NATHANS FAMOUS, INC. 10-Q

Item 1. Financial Statements.   Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS June 26, 2022 and March 27, 2022 (in thousands, except share and per share amounts)       June 26, 2022     March 27, 2022       (Unaudited)           ASSETS                 CURRENT ASSETS                 Cash and cash equivalents (Note E)   $ 47,668     $ 50,063   Accounts and other receivables, net (Note G)     20,851       13,374   Inventories     889       522   Prepaid expenses and other current assets (Note H)     1,308       1,441   Total current assets     70,716       65,400                     Property and equipment, net of accumulated depreciation of $ 10,489 and $ 10,344 , respectively     3,824       3,785   Operating lease assets (Note Q)     7,113       7,416   Goodwill     95       95   Intangible asset, net (Note I)     1,015       1,043   Deferred income taxes     565       582   Other assets     189       195                     Total assets   $ 83,517     $ 78,516                     LIABILITIES AND STOCKHOLDERS’ DEFICIT                                   CURRENT LIABILITIES                 Accounts payable   $ 8,217     $ 6,381   Accrued expenses and other current liabilities (Note K)     7,120       7,833   Current portion of operating lease liabilities (Note Q)     1,849       1,849   Deferred franchise fees     357       349   Total current liabilities     17,543       16,412                     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 Q)     6,122       6,487   Other liabilities     701       674   Deferred franchise fees     1,606       1,748   Total liabilities     134,282       133,504                     COMMITMENTS AND CONTINGENCIES (Note S)                                       STOCKHOLDERS’ DEFICIT                 Common stock, $ .01 par value; 30,000,000 shares authorized; 9,369,235 shares issued; and 4,094,784 and 4,115,154 shares outstanding at June 26, 2022 and March 27, 2022, respectively     94       94   Additional paid-in capital     62,315       62,307   Accumulated deficit     ( 27,334 )     ( 32,619 ) Stockholders’ equity before treasury stock     35,075       29,782                     Treasury stock, at cost, 5,274,451 and 5,254,081 shares at June 26, 2022 and March 27, 2022, respectively     ( 85,840 )     ( 84,770 ) Total stockholders’ deficit     ( 50,765 )     ( 54,988 )                   Total liabilities and stockholders’ deficit   $ 83,517     $ 78,516     The accompanying notes are an integral part of these consolidated financial statements.   -3-          Nathan ’ s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF EARNINGS Thirteen weeks ended June 26, 2022 and June 27, 2021 (in thousands, except per share amounts) (Unaudited)       June 26, 2022     June 27, 2021                     REVENUES                 Sales   $ 26,894     $ 19,325   License royalties     11,314       10,682   Franchise fees and royalties     1,093       907   Advertising fund revenue     419       405   Total revenues     39,720       31,319                     COSTS AND EXPENSES                 Cost of sales     22,667       15,365   Restaurant operating expenses     1,032       1,111   Depreciation and amortization     233       278   General and administrative expenses     3,589       3,458   Advertising fund expense     419       405   Total costs and expenses     27,940       20,617                     Income from operations     11,780       10,702                     Interest expense     ( 1,944 )     ( 2,650 ) Interest income     22       36   Other income, net     22       16                     Income before provision for income taxes     9,880       8,104   Provision for income taxes     2,743       2,341   Net income   $ 7,137     $ 5,763                     PER SHARE INFORMATION                 Weighted average shares used in computing income per share:                 Basic     4,113       4,115   Diluted     4,113       4,115                     Income per share:                 Basic   $ 1.74     $ 1.40   Diluted   $ 1.74     $ 1.40                     Dividends declared per share   $ .45     $ .35     The accompanying notes are an integral part of these consolidated financial statements.   -4-       Nathan ’ s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ DEFICIT Thirteen weeks ended June 26, 2022 and June 27, 2021 (in thousands, except share and per share amounts) (Unaudited)                       Additional                             Total       Common     Common     Paid-in     Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit     Shares     Amount     Deficit                                                             Balance, March 27, 2022     9,369,235     $ 94     $ 62,307     $ ( 32,619 )     5,254,081     $ ( 84,770 )   $ ( 54,988 )                                                           Repurchase of common stock                             20,370       ( 1,070 )     ( 1,070 ) Dividends on common stock     -       -       -       ( 1,852 )     -       -       ( 1,852 ) Share-based compensation     -       -       8       -       -       -       8   Net income     -       -       -       7,137       -       -       7,137   Balance, June 26, 2022     9,369,235     $ 94     $ 62,315     $ ( 27,334 )     5,274,451     $ ( 85,840 )   $ ( 50,765 )                       Additional                             Total       Common     Common     Paid-in     Accumulated     Treasury Stock, at Cost     Stockholders’       Shares     Stock     Capital     Deficit     Shares     Amount     Deficit                                                             Balance, March 28, 2021     9,369,015     $ 94     $ 62,240     $ ( 40,042 )     5,254,081     $ ( 84,770 )   $ ( 62,478 )                                                           Dividends on common stock     -       -       -       ( 1,440 )     -       -       ( 1,440 ) Share-based compensation     -       -       29       -       -       -       29   Net income     -       -       -       5,763       -       -       5,763   Balance, June 27, 2021     9,369,015     $ 94     $ 62,269     $ ( 35,719 )     5,254,081     $ ( 84,770 )   $ ( 58,126 )   The accompanying notes are an integral part of these consolidated financial statements.   -5-       Nathan ’ s Famous, Inc. and Subsidiaries   CONSOLIDATED STATEMENTS OF CASH FLOWS Thirteen weeks ended June 26, 2022 and June 27, 2021 (in thousands, except per share amounts) (Unaudited)       June 26, 2022     June 27, 2021   Cash flows from operating activities:                 Net income   $ 7,137     $ 5,763   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     233       278   Amortization of debt issuance costs     127       173   Share-based compensation expense     8       29   Provision for doubtful accounts     81       -   Deferred income taxes     17       ( 8 ) Other non-cash items     ( 62 )     105   Changes in operating assets and liabilities:                 Accounts and other receivables, net     ( 7,558 )     ( 7,532 ) Inventories     ( 367 )     ( 127 ) Prepaid expenses and other current assets     133       531   Other assets     6       5   Accounts payable, accrued expenses and other current liabilities     1,123       395   Deferred franchise fees     ( 134 )     423   Other liabilities     27       42                     Net cash provided by operating activities     771       77                     Cash flows from investing activities:                 Purchase of property and equipment     ( 244 )     ( 175 )                   Net cash used in investing activities     ( 244 )     ( 175 )                   Cash flows from financing activities:                 Dividends paid to stockholders     ( 1,852 )     ( 1,440 ) Repurchase of treasury stock     ( 1,070 )     -                     Net cash used in financing activities     ( 2,922 )     ( 1,440 )                   Net decrease in cash and cash equivalents     ( 2,395 )     ( 1,538 )                   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:                 Interest   $ 3,644     $ 4,969   Income taxes   $ 146     $ 145                     Noncash financing activity:                 Dividends declared per share   $ .45     $ .35     See Note R for information on Supplemental Cash Flow Information.   The accompanying notes are an integral part of these consolidated financial statements.   -6-     NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 26, 2022 (Unaudited)     NOTE A - BASIS OF PRESENTATION   The accompanying consolidated financial statements of Nathan's Famous, Inc. and subsidiaries (collectively “Nathan’s,” the “Company,” “we,” “us” 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. However, our results of operations are seasonal in nature, and the results of any interim period are not necessarily indicative of results for any other interim period or the full fiscal year.   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 (“SEC”).   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 27, 2022 as filed with the SEC on June 10, 2022.   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 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 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.   - 7 -       NOTE B – NEW ACCOUNTING STANDARD NOT YET ADOPTED   In June 2016, the FASB issued ASU 2016 - 13, “ Financial Instruments – Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments, ” which significantly changes the impairment model for most financial instruments. 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 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. In November 2019, the FASB deferred the effective date for smaller reporting companies for annual reporting periods beginning after December 15, 2022. This standard is required to take effect in Nathan’s first quarter ( June 2023) of our fiscal year ending March 31, 2024. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and related disclosures.   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 C – REVENUES   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   $ 23,171     $ 15,996   Company-owned restaurants     3,723       3,329   Total sales     26,894       19,325                     License royalties     11,314       10,682                     Royalties     901       800   Franchise fees     192       107   Total franchise fees and royalties     1,093       907                     Advertising fund revenue     419       405                     Total revenues   $ 39,720     $ 31,319     The following table disaggregates revenues by primary geographical market (in thousands):       Thirteen weeks ended       June 26, 2022     June 27, 2021                     United States   $ 37,917     $ 30,601   International     1,803       718   Total revenues   $ 39,720     $ 31,319     - 8 -     Contract balances   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” (a)   $ -     $ 312   Deferred franchise fees (b)   $ 1,963     $ 2,097       (a) Includes receivables related to “franchise fees and royalties”   (b) 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):       Thirteen weeks ended       June 26, 2022     June 27, 2021   Deferred franchise fees at beginning of period   $ 2,097     $ 1,773   New deferrals due to cash received and other     58       530   Revenue recognized during the period     ( 192 )     ( 107 ) Deferred franchise fees at end of period   $ 1,963     $ 2,196     Anticipated future recognition of deferred franchise fees   The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands):       Estimate for fiscal year   2023 (a)   $ 269   2024     348   2025     329   2026     293   2027     171   Thereafter     553   Total   $ 1,963       (a) 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 $ 192 of franchise fee revenue recognized for the thirteen weeks ended June 26, 2022.     