LUCK 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information contained in this Annual Report on Form 10-K, including the matters addressed under the heading “Forward-Looking Statements,” you should carefully consider the following risk factors in this Annual Report on Form 10-K before investing in our securities. The risk factors described below disclose bothmaterial materialrisks to the Company and are not intended to be exhaustive and are not the only risks facing us. Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and cash flows in future periods or are not identified because they are generally common to businesses.

Visiting our locations is a discretionary purchase for consumers; therefore, our business is susceptible to economic slowdowns and recessions. We are dependent in particular upon discretionary spending by consumers living in the communities in which our locations are located. A significant weakening in the local economies of these geographic areas, or any of the areas in which our locations are located, may cause consumers to curtail discretionary spending, which in turn could reduce our locations’ sales and have an adverse effect on our business and our results of operations. Consumer discretionary spending may be adversely affected by a range of macroeconomic and geopolitical conditions that are beyond our control, including inflation, elevated interest rates, changes in fuel and transportation costs, unemployment, volatility in financial and credit markets, new or increased tariffs and trade barriers, changes in U.S. and foreign government and central bank monetary and fiscal policies, wars and other armed conflicts or geopolitical instability in certain regions, and pandemics or other public health concerns. When these conditions negatively affect consumer confidence or discretionary spending, guest traffic at our locations may decline and the average amount our guests spend may be reduced, which could adversely affect our results of operations and could also result in reduced staffing levels, asset impairment charges and potential location closures. Our locations are sometimes located near high density retail areas such as regional malls, lifestyle locations, big box shopping locations and entertainment locations. We depend on a high volume of visitors at these locations to attract guests to our locations. As demographic and economic patterns change, current locations may or may not continue to be attractive or profitable.

•making it more difficult for us to satisfy our obligations with respect to our debt, and any failure to comply with the obligations under our debt instruments, including restrictive covenants, could result in an event of default under the agreements governing our indebtedness increasing our vulnerability to general economic and industry conditions;

We rely heavily on various information technology systems, including point-of-sale, kiosk and amusement operations systems in our locations, data centers that process transactions, communication systems and various other software applications used throughout our operations. While some of these systems have been internally developed ordeveloped, we rely on third-party providers and platforms for some of our information technology systems and support. Although we have operational safeguards in place, those technology systems and solutions could become vulnerable to damage, disability, or failures due to theft, fire, power outages, telecommunications failure or other catastrophic events. Any failure of these systems could significantly impact our operations and could make our content unavailable or degraded. These service disruptions could be prolonged. Our reliance on systems operated by third parties also presents the risks faced by the third party’s business, including the operational, cybersecurity, and credit risks of those parties. If those systems were to fail or otherwise be unavailable, and we were unable to timely recover, we could experience an interruption in our operations. Our business interruption insurance may not cover us in the event these types of business interruptions occur.

Our profitability depends in part on our ability to anticipate and react to changes in commodity and other product costs. Various factors beyond our control, including adverse weather conditions, tariffs (new or increased), governmental regulation and monetary policy, product availability, recalls of food products, disruption of our supplier manufacturing and distribution processes due to public health crises or pandemics, and seasonality, may affect our commodity costs or cause a disruption in our supply chain. In an effort to mitigate some of this risk, we have multiple short-term supply contracts with a limited number of suppliers. If any of these suppliers do not perform adequately or otherwise fail to distribute products or supplies to our locations, we may be unable to replace the suppliers in a short period of time on acceptable terms, which could increase our costs, cause shortages of food and other items at our locations and cause us to remove certain items from our menu. Changes in the price or availability of commodities for which we do not have short-term supply contracts could have a material adverse effect on our profitability. In addition, a significant portion of the redemption prizes, amusement games and other merchandise and equipment used in our locations is manufactured or sourced, directly or indirectly, outside the United States. As a result, new or increased tariffs, trade restrictions, retaliatory trade measures and other changes in trade policy, as well as foreign currency fluctuations and geopolitical instability affecting our suppliers or their supply chains, could increase our costs, disrupt the availability or timely delivery of these products, and adversely affect our operating results. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with other suppliers. Other than short-term supply contracts for certain food items and certain utilities contracts, we currently do not engage in futures contracts or other financial risk management strategies with respect to potential price fluctuations in the cost of food and other supplies. Also, the unplanned loss of a major distributor could adversely affect our business by disrupting our operations as we seek out and negotiate a new distribution contract. If we have to pay higher prices for food or other product costs, our operating costs may increase, and, if we are unable to adjust our purchasing practices or pass any cost increases on to our guests, our operating results could be adversely affected.

