NATHANS FAMOUS, INC. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and Exchange Act Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of March 30, 2025. Based on that evaluation, the Chief Executive Officer, and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management ’ s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined by Exchange Act Rule 13a-15(f) and Exchange Act Rule 15d-15(f). Our internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted accounting principles in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Management has assessed the effectiveness of our system of internal control over financial reporting as of March 30, 2025. In making this assessment, management used the framework in Internal Control — Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment and the criteria set forth by COSO in 2013, management believes that Nathan’s maintained effective internal control over financial reporting as of March 30, 2025. The effectiveness of our internal control over financial reporting as of March 30, 2025, has been audited by CBIZ CPAs P.C., an independent registered public accounting firm which has also audited our consolidated financial statements, as stated in its attestation report which is included herein. Changes in Internal Controls There were no changes in our internal controls over financial reporting that occurred during the quarter ended March 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 51 Limitations on the Effectiveness of Controls We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures are effective at the reasonable assurance level. Item 9B. Other Information. As disclosed in this Annual Report on Form 10-K, the Company’s Board of Directors has declared a $0.50 per share dividend payable on July 1, 2025 to shareholders of record at the close of business on June 23 , 2025. During the quarter ended March 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. None. 52 Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting To the Stockholders and Board of Directors of Nathan’s Famous, Inc. Opinion on Internal Control over Financial Reporting We have audited Nathan’s Famous, Inc. and Subsidiaries’ (the “Company”) internal control over financial reporting as of March 30, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 30, 2025, based on criteria established in COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet as of March 30, 2025 and the related consolidated statements of earnings, changes in stockholders’ deficit, and cash flows and the related notes (collectively referred to as the “financial statements”) for the fifty-two week period ended March 30, 2025 of the Company, and our report dated June 10, 2025 expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Annual Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate. /s/ CBIZ CPAs P.C. CBIZ CPAs P.C. New York New York June 10, 2025 53 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required in response to this Item is incorporated herein by reference from the discussions under the captions Proposal 1 – Election of Directors, Corporate Governance Management and Security Ownership in our proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Report. Our Board of Directors has adopted a Financial Officer Code of Ethics applicable to the Company’s Chief Executive Officer, Chief Financial Officer and all other members of the Company’s Finance Department. This Code of Ethics is posted on the Company’s website within a broader Code of Business Conduct and Ethics at www.nathansfamous.com in the Investor Relations section. We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or a waiver from, the provision of our Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of such provision of our Code of Ethics by posting such information on our website within four business days of the date of such amendment or waiver. In the case of a waiver, the nature of the waiver, the name of the person to whom the waiver was granted and the date of the waiver will also be disclosed. Item 11. Executive Compensation. The information required in response to this Item is incorporated herein by reference from the discussion under the caption Executive Compensation , including the Summary Compensation and other tables, Non-Qualified Deferred Compensation, Risk Consideration in our Compensation Programs and 2025 Director Compensation in our proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Report. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required in response to this Item is incorporated herein by reference from the discussion under the caption Equity Plan Information and Security Ownership in our proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Report. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required in response to this Item is incorporated herein by reference from the discussion under the caption Corporate Governance – Director Independence and Corporate Governance – Certain Relationships and Related Persons transactions in our proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the fiscal year covered by this Report. 54 Item 14. Principal Accountant Fees and Services. Audit Fees We were billed by CBIZ CPAs P.C. and Marcum LLP the aggregate amount of approximately $327,000 and $70,000 for fiscal 2025 for fees for professional services rendered for the audit of our annual financial statements and the effectiveness of our internal control over financial reporting, as well as the review of our financial statements included in our Form 10-Q. We were billed by Marcum LLP the aggregate amount of approximately $381,000 for fiscal 2024 for fees for professional services rendered for the audit of our annual financial statements and the effectiveness of our internal control over financial reporting, as well as the review of our financial statements included in our Form 10-Q. Audit-Related Fees CBIZ CPAs P.C. or Marcum LLP did not render any audit-related services for fiscal 2025 and 2024, respectively and, accordingly, did not bill for any such services. Tax Fees CBIZ CPAs P.C. or Marcum LLP did not render any tax compliance, tax advice or tax planning services for fiscal 2025 and 2024, respectively and, accordingly, did not bill for any such services. All Other Fees CBIZ CPAs P.C. or Marcum LLP did not render any other services for fiscal 2025 and 2024, respectively and, accordingly, did not bill for any such services. Pre-Approval Policies Our Audit Committee has not adopted any pre-approval policies. Instead, the Audit Committee will specifically pre-approve the provision by CBIZ CPAs P.C. of all audit and non-audit services. Our Audit Committee approved all of the audit services provided by CBIZ CPAs P.C. and Marcum LLP during fiscal 2025 and 2024, respectively. 55 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) (1) Consolidated Financial Statements The consolidated financial statements listed in the accompanying index to the consolidated financial statements on Page F-1 are filed as part of this Report. (2) Financial Statement Schedule None. (3) Exhibits Certain of the following exhibits were previously filed as exhibits to other reports or registration statements filed by the Registrant under the Securities Act of 1933 or under the Securities Exchange Act of 1934 and are therefrom incorporated by reference. Exhibit No. Exhibit 3.1 Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-1 No. 33- 56976.) 3.2 Amendment to the Certificate of Incorporation, filed December 15, 1992. (Incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-1 No. 33-56976.) 3.3 By-Laws, as amended. (Incorporated by reference to Exhibit 3.1 to Form 8-K dated November 1, 2006.) 3.4 First Amendment to By-Laws (Incorporated by reference to Exhibit 3.1 to Form 8-K dated July 6, 2023.) 4.1 Specimen Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-1 No. 33-56976.) 4.2 Indenture, dated as of November 1, 2017, by and among Nathan’s Famous, Inc., certain of its wholly owned subsidiaries, as guarantors, and U.S. Bank Trust Company, National Association (formerly U.S. Bank National Association), as trustee and collateral trustee (including the form of Note (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report filed on Form 8-K dated November 1, 2017.) 4.3 Description of Common Stock (incorporated by reference to Exhibit 4.5 to Form 10-K for the year ended March 29, 2020.) 10.1 Leases for premises at Coney Island, New York, as follows: (Incorporated by reference to Exhibit 10.3 to Registration Statement on Form S-1 No. 33-56976.) a) Lease, dated November 22, 1967, between Nathan’s Realty Associates and the Company. b) Lease, dated November 22, 1967, between Ida’s Realty Associates and the Company. 10.2 Form of Standard Franchise Agreement. (Incorporated by reference to Exhibit 10.12 to Registration Statement on Form S-1 No. 33-56976.) 10.3 ***Employment Agreement with Howard M. Lorber, dated as of December 15, 2006. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 15, 2006.) 10.4 ***Employment Agreement with Eric Gatoff, dated as of December 15, 2006. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated December 15, 2006.) 10.5 ***Amendment to Employment Agreement with Eric Gatoff dated August 3, 2010. (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended June 27, 2010.) 10.6 Agreement of Lease between One-Two Jericho Plaza Owner LLC and Nathan’s Famous Services, Inc. dated September 11, 2009, (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended September 27, 2009.) 10.7 Guaranty by Nathan’s Famous, Inc. of Agreement of Lease with One-Two Jericho Plaza Owner LLC dated September 11, 2009, (Incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended September 27, 2009.) 56 10.8 ***2010 Stock Incentive Plan (Incorporated by reference to Exhibit A to Proxy Statement on Schedule 14A dated July 23, 2010). 10.9 ***Amendment to 2010 Stock Incentive Plan (Incorporated by reference to Exhibit A to Proxy Statement on Schedule 14A dated July 23, 2012). 10.10 ***Amendment to Employment Agreement with Howard M. Lorber, dated November 1, 2012. (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended September 23, 2012). 