Thank you, operator. Good morning, and thank you for joining us on our conference call for the fourth quarter and fiscal year ended September 30, 2023. My name is Christopher Love, and I am the Secretary of Ark Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO; and Anthony Sirica, our President and Chief Financial Officer. For those of you who have not yet obtained a copy of our press release, it was issued over the Newswires yesterday and is available on our website. To review the full text of that press release, along with the associated financial tables, please go to our homepage at www.arkrestaurants.com. Before we begin, however, I'd like to read the safe harbor statement. I will need to remind everyone that part of our discussion this morning will include forward-looking statements and that these statements are not guarantees of future performance and therefore, undue reliance should not be placed on them. We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance and financial condition. I'll now turn the call over to Michael.

Before I start, I want to bring in Anthony, our CFO and President, to talk about our balance sheet and the write-off of the goodwill to try to give you better explanation.

Good morning, everyone. Our balance sheet at year-end continues to be strong. Our cash position was about $13.5 million. Currently, it's probably tracking a little higher than that. Our debt is $7.2 million compared to $20-some-odd million last year, $24 million last year. As you might be aware, we paid off about $16 million of our notes late March, early April with our new credit agreement. The only other significant change, as you read in the release, was a goodwill impairment of $10 million. As we got into the quarter close, we realized that there was a triggering event related to our goodwill assessment due to the decline in the stock price and the upcoming expiration of the Bryant Park leases and the related RFPs that were issued for the spaces. So as a result, we performed a quantitative assessment based on the income approach utilizing a discounted cash flow analysis. The analysis took into account the estimating future after-tax cash flows, discounting them back to present value and the possibility that the leases may not be renewed. So given all that, we also consulted with third-party experts. The impairment came up to about $10 million. And that's really the highlight of the balance sheet. On the P&L, Michael is going to talk about.

The EBITDA for the year was approximately $9.6 million. I believe that's on the conservative side. The refurbishment of Gallagher's, along with capital improvement costs of about $2 million, affected our cash flow by around $1.6 million to $1.7 million. This is because we agreed to continue paying rent during the refurbishing period at New York-New York and also maintained full payrolls and insurance, aside from food and beverage purchases. Food and beverage costs at Gallagher's were around 32%, and we experienced about $2.2 million to $2.3 million in lost sales during the transition. Gallagher's is currently performing better than ever, suggesting that the refurbishment is positively impacting revenue. However, I estimate that we lost around 15% to 17% in cash flow during that period. If Gallagher's had not closed, our EBITDA could have potentially exceeded $11 million. We have faced significant challenges over the past four months with sales at our full-service restaurants in Southern Florida, including JBs, Blue Moon, and Shuckers, which are down 10% to 15% weekly. Our Hollywood property, a fast-food venue in the Hard Rock Casino, is doing well and saw a boost in sales due to the addition of table games, which have been approved by the state. Sales in Tampa have also seen a slight increase from this expansion. Our Alabama properties continue to perform strongly, and our Las Vegas sales are robust with improved efficiency after management changes. We've been dealing with heightened payroll pressures due to competition for skilled workers. In New York, business remains strong and is largely driven by events, with no significant price sensitivity observed. In Washington, D.C., we are performing adequately, though it falls short of our expectations and requires continuous improvement. Overall, I believe we are doing well at the restaurant level; our product and service quality are high, and our teams are excelling. Recently, we've been experiencing record sales at our Robert and Bryant Park locations and in Las Vegas. However, my hesitation to raise prices aggressively may impact our margins amidst rising payroll, insurance, and utility costs. We're keeping price increases modest as I anticipate customer backlash against what I consider inflated prices. Regarding Bryant Park, as mentioned in our 10-K, we learned that the Parks Department plans to issue RFPs for Bryant Park operations due to our lease expiring in May 2025. The RFPs were somewhat unclear, but we submitted our response on November 1 and have been informed that we are finalists. While I have mixed feelings about this, I believe we made a strong presentation and have successfully managed one of the highest-grossing restaurants in the country, despite limitations on service hours and noise levels due to its residential location. As for the Meadowlands, we remain optimistic about the issuance of a casino license, though it's likely that no action will be taken until New York issues its downstate liquor licenses. We're in a good position to secure a casino license if the state decides to allow a casino in the North. I hope this provides a better understanding of our business performance, and I'm open to any questions you may have.

Our first question comes from Jeff Kaminski with JJK Consultants. Please go ahead with your question.

I would like some clarification on the goodwill impairment test mentioned in the press release. Anthony referred to a singular triggering event, which is associated with the volatility of the Company's stock price. Based on my experience, the stock price has seen significant fluctuations, ranging from high 17s to low 18s, and down to high 14s or 15s, indicating about a 20% movement. I'm not sure if that's sufficient to be considered volatile enough for triggering events. Additionally, the triggering event also includes the upcoming expiration of the Bryant Park Properties lease and related proposals. What exactly was the trigger? Was it the stock price volatility, or was it the Bryant Park situation, which remains unresolved? If the Bryant Park situation is resolved positively, would that lead to a reversal of the $10 million goodwill impairment? I need some clarity on this, as it seems confusing.

