Ark Restaurants Corp 10-Q for FY2020 Q1

Ark Restaurants Corp (ARKR)

10-Q 2020-02-11 For: 2019-12-28

Added on April 11, 2026

About this 10-Q

Ark Restaurants Corp filed this 10-Q on February 11, 2020, covering the quarter ended December 28, 2019 (FY2020 Q1).

Headline figures

Quarter ended December 28, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $43.51M; up 7.3% from $40.55M a year earlier
Net income: $1.51M; compared with a net loss of $62K a year earlier
Diluted EPS: $0.43; compared with -$0.02 a year earlier

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New York		13-3156768
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)



	85 Fifth Avenue, New York, NY	10003
	(Address of Principal Executive Offices)	(Zip Code)



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ARKR	The NASDAQ Stock Market LLC



Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller Reporting Company	x

Emerging Growth Company	o



	December 28, 2019		September 28, 2019
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents (includes $95 at December 28, 2019 and $170 at September 28, 2019 related to VIEs)	$	7,211	$	7,177
Accounts receivable (includes $266 at December 28, 2019 and $219 at September 28, 2019 related to VIEs)	2,407		2,621
Employee receivables	433		414
Inventories (includes $34 at December 28, 2019 and $41 at September 28, 2019 related to VIEs)	3,247		2,222
Prepaid and refundable income taxes (includes $254 at December 28, 2019 and $254 at September 28, 2019 related to VIEs)	254		254
Prepaid expenses and other current assets (includes $13 at December 28, 2019 and $12 at September 28, 2019 related to VIEs)	706		1,021
Total current assets	14,258		13,709
FIXED ASSETS - Net (includes $236 at December 28, 2019 and September 28, 2019 related to VIEs)	39,107		47,781
OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $2,846 at December 28, 2019 related to VIEs)	60,749		—
INTANGIBLE ASSETS - Net	291		303
GOODWILL	15,570		15,570
TRADEMARKS	3,720		3,720
DEFERRED INCOME TAXES	3,981		4,106
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK	6,834		6,821
OTHER ASSETS (includes $82 at December 28, 2019 and September 28, 2019 related to VIEs)	2,640		2,642
TOTAL ASSETS	$	147,150	$	94,652

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable - trade (includes $75 at December 28, 2019 and $65 at September 28, 2019 related to VIEs)	$	4,318	$	3,549
Accrued expenses and other current liabilities (includes $431 at December 28, 2019 and $440 at September 28, 2019 related to VIEs)	9,761		10,672
Accrued income taxes	471		285
Dividend payable	875		875
Current portion of notes payable	2,701		2,701
Current portion of operating lease liabilities (includes $211 at December 28, 2019 related to VIEs)	6,218		—
Total current liabilities	24,344		18,082
OPERATING LEASE DEFERRED CREDIT (includes ($30) at September 28, 2019 related to VIEs)	—		10,077
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs	23,121		23,786
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $2,614 at December 28, 2019 related to VIEs)	56,242		—
TOTAL LIABILITIES	103,707		51,945
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $.01 per share - authorized, 10,000 shares; issued and outstanding, 3,499 shares at December 28, 2019 and September 28, 2019	35		35
Additional paid-in capital	13,289		13,277
Retained earnings	29,190		28,552
Total Ark Restaurants Corp. shareholders’ equity	42,514		41,864
NON-CONTROLLING INTERESTS	929		843
TOTAL EQUITY	43,443		42,707
TOTAL LIABILITIES AND EQUITY	$	147,150	$	94,652



	13 Weeks Ended
	December 28, 2019			December 29, 2018
REVENUES:
Food and beverage sales	$	42,829		$	39,838
Other revenue	685			710
Total revenues	43,514			40,548

COSTS AND EXPENSES:
Food and beverage cost of sales	10,940			10,476
Payroll expenses	15,122			14,105
Occupancy expenses	5,439			5,005
Other operating costs and expenses	5,328			4,975
General and administrative expenses	3,054			3,409
Depreciation and amortization	1,195			1,206
Total costs and expenses	41,078			39,176
RESTAURANT OPERATING INCOME	2,436			1,372
Loss on closure of Durgin-Park	—			(1,067		)
OPERATING INCOME	2,436			305
OTHER (INCOME) EXPENSE:
Interest expense	459			311
Interest income	(13		)	(14		)
Total other expense, net	446			297
INCOME BEFORE PROVISION FOR INCOME TAXES	1,990			8
Provision for income taxes	319			23
CONSOLIDATED NET INCOME (LOSS)	1,671			(15		)
Net income attributable to non-controlling interests	(158		)	(47		)
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$	1,513		$	(62	)

NET INCOME (LOSS) PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic	$	0.43		$	(0.02	)
Diluted	$	0.43		$	(0.02	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	3,499			3,474
Diluted	3,541			3,474




	Common Stock			Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity
	Shares	Amount		Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity

BALANCE - September 29, 2018	3,470	$	35	$	12,897	$	29,364		$	42,296		$	1,440		$	43,736

Net income	—	—		—		(62		)	(62		)	47			(15		)
Exercise of stock options	7	—		94		—			94			—			94
Stock-based compensation	—	—		12		—			12			—			12
Distributions to non-controlling interests	—	—		—		—			—			(97		)	(97		)
Dividends paid - $0.25 per share	—	—		—		(868		)	(868		)	—			(868		)

BALANCE - December 29, 2018	3,477	$	35	$	13,003	$	28,434		$	41,472		$	1,390		$	42,862



	Common Stock			Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity
	Shares	Amount		Additional Paid-In Capital		Retained Earnings			Total Ark Restaurants Corp. Shareholders’ Equity			Non- controlling Interests			Total Equity