10.11 ***Amendment Number 2, dated December 7, 2017 to Employment Agreement with Howard M. Lorber (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 6, 2017). 10.12 **Letter agreement dated December 5, 2012 between Nathan’s Famous Systems, Inc. and John Morrell & Co. (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended December 23, 2012). 10.13 First Amendment to Licensing and Supply Agreement, dated September 22, 2016 between Nathan’s Famous Systems, Inc. and John Morrell & Co. (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended September 24, 2017). 10.14 Second Amendment to Licensing and Supply Agreement, dated June 29, 2017 between Nathan’s Famous Systems, Inc. and John Morrell & Co. (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended September 24, 2017). 10.15 ***Restricted Stock Agreement with Eric Gatoff, dated June 4, 2013. (Incorporated by reference to Exhibit 10.27 to Form 10-K for the year ended March 31, 2013.) 10.16 Parity Lien Security Agreement dated as of November 1, 2017, by and among Nathan’s Famous, Inc. and Other Assignors Identified therein and U.S. Bank Trust Company, National Association (formerly U.S. Bank National Association), as Collateral Trustee. (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended December 24, 2017.) 10.17 ***2019 Management Incentive Plan for the Fiscal Year ending March 29, 2020 (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended June 24, 2018). 10.18 ***Nathan’s Famous, Inc. Code Section 162(m) Bonus Plan (Incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed on July 28, 2016). 10.19 Agreement of Sale between Nathan’s Famous Operating Corp. and 660 86 LLC dated September 8, 2017. (Incorporated by reference to Exhibit 10.20 to Form 10-K for the year ended March 25, 2018.) 10.20 Amendment to Agreement of Sale between Nathan’s Famous Operating Corp. and 660 86 LLC dated March 6, 2018. (Incorporated by reference to Exhibit 10.21 to Form 10-K for the year ended March 25, 2018.) 10.21 Amendment to Agreement of Sale between Nathan’s Famous Operating Corp. and 660 86 LLC dated July 15, 2018. (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended June 24, 2018.) 10.22 First Amendment to Lease, dated April 1, 2019 by and between Jericho Plaza, LLC and Nathan’s Famous Services, Inc. (Incorporated by reference to Exhibit 10.22 to Form 10-K for the year ended March 31, 2019.) 10.23 ***2019 Stock Incentive Plan. (Incorporated by reference to Annex A to Proxy Statement on Schedule 14A dated July 26, 2019.) 10.24 ***Amendment No. 3 to Employment Agreement dated as of December 8, 2022 between Nathan’s Famous, Inc. and Howard M. Lorber (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 9, 2022.) 10.25 Credit Agreement, dated as of July 10, 2024, among Nathan’s Famous, Inc., as the Borrower, the Subsidiaries of the Borrower Party hereto, as Guarantors, and Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and the Other Lenders Party hereto (Incorporated by Reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K dated July 10, 2024.) 16.1 Letter of Grant Thornton LLP, dated July 6, 2018. (Incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K dated July 6, 2018.) 16.2 Letter from Marcum LLP dated February 20, 2025 (Incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K dated February 20, 2025.) 19.1 Policy on Insider Trading (Incorporated by reference to Exhibit 19.1 to Form 10-K for the year ended March 26, 2023.) 19.2 Policy on Trading Procedures for Covered Individuals (Incorporated by reference to Exhibit 19.2 to Form 10-K for the year ended March 26, 2023.) 21 (1) List of Subsidiaries of the Registrant. 57 23.1 (1) Consent of CBIZ CPAs P.C. dated June 10, 2025. 23.2 (1) Consent of Marcum LLP dated June 10, 2025. 31.1 (1) Certification by Eric Gatoff, Chief Executive Officer, pursuant to Rule 13a - 14(a). 31.2 (1) Certification by Robert Steinberg, Chief Financial Officer, pursuant to Rule 13a - 14(a). 32.1 (1) Certification by Eric Gatoff, Chief Executive Officer of Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 (1) Certification by Robert Steinberg, Chief Financial Officer of Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Nathan’s Famous, Inc. Clawback Policy (Incorporated by reference to Exhibit 97.1 to Form 10-K for the year ended March 31, 2024.) 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Date File (embedded within the Inline XBRL and contained in Exhibit 101) (1) Filed herewith. **Filed with confidential portions omitted pursuant to request for confidential treatment. The omitted portions have been separately filed with the SEC. *** Indicates a management plan or arrangement. Item 16. Form 10-K Summary. None. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 10th day of June, 2025. Nathan’s Famous, Inc. /s/ ERIC GATOFF Eric Gatoff Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 10th day of June, 2025. /s/ ERIC GATOFF Eric Gatoff Chief Executive Officer (Principal Executive Officer) /s/ HOWARD LORBER Howard Lorber Executive Chairman /s/ ROBERT STEINBERG Robert Steinberg Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ WAYNE NORBITZ Wayne Norbitz, Director /s/ ROBERT J. EIDE Robert J. Eide, Director /s/ BARRY LEISTNER Barry Leistner, Director /s/ BRIAN GENSON Brian Genson, Director /s/ ATTILIO F. PETROCELLI Attilio F. Petrocelli, Director /s/ CHARLES RAICH Charles Raich, Director /s/ ANDREW LEVINE Andrew Levine, Director /s/ JOANNE PODELL Joanne Podell, Director Nathan’s Famous, Inc. and Subsidiaries TABLE OF CONTENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 199 ) F-2 – F-3 Consolidated Balance Sheets F-4 Consolidated Statements of Earnings F-5 Consolidated Statements of Changes in Stockholders’ Deficit F-6 – F-7 Consolidated Statements of Cash Flows F-8 Notes to Consolidated Financial Statements F-9 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Nathan’s Famous, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Nathan’s Famous, Inc. and Subsidiaries (the “Company”) as of March 30, 2025, the related consolidated statements of earnings, changes in stockholders’ deficit and cash flows for the fifty-two week period ended March 30, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 30, 2025, and the results of its operations and its cash flows for the fifty-two week period ended March 30, 2025, in conformity with accounting principles generally accepted in the United States of America . We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of March 30, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated June 10, 2025 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ CBIZ CPAs P.C. CBIZ CPAs P.C. We have served as the Company’s auditor since 2018 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024.) New York, NY June 10, 2025 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Nathan’s Famous, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Nathan’s Famous, Inc. and Subsidiaries (the “Company”) as of March 31, 2024, the related consolidated statements of earnings, changes in stockholders’ deficit and cash flows for the fifty-three week period ended March 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operations and its cash flows for the fifty-three week period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor from 2018 through 2025. New York, NY June 12, 2024 F-3 Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) March 30, 2025 March 31, 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 27,802 $ 21,027 Accounts and other receivables, net (Note D) 14,064 14,731 Inventories 1,221 842 Prepaid expenses and other current assets (Note E) 2,048 2,176 Total current assets 45,135 38,776 Property and equipment, net of accumulated depreciation of $ 12,295 and $ 11,687 , respectively (Note F) 2,114 2,673 Operating lease right-of-use assets (Note K) 4,987 6,203 Goodwill 95 95 Intangible asset, net 522 695 Deferred income taxes (Note H) 510 275 Other assets 113 141 Total assets $ 53,476 $ 48,858 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Current portion of long-term debt (Note J) $ 2,400 $ - Accounts payable 6,163 5,744 Accrued expenses and other current liabilities (Note G) 5,969 7,615 Current portion of operating lease liabilities (Note K) 1,923 1,887 Deferred franchise fees 309 327 Total current liabilities 16,764 15,573 Long-term debt, net of unamortized debt issuance costs of $ 327 and $ 438 , respectively (Note J) 48,073 59,562 Long-term portion of operating lease liabilities (Note K) 3,528 4,937 Other liabilities 927 810 Deferred franchise fees 697 899 Total liabilities 69,989 81,781 COMMITMENTS AND CONTINGENCIES (Note M) STOCKHOLDERS’ DEFICIT Common stock, $ .01 par value; 30,000,000 shares authorized; 9,379,025 and 9,374,130 shares issued; and 4,089,510 and 4,084,615 shares outstanding at March 30, 2025 and March 31, 2024, respectively 94 94 Additional paid-in capital 63,492 62,936 Retained earnings (Accumulated deficit) 6,563 ( 9,291 ) Stockholders’ equity before treasury stock 70,149 53,739 Treasury stock, at cost, 5,289,515 shares at March 30, 2025 and March 31, 2024 ( 86,662 ) ( 86,662 ) Total stockholders’ deficit ( 16,513 ) ( 32,923 ) Total liabilities and stockholders’ deficit $ 53,476 $ 48,858 The accompanying notes are an integral part of these consolidated financial statements. F-4 Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except share and per share amounts) Fifty-Two Fifty-Three weeks ended weeks ended March 30, 2025 March 31, 2024 REVENUES Branded Products $ 91,828 $ 86,489 Company-owned restaurants 12,714 12,103 License royalties 37,418 33,581 Franchise fees and royalties 4,148 4,356 Advertising fund revenue 2,074 2,081 Total revenues 148,182 138,610 COSTS AND EXPENSES Cost of sales 89,707 83,182 Restaurant operating expenses 4,379 4,177 Depreciation and amortization 957 1,135 General and administrative expenses 14,530 15,612 Advertising fund expense 2,112 1,998 Total costs and expenses 111,685 106,104 Income from operations 36,497 32,506 Interest expense ( 4,106 ) ( 5,355 ) Loss on debt extinguishment (NOTE J) ( 389 ) ( 169 ) Interest and dividend income 672 383 Other income, net 87 86 Income before provision