We believe it is becoming increasingly likely that the United States federal government will significantly increase the federal minimum wage and tip credit wage (or eliminate the tip credit wage) and require significantly more mandated benefits than what is currently required under federal law. Should this happen, other jurisdictions that have historically mandated higher wages and greater benefits than what is required under federal law may seek to further increase wages and mandated benefits. In addition to increasing the overall wages paid to our minimum wage and tip credit wage earners, these increases create pressure to increase wages and other benefits paid to other associates who, in recognition of their tenure, performance, job responsibilities and other similar considerations, historically received a rate of pay exceeding the applicable minimum wage or minimum tip credit wage. Because we employ a large workforce, any wage increase and/or expansion of benefits mandates could have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction, and services in order to offset their increasing labor costs. We may not be able to partially or fully offset cost increases resulting from changes in minimum wage rates by increasing bowling, menu or game prices, improving productivity, or through other adjustments, and our business, results of operations and financial condition could be adversely affected. Moreover, although only a fewsome of our employees have been or are now represented by any unions, labor organizations may seek to represent an increasing number of our employees in the future, and if they are successful, our payroll expenses and other labor costs may be increased in the course of collective bargaining, and/or there may be strikes or other work disruptions that may adversely affect our business.

Moreover, the final determination of any potential tax audits or related litigation could be materially different from our historical tax provisions and accruals. The Company currently has open audits in Mexico and in several state and local jurisdictions. Changes in our tax expense or an increase in our tax liabilities, whether due to changes in applicable laws and regulation, the interpretation or application thereof, or a final determination of tax audits or litigation, could materially adversely affect our financial performance.

In addition, Old Bowlero’s net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service (“IRS”), and state tax authorities including the treatment of the Combination as a reverse acquisition for income tax purposes. Under Sections 382 and 383 of the Code, Lucky Strike Entertainment’s federal net operating loss carryforwards and other tax attributes may become subject to an annual limitation in the event of certain cumulative changes in the ownership of Lucky Strike Entertainment’s stock. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Our ability to utilize certain net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the Business Combination or other transactions. Similar rules may apply under state tax laws. It is currently estimated that $23,057 of the Company’s NOLs are subject to limitation due to the changes in ownership that occurred in 2004 and 2017. The Company expensed $208,697 in the prior fiscal year of tax losses that will expire unused due to the limitation caused by the 2004 ownership change. The Company has concluded it has not experienced an ownership change, as defined under Section 382 and 383, since July 2017.

We have no direct operations and no significant assets other than our ownership of our operating subsidiaries. We depend on our operating subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company and tothe paypayment of any dividends with respect to our common stock and preferred stock. The financial condition and operating requirements of our operating subsidiaries may limit our ability to obtain cash from such subsidiaries. The earnings from, or other available assets of, Lucky Strike Entertainment may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations.

As of August 21,20, 2025,2026, A-B Parent LLC (“Atairos”) and Mr. Shannon, our Chairman, Founder and Chief Executive Officer, collectively beneficially own approximately 95%98% of the outstanding shares of Lucky Strike Entertainment’s common stock (which includes both Class A common stock and Class B common stock) on an as-converted basis. Neither Atairos nor Mr. Shannon areis subject to any lock-ups and areneither notis restricted from selling shares of Lucky Strike Entertainment’s common stock held by them, other than by applicable securities laws. We have also registered shares held by the Atairos and Mr. Shannon for sale under various registration statements and such registration statements remain available for use. As such, sales of a substantial number of shares of Lucky Strike Entertainment’s common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of Class A common stock.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Sarbanes-Oxley Act. The Exchange Act requires the filing of annual, quarterly and current reports with respect to a public company’s business and financial condition. The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective internal control over financial reporting. Additionally, once we are no longer an emerging growth company, we will be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. As a result, we have and will continue to incur significant legal, accounting and other expenses due to implementation and maintenance of internal controls over financial reporting as a public company and to remediate any significant deficiencies and material weaknesses in internal controls over financial reporting. Our management team and many of our other employees have devoted and will continue to need to devote substantial time to compliance.

Shares of Class B common stock have 10 votes per share, while shares of Class A common stock have one vote per share. Mr. Shannon holds all of the issued and outstanding shares of Class B common stock. Accordingly, Mr. Shannon, directly or indirectly, holds over 85% of the voting power of our capital stock and is able to control matters submitted to our stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions, despite holding only approximately 43%45% of the total shares of Lucky Strike Entertainment’s common stock. So long as at least approximately 16% of the outstanding of shares of our Class B common stock remain outstanding, the holders of Class B common stock will be able to control the outcome of matters submitted to a stockholder vote requiring a majority vote.

