Nottingham Creations and Sherwood Forest $18,700 and $10,700, respectively, in unpaid billings.
TW Mechanical LLC (“TW Mechanical”) provided plumbing and HVAC services to both a third-party general contractor providing construction services to the Company, as well as directly to the Company during fiscal 2024, 2023, and 2022. 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 approximately $16,491, $443,295, and $3,809 for the fiscal years 2024, 2023, and 2022, respectively. Amounts billed directly to the Company were approximately $3,160, $9,430, and $133,000 for the fiscal years 2024, 2023, and 2022, respectively. As of September 30, 2024, and 2023, the Company owed TW Mechanical approximately $0 and $0, respectively, in unpaid direct billings.
Review, Approval, or Ratification of Related Transactions
On September 23, 2019, the board of directors, acting upon the recommendation of its Audit Committee, adopted a written related party transaction policy, under which related party transactions are subject to review, approval, rejection, modification and/or ratification by the Audit Committee. The policy provides that prior to the entry into any transaction between the Company and one of its officers, directors, 5% shareholders or an immediate family member of any of the foregoing (a “related party”), such transaction will be reported to the Company’s chief compliance officer. The Company’s chief compliance officer will undertake an evaluation of the transaction. If that evaluation indicates that the transaction would require the Audit Committee’s approval, the Company’s chief compliance officer will report this transaction to the Audit Committee. The Audit Committee will review the material facts of all related party transactions that require the Audit Committee’s approval and either approve or disapprove of the entry into the related party transaction. If advance Audit Committee approval of a related party transaction is not feasible, then the related party transaction will be considered and, if the Audit Committee determines it to be appropriate, ratified at the Audit Committee’s next regularly scheduled meeting. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account factors it deems appropriate. In the event that the Audit Committee determines not to ratify and approve the related party transaction, then the Audit Committee will instruct that the related party transaction be rescinded or unwound. The Audit Committee will not approve or ratify any related party transaction unless it deems that the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. No director will participate in any discussion or approval of a related party transaction for which he or she is a related party, except that the director shall provide all material information concerning the transaction to the Audit Committee.
123

Table of Contents
In reviewing related party transactions under the policy, the Audit Committee will review and consider one or more of the following as it seems appropriate for the circumstances: (1) the related party’s interest in the related party transaction; (2) the approximate dollar value of the amount involved in the related party transaction; (3) the approximate dollar value of the amount of the related party’s interest in the transaction without regard to the amount of any profit or loss; (4) whether the transaction was undertaken in the ordinary course of business of the Company; (5) whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; (6) the purpose of, and the potential benefits to the Company of, the related party transaction; (7) whether the related party transaction would impair the independence of an outside director; (8) required public disclosure, if any; and (9) any other information regarding the related party transaction or the related party in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction. The Audit Committee will review all relevant information available to it about the related party transaction. The Audit Committee may approve or ratify the related party transaction only if the Audit Committee determines in good faith that, under all of the circumstances, the transaction is fair as to the Company. The Audit Committee, in its sole discretion, may impose such condition as it deems appropriate on the Company or the related party in connection with approval of the related party transaction.
Our Audit Committee is composed of all independent directors, including Yura Barabash, Elaine Martin and Arthur Allan Priaulx. We additionally have one other independent director, Luke Lirot, who is not on the Audit Committee. The definition of “independent” used herein is based on the independence standards of The NASDAQ Stock Market LLC.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following table sets forth the aggregate fees paid or accrued for professional services and the aggregate fees paid or accrued for audit-related services and all other services rendered by Marcum LLP and Friedman LLP for the fiscal 2024 and 2023.

| Marcum 2024 |  | Marcum 2023 |  | Friedman 2023
Audit fees | $ | 1,313,698 |  |  | $ | 659,789 |  |  | $ | 523,017 |
Audit-related fees | 20,600 |  |  | — |  |  | — |
Tax fees | — |  |  | — |  |  | — |
All other fees | — |  |  | — |  |  | — |
Total | $ | 1,334,298 |  |  | $ | 659,789 |  |  | $ | 523,017 |