for income taxes 32,761 27,451 Provision for income taxes 8,735 7,835 Net income $ 24,026 $ 19,616 PER SHARE INFORMATION Weighted average shares used in computing net income per share: Basic 4,086,000 4,081,000 Diluted 4,095,000 4,087,000 Net income per share: Basic $ 5.88 $ 4.81 Diluted $ 5.87 $ 4.80 The accompanying notes are an integral part of these consolidated financial statements. F-5 Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT Fifty-two weeks ended March 30, 2025 and the Fifty-three weeks ended March 31, 2024 (in thousands, except share and per share amounts) 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 - - ( 187 ) - - ( 187 ) Shares issued in connection with share-based compensation plans 4,895 - - - - - - Withholding tax on net share settlement of share-based compensation plans - - ( 362 ) - - - ( 362 ) Dividends on common stock ($ 2.00 per share) - - - ( 8,161 ) - - ( 8,161 ) Share-based compensation - - 733 - - - 733 Net income - - - 19,616 - - 19,616 Balance, March 31, 2024 9,374,130 $ 94 $ 62,936 $ ( 9,291 ) 5,289,515 $ ( 86,662 ) $ ( 32,923 ) The accompanying notes are an integral part of these consolidated financial statements. F-6 Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT Fifty-two weeks ended March 30, 2025 and the Fifty-three weeks ended March 31, 2024 (in thousands, except share and per share amounts) Retained Additional Earnings Total Common Common Paid-in (Accumulated Treasury Stock, at Cost Stockholders’ Shares Stock Capital Deficit) Shares Amount Deficit Balance, March 31, 2024 9,374,130 $ 94 $ 62,936 $ ( 9,291 ) 5,289,515 $ ( 86,662 ) $ ( 32,923 ) Shares issued in connection with share-based compensation plans 4,895 - - - - - - Withholding tax on net share settlement of share-based compensation plans - - ( 437 ) - - - ( 437 ) Dividends on common stock ($ 2.00 per share) - - - ( 8,172 ) - - ( 8,172 ) Share-based compensation - - 993 - - - 993 Net income - - - 24,026 - - 24,026 Balance, March 30, 2025 9,379,025 $ 94 $ 63,492 $ 6,563 5,289,515 $ ( 86,662 ) $ ( 16,513 ) The accompanying notes are an integral part of these consolidated financial statements. F-7 Nathan ’ s Famous, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fifty-Two Fifty-Three weeks ended weeks ended March 30, 2025 March 31, 2024 Cash flows from operating activities: Net income $ 24,026 $ 19,616 Adjustments to reconcile net income to net cash provided by operating activities Loss on debt extinguishment 389 169 Depreciation and amortization 957 1,135 Amortization of debt issuance costs 153 345 Share-based compensation expense 993 733 Provision for expected credit losses 275 157 Deferred income taxes ( 235 ) 165 Changes in operating assets and liabilities: Accounts and other receivables, net 392 ( 74 ) Inventories ( 379 ) ( 303 ) Prepaid expenses and other current assets 128 ( 281 ) Other assets 28 27 Operating lease assets and liabilities ( 157 ) ( 146 ) Accounts payable, accrued expenses and other current liabilities ( 1,227 ) ( 1,232 ) Deferred franchise fees ( 220 ) ( 382 ) Other liabilities 117 73 Net cash provided by operating activities 25,240 20,002 Cash flows from investing activities: Purchases of property and equipment, net ( 225 ) ( 313 ) Net cash used in investing activities ( 225 ) ( 313 ) Cash flows from financing activities: Proceeds from Credit Facility 60,000 - Repayment of Senior Secured Notes ( 60,000 ) ( 20,000 ) Repayment of Credit Facility ( 9,200 ) - Debt issuance costs ( 431 ) - Dividends paid to stockholders ( 8,172 ) ( 8,161 ) Payments of withholding tax on net share settlement of share-based compensation plans ( 437 ) ( 362 ) Net cash used in financing activities ( 18,240 ) ( 28,523 ) Net increase (decrease) in cash and cash equivalents 6,775 ( 8,834 ) Cash and cash equivalents, beginning of year 21,027 29,861 Cash and cash equivalents, end of year $ 27,802 $ 21,027 Cash paid during the year for: Interest $ 5,481 $ 5,477 Income taxes $ 8,489 $ 8,309 The accompanying notes are an integral part of these consolidated financial statements. F-8 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE A - DESCRIPTION AND ORGANIZATION OF BUSINESS Nathan’s Famous, Inc. and subsidiaries (collectively the “Company” or “Nathan’s”) has historically operated or franchised a chain of retail fast food restaurants featuring the “Nathan’s World Famous Beef Hot Dog”, crinkle-cut French-fried potatoes and a variety of other menu offerings. Nathan’s has also established a Branded Product Program, which enables foodservice retailers to sell select Nathan’s proprietary products outside of the realm of a traditional franchise relationship. Nathan’s also licenses the manufacture and sale of “Nathan’s Famous” packaged hot dogs, crinkle-cut French fries and a number of other products to a variety of third parties for sale to supermarkets, club stores and grocery stores. The Company is also the owner of the Arthur Treacher’s Fish & Chips brand. Arthur Treacher’s main product is its "Original Fish & Chips" product consisting of fish fillets coated with a special batter prepared under a proprietary formula, deep-fried golden brown, and served with English-style chips and corn meal "hush puppies." The Company considers itself to be a brand marketer of its products to the foodservice and retail industries, pursuant to its various business structures. Nathan’s has also pursued co-branding and co-hosting initiatives. At March 30, 2025, the Company’s restaurant system included four Company-owned restaurants (including one seasonal unit) in the New York City metropolitan area and 230 franchised units, located in 17 states and 12 foreign countries. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies have been applied in the preparation of the consolidated financial statements: 1. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 2. Fiscal Year The Company’s fiscal year ends on the last Sunday in March, which results in a 52 or 53 week reporting period. The fiscal year ended March 30, 2025 was on the basis of a 52 week reporting period and the fiscal year ended March 31, 2024 was on the basis of a 53 week reporting period. All references to years and quarters relate to fiscal periods rather than calendar periods. F-9 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3. Reclassifications Certain prior year amounts have been reclassified in operating activities within the Consolidated Statements of Cash Flows to conform with the current year presentation. This reclassification does not affect previously reported cash flows from operating activities in the Consolidated Statements of Cash Flows. 4. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management in preparing the consolidated financial statements include the valuation of long lived assets, the valuation of an intangible asset, the allowance for credit losses, customer rebates and the accounting for income taxes. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and other assumptions under the circumstances. Actual results could differ from those estimates. 5. Cash and Cash Equivalents Cash and cash equivalents principally consist of cash in bank accounts, money market accounts and money market funds. The Company considers money market accounts and money market funds to be cash equivalents. Cash equivalents were $ 19,400 and $ 11,330 at March 30, 2025 and March 31, 2024, respectively. At March 30, 2025 and March 31, 2024, substantially all of the Company’s cash balances are in excess of insurance limits of the Federal Deposit Insurance Corporation, or the FDIC. The Company has not experienced any losses in such accounts. 6. Inventories Inventories, which are stated at the lower of cost or net realizable value, consist primarily of food, beverages, and paper supplies. Cost is determined using the first-in, first-out method. F-10 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 7. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term of the related asset. The estimated useful lives are as follows: Building and improvements (years) 5 – 25 Machinery, equipment, furniture and fixtures (years) 3 – 15 Leasehold improvements (years) 5 – 20 8. Goodwill and Intangible Asset Goodwill and intangible assets consist of (i) goodwill of $ 95 resulting from the acquisition of Nathan’s in 1987; and (ii) trademarks, and the trade name and other intellectual property of $ 522 in connection with the Arthur Treacher’s brand. Goodwill is not amortized, but is tested for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. As of March 30, 2025 and March 31, 2024 the Company performed its annual quantitative impairment test of goodwill and has determined no impairment is deemed to exist. Based upon the review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is three years concluding in fiscal year 2028, and the intangible asset is subject to annual amortization. The Company has recorded amortization expense of $ 173 for the fiscal year ending March 30, 2025 and estimates that our annual amortization expense will approximate $ 173 for each of the next three fiscal years. The Company’s definite-lived intangible asset is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. 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. 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 fiscal years ended March 30, 2025 and March 31, 2024. 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. F-11 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 9. Long-lived Assets Long-lived assets on Company-owned restaurants 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 assets, 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 assets. 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. No long-lived assets were deemed impaired during the fiscal years ended March 30, 2025 and March 31, 2024. 