What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-02-04 · 243 added, 320 removed, 376 unchanged (60% of the section changed)

4 unchanged sentences

CONSOLIDATED BALANCE SHEETS

December 26, 2021 and March 28, 2021

June 26, 2022 and March 27, 2022

(in thousands, except share and per share amounts)

December 26, 2021

June 26, 2022

March 27, 2022

(Unaudited)  

ASSETS  

CURRENT ASSETS

Cash and cash equivalents (Note F)

Cash and cash equivalents (Note E)

$ 47,668  

$ 50,063  

Accounts and other receivables, net (Note H)

Accounts and other receivables, net (Note G)

20,851  

13,374  

Prepaid expenses and other current assets (Note I)

Prepaid expenses and other current assets (Note H)

Total current assets

2 unchanged sentences

Property and equipment, net of accumulated depreciation of $ 10,489 and $ 10,344 , respectively

Operating lease assets (Note R)

Intangible asset, net

Operating lease assets (Note Q)

Intangible asset, net (Note I)

Deferred income taxes

3 unchanged sentences

CURRENT LIABILITIES

Current maturities of long-term debt (Note Q)

$ 40,000  

Accounts payable

Accrued expenses and other current liabilities (Note L)

Current portion of operating lease liabilities (Note R)

$ 8,217  

$ 6,381  

Accrued expenses and other current liabilities (Note K)

Current portion of operating lease liabilities (Note Q)

Deferred franchise fees

2 unchanged sentences

16,412  

Long-term debt, net of unamortized debt issuance costs of $ 2,651 and $ 3,169 , respectively (Note Q)

Long-term debt, net of unamortized debt issuance costs of $ 1,690 and $ 1,817 , respectively (Note P)

108,310  

108,183  

Operating lease liabilities (Note R)

Other liabilities (Note L)

Operating lease liabilities (Note Q)

Other liabilities

Deferred franchise fees

6 unchanged sentences

30,000,000 shares authorized;

9,369,235 and 9,369,015 shares issued;

and 4,115,154 and 4,114,934 shares outstanding at December 26, 2021 and March 28, 2021, respectively

9,369,235 shares issued;

and 4,094,784 and 4,115,154 shares outstanding at June 26, 2022 and March 27, 2022, respectively

Additional paid-in capital

7 unchanged sentences

29,782  

Treasury stock, at cost, 5,254,081 shares at December 26, 2021 and March 28, 2021

Treasury stock, at cost, 5,274,451 and 5,254,081 shares at June 26, 2022 and March 27, 2022, respectively

( 85,840 )  

9 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Thirteen and Thirty-nine weeks ended December 26, 2021 and December 27, 2020

Thirteen weeks ended June 26, 2022 and June 27, 2021

(in thousands, except per share amounts)

Thirteen weeks ended

Thirty-nine weeks ended

June 26, 2022

June 27, 2021

$ 26,894  

$ 19,325  

License royalties

11,314  

10,682  

Franchise fees and royalties

1 unchanged sentence

Total revenues

39,720  

31,319  

COSTS AND EXPENSES

Cost of sales

22,667  

15,365  

Restaurant operating expenses

3 unchanged sentences

Total costs and expenses

27,940  

20,617  

Income from operations

11,780  

10,702  

Interest expense

( 1,944 )  

Interest income

2 unchanged sentences

Provision for income taxes

$ 7,137  

$ 5,763  

PER SHARE INFORMATION

1 unchanged sentence

Income per share:

$ 1.74  

$ 1.40  

$ 1.74  

$ 1.40  

Dividends declared per share

4 unchanged sentences

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

Thirteen weeks ended December 26, 2021 and December 27, 2020

(in thousands, except share amounts)

Treasury Stock, at Cost

Stockholders’

Balance, September 26, 2021

Dividends on common stock

Share-based compensation

Balance, December 26, 2021

Thirteen weeks ended June 26, 2022 and June 27, 2021

(in thousands, except share and per share amounts)

Treasury Stock, at Cost

Stockholders’

Balance, September 27, 2020

Balance, March 27, 2022

9,369,235  

3 unchanged sentences

$ ( 84,770 )  

Repurchase of common stock

20,370  

( 1,070 )  

Dividends on common stock

1 unchanged sentence

Share-based compensation

Balance, December 27, 2020

Balance, June 26, 2022

9,369,235  

3 unchanged sentences

$ ( 85,840 )  

The accompanying notes are an integral part of these consolidated financial statements.

Nathan ’

s Famous, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

Thirty-nine weeks ended December 26, 2021 and December 27, 2020

(in thousands, except share amounts)

Treasury Stock, at Cost

6 unchanged sentences

$ ( 84,770 )  

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Dividends on common stock

1 unchanged sentence

Share-based compensation

11,438  

Balance, December 26, 2021

Balance, June 27, 2021

9,369,015  

3 unchanged sentences

$ ( 84,770 )  

Treasury Stock, at Cost

Stockholders’

Balance, March 29, 2020

Shares issued in connection with share-based compensation plans

Withholding tax on net share settlement of share-based compensation plans

Repurchase of common stock

Dividends on common stock

Share-based compensation

Balance, December 27, 2020

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirty-nine weeks ended December 26, 2021 and December 27, 2020

(in thousands)

Thirteen weeks ended June 26, 2022 and June 27, 2021

(in thousands, except per share amounts)

June 26, 2022

June 27, 2021

Cash flows from operating activities:

$ 7,137  

$ 5,763  

Adjustments to reconcile net income to net cash provided by operating activities:

5 unchanged sentences

Other non-cash items

( 62 )  

Changes in operating assets and liabilities:

Accounts and other receivables, net

( 7,558 )  