Lucky Strike Entertainment Corporation is one of the world’s premier operators of location-based entertainment. The Company operates traditional bowling locations andunder its AMF brand, as well as more upscale entertainment conceptsvenues withunder its Lucky Strike and Bowlero brands, featuring lounge seating, arcades, enhanced food and beverage offerings, and more robustelevated customer service for both individuals and group events,events. asThe wellCompany asalso hostinghosts and overseeingoversees professional and non-professional bowling tournaments and related broadcasting.broadcasting Theactivities. In addition, the Company also operates other forms of location-based entertainment, suchincluding asfamily FEC’sentertainment centers (“FECs”) and water parks, whichunder includebrands including Octane Raceway, Raging Waves water park,Waves, Shipwreck Island water park,Island, Big Kahuna’sKahuna’s, waterWet park‘n Wild Emerald Pointe, Raging Waters Los Angeles, Castle Park, and Boomers Parks.

The Company remains focused on creating long-term shareholder value through continued organic growth, the conversion and upgrading of existing locations to more upscale entertainment conceptsexperiences offering a broader range of offerings, the opening of new locations and strategic acquisitions. The Company also routinely evaluates the performance of its location portfolio and may rationalize locations that no longer align with its long-term strategic and financial objectives.

•WeNew Location Opening: The Company completed construction of and opened foura newly-builtnewly built Lucky Strike locationsentertainment location in primeSouthern markets.California.

Revenues: For fiscal 2025,2026, revenues totaled $1,201,333$1,245,318 and represented an increase of $46,719$43,985 or 4% over the prior fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations, whichwith was partially offset by a decline insame-store revenues onessentially aflat same-store basis.year-over-year.

Same-store revenues includesinclude revenues from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues. TheManagement decreasebelieves the flatness in same-store revenues reflects the cumulative impact of the adverse weather conditions experienced during the third quarter of fiscal 20252026 and consumer confidence headwinds experienced throughout the second half of fiscal 2026. Partially offsetting these headwinds was primarily attributable to a reduction in retail or walk-in andbowling corporateentertainment eventrevenue businessat relativesame-store tolocations fiscalthat yearremained 2024.strong during the year, contributing approximately $8,800 of incremental same-store revenues, as well as strong league bowling revenue of $4,100. This strength was partially offset by acombined strongdeclines consumerin responsesame-store toalcoholic springbeverage offeringsrevenues and ouramusement summerand seasonother passrevenues, duringresulting in overall same-store revenue stability for the fourth quarter.year.

Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 22%. Location food & beverage costs increased $3,801,$2,004, or 4%.2%. The increase in location food & beverage costs is mainly attributable to increased food & beverage revenue as compared to the prior fiscal 2024.year.

Change in fair value of earnouts: The impact on the statement of operations during fiscal 20252026 is due to the decrease in the fair value of the earnouts, whichdriven mainly reflectsby the decrease in the Company’s stock price inand fiscalthe 2025.limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.

Income Taxes: Income tax expense (benefit) expense and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. The currentCompany yearrecognized an income tax expensebenefit at an effective rate of 9% compared to the 21% federal statutory rate. The benefit was mainlyattributed drivento our net loss, business combinations, and federal income tax credits, which was partially offset by thea $13,665 increase ofin $65,104 forthe valuation allowance dueon to unrealizablethe Section 163(j) interest limitation offcarryforward, setalong by benefits forwith state and local income taxtaxes expenses,and disallowedSection expenses associated with the earnout expense, S162162(m) limitationscompensation andlimitations. otherFavorable items.impacts due to the One Big Beautiful Bill Act (“OBBBA”) limited the impact to the valuation allowance for the Section 163(j) interest limitation carryforward as compared to the prior year valuation allowance increase of $65,104.

The amount of income taxes the Company pays is subject to audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of our tax positions and accrues estimated amounts for applicable tax positions. Based on these reviews, the results of discussions and resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, liabilities for applicable tax positions are adjusted as necessary. The Company currently has open income tax audits in Mexico and in one state.