10. Leases Determination of Whether a Contract Contains a Lease We determine if an arrangement is a lease at inception or modification of a contract and classify each lease as either an operating or finance lease at commencement. The Company only reassesses lease classifications subsequent to commencement upon a change to the expected lease term or the contract being modified. Operating leases represent the Company’s right to use an underlying asset as lessee for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. F-12 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) ROU Model and Determination of Lease Term The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, as both lessee and lessor, the Company includes option periods when it is reasonably certain that those options will be exercised. Significant Assumptions and Judgement Management makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income would vary if different estimates and assumptions were used. F-13 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Operating Leases For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, rent expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other Assets” where the Company is a lessor. The Company recorded $ 15 and $ 22 in Other Assets at March 30, 2025 and March 31, 2024, respectively. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Certain leases may include rent escalations based on inflation indexes. Subsequent escalations subject to such an index and contingent rental payments are recognized as variable lease expense in the period incurred. Lease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense relating to the operating lease liability. Variable lease cost for operating leases include Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Leases with an initial expected term of 12 months or less are not recorded in the Consolidated Balance Sheets and the related lease expense is recognized on a straight-line basis over the lease term. Lease costs are recorded in the Consolidated Statements of Earnings based on the nature of the underlying leases as follows: (1) rental expense related to leases for Company-owned restaurants is recorded to “Restaurant operating expenses,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Other income, net” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative expenses.” Rental income for operating leases on properties subleased to franchisees is recorded net of associated lease costs to “Other income, net.” At March 30, 2025, the Company leases one site which it in turn subleases to a franchisee, which expires in April 2027 exclusive of renewal options. The Company remains liable for all lease costs when property is subleased to a franchisee. F-14 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 11. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy, as outlined in the applicable accounting guidance, is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: ● 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 and reflect the Company’s own assumptions The use of observable market inputs (quoted market prices) when measuring fair value and, specifically, the use of Level 1 quoted prices to measure fair value are required whenever possible. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures quarterly and based on various factors, it is possible that an asset or liability may be classified differently from year to year. At March 30, 2025 and March 31, 2024, we did not have any assets or liabilities that were recorded at fair value. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of those items. The carrying amount of our long-term debt (see NOTE J – LONG TERM DEBT) also approximates fair value since such borrowings bear interest at variable market rates and is categorized as Level 2. The face and fair value of the 6.625 % Senior Secured Notes due 2025 (“2025 Notes”) as of March 31, 2024 was $ 60,000 and $ 59,903 , respectively, and was based upon review of observable pricing in secondary markets as of March 31, 2024. Accordingly, the Company classified it as Level 2. F-15 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The majority of the Company’s non-financial assets and liabilities are not required to be carried at fair value on a recurring basis. However, the Company is required on a non-recurring basis to use fair value measurements when analyzing asset impairment as it relates to goodwill and its other definite-lived asset and long-lived assets. The Company utilized the income approach (Level 3 inputs) which utilized projected undiscounted cash flows in performing its annual impairment testing of the Company’s intangible asset and long-lived assets. 12. Start-up Costs Pre-opening and similar restaurant costs are expensed as incurred and are included in “Restaurant operating expenses” in the accompanying Consolidated Statement of Earnings. 13. Revenue Recognition - Branded Product Program The Company recognizes sales from the Branded Product Program and certain products sold from the Branded Menu Program upon delivery to Nathan’s customers via third party common carrier. Rebates provided to customers are classified as a reduction to sales. 14. Revenue Recognition - Company-owned Restaurants Sales by Company-owned restaurants, which are typically paid in cash or with credit card by the customer, are recognized at the point of sale when food and beverage items are sold. Sales are presented net of sales tax collected from customers and remitted to governmental taxing authorities. 15. Revenue Recognition - License Royalties The Company earns revenue from royalties on the licensing of the use of its intellectual property in connection with certain products produced and sold by outside vendors. The use of the Company’s intellectual property must be approved by the Company prior to each specific application to ensure proper quality and a consistent image. Revenue from license royalties is generally based on a percentage of sales, subject to certain annual minimum royalties, and is recognized on a monthly basis when it is earned and deemed collectible. 16. Revenue Recognition - Franchising Operations In connection with its franchising operations, the Company receives initial franchise fees, international development fees, royalties, and in certain cases, revenue from sub-leasing restaurant properties to franchisees. F-16 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following services are typically provided by the Company prior to the opening of a franchised restaurant: ● Approval of all site selections to be developed. ● Provision of architectural plans suitable for restaurants to be developed. ● Assistance in establishing building design specifications, reviewing construction compliance and equipping the restaurant. ● Provision of appropriate menus to coordinate with the restaurant design and locations to be developed. ● Provision of management training for the new franchisee and selected staff. ● Assistance with the initial operations of restaurants being developed. The services provided in exchange for these upfront restaurant franchise fees do not contain separate and distinct performance obligations from the franchising right and these initial franchise fees, renewal fees and transfer fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement. The services provided in exchange for these international development fees do not contain separate and distinct performance obligations from the franchising right and these international development fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement. Certain other costs, such as legal expenses, are expensed as incurred. The Company recognizes franchise royalties on a monthly basis, which are generally based upon a percentage of sales made by the Company’s franchisees, including virtual kitchens, when they are earned and deemed collectible. The Company recognizes royalty revenue from its Branded Menu Program directly from the sale of Nathan’s products by its distributors or directly from the manufacturers. Franchise fees and royalties that are subsequently deemed to be not collectible are recorded as bad debts until paid by the franchisee or until collectability is deemed to be reasonably assured. F-17 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following is a summary of franchise openings and closings (excluding virtual kitchens) for the Nathan’s franchise restaurant system for the fiscal years ended March 30, 2025 and March 31, 2024: March 30, March 31, 2025 2024 Franchised restaurants operating at the beginning of the period 230 232 Franchised restaurants opened during the period 25 17 Franchised restaurants closed during the period ( 25 ) ( 19 ) Franchised restaurants operating at the end of the period 230 230 Contract balances The following table provides information about contract liabilities from contracts with customers: March 30, March 31, 2025 2024 Deferred franchise fees (a) $ 1,006 $ 1,226 Deferred revenues, which are included in “Accrued expenses and other current liabilities” (b) $ 1,392 $ 1,375 (a) Deferred franchise fees of $ 309 and $ 697 as of March 30, 2025 and $ 327 and $ 899 as of March 31, 2024 are included in Deferred franchise fees – current and long term, respectively. (b) Includes $ 892 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 30, 2025 and $ 875 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 31, 2024. Significant changes in deferred franchise fees for the fiscal years ended March 30, 2025 and March 31, 2024 are as follows: March 30, March 31, 2025 2024 Deferred franchise fees at beginning of period $ 1,226 $ 1,608 New deferrals due to cash received and other 161 88 Revenue recognized during the period ( 381 ) ( 470 ) Deferred franchise fees at end of period $ 1,006 $ 1,226 F-18 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Significant changes in deferred revenues for the fiscal years ended March 30, 2025 and March 31, 2024 are as follows: March 30, March 31, 2025 2024 Deferred revenues at beginning of period $ 1,375 $ 1,406 New deferrals due to cash received and other 2,577 2,340 Revenue recognized during the period ( 2,560 ) ( 2,371 ) Deferred revenues at end of period $ 1,392 $ 1,375 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: Estimate for fiscal year 2026 $ 309 2027 195 2028 107 2029 71 2030 51 Thereafter 273 Total $ 1,006 We have applied the optional exemption, as provided for under ASC Topic 606, “ Revenues from Contracts with Customers, ” which allows us not to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty. 