NOTE D – INCOME PER SHARE                     Basic income per common share is calculated by dividing income by the weighted-average number of common shares outstanding and excludes any dilutive effect of stock options. Diluted income per common share gives effect to all potentially dilutive common shares that were outstanding during the period. 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.   - 9 -   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                                                                                     Net Income       Net Income     Number of Shares     Per Share       2022     2021     2022     2021     2022     2021       (in thousands)     (in thousands)                   Basic EPS                                                 Basic calculation   $ $ 7,137       $ 5,763       4,113       4,115       $1.74       $1.40   Effect of dilutive employee stock options     -       -       -       -       -       -                                                     Diluted EPS                                                 Diluted calculation   $ 7,137       $ 5,763       4,113       4,115       $1.74       $1.40     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’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   Nathan’s follows a three -level fair value hierarchy that prioritizes the inputs to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. 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 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 as of June 26, 2022 and March 27, 2022 were as follows (in thousands):       June 26, 2022     March 27, 2022       Face value     Fair value     Face Value     Fair value                                     Long-term debt   $ 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.   - 10 -     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.   Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis; 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 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                     Accounts and other receivables, net, consist of the following (in thousands):       June 26,     March 27,       2022     2022                     Branded product sales   $ 13,804     $ 9,318   Franchise and license royalties     6,066       3,923   Other     1,320       391         21,190       13,632                     Less: allowance for doubtful accounts     339       258   Accounts and other receivables, net   $ 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. The Company does not recognize franchise and license royalties that are not deemed to be realizable.   The Company individually reviews each past due account and determines its allowance for doubtful accounts by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current and expected future ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole. Based on management’s assessment, the Company provides for estimated uncollectible amounts through a charge to earnings. 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 thirteen week period ended June 26, 2022 and the fiscal year ended March 27, 2022 are as follows (in thousands):                June 26, 2022     March 27, 2022                     Beginning balance   $ 258     $ 345   Bad debt expense     81       186   Write offs and other     -       ( 273 ) Ending balance   $ 339     $ 258       NOTE H – PREPAID EXPENSES AND OTHER CURRENT ASSETS   Prepaid expenses and other current assets consist of the following (in thousands):       June 26,     March 27,       2022     2022                     Real estate taxes   $ 152     $ 71   Insurance     266       327   Marketing     668       653   Other     222       390   Total prepaid expenses and other current assets   $ 1,308     $ 1,441        -11-       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. 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.   Long-lived assets include property, equipment and right of use assets for operating leases with finite useful lives. Assets are grouped at the individual restaurant level which represents the lowest level for which cash flows can be identified largely independent of the cash flows of other assets and liabilities. The Company generally considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations.   The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record on a restaurant-by-restaurant basis, an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering discounted estimated future cash flows from such assets. 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 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):                June 26,     March 27,       2022     2022   Payroll and other benefits   $ 1,373     $ 3,109   Accrued rebates     555       166   Rent and occupancy costs     114       90   Deferred revenue     525       876   Construction costs     78       58   Interest     1,141       2,968   Professional fees     139       129   Sales, use and other taxes     210       39   Corporate income taxes     2,656       103   Other     329       295   Total accrued expenses and other current liabilities   $ 7,120     $ 7,833       -12-       NOTE L – INCOME TAXES   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 – 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-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. Certain administrative expenses are not allocated to the segments and are reported within the Corporate segment.   Branded Product Program – This segment derives revenue principally from the sale of hot dog products either directly to foodservice operators or to various foodservice distributors who resell the products to foodservice operators.   Product licensing – This segment derives revenue, primarily in the form of royalties, from licensing a broad variety of Nathan’s Famous branded products, including our hot dogs, sausage and corned beef products, frozen French fries and additional products through retail grocery channels and club stores throughout the United States.   