The assessment begins by comparing the value of shares and the entity value to the company's book value. You calculate this by taking the outstanding shares at the end of the quarter and multiplying that by the publicly traded price. In previous quarters leading up to the fourth quarter, our stock was trading above $17.50 to $18, which meant our fair value for the shares exceeded the book value of equity. By the end of the quarter, the stock price had dropped to around 15 percent, 15.5%, and when we conducted the test, we found a significant shortfall, roughly about $6 million to $7 million below the book value. This leads us to the second step of the goodwill impairment process, which involves examining discounted cash flows and modeling various scenarios. We had to consider more than just the assumption that we would retain Bryant Park for the next decade; we had to include weighted scenarios that account for potential loss of the property and, consequently, the associated cash flows. This approach is how we arrived at the impairment amount.

Had the stock price held then you wouldn't have had to consider the Bryant Park lease expiration. It was the triggering event was the stock price vis-à-vis the book value?

Yes.

So the answer to that, Jeffrey, is two-fold. Number one, if the stock price had held, we once we've gone through this process and then the outside consultants and our own J. H. Cohn, who are our auditors, once they've had to go further and say, what if and what if, all right? I don't want anybody to think that us considering Bryant Park's lease in this scenario of refiguring taking the write-off of goodwill has anything to do with characterizing our chances of renewing the lease. This is strictly a mathematical computation. It doesn't take into account at all any feelings about where we stand in the process of renewing that lease. It just says basically the lease comes due in May of 2025. And what happens if we don't get it, and this would be the result. And it's all triggered by the stock price falling below a certain point where this whole process begins. All right, it has nothing to do with our feelings about whether or not we're going to renew that rate.

Okay. So should you get the lease back and the stock should probably bounce, are you then going to have to reconsider the goodwill situation again because now you're going to have at least to another 20 or 30 days from a stock the accounting standards.

No. The accounting standards, once you write-off the goodwill, it's gone. You don't put it back on the books. The stock would go to 50%, you don't put it back on the books. That's the accounting standards. I mean, it's not.

Last point in hindsight 2020, there have been people on this call that have mentioned perhaps having some sort of buyback in place, stabilizing mechanism in a very, very illiquid stock, which has been, and we're paying interest on a $7 million loan for the moment we don't need, and again, hindsight is 2020, but might have been prudent to have a small buyback in place, and you might have this exercise wouldn't be necessary because it wouldn't have taken much to keep the stock at $17, $18, and $19?

So, that's a good point. The best way for me to answer this is there are certain moving parts in the way this occurred or even with the stock at $15, $16. We continue to have an eye on making some acquisitions. So we like the fact that we have this $14 million, $15 million balance to make acquisitions, and we're constantly looking at it. And I'd rather be buying what I consider reliable cash flow than buy back my stock and have to borrow money to make acquisitions. So that's part of this. The second part, honestly, the stock is very, very thin. It's very hard to buy it. I assume that at some point, the stock price will rationalize itself if we perform well. I'm not interested in being a support for the stock unless I had a lot of money that I didn't see having anything any targets out there to use the money for. So if we were in that position, yes, would I buy back the stock? Yes. But how much am I going to be able to buy back? It's not going to be meaningful. What's more meaningful is having the money available to make a meaningful acquisition that gives us long-term cash flow. So that's been my position. Would we do a transaction to try to take the Company private? Well, that presents problems also because certainly, certain shareholders will get screwed by that. Others would do well. But the big problem would be how do you evaluate the value of our deal at the Meadowlands. And if that were to become a casino, everybody that was bought out would feel that we knew something and took advantage of some information that wasn't available to them, which is not the case. But we still viewed that way. So I'm comfortable at the moment in terms of the Company's cash balances to leave those in place and try to find something that enhances the Company's cash flow long term.

Our next question comes from Peter Jackson, a Private Investor. Please go ahead with your question.

Couple of questions. First of all, do you have any sense of timing on when the Bryant Park decision would be made?

We are told sometime in spring of this year, this coming year.

Okay. How does it work in terms of how they view things if a larger and better-financed restaurant group enters the scene? Does the fact that we've been successful there give us a lead position, or is it a completely fresh start with everyone considered equally?

I have no idea what they're trying to do in terms of the goals or I think this is a requirement of the Parks Department at the end of the lease and we've submitted our proposal. We know other people who submitted their proposals. As I said, we're a finalist. We do not know what their goals are or other than to put out an RFP.

Okay. In terms of acquisition, obviously...

By the way, excuse me. We've disciplined ourselves here not to drive ourselves crazy by speculating.