( 367 )  

Prepaid expenses and other current assets

1 unchanged sentence

Deferred franchise fees

( 134 )  

Other liabilities

2 unchanged sentences

Purchase of property and equipment

( 244 )  

Net cash used in investing activities

( 244 )  

Cash flows from financing activities:

Dividends paid to stockholders

Payments of withholding tax on net share settlement of share-based compensation plans

( 1,852 )  

Repurchase of treasury stock

( 1,070 )  

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

( 2,922 )  

Net decrease in cash and cash equivalents

( 2,395 )  

Cash and cash equivalents, beginning of period

50,063  

81,064  

Cash and cash equivalents, end of period

$ 47,668  

$ 79,526  

Cash paid during the period for:

Income taxes paid

Non-cash financing activity:

$ 3,644  

$ 4,969  

Noncash financing activity:

Dividends declared per share

See Note R for information on Supplemental Cash Flow Information.

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 26, 2021

June 26, 2022

NOTE A - BASIS OF PRESENTATION

4 unchanged sentences

“us”

or “our”) as of and for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America.

or “our”) as of and for the thirteen week periods ended June 26, 2022 and June 27, 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America.

The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial condition, results of operations and cash flows for the periods presented.

1 unchanged sentence

Certain information and footnote disclosures normally included in financial statements in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the requirements of the U.S.

Securities and Exchange Commission.

Management believes that the disclosures included in the accompanying consolidated interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Nathan’s Annual Report on Form 10 -K for the fiscal year ended March 28, 2021.

Our significant interim accounting policies include the recognition of advertising fund expense in proportion to advertising fund revenue.

Securities and Exchange Commission (“SEC”).

Our significant interim accounting policies include the recognition of advertising fund expense in proportion to advertising funds revenue.

A summary of the Company’s significant accounting policies is identified in Note B of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10 -K for the fiscal year ended March 27, 2022.

Covid- 19 Pandemic

COVID- 19 Pandemic and Inflation

In March 2020, the World Health Organization declared the novel strain of coronavirus (COVID- 19 ), a global pandemic.

The COVID- 19 pandemic has had an impact on the Company’s business, financial condition, cash flows and results of operations for the thirteen and thirty-nine weeks ended December 26, 2021 ( “fiscal 2022 period”) and continues into the fourth quarter of fiscal 2022.

Governmental restrictions and public perceptions of the risks associated with COVID- 19 have caused consumers to avoid or limit nonessential travel, gatherings in public places and other social interactions, which has adversely affected, and could continue to adversely affect, our business.

The COVID- 19 pandemic has and may continue to impact customer traffic at our Company-owned restaurants and franchised restaurants, as well as sales to our Branded Product Program customers.

During the fiscal 2022 period, the number of COVID- 19 cases continued to stabilize with approved vaccines being more widely distributed and administered and, as a result, more regions continued to loosen restrictions, adhering to state and local guidelines.

Although the Company experienced higher revenues during the fiscal 2022 period as compared to the fiscal 2021 period, the COVID- 19 pandemic may have a material adverse impact on the Company’s business, results of operations and financial condition.

There continues to be uncertainty around the COVID- 19 pandemic as the Omicron variant of COVID- 19, which appears to be the most transmissible variant to date, has caused a recent increase in COVID- 19 cases globally.

We cannot predict the ultimate duration, scope and severity of the COVID- 19 pandemic or its ultimate impact on our business in the short or long-term, which may be impacted by the Delta variant, Omicron variant, and other variants that may emerge;

the efficacy of the COVID- 19 vaccines against the Delta variant, Omicron variant, and other variants that may emerge;

and the adoption rates of the COVID- 19 vaccines in the areas in which the Company operates.

The COVID- 19 pandemic has had and may continue to have a significant impact on our business and results of operations.

During fiscal 2022, we experienced pandemic related pressures, most notably within our Restaurant Operations and Branded Products Program segments.

We experienced macroeconomic impacts arising from the long-term duration of the pandemic, including rising labor costs, increasing commodity prices, higher packaging costs and fuel prices, which contributed to a decline in consumer confidence and spending.

We expect this trend to continue for the remainder of fiscal 2023.

Our average cost of hot dogs for the thirteen week period ended June 26, 2022 was approximately 21 % higher than during the thirteen week period ended June 27, 2021.

The Company’s franchisees and Branded Menu Program operators also have experienced some disruptions and challenges as a result of the pandemic including workforce absences, as well as changes in the availability and cost of labor, including higher wages and overtime costs.

There is continued uncertainty due to the COVID- 19 pandemic and supply chain disruptions and their impacts on the Company’s business.

We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.

The extent to which COVID- 19 will continue to impact the Company will depend on future developments, which cannot be predicted, including the duration and severity of the COVID- 19 pandemic, which may be impacted by new and evolving variants, the adoption rates of vaccines in the jurisdictions in which the Company operates, and further actions that may be taken to limit the public health and economic impact.

Such impacts may include non-cash asset impairments and difficulty collecting trade receivables, among other things.

NOTE B –

ADOPTION OF NEW ACCOUNTING STANDARD

In December 2019, the FASB issued ASU 2019 - 12, “

Income Taxes (Topic 740 ):

Simplifying the Accounting for Income Taxes, ”

which simplifies various aspects related to accounting for income taxes.

ASU 2019 - 12 removes certain exceptions to the general principles in Topic 740 and, also clarifies and amends existing guidance to improve consistent application.

The Company adopted this guidance on March 29, 2021.

The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

NOTE C –

NEW ACCOUNTING STANDARD NOT YET ADOPTED

5 unchanged sentences

Current guidance requires the recognition of credit losses based on an incurred loss impairment methodology that reflects losses once the losses are probable.