Adjusted EBITDA is a non-GAAP financial measure that is not in accordance with, or an alternative to, measures prepared in accordance with GAAP. The Company believes certain financial measures which meet the definition of non-GAAP financial measures provide important supplemental information. The Company considers Adjusted EBITDA as an important financial measure because it provides a financial measure of the quality of the Company’s earnings. Other companies may calculate Adjusted EBITDA differently than we do, which might limit its usefulness as a comparative measure. Adjusted EBITDA is used by management in addition to and in conjunction with the results presented in accordance with GAAP. We have presented Adjusted EBITDA solely as a supplemental disclosure because we believe it allows for a more complete analysis of results of operations and assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance, such as Interest, Income Taxes, Depreciation and Amortization, Impairment Charges, Share-based Compensation, EBITDA from Closed Locations, Foreign Currency Exchange Loss (Gain), Asset Disposition Loss (Gain), Transactional and other advisory costs, System modernization costs, Change in the value of earnouts, and Other. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and trailing twelve month Adjusted EBITDA do not reflect:

Adjusted EBITDA represents Net loss before Interest, Income Taxes, Depreciation and Amortization, Impairment Charges, Share-based Compensation, EBITDA from Closed Locations, Foreign Currency Exchange Loss (Gain), Loss, Asset Disposition Loss (Gain),Loss, Transactional and other advisory costs, System modernization costs, Changes in the value of earnouts and Other. Refer to notes below for additional details concerning the respective items for Adjusted EBITDA.

(3)The adjustment for transaction costs and other advisory costs is to remove charges incurred in connection with any transaction, including mergers, acquisitions, refinancing, amendment or modification to indebtedness, dispositions and costs in connection with an initial public offering,dispositions, in each case, regardless of whether consummated. Certain prior year amounts have been reclassified to conform to current year presentation.

(45)The adjustment for changes in the value of earnouts is to remove the impact of the revaluation of the earnouts. Changes in the fair value of the earnout liability isare recognized in the statement of operations. Decreases in the liability will have a favorable impact on the statement of operations and increases in the liability will have an unfavorable impact.

(56)Other includes the following related to transactions that do not represent ongoing or frequently recurring activities as part of the Company’s operations: (i) non-routine expenses, net of recoveries for matters outside the normal course of business, (ii) costs incurred that have been expensed associated with obtaining an equity method investment in a subsidiary of VICI, (iii) severance expense, and (iviii) other individually de minimis expenses. Certain prior year amounts have been reclassified to conform to current year presentation.

On July 10, 2025, the Company entered into a Thirteenth Amendment (the “Thirteenth Amendment”) to the First Lien Credit Agreement. The Thirteenth Amendment providesprovided for a $230,000 bridgeBridge termTerm loan.Loan. The maturity date for the bridgeBridge termTerm loanLoan is the date that is 364 days after July 10, 2025. The bridgeBridge termTerm loansLoan bears interest at a rate per annum equal to the Adjusted Term SOFR plus 2.50%, which will increase by 0.50% on each of the 90th, 180th and 270th days after July 10, 2025. In connection with the Fifteenth Amendment discussed below, the Bridge Term Loan was repaid in full and no amounts are outstanding.

Operating activities provided $177,221$103,896 as compared to $154,830$177,221 during the prior fiscal year. The increasedecrease in cash provided by operating activities is due primarily reflectsto anunfavorable increasechanges in revenuesworking andcapital, leasetogether incentivewith receiptslower partiallynet offset by higher interest expense.income.

Investing activities used $220,311$453,265 as compared to $385,656$220,311 during the prior fiscal year. The decreaseincrease in cash used in investing activities mainly reflects a reduction in capital expenditures and less acquisition activity as compared to the prior year. This was partially offset by the purchase of 66previously acresleased assets offset by a decrease in purchases of landproperty adjacentand to Raging Waves water park for $9,400.equipment.

Financing activities provided $35,860$328,452 as compared to $102,157$35,860 in the prior year. The decreaseincrease in cash provided by financing activities primarily reflects the proceeds from the transactionFifteenth withAmendment VICIto inthe fiscalFirst 2024,Lien increasedCredit cash dividends,Agreement and the settlementissuance of equitySenior awardsSecured during fiscal 2025.Notes. This was partially offset by less share buyback activity as compared to the same periodrepayment of theoutstanding prior yeardebt and the impactpayment of thedeferred $150,000financing incremental term loan.costs.

Our results of operations and financial condition as reflected in the consolidated financial statements included in this Annual Report on Form 10-K have been prepared in accordance with U.S. generally accepted accounting principles. Preparation of financial statements requires management to make estimates, judgements,judgments, and assumptions affecting the reported amounts of assets, liabilities, revenues, expenses and the disclosures of contingent assets and liabilities. We base these estimates and judgments on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual results, however, may differ from the estimated amounts we have recorded. We regularly evaluate these estimates, judgementsjudgments and assumptions.