Effective September 1, 2022, Friedman LLP, our independent registered public accounting firm of record in fiscal 2022, combined with Marcum LLP and continued to operate as an independent registered public accounting firm.
“Audit fees” include fees billed for professional services rendered in connection with the annual audit and quarterly reviews of the Company’s consolidated financial statements, the audit of internal control over financial reporting as required by the Sarbanes-Oxley Act of 2002, and assistance with securities filings other than periodic reports.
“Audit-related fees” include professional services in relation to review of our franchise disclosure document.
“Tax fees” include consultation related to tax compliance and tax structuring.
“All other fees” include fees billed for professional services rendered in connection with the SEC investigation.
All above audit services, audit-related services and tax services were pre-approved by the Audit Committee, which concluded that the provision of such services by Marcum LLP and Friedman, LLP was compatible with the maintenance of those firms’ independence in the conduct of their auditing functions. The Audit Committee’s outside auditor independence policy provides for pre-approval of all services performed by the outside auditors.
124

Table of Contents
Merger of Marcum LLP with CBIZ, Inc.
On July 30, 2024, CBIZ, Inc. entered into an agreement and plan of merger with Marcum LLP with an anticipated close date of November 1, 2024.
On August 15, 2024, Marcum LLP informed the Company that it would not be independent with respect to the completion of the fiscal year ended September 30, 2024, integrated audit as a result of internal audit services that were performed by CBIZ, Inc. during the period under audit. For the following reasons, the Audit Committee of the Board of Directors of the Company and Marcum have each concluded, and are of the view that a reasonable investor with knowledge of all relevant facts and circumstances would conclude, that the provision of these services did not impair Marcum LLP’s objectivity and impartiality with respect to Marcum LLP’s integrated audit of the Company’s financial statements and internal controls over financial reporting:
1.Majority of the CBIZ, Inc. services were performed prior to July 31, 2024, when the proposed transaction between CBIZ, Inc. and Marcum LLP was publicly announced. The audit engagement team was not aware of this proposed transaction prior to July 31, 2024. CBIZ, Inc. services did not involve decision making and supervisory responsibilities over and on behalf of the Company management.
2.The Company terminated CBIZ, Inc.’s engagement promptly after the merger announcement and hired an unrelated third party to reperform all the work performed by CBIZ, Inc. in relation to the fiscal year ending September 30, 2024.
3.Marcum audit planning and procedures did not rely upon any testing performed by CBIZ, Inc.
4.After Marcum LLP’s expected merger with CBIZ, Inc., no personnel from CBIZ, Inc. who worked on the Company’s engagement will be part of the audit team or have any involvement in the audit.
125

Table of Contents
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit No. |  | Description
3.1 |  | Articles of Incorporation dated December 9, 1994. (Incorporated by reference from Form SB-2 filed with the SEC on January 11, 1995.) *
3.2 |  | Certificate of Amendment to Articles of Incorporation dated September 9, 2008. (Incorporated by reference from Definitive Schedule 14A filed with the SEC on July 21, 2008.) *
3.3 |  | Certificate of Amendment to Articles of Incorporation dated August 6, 2014. (Incorporated by reference from Definitive Schedule 14A filed with the SEC on June 24, 2014.) *
3.4 |  | Amended and Restated Bylaws (Incorporated by reference from Form 8-K filed with the SEC on March 16, 2016.) *
4.1 |  | Consolidated, Amended and Restated Promissory Note for $99,145,838.22 with Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on October 4, 2021) *
4.2 |  | 10-Year Secured Promissory Note for $11,000,000 by Big Sky Hospitality Holdings, Inc. to Family Dog, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
4.3 |  | 20-Year Secured Promissory Note for $8,000,000 by Big Sky Hospitality Holdings, Inc. to Family Dog, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
4.4 |  | 10-Year Promissory Note for $1,200,000 by RCI Holdings, Inc. to 3480 South Galena, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
4.5 |  | IP Promissory Note for $1,000,000 by Big Sky Hospitality Holdings, Inc. to Club Licensing, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
4.6 |  | Promissory Note for $18,740,000 with Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2022) *
4.7 |  | Revolving Promissory Note for $10,000,000 with Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on March 15, 2023) *
4.8 |  | Form of Promissory Note dated March 16, 2023 (in connection with Baby Dolls/Chicas Locas acquisition transaction) (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
4.9 |  | Promissory Note (Real Estate) with Duncan Burch dated March 16, 2023 (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
4.10 |  | Amended and Restated 12% Unsecured Promissory Note (form of interest-only version of the note) (Incorporated by reference from Form 8-K filed with the SEC on October 26, 2023) *
4.11 |  | Amended and Restated 12% Unsecured Promissory Note (form of amortizing payment schedule version of the note) (Incorporated by reference from Form 8-K filed with the SEC on October 26, 2023) *
4.12 |  | P romissory Note for $20,000,000 with Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on May 3, 2024) *