Under the new standard, the Company will be required to use a current expected credit loss model (“CECL”) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the financial instruments that are in the scope of this update, including trade receivables.

Under the new standard, the Company will be required to use a current expected credit loss model (“CECL”) that will immediately recognize an estimate of credit losses that are expected to occur over the life of the consolidated financial instruments that are in the scope of this update, including trade receivables.

The CECL model uses a broader range of reasonable and supportable information in the development of credit loss estimates.

3 unchanged sentences

The Company does not believe that any other recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated financial statements.

NOTE D –

The Company’s disaggregated revenues for the thirteen and thirty-nine weeks ended December 26, 2021 and December 27, 2020 are as follows (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

NOTE C –

The Company’s disaggregated revenues for the thirteen weeks ended June 26, 2022 and June 27, 2021 are as follows (in thousands):

Thirteen weeks ended  

June 26, 2022

June 27, 2021

Branded Products

1 unchanged sentence

$ 15,996  

$ 51,960  

$ 24,450  

Company-operated restaurants

18,637  

11,322  

Company-owned restaurants

26,894  

3 unchanged sentences

10,682  

Franchise royalties

Franchise fees

4 unchanged sentences

$ 31,319  

$ 90,110  

$ 57,555  

The following table disaggregates revenues by primary geographical market (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

Thirteen weeks ended  

June 26, 2022

June 27, 2021

United States

1 unchanged sentence

$ 30,601  

$ 87,545  

$ 56,723  

International

2 unchanged sentences

$ 31,319  

$ 90,110  

$ 57,555  

Contract balances

The following table provides information about contract receivables and liabilities (deferred franchise fees) from contracts with customers (in thousands):

The following table provides information about receivables and contract liabilities (deferred franchise fees) from contracts with customers (in thousands):

June 26, 2022

March 27, 2022

Receivables, which are included in “Accounts and other receivables, net”

3 unchanged sentences

Includes receivables related to “franchise fees and royalties”

Deferred franchise fees of $ 359 and $ 1,663 as of December 26, 2021 and $ 237 and $ 1,536 as of March 28, 2021 are included in Deferred franchise fees – current and long term, respectively.

Deferred franchise fees of $ 357 and $ 1,606  

as of June 26, 2022 and $ 349 and $ 1,748 as of March 27, 2022 are included in Deferred franchise fees – current and long term, respectively.

Significant changes in deferred franchise fees are as follows (in thousands):

Thirty-nine weeks ended

Thirteen weeks ended

June 26, 2022

June 27, 2021

Deferred franchise fees at beginning of period

1 unchanged sentence

$ 1,773  

New deferrals due to cash received and other

Revenue recognized during the period

( 192 )  

New deferrals due to cash received and other

Deferred franchise fees at end of period

6 unchanged sentences

Represents franchise fees expected to be recognized for the remainder of the 2023 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less.

Amount does not include $ 412 of franchise fee revenue recognized for the thirty-nine weeks ended December 26, 2021.

NOTE E –

Amount does not include $ 192 of franchise fee revenue recognized for the thirteen weeks ended June 26, 2022.

NOTE D –

INCOME PER SHARE                  

2 unchanged sentences

Dilutive common shares used in the computation of diluted income per common share result from the assumed exercise of stock options and warrants, as determined using the treasury stock method.

The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020, respectively.

The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen week periods ended June 26, 2022 and June 27, 2021, respectively.

Thirteen weeks

5 unchanged sentences

$ 5,763  

$ 0.52  

$ 0.33  

Effect of dilutive employee stock options

Diluted calculation

$ 2,130  

$ 1,359  

$ 0.52  

$ 0.33  

Thirty- nine weeks

Number of Shares

(in thousands)

Basic calculation

$ 11,438  

$ 9,014  

$ 2.78  

$ 2.19  

Effect of dilutive employee stock options

Effect of dilutive employee stock options

Diluted calculation

1 unchanged sentence

$ 5,763  

$ 2.78  

$ 2.19  

Options to purchase 20,000 shares of common stock in the thirteen and thirty-nine week periods ended December 26, 2021, were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

Options to purchase 10,000 shares of common stock in the thirteen and thirty-nine week periods ended December 27, 2020, were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

NOTE F –

Options to purchase 20,000 shares of common stock in the thirteen week period ended June 26, 2022 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

Options to purchase 10,000 shares of common stock in the thirteen week period ended June 27, 2021 were not included in the computation of diluted EPS because the exercise price exceeded the average market price of common shares during the period.

NOTE E –

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company did not have any cash equivalents at December 26, 2021 and March 28, 2021.

At December 26, 2021 and March 28, 2021, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

The Company does not believe that it is exposed to any significant risk on these balances.

NOTE G –

The Company’s cash and cash equivalents principally consist of cash in bank and money market accounts.

The Company did not have any cash equivalents at June 26, 2022 and March 27, 2022.

At June 26, 2022 and March 27, 2022, substantially all of the Company’s cash balances are in excess of Federal government insurance limits.

The Company has not experienced any losses in such accounts.

NOTE F –

FAIR VALUE MEASUREMENTS

4 unchanged sentences

The three levels are defined as follows:

●    Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

● 

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability

●  

 Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

The face value and fair value of long-term debt, including the current portion, as of December 26, 2021 and March 28, 2021 were as follows (in thousands):

December 26, 2021

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

The face value and fair value of long-term debt as of June 26, 2022 and March 27, 2022 were as follows (in thousands):

June 26, 2022

March 27, 2022

Long-term debt

The Company estimates the fair value of its long-term debt, including the current portion, based upon review of observable pricing in secondary markets as of the last trading day of the fiscal period.