We assessed macroeconomic conditions, industry and market considerations, cost factors that could have a negative impact, overall financial performance including actual results and trends, and other relevant entity-specific events. For fiscal 2025,2026, the Company performed a quantitative impairment test of the Indoor Entertainment reporting unit and a qualitative impairment assessment of goodwillthe Outdoor Entertainment reporting unit, and concluded that it was not more likely than not that the fair value of theeither reporting unitsunit was less than its carrying values.amount. There were no other impairment charges for goodwill or indefinite-lived intangible assets, recorded in fiscal yearsyear 2025.2026.

There have been no material changes to our risk factors contained in Part I. Item IA.1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended June 29, 2025.

This discussion should be read in conjunction with Lucky StrikesStrike Entertainment’s unaudited condensed consolidated financial statements and the related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025 as filed with the Securities and Exchange Commission (“SEC”) on August 28, 2025. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 29, 2025. Actual results may differ materially from those contained in any forward-looking statements. All period references are to our fiscal periods unless otherwise indicated. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” the “Company,” “Lucky Strike Entertainment,” and “Lucky Strike” are intended to mean the business and operations of Lucky Strike Entertainment Corporation and its consolidated subsidiaries. All financial information in this section is presented in thousands, unless otherwise noted, except share and per share amounts.

Lucky Strike Entertainment is one of the world’s premier operators of location-based entertainment. The Company operates traditional bowling locations under its AMF and Bowl America brands, as well as more upscale entertainment conceptsvenues withunder its Lucky Strike and Bowlero brands, featuring lounge seating, arcades, enhanced food and beverage offerings, and more robustelevated customer service for both individuals and group events,events. asThe wellCompany asalso hostinghosts and overseeingoversees professional and non-professional bowling tournaments and related broadcasting.broadcasting Theactivities. In addition, the Company also operates other forms of location-based entertainment, such asincluding family entertainment centers (FEC’s“FECs”) and water parks.parks, Our other entertainmentunder brands includeincluding Octane Raceway, Raging Waves water park,Waves, Shipwreck Island water park,Island, Big Kahuna’s water park,Kahuna’s, Wet ‘n Wild Emerald PointePointe, waterRaging park,Waters Los Angeles, Castle ParkPark, and Boomers Parks.

The Company remains focused on creating long-term shareholder value through continued organic growth, the conversion and upgrading of existing locations to more upscale entertainment conceptsexperiences offering a broader range of offerings, the opening of new locations and strategic acquisitions.

Lucky Strike’s results forDuring the sixnine months ended DecemberMarch 28,29, 20252026, exhibitedLucky theStrike expectedEntertainment continued to execute on its long-term growth strategy, delivering total revenue growth of 5% and further expansionexpanding of ourits three core verticals: bowling, water parks, and high-qualityFECs. FEC’s.The Tofollowing highlightsummarizes the Company’s recentsignificant activitydevelopments during the six months ended December 28, 2025period:

•WeProperty Acquisition from Carlyle: The Company acquired 58 existing properties that were previously undersubject to a master lease agreement with Carlyle for aggregate consideration of $306,000. SpanningThe acquired portfolio spans 16 states,states the 58 property portfolioand includes prime locations in California, Illinois, Georgia, Arizona, and Colorado. This transaction represents a major step forward in the Company’s long-term growth strategy by reducingreduced annual rent obligations asby a result of removingeliminating the associated lease liabilitiesliabilities, andwhile unlockingproviding powerfulmeaningful financial and operational flexibility.flexibility in support of the Company's long-term growth strategy.

•WeWater Park and FEC Acquisitions: The Company completed the acquisitionacquisitions of Wet ‘n Wild Emerald Pointe water park, Raging Waters Los Angeles water park, Castle Park, and two additional Boomers Parks locations.locations, further expanding the Company’s water park and FEC portfolio.

•WeNew Location Opening: The Company completed construction of and opened a newly built Lucky Strike entertainment location in Southern California.California during the period.

•WeLucky Strike Rebrand Initiative: The Company continued to make meaningful progress on the Lucky Strike rebrand initiative with an additional 4866 locations converted. As of DecemberMarch 28,29, 2025,2026, we had 93110 Lucky Strike locations.

•WeDebt Refinancing: The Company refinanced ourits existing term loan forwith a new $1,200,000 Termterm Loan,loan, issued $500,000 aggregate principal amount of 7.25% Senior Secured Notes, and increased ourits Revolverrevolving credit facility commitment to $425,000. Management believes this refinancing strengthens the Company's balance sheet and provides enhanced financial flexibility to support ongoing growth initiatives.

