NATHANS FAMOUS, INC. 10-Q

Item 1. Financial Statements. Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS June 25, 2023 and March 26, 2023 (in thousands, except share and per share amounts)       June 25, 2023     March 26, 2023       (Unaudited)           ASSETS                 CURRENT ASSETS                 Cash   $ 31,936     $ 29,861   Accounts and other receivables, net (Note G)     20,965       15,066   Inventories     764       539   Prepaid expenses and other current assets (Note H)     1,361       1,895   Total current assets     55,026       47,361                     Property and equipment, net of accumulated depreciation of $ 11,140 and $ 10,871 , respectively     3,124       3,321   Operating lease assets (Note Q)     6,104       6,421   Goodwill     95       95   Intangible asset, net (Note I)     826       869   Deferred income taxes     486       375   Other assets     161       168                     Total assets   $ 65,822     $ 58,610                     LIABILITIES AND STOCKHOLDERS’ DEFICIT                                   CURRENT LIABILITIES                 Accounts payable   $ 7,811     $ 6,461   Accrued expenses and other current liabilities (Note K)     8,976       8,130   Current portion of operating lease liabilities (Note Q)     1,743       1,782   Deferred franchise fees     339       336   Total current liabilities     18,869       16,709                     Long-term debt, net of unamortized debt issuance costs of $ 860 and $ 952 , respectively (Note P)     79,140       79,048   Operating lease liabilities (Note Q)     5,058       5,406   Other liabilities     762       737   Deferred franchise fees     1,217       1,272                     Total liabilities     105,046       103,172                     COMMITMENTS AND CONTINGENCIES (Note R)                                   STOCKHOLDERS’ DEFICIT                 Common stock, $ .01 par value; 30,000,000 shares authorized; 9,369,235 shares issued; and 4,079,720 shares outstanding at June 25, 2023 and March 26, 2023.     94       94   Additional paid-in capital     62,742       62,565   Accumulated deficit     ( 15,398 )     ( 20,559 ) Stockholders’ equity before treasury stock     47,438       42,100                     Treasury stock, at cost, 5,289,515 shares at June 25, 2023 and March 26, 2023.     ( 86,662 )     ( 86,662 ) Total stockholders’ deficit     ( 39,224 )     ( 44,562 )                   Total liabilities and stockholders’ deficit   $ 65,822     $ 58,610     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 25, 2023 and June 26, 2022 (in thousands, except per share amounts) (Unaudited)       June 25, 2023     June 26, 2022                     REVENUES                 Sales   $ 28,828     $ 26,894   License royalties     11,658       11,314   Franchise fees and royalties     1,075       1,093   Advertising fund revenue     424       419   Total revenues     41,985       39,720                     COSTS AND EXPENSES                 Cost of sales     24,684       22,667   Restaurant operating expenses     1,043       1,032   Depreciation and amortization     313       233   General and administrative expenses     4,058       3,589   Advertising fund expense     424       419   Total costs and expenses     30,522       27,940                     Income from operations     11,463       11,780                     Interest expense     ( 1,414 )     ( 1,944 ) Interest income     62       22   Other income, net     21       22                     Income before provision for income taxes     10,132       9,880   Provision for income taxes     2,744       2,743   Net income   $ 7,388     $ 7,137                     PER SHARE INFORMATION                 Weighted average shares used in computing income per share:                 Basic     4,080       4,113   Diluted     4,088       4,113                     Income per share:                 Basic   $ 1.81     $ 1.74   Diluted   $ 1.81     $ 1.74                     Dividends declared per share   $ .50     $ .45     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 25, 2023 and June 26, 2022 (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 26, 2023     9,369,235     $ 94     $ 62,565     $ ( 20,559 )     5,289,515     $ ( 86,662 )   $ ( 44,562 )                                                           Cumulative effect of adoption of ASU 2016-13 (Note B)     -       -       -       ( 187 )     -       -       ( 187 ) Dividends on common stock     -       -       -       ( 2,040 )     -       -       ( 2,040 ) Share-based compensation     -       -       177       -       -       -       177   Net income     -       -       -       7,388       -       -       7,388   Balance, June 25, 2023     9,369,235     $ 94     $ 62,742     $ ( 15,398 )     5,289,515     $ ( 86,662 )   $ ( 39,224 )                           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 )   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 25, 2023 and June 26, 2022 (in thousands, except per share amounts) (Unaudited)       June 25, 2023     June 26, 2022   Cash flows from operating activities:                 Net income   $ 7,388     $ 7,137   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     313       233   Amortization of debt issuance costs     92       127   Share-based compensation expense     177       8   Provision for uncollectible accounts     81       81   