BALANCE - September 28, 2019	3,499	$	35	$	13,277	$	28,552		$	41,864		$	843		$	42,707

Net income	—	—		—		1,513			1,513			158			1,671
Stock-based compensation	—	—		12		—			12			—			12
Distributions to non-controlling interests	—	—		—		—			—			(72		)	(72		)
Dividends accrued - $0.25 per share	—	—		—		(875		)	(875		)	—			(875		)

BALANCE - December 28, 2019	3,499	$	35	$	13,289	$	29,190		$	42,514		$	929		$	43,443



NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS December 28, 2019 (Unaudited)



	December 28, 2019		September 28, 2019
	(in thousands)
Cash and cash equivalents	$	95	$	170
Accounts receivable	266		219
Inventories	34		41
Prepaid and refundable income taxes	254		254
Prepaid expenses and other current assets	13		12
Due from Ark Restaurants Corp. and affiliates (1)	394		392
Fixed assets - net	236		236
Operating lease right-of-use assets - net	2,846		—
Other assets	82		82
Total assets	$	4,220	$	1,406

Accounts payable - trade	$	75	$	65
Accrued expenses and other current liabilities	431		440
Current portion of operating lease liabilities	211		—
Operating lease deferred credit	—		(30		)
Operating lease liabilities, less current portion	2,614		—
Total liabilities	3,331		475
Equity of variable interest entities	889		931
Total liabilities and equity	$	4,220	$	1,406


(1)	Amounts Due from and to Ark Restaurants Corp. and affiliates are eliminated upon consolidation.



Cash	$	11
Inventory	80
Furniture, fixtures and equipment	200
Trademarks	1,110
Goodwill	5,690
Liabilities assumed	(55		)
	$	7,036


•	Promissory Note - Sequoia renovation – Also on May 15, 2019, the Company converted $3,200,000 of Revolving Facility borrowings incurred in connection with the Sequoia renovation to a promissory note which is payable in 23 equal quarterly installments of $114,286, commencing on September 1, 2019, with a balloon payment of $571,429 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.



	Weighted-Average Remaining Lease Term (Years)	Weighted-Average Discount Rate
Operating leases	11.0 Years	5.5	%



	Operating Leases
Fiscal Year Ending	(In thousands)
October 3, 2020	$	7,087
October 2, 2021	9,552
October 1, 2022	9,638
September 30, 2023	8,125
September 28, 2024	7,739
Thereafter	41,079
Total future lease commitments	83,220
Less imputed interest	(20,760		)
Present value of lease liabilities	$	62,460



	2020
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	363,500	$18.46	4.8 Years
Options:
Granted	—
Exercised	—
Canceled or expired	—
Outstanding and expected to vest, end of period	363,500	$19.25	4.5 Years	$	1,090,000
Exercisable, end of period	341,000	$19.21	4.1 Years	$	1,043,000

Shares available for future grant	441,000


1.	BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES


2.	VARIABLE INTEREST ENTITIES


3.	RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS


4.	RECENT RESTAURANT DISPOSITIONS



	13 Weeks Ended
	December 28,	December 29,
	2019	2018
Basic	3,499	3,474
Effect of dilutive securities:
Stock options	42	—
Diluted	3,541	3,474



	13 Weeks Ended				Variance
	December 28, 2019		December 29, 2018		$			%
	(in thousands)
REVENUES:
Food and beverage sales	$	42,829	$	39,838	$	2,991		7.5	%
Other revenue	685		710		(25		)	-3.5	%
Total revenues	43,514		40,548		2,966			7.3	%
COSTS AND EXPENSES:
Food and beverage cost of sales	10,940		10,476		464			4.4	%
Payroll expenses	15,122		14,105		1,017			7.2	%
Occupancy expenses	5,439		5,005		434			8.7	%
Other operating costs and expenses	5,328		4,975		353			7.1	%
General and administrative expenses	3,054		3,409		(355		)	-10.4	%
Depreciation and amortization	1,195		1,206		(11		)	-0.9	%
Total costs and expenses	41,078		39,176		1,902			4.9	%
RESTAURANT OPERATING INCOME	$	2,436	$	1,372	$	1,064		77.6	%



	13 Weeks Ended December 28, 2019		% to Total Revenues		13 Weeks Ended December 29, 2018		% to Total Revenues		Increase (Decrease)
	13 Weeks Ended December 28, 2019		% to Total Revenues		13 Weeks Ended December 29, 2018		% to Total Revenues		$			%
Food and beverage cost of sales	$	10,940	25.1	%	$	10,476	25.8	%	$	464		4.4	%
Payroll expenses	15,122		34.8	%	14,105		34.8	%	1,017			7.2	%
Occupancy expenses	5,439		12.5	%	5,005		12.3	%	434			8.7	%
Other operating costs and expenses	5,328		12.2	%	4,975		12.3	%	353			7.1	%
General and administrative expenses	3,054		7.0	%	3,409		8.4	%	(355		)	-10.4	%
Depreciation and amortization	1,195		2.7	%	1,206		3.0	%	(11		)	-0.9	%
Total costs and expenses	$	41,078			$	39,176			$	1,902



Date:	February 11, 2020

	ARK RESTAURANTS CORP.

By:	/s/ Michael Weinstein
	Michael Weinstein
	Chairman & Chief Executive Officer
	(Principal Executive Officer)

By:	/s/ Anthony J. Sirica
	Anthony J. Sirica
	Chief Financial Officer
	(Authorized Signatory and Principal
	Financial and Accounting Officer)


1.	I have reviewed this quarterly report on Form 10-Q of Ark Restaurants Corp.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



/s/ Michael Weinstein

Michael Weinstein
Chairman and Chief Executive Officer
(Principal Executive Officer)


(i)	this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)); and


(ii)	the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.