17. Revenue Recognition – National Advertising Fund The Company maintains a national advertising fund (the “Advertising Fund”) established to collect and administer funds contributed for use in advertising and promotional programs for Company-owned and franchised restaurants. The revenue, expenses and cash flows of the Advertising Fund are fully consolidated into the Company’s Consolidated Statements of Earnings and Statements of Cash Flows. While this treatment impacts the gross amount of reported advertising fund revenue and related expenses, the impact is expected to approximately offset the increase to both revenue and expense, with minimal impact to income from operations or net income because the Company attempts to manage the Advertising Fund to breakeven over the course of the fiscal year. However, any surplus or deficit in the Advertising Fund will impact income from operations and net income. F-19 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 18. Business Concentrations and Geographical Information The Company’s accounts receivable consists principally of receivables from franchisees, including virtual kitchens, for royalties and advertising contributions, from sales under the Branded Product Program, and from royalties from retail licensees. At March 30, 2025, three Branded Product customers represented 18 %, 14 % and 12 %, of accounts receivable. At March 31, 2024, three Branded Product customers represented 21 %, 15 % and 13 %, of accounts receivable. One Branded Product customer accounted for 20 % and 18 % of total revenue for each of the fiscal years ended March 30, 2025 and March 31, 2024, respectively. One retail licensee accounted for 24 % and 23 % of the total revenue for the fiscal years ended March 30, 2025 and March 31, 2024, respectively. The Company’s primary supplier of hot dogs represented 96 % and 95 % of product purchases for each of the fiscal years ended March 30, 2025 and March 31, 2024, respectively. The Company’s primary distributor of products to its Company-owned restaurants represented 3 % of product purchases for each of the fiscal years ended March 30, 2025 and March 31, 2024. If a disruption of service from a primary supplier or distributor was to occur, we could experience short-term increases in our costs while supply or distribution channels were adjusted. The Company’s revenues for the fiscal years ended March 30, 2025 and March 31, 2024 were derived from the following geographic areas: March 30, 2025 March 31, 2024 United States $ 144,318 $ 133,205 International 3,864 5,405 Total revenues $ 148,182 $ 138,610 The Company’s revenues for the fiscal years ended March 30, 2025 and March 31, 2024 were derived from the following: March 30, 2025 March 31, 2024 Branded Products $ 91,828 $ 86,489 Company-owned restaurants 12,714 12,103 License royalties 37,418 33,581 Franchise royalties 3,767 3,886 Franchise fees 381 470 Advertising fund revenue 2,074 2,081 Total revenues $ 148,182 $ 138,610 F-20 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 19. Advertising The Company administers an Advertising Fund on behalf of its restaurant system to coordinate the marketing efforts of the Company. Under this arrangement, the Company collects and disburses fees paid by manufacturers, franchisees and Company-owned restaurants for national and regional advertising, promotional and public relations programs. Contributions to the Advertising Fund are based on specified percentages of net sales, generally ranging up to 2.5 %. Company-owned restaurant advertising expense, which is expensed as incurred, was $ 94 and $ 117 , for the fiscal years ended March 30, 2025 and March 31, 2024, respectively, and has been included in “Restaurant operating expenses” in the accompanying Consolidated Statements of Earnings. 20. Share-Based Compensation At March 30, 2025, the Company had one share-based compensation plan in effect which is more fully described in Note L.2. The cost of all share-based payments, including grants of restricted stock units and stock options, is recognized in the consolidated financial statements based on their fair values measured at the grant date, or the date of any later modification, over the requisite service period. The Company recognizes compensation cost for unvested stock awards on a straight-line basis over the requisite vesting period. 21. Classification of Operating Expenses Cost of sales consists of the following: ● The cost of food and other products sold by Company-owned restaurants, through the ● Branded Product Program and through other distribution channels. ● The cost of labor and associated costs of Company-owned restaurants. ● The cost of paper products used in Company-owned restaurants. ● Other direct costs such as fulfillment, commissions, freight and samples. Restaurant operating expenses consist of the following: ● Occupancy costs of Company-owned restaurants. ● Utility costs of Company-owned restaurants. ● Repair and maintenance and other incidental expenses of Company-owned restaurants. ● Marketing and advertising expenses done locally and contributions to advertising funds for Company-owned restaurants. ● Insurance costs directly related to Company-owned restaurants. F-21 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) General and administrative expenses consist of the following: ● Payroll and related benefits, incentive compensation expense and share-based compensation. ● Travel expense, marketing, trade show expense and certain other overhead expenses of the various departments that support our operations. ● Corporate administrative functions such as executive management, finance, information technology, legal and professional fees, insurance, corporate rent and certain other overhead expenses of our Corporate office. 22. Income Taxes The Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible. Should management determine that it is more likely than not that some portion of the deferred tax assets will not be realized, a valuation allowance against the deferred tax assets would be established in the period such determination was made. Uncertain Tax Positions The Company has recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Nathan’s recognizes accrued interest and penalties associated with unrecognized tax benefits as part of the income tax provision. See Note H for a further discussion of our income taxes. F-22 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 23. Adoption of New Accounting Standard In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ” , which provides guidance to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment and contains other disclosure requirements. The purpose of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The Company adopted ASU 2023-07 during the fourth quarter of fiscal year 2025. The adoption did not have a material impact on our consolidated financial statements. Refer to NOTE I – SEGMENT INFORMATION for the expanded reportable segment disclosures added as a result of the adoption of ASU 2023-07. 24. New Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures ” , which updates income tax disclosure requirements primarily by requiring specific categories and greater disaggregation within the rate reconciliation table and disaggregation of income taxes paid, net of refunds, by jurisdiction. All entities are required to apply the guidance prospectively, with the option to apply it retrospectively. The guidance is effective for fiscal years beginning after December 15, 2024, which for us is our fiscal year 2026 beginning on March 31, 2025. Early adoption is permitted. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ”, which requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the expense captions presented on the face of the statement of earnings. Additionally, in January 2025, the FASB issued ASU 2025-01, “ Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ”, which clarified the effective date for non-calendar year-end entities such as us. The guidance is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this Update should be applied either (1) prospectively to financial statements for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. F-23 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) For the Company, annual reporting requirements will be effective for our fiscal year 2028 beginning on March 29, 2027 and interim reporting requirements will be effective beginning with our first quarter of fiscal year 2029. The Company is currently evaluating the impact that the new guidance will have on our consolidated financial statements. The Company does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on our consolidated financial statements. NOTE C – NET INCOME PER SHARE Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding and excludes any dilutive effect of share-based awards. Diluted net 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 as determined using the treasury stock method and restricted stock unit awards. The following chart provides a reconciliation of information used in calculating the per-share amounts for the fiscal years ended March 30, 2025 and March 31, 2024, respectively: March 30, March 31, 2025 2024 Net income $ 24,026 $ 19,616 Common Stock: Weighted average basic shares outstanding 4,086,000 4,081,000 Effect of dilutive share-based awards 9,000 6,000 Weighted average diluted shares outstanding 4,095,000 4,087,000 Net income per share: Basic $ 5.88 $ 4.81 Diluted $ 5.87 $ 4.80 Anti-dilutive share-based awards - 10,000 F-24 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE D - ACCOUNTS AND OTHER RECEIVABLES, NET Accounts and other receivables, net, consist of the following: March 30, March 31, 2025 2024 Branded product sales $ 10,534 $ 10,833 Franchise and license royalties 3,902 4,139 Other 270 162 14,706 15,134 Less: allowance for credit losses ( 642 ) ( 403 ) Accounts and other receivables, net $ 14,064 $ 14,731 Our provision for credit losses is based on the current expected credit losses model. 