Deferred income taxes     ( 46 )     17   Other non-cash items     ( 70 )     ( 62 ) Changes in operating assets and liabilities:                 Accounts and other receivables, net     ( 6,232 )     ( 7,558 ) Inventories     ( 225 )     ( 367 ) Prepaid expenses and other current assets     534       133   Other assets     7       6   Accounts payable, accrued expenses and other current liabilities     156       1,123   Deferred franchise fees     ( 52 )     ( 134 ) Other liabilities     25       27                     Net cash provided by operating activities     2,148       771                     Cash flows from investing activities:                 Purchase of property and equipment     ( 73 )     ( 244 )                   Net cash used in investing activities     ( 73 )     ( 244 )                   Cash flows from financing activities:                 Dividends paid to stockholders     -       ( 1,852 ) Repurchase of treasury stock     -       ( 1,070 )                   Net cash used in financing activities     -       ( 2,922 )                   Net increase (decrease) in cash     2,075       ( 2,395 )                   Cash, beginning of period     29,861       50,063                     Cash, end of period   $ 31,936     $ 47,668                     Cash paid during the period for:                 Interest   $ 2,650     $ 3,644   Income taxes   $ 81     $ 146                     Noncash financing activity:                 Dividends declared per share   $ .50     $ .45     See Note S for 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 25, 2023 (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 25, 2023 and June 26, 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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.   The Company uses a 52-53 week fiscal year ending on the Sunday closest to March 31. The 2024 fiscal year will end on March 31, 2024 and will contain 53 weeks.   Certain information and footnote disclosures normally included in financial statements in accordance with GAAP 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 26, 2023 as filed with the SEC on June 8, 2023.   Our significant interim accounting policies include the recognition of advertising fund expense in proportion to advertising fund revenue, and the recognition of income taxes using an estimated annual effective tax rate.   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 26, 2023.     NOTE B – ADOPTION OF NEW ACCOUNTING STANDARD   In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, ” (“CECL”) which requires measurement and recognition of expected versus incurred losses for financial assets held. The Company adopted ASU 2016-13 as of March 27, 2023 (the first day of fiscal 2024) under the modified retrospective method. Accordingly, the consolidated financial statements have not been adjusted prior to the date of adoption.   Upon adoption, the Company recorded an increase to the allowance for credit losses of $ 252 and a cumulative effect adjustment to retained earnings of $ 187 , net of $ 65 of income taxes.   The Company does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated financial statements.   -7-       NOTE C – REVENUES   The Company’s disaggregated revenues for the thirteen weeks ended June 25, 2023 and June 26, 2022 are as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     Branded Products   $ 25,170     $ 23,171   Company-owned restaurants     3,658       3,723   Total sales     28,828       26,894                     License royalties     11,658       11,314                     Royalties     980       901   Franchise fees     95       192   Total franchise fees and royalties     1,075       1,093                     Advertising fund revenue     424       419                     Total revenues   $ 41,985     $ 39,720     The following table disaggregates revenues by primary geographical market (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     United States   $ 39,882     $ 37,917   International     2,103       1,803   Total revenues   $ 41,985     $ 39,720     Contract balances   The following table provides information about contract liabilities from contracts with customers (in thousands):       June 25, 2023     March 26, 2023   Deferred franchise fees (a)   $ 1,556     $ 1,608   Deferred revenues, which are included in                 “Accrued expenses and other current liabilities” (b)   $ 797     $ 1,406       (a) Deferred franchise fees of $ 339 and $ 1,217 as of June 25, 2023 and $ 336 and $ 1,272 as of March 26, 2023 are included in Deferred franchise fees – current and long term, respectively.   (b) Includes $ 547 of deferred license royalties and $ 250 of deferred advertising fund revenue as of June 25, 2023 and $ 906 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 26, 2023.   Significant changes in deferred franchise fees are as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022   Deferred franchise fees at beginning of period   $ 1,608     $ 2,097   New deferrals due to cash received and other     43       58   Revenue recognized during the period     ( 95 )     ( 192 ) Deferred franchise fees at end of period   $ 1,556     $ 1,963     -8-     Significant changes in deferred revenues are as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022   Deferred revenues at beginning of period   $ 1,406     $ 876   Revenue recognized during the period     ( 609 )     ( 351 ) Deferred revenues at end of period   $ 797     $ 525     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   2024 (a)   $ 256   2025     324   2026     301   2027     181   2028     87   Thereafter     407   Total   $ 1,556       (a) Represents franchise fees expected to be recognized for the remainder of the 2024 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less. Amount does not include $ 95 of franchise fee revenue recognized for the thirteen weeks ended June 25, 2023.   