There are a number of factors that could materially affect our future profitability, including changing economic conditions with the resulting impact on our sales, profitability, and capital spending, changes in our debt levels and applicable interest rates, and increasing prices of labor and inventory, which includes food and beverage costs. For example, the Company continues to monitor the impacts of various macroeconomic trends, such as inflationary pressure, changes in monetary policy, decreasing consumer confidence and spending, and the introduction of or changes in tariffs. The Company also monitors geopolitical developments, including the ongoing conflict involving Iran and related regional instability, which have contributed to volatility in global energy markets, supply chain disruptions, and broader macroeconomic uncertainty. Such changes in macroeconomic conditions may lead to increased costs for the business. Furthermore, these macroeconomic and geopolitical trends could adversely affect the Company’s customers, which could impact their willingness to visit the Company’s locations, which could harm the financial results. Additionally, sales and results of operations could be impacted by acquisitions and restructuring projects. Restructuring can include various projects, including closure of locations not performing well, cost reductions through staffing reductions, and optimizing and allocating resources to improve profitability.

Our operating results fluctuate seasonally. For our bowling locations, we typically generate our highest sales volumes during the third quarter of each fiscal year due to the timing of leagues, holidays and changing weather conditions. For our FEC and water park locations, we typically generate our highest sales volumes during the fourth and first quarters of our fiscal yearsyear due to more favorable weather conditions and the timing of operating seasons. School operating schedules, holidays and weather conditions may also affect our sales volumes in some operating regions differently than others. Because of the seasonalityseasonal nature of our business, results for any quarter are not necessarily indicative of the results that may be achieved for ourthe full fiscal year.

Three Months Ended DecemberMarch 28,29, 20252026 Compared to the Three Months Ended DecemberMarch 29,30, 20242025

Revenues: For the quarter ended DecemberMarch 28,29, 2025,2026, revenues totaled $306,861$342,231 and represented an increase of $6,787,$2,349, or 2%,1%, over the same period of last fiscal year. The increase is primarily attributable to newly acquired or opened locations.

The following table summarizes our revenues on a same-store-basis for the quarter ended DecemberMarch 28,29, 20252026 as compared to the corresponding period last fiscal year:

(1) Revenues from 356360 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed Form 10-Q for the three months ended DecemberMarch 29,30, 2024,2025, revenues from 347348 locations were included in the same-store revenue.

Same-store revenues includes revenue from locations that are open in periods presented (open in both the current period and the prior period being reported) and excludes revenues from locations that are not open in periods presented such as acquired new locations or locations closed for upgrades, renovations or other such reasons, as well as media revenues and service fee revenues. Same-store revenues was up slightly during the quarter ended December 28, 2025 relative to the same period of last fiscal year. The walk-in business for same-store bowling entertainment locations remained strong during the quarter, contributing approximately $2,800 of comparable store revenue, which was offset by decreases in our offline events business.

Location operating costs as a percent of revenues increased from 28%27% to 32%.29% during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The increase as a percentpercentage of revenues is attributedprimarily attributable to location operating costs related to ourthe FEC and water park locations,locations within our portfolio, which typically generate their highest sales volumes during the fourth and first quarters of our fiscal yearsyear due to more favorable weather conditions and the timing of their operating seasons. Therefore,As a result, location operating costs for these locations willtend typicallyto increase at a higher rate than revenues during the second and third quarters of our fiscal years.year, consistent with the seasonal pattern observed in the current period.

Location payroll and benefit costs: Location payroll and benefit costs consist of employee costs that directly support location operations. Location payroll and benefit costs increased $7,006,$5,178, or 10%,7%, mainlyduring the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The increase is primarily driven by the impact of location count growth, additional bonus incentives, and an overall increase in labor hours per location. ForWater instance, water parkspark and FEC’sFEC contributedlocations had a significant impact, contributing approximately $1,500$2,400 to the increase over the comparable period. The remaining increase reflects higher labor hours and bonus incentive costs across existing same-store locations during the period.

Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 21%.23%. Location food & beverage costs increaseddecreased $730,$801, or 3%. The increasedecrease in location food & beverage costs is mainly attributable to increaseddecreased food & beverage revenue as compared to the secondsame quarterperiod of the prior fiscal 2025.year.

Depreciation and amortization: Depreciation and amortization decreased $8,696$8,180 or 22%.20%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The decrease in depreciation and amortization primarily reflects the impact of a change in the estimated useful lives of certain fixed assets, which benefitedresulted fromin a decreasereduction in depreciation expense of $8,341.approximately $8,157 during the quarter.