Accordingly, the Company classifies its long-term debt, including the current portion, as Level 2.

$ 110,000  

$ 110,228  

$ 110,000  

$ 111,346  

The Company estimates the fair value of its long-term debt based upon review of observable pricing in secondary markets as of the last trading day of the fiscal period.

Accordingly, the Company classifies its long-term debt as Level 2.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of the instruments.

1 unchanged sentence

that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when evidence of impairment exists.

At December 26, 2021, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

NOTE H –

At June 26, 2022, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

NOTE G –

ACCOUNTS AND OTHER RECEIVABLES, NET                  

1 unchanged sentence

Branded product sales

$ 13,804  

$ 9,318  

Franchise and license royalties

21,190  

13,632  

allowance for doubtful accounts

Accounts and other receivables, net

Accounts receivable are due within 30 days and are stated at amounts due from franchisees, including virtual or “ghost”

kitchens, retail licensees and Branded Product Program customers, net of an allowance for doubtful accounts.

$ 20,851  

$ 13,374  

Accounts receivable are due within 30 days and are stated at amounts due from franchisees, including virtual kitchens, retail licensees and Branded Product Program customers, net of an allowance for doubtful accounts.

Accounts that are outstanding longer than the contractual payment terms are generally considered past due.

3 unchanged sentences

After the Company has used reasonable collection efforts, it writes off accounts receivable through a charge to the allowance for doubtful accounts.

Changes in the Company’s allowance for doubtful accounts for the thirty-nine week period ended December 26, 2021 and the fiscal year ended March 28, 2021 are as follows (in thousands):

March 28, 2021

Changes in the Company’s allowance for doubtful accounts for the thirteen week period ended June 26, 2022 and the fiscal year ended March 27, 2022 are as follows (in thousands):

Beginning balance

2 unchanged sentences

Ending balance

NOTE I –

NOTE H –

PREPAID EXPENSES AND OTHER CURRENT ASSETS

2 unchanged sentences

Total prepaid expenses and other current assets

NOTE J –

GOODWILL AND INTANGIBLE ASSETS

The Company has continued to monitor the economic uncertainty as a result of COVID- 19 and has determined that the impact of COVID- 19 was a triggering event that required the Company to perform a quantitative interim goodwill impairment test.

Based on the quantitative test performed, management determined that the Company’s goodwill has not been impaired as of December 26, 2021 and December 27, 2020, and as a result, no impairment charge was recorded for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020.

$ 1,308  

$ 1,441  

NOTE I - INTANGIBLE ASSET

The Company’s definite-lived intangible asset consists of trademarks, tradenames and other intellectual property in connection with its Arthur Treacher’s co-branding agreements.

The Company reviews its definite-lived intangible asset for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company determined that the impact of COVID- 19 on its business was a sufficient indicator that the carrying value may not be recoverable.

The Company tested for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements, which has a remaining useful life based upon the term of its agreements.

Based on the quantitative test performed, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020.

NOTE K - LONG LIVED ASSETS

Based upon review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is nine years, and the intangible asset is subject to annual amortization.

The Company performs an annual impairment test, or more frequently if events or changes in circumstances indicate that the intangible asset may be impaired.

The Company tests for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements.

Cash flow projections require significant estimates and assumptions by management.

Should the estimates and assumptions prove to be incorrect, the Company may be required to record an impairment charge in future periods and such impairment could be material.

There have been no significant events or changes in circumstances during the thirteen weeks ended June 26, 2022 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of June 26, 2022.

NOTE J - LONG LIVED ASSETS

Long-lived assets on a restaurant-by-restaurant basis are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

2 unchanged sentences

The Company generally considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations.

As a result of the impact of the COVID- 19 pandemic on its business, the Company determined that sufficient indicators existed to trigger the performance of an interim impairment analysis as of December 26, 2021 and December 27, 2020.

The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets.

2 unchanged sentences

Cash flow projections and fair value estimates require significant estimates and assumptions by management.

Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairments in future periods and such impairments could be material.

As a result of the Company’s analysis, no long-lived assets were deemed to be impaired as of December 26, 2021 and December 27, 2020, and, as a result, no impairment charge was recorded for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020.

NOTE L –

ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES

Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material.

There have been no significant events or changes in circumstances during the thirteen weeks ended June 26, 2022 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of June 26, 2022.

NOTE K –

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):         

12 unchanged sentences

$ 7,833  

Other liabilities consist of the following (in thousands):

Reserve for uncertain tax positions

Total other liabilities

NOTE L –

The income tax provisions for the thirteen week periods ended June 26, 2022 and June 27, 2021 reflect effective tax rates of 27.8 % and 28.9 %, respectively.

The effective tax rates are higher than the statutory rates primarily due to state and local taxes.

The amount of unrecognized tax benefits included in Other Liabilities at June 26, 2022 and March 27, 2022 was $ 418 and $ 422 , respectively, all of which would impact the Company’s effective rate, if recognized.

As of June 26, 2022 and March 27, 2022, the Company had approximately $ 289 and $ 271 , respectively, accrued for the payment of interest and penalties in connection with unrecognized tax benefits.

NOTE M –

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted into law which among other provisions increases the limitation on the allowed business interest expense deduction from 30 percent to 50 percent of adjusted taxable income for tax years beginning January 1, 2019 and 2020.

Additionally, the CARES Act allows businesses to immediately expense the full cost of Qualified Improvement Property, retroactive to tax years beginning on or after January 1, 2018.

The income tax provisions for the thirty-nine week periods ended December 26, 2021 and December 27, 2020 reflect effective tax rates of 28.1 % and 27.7 %, respectively.