We have applied the optional exemption, as provided for under Topic 606 “ Revenues from Contracts with Customers, ” which allows us to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.     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 share-based awards. 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.   The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen week periods ended June 25, 2023 and June 26, 2022, respectively.   Thirteen weeks                                                                                     Net Income       Net Income     Number of Shares     Per Share       2023     2022     2023     2022     2023     2022       (in thousands)     (in thousands)                   Basic EPS                                                 Basic calculation   $ 7,388     $ 7,137       4,080       4,113     $ 1.81     $ 1.74   Effect of dilutive share-based awards     -       -       8       -       -       -                                                     Diluted EPS                                                 Diluted calculation   $ 7,388     $ 7,137       4,088       4,113     $ 1.81     $ 1.74     -9-     Options to purchase 10,000 shares of common stock in the thirteen week period ended June 25, 2023 were excluded in the computation of diluted earnings per share because the exercise price exceeded the average market price of common shares during the period.   Options to purchase 20,000 shares of common stock in the thirteen week period ended June 26, 2022 were excluded in the computation of diluted earnings per share 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 June 25, 2023 and March 26, 2023. The Company’s cash balances principally consist of cash in bank and money market accounts.   At June 25, 2023 and March 26, 2023, 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 25, 2023 and March 26, 2023 were as follows (in thousands):       June 25, 2023     March 26, 2023       Face value     Fair value     Face Value     Fair value                                     Long-term debt   $ 80,000     $ 79,921     $ 80,000     $ 80,080     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, accounts receivable and accounts payable approximate fair value due to the short-term nature of those items.   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 25, 2023, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.   -10-       NOTE G – ACCOUNTS AND OTHER RECEIVABLES, NET   Accounts and other receivables, net, consist of the following (in thousands):       June 25,     March 26,       2023     2023                     Branded product sales   $ 14,124     $ 11,106   Franchise and license royalties     6,389       3,817   Other     822       623         21,335       15,546                     Less: allowance for credit losses     ( 370 )     ( 480 ) Accounts and other receivables, net   $ 20,965     $ 15,066     The recently adopted CECL guidance requires companies to use a current expected credit loss model that immediately recognizes an estimate of credit losses expected to occur over the life of the consolidated financial instruments, including trade receivables. The Company is exposed to credit losses through its trade accounts receivable. Trade accounts receivable are generally 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 credit losses. Accounts that are outstanding longer than the contractual payment terms are generally considered past due.   Under the CECL guidance, the Company applied the credit loss methodology by pooling financial assets based on similar risk characteristics and delinquency status under an aging method at the measurement date. The risk characteristics the Company generally reviews when analyzing its trade accounts receivable pools include the type of receivable (for example, franchise receivable versus license receivable), payment terms, the Company’s previous loss history, current and future economic conditions and the length of time accounts receivables are past due. For those trade accounts receivable that no longer share similar risk characteristics with its pool and potential loss is evident, a specific reserve will be recorded.   For pooled trade account receivables, the Company develops its allowance for credit losses by applying a historical loss rate to each pool based on historical account write-off trends. The Company believes that the past five years provide a reasonable representation of the Company’s operations and performance through various business cycles, both favorable and unfavorable. The allowance for credit losses is then adjusted for current macroeconomic factors, including the effects of COVID-19 and inflation and reasonable and supportable forecasts of future economic conditions. The Company provides for expected credit losses 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 credit losses.   