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. An allowance for credit losses is determined by pooling the Company’s trade accounts receivable based on similar risk characteristics and delinquency status under an aging method at the measurement date. The Company considers both qualitative and quantitative information when developing the estimate including assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, licensees and Branded Product Program customers, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future. 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. F-25 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE D - ACCOUNTS AND OTHER RECEIVABLES, NET (continued) Changes in the Company’s allowance for credit losses for the fiscal years ended March 30, 2025 and March 31, 2024 are as follows: March 30, 2025 March 31, 2024 Beginning balance $ 403 $ 480 Cumulative effect of adoption of ASU 2016-13 - 252 Provision for expected credit losses 275 157 Write offs and other ( 36 ) ( 486 ) Ending balance $ 642 $ 403 NOTE E - PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: March 30, March 31, 2025 2024 Income taxes $ 493 $ 858 Real estate taxes 80 93 Insurance 379 268 Marketing 798 562 Other 298 395 Total prepaid expenses and other current assets $ 2,048 $ 2,176 NOTE F - PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: March 30, March 31, 2025 2024 Land $ 123 $ 123 Building and improvements 1,441 1,414 Machinery, equipment, furniture and fixtures 5,421 5,405 Leasehold improvements 7,418 7,418 Construction-in-progress 6 - Total property and equipment 14,409 14,360 Less: accumulated depreciation and amortization ( 12,295 ) ( 11,687 ) Property and equipment, net $ 2,114 $ 2,673 F-26 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE F - PROPERTY AND EQUIPMENT, NET (continued) Depreciation and amortization expense related to property and equipment was $ 784 and $ 961 for each of the fiscal years ended March 30, 2025 and March 31, 2024, respectively. NOTE G – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: March 30, March 31, 2025 2024 Payroll and other benefits $ 3,269 $ 3,522 Accrued rebates 742 693 Rent and occupancy costs 60 78 Deferred revenue 1,392 1,375 Interest 148 1,676 Professional fees 60 56 Sales, use and other taxes 33 41 Other 265 174 Total accrued expenses and other current liabilities $ 5,969 $ 7,615 NOTE H – INCOME TAXES The income tax provision consists of the following for the fiscal years ended March 30, 2025 and March 31, 2024: March 30, March 31, 2025 2024 Federal Current $ 6,909 $ 5,767 Deferred ( 190 ) 118 Total Federal income tax 6,719 5,885 State and local Current 2,060 1,903 Deferred ( 44 ) 47 Total State and local income tax 2,016 1,950 Total provision for income taxes $ 8,735 $ 7,835 The income tax provisions for the fiscal years ended March 30, 2025 and March 31, 2024 reflect effective tax rates of 26.7 % and 28.5 %, respectively. F-27 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE H – INCOME TAXES (continued) The total income tax provision for the fiscal years ended March 30, 2025 and March 31, 2024 differs from the amounts computed by applying the United States Federal income tax rate of 21 % to income before income taxes as a result of the following: March 30, March 31, 2025 2024 Income tax provision at the U.S. Federal statutory rate $ 6,880 $ 5,765 State and local income taxes, net of U.S. Federal income tax benefit 1,527 1,485 Change in uncertain tax positions, net 116 73 Nondeductible meals and entertainment and other ( 72 ) ( 24 ) Nondeductible executive compensation 284 536 Total provision for income taxes $ 8,735 $ 7,835 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below: March 30, March 31, 2025 2024 Deferred tax assets Accrued expenses $ 312 $ 303 Allowance for credit losses 159 101 Deferred revenue 246 305 Deferred stock compensation 106 28 Operating lease liability 1,189 1,505 Other 177 151 Total deferred tax assets $ 2,189 $ 2,393 Deferred tax liabilities Deductible prepaid expense $ 125 $ 150 Operating lease right-of-use asset 1,091 1,373 Depreciation expense 360 465 Amortization 103 130 Total deferred tax liabilities 1,679 2,118 Net deferred tax asset $ 510 $ 275 F-28 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE H – INCOME TAXES (continued) A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than not that the Company will realize the benefit of its deferred tax asset. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 30, 2025 and March 31, 2024: March 30, 2025 March 31, 2024 Unrecognized tax benefits, beginning of year $ 465 $ 432 Decreases of tax positions taken in prior years ( 60 ) ( 19 ) Increases based on tax positions taken in current year 127 52 Unrecognized tax benefits, end of year $ 532 $ 465 The amount of unrecognized tax benefits included in Other liabilities at March 30, 2025 and March 31, 2024 were $ 532 and $ 465 , respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of March 30, 2025 and March 31, 2024, the Company had $ 395 and $ 345 , respectively, accrued for the payment of interest and penalties. For the fiscal years ended March 30, 2025 and March 31, 2024, Nathan’s recognized interest and penalties in the amounts of $ 49 and $ 41 , respectively. During the fiscal year ending March 29, 2026, we believe it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $ 55 , due primarily to the lapse of statutes of limitations which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard. On August 16, 2022 the United States enacted the Inflation Reduction Act. Among other provisions, this law imposes a 1% excise tax on stock buybacks made after December 31, 2022, with certain exceptions including stock repurchases of less than $1,000 within a tax year. We do not expect this law to have a material impact on our consolidated financial statements. The American Rescue Plan Act (“ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations. Effective tax years starting after December 31, 2026 (March 29, 2027 for the Company), ARPA expands the limitation to cover the next five most highly compensated employees. We continue to evaluate the potential impact ARPA may have on our operations and consolidated financial statements in future periods. F-29 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE H – INCOME TAXES (continued) The earliest tax years that are subject to examination by taxing authorities by major jurisdictions are as follows: Jurisdiction Fiscal Year Federal 2022 New York State 2022 New York City 2022 New Jersey 2021 California 2021 NOTE I – 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 stores nationwide. The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”) who regularly reviews operating results, 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 as reported on the Consolidated Statement of Earnings. The CODM regularly reviews revenues, gross profit and income from operations by segment when evaluating the financial performance of each segment. Significant segment expenses are monitored by the CODM and included in the tables below. Segment asset information is not used by the CODM to assess performance and allocate resources and therefore is not presented. 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, frozen crinkle-cut French fries and additional products through retail supermarkets, grocery channels and club stores throughout the United States. F-30 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE I – SEGMENT INFORMATION (continued) 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. Interest expense, loss on debt extinguishment, interest and dividend 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. The following tables summarize segment information and reconcile our segment results to our consolidated results as reported on our Consolidated Statement of Earnings: March 30, 2025 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 91,828 37,418 16,862 2,074 148,182 Less: Cost of sales 82,461 - 7,246 - 89,707 Segment gross profit 9,367 37,418 9,616 2,074 58,475 Less (1): Restaurant operating expenses (2) - - 4,379 - 4,379 Department expenses (3) 956 182 713 410 2,261 Other general and administration expenses (4) - - - 6,204 6,204 Payroll expense 1,127 - 1,457 3,481 6,065 Depreciation and amortization 148 - 636 173 957 Advertising fund expense - - - 2,112 2,112 Income from operations 7,136 37,236 2,431 ( 10,306 ) 36,497 Interest expense - - - ( 4,106 ) ( 4,106 ) Loss on debt extinguishment - - - ( 389 ) ( 389 ) Interest and dividend income - - - 672 672 Other income, net - - 87 - 87 Income before provision for income taxes 7,136 37,236 2,518 ( 14,129 ) 32,761 F-31 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE I – SEGMENT INFORMATION (continued) March 31, 2024 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 86,489 33,581 16,459 2,081 138,610 Less: Cost of sales 75,966 - 7,216 - 83,182 Segment gross profit 10,523 33,581 9,243 2,081 55,428 Less (1): Restaurant operating expenses (2) - - 4,177 - 4,177 Department expenses (3) 944 182 1,062 403 2,591 Other general and administration expenses (4) - - - 5,783 5,783 Payroll expense 1,151 - 1,643 4,444 7,238 Depreciation and amortization 144 - 700 291 1,135 Advertising fund expense - - - 1,998 1,998 Income from operations 8,284 33,399 1,661 ( 10,838 ) 32,506 Interest expense - - - ( 5,355 ) ( 5,355 ) Loss on debt extinguishment - - - ( 169 ) ( 169 ) Interest and dividend income - - - 383 383 Other income, net - - 86 - 86 Income before provision for income taxes 8,284 33,399 1,747 ( 15,979 ) 27,451 (1) The significant expense categories and amounts align with segment-level information that is regularly provided to the CODM. (2) Includes occupancy expenses, insurance expenses, utility costs, repair and maintenance expense and other Company-owned restaurant expenses. (3) Includes travel expense, marketing and trade show expense and certain other overhead expenses. (4) Includes incentive compensation expense, share-based compensation expense, professional fees, occupancy expenses, provision for credit losses and certain other overhead expenses. F-32 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE J – LONG-TERM DEBT Long-term debt consists of the following: March 30, March 31, 2025 2024 6.625 % Senior Secured Notes due 2025 $ - $ 60,000 SOFR