The amount of unrecognized tax benefits at December 26, 2021 was $ 445,000 all of which would impact Nathan’s effective tax rate, if recognized.

As of December 26, 2021, Nathan’s had $ 307,000 of accrued interest and penalties in connection with unrecognized tax benefits.

NOTE N –

SEGMENT INFORMATION

Nathan’s considers itself to be a brand marketer of the Nathan’s Famous signature products to the foodservice industry pursuant to its various business structures.

Nathan’s sells its products directly to consumers through its restaurant operations segment consisting of Company-operated and franchised restaurants, including virtual or “ghost”

kitchens, to distributors that resell our products to the foodservice industry through the Branded Product Program (“BPP”) and by third party manufacturers pursuant to license agreements that sell our products to club stores and grocery stores nationwide.

Nathan’s sells its products directly to consumers through its restaurant operations segment consisting of Company-owned and franchised restaurants including virtual kitchens, to distributors that resell our products to the foodservice industry through the Branded Product Program and by third party manufacturers pursuant to license agreements that sell our products to club stores and grocery stores nationwide.

The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”) who evaluates performance and allocates resources for the Branded Product Program, Product Licensing and Restaurant Operations segments based upon a number of factors, the primary profit measure being income from operations.

5 unchanged sentences

Restaurant operations –

This segment derives revenue from the sale of our products at Company-owned restaurants and earns fees and royalties from its franchised restaurants, including its virtual or “ghost”

This segment derives revenue from the sale of our products at Company-owned restaurants and earns fees and royalties from its franchised restaurants, including its virtual kitchens.

Revenues from operating segments are from transactions with unaffiliated third parties and do not include any intersegment revenues.

3 unchanged sentences

Thirteen weeks ended

Thirty-nine weeks ended

June 26, 2022

June 27, 2021

Branded Product Program

$ 23,171  

$ 15,996  

Product licensing

11,314  

10,682  

Restaurant operations

1 unchanged sentence

Total revenues

$ 39,720  

$ 31,319  

Income from operations

Branded Product Program

$ 2,067  

$ 2,254  

Product licensing

11,269  

10,637  

Restaurant operations

( 2,197 )  

Income from operations

$ 11,780  

$ 10,702  

Interest expense

( 1,944 )  

Interest income

1 unchanged sentence

Income before provision for income taxes

$ 9,880  

$ 8,104  

Represents Advertising fund revenue

NOTE O –

NOTE N –

SHARE-BASED COMPENSATION

Total share-based compensation during each of the thirteen -week periods ended December 26, 2021 and December 27, 2020 was $ 8,000 and $ 29,000 , respectively.

Total share-based compensation during each of the thirty-nine week periods ended December 26, 2021 and December 27, 2020 was $ 66,000 and $ 87,000 , respectively.

As of December 26, 2021, there was $ 122,000 of unamortized compensation expense related to share-based incentive awards.

We expect to recognize this expense over approximately twenty-two months, which represents the weighted average remaining requisite service periods for such awards.

Total share-based compensation during the thirteen week periods ended June 26, 2022 and June 27, 2021 was $ 8 and $ 29 , respectively.

Total share-based compensation is included in general and administrative expenses in our accompanying Consolidated Statements of Earnings.

As of June 26, 2022, there was $ 106 unamortized compensation expense related to share-based incentive awards.

We expect to recognize this expense over approximately nineteen months, which represents the weighted average remaining requisite service periods for such awards.

The Company recognizes compensation cost for unvested stock-based incentive awards on a straight-line basis over the requisite service period.

Compensation cost charged to expense under all stock-based incentive awards is as follows (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

Thirteen weeks ended  

June 26, 2022

June 27, 2021

Stock options

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Stock options:

During the thirty-nine week period ended December 26, 2021, the Company granted options to purchase 10,000 shares at an exercise price of $ 68.50 per share, all of which expire five years from the date of grant.

All such options vest ratably over a four -year period commencing August 10, 2021.

The weighted-average option fair values, as determined using the Black-Scholes option valuation model, and the assumptions used to estimate these values for stock options granted during the thirty-nine week period ended December 26, 2021 are as follows:

Weighted-average option fair values

Expected life (years)

Interest rate

Dividend yield

The expected dividend yield is based on historical and projected dividend yields.

The Company estimates volatility based primarily on historical monthly price changes of the Company’s stock equal to the expected life of the option.

The risk-free interest rate is based on the U.S.

Treasury yield in effect at the time of grant.

The expected option term is the number of years the Company estimates the options will be outstanding prior to exercise based on expected historical exercise patterns and employment termination behavior.

Transactions with respect to stock options for the thirty-nine weeks ended December 26, 2021 are as follows:

There were no new share-based awards granted during the thirteen week period ended June 26, 2022.

Transactions with respect to stock options for the thirteen weeks ended June 26, 2022 are as follows:

Contractual Life

1 unchanged sentence

Options outstanding at March 27, 2022

Options outstanding at December 26, 2021

Options exercisable at December 26, 2021

Restricted stock:

Transactions with respect to restricted stock for the thirty-nine weeks ended December 26, 2021 are as follows:

Unvested restricted stock at March 28, 2021

Unvested restricted stock at December 26, 2021

NOTE P –

20,000  

$ 79.20  

Options outstanding at June 26, 2022

20,000  

$ 79.20  

Options exercisable at June 26, 2022

10,000  

$ 89.90  

NOTE O –

STOCKHOLDERS’

Effective June 11, 2021, the Board of Directors (the “Board”) declared its first quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on June 25, 2021 to stockholders of record as of the close of business on June 21, 2021.

Effective August 6, 2021, the Board declared its second quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on September 3, 2021 to stockholders of record as of the close of business on August 23, 2021.

