RCI HOSPITALITY HOLDINGS, INC.

5. Revenues

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

5. Revenues - continued

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):

Contract liabilities with customers are included in accrued liabilities as unearned revenues in our consolidated balance sheets (see also Note 6), while the revenues associated with these contract liabilities are included in other revenues in our consolidated statements of income.

5. Revenues - continued

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 offive years, and the right of first refusal forthree 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 offive 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 16.

6. Selected Account Information

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

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):

6. Selected Account Information - continued

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

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

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

6. Selected Account Information - continued

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

7. Property and Equipment

Property and equipment consisted of the following (in thousands):

Included in buildings and leasehold improvements above are construction-in-progress amounting to $7.9 million and $15.0 million as of September 30, 2025, and 2024, respectively, which are mostly related to Bombshells development projects.

Depreciation expense was approximately $12.7 million, $12.9 million, and $11.6 million for fiscal years 2025, 2024, and 2023, respectively. Impairment loss for property and equipment, including those later reclassified to assets held for sale, was $1.6 million, $10.6 million, and $58,000 for fiscal 2025, 2024, and 2023, respectively.

8. Goodwill and Other Intangible Assets

Goodwill and other intangible assets consisted of the following (in thousands):

Substantially all of our goodwill and other intangible assets belong to our Nightclubs segment.

8. Goodwill and Other Intangible Assets - continued

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

As of September 30, 2025 and 2024, the accumulated impairment balance of indefinite-lived intangibles was $32.6 million and $28.8 million, respectively, while the accumulated impairment balance of goodwill was $34.3 million and $34.3 million, respectively. As of September 30, 2025 and 2024, the gross amount of goodwill amounted to $97.0 million and $96.2 million, respectively. Future amortization expense related to definite-lived intangible assets that are subject to amortization at September 30, 2025 is: 2026 - $2.3 million; 2027 - $2.2 million; 2028 - $1.5 million; 2029 - $1.5 million; 2030 - $1.5 million; and thereafter - $8.7 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, 2025, the Company recognized a $3.8 million impairment related to the SOB licenses ofsix clubs. During the fiscal year ended September 30, 2024, the Company recognized a $11.8 million impairment related to the SOB licenses ofseven clubs, a $8.9 million impairment related to goodwill offour reporting units, and a $693,000 impairment related to tradename ofone club. During the fiscal year ended September 30, 2023, the Company recognized a $6.5 million impairment related to the SOB licenses ofeight clubs and a $4.2 million impairment related to the goodwill offour reporting units.