Term Loan Borrowings with an effective interest rate of 5.825 % 50,800 - Total debt 50,800 60,000 Less: unamortized debt issuance costs ( 327 ) ( 438 ) Total debt, net of debt issuance costs 50,473 59,562 Less: Current portion of long-term debt ( 2,400 ) - Long-term debt, net $ 48,073 $ 59,562 Credit Agreement On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender (capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement). The Company’s mandatory debt principal repayments as of March 30, 2025 were as follows: Fiscal Year Amount 2026 $ 2,400 2027 2,400 2028 2,400 2029 2,400 2030 41,200 Total $ 50,800 Total debt repayments through 2030 exceed the total carrying amount of the Company’s debt as of March 30, 2025 because the carrying amount reflects the unamortized portion of debt issuance costs. F-33 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE J – LONG-TERM DEBT (continued) The Credit Agreement provides for a term loan facility (“Term Loan”) of $ 60,000 and a revolving credit facility (“Revolving Loan”) of up to $ 10,000 . The Credit Agreement also provides that the Company has the right from time to time during the term of the Credit Agreement to request the Lenders for incremental revolving loan borrowing increases of up to an additional $ 10,000 in the aggregate, subject to, among other items, the Lenders agreeing to lend any such additional amounts and compliance with terms specified in the Credit Agreement. The Credit Agreement matures on July 10, 2029. The Company borrowed $ 60,000 in Term Loan borrowings on the Effective Date to refinance and redeem its outstanding 2025 Notes. The Company completed the redemption of the 2025 Notes on August 13, 2024. The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes. As of March 30, 2025, there were no outstanding borrowings under the Revolving Loan. In connection with the refinancing, the Company recorded a loss on extinguishment of debt of $ 334 that reflected the write-off of the remainder of the debt issuance costs on the 2025 Notes. Additionally, in connection with the refinancing, the Company incurred $ 431 of debt issuance costs on the Term Loan borrowings that were capitalized and will be amortized over the term of the Credit Agreement. Term Loan and Revolving Loan borrowings under the Credit Agreement will bear interest at a rate per annum, at the Company’s option, of (a) for Base Rate Loans, the Base Rate plus the Applicable Rate of 0.00 % or (b) for Term SOFR Loans, Term SOFR plus the Applicable Rate of 1.40 % for one (1), three (3) or six (6) month periods, as selected by the Company in its Loan Notice. The Company will be subject to a commitment fee of 0.20 % per annum on the daily amount of the undrawn portion of the Revolving Committed Amount. The interest rate on the Term Loan borrowings at March 30, 2025 was 5.825 %. The Credit Agreement contains customary affirmative covenants and negative covenants and requires the Company to maintain a Consolidated Fixed Charge Ratio not to exceed 1.20 to 1.00 and a Consolidated Net Leverage Ratio not to exceed 3.00 to 1.00, in each case, as of the end of each fiscal quarter. The Company was in compliance with the covenants of the Credit Agreement at March 30, 2025. The outstanding Term Loan borrowings under the Credit Agreement are payable quarterly in equal installments of 1.0 % of the original principal amount of the Term Loan, or $ 600 , beginning September 30, 2024, with the balance payable on the final maturity date. The Company made mandatory principal repayments on the Term Loan of $ 1,200 during fiscal 2025. F-34 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE J – LONG-TERM DEBT (continued) The outstanding Term Loan borrowings and the Revolving Loan borrowings under the Credit Agreement are voluntarily prepayable by the Company without penalty or premium, provided, that each of the following shall require a mandatory prepayment of outstanding Term Loan borrowings and Revolving Loan borrowings by the Company as follows: (i) 100 % of any Net Cash Proceeds in excess of $ 2,000 individually or in the aggregate over the term of the Credit Agreement in respect of any Extraordinary Receipt provided that the Company shall be permitted to reinvest such Net Cash Proceeds in accordance with the Credit Agreement, (ii) 100 % of any Net Cash Proceeds of an Equity Issuance, (iii) 100 % of any Net Cash Proceeds from a Debt Issuance and (iv) 100 % of any Net Cash Proceeds from the Disposition of certain assets individually, or in the aggregate, in excess of $ 2,000 in any fiscal year provided that the Company shall be permitted to reinvest such Net Cash Proceeds in accordance with the Credit Agreement. On October 10, 2024, the Company made a voluntary principal prepayment of $ 8,000 of its Term Loan borrowings and incurred a loss on debt extinguishment of $ 55 related to the write-off of a portion of previously recorded debt issuance costs on the Term Loan borrowings. The Company’s obligations under the Credit Agreement are fully and unconditionally guaranteed by all of the Company’s wholly-owned subsidiaries. The Credit Agreement provides that certain Change of Control events constitute an Event of Default. Such an Event of Default entitles the Lenders to, among other things, cause all outstanding debt obligations under the Credit Agreement to become immediately due and payable. 2025 Notes The Company had $ 80,000 principal amount of 6.625 % Senior Secured Notes outstanding at March 26, 2023 due November 1, 2025. During fiscal 2024, the Company completed the partial redemption of $ 20,000 of the 2025 Notes by paying cash of $ 20,177 , inclusive of accrued interest of $ 177 , and recognized a loss on early extinguishment of $ 169 that reflected the write-off of a portion of previously recorded debt issuance costs. NOTE K – 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. F-35 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE K – LEASES (continued) Company as lessee The components of the net lease cost for the fiscal years ended March 30, 2025 and March 31, 2024 were as follows: March 30, March 31, 2025 2024 Operating lease cost $ 1,598 $ 1,580 Variable lease cost 1,996 1,751 Less: Sublease income, net ( 87 ) ( 87 ) Total net lease cost $ 3,507 $ 3,244 The components of the net lease cost are included on the Consolidated Statement of Earnings for the fiscal years ended March 30, 2025 and March 31, 2024 as follows: March 30, March 31, 2025 2024 Restaurant operating expenses $ 2,769 $ 2,535 General and administrative expenses 825 796 Less: Other income, net ( 87 ) ( 87 ) Total net lease cost $ 3,507 $ 3,244 Cash paid for amounts included in the measurement of lease liabilities for the fiscal years ended March 30, 2025 and March 31, 2024 were as follows: March 30, March 31, 2025 2024 Operating cash flows from operating leases $ 1,887 $ 1,867 F-36 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE K – LEASES (continued) The weighted average remaining lease term and weighted average discount rate for operating leases for the fiscal years ended March 30, 2025 and March 31, 2024 were as follows: March 30, March 31, 2025 2024 Weighted average remaining lease term (years): 3.5 4.4 Weighted average discount rate: 8.474 % 8.480 % Future lease commitments to be paid and received by the Company as of March 30, 2025 were as follows: Payments Receipts Operating Leases Subleases Net Leases Fiscal year: 2026 1,923 278 1,645 2027 1,931 281 1,650 2028 1,781 129 1,652 2029 434 118 316 2030 171 122 49 Thereafter - 255 ( 255 ) Total lease commitments $ 6,240 $ 1,183 $ 5,057 Less: Amount representing interest ( 789 ) Present value of lease liabilities (a) $ 5,451 (a) The present value of minimum operating lease payments of $ 1,923 and $ 3,528 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 fiscal years ended March 30, 2025 and March 31, 2024 were as follows: March 30, March 31, 2025 2024 Operating lease income, net $ 87 $ 87 F-37 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS 1. Dividends The Company paid dividends on common stock of $ 2.00 per share during each of the fiscal years ended March 30, 2025 and March 31, 2024. Effective June 10, 2025, the Board declared its first quarterly cash dividend of $ 0.50 per share for fiscal year 2026, which is payable on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025. Our ability to pay future dividends is limited by the terms of our Credit Agreement. In addition to the terms of our Credit Agreement, 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 Incentive Plan 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 have 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 expire unexercised, or were otherwise forfeited, up to a maximum of an additional 11,000 shares. As of March 30, 2025, there were up to 38,584 shares available to be issued for future option grants or up to 134,808 shares of restricted stock to be granted under the 2019 Plan. In general, options granted under the Company’s stock incentive plans have terms of five or ten years and vest over periods of between three and five years. The Company has historically issued new shares of common stock for options that have been exercised and used the Black-Scholes option valuation model to determine the fair value of options granted at the grant date. F-38 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) Share-based compensation: The Company recognizes compensation cost for unvested share-based awards on a straight-line basis over the requisite service period. Compensation expense under all share-based awards for the fiscal years ended March 30, 2025 and March 31, 2024 is as follows: March 30, March 31, 2025 2024 Stock options $ 318 $ 58 Restricted stock units 675 675 $ 993 $ 733 As of March 30, 2025, there was $ 3,281 of unamortized compensation expense related to share-based awards. The Company expects to recognize this expense over approximately 36 months, which represents the weighted average remaining requisite service periods for such awards. Stock options: During the fiscal year ended March 30, 2025, the Company granted options to purchase 110,000 shares at an exercise price of $ 74.47 per share, all of which expire five years from the date of grant. All such options vest ratable over a four -year period commencing August 19, 2024. During the fiscal year ended March 31, 2024, the Company granted options to purchase 10,000 shares at an exercise price of $ 78.00 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 11, 2023. 