Effective November 5, 2021, the Board declared its third quarterly cash dividend of $ 0.35 per share for fiscal year 2022, aggregating $ 1,440,000 , which was paid on December 3, 2021 to stockholders of record as of the close of business on November 22, 2021.

Effective February 4, 2022, the Board authorized the increase of its regular dividend from $0.35 to $0.45 per quarter and declared its fourth quarterly cash dividend of $ 0.45 per share payable on March 4, 2022 to stockholders of record as of the close of business on February 21, 2022.

Effective June 10, 2022, the Company's Board of Directors (the "Board") declared its first quarterly cash dividend of $ 0.45 per share for fiscal 2023, which was paid on June 24, 2022 to stockholders of record as of the close of business on June 20, 2022.

Effective August 5, 2022, the Board declared its second quarterly cash dividend of $ 0.45 per share for fiscal 2023 payable on September 2, 2022 to stockholders of record as of the close of business on August 22, 2022.

Our ability to pay future dividends is limited by the terms of the Indenture with U.S.

Bank National Association, as trustee and collateral trustee (see Note Q).

Bank National Association, as trustee and collateral trustee.

In addition to the terms of the Indenture, the declaration and payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements.

Stock Incentive Plans

On September 18, 2019, the Company’s shareholders approved the Nathan’s Famous, Inc.

2019 Stock Incentive Plan (the “2019 Plan”).

The 2019 Plan became effective as of July 1, 2020 ( the "Effective Date").

Following the Effective Date, (i) no additional stock awards were granted under the 2010 Plan and (ii) all outstanding stock awards previously granted under the 2010 Plan remained subject to the terms of the 2010 Plan.

All awards granted on or after the Effective Date are subject to the terms of the 2019 Plan.

As of the Effective Date, we were able to issue up to:

(a) 369,584 shares of common stock under the 2019 Plan which includes:

(i) shares that had been authorized but not issued pursuant to the 2010 Plan as of the Effective Date up to a maximum of an additional 208,584 shares and (ii) any shares subject to any outstanding options or restricted stock grants under any plan of the Company that were outstanding as of the Effective Date and that subsequently expired unexercised, or were otherwise forfeited, up to a maximum of an additional 11,000 shares.

As of December 26, 2021, there were up to 198,584 shares available to be issued for future option grants or up to 181,683 shares of restricted stock to be granted under the 2019 Plan.

Stock Repurchase Program

During the period from October 2001 through December 26, 2021, Nathan’s purchased 5,254,081 shares of common stock at a cost of $ 84,770,000 pursuant to various stock repurchase plans previously authorized by the Board.

During the thirty-nine week period ended December 26, 2021, we did not repurchase any shares of common stock.

Stock Repurchase Programs

In 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company.

As of December 26, 2021, Nathan’s had repurchased 1,066,450 shares at a cost of $ 37,108,000 under the sixth stock repurchase plan.

At December 26, 2021 there were 133,550 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

As of June 26, 2022, Nathan’s had repurchased 1,086,820 shares at a cost of $ 38,178 under the sixth stock repurchase plan.

At June 26, 2022 there were 113,180 shares remaining to be repurchased pursuant to the sixth stock repurchase plan.

The plan does not have a set expiration date.

1 unchanged sentence

There is no set time limit on the repurchases.

On March 13, 2020, the Board approved a 10b5 - 1 stock plan (the “10b5 - 1 Plan”) which expired on August 12, 2020.

During the fiscal 2021 period, the Company repurchased in open market transactions 26,676 shares of the Company’s common stock at an average share price of $ 56.26 for a total cost of $ 1,501,000 under the 10b5 - 1 Plan.

NOTE Q –

On June 14, 2022, the Board approved a 10b5 - 1 Plan (the “10b5 - 1 Plan”) which will expire on the earlier of (a) September 13, 2022 or (b) the earlier of when the aggregate purchases under the 10b5 - 1 Plan equals 50,000 shares unless terminated earlier by the Board.

During the thirteen week period ended June 26, 2022, the Company repurchased in open market transactions 20,370 shares of the Company’s common stock at an average share price of $ 52.49 for a total cost of $ 1,070 under the 10b5 - 1 Plan.

Through July 29, 2022, the Company repurchased an additional 13,896 shares of the Company’s common stock at an average share price of $ 54.51 for a total cost of $ 758 .

At July 29, 2022, 15,734 shares were available to repurchase under the 10b5 - 1 Plan.

NOTE P –

LONG-TERM DEBT

5 unchanged sentences

( 1,690 )  

$ 147,349  

$ 146,831  

Current maturities of long-term debt

( 40,000 )  

Long-term debt, net

1 unchanged sentence

$ 108,183  

On November 1, 2017, the Company issued $ 150,000,000 of 6.625% Senior Secured Notes due 2025 (the "2025 Notes") in a private offering in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The 2025 Notes were issued pursuant to an indenture dated as of November 1, 2017 by and among the Company, certain of its wholly-owned subsidiaries and U.S.

Bank National Association (the “Indenture”).

The Company used the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the $ 135,000,000 of 10.000% Senior Secured Notes due 2020 and redeemed such notes (the "Redemption"), paid a portion of a special $ 5.00 per share cash dividend to Nathan's stockholders of record, and used the remaining net proceeds for general corporate purposes, including working capital.

The Company also funded the majority of the special dividend of $5.00 per share through its existing cash.

The Redemption occurred on November 16, 2017.

The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1 st and November 1 st of each year.

The Company made its required semi-annual interest payments of $ 4,968,750 on May 1, 2021 and November 1, 2021.