Changes in the Company’s allowance for credit losses for the thirteen week period ended June 25, 2023 and the fiscal year ended March 26, 2023 are as follows (in thousands):       June 25, 2023     March 26, 2023                     Beginning balance   $ 480     $ 258   Cumulative effect of adoption of ASU 2016-13     252       -   Bad debt expense     81       457   Write offs and other     ( 443 )     ( 235 ) Ending balance   $ 370     $ 480     -11-       NOTE H – PREPAID EXPENSES AND OTHER CURRENT ASSETS   Prepaid expenses and other current assets consist of the following (in thousands):       June 25,     March 26,       2023     2023                     Income taxes   $ -     $ 146   Real estate taxes     159       78   Insurance     354       389   Marketing     601       814   Other     247       468   Total prepaid expenses and other current assets   $ 1,361     $ 1,895       NOTE I - INTANGIBLE ASSET   The Company’s definite-lived intangible asset consists of trademarks, and the trade name 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 five years concluding in fiscal year 2028, 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 25, 2023 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of June 25, 2023.     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 25, 2023 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of June 25, 2023.   -12-       NOTE K – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES   Accrued expenses and other current liabilities consist of the following (in thousands):       June 25,     March 26,       2023     2023   Dividend payable   $ 2,040     $ -   Payroll and other benefits     1,310       3,410   Accrued rebates     793       698   Rent and occupancy costs     92       70   Deferred revenue     797       1,406   Interest     814       2,143   Professional fees     52       99   Sales, use and other taxes     194       76   Corporate income taxes     2,540       -   Other     344       228   Total accrued expenses and other current liabilities   $ 8,976     $ 8,130       NOTE L – INCOME TAXES   The income tax provisions for the thirteen week periods ended June 25, 2023 and June 26, 2022 reflect effective tax rates of 27.1 % and 27.8 %, respectively. The effective income tax rate for the thirteen weeks ended June 25, 2023 reflected $ 2,744 of income tax expense recorded on $ 10,132 of pre-tax income. The effective income tax rate for the thirteen weeks ended June 26, 2022 reflected $ 2,743 of income tax expense recorded on $ 9,880 of pre-tax income. The effective tax rates are higher than the United States Federal statutory rates primarily due to state and local taxes.   The amount of unrecognized tax benefits included in Other liabilities at June 25, 2023 and March 26, 2023 was $ 446 and $ 432 , respectively, all of which would impact the Company’s effective rate, if recognized. As of June 25, 2023 and March 26, 2023, the Company had approximately $ 321 and $ 305 , 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 supermarkets, club stores and grocery channels 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, sausages, frozen crinkle-cut French fries and additional products through retail supermarkets, 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 25, 2023     June 26, 2022                     Revenues                 Branded Product Program   $ 25,170     $ 23,171   Product licensing     11,658       11,314   Restaurant operations     4,733       4,816   Corporate (1)     424       419   Total revenues   $ 41,985     $ 39,720                     Income from operations                 Branded Product Program   $ 1,961     $ 2,067   Product licensing     11,613       11,269   Restaurant operations     669       641   Corporate     ( 2,780 )     ( 2,197 ) Income from operations   $ 11,463     $ 11,780                     Interest expense     ( 1,414 )     ( 1,944 ) Interest income     62       22   Other income, net     21       22   Income before provision for income taxes   $ 10,132     $ 9,880     (1) Represents advertising fund revenue.     NOTE N – SHARE-BASED COMPENSATION   Total share-based compensation expense during the thirteen week periods ended June 25, 2023 and June 26, 2022 was $ 177 and $ 8 , respectively. Total share-based compensation expense is included in general and administrative expenses in our accompanying Consolidated Statements of Earnings. As of June 25, 2023, there was $ 3,055 of unamortized compensation expense related to share-based awards. We expect to recognize this expense over approximately forty-nine months, which represents the weighted average remaining requisite service periods for such awards.   The Company recognizes compensation expense for unvested share-based awards on a straight-line basis over the requisite service period. Compensation expense recognized under all share-based awards is as follows (in thousands):                        Thirteen weeks ended       June 25, 2023     June 26, 2022                     Stock options   $ 8     $ 8   Restricted stock units     169       -   Total compensation cost   $ 177     $ 8     Stock options   There were no new share-based awards granted during the thirteen week period ended June 25, 2023.   