You mentioned you're always evaluating acquisitions and the prices you've previously paid have been excellent. However, I would like to understand more about the price increases. I completely recognize your desire to keep prices as low as possible. On the flip side, you are facing rising expenses for payroll, insurance, and utilities, which I assume your competitors are also dealing with to varying extents. At what point does this become a challenge? The issue seems to be that not raising prices while facing these higher costs isn't helping your margins. So, what is the situation, and how does it differ from other restaurants?

Thank you for the question. I want to highlight something mentioned in our response to the RFP and Bryant Park. After the pandemic, we raised our prices by 7%, which has been the average increase over the past couple of years. Our revenues since then have risen by 12%, allowing us to increase our workforce. This also applies to our operations in Vegas, where the growth is significant. While we are adding staff, we are very mindful of headcount relative to revenue. Our long-term leases, like the one at Rustic, require us to raise prices by more than 7% due to rising costs, such as the price of crab from $23 a pound to $54 a pound. At one point, our costs to serve a dish were significantly higher, and while some customers, particularly those from a blue-collar background, use our restaurant for special occasions, we also attract wealthier patrons. It's important to us that we don't develop a reputation for being overpriced, which has been a guiding principle since the company's inception. We’ve always maintained a balance between the quality of our products and our pricing compared to other restaurants in the area. Currently, food and alcohol prices are stabilizing, and in some cases, they're decreasing, such as for crab legs. Our cost for crab legs has reduced from 70% to around 50% of the plate costs. While payrolls may stabilize rather than decrease, insurance premiums are expected to decline. It takes time for margins to recover, but we are committed to maintaining our reputation for offering quality at fair prices without resorting to discounts or coupons. Our message to the public is clear: you receive good quality, service, and atmosphere for fair prices, and we believe this approach is consistent with how we want to operate our business.

Okay. That makes sense. Going back to Bryant Park, did you disclose what the revenue is there and what would be lost if we didn't receive it for some reason?

We do not share revenue details for individual restaurants, nor do we disclose profits. In this instance, the landlord is aware of the revenues because we operate under a percentage lease agreement. However, we have never permitted individual restaurants to disclose their revenues through us as we believe it could negatively impact our negotiations with landlords.

Okay. And then going back to Meadowlands, certainly, as a long-term investor, I appreciate your point about not wanting to take the Company private because you potentially deprive shareholders of the upside from the Meadowlands. But with that said, obviously, that's something that may not happen or may not happen for a long time. And obviously, it's hard to make a plan when it involves governments and legislation. It's hard to really handicap when that's going to happen, if it happens, would it ever make sense? You said in prior calls, I think, that maybe Hard Rock would be the natural people to buy us out of our interest there. Presumably, they see the value there. They're not going to pay as much today as they would if it were a sure thing, right? And if it was a sure thing, it wouldn't make sense to do anything now. But is there a way to sort of bake into some kind of price with Hard Rock where they give us some value that reflects the potential while also on their side, reflecting the fact that may not happen. I'm not really saying that the proper way, but you know what I'm getting that?

Yes, Hard Rock is a 20% owner of the limited partnership in the Meadowlands. However, since we last discussed this a few quarters ago, they are now part of a bidding process with Steve Cohen to establish a casino in Queens. If that goes through, we are uncertain if Hard Rock will remain with us as an operator, although they would likely stay on as an investor unless we or another operator bought them out. Currently, discussions with Hard Rock don’t seem productive. It may make more sense to engage if they become the operator, especially if there is progress toward obtaining a casino license in the North. I prefer not to have that conversation right now, especially since we believe there is a good chance of securing a casino license there—it’s just a matter of when New Jersey's legislators will respond to downstate casino licenses in New York, which we think won’t happen for another year to 18 months. Regarding the idea of taking the company private, I want to emphasize that I prefer to generate recurring cash flow for our shareholders rather than just trying to maneuver for a better price. The decision lies largely with our Board of Directors, and this topic does come up for discussion. I’m sharing my view as a Board member. I have been in this business for a long time and have never sold or bought a share of stock outside of my foundation. I believe the stock price will eventually reflect the value as investors recognize it. This quarter, the focus is on the $10 million non-cash write-off, which does not impact our operations. When you account for Gallagher's in Las Vegas, we still have an EBITDA of over $11 million, despite Southern Florida's poor performance, which we believe will improve given the quality of our sites there. Las Vegas is already strong and will continue to improve. Our restaurants in New York and Alabama are performing well. We will find ways to enhance cash flow through acquisitions, which will eventually be recognized, and our balance sheet is solid for a company of our size. That is our perspective on the matter.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

All right. Thank you. There are some good questions. I appreciate the time you're spending with us, and we look forward to our next call with you. Have a happy holiday season, everybody.

Ladies and gentlemen, this does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day.