Interest expense, net: Interest expense primarily relates to interest on debt, finance leases, and financing obligations. Interest expense increased $1,321,$1,326, or 3%.3%, during the quarter ended March 29, 2026 compared to the same period of the prior fiscal year. The higher interest expenseincrease is primarily attributable to increases inhigher debt sincelevels relative to the secondthird quarter of fiscal 2025.2025, Specifically,driven by two principal factors: (i) the issuance of the 7.25% Senior Secured Notes (the “"Notes”"), which were issued late in the first quarter of fiscal 2026.2026, and (ii) amounts outstanding on the Revolver during the quarter, where no such amounts were outstanding during the comparable prior year period. Interest on the Notes is payable semi-annually in arrears on April 15 and October 15 of each yearyear. andAs of March 29, 2026, we havehad approximately $9,900$19,000 of accrued interest accrued related to the NotesNotes, of which approximately $9,200 was accrued during the third quarter of fiscal 2026. Interest expense on the Revolver increased approximately $1,000 as compared to the third quarter of December 28,fiscal 2025. TheThese increases in interest expense were partially offset by a $4,996$4,806 decrease in interest expense forrelated to finance leases dueand a $4,300 decrease in interest expense related to term loan debt. The decrease in finance lease interest expense reflects the purchase of certain previously leased assets.assets during the first quarter of fiscal 2026. The decrease in term loan debt interest expense reflects both lower outstanding principal balances and more favorable interest rates achieved in connection with the refinancing completed in the first quarter of fiscal 2026.

Change in fair value of earnouts: The impact on the statement of operations during the quarter ended DecemberMarch 28,29, 20252026 is due to the decrease in the fair value of the earnouts. The decrease in the fair value of the earnouts is primarily driven by the decrease in the Company’s stock price and the limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.

Income tax expense (benefit): The income tax expense (benefit) and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. During the quartercurrent ended December 28, 2025,year, the Company determined that its estimated AETR was not possible to reliably estimate due to the timing of results and the existence of a valuation allowance against interest limitation due to IRC Section 163(j). As a result, the Company utilized the discrete method. The effective tax rate of 504%26% for the quarter ended DecemberMarch 28,29, 20252026 was primarily attributed to the change in fair value of the earnout liability, unrealizable Section 163(j) interest limitation, and permanent differences.

SixNine Months Ended DecemberMarch 28,29, 20252026 Compared to the SixNine Months Ended DecemberMarch 29,30, 20242025

Revenues: For the sixnine months ended DecemberMarch 28,29, 2025,2026, revenues totaled $599,139$941,370 and represented an increase of $38,870,$41,219, or 7%,5%, over the same period of last fiscal year. The increase in revenues is primarily attributable to revenue from newly acquired or leased locations.

The following table summarizes our revenues on a same-store-basis for sixnine months ended DecemberMarch 28,29, 20252026 as compared to the corresponding period last fiscal year:

(1) Revenues from 351350 locations are included in the same-store comparable location base for the comparison in the above table. In our previously filed 10-Q for the sixnine months ended DecemberMarch 29,30, 2024,2025, revenues from 327 locations were included in the same-store revenue.

Same-store revenues remained relatively flat during sixthe nine months ended DecemberMarch 28,29, 20252026 relativecompared to the same period of lastthe prior fiscal year.year, Theconsistent with the relative flatness observed through the first half of fiscal 2026. Management believes the continued flatness in same-store revenues reflects the cumulative impact of the adverse weather conditions and consumer confidence headwinds experienced during the third quarter of fiscal 2026, as described above. Partially offsetting these headwinds, walk-in business for same-store bowling entertainment revenue at same-store locations remained strong during the third quarter, contributing approximately $5,200$7,800 of comparableincremental storesame-store revenue,revenues. whichThis strength in walk-in business was partially offset by decreasesdeclines in our offline events business.business during the period.

LocationWater operating costs: Location operating costs increased $28,571, or 17%. Increases in costs were in most areaspark and includeFEC amusement costs, marketing, rent, property taxes, insurance, and utilities. The increase in costs was mainly attributable to location count growth and other initiatives. For instance, water parks and FEC’slocations contributed approximately $10,400$13,600 to the increase over the comparable period, and new bowling locations contributed approximately $4,800$7,500. toIn the increase over the comparable period. Additionally,addition, marketing expense increased approximately $6,600$9,500 compared to the previousprior year,year whichperiod, isreflecting driven by ourmanagement's initiative to move ouralign marketing budgetspend closermore toclosely with industry benchmarks. WeManagement believebelieves the increased marketing spendinvestment has assistedcontributed to growth in driving higher retail entertainment revenue.revenue during the period.