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 fiscal years ended March 30, 2025 and March 31, 2024 were as follows: March 30, 2025 March 31, 2024 Weighted-average option fair values $ 14.67 $ 16.23 Expected life (years) 4.4 4.4 Interest rate 3.75 % 4.31 % Volatility 24.50 % 24.29 % Dividend yield 2.69 % 2.56 % F-39 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) 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. A summary of the status of the Company’s stock options at March 30, 2025 and March 31, 2024 and changes during the fiscal years then ended is presented in the tables below: March 30, 2025 Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life Value Options outstanding – beginning of year 20,000 $ 73.25 3.36 $ 23 Granted 110,000 $ 74.47 4.39 - Options outstanding - end of year 130,000 $ 74.28 4.08 $ 2,667 Options exercisable - end of year 10,000 $ 70.88 1.86 $ 239 March 31, 2024 Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Life Value Options outstanding – beginning of year 20,000 $ 79.20 1.92 $ 40 Granted 10,000 $ 78.00 4.37 - Expired ( 10,000 ) $ 89.90 - - Options outstanding - end of year 20,000 $ 73.25 3.36 $ 23 Options exercisable - end of year 5,000 $ 68.50 2.36 $ 12 F-40 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) Restricted stock units: A summary of the status of the Company’s restricted stock units at March 30, 2025 and March 31, 2024 and changes during the fiscal years then ended are presented in the tables below: March 30, 2025 Weighted Average Grant-date Fair value Shares Per share Unvested restricted stock units – beginning of year 40,000 $ 67.59 Vested ( 10,000 ) $ 67.59 Unvested restricted stock units – end of year 30,000 $ 67.59 March 31, 2024 Weighted Average Grant-date Fair value Shares Per share Unvested restricted stock units – beginning of year 50,000 $ 67.59 Vested ( 10,000 ) $ 67.59 Unvested restricted stock units – end of year 40,000 $ 67.59 The aggregate fair value of restricted stock units vested for the fiscal years ended March 30, 2025 and March 31, 2024 was $ 856 and $ 710 , respectively. 3. 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 March 30, 2025, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan. The Company did not make any stock repurchases during fiscal 2025 and fiscal 2024. At March 30, 2025, 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. F-41 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) 4. Employment Agreements Effective January 1, 2007, Howard M. Lorber, previously Chairman of the Board and Chief Executive Officer, assumed the position of Executive Chairman of the Board of Nathan’s and Eric Gatoff, previously Vice President and Corporate Counsel, became Chief Executive Officer of Nathan’s. In connection with the foregoing, the Company entered into an employment agreement with each of Messrs. Lorber (as amended, the “Lorber Employment Agreement”) and Gatoff (as amended, the “Gatoff Employment Agreement”). Mr. Lorber receives a base salary of $ 1,000 . On December 8, 2022, the Company entered into Amendment No. 3 to the Lorber Employment Agreement. Under the amendment, the term of the employment agreement was extended from December 31, 2022 to December 31, 2027. In addition, Mr. Lorber received a grant of 50,000 restricted stock units under the Company’s 2019 Stock Incentive Plan which vest in equal installments over five years. The Lorber Employment Agreement provides for a three -year consulting period after the termination of employment during which Mr. Lorber will receive a consulting fee of $ 200 per year in exchange for his agreement to provide no less than 15 days of consulting services per year, provided, Mr. Lorber is not required to provide more than 50 days of consulting services per year. The Lorber Employment Agreement provides Mr. Lorber with the right to participate in employment benefits offered to other Nathan’s executives. During and after the contract term, Mr. Lorber is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company. In the event that Mr. Lorber’s employment is terminated without cause, he is entitled to receive his salary and bonus for the remainder of the contract term. The Lorber Employment Agreement further provides that in the event there is a change in control, as defined in the agreement, Mr. Lorber has the option, exercisable within one year after such event, to terminate the agreement. Upon such termination, he has the right to receive a lump sum cash payment equal to the greater of (A) his salary and annual bonuses for the remainder of the employment term (including a prorated bonus for any partial fiscal year), which bonus shall be equal to the average of the annual bonuses awarded to him during the three fiscal years preceding the fiscal year of termination; or (B) 2.99 times his salary and annual bonus for the fiscal year immediately preceding the fiscal year of termination, in each case together with a lump sum cash payment equal to the difference between the exercise price of any exercisable options having an exercise price of less than the then current market price of the Company’s common stock and such then current market price. In addition, Nathan’s will provide Mr. Lorber with a tax gross-up payment to cover any excise tax due. F-42 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) In the event of termination due to Mr. Lorber’s disability or death, he or his beneficiary is entitled to receive an amount equal to his salary and annual bonuses for a three-year period, which bonus shall be equal to the average of the annual bonuses awarded to him during the three fiscal years preceding the fiscal year of termination. Under the terms of the Gatoff Employment Agreement, Mr. Gatoff initially served as Chief Executive Officer from January 1, 2007 until December 31, 2008, which period automatically extends for additional one-year periods unless either party delivers notice of non-renewal no less than 180 days prior to the end of the term then in effect. Consequently, the Gatoff Employment Agreement is expected to be extended through December 31, 2026, based on the original terms, and no non-renewal notice has been given. Pursuant to the agreement, Mr. Gatoff receives a base salary, currently $ 625 and an annual bonus based on his performance measured against the Company’s financial, strategic and operating objectives as determined by the Compensation Committee. The Gatoff Employment Agreement provides for an automobile allowance and the right of Mr. Gatoff to participate in employment benefits offered to other Nathan’s executives. The employment agreement automatically extends for successive one-year periods unless notice of non-renewal is provided in accordance with the agreement. During and after the contract term, Mr. Gatoff is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company. Each employment agreement terminates upon death or voluntary termination by the respective employee or may be terminated by the Company on up to 30-days’ prior written notice by the Company in the event of disability or “cause,” as defined in each agreement. 5. Defined Contribution and Union Pension Plans The Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code covering all nonunion employees over age 21, who have been employed by the Company for at least one year. Employees may contribute to the plan, on a tax-deferred basis, up to 20 % of their total annual salary. Historically, the Company has matched contributions at a rate of $.25 per dollar contributed by the employee on up to a maximum of 3 % of the employee’s total annual salary. Employer contributions for the fiscal years ended March 30, 2025 and March 31, 2024 were $ 34 and $ 38 and are included in general and administrative expenses on the Consolidated Statements of Earnings. F-43 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE L – STOCKHOLDERS ’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued) The Company participates in a noncontributory, multi-employer, defined benefit pension plan (the “Union Plan”) covering substantially all of the Company’s union-represented employees. The risks of participating in the Union Plan are different from a single-employer plan in the following aspects: (a) assets contributed to the Union Plan by one employer may be used to provide benefits to employees of other participating employers; (b) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) if the Company chooses to stop participating in the Union Plan, the Company may be required to pay the Union Plan an amount based on the underfunded status of the Union Plan, referred to as a withdrawal liability. The most recent estimate of our potential withdrawal liability is $ 329 as of December 31, 2024. The Company has no plans or intentions to stop participating in the plan as of March 30, 2025 and does not believe that there is a reasonable possibility that a withdrawal liability will be incurred. Any adjustment for withdrawal liability will be recorded only when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Contributions to the Union Plan were $ 9 and $ 8 for the fiscal years ended March 30, 2025 and March 31, 2024, respectively. 6. Other Benefits The Company provides, on a contributory basis, medical benefits to active employees. The Company does not provide medical benefits to retirees. NOTE M – 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 N - RELATED PARTY TRANSACTIONS A firm to which the Company’s Executive Chairman of the Board is as an investor, and the firm’s affiliates, received ordinary and customary insurance commissions aggregating approximately $ 11 for the fiscal year ended March 31, 2024. F-44 Nathan ’ s Famous, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share amounts) March 30, 2025 and March 31, 2024 NOTE O - 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. F-45