126

Table of Contents

4.13 |  | The description of our common stock (Incorporated by reference from Form 10-K filed with the SEC on December 14, 2020) *
10.1 |  | Employment Agreement with Eric S. Langan. (Incorporated by reference from Form 8-K filed with the SEC on September 5, 2024) *
10.2 |  | Employment Agreement with Bradley Chhay (Incorporated by reference from Form 8-K filed with the SEC on A ugust 30, 2023) *
10.3 |  | Employment Agreement with Travis Reese (Incorporated by reference from Form 8-K filed with the SEC on September 5, 2024) *
10.4 |  | Loan Agreement between RCI Holdings, Inc. and Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on October 4, 2021) *
10.5 |  | Absolute Unconditional and Continuing Guaranty of RCI Hospitality Holdings, Inc. (Incorporated by reference from Form 8-K filed with the SEC on October 4, 2021) *
10.6 |  | Absolute Unconditional and Continuing Guaranty of Eric S. Langan (Incorporated by reference from Form 8-K filed with the SEC on October 4, 2021) *
10.7 |  | Guaranty by RCI Hospitality Holdings, Inc. in favor of Family Dog (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
10.8 |  | Guaranty by RCI Hospitality Holdings, Inc. in favor of 3480 South Galena LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
10.9 |  | Guaranty by RCI Hospitality Holdings, Inc. in favor of Club Licensing, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
10.10 |  | Lock-Up Agreement between RCI Hospitality Holdings, Inc. and Family Dog, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
10.11 |  | Lock-Up Agreement by RCI Hospitality Holdings, Inc. in favor of Club Licensing, LLC (Incorporated by reference from Form 8-K filed with the SEC on October 21, 2021) *
10.12 |  | Loan Agreement between RCI Holdings, Inc. and Centennial Bank dated January 25, 2022 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2022) *
10.13 |  | Absolute Unconditional and Continuing Guaranty of RCI Hospitality Holdings, Inc. dated January 25, 2022 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2022) *
10.14 |  | Absolute Unconditional and Continuing Guaranty of Eric S. Langan dated January 25, 2022 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2022) *
10.15 |  | Asset Purchase Agreement with TTNA, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.16 |  | Asset Purchase Agreement with DB Entertainment, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *

127

Table of Contents

10.17 |  | Asset Purchase Agreement with Duncan Burch, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.18 |  | Asset Purchase Agreement with Millennium Restaurants Group, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.19 |  | Asset Purchase Agreement with T&N, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.20 |  | Intellectual Property Purchase Agreement with HQ Real Estate Management LLC dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.21 |  | Intellectual Property Purchase Agreement with ERAF, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.22 |  | Asset Purchase Agreement with ECAL-D&D, Inc. dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.23 |  | Purchase and Sale Agreement with Duncan Burch dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.24 |  | Cooperation Agreement dated December 12, 2022 (Incorporated by reference from Form 8-K filed with the SEC on December 15, 2022) *
10.25 |  | Amendment to Asset Purchase Agreement with TTNA, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.26 |  | Amendment to Asset Purchase Agreement with DB Entertainment, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.27 |  | Amendment to Asset Purchase Agreement with Duncan Burch, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.28 |  | Amendment to Asset Purchase Agreement with Millennium Restaurants Group, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.29 |  | Second Amendment to Asset Purchase Agreement with T AND N, INCORPORATED dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.30 |  | Amendment to Intellectual Property Purchase Agreement with HQ Real Estate Management LLC dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.31 |  | Amendment to Intellectual Property Purchase Agreement with ERAF, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.32 |  | Amendment to Asset Purchase Agreement with ECAL-D&D, Inc. dated January 25, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.33 |  | Amendment to Purchaser and Sale Agreement with Duncan Burch dated January 26, 2023 (Incorporated by reference from Form 8-K filed with the SEC on January 27, 2023) *
10.34 |  | Second Amendment to Asset Purchase Agreement with TTNA, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *

128

Table of Contents

10.35 |  | Second Amendment to Asset Purchase Agreement with DB Entertainment, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.36 |  | Second Amendment to Asset Purchase Agreement with Duncan Burch, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.37 |  | Second Amendment to Asset Purchase Agreement with Millennium Restaurants Group, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.38 |  | Third Amendment to Asset Purchase Agreement with T AND N, INCORPORATED dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.39 |  | Second Amendment to Intellectual Property Purchase Agreement with HQ Real Estate Management LLC dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.40 |  | Second Amendment to Intellectual Property Purchase Agreement with ERAF, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.41 |  | Second Amendment to Asset Purchase Agreement with ECAL-D&D, Inc. dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.42 |  | Second Amendment to Purchase and Sale Agreement with Duncan Burch dated February 27, 2023 (Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023) *
10.43 |  | Loan Agreement with Centennial Bank (Incorporated by reference from Form 8-K filed with the SEC on March 15, 2023) *
10.44 |  | Absolute Unconditional and Continuing Guaranty of RCI Hospitality Holdings, Inc. (Incorporated by reference from Form 8-K filed with the SEC on March 15, 2023) *
10.45 |  | Absolute Unconditional and Continuing Guaranty of Eric Langan (Incorporated by reference from Form 8-K filed with the SEC on March 15, 2023) *
10.46 |  | Form of Absolute Unconditional and Continuing Guaranty of Burch Management Company, Inc. dated March 16, 2023 (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
10.47 |  | Form of Absolute Unconditional and Continuing Guaranty of BD Hospitality Acquisition, Inc. dated March 16, 2023 (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
10.48 |  | Lock-Up Agreement with Duncan Burch dated March 16, 2023 (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
10.49 |  | Non-Competition Agreement with Duncan Burch dated March 16, 2023 (Incorporated by reference from Form 8-K filed with the SEC on March 17, 2023) *
10.50 |  | Loan Agreement between RCI Holdings, Inc. and Centennial Bank dated April 30, 2024 (Incorporated by reference from Form 8-K filed with the SEC on May 3, 2024) *
10.51 |  | Absolute Unconditional and Continuing Guaranty of RCI Hospitality Holdings, Inc. dated April 30, 2024 (Incorporated by reference from Form 8-K filed with the SEC on May 3, 2024) *

129

Table of Contents

10.52 |  | Absolute Unconditional and Continuing Guaranty of Eric S. Langan dated April 30, 2024 (Incorporated by reference from Form 8-K filed with the SEC on May 3, 2024) *
19.1 |  | P olicy on Insider Trading
21.1 |  | Subsidiaries
23.1 |  | Consent of Marcum LLP
23.2 |  | Consent of Friedman LLP
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.
32.1 |  | 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.
97.1 |  | Policy for Recovery of Erroneously Awarded Incentive Compensation (Incorporated by reference from Form 10-K filed with the SEC on December 14, 202 3) *
101 |  | The following financial information from RCI Hospitality Holdings, Inc.'s Annual Report on Form 10-K for the year ended September 30, 2024 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Incorporated by reference from our previous filings with the SEC.
Item 16. FORM 10-K SUMMARY.
None.
130

Table of Contents
SIGNATURES
In accordance with the requirements of Section 13 of 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on December 16, 2024.

| RCI Hospitality Holdings, Inc.
| By: | /s/ Eric S. Langan
|  | Eric S. Langan
|  | Chief Executive Officer and President

Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons in the capacities and on the dates indicated:

Signature |  | Title |  | Date
/s/ Eric S. Langan |  |  |  |
Eric S. Langan |  | Director, Chief Executive Officer, and President |  | December 16, 2024
/s/ Bradley Chhay |  |  |  |
Bradley Chhay |  | Chief Financial Officer and Principal Accounting Officer |  | December 16, 2024
/s/ Travis Reese |  |  |  |
Travis Reese |  | Director and Executive Vice President |  | December 16, 2024
/s/ Yura Barabash |  |  |  |
Yura Barabash |  | Director |  | December 16, 2024
/s/ Luke Lirot |  |  |  |
Luke Lirot |  | Director |  | December 16, 2024
/s/ Elaine Martin |  |  |  |
Elaine Martin |  | Director |  | December 16, 2024
Arthur Allan Priaulx |  | Director |  |

131