The 2025 Notes have no scheduled principal amortization payments prior to its final maturity on November 1, 2025.

The terms and conditions of the 2025 Notes are as follows (terms not defined shall have the meanings set forth in the Indenture):

There are no financial maintenance covenants associated with the 2025 Notes.

As of December 26, 2021, Nathan’s was in compliance with all covenants associated with the 2025 Notes.

The Indenture contains certain covenants limiting the Company’s ability and the ability of its restricted subsidiaries (as defined in the Indenture) to, subject to certain exceptions and qualifications:

(i) incur additional indebtedness;

(ii) pay dividends or make other distributions on, redeem or repurchase, capital stock;

(iii) make investments or other restricted payments;

(iv) create or incur certain liens;

(v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries;

(vi) enter into certain transactions with affiliates;

(vii) sell assets;

or (viii) effect a consolidation or merger.

Certain Restricted Payments which may be made or indebtedness incurred by Nathan’s or its Restricted Subsidiaries may require compliance with the following financial ratios:

Fixed Charge Coverage Ratio :

the ratio of the Consolidated Cash Flow to the Fixed Charges for the relevant period, currently set at 2.0 to 1.0 in the Indenture.

The Fixed Charge Coverage Ratio applies to determining whether additional Restricted Payments may be made, certain additional debt may be incurred and acquisitions may be made.

Priority Secured Leverage Ratio :

the ratio of (a) Consolidated Net Debt outstanding as of such date that is secured by a Priority Lien to (b) Consolidated Cash Flow of Nathan’s for the Test Period then most recently ended, in each case with such pro forma adjustments as are appropriate;

currently set at 0.40 to 1.00 in the Indenture.

Secured Leverage Ratio :

the ratio of (a) Consolidated Net Debt outstanding as of such date that is secured by a Lien on any property of Nathan’s or any Guarantor to (b) Consolidated Cash Flow of Nathan’s for the Test Period then most recently ended, in each case with such pro forma adjustments as are appropriate.

The Secured Leverage Ratio under the Indenture is 3.75 to 1.00 and applies if Nathan’s wants to incur additional debt on the same terms as the 2025 Notes.

The Indenture also contains customary events of default, including, among other things, failure to pay interest, failure to comply with agreements related to the Indenture, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy.

Generally, if any event of default occurs, the Trustee or the holders of at least 25 % in principal amount of the 2025 Notes may declare the 2025 Notes due and payable by providing notice to the Company.

In case of default arising from certain events of bankruptcy or insolvency, the 2025 Notes will become immediately due and payable.

The 2025 Notes are general senior secured obligations, are fully and unconditionally guaranteed by substantially all of the Company’s wholly-owned subsidiaries and rank pari passu in right of payment with all of the Company’s existing and future indebtedness that is not subordinated, are senior in right of payment to any of the Company’s existing and future subordinated indebtedness, are structurally subordinated to any existing and future indebtedness and other liabilities of the Company’s subsidiaries that do not guarantee the 2025 Notes, and are effectively junior to all existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes.

Pursuant to the terms of a collateral trust agreement, the liens securing the 2025 Notes and the guarantees will be contractually subordinated to the liens securing any future credit facility.

The 2025 Notes and the guarantees are the Company and the guarantors’

senior secured obligations and will rank:

senior in right of payment to all of the Company and the guarantors’ future subordinated indebtedness;

effectively senior to all unsecured senior indebtedness to the extent of the value of the collateral securing the 2025 Notes and the guarantees;

pari passu  with all of the Company and the guarantors’ other senior indebtedness;

effectively junior to any future credit facility to the extent of the value of the collateral securing any future credit facility and the 2025 Notes and the guarantees and certain other assets;

effectively junior to any of the Company and the guarantors’ existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes and the guarantees to the extent of the value of any such assets;

structurally subordinated to the indebtedness of any of the Company’s current and future subsidiaries that do not guarantee the 2025 Notes.

On or after November 1, 2020, the Company may redeem some or all of the 2025 Notes at a decreasing premium over time, plus accrued and unpaid interest as follows:

On or after November 1, 2020 and prior to November 1, 2021

On or after November 1, 2021 and prior to November 1, 2022

On or after November 1, 2022

On December 15, 2021, the Company announced its intent to complete the partial redemption, in the principal amount of $ 40,000,000 , of the 2025 Notes, in accordance with the terms and conditions of the Indenture.

The redemption price of the redeemed notes was 101.656 % of the principal amount, plus accrued and unpaid interest from, and including November 1, 2021 to, but excluding, the redemption date of January 26, 2022.

On January 26, 2022, the Company redeemed $ 40,000,000 of the 2025 Notes by paying cash of $ 41,288,094 , inclusive of the redemption premium and accrued interest, and recognized a loss on early extinguishment of approximately $ 1,400,000 that primarily reflected the redemption premium and the write-off of a portion of previously recorded debt issuance costs.

In certain circumstances involving a change of control, the Company will be required to make an offer to repurchase all or, at the holder’s option, any part, of each holder’s 2025 Notes pursuant to the offer described below (the “Change of Control Offer”).

In the Change of Control Offer, the Company will be required to offer payment in cash equal to 101 % of the aggregate principal amount of 2025 Notes repurchased plus accrued and unpaid interest, to the date of purchase.

If the Company sells certain assets and does not use the net proceeds as required, the Company will be required to use such net proceeds to repurchase the 2025 Notes at 100 % of the principal amount thereof, plus accrued and unpaid interest and additional interest penalty, if any, to the date of repurchase.

The 2025 Notes may be traded between qualified institutional buyers pursuant to Rule 144A of the Securities Act.

We have recorded the 2025 Notes at cost.