Transactions with respect to stock options for the thirteen weeks ended June 25, 2023 are as follows:               Weighted     Weighted     Aggregate               Average     Average     Intrinsic               Exercise     Remaining     Value       Shares     Price     Contractual Life     (in thousands)                                     Options outstanding at March 26, 2023     20,000     $ 79.20       1.92     $ 40   Granted     -       -       -       -   Exercised     -       -       -       -   Options outstanding at June 25, 2023     20,000     $ 79.20       1.67     $ 78                                     Options exercisable at June 25, 2023     12,500     $ 85.62       .80     $ 19     -14-     Restricted stock units   Transactions with respect to restricted stock units for the thirteen weeks ended June 25, 2023 are as follows:               Weighted               Average               Grant-date Fair value       Shares     Per share                     Unvested restricted stock units at March 26, 2023     50,000     $ 67.59                     Granted     -     $ -                     Vested     -     $ -                     Unvested restricted stock units at June 25, 2023     50,000     $ 67.59       NOTE O – STOCKHOLDERS’ EQUITY   1. Dividends   Effective June 8, 2023, the Company’s Board of Directors (the “Board”) declared its first quarterly cash dividend of $ 0.50 per share for fiscal 2024, which was paid on June 28, 2023 to stockholders of record as of the close of business on June 20, 2023.   Effective August 3, 2023, the Board declared its second quarterly cash dividend of $ 0.50 per share for fiscal 2024 payable on September 1, 2023 to stockholders of record as of the close of business on August 21, 2023.   Our ability to pay future dividends is limited by the terms of the Indenture with U.S. Bank Trust Company, 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 25, 2023, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan. At June 25, 2023 there were 98,116 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.     NOTE P – LONG-TERM DEBT   Long-term debt consists of the following (in thousands):       June 25,     March 26,       2023     2023                     6.625 % Senior Secured Notes due 2025   $ 80,000     $ 80,000   Less: unamortized debt issuance costs     ( 860 )     ( 952 ) Long-term debt, net   $ 79,140     $ 79,048     -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 25, 2023 and June 26, 2022 were as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     Operating lease cost   $ 426     $ 428   Variable lease cost     388       368   Less: Sublease income, net     ( 21 )     ( 22 )                   Total net lease cost   $ 793     $ 774     The components of the net lease cost on the Consolidated Statement of Earnings for the thirteen week periods ended June 25, 2023 and June 26, 2022 were as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     Restaurant operating expenses   $ 615     $ 607   General and administrative expenses     199       189   Less: Other income, net     ( 21 )     ( 22 )                   Total net lease cost   $ 793     $ 774     Cash paid for amounts included in the measurement of lease liabilities for the thirteen week periods ended June 25, 2023 and June 26, 2022 were as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     Operating cash flows from operating leases   $ 393     $ 364     The weighted average remaining lease term and weighted average discount rate for operating leases as of June 25, 2023 were as follows:   Weighted average remaining lease term (years):     5.1             Weighted average discount rate:     8.862 %   -16-     Future lease commitments to be paid and received by the Company as of June 25, 2023 were as follows (in thousands):       Payments     Receipts               Operating Leases     Subleases     Net Leases                             Fiscal year:                         2024 (a)   $ 1,240     $ 188     $ 1,052   2025     1,690       274       1,416   2026     1,721       278       1,443   2027     1,726       281       1,445   2028     1,572       129       1,443   Thereafter     462       495       ( 33 ) Total lease commitments   $ 8,411     $ 1,645     $ 6,766   Less: Amount representing interest     ( 1,610 )                 Present value of lease liabilities (b)   $ 6,801                       (a) Represents future lease commitments to be paid and received by the Company for the remainder of the 2024 fiscal year. Amount does not include $ 459 of lease commitments paid and received by the Company for the thirteen week period ended June 25, 2023.   (b) The present value of minimum operating lease payments of $ 1,743 and $ 5,058 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 25, 2023 and June 26, 2022 were as follows (in thousands):       Thirteen weeks ended       June 25, 2023     June 26, 2022                     Operating lease income, net   $ 21     $ 22       NOTE R - COMMITMENTS AND CONTINGENCIES   Legal Proceedings   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 S – SUPPLEMENTAL CASH FLOW INFORMATION   Noncash financing activities   Dividends declared but not yet paid of $ 2,040 are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet at June 25, 2023.     NOTE T – SUBSEQUENT EVENTS   The Company evaluated subsequent events through the date the consolidated financial statements were issued and filed with the SEC. There were no subsequent events that required recognition or disclosure.   -17-