Location payroll and benefit costs: Location payroll and benefit costs increased $14,814,$19,992, or 11%,9%, mainlyduring the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The increase is primarily driven by the impact of location count growth, additional bonus incentives, and an overall increase in labor hours per location. ForWater instance, water parkspark and FEC’sFEC contributedlocations had a significant impact, contributing approximately $7,700$10,100 to the increase over the comparable period. The remaining increase reflects higher labor hours and bonus incentive costs across existing same-store locations during the period.

Location food & beverage costs: Location food & beverage costs as a percentage of food & beverage revenue remained flat at 22%. Location food & beverage costs increased $2,135,$1,334, or 5%.2%. The increase in location food & beverage costs is mainly attributable to increased food & beverage revenue as compared to the comparablesame period of the prior fiscal 2025.year.

Selling, general and administrative expenses (“SG&A”): SG&A expenses increaseddecreased $5,222$454 or 8%.less than 1% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The increasedecrease is mainlyprimarily attributable to SG&Aa labor,decline whichin increasedshare-based compensation expense of approximately $5,200.$8,600, Thedriven by a non-recurring settlement of equity awards in the prior year period related to the retirement of a long-tenured executive of the Company. Partially offsetting this decrease, SG&A labor increaseincreased isapproximately driven$7,200, byreflecting strategic investments in our marketing, water parkpark, and FEC teams. InThe conjunctionincrease in marketing headcount is directly aligned with our initiative to increase our overall marketing budget, weas aremanagement alsobelieves investinga inlarger ourand more capable marketing team inis ordernecessary to effectively deploy the increasedexpanded budget.investment. The water park and FEC teams areconsist primarily yearof round-staffyear-round thatstaff who support peak seasonal operations during the peaksummer Summer periods.months.

Interest expense, net: Interest expense increased $6,048,$7,374, or 6%.5% for the nine months ended March 29, 2026 compared to the same period of the prior fiscal year. The higher interest expense is primarily attributable to increases in debt since the secondthird quarter of fiscal 2025. Specifically, the Notes, which were issued late in the first quarter of fiscal 2026. We have approximately $9,900$19,000 of interest accrued related to the Notes as of DecemberMarch 28,29, 2025.2026. In addition to the impact of the Notes, the increase is attributable to the amortization of approximately $3,300 of deferred financing costs associated with the Bridge Term Loan during the first quarter of fiscal 2026. The increases in interest expense were partially offset by a $9,439$14,245 decrease in interest expense for finance leases due to the purchase of previously leased assets.

Change in fair value of earnouts: The impact on the statement of operations during sixnine months ended DecemberMarch 28,29, 20252026 is due to the decrease in the fair value of the earnouts. The decrease in the fair value of the earnouts is primarily driven by the decrease in the Company’s stock price and the limited remaining vesting period associated with the earnouts, which reduce the estimated probability of vesting.

Income tax expense (benefit): Income tax expense (benefit) and deferred tax assets and liabilities reflect management’s assessment of the Company’s tax position. During the sixnine months ended DecemberMarch 28,29, 2025,2026, the Company determined that its estimated AETR was not possible to reliably estimate due to the timing of results and the existence of a valuation allowance against interest limitation due to IRC Section 163(j). As a result, the Company utilized the discrete method. The effective tax rate of (131,099)% for sixnine months ended DecemberMarch 28,29, 20252026 was primarily attributed to state taxes incurred relating to the repurchase of the 58 properties under the Carlyle master lease agreement, the change in fair value of the earnout liability, permanent differences, and other discrete tax items.

The following table provides a reconciliation from net income (loss) income to Adjusted EBITDA for each reporting period:

At DecemberMarch 28,29, 2025,2026, we had approximately $95,912$58,654 of available cash and cash equivalents.

SixNine Months Ended DecemberMarch 28,29, 20252026 Compared to the SixNine Months Ended DecemberMarch 29,30, 20242025

The following compares the primary categories of the condensed consolidated statements of cash flows for the periods ended DecemberMarch 28,29, 20252026 and DecemberMarch 29,30, 20242025:

Our critical accounting estimates are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended June 29, 2025 under “Critical Accounting Estimates.” There have been no significant changes in our critical accounting estimates during the quarter ended DecemberMarch 28,29, 2025.2026.