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 kitchens.   Revenues from operating segments are from transactions with unaffiliated third parties and do not include any intersegment revenues.   Income from operations attributable to Corporate consists principally of administrative expenses not allocated to the operating segments such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation and compliance costs and expenses of the Advertising Fund.   Interest expense, interest income, and other income, net are managed centrally at the corporate level, and, accordingly, such items are not presented by segment since they are excluded from the measure of profitability reviewed by the CODM.   - 13 -     Operating segment information is as follows (in thousands):       Thirteen weeks ended       June 26, 2022     June 27, 2021                     Revenues                 Branded Product Program   $ 23,171     $ 15,996   Product licensing     11,314       10,682   Restaurant operations     4,816       4,236   Corporate (1)     419       405   Total revenues   $ 39,720     $ 31,319                     Income from operations                 Branded Product Program   $ 2,067     $ 2,254   Product licensing     11,269       10,637   Restaurant operations     641       ( 2 ) Corporate     ( 2,197 )     ( 2,187 ) Income from operations   $ 11,780     $ 10,702                     Interest expense     ( 1,944 )     ( 2,650 ) Interest income     22       36   Other income, net     22       16   Income before provision for income taxes   $ 9,880     $ 8,104       ( 1 ) Represents Advertising fund revenue     NOTE N – SHARE-BASED COMPENSATION   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       June 26, 2022     June 27, 2021                     Stock options   $ 8     $ 21   Restricted stock     -       8   Total compensation cost   $ 8     $ 29     Stock options:   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:               Weighted-     Weighted-     Aggregate               Average     Average     Intrinsic               Exercise     Remaining     Value       Shares     Price     Contractual Life     (in thousands)                                     Options outstanding at March 27, 2022     20,000     $ 79.20       2.92       -   Granted     -       -       -       -   Exercised     -       -       -       -   Options outstanding at June 26, 2022     20,000     $ 79.20       2.67       -                                     Options exercisable at June 26, 2022     10,000     $ 89.90       1.21       -       -14-       NOTE O – STOCKHOLDERS’ EQUITY   1. Dividends   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. 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.   2. 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 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. Purchases under the Company’s stock repurchase program may be made from time to time, depending on market conditions, in open market or privately-negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases.   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   Long-term debt consists of the following (in thousands):       June 26,     March 27,       2022     2022                     6.625% Senior Secured Notes due 2025   $ 110,000     $ 110,000   Less: unamortized debt issuance costs     ( 1,690 )     ( 1,817 ) Long-term debt, net   $ 108,310     $ 108,183       -15-       NOTE Q – LEASES   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 week periods ended June 26, 2022 and June 27, 2021 were as follows (in thousands):       Thirteen weeks ended       June 26, 2022     June 27, 2021   Statement of Earnings                 Operating lease cost   $ 428     $ 432   Variable lease cost     368       442   Less: Sublease income, net     ( 22 )     ( 16 )                   Total net lease cost (a)   $ 774     $ 858       (a) 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 $ 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.   Cash paid for amounts included in the measurement of lease liabilities were as follows (in thousands):       Thirteen weeks ended       June 26, 2022     June 27, 2021                     Operating cash flows from operating leases   $ 364     $ 174     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):         Operating leases     6.0             Weighted average discount rate:         Operating leases     8.873 %   - 16 -     Future lease commitments to be paid and received by the Company as of June 26, 2022 were as follows (in thousands):       Payments     Receipts               Operating Leases     Subleases     Net Leases                             Fiscal year:                         2023 (a)   $ 1,305     $ 186     $ 1,119   2024     1,774       271       1,503   2025     1,678       274       1,404   2026     1,712       278       1,434   2027     1,726       281       1,445   Thereafter     2,036       624       1,412   Total lease commitments   $ 10,231     $ 1,914     $ 8,317   Less: Amount representing interest     2,260                   Present value of lease liabilities (b)   $ 7,971                       (a) 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 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 week periods ended June 26, 2022 and June 27, 2021 were as follows (in thousands):       Thirteen weeks ended       June 26, 2022     June 27, 2021                     Operating lease income, net   $ 22     $ 16       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   1. Contingencies   The Company and its subsidiaries are from time to time involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Company’s results of operations for the period in which the ruling occurs.     NOTE T – SUBSEQUENT EVENTS   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 subsequent events that required recognition or disclosure.   -17-