NOTE R –

The Company is party as lessee to various leases for its Company-operated restaurants and lessee/sublessor to one franchised location property, including land and buildings, as well as leases for its corporate office and certain office equipment.

NOTE Q –

The Company is party as lessee to various leases for its Company-owned restaurants and lessee/sublessor to one franchised location property, including land and buildings, as well as leases for its corporate office and certain office equipment.

Company as lessee

The components of the net lease cost for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020 were as follows (in thousands):

The components of the net lease cost for the thirteen week periods ended June 26, 2022 and June 27, 2021 were as follows (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

June 26, 2022

June 27, 2021

Statement of Earnings

2 unchanged sentences

Sublease income, net

( 22 )  

Total net lease cost (a)

Includes $ 243 , net and $ 502 , net for the thirteen week periods ended December 26, 2021 and December 27, 2020, respectively, and $ 1,713 , net and $ 1,696 , net for the thirty-nine week periods ended December 26, 2021 and December 27, 2020, respectively, recorded to “Restaurant Operating Expenses” for leases for Company-owned restaurants.

Includes $ 192 and $ 160 for the thirteen week periods ended December 26, 2021 and December 27, 2020, respectively, and $ 533 and $ 492 for the thirty-nine week periods ended December 26, 2021 and December 27, 2020, respectively, recorded to “General and administrative expenses”

Includes $ 607 , net and $ 700 , net for the thirteen week periods ended June 26, 2022 and June 27, 2021, respectively, recorded to “Restaurant operating expenses” for leases for Company-owned restaurants;

Includes $ 189 and $ 174 for the thirteen week periods ended June 26, 2022 and June 27, 2021, respectively, recorded to “General and administrative expenses”

for leases for corporate offices and equipment;

Also includes $ 41 and $ 9 for the thirteen week periods ended December 26, 2021 and December 27, 2020, respectively, and $ 62 and $ 31 for the thirty-nine week periods ended December 26, 2021 and December 27, 2020, respectively, recorded to “Other income, net”

Also includes $ 22 and $ 16 for the thirteen week periods ended June 26, 2022 and June 27, 2021, respectively, recorded to “Other income, net”

for leased properties that are leased to franchisees.

1 unchanged sentence

Thirteen weeks ended

Thirty-nine weeks ended

June 26, 2022

June 27, 2021

Operating cash flows from operating leases

The weighted average remaining lease term and weighted average discount rate for operating leases as of December 26, 2021 

were as follows:

The weighted average remaining lease term and weighted-average discount rate for operating leases as of June 

26, 2022  were as follows:

Weighted average remaining lease term (years):

2 unchanged sentences

Operating leases

Future lease commitments to be paid and received by the Company as of December 26, 2021 were as follows (in thousands):

Future lease commitments to be paid and received by the Company as of June 26, 2022 were as follows (in thousands):

Operating Leases

$ 1,305  

$ 1,119  

Total lease commitments

$ 10,231  

$ 1,914  

$ 8,317  

Amount representing interest

Present value of lease liabilities (b)

$ 7,971  

Represents future lease commitments to be paid and received by the Company for the remainder of the 2023 fiscal year.

Amount does not include $ 453  

of lease commitments paid and received by the Company for the thirty-nine week period ended December 26, 2021.

The present value of minimum operating lease payments of $ 1,848 and $ 6,680  

are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively on the Consolidated Balance Sheet.

of lease commitments paid and received by the Company for the thirteen week period ended June 26, 2022.

(b) The present value of minimum operating lease payments of $ 1,849 and $ 6,122 are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively on the Consolidated Balance Sheet.

Company as lessor

The components of lease income for the thirteen and thirty-nine week periods ended December 26, 2021 and December 27, 2020 were as follows (in thousands):

The components of lease income for the thirteen week periods ended June 26, 2022 and June 27, 2021 were as follows (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

December 26, 2021

December 27, 2020

December 26, 2021

December 27, 2020

June 26, 2022

June 27, 2021

Operating lease income, net

NOTE S –

COMMITMENTS AND CONTINGENCIES

On February 27, 2017, a wholly-owned subsidiary of the Company executed a Guaranty of Lease (the “Brooklyn Guaranty”) in connection with its re-franchising of a restaurant located in Brooklyn, New York.

The Company was obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee.

The Brooklyn Guaranty had an initial term of 10 years and one 5 -year option and was limited to 24 months of rent for the first three years of the term.

For the remainder of the term, the Brooklyn Guaranty was limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.

The Company entered into a termination of lease agreement effective January 15, 2022 ( the “Termination Date”).

As consideration for all outstanding amounts due and payable under the Brooklyn Guaranty, the Company agreed to pay a termination fee in the amount of $ 75,000 , of which the Company agreed to pay 50 % or $ 37,500 and the tenant/franchisee agreed to pay 50 % or $ 37,500 .

The Company paid its share of the termination fee in January 2022.

NOTE R –

SUPPLEMENTAL CASH FLOW INFORMATION

Noncash Investing Transactions

Omitted from the Company’s Consolidated Statement of Cash Flows for the thirteen weeks ended June 26, 2022 were capital expenditures related to property and equipment of $ 78 that were accrued and not yet paid as of the end of the period.

NOTE S - COMMITMENTS AND CONTINGENCIES

Contingencies

5 unchanged sentences

SUBSEQUENT EVENTS

The Company evaluated subsequent events through the date the consolidated interim financial statements were issued and filed with the U.S.

The Company evaluated subsequent events through the date the Consolidated Financial Statements were issued and filed with the U.S.

Securities and Exchange Commission.

There were no other subsequent events that require recognition or disclosure.